Australian Securities and Investments Commission v One Tech Media Limited

Federal Court of Australia|2017-09-06|Before: Moshinsky J

By 4.00 pm on 27 September 2017, the third, sixth and eighth defendants (the Companies) each file and serve on all parties a List of Documents (within the meaning of r 20.17 of the Federal Court Rules 2011) relating to the categories of documents referred to in Schedule 2 to these orders.
By 4.00 pm on 27 September 2017, Kalus Kenny Intelex (a firm) (KKI) file and serve on all parties a List of Documents (within the meaning of r 20.17 of the Federal Court Rules) relating to the categories of documents referred to in Schedule 3 to these orders.
By 4.00 pm on 11 October 2017, the third, fourth, sixth, eighth and ninth defendants (the Defendants) give notice in writing to all parties of any claims for legal professional privilege that are made in respect of any of the documents in the Lists of Documents served under paragraphs 1 and 2 of these orders.
By 4.00 pm on 11 October 2017, the Companies and KKI make available for inspection by the plaintiff all documents in the List of Documents served under paragraph 1 and 2 of these orders respectively, other than any document over which legal professional privilege is claimed.
By 4.00 pm on 25 October 2017, the plaintiff give notice in writing to all parties of which documents it wishes to inspect in respect of which one of the Defendants or KKI has claimed legal professional privilege.
The matter be listed for a case management hearing at 9.30 am on 2 November 2017.
Costs be reserved.
There be liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Schedule 2 Discovery to be made by the Third, Sixth and Eighth Defendants (Companies) Category (a): Documents (including bank account statements and receipts) recording: (i) all transfers or deposits of funds made between 25 August 2016 and 1 March 2017 by or on behalf of each Company into the Eustace Senese Trust Account; and (ii) directions, requests or other communications made by or on behalf of each Company in relation to the application of those trust account funds towards invoices issued by KKI between 25 August 2016 and 1 March 2017. Category (b): Documents recording: (i) requests made, by, or on behalf of, the Companies to draw-down on the loan with Edge Premium Funding Pty Ltd (Edge Premium Loan); (ii) communications between any of the Companies in respect of the amounts drawn down under the Edge Premium Loan, in respect of the nine amounts of $15,000 referred to in Charges Al to A78. Category (c): Documents recording communications between each of the Companies and KKI relating to amounts paid to KKI (whether directly or indirectly) pursuant to the loan agreement with Edge Premium Funding Pty Ltd dated 1 August 2016 including any relevant direction given by the Third, Fourth, Sixth, Eighth or Ninth Defendants on the Company's behalf. Category (d): Documents recording all payments made by or on behalf of the Third Defendant, the Sixth Defendant or both of them to the Eighth Defendant or the Ninth Defendant between 25 August 2016 and 1 March 2017. Category (e): Documents recording all transfers made by or on behalf of the Eighth Defendant between 25 August 2016 and 2 February 2017 from the Ubank Savings Account. Category (f): Documents recording all payments made by or on behalf of the Eighth Defendant between 25 August 2016 and 2 February 2017 from Ubank account number 22-107-0440. Category (g): Documents recording communications between the Eighth Defendant and KKI in relation to the payment out of the Ubank account number 22-107-0440 and into the Cameron Senese Trust Account on 1 February 2017, including but not limited to communications relating to compliance with the court's freezing orders made in this proceeding.

Schedule 3 Discovery to be made by KKI Category (a): KKI's trust account ledger for Eustace and Sandra Senese referred to in paragraph 11 of the Kenny Affidavit for the period 25 August 2016 to 1 March 2017. Category (b): The trust account statement and office account statement of KKI for Eustace Senese which record or otherwise relate to the transactions referred to in paragraphs 11, 12 and 16 of the Kenny Affidavit. Category (c): Bank account statements of KKI and any other financial documents that record or otherwise relate to the transactions referred to in paragraphs 11, 12 and 16 of the Kenny Affidavit. Category (d): Documents recording any payment (and any communications in relation to payment) made between 26 July 2016 and 4 April 2017 by the Fourth Defendant (whether on his own behalf or on behalf of any of the other Defendants) to KKI in respect of the matter concerning "Michael Philling and Vero", being KKI Matter number 84649 as referred to in paragraph 12 and MJK-1 of the Kenny Affidavit. Category (e): Copy of KKI invoice number 45408 for $757.02, including any attachments to that invoice. Category (f): Full copy of email from Jonathan Kenny to tony@sansencorp.com dated 19 December 2016, including any attachments. (Note: This does not include earlier emails in the email chain before 19 December 2016.) Category (g): Unredacted copy of email from tony@sansencorp.com to Jonathan Kenny dated 19 December 2016, including any attachments. (Note: This does not include earlier emails in the email chain before 19 December 2016.)

Introduction 1 The issue before the Court concerns an application by the plaintiff (ASIC) for discovery of documents in connection with an interlocutory application seeking orders that certain defendants and a firm of solicitors be punished for contempt of court. 2 The background to the contempt application is, briefly, as follows. On 26 July 2016, ASIC made an ex parte application for injunctions to: prohibit certain of the defendants from carrying on a financial services business; and preserve certain bank accounts and other assets pending its investigation into suspected contraventions of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Act 2001 (Cth) (the ASIC Act) by the defendants. The suspected contraventions related to the operation of a website (www.titantrade.com). In broad terms, ASIC's investigation concerned whether customers of the website had been induced to invest money in 'binary options', which are said to be essentially bets on the movement in prices of certain assets, such as shares. ASIC was concerned that a number of Australian customers may have lost substantial amounts of money by these investments. A judge of this Court made orders pursuant to ss 1323 and 1324 of the Corporations Act, including an order that the first to eleventh defendants "be prohibited from selling, transferring, encumbering, disposing of or otherwise dealing with any of their assets or property". It will be convenient to refer to this as a general freezing order. 3 The matter returned to Court on an inter partes basis several days later, on 3 August 2016. The defendants were represented at this hearing. Orders were made to similar effect as the earlier orders, with the injunctions now lasting until 4.00 pm on 16 November 2016. The injunctions included a general freezing order as described above. At the request of the defendants, a 'carve out' was made for certain living expenses and certain legal expenses. 4 Subsequently, the matter returned to Court on a number of occasions. The injunctions were continued by further Court orders made on 15 November 2016, 2 February 2017 and 5 May 2017. Adjustments were also made on these and other occasions, at the request of the defendants, to the carve outs for living expenses and legal expenses. The firm of solicitors acting for the defendants at these hearings was Kalus Kenny Intelex (Kalus Kenny or KKI). 5 By interlocutory application dated 1 May 2017 (the Contempt Application), ASIC alleges that certain of the defendants have breached the orders referred to above and are guilty of contempt of court. The defendants against whom the Contempt Application is brought are the third, fourth, sixth, eighth and ninth defendants. Additionally, it is alleged that Kalus Kenny is guilty of contempt of court through its involvement in certain transactions by which legal expenses were paid in excess of the carve outs provided in the various orders. On 26 May 2017, ASIC obtained leave to serve the Contempt Application on Kalus Kenny, a non-party. 6 ASIC's allegations are set out in a lengthy statement of charge dated 1 May 2017 (the statement of charge). The Contempt Application is supported by an affidavit of Bruce Craig Standfield, a senior investigator in the Financial Services Enforcement Team of ASIC, dated 1 May 2017. 7 The current issue concerns an application by ASIC for discovery of documents in connection with the Contempt Application. The application is made by interlocutory application dated 21 July 2017 (the Discovery Application). The application is brought against the following parties: (a) the third, sixth and eight defendants (the Companies); and (b) Kalus Kenny. 8 In relation to the Companies, ASIC seeks discovery of documents in the categories set out in Schedule 2 to the Discovery Application. In relation to Kalus Kenny, ASIC seeks discovery of documents in the categories set out in Schedule 3 to that application. 9 In support of the Discovery Application, ASIC relies on the affidavit of Mr Standfield dated 1 May 2017 and a further affidavit of Mr Standfield dated 21 July 2017. ASIC also relies on an affidavit of Michael Jonathan Kenny, a partner of Kalus Kenny, dated 4 May 2017 (the Kenny Affidavit) in support of an argument that the firm has waived the privilege against exposure to penalty and the privilege against self-incrimination in relation to the categories of documents sought. 10 The Companies and Kalus Kenny oppose the orders sought by ASIC in the Discovery Application. No affidavit material was filed by the Companies or Kalus Kenny in respect of the Discovery Application. In their submissions, they referred to aspects of the evidence relied on by ASIC. In addition, senior counsel for Kalus Kenny handed up, during the course of the hearing before me, a copy of the transcript of a hearing that took place in the proceeding on 5 May 2017 and relied on certain aspects of that transcript. 11 For the reasons that follow, I consider that discovery orders should be made in relation to the Companies substantially as sought by ASIC, save that the date range should be narrowed. In relation to Kalus Kenny, I consider that discovery orders should be made, but that these should be narrower than the orders sought by ASIC.

