David Robert Siminton v Australian Prudential Regulation Authority

REASONS FOR JUDGMENT 1 This is an application by David Siminton for leave to appeal from an interlocutory judgment of Tracey J dismissing a motion seeking orders permanently staying or summarily dismissing the proceedings brought against him by the Australian Prudential Regulation Authority ("APRA"). In support of his motion Mr Siminton invoked the inherent and/or implied jurisdiction of the Court and O 20 r 2 of the Federal Court Rules. He argued that the proceedings had been brought for an improper purpose, that they had been brought without any basis in law and that they had been brought "unconstitutionally". In that regard, he invoked s 51(xxxi) of the Constitution (no acquisition of property other than on just terms). 2 Tracey J ordered that Mr Siminton's application be dismissed with costs on 6 October 2006. His Honour gave reasons for that decision in the form of a "ruling" delivered on that same day: Australian Prudential Regulation Authority v David Robert Siminton (No 4) [2006] FCA 1339. He noted that a number of the matters raised by Mr Siminton had been agitated before another judge of this Court, Merkel J, earlier this year: Australian Prudential Regulation Authority v Siminton (No 2) [2006] FCA 336. However, Tracey J also noted that Mr Siminton had raised what his Honour described as a "novel complaint", namely that the proceeding had been brought unconstitutionally because it was said to provide for the acquisition of Mr Siminton's property by APRA, or the Commonwealth, without just terms. 3 Tracey J set out his reasons for dismissing Mr Siminton's application at [3]-[8] of his ruling. He rejected the contention that the various interlocutory processes engaged in by APRA constituted evidence of a collateral purpose which rendered the proceeding an abuse of process. He noted that the constitutional argument had not been raised in Mr Siminton's defence to the proceeding. He declined to deal with the merits of that argument, saying simply that if it had any substance, it could be raised at the trial. Finally, his Honour rejected a submission that there was "no evidence" to support the allegations made by APRA, noting that this same claim had been made before Merkel J, and failed. When it was said by Mr Siminton that APRA had not, in the intervening period, supplied evidence to fill the void that allegedly existed in its case (namely, the lack of any evidence to demonstrate that Mr Siminton had carried on a "banking business" as defined in s 5 of the Banking Act 1959 (Cth)), his Honour replied that APRA was not under any obligation to supply such evidence. The time for it to be supplied would be when the matter was being readied for trial. If it turned out that there was no evidence to support APRA's claims, Mr Siminton could then move for summary judgment. 4 The principles upon which leave to appeal from an interlocutory judgment will be granted are clear. They are set out in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. 5 I have been provided with a draft notice of appeal upon which Mr Siminton proposes to rely if leave to appeal is granted. It raises what Tracey J described as the "no evidence" ground. However, it also contends that his Honour erred in construing s 65A of the Banking Act, and, in addition, raises the s 51(xxxi) constitutional ground. 6 It was submitted by Mr Sharp, who appeared on behalf of Mr Siminton this morning before me, that leave to appeal should be granted because Tracey J had erred in rejecting the "no evidence" ground. Mr Sharp referred to a "concession" by counsel for APRA before Sundberg J, who granted the original interlocutory injunction in this matter in December 2005, that APRA at that time had no evidence of any actual lending by Mr Siminton's "bank", but only evidence of an intention to lend in the future. It was submitted that there could not be a contravention of s 7 of the Banking Act without both receipt of depositors' money, and lending of that money. 7 In response, Mr Hibble, on behalf of APRA, submitted that APRA had evidence of lending, and would produce that evidence in accordance with any timetable laid down by Tracey J. He submitted that Mr Sharp's application was premature, and that whatever may have been said to Sundberg J, in the course of an urgent application for interlocutory relief, should not be regarded as APRA's actual position in the primary proceeding. 8 In my view, Tracey J's conclusion that this issue should await the filing of evidence by APRA was not attended with sufficient doubt to warrant the grant of leave to appeal. Indeed, I consider that conclusion to be plainly correct. APRA has pleaded, in paragraph 5(a) of its Statement of Claim, that between January 2004 and "the present" Mr Siminton "has loaned money to members of the public", as well as pleading in paragraph 5(b) that he had "stated an intention to loan money to members of the public". If APRA cannot produce evidence to support the allegation contained in paragraph 5(a), that may mean that its claim against Mr Siminton for having contravened s 7 of the Banking Act will fail, and that point can be addressed by way of an application for summary judgment. However, at this stage, it would be quite wrong to stay or dismiss this proceeding simply because APRA has not yet produced this evidence. 9 Mr Sharp submitted that APRA had been under a duty not to plead facts for which there was no evidence available. That states the principle too narrowly. The duty is not to allege facts unless there is a proper basis for making that allegation. A genuine belief, on reasonable grounds, