Australian Securities & Investments Commission v Matthews

REASONS FOR JUDGMENT 1 The respondent has filed a notice of motion seeking an order that the hearing of the charge of contempt against him be heard by a Judge and jury. The respondent's motion was filed not later than twenty-one days before the date appointed for the trial, as required by Federal Court Rules ("FCR"), O 31, r 1(1). 2 The respondent makes the application pursuant to s 39 or, alternatively, s 40 of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act"). Those sections provide as follows: "39 In every suit in the Court, unless the Court or a Judge otherwise orders, the trial shall be by a Judge without a jury. 40 The Court or a Judge may, in any suit in which the ends of justice appear to render it expedient to do so, direct the trial with a jury of the suit or of an issue of fact, and may for that purpose make all such orders, issue all such writs and cause all such proceedings to be had and taken as the Court or Judge thinks necessary, and upon the finding of the jury the Court may give such decision and pronounce such judgment as the case requires." The word "suit" includes any action or original proceeding between parties: s 4. 3 The contempt proceedings were instituted by the applicant ("ASIC") on 22 March 1999. ASIC filed a notice of motion seeking orders that the respondent be found guilty of contempt of this Court for failing to comply with certain interlocutory orders made by O'Connor J on 19 February 1999. This procedure was in conformity with that laid down by FCR, O 40, r 5. In compliance with FCR, O 40, r 6 a statement of charge specifying the contempt of which the respondent is alleged to be guilty was filed with the motion. 4 The orders allegedly breached by the respondent were made by O'Connor J in the course of what I shall describe as the principal proceedings. In those proceedings, which have not been finally determined, ASIC alleges, inter alia, that the respondent contravened s 781 of the Corporations Law by carrying on an investment advice business or holding himself out as an investment adviser without holding the requisite licence or being exempt from the licensing requirement. In particular, ASIC alleges that the respondent systematically published advice about securities on an internet website known as "The Chimes". 5 On 19 February 1999, her Honour heard an application by ASIC, pursuant to s 1324(4) of the Corporations Law, for interim injunctions against the respondent: Australian Securities & Investments Commission v Matthews [1999] FCA 164. The respondent was not legally represented at that hearing. O'Connor J made the following orders, each of which was expressed to operate until further order: "1. [T]he Respondent...be restrained from advising either directly or indirectly other persons about securities. 2. [T]he Respondent...be restrained from publishing either directly or indirectly reports about securities. 3. [T]he Respondent...be restrained from advising other persons about securities on the internet including but not limited to the internet site known as "The Chimes" and situated at . 4. [T]he Respondent...be restrained from publishing reports or allowing to be published reports about securities on the internet including but not limited to the internet site known as "The Chimes" and situated at ." 6 The statement of charge filed by ASIC alleges that the respondent breached O'Connor J's orders, inter alia, by allowing certain investment and securities advice to be published on The Chimes website during the period 19 February 1999 to 12 March 1999. 7 The respondent acknowledges that the usual method of trial in a suit in this Court is by Judge alone and, indeed, that there does not appear to have been any case in which the Court has directed a trial with a jury. However, he points out that the Court has the physical facilities to enable a jury trial to take place (cf Mansell v Cumming (1989) 86 ALR 637 (Northrop J), at 641) and that the Federal Court Act, s 41, applies the laws in force in the State relating to a trial with a jury in the Court in that State. The respondent submits that contempt proceedings are not an "everyday part of the Federal Court's business". He says that in view of the seriousness of the contempt proceedings and what he claims is the possibility of injustice if the matter were to be heard by a Judge alone, that an order should be made for a trial by Judge and jury. 8 Sections 39 and 40 of the Federal Court Act are in substantially the same terms as ss 12 and 13 of the High Court Procedure Act 1903 (Cth), considered in McDermott v Collien (1953) 87 CLR 154 (Fullagar J). (The High Court Procedure Act was repealed by s 3 of the High Court of Australia Act 1979 (Cth). The relevant provisions continue as High Court Rules, O 36, rr 3, 5.) Fullagar J there dealt with an application for an order that a claim for damages in the diversity jurisdiction be tried by a Justice of the Court with a jury. His Honour stated the principles as follows (at 157): "Two things...seem clear enough. The first is that with the merits and demerits of trial by jury as a means of determining civil causes I have nothing whatever to do. ...