The Contempt Application 12 ASIC submits that in late 2016 and early 2017 it became aware that certain defendants had contravened the injunctions (or freezing orders) by making and receiving payments not permitted by the carve outs to the orders. ASIC notes that: Cameron Senese admitted in an examination conducted pursuant to s 19 of the ASIC Act that he had opened two new bank accounts with UBank and arranged for payments for the provision by the eighth defendant (Bianco) of IT services to be made into those accounts; and in addition to the amounts he was entitled to withdraw from the frozen bank accounts pursuant to the carve outs, Cameron Senese withdrew other amounts from the two new UBank accounts. ASIC contends that the operation of these accounts was in contravention of the general freezing order (paragraph 3(e) of the orders made on 26 July 2016, reiterated in paragraph 1(e) of the orders made on 3 August 2016, 15 November 2016, 2 February 2017 and 5 May 2017). 13 ASIC submits that it has also emerged that, shortly after the freezing orders were first made, Eustace Senese, also known as Tony Senese, entered into a loan agreement (the Edge Funding loan agreement) with Edge Premium Funding Pty Ltd (Edge). It is contended by ASIC that a number of drawdowns have been made under that loan agreement that were also in breach of the general freezing order. 14 The charges set out in the statement of charge may be summarised as follows: (a) Drawdowns from the Edge Funding loan agreement: (i) to pay Cameron Senese/Bianco; (ii) to pay Kalus Kenny; (iii) to pay Tony and Sandra Senese's home mortgage (with Pepper Group Ltd); (iv) to pay Tony Senese's NAB credit card; and (v) to pay Tony Senese's Italian bank account. (b) Transfers between the UBank accounts. (c) Transfers from the UBank savings account. (d) Transfers from the UBank transaction account. (e) Transfers from Cameron Senese's CBA account. (f) Kalus Kenny trust account transactions. 15 ASIC submits that the statement of charge alleges multiple alternative charges because of the difficulty of knowing which legal person was responsible for particular transactions. For example, although the Edge Funding loan agreement was entered into by Tony Senese, ASIC notes that it is possible that he entered into this agreement on behalf of the third defendant (Allianz Metro) and the sixth defendant (Transcomm) as the purpose of the funding was to permit those companies to continue with their online payment business. Accordingly, ASIC states, when a drawdown was made under that agreement, the legal person responsible for the drawdown may have been Allianz Metro, Transcomm or Tony Senese. ASIC submits that, if it was one of the companies, then Tony Senese would also be liable for the contravention of the freezing order because he caused or procured the company to commit the contravention. 16 Further, ASIC submits that the drawdowns that were paid into the UBank account were received either by Cameron Senese in his own right or, more likely, by him on behalf of Bianco because the payments were made for the IT services Bianco provided to Allianz Metro and Transcomm. It is contended by ASIC that the receipt of those payments was a contravention of the general freezing order and this was committed either by Cameron Senese or by Bianco. If the latter, ASIC contends that Cameron would also be liable for causing or procuring the contravention. Likewise, ASIC states, the many transactions involving the UBank accounts may have been made by Cameron Senese in his own right, or by Bianco and caused or procured by Cameron Senese. 17 ASIC submits that there have been literally hundreds of transactions in contravention of the Court orders. Many of these are for small amounts but the aggregate value of the contravening transactions is said to be in excess of $300,000. According to ASIC, both Tony Senese and Cameron Senese have sworn affidavits in which they acknowledge contraventions of the Court orders. 18 The position of Kalus Kenny merits particular mention. It is alleged that Kalus Kenny committed contempts of court by receiving payments of its legal fees in excess of the amounts permitted by the carve outs to the freezing orders. ASIC says that this happened by Kalus Kenny debiting its trust account and thereby causing Transcomm to pay more than was permitted by the carve outs. It is also alleged that Kalus Kenny received into Cameron Senese's trust account moneys from the UBank account that were paid in contravention of the general freezing order. 19 The freezing orders do not bind Kalus Kenny. ASIC submits, however, that it is well established that a person who is not personally bound by a court order can be liable for contempt by causing or procuring a person bound by the order to contravene it: see Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 at [121]; Attorney-General v Times Newspapers Ltd [1992] 1 AC 191. ASIC contends that, while the liability for contempt of a person bound by an order is strict, to prove contempt by a stranger to the litigation it must usually be established that the stranger intended an interference with the administration of justice: see Attorney General v Punch Ltd [2003] 1 AC 1046 at [87]. However, ASIC notes that it is unclear whether the solicitor on the record for a party bound by a court order is a stranger to the litigation. More likely, ASIC submits, the solicitor is "someone acting for [the party] or at his direction" (see Attorney General v Punch Ltd at [87]), and so the solicitor's liability for contempt is also strict.

