Australian Securities & Investments Commission v Pappas

REASONS FOR JUDGMENT 1 This application concerns the failure by the defendant, Andrew Pappas, to comply with notices given by the plaintiff, Australian Securities and Investments Commission ('the Commission'), under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) ('the ASIC Act'). Section 19 applies where the Commission, on reasonable grounds, suspect or believes that a person can give information relevant to a matter that it is investigating under s 13. Under s 19(2), the Commission may, by written notice, require the person to give to the Commission all reasonable assistance in connection with the investigation and to appear before a specified member or staff member for examination on oath and to answer questions. 2 Section 70 of the ASIC Act applies where the Commission is satisfied that a person has, without reasonable excuse, failed to comply with a requirement made under Part 3, which includes s 19. Under s 70(2), the Commission may by writing, certify the failure to the Court and, under s 70(3), if the Commission does so, the Court may inquire into the case and may order the person to comply with the requirement as specified in the order. 3 When the matter was called on for hearing today, there was no appearance for the defendant. However, the Court received a facsimile communication, purportedly from the defendant, saying that he wished to ask the Court for an adjournment. The communication says: '(1) The alleged offences are serious and the defendant feels that he would be significantly disadvantaged if the matter was to proceed without the defendant first obtaining legal representation. The defendant hereby wishes to state, he has not had sufficient funds available to afford proper legal advice. The defendant currently is seeking to borrow funds from third parties. The defendant wishes to state, this alleged matter is a complicated case, which would cost considerable amount of monies in legal expense. The plaintiff has access to relatively large funding for legal costs, however the defendant is in a considerably weaker financial position. The defendant believes that he should not be disadvantaged because of this, and asks for an adjournment to allow time to obtain the monies for legal advice. (2) The defendant has been severely distressed by personal and financial issues. The defendant has been severely depressed as a result of an alleged debt of $145,000 being pursued against him in the Civil Claims Court. The defendant has found it difficult to sleep and function. The defendant is attempting to lodge a defense for that claim and has found it difficult to attend to both matters simultaneously (heard today as well). The defendant has found the stress overwhelming. (3) The defendant wishes to ask the Court to allow an additional six-week adjournment to allow the defendant to prepare a defense. (4) The defendant is seeking an adjournment further to provide medical evidence to the Court.' In the absence of attendance on the part of the defendant and in the absence of any evidence, I do not consider it is appropriate to adjourn the hearing of the matter today, particularly in light of the evidence before the Court in support of the Commission's application. 4 By its application, the Commission asks the Court to inquire into the failure, on the part of the defendant, to appear on five occasions, pursuant to notices under s 19 of the ASIC Act. The Commission also asks the Court for an order under s 70(3) that the defendant appear before named persons on a date to be set down by the Court. Specifically, counsel for the Commission asks for an order that the defendant appear before Penelope Beck, Alexander Kuklik and Paul Roland at 9 am on 28 September 2005 at the Commission's Sydney office. 5 The Commission is conducting an investigation, pursuant to s 13 of the ASIC Act, into the share trading of the defendant in January 2005 and loans that he obtained to fund that and other trading. On 28 June 2005, the defendant was served with a notice under s 19 requiring him to attend for examination on 7 July 2005. The defendant did not appear at the time appointed. 6 On 7 July 2005, a second notice was served on the defendant requiring him to attend for examination on 13 July 2005. That notice was served on 7 July at about 3.45 pm. On the occasion of its being served, the defendant, in response to an inquiry as to why he did not attend, said: 'I thought it was tomorrow. I'm sure it said tomorrow.' 7 At about 12.25 pm on 12 July 2005, the defendant received a telephone call from an officer of the Commission reminding him of the examination the next day. He was told the precise location of the Commissioner's office where he was required to attend. The defendant did not appear on 13 July 2005 at the appointed time and place. At 9.30 am a telephone call to the defendant's mobile telephone number was not answered. At about 11.25 am on that day, the defendant telephoned a Commission officer to say that he had slept in. A third notice was served on the defendant requiring him to appear for an examination at 9 am on 14 July 2005. 8 The defendant arrived at the appointed place at about 9.45 am on that day and, at about 10 am, an examination commenced before Ms Beck, Mr Kuklik, and Mr Roland. During a brief break in the examination, at about 10.45 am, the defendant requested that the examination be adjourned so that he could obtain legal advice. The examination was then adjourned to 9 am on 21 July 2005. On 15 July 2005, a further notice requiring the defendant to appear for examination at the Commission's Sydney office at 9 am on 21 July 2005 was served on the defendant. 9 On 20 July 2005, a telephone call was made to the defendant to confirm his attendance at the examination on the following day. At about 9 am on 21 July 2005, Mr Roland telephoned the defendant, who said that he would not be attending the examination on that day. The defendant explained that his father objected to his attendance at the Commission without a lawyer being present. However, he declined to furnish the name, or said that he did not know the name, of the lawyer his father required him to retain. On 25 July 2005, a fifth notice was served on the defendant requiring him to appear for examination on 29 July 2005 at 9.30 am. The defendant failed to attend that appointment. 10 At about 12.50 pm on 3 August 2005, the defendant telephoned Mr Roland and explained that he could not afford lawyers' fees on the day as his lawyer wanted an up-front payment for his attendance. Later, on 4 August 2005, a sixth notice was served on the defendant, requiring his attendance at 9 am on 10 August 2005. Once again, the defendant did not attend on that day. 11 While the Commission accepts that a person who is examined pursuant to s 19 is, in ordinary circumstances, entitled to legal assistance in connection with the examination, it is clear from the circumstances that I have briefly related that the defendant has had ample opportunity to obtain legal advice, and to attend an examination by the Commission. 12 The Commission, by instrument dated 11 August 2005, has certified that the defendant has, without a reasonable excuse, on five occasions failed to comply with requirements made under Part 3 of the ASIC Act. I consider that it is appropriate to accede to the Commission's application that the defendant be ordered to attend an examination. Accordingly, I propose to make an order in terms of the draft order substituted by the Commissioner. I propose to order the defendant to pay the Commission's costs of the application.