Australian Securities and Investments Commission v M101 Nominees Pty Ltd

Consideration 55 It is true, as Mr Mawhinney submitted, that there is no reference on the face of the remittal order to the possibility of further relief being sought, or to further allegations being made beyond those that were made at the first trial. It is equally true, as ASIC submitted, that no restrictions on the scope of the remitter are expressed in terms. 56 Despite the fact that both parties said that the position for which they contended was obvious, the remittal order is ambiguous. As the cases make clear, resort may thus be had, in aid of its true interpretation, to the surrounding circumstances - here, the reasons for judgment. 57 Although the Full Court did not say which provision of the Federal Court Act it had in mind, it is to be assumed that the remittal order was made pursuant to s 28(1)(c) - that is, that "the proceeding" (which the Full Court called "the matter" in the remittal order) was remitted "for further hearing and determination', not a new trial (compare s 28(1)(f)). The remittal order referred to "hearing and determination" not "further hearing and determination", but once it is apparent that the Full Court must have had s 28(1)(c) in mind, and accepting that the word "matter" was used as a synonym for "proceeding" (and was not used in a constitutional sense), the Full Court must be taken to have intended that "the proceeding be remitted for further hearing and determination". 58 It follows, as Finkelstein J said in CPSU v Telstra at 329 [17], that such an order does not result in a new trial, and that further hearing is a continuation of the first trial, "where the parties can only mend their hand or change course in accordance with well known rules". 59 Mr Mawhinney placed reliance on the decision of the Full Court in Repatriation Commission v Nation (1995) 57 FCR 25. 60 In that case, the only issue raised by the claim related to the chain of causation from the nasal operation to the existing disease of obsessive compulsory neurosis. The first Tribunal's decision was set aside by the Court, which ordered that "the matter be remitted to the Tribunal to be heard and determined according to law after admitting such further evidence as it considered appropriate". 61 At the second hearing before the Tribunal, the Repatriation Commission withdrew previous admissions that the respondent's sinusitis was a war-caused disease. The Tribunal held that, while the surgery for sinusitis was a substantial contributing cause of the respondent's neurosis, the material did not raise a reasonable hypothesis connecting his sinusitis with his war service, and it affirmed the refusal of the claim. 62 The respondent again appealed to the Federal Court. Justice Northrop set aside the Tribunal's decision, reasoning as follows: The order remitted 'the matter' to the tribunal. The word 'matter' means all things in dispute between the parties. In the Federal Court, the things in dispute were limited to the issue of causation from the nasal operation to the existing disease of obsessive compulsory neurosis. That was the matter remitted to the Tribunal to be heard and determined. Nothing else was remitted. To use the terminology of Gray J [in Blackman v Commissioner of Taxation (1993) 43 FCR 449 at 455-56], the order of the court limited the ambit of the issues with which the Tribunal was to deal with upon the matter being remitted to the Tribunal. … That authority is not directly applicable to the facts of the present case. Here, the claim by the applicant in February 1988 was for a special rate of pension under s 24 ... At all times, the only issue raised by the claim before the commission, the ... Board, the first review before the tribunal and the Federal Court related to the 'chain of causation from the nasal operation to the existing disease of obsessive compulsory neurosis'. That was the 'matter' in issue. I have concluded that that was the 'matter' remitted to the tribunal for hearing and determination [and]… the only 'matter' to be heard and determined by the tribunal and that accordingly the tribunal, on the remittal, could not consider other matters and in particular the matter of whether the bilateral maxillary sinusitis was a war-caused disease. See Nation v Repatriation Commission (No 2) [1994] FCA 1038; (1994) 37 ALD 63 at 68-9. 