The Discovery Application 20 ASIC seeks discovery from the Companies and Kalus Kenny. ASIC has filed and served an interlocutory application dated 21 July 2017 seeking, by paragraph 1, discovery from the Companies and, by paragraph 2, discovery from Kalus Kenny. The other orders sought by ASIC seek to create a regime for dealing with any claims of legal professional privilege in the discovered material. 21 ASIC seeks discovery by categories, being "non-standard discovery" within the meaning of r 20.15 of the Federal Court Rules 2011. However, ASIC does not seek to broaden the scope of discovery beyond what would normally be discovered pursuant to a standard discovery order under r 20.14. Accordingly, ASIC seeks an order for discovery whereby the usual criteria of r 20.14(1) and (2) continue to apply but where discovery by the Companies and Kalus Kenny is limited to those documents that fall into the categories set out in Schedules 2 and 3 to the Discovery Application. 22 As explained in the affidavit of Mr Standfield dated 21 July 2017, the purpose of ASIC's discovery application is: (a) to narrow the scope of the contempt charges by eliminating (either partially or in full) certain alternative charges through the identification of the relevant corporate defendant legally responsible for a particular transaction; and (b) to clarify, and if possible narrow, the scope of the contempt charges against Kalus Kenny in view of the matters set out in the Kenny Affidavit. 23 The categories of documents sought against the Companies, as set out in Schedule 2 to the Discovery Application, are as follows: Schedule 2 Discovery sought from Third, Sixth and Eighth Defendants (Companies) Category (a): Documents (including bank account statements and receipts) recording: (i) all transfers or deposits of funds made between 25 August 2016 and 4 May 2017 by or on behalf of each Company into the Eustace Senese Trust Account; and (ii) directions, requests or other communications made by or on behalf of each Company in relation to the application of those trust account funds towards invoices issued by KKI between 25 August 2016 and 4 May 2017. Category (b): Documents recording: (i) requests made, by, or on behalf of, the Companies to draw-down on the loan with Edge Premium Funding Pty Ltd (Edge Premium Loan); (ii) communications between any of the Companies in respect of the amounts drawn down under the Edge Premium Loan, in respect of the nine amounts of $15,000 referred to in Charges Al to A78. Category (c): Documents recording communications between each of the Companies and KKI relating to amounts paid to KKI (whether directly or indirectly) pursuant to the loan agreement with Edge Premium Funding Pty Ltd dated 1 August 2016 including any relevant direction given by the Third, Fourth, Sixth, Eighth or Ninth Defendants on the Company's behalf. Category (d): Documents recording all payments made by or on behalf of the Third Defendant, the Sixth Defendant or both of them to the Eighth Defendant or the Ninth Defendant between 25 August 2016 and 4 May 2017. Category (e): Documents recording all transfers made by or on behalf of the Eighth Defendant between 25 August 2016 and 2 February 2017 from the Ubank Savings Account. Category (f): Documents recording all payments made by or on behalf of the Eighth Defendant between 25 August 2016 and 2 February 2017 from Ubank account number 22-107-0440. Category (g) Documents recording communications between the Eighth Defendant and KKI in relation to the payment out of the Ubank account number 22-107-0440 and into the Cameron Senese Trust Account on 1 February 2017, including but not limited to communications relating to compliance with the court's freezing orders made in this proceeding.