[S]o far as any question of general policy is involved, it is settled for me by the High Court Procedure Act. Trial without a jury is the normal mode of trial of actions in this Court, and some special reason must be shown for a departure in any particular case from that normal mode. The second thing that seems clear is that it is not enough to show that the cause of action is of a kind which could quite properly be tried with a jury and which was normally tried with a jury in England before the Judicature Act 1873 (36 & 37 Vict. c 66). The decisions of Hodges J and of Isaacs J perhaps suggest that the nature of the cause of action is not even a relevant consideration. I would not be prepared to assent to that as a general proposition: indeed I would rather have thought that it might in some cases be a potent consideration. But it is clear that it is not enough to say: 'This is a kind of action which is quite suitable for trial with a jury, and I would like to have it tried with a jury'." 9 It follows from this passage that some special reason must be shown for a departure in any particular case in the Court from the usual mode of trial by Judge alone. Is there, then, anything in the nature of the contempt proceedings that might suggest an order should be made for a trial by jury? 10 The Federal Court derives its contempt power both from its status as a superior court of record (Federal Court Act, s 5(2)) and express grants of power: Law Reform Commission, Contempt (ALRC 35, 1987), par 31. Section 31(1) of the Federal Court Act provides that the Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court. Contempt committed in the face of the Court is dealt with in s 31(2). The High Court has the same power to punish contempts of its power and authority as was possessed at the commencement of the Judiciary Act 1903 (Cth) by the Supreme Court of Judicature in England: Judiciary Act 1903 (Cth), s 24. Division 2 of FCR, O 40 prescribes the procedure to be followed where it is alleged that a person is guilty of contempt of court (other than contempt committed in the face of the Court). 11 In Witham v Holloway (1995) 183 CLR 525, the issue before the High Court was the standard of proof to be applied in proceedings for contempt brought by a party to civil proceedings against another party. The joint judgment (Brennan, Deane, Toohey and Gaudron JJ) commented on the distinction between civil and criminal contempt. Their Honours observed that the authorities had suggested, in general terms, that (at 530): "a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is an interference with the course of justice". The judgment analysed the basis for this distinction and concluded as follows (at 534): "The differences upon which the distinction between civil and criminal contempt is based are, in significant respects, illusory. They certainly do not justify the allocation of different standards of proof for civil and criminal contempt. Rather, the illusory nature of those differences and the fact that the usual outcome of successful proceedings is punishment, no matter whether primarily for the vindication of judicial authority or primarily for the purpose of coercing obedience in the interest of the individual, make it clear as Deane J said in [Hinch v Attorney-General (Victoria) (1987) 164 CLR 15, at 49], that all proceedings for contempt 'must realistically be seen as criminal in nature'. The consequence is that all charges of contempt must be proved beyond reasonable doubt." See also Pelechowski v Registrar, Court of Appeal (1998) 72 ALJR 711, at 712, per Gummow J. 12 Witham v Holloway shows that contempt proceedings have at least some of the characteristics of criminal proceedings. However, the joint judgment specifically adverted to and rejected the proposition that this fact means that contempt charges should be determined by a jury. Their Honours said this (at 534): "to say that proceedings for contempt are essentially criminal in nature is not to equate them with the trial of a criminal charge. There are clear procedural differences, the most obvious being that criminal charges ordinarily involve trial by jury, whereas charges of contempt do not." (See also Microsoft Corporation v Marks (1996) 69 FCR 117 (FC), holding that, for the purpose of determining whether an appeal can be brought against the dismissal of contempt proceedings, it is necessary to classify them as either criminal or civil.) 