Australian Securities and Investments Commission v Bekier

Number of paragraphs: 43

Date of hearing: 24 February 2025

Counsel for the second defendant: Mr B Hancock

Solicitor for the second defendant: Gadens Lawyers

Counsel for the Department of Creative Industries, Tourism, Hospitality and Sport: Mr J Wherrett

Counsel for the New South Wales Independent Casino Commission: Mr M Dalla-Pozza

BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff MATTHIAS MICHAEL BEKIER First Defendant AND: PAULA MAREE MARTIN Second Defendant GREGORY FRANCIS HAWKINS (and others named in the Schedule) Third Defendant

order made by: LEE J DATE OF ORDER: 24 FEBRUARY 2025

THE COURT ORDERS THAT:

1. The subpoena dated 7 February 2025 and issued to the Proper Officer of the Department of Creative Industries, Tourism, Hospitality and Sport be set aside.
2. The subpoena dated 13 February 2025 and issued to the Proper Officer of the New South Wales Independent Casino Commission be set aside.
3. There be no order as to costs. Date orders authenticated: 24 February 2025 Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (Delivered ex tempore, revised from the transcript) LEE J:

A INTRODUCTION & A PROCEDURAL ISSUE

1. Two subpoenas to produce issued by my leave and returnable before me today have been called upon by the second defendant, Ms Martin. The first is directed to the Proper Officer of the Department of Creative Industries, Tourism, Hospitality and Sport; and the second to the Proper Officer of the New South Wales Independent Casino Commission.
2. In the balance of this judgment, I will refer only to the first subpoena, as the recipient of the second subpoena and Ms Martin, expressly agree, that my ruling as to the first subpoena is determinative as to the resolution of the cognate controversy that has arisen in relation to the second subpoena.
3. In answer to the subpoena, the Proper Officer of the Department of Creative Industries, Tourism, Hospitality and Sport (recipient) asserts he is not required to comply with the subpoena. More particularly, he contends that documents responsive to the subpoena do not need to be produced as there is a "lawful excuse" not to do so within the meaning of r 24.23(1) of the Federal Court Rules 2011 (Cth) (FCR) because any responsive document is immune from production by reason of s 17(4) of the Gaming and Liquor Administration Act 2007 (NSW) (GALA Act) (which is "picked up" and applied in this Court by reason of s 79 of the Judiciary Act 1903 (Cth) (JA)).
4. Before coming to the substantive argument, it is worth dealing with a point of procedure. FCR 24.17(4) provides that a recipient must comply with a subpoena to produce by, relevantly, attending at the date, time and place specified for production and producing the subpoena or a copy of it and the documents to the Court.
5. As is well known, the word "subpoena" means "under penalty" which historically are the first words of the writ commanding the presence of a stranger to litigation to Court under penalty of failure. It amounts to a peremptory order of the Court (made in this Court on application to a judge) requiring a third party to assist the Court by attending to give evidence or produce documents or both.
6. The subpoena was made in its common form (see FCR 24.13(b), Form 43B). Hence the order for production contained a notation (Note 10) which notified the recipient as follows: Applications in relation to subpoena
7. You have the right to apply to the Court: (a) for an order setting aside the subpoena (or a part of it) or for relief in respect of the subpoena; and (b) for an order with respect to your claim for privilege, public interest immunity or confidentiality in relation to any document or thing the subject of the subpoena.
8. Consistently with the notation to the order for production constituted by the subpoena, it seems to me the appropriate procedural course was for the recipient to bring an application to set aside the subpoena on the basis that the Court could not compel production of the documents the subject of the subpoena (rather than simply relying on FCR 24.23(1) which is directed to the consequences of a failure to comply with the subpoena). In any event, after this issue was raised by the Court, both parties were content to proceed on the basis that I was dealing with an application to set aside the subpoena.