24 In relation to Kalus Kenny, the categories of documents sought, as set out in Schedule 3 to the Discovery Application, are as follows: Schedule 3 Discovery sought from Kalus Kenny Intelex Category (a): The trust account ledger (and corresponding office account ledger) referred to in paragraph 11 of the Kenny Affidavit for the period 25 August 2016 to 4 May 2017 inclusive. Category (b): The full trust account statement and office account statements of KKI for Eustace Senese which record or otherwise relate to the transactions referred to in paragraphs 11 to 29 of the Kenny Affidavit. Category (c): Bank account statements of KKI and any other financial documents that record the funds received from and transferred to the Defendants (including documents recording the payment of invoices issued by KKI to the Defendants) in respect of the transactions referred to in paragraphs 11 to 29 of the Kenny Affidavit. Category (d): Documents relating to directions given to, or requests made of, KKI between 25 August 2016 and 1 March 2017 in relation to the application of the Eustace Senese Trust Account funds towards invoices issued by KKI. Category (e): Documents recording any payment (and any communications in relation to payment) made between 26 July 2016 and 4 April 2017 by the Fourth Defendant (whether on his own behalf or on behalf of any of the other Defendants) to KKI in respect of the matter concerning "Michael Philling and Vero", being KKI Matter number 84649 as referred to in paragraph 12 and MJK-1 of the Kenny Affidavit. Category (f): Copy of KKI invoice number 45408 for $757.02, including any attachments to that invoice. Category (g): Full copy of email from Jonathan Kenny to tony@sansencorp.com dated 19 December 2016, including any attachments. Category (h): Unredacted copy of email from tony@sansencorp.com to Jonathan Kenny dated 19 December 2016, including any attachments. Category (i): Documents relating to any restrictions imposed by KKI between 25 August 2016 and 4 May 2017 on the application of trust funds held by KKI in relation to Proceeding VID 848/2016, or any other measure implemented by KKI to ensure invoices rendered and paid did not exceed a predetermined amount (including but not limited to any internal fee caps implemented by KKI).

25 However, in the course of the hearing, senior counsel for ASIC indicated that ASIC did not press category (i). Further, ASIC accepted that where the above categories refer to a date range from 25 August 2016 to 4 May 2017, this period should end on 1 March 2017.

Discovery by the Companies 26 It is common ground that the privilege against self-incrimination and the privilege against exposure to penalty are not applicable in relation to the corporate defendants: see s 187 of the Evidence Act 1995 (Cth); see also Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [31]; Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375 at [1]-[2]. 27 The Companies' submissions in opposition to the discovery orders sought can be summarised as follows: (a) ASIC must satisfy the Court that an order for discovery is warranted. (b) ASIC makes 1,894 charges of contempt against the third, fourth, sixth, eighth and ninth defendants. Had ASIC filed and served a pleading, it would have been required to provide a certificate that it had a proper basis for each allegation. The serious nature of the allegations of contempt dictates that ASIC should have had a proper basis for bringing each of the charges. ASIC, however, is embarking upon a 'fishing expedition'. The Court should decline to assist it by making the discovery orders sought. (c) The evidence that ASIC had prior to making the contempt charges included: the Edge Funding loan agreement; the affidavit of Tony Senese sworn 21 April 2017 in which he swore that he was liable under the Edge Funding loan agreement and that Edge had paid nine amounts of $15,000 to Cameron Senese; the transcript of the compulsory examination of Cameron Senese who swore that Bianco had ceased operating in August 2016 and he was not doing work for Transcomm but for Barry King; Cameron Senese's 1 February 2017 affidavit in which he swore that he (not Bianco or he on behalf of Bianco) opened the UBank accounts; and Cameron Senese's 17 February 2017 affidavit in which he swore that he (not Bianco or he on behalf of Bianco) received the $15,000 per month for working for the Comersa Group. (d) The 'fishing nature' of ASIC's contempt charges is demonstrated by, for example, charges A1 to A3, and charges D93, D218 and D343 (where, in each case, the charges are expressed in the alternative). ASIC's primary charges are against the Companies and the alternative charges are against Tony and Cameron Senese. (The submission appears to be that this is at odds with the evidence described in (c) above, thus indicating the fishing nature of ASIC's discovery application.) (e) ASIC is in the same position as a prosecuting authority with its compulsory processes for obtaining evidence that can be used before deciding to charge a party with contempt. This is a powerful consideration in deciding whether to order discovery: CFMEU v Boral (2015) 256 CLR 375 at [44]. 28 In my view, the discovery orders sought against the Companies are not aptly described as a fishing expedition. While it is true that the statement of charge contains a large number of alleged breaches of the Court orders, and that these include alternative charges, this is explained by the different ways in which it is said that the relevant transactions breached the Court orders and the lack of clarity as to which corporate entity was responsible for certain transactions and as to whether the individuals were acting simply on their own behalf or on behalf of one or more of the corporate entities. 29 As for the submission that ASIC had available to it, and should have used, its compulsory powers to acquire relevant documents, a distinction needs to be drawn between ASIC's investigation of the substantive matters giving rise to the proceeding and the Contempt Application. It is not clear that ASIC's powers under, for example, s 19 of the ASIC Act would have been available to obtain documents in support of the alleged breaches of the Court orders. In any event, I do not consider the possibility that such powers could have been used to preclude an order being made for discovery as sought by ASIC. 30 Counsel for the Companies did not make any submissions as to the text of the categories sought in Schedule 2 to the Discovery Application. That is to say, no submission was advanced to the effect that, if I was otherwise minded to order the discovery sought, the categories should be narrowed, for example, on the ground of relevance or on the ground that the time or expense that would be involved in making the discovery was disproportionate. Nevertheless, as noted above, ASIC accepts that where the categories contain a date range 25 August 2016 to 4 May 2017, this should be narrowed to 25 August 2016 to 1 March 2017. 31 Apart from the date range, it appears to me that the discovery sought by ASIC in relation to the Companies is appropriate in light of the issues raised by the statement of charge. Accordingly, I will make orders for discovery in relation to the Companies substantially as sought by ASIC in the Discovery Application, save that the date range will be narrowed as indicated above.