63 On appeal, Beaumont J (with whom Black CJ and Jenkinson J agreed) reasoned as follows in dismissing the appeal at 33-34: As has been seen, the orders made by the Court in its first judgment included an order that "the matter" be remitted to the Tribunal to be heard and determined according to law after admitting such further evidence as it considered appropriate. … The … question is whether, upon its true construction, the order should have been read down, as Northrop J has now held, so as to have remitted to the Tribunal only that part of the claim as was concerned with the alleged sequela, that is, the question whether the neurosis was war-caused. … It follows from the ambiguity of the order of remitter that resort may be had, in aid of its true interpretation, to the surrounding circumstances. Those circumstances included, of course, the reasons for judgment. When regard is had to those reasons, it appears clearly that the meaning to be given to "matter" in the present context is the more restricted one, that is, the sequela question. That was the only issue tendered for determination by the Court. There was no issue that the sinusitis was war-caused. It follows that I agree with Northrop J that the Tribunal went beyond its jurisdiction in embarking upon the sinusitis issue. 64 Mr Pearce SC, who appeared with Mr Aleksov and Mr Donovan for Mr Mawhinney, submitted that, adopting a similar approach in this case: … the matter that [was] before Anderson J and before the Full Court, was [the] question whether Mr Mawhinney should be permanently restrained from dealing with financial products because of the conduct of companies with which he was associated. That was the matter before - that was a matter raised by the originating process. The matter that was agitated before Anderson J and agitated before the Full Court. It was no part of that matter whether Mr Mawhinney might also be disqualified from managing corporations under 206D or 206E, or whether he might be subject to pecuniary penalties under the ASIC Act. 65 Although the meaning of the word "matter" is bound to take its meaning from the context in which it is used, here, in my view the context - the reasons of the Full Court - supports the proposition contended for by Mr Mawhinney in this case. 66 In my view, the most obvious indication that the Full Court did not intend to remit anything other than what remained of ASIC's case after it abandoned reliance on s 1324(1) of the Corporations Act, and did not intend it to be able to bring a new case seeking penalties and disqualification orders, is found in this passage of its reasons at 405 [109]: The discretion to permit ASIC not to be held to the legal (or evidentiary) case it put below exists in exceptional circumstances. Further, and as explained in the fifth point below, the worry, inconvenience and interference with personal and business affairs which all litigation involves will be no different for Mr Mawhinney now than it would have been had he been given procedural fairness below. 67 As Mr Pearce submitted, and I agree: Now, your Honour, that cannot be correct if, on the remitter, Mr Mawhinney is now subject to these additional penalties. He won't be in the same position he was in at the first trial, and clearly, that is the clearest indication that the Full Court did not envisage that on the remitter, any further relief could be sought against Mr Mawhinney. 68 I do not agree with ASIC's submission that when the Full Court said at 407 [114] that "[w]e acknowledge that ASIC ran one case and now will have to run another", it meant that it could on remitter make not just "a second attempt at the case already formulated, articulated and pleaded, but a new case - a new case trying issues not litigated at the first trial". It seems to me if the Full Court had intended such a result, it would have said so, and ordered a retrial under s 28(1)(f), not made a remittal order under s 28(1)(c). 69 The words in 407 [114] of the Full Court's reasons upon which ASIC sought to fasten must be read in their context. The paragraph relevantly reads: We acknowledge that ASIC ran one case and now will have to run another. We recognise that ASIC having done so caused the hearing below to miscarry and caused this appeal to be necessary (albeit that the appeal could and should have been confined to the ground of procedural fairness). We recognise that ASIC positively disavowed the legal position it now accepts applies, and that this may well mean that further evidence is required to be adduced at the further hearing by both parties. 70 In my view, the "further evidence" to which the Full Court referred in that passage, and in the remittal order, was a reference to the evidence that it must adduce on the remittal in support of the case that Mr Mawhinney has contravened the Corporations Act within the meaning of s 1101B(1) - not some new case involving different provisions of that Act and the ASIC Act, directed to different relief (that is, penalties and disqualification). 71 ASIC also now seeks to bring a case under s 1324 of the Corporations Act. In my view, having abandoned reliance on that provision before the Full Court, the remittal order, on its proper construction, does not permit it to resuscitate the claim in that way. It seems to me tolerably clear that the Full Court envisaged that the remitted proceeding would involve a trial about s 1101B - and that is why their Honours dedicated 15 paragraphs of their reasons to explaining (as considered obiter dicta) how the provision is intended to operate (and said very little about s 1324). See J at 416-20 [150]-[164]. 