Australian Securities and Investments Commission v Cassimatis

REASONS FOR JUDGMENT 1 This is the first directions hearing in respect of an application which the Australian Securities and Investments Commission (the Commission) makes under the Corporations Act 2001 (Cth) against Mr and Mrs Cassimatis for the imposition of pecuniary penalties. In 2009, it fell to me to hear and determine an application which the Commission made for the winding up of Storm Financial Ltd: Australian Securities & Investments Commission v Storm Financial Ltd (recs and mgrs apptd) (admin apptd) and Others (ACN 064 804 691) (2009) 71 ACSR 81. 2 In the course of determining that case, as my reasons for judgment reveal, it became necessary for me to form a view about a particular memorandum which had been circulated in conjunction with a proposed deed of company arrangement. The view which I reached, having heard the oral testimony of both Mrs Cassimatis and that company's then solicitor, Mr Russell, was that there was an absence of candour in that memorandum. I also made a finding which appears at paragraph 69 of the reasons for judgment, that, "Self-evidently, neither Mr nor Mrs Cassimatis appreciates this public interest". The public interest to which I referred was a public interest in the inquiry described by the administrators in their report and also an interest in certain other areas of inquiry which had occurred to me and which are detailed in the reasons for judgment. 3 The application today involves allegations of the conduct of Mr and Mrs Cassimatis as directors of Storm Financial. When the case was first called on for directions, Mr Doyle SC, who leads for Mr and Mrs Cassimatis, instructed by Mr Russell's firm, quite properly foreshadowed the making of an application that I ought to disqualify myself on the basis that there existed a reasonable apprehension of bias. 4 The stance adopted by the Commission was, not to support that application, as one might, perhaps, have apprehended would be a stance taken in the circumstances, but rather to abide the order of the Court. The Commission's stance, one way or the other, is not, of course, determinative. 5 In any event, the issue having being raised informally and the basis for it identified as apparent in the reasons for judgment in the winding up application, I determined that it was an issue which I ought raise in any event of my own motion and on the same foundation. The importance of justice not only being done but being seen to be done in courts constituted under Ch III of our Constitution (Cth) cannot be over-emphasised. The relevant principles are authoritatively stated in Ebner v The Official Trustee in Bankruptcy (2000) 205 CLR 337 and Johnson v Johnson (2000) 201 CLR 488. 6 An example of the application of those principles, to which I was helpfully directed by Mr Doyle, is to be found in MG Corrosion Consultants Pty Ltd v Gilmour [2010] FCA 1390. 7 The question is not one of actual bias but rather, as is made plain in the authorities mentioned, whether there might be a reasonable apprehension in that regard. In a sense, the authorities are predicated on an abundance of caution that justice be seen to be done. That is particularly pertinent in a case where one might expect that questions of credit may be involved in the event that the respondents choose to give evidence and, in any event, would involve a value judgment in respect of whether, having regard to the duties imposed on directors, there was a transgression on their part; and this in a proceeding where the imposition of pecuniary penalties is sought. 8 In my opinion, the case for my not hearing the pecuniary penalty proceeding, on the basis identified, is a compelling one, having regard to the findings and observations necessarily made in the course of giving judgment for the winding up of Storm Financial. I therefore do not propose to hear and determine the case. 9 I should add that the questions at issue in this case, may also even be such there is a need for Mr Russell to give evidence. I say that because of matters apparent in the reasons for judgment delivered in the winding up, and my knowledge of the evidence in that case. That is another circumstance which I bear in mind in relation to the conclusion that I have reached as to the existence of circumstances where a reasonable apprehension of bias might exist. 10 I should say that I have raised that latter subject of my own motion. I do not, in so doing, wish, in any way, to embarrass the conduct of Mr and Mrs Cassimatis' defence but, rather, advert to that out of an abundance of caution on my part in terms of why it is I do not consider that I ought to sit to hear and determine the pecuniary penalty application. 11 That being so, there is a question as to whether any procedural directions might usefully be given today, if only to save expense both to the Commission and Mr and Mrs Cassimatis in terms of the progression of the case. I do not consider that the past involvement which has prompted my deciding that I ought not to hear and determine the substantive proceeding, would have precluded my making procedural directions, particularly ones that were not controversial. However, there are no such directions which are proposed. Further, I was informed by counsel that there are steps being undertaken in accordance with the rules in relation to the production of documents referred to in the statement of claim. In that sense, therefore, the case is progressing. What I propose to do, therefore, is to adjourn the case for directions on a date to be fixed. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.