B THE ARGUMENT AS TO WHY THE SUBPEONA IS VALID

1. Although, obviously enough, it is for the party seeking to set aside the subpoena to establish the basis for such an order, the argument has been identified in broad brush above, and it is convenient to move directly to summarise some matters that are common ground and why it is said the subpoena does require production and there is no lawful excuse for non-compliance.
2. It is common ground that this "matter" (to use that word in its Constitutional sense) is wholly within federal jurisdiction and this proceeding is within the subject matter jurisdiction of this Court. It follows that in quelling this controversy in federal jurisdiction to which Ms Martin is an actor, this Court is required to apply the statutory law of the Commonwealth, any "surrogate" Federal law "picked up" by s 79 of the JA (being applicable State laws applied as Federal laws), and the common law of Australia.
3. The State law said to be relevant is s 17(4) of the GALA Act, which provides: 17 Secrecy … (4) A person cannot be required - (a) to produce in any court any document or other thing that has come into the person's possession, custody or control by reason of, or in the course of, the exercise of the person's functions under the gaming and liquor legislation, or (b) to divulge to any court any information that has come to the person's notice in the exercise of the person's functions under that legislation.
4. Section 17(4) of the GALA Act cannot, of course, regulate the exercise of this Court's jurisdiction or powers. Rather, the only potential mechanism for its present application is through it being "picked up" by reason of s 79(1) of the JA.
5. As I explained in Herron and Another v HarperCollins Publishers Australia Pty Ltd and Another [2022] FCAFC 68; (2022) 292 FCR 336 (at 413-420 [326]-[364], in observations with which Rares and Wigney JJ agreed) in Rizeq v Western Australia [2017] HCA 23; (2017) 262 CLR 1 and Masson v Parsons [2019] HCA 21; (2019) 266 CLR 554, the High Court resolved some doubts that had arisen concerning the operation of s 79 of the JA including the appropriate test imposed by s 79(1) in holding that certain State and Territory laws are binding on courts exercising federal jurisdiction "except as otherwise provided by the Constitution or the laws of the Commonwealth".
6. The six-member plurality in Masson (Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ) concluded that "[t]he meaning of the expression 'otherwise provided' in s 79(1) of the Judiciary Act is… to be equated with the concept of inconsistency in s 109 of the Constitution" (at 579-580 [43]).
7. Again, as explained in Herron, prior to Masson, the starting point for considering whether Commonwealth law has "otherwise provided" (such that a given State or Territory law is not picked up) was the judgment of Gleeson CJ and Gummow J in Northern Territory v GPAO [1999] HCA 8; (1999) 196 CLR 553 (at 587-588 [78]-[81], Gaudron and Hayne JJ agreeing at 606 [135] and 650 [254]). Gleeson CJ and Gummow J noted that the "objective of s 79" was to facilitate the particular exercise of federal jurisdiction by the application of a coherent body of law, the elements of which may comprise the laws of the State or Territory in which the jurisdiction is being exercised, together with the laws of the Commonwealth, but subject always to the overriding effect of the Constitution itself (at 588 [80]). The objective was said to lead to the conclusion that the "otherwise provided" type of inconsistency in s 79 was conceptually analogous to the "problem that arises by conflict between conflicting statutes having the same source" (at 588 [80]). This differed from a situation of inconsistency between a law of a supreme legislature and one enacted by a hierarchically inferior legislature, in which the conflict is resolved by giving primacy to the former (at 579-580 [51], 588 [80]). In other words, under s 79, "[t]he law of a State or Territory which is to operate as a surrogate law of the Commonwealth is to be measured beside other laws of the Commonwealth" (at 588 [80]). Hence, the Court asked whether the operation of the federal law so reduced the ambit of the putative surrogate law such that the former was "irreconcilable" with the latter (at 588 [81]).
8. It has been observed (see Celia Winnett 'Picking up where Rizeq left off: Masson v Parsons [2019] HCA 21, s 79 of the Judiciary Act and the "otherwise provides" test' Australian Public Law (24 July 2019)) that this understanding of s 79's operation appeared to involve a narrower test for inconsistency than the test under s 109 (see Geoffrey Lindell, Cowen and Zines's Federal Jurisdiction in Australia (The Federation Press, 4th ed, 2016) (at pp 370-71, referring to Butler v Attorney-General (Vic) [1961] HCA 32; (1961) 106 CLR 268)). That is because the prism through which two apparently competing provisions of the same legislature are viewed is one of harmony (two laws operating alongside each other where possible because Parliament does not intend to contradict itself), rather than hierarchy (Commonwealth law trumping State/ Territory law where a conflict arises).
9. But consistently with the current approach, Ms Martin submits that a law of the Commonwealth will "otherwise provide" if there is a real conflict between it and the State law and this assessment is often undertaken using two, interrelated and potentially overlapping, tests. Under those tests, a Commonwealth law will "otherwise provide" if: (a) the State law would "alter, impair or detract" from the operation of the Commonwealth law, in the sense that its operation and effect would undermine the Commonwealth law (Work Health Authority v Outback Ballooning Pty Ltd [2019] HCA 2; (2019) 266 CLR 428 (at 447 [32] per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ)); and/or (b) the Commonwealth law is to be read as expressing exclusively what the law governing the particular matter to which its attention is directed: Outback Ballooning (at 447 [33]).
10. Applying this approach, Ms Martin then submits s 5 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) creates this Court as a superior court of record and as a court of law and equity, and s 23 provides it with power to make orders of such kinds as it thinks appropriate. Additionally, s 59 of the FCA Act empowers the Judges of the Court to make Rules of Court and, pursuant to that power, the FCR have commenced. The FCR make provision for the issuance of, and compliance with, subpoenas which constitute orders of the Court.
11. It is then said that a State law that has the effect of denuding an order of this Court of any authority or content is not consistent with the Commonwealth laws that confer power on this Court to make such orders. More particularly, it is said s 17(4) of the GALA Act would, if it were binding on this Court, impair and detract from the conferral of power made by s 23 of the FCA Act and FCR 1.32 (which provides that the Court may make any order that it considers appropriate in the interests of justice).
12. The inconsistency is said to be even more stark when r 24.17(4) is considered. That rule provides that an addressee of a subpoena "must comply with a subpoena to produce" and a State law that excuses an addressee of a subpoena from compliance with the subpoena is in direct conflict with that law of the Commonwealth.
13. In this way, it is said s 17(4) of the GALA Act would be inconsistent with laws of the Commonwealth and is therefore not binding on this Court by operation of s 79(1) of the JA.