13 The comments in Witham v Holloway concerning the ordinary practice reflect the well-established practice in contempt proceedings, whether regarded as "criminal" or "civil" in nature. The position was summarised by the New South Wales Court of Appeal in Director of Public Prosecutions v Australian Broadcasting Corporation (1986) 7 NSWLR 588 (NSW CA: Street CJ, Hope, Glass, Samuels and Priestley JJA), at 595: "For centuries charges in respect of some although not all forms of contempt were tried upon indictment. In 1765, following the undelivered draft judgment of Wilmot J in R v Almon (1765) Wilm 243; 97 ER 94, English 'courts claimed jurisdiction to punish all contempts by the summary procedure. For practical purposes, the summary procedure has superseded trial by a jury': Attorney-General for New South Wales v John Fairfax & Sons Ltd and Bacon (1985) 6 NSWLR 695 per McHugh JA. As Hutley AP said in Registrar, Court of Appeal v Willesee [1984] 2 NSWLR 378 at 379, the procedure by indictment 'is for all practical purposes obsolete, counsel could not refer to any case in which it had been availed of in this country. It is for all practical purposes also obsolete in England: Halsbury's Laws of England (3rd ed), vol 8, p 4. R v Tibbits [1902] 1 KB 77 appears to have been the last such instance'. The provisions of the Supreme Court Rules 1970, Pt 55, support this view. In our opinion the proper procedure by which to prosecute criminal contempt is now by summary proceedings, and not by indictment." For an analysis to the same effect, with full reference to authority, see Broken Hill Proprietary Company Ltd v Dagi [1996] 2 VR 117 (CA), at 136-137, per Brooking JA. 14 In Registrar v Willessee, the Court of Appeal rejected an application by two parties, who had been charged with contempt of the District Court by publishing material prejudicial to a criminal trial, that the charges should be heard and determined by a Judge and jury. Hutley AP declined to depart from the "established procedure" in cases of alleged contempt. His Honour held that the mere fact that there was no need for urgency in the resolution of the contempt proceedings did not justify substituting a jury trial for the summary procedure (at 379-380). Further, even if it were true (as the alleged contemnors had contended) that jurors would be better able to understand the effect the publication would have on other jurors, that was no reason for a jury trial (at 380). Glass JA considered (at 381) that the time had come to recognise that "the summary trial is now the ordinary and normal procedure" in contempt proceedings. So, too, did Samuels JA (at 382). 15 These authorities and others suggest that it will be rarely, if ever, that the Court will exercise its powers to order a jury trial in contempt proceedings. It follows that, far from the nature of contempt proceedings providing a basis for departing from the normal mode of trial, the contrary is true. The practice is settled and has received endorsement from the High Court. The point can be illustrated by contempt proceedings recently determined in this Court by a Judge sitting alone: see: Deputy Commissioner of Taxation v Hickey [1999] FCA 259 (Carr J); Forestview Nominees Pty Ltd v Perron Investments Pty Ltd [1999] FCA 405 (FC); Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585 (Kiefel J); Clarkson v The Mandarin Club Limited, unreported, Burchett J, 23 December, 1998. 16 Even if the Court's discretion is broader than the authorities suggest, there are no circumstances special to this case warranting a trial by jury. The matters referred to by the respondent are largely general in character and not specific to the circumstances of this case. The respondent refers, for example, to the danger that Judges may adopt a more stringent construction of the orders than a jury or be loath (or perceived to be loath) to criticise orders made by a colleague. He also says that the criminal nature of contempt proceedings makes it appropriate for him to be tried by a jury of his peers and implies that jurors will be more sympathetic than a Judge to the fact that he was not legally represented when the orders were made. 17 The general concerns expressed by the respondent are neither new nor, it should be said, totally without force: see ALRC, Contempt, pars 556 ff. But in the absence of legislative reforms, they are not to be addressed by a departure from principles clearly laid down. The issues presented by the current proceedings are typical of contempt proceedings based on an alleged failure to comply with restraining orders and should be dealt with in the usual way. 18 The respondent's motion, insofar as it seeks an order for the trial to be by Judge and jury must be dismissed. Other issues raised by the motion are to be dealt with by consent. The respondent must pay ASIC's costs of the motion. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.