Discovery by Kalus Kenny 32 Kalus Kenny is a partnership of natural persons. ASIC submits that it is unclear whether such a partnership can refuse to make discovery because of the privilege against exposure to penalty. Nevertheless, it submits that this question is "best left for another day" and contends that, even if Kalus Kenny can claim the privilege, it has waived it in the present case, at least in respect of the documents the subject of the Discovery Application. Accordingly, I will proceed on the basis that the privilege against exposure to penalty is applicable (subject to waiver) in relation to a partnership comprising natural persons. 33 The real issue between the parties, that is to say, ASIC and Kalus Kenny, concerns the operation of the principle of waiver in the context of the privilege against exposure to penalty and the privilege against self-incrimination. ASIC contends that the principles applicable to the waiver of legal professional privilege are also applicable in the context of these privileges. On this basis, it contends that a waiver may extend to associated material on the same subject matter: see Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL (No 10) (2015) 235 FCR 593 at [14]-[18]. While Kalus Kenny accepts that the principle of waiver can operate in the context of these privileges, it submits that a narrow approach should be adopted as to the extent of any waiver, consistently with the preservation of the privilege against exposure to penalty and the privilege against self-incrimination: see CSL Australia Pty Ltd v Maritime Union of Australia [2016] FCA 1141 at [15]-[18]. 34 In my view, it is appropriate, at least in the circumstances of this case, to adopt a narrow approach to the extent of any waiver of the privilege against exposure to penalty and the privilege against self-incrimination. 35 ASIC relies on the Kenny Affidavit as constituting a waiver. ASIC does not contend that Kalus Kenny has waived the privilege for all intents and purposes. Rather, it contends that "the privilege has been waived to the extent of the disclosures made by Mr Kenny in the affidavit". ASIC submits that the affidavit "amounts to the making of a positive defence to the charges" and that it "relies on certain materials to which ASIC does not have access". 36 It is important to have regard to the circumstances in which the Kenny Affidavit was made and relied upon by the firm. The Contempt Application and the statement of charge, both dated 1 May 2017, were accepted for filing by the Court on 2 May 2017. A copy of these documents was provided to Kalus Kenny shortly thereafter (and by no later than 4 May 2017). Thus, notwithstanding that one of the orders sought by ASIC in the Contempt Application was leave to serve the application on Kalus Kenny (Kalus Kenny not being a party to the proceeding), ASIC provided a copy of the application to Kalus Kenny. Following receipt of the Contempt Application, Mr Kenny prepared the affidavit. The purpose of the affidavit, as indicated in paragraph 2 of that document, was to support an argument that leave to serve the Contempt Application on Kalus Kenny should be refused. Consistently with this purpose, the Kenny Affidavit was filed with the Court and relied upon by counsel for Kalus Kenny at a hearing in this proceeding on 5 May 2017. (I note for completeness that the question of whether leave should be granted to serve Kalus Kenny was not determined at the hearing on 5 May 2017 and that subsequently, on 26 May 2017, an order was made to the effect that ASIC have leave to serve the Contempt Application on Kalus Kenny.) 37 The contempt charges against Kalus Kenny relate to four transactions in which it is said moneys were transferred from its trust account to pay legal expenses in excess of the carve outs in the Court orders referred to earlier in these reasons. In summary: (a) Charges F3 and F4 relate to a transaction whereby it is alleged that, on 19 December 2016, Kalus Kenny applied an amount of $13,084.75 in payment of its invoice 48183. It is alleged that this brought the total amount of money applied to legal costs and expenses to $54,942.57, being $1,904.88 in excess of the total amount permitted by the Court as at that date. (b) Charges F6 and F7 relate to a transaction whereby it is alleged that, on 20 December 2016, Kalus Kenny applied a further $757.02 in payment of its invoice 45408, bringing the total applied towards legal costs and expenses to $55,699.59, being $2,661.90 in excess of the total amount permitted by the Court as at that date. (c) Charges F9 and F10 relate to a transaction whereby it is alleged that, on 16 January 2017, Kalus Kenny applied a further $2,266 in payment of its invoice 48531, bringing the total applied towards legal costs and expenses to $57,965.59, being $4,927.90 in excess of the total amount permitted by the Court as at that date. (d) Charges F12 and F13 relate to a transaction whereby it is alleged that, on 31 January 2017, Kalus Kenny applied a further $4,170 in payment of its invoice 48711, bringing the total applied towards legal costs and expenses to $62,135.59, being $9,097.90 in excess of the total amount permitted by the Court as at that date. 38 It is convenient to note at this point that the dates of payment of the above amounts alleged by ASIC in the above charges reflect information set out in the attachment to a letter from Mr Kenny to ASIC dated 1 March 2017 (exhibit BCS-31 to Mr Standfield's affidavit of 1 May 2017). 39 Turning then to the Kenny Affidavit, the following matters are noted: (a) In paragraph 4, Mr Kenny referred to the charges against the firm set out in the statement of charge, namely charges F3-F4, F6-F7, F9-F10 and F12-F13, and said that each of these charges was "denied". Mr Kenny stated that "save for an error on my part which relates to the sum of $2,967.02 which is explained hereafter, the matters alleged by ASIC as constituting the alleged contempts are in each case, incorrect". (b) After referring to the Court orders made on 22 August 2016 and 14 December 2016, Mr Kenny stated in paragraph 9 that, when the orders were made, he did not turn his mind to the effect of GST. He explained in paragraph 10 that when Kalus Kenny renders a bill for legal costs and disbursements, it adds 10% GST to the amount of the legal costs and disbursements. (c) In paragraph 11, Mr Kenny stated: I have examined my firm's trust account ledger for Eustace and Sandra Senese. The following amounts were received by KKI up to 1 March, 2017 for legal costs and disbursements and GST: 26.8.16 $16,312.00 26.10.16 $2,150.00 $850.00 $5,962.00 $2,612.02 24.11.16 $1,750.00 $850.00 $7,452.30 13.12.16 $3,375.00 $544.50 17.1.17 $35.00 $4,391.69 $4,500.00 25.1.17 $4,158.06 $2,266.00 6.2.17 $1,750.00 $2,420.00 $63,128.55