C WHY THE SUBPEONA OUGHT BE SET ASIDE

1. Although presented skilfully, the arguments made by Ms Martin do not bear scrutiny. In my view, the present circumstances are relevantly identical to those dealt with by the High Court in GPAO, notwithstanding the development in the principled approach to the operation of s 79 which has occurred since the delivery of that decision.
2. GPAO concerned a subpoena issued by the Family Court of Australia to a Northern Territory Department. The subpoena was issued under the relevant provisions of the Family Law Act 1975 (Cth) (Family Law Act) and the Family Law Rules 1984 (Cth) (Family Law Rules). The recipient of the subpoena submitted the documents were immune from production by reason of s 97(3) of the Community Welfare Act 1983 (NT) (Community Welfare Act). That sub-section provided: A person who is, or has been, an authorized person shall not, except for the purposes of this Act, be required to - (a) produce in a court a document that has come into his possession or under his control; or (b) disclose or communicate to a court any matter or thing that has come under his notice, in the performance of his duties or functions under this Act.
3. In addressing the issue as to whether the Family Law Act made relevant provision otherwise to s 97(3) of the Community Welfare Act, the Court asked itself whether the operation of the former so reduced the ambit of the latter such that the provisions of the Family Law Act were irreconcilable with those of the Territory law, with the result that the Family Law Act "otherwise provide[d]" (at 588 [81] per Gleeson CJ and Gummow J).
4. Notwithstanding Gleeson CJ and Gummow J identified this as the appropriate test, their Honours went on to observe as follows (at [84]-[85]):
5. What is presently significant is that the provisions of Pt XIIIA of the Family Law Act leave room for the operation of the immunity conferred by s 97(3) of the Community Welfare Act. The provisions of Pt XIIIA are outlined earlier in these reasons. Section 112AC is particularly significant in its provision for "reasonable excuse". The submission that the immunity provided for by s 97(3)(a) provides a reasonable excuse for failure to comply with the requirement of a subpoena issued under the Rules of Court that a document be produced to the Family Court should be accepted. Section 112AD, in its application with respect to subpoenas, takes no large step. The apparently absolute terms of the command in subpoenas issued under other Rules of Court are treated as permitting the recipient to rely on provisions such as s 97(3) as an answer to production (122).
6. The result is that Pt VII does not otherwise provide within the meaning of s 79 of the Judiciary Act. (Footnotes omitted)
7. In Masson, the plurality (at 580-581 [45] per Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ) stressed that s 79(1) does not operate to insert provisions of State law into a Commonwealth legislative scheme which is "complete upon its face" or where, upon their proper construction, the provisions of the Commonwealth scheme can "be seen to have left no room" for the operation of State provisions. In a footnote to this observation, reference was not only made to GPAO, but also to R v Gee [2003] HCA 12; (2003) 212 CLR 230 (at 254 [62] per McHugh and Gummow JJ, adopting, by analogy, the reasoning in Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 (at 64 per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ).
8. In R v Gee (although a case about the operation of s 68(2) of the JA), McHugh and Gummow JJ observed (at 254 [62]) that s 79 does not operate to insert a provision of State law into the Commonwealth legislative scheme which is complete upon its face, if the federal provisions can be seen to have left no room for the picking up of State law.
9. It is evident from Masson that this approach continues to provide a useful metaphorical tool for determining whether a Commonwealth law "otherwise provides".
10. Ms Martin points to the provisions of both the Act and the Rules (in a combined manner) as being the relevant laws of the Commonwealth directed to the making of the peremptory order of the Court requiring production of documents. But the making of an order by the Federal Court pursuant to those provisions expressly contemplates that there will be circumstances in which persons have a proper reason or lawful excuse from either producing documents to the Court, or, alternatively, resisting inspection of documents produced to the Court.
11. There is nothing surprising about the fact that laws may excuse compliance with an order of the Court. There is no Chapter III problem with the Court exercising judicial power in the absence of an ability to obtain particular classes of documents a fortiori when particular other classes of documents may not be admissible. It is well accepted and constitutionally permissible that a Court may "arrive at its decision on less than the whole of the relevant materials" or that the lack of an ability to obtain and then adduce certain documents into evidence "handicaps a party" (see Graham v Minister for Immigration and Border Protection [2017] HCA 33; (2017) 263 CLR 1 (at 22-23 [33] per Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ) and Gypsy Jokers Motorcycle Club Incorporated v Commissioner of Police [2008] HCA 4; (2008) 234 CLR 532 (at 556 [24] per Gummow, Hayne, Heydon and Kiefel JJ).
12. As the subpoena contemplated by its notation, a third party, being a stranger to litigation, was entitled to seek to set aside the order on the basis that, among other things, the subpoena required it to produce documents it could not be required to produce. This does not relevantly impair or detract from the FCA Act or the FCR in the sense that contemplated exceptions would somehow undermine the Commonwealth law, nor could it be sensibly suggested that the Commonwealth law which allows the Court to make orders requiring the production of documents expresses exclusively the circumstances in which documents could be required to be produced in answer to such an order.
13. One can think of other obvious examples. Part 1 of Sch 2 to the Imperial Acts Application Act 1969 (NSW) provides for the statutory recognition in New South Wales of the privilege founded in Art 9 of the Bill of Rights 1688 (Eng).
14. It could not be said, for example, that in relation to a subpoena which called for the production of documents properly the subject of a claim of parliamentary privilege provided for by State law, that this would not require a lawful excuse to a subpoena because such a provision was not picked up in federal jurisdiction.
15. Other examples can readily be contemplated. The fact that a subpoena calls for the production of documents that cannot be adduced into evidence is no answer to the relevance of such an analogy. The test for apparent relevance of a subpoena is, of course, quite different from the rules of admissibility pursuant to the terms of the Evidence Act 1995 (Cth).