72 ASIC also submitted that I should take into account in construing the remittal order two observations made in the Full Court's separate reasons about costs. The first one was the statement made by O'Bryan and Cheeseman JJ at [62] that "the Court has determined that it is in the interests of justice for the proceeding to be remitted for retrial". The second was Allsop CJ's statement at [7] that "[t]he price of having the proceedings remitted for a full re-pleading and the running of a new case should be that Mr Mawhinney, within reason, be held harmless and made whole from the consequences of the first failed attempt by ASIC" (emphasis added). 73 Both observations are, if one is to be strictly literal about it, inaccurate. The Full Court did not order a retrial, as I have explained (see paragraph [57] above). And there were no pleadings at the trial. But in any event, the principal reasons must govern the position, otherwise it would be a case of the tail wagging the dog. 74 In his oral submissions, Mr Borsky KC, who appeared with Mr Tran and Mr Congram for ASIC, sought to rely on a contention that the new pleaded case involves "substantially the same conduct" as that relied on before Anderson J. Even accepting, without deciding, that that is so, it seems to me to have little relevance to the question of the proper construction of the remittal order. 75 For all those reasons, it follows that I accept Mr Mawhinney's submission that ASIC is confined on remittal to a case for permanent injunctions under s 1101B(1) of the Corporations Act, and that for the reasons I have given, it may not on remittal: (1) resurrect the case for relief under s 1324(1) of the Corporations Act; (2) seek declarations that concern contraventions of ss 911A and 1041H of the Corporations Act or ss 12DA or 12DB of the ASIC Act; (3) seek injunctions pursuant to s 12GD of the ASIC Act or s 23 of the Federal Court Act; (4) seek orders that Mr Mawhinney be disqualified from managing corporations under ss 206D and 206E of the Corporations Act or s 12GLD of the ASIC Act; (5) make claims under s 12GBB of the ASIC Act (or s 21 of the Federal Court Act) that Mr Mawhinney pay pecuniary penalties for the conduct the subject of the declarations sought by ASIC that concern contraventions of civil penalty provisions of the ASIC Act. 76 Mr Mawhinney submitted that a further reason that the amendments to the originating process should not be allowed was that, even if they are within the scope of the remittal order, they do not conform with the well-known rules to which Finkelstein J referred in CPSU v Telstra. 77 In this case, it was submitted, those rules include the rules relating to an amendment of a party's claim. Because the remitter is the continuation of a trial that has already begun, the same rules apply as if they were sought part-way through a trial. 78 Whether to permit amendments in such circumstances is a matter of discretion, but relevant factors telling against allowing them include where they are sought at a late stage in the proceeding, and where there is no sufficient explanation for the delay. See, for example, Aon Risk Services Australia Pty Ltd v Australian National University (2009) 239 CLR 175 at 214-15 [102] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). 79 Here, as Mr Mawhinney submitted, the amendments are sought to be made at a late stage of the proceeding, after an initial trial has been conducted and an appeal heard. 80 ASIC has not explained why it did not raise the "new" claims which I have held do not fall within the scope of the remitter. Nor has it explained why it abandoned its claim under s 1324(1) of the Corporations Act, but now seeks to reinstate it. 81 ASIC instead submitted that the new claims are "a logical extension" of the "legally correct" case it now seeks to bring (that is, that contraventions are required to be proved), and that they largely "arise out of the matters that were before Anderson J". 82 I do not agree. The claims are distinct and would, as was submitted, place Mr Mawhinney in significantly greater jeopardy. Absent some sensible explanation as to why they were not made at the first trial (or even mentioned on appeal), that they not now be allowed. 83 ASIC also contended that the public functions of ASIC should in some fashion weigh in the balance in the exercise of discretion whether to permit late made amendments, absent any explanation for the delay. Again, at least on the facts here, I see no reason why those functions are relevant to the question whether leave should be granted to bring the new claims.

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Judgment (7 paragraphs)

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Legislation Cited (5)

Cases Cited (19)

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