It is convenient to note at this point that details set out in the above paragraph (both as to date of payment and amount) do not correlate with the details set out in the statement of charge (which reflect the information in the attachment to the letter from Mr Kenny dated 1 March 2017, referred to above). If the information set out in paragraph 11 of the affidavit is correct, it may be exculpatory in that it may mean that payments for legal expenses were not made in excess of the carve outs in the Court orders. Although the paragraph refers to and relies on the firm's "trust account ledger for Eustace and Sandra Senese", the affidavit does not annex a copy of this document. (d) In paragraph 12, Mr Kenny noted that the statement annexed to his letter dated 1 March 2017 contained a payment of $757.02 on 20 December 2016. He stated: "That was a payment from living expenses for an unrelated matter, and not for legal expenses for this matter, so it should not have been included in that statement". Mr Kenny then annexed, as "MJK-1", a copy of an email exchange between Tony Senese and himself on 19 December 2016 and stated that this correspondence related to the transaction the subject of charge F5 (and thus, by implication, the subject of charges F6 and F7, regarding a payment of $757.02). I note that, in relation to "MJK-1", there was discussion at the hearing before me as to whether this document had been redacted (as several lines are blank). I was told by senior counsel for Kalus Kenny that the emails dated 19 December 2016 had not been redacted but that an earlier email exchange, which took place some six weeks earlier, had been omitted from the email chain on the ground of relevance. (e) In paragraph 16, Mr Kenny referred in more detail to some of the charges against the firm. In relation to charges F3 and F4, it was stated that, taking into account GST, the amount paid for legal costs and disbursements as at 19 December 2016 "was within the allowed sum". In relation to charges F6 and F7, the affidavit referred back to paragraph 12. In relation to charges F9 and F10, it was stated that, taking into account Kalus Kenny's response regarding the sum of $757.02 and taking into account GST, the amount paid for legal costs and disbursements as at 16 January 2017 "was within the allowed sum". In relation to charges F12 and F13, it was stated that Kalus Kenny "was not paid $4,170 on 31 January, 2017". Mr Kenny stated that he referred to "the trust account statement", presumably a reference to the trust account statement referred to in paragraph 11 of the affidavit. After setting out some calculations, and making reference to GST, Mr Kenny noted that "the amount paid for legal costs and disbursements at that time [6 February 2017] was $2,967.02 more than the allowed sum". He stated that this "was an unintentional error on my part". (f) In paragraph 17, Mr Kenny stated that he did not realise that the amount transferred on 6 February 2017 was in excess of the amounts allowed until about 1 March 2017 and that he immediately informed ASIC by letter dated 1 March 2017. 40 Based on the matters referred to above, in my view the making of the Kenny Affidavit by Mr Kenny, and the firm's reliance on that affidavit as described above, constituted a waiver of the privilege against exposure to penalty and the privilege against self-incrimination to the extent that it put in issue the dates of payment and the amounts of payment alleged by ASIC in the contempt charges against the firm. The affidavit was filed with the Court and relied on by Kalus Kenny (at least at the hearing on 5 May 2017) in opposition to leave being granted to ASIC to serve the Contempt Application on the firm. In those circumstances, a waiver