D CONCLUSION AND ORDERS

1. In my view, the relevant provision of State law is picked up in federal jurisdiction and, accordingly, the subpoena seeking the production of documents cannot be compelled.
2. Nothing about this would prevent such documents being provided voluntarily by the recipient of the subpoena in order to assist the exercise of judicial power by the Federal Court if the recipient was satisfied that the documents are apparently relevant to the determination of the issues before the Court, but that is a different thing from concluding that I have a power to compel them to produce the documents by subpoena.
3. Accordingly, given that the subpoena calls for production of documents that cannot be compelled, I propose to set aside the subpoena. It follows, for reasons explained above, that the subpoena issued to the proper officer of the New South Wales Independent Casino Commission should also be set aside. [THE PARTIES THEN ADDRESSED ON COSTS]
4. An application is made by the subpoena recipient for costs, referring to the fact that the position which has been vindicated during the course of argument was expressed in a letter sent to those acting for Ms Martin.
5. In the exercise of my broad discretion, I do not propose to order costs for three reasons.
6. The first is that the arguments advanced by Ms Martin seem to me to be ones that were advanced responsibly. The Court had issued a subpoena, and it was appropriate that the Court's power to compel documents be resolved with the benefit of argument, given the position adopted by the recipient.
7. The second is that I did indicate that I was prepared to deal with this matter previously during the hearing, but it was adjourned to today on the application of the subpoena recipient. In my view, none of the arguments advanced today are ones that could not have been advanced when the issue was first raised.
8. The third reason is that the subpoena recipient is a State Government body which has behaved differentially in relation to the production of documents pursuant to requests by both a Commonwealth agency and a private party to the litigation. I did not think it was unreasonable for Ms Martin to seek the production of documents even though there was no prohibition on the documents being produced if it was done voluntarily, and I do not think the approach taken by Ms Martin to seek production of the documents she considers are apparently relevant to the disposition of the issues between ASIC and herself was in any way unreasonable.
9. Although none of these matters are determinative of the issue of costs, I consider that the better view is that I should make no order as to costs.
10. Accordingly, I make the following orders:
11. The subpoena dated 7 February 2025 and issued to the Proper Officer of the Department of Creative Industries, Tourism, Hospitality and Sport be set aside.
12. The subpoena dated 13 February 2025 and issued to the Proper Officer of the New South Wales Independent Casino Commission be set aside.
13. There be no order as to costs. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.

Associate: Dated: 28 February 2025 SCHEDULE OF PARTIES NSD 1082 of 2022 Defendants Fourth Defendant: HARRY JAMES THEODORE Fifth Defendant: JOHN ANTHONY O'NEILL AO Sixth Defendant: WALLACE RICHARD SHEPPARD Seventh Defendant: KATHLEEN LAHEY AM Eighth Defendant: GERARD PATRICK BRADLEY AO Ninth Defendant: SALLY ANNE MAJELLA PITKIN AO Tenth Defendant: BENJAMIN ANDREW HEAP Eleventh Defendant: ZLATKO TODORCEVSKI