occurred, albeit to a limited extent: see Ewin v Vergara (No 2) (2012) 209 FCR 288 at [23]-[25]. The affidavit put forward as correct the dates and amounts set out in paragraph 11 of the affidavit, which differed from the dates and amounts previously set out in the attachment to Mr Kenny's letter to ASIC dated 1 March 2017. The affidavit also put forward, in paragraphs 12 and 16, details of specific transactions. It was inconsistent with the maintenance of the relevant privileges for the firm to put forward the dates and amounts in the affidavit: cf Mann v Carnell (1999) 201 CLR 1 at [29], [34]. In these circumstances, there was a waiver of the privileges in respect of the firm's trust account ledger for Eustace and Sandra Senese, which was expressly relied on in putting forward the information in paragraph 11, and other documents, such as bank statements, which go to whether or not the dates and amounts put forward by Mr Kenny in his affidavit are correct. 41 Approaching the matter in this way, I consider it appropriate to order discovery of the following categories of documents, which are narrower than those sought by ASIC: (a) Kalus Kenny's trust account ledger for Eustace and Sandra Senese referred to in paragraph 11 of the Kenny Affidavit for the period 25 August 2016 to 1 March 2017. (b) The trust account statement and office account statement of Kalus Kenny for Eustace Senese which record or otherwise relate to the transactions referred to in paragraphs 11, 12 and 16 of the Kenny Affidavit. (c) Bank account statements of Kalus Kenny and any other financial documents that record or otherwise relate to the transactions referred to in paragraphs 11, 12 and 16 of the Kenny Affidavit. (d) Documents recording any payment (and any communications in relation to payment) made between 26 July 2016 and 4 April 2017 by the fourth defendant (whether on his own behalf or on behalf of any of the other defendants) to Kalus Kenny in respect of the matter concerning "Michael Philling and Vero", being Kalus Kenny matter number 84649 as referred to in paragraph 12 and MJK-1 of the Kenny Affidavit. (e) A copy of Kalus Kenny invoice number 45408 for $757.02, including any attachments to that invoice. (f) A full copy of the email from Jonathan Kenny to tony@sansencorp.com dated 19 December 2016, including any attachments. (Note: This does not include earlier emails in the email chain before this date.) (g) An unredacted copy of the email from tony@sansencorp.com to Jonathan Kenny dated 19 December 2016, including any attachments. (Note: This does not include earlier emails in the email chain before this date.) 42 I will hear from the parties as to the precise form of these categories. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.

SCHEDULE OF PARTIES VID 848 of 2016 Defendants Fourth Defendant: EUSTACE SENESE Fifth Defendant: SANSEN PTY LTD (ACN 111 816 178) Sixth Defendant: TRANSCOMM GLOBAL PTY LTD (ACN 169 503 762) Seventh Defendant: SANDRA SENESE Eighth Defendant: BIANCO PTY LTD (ACN 604 778 305) Ninth Defendant: CAMERON DAVID SENESE Tenth Defendant: IMC HOLDINGS PTY LTD (ACN 138 415 291) Eleventh Defendant: YOAV IDA Twelfth Defendant: WESTPAC BANKING CORPORATION (ABN 33 007 457 141) Thirteenth Defendant: NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Fourteenth Defendant: BENDIGO AND ADELAIDE BANK LIMITED (ABN 11 068 049 178) Fifteenth Defendant: COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) Sixteenth Defendant: CITIGROUP PTY LTD (ABN 88 004 325 080)

Australian Securities and Investments Act 2001(Cth)

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Judgment (11 paragraphs)

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Legislation Cited (3)

Cases Cited (7)

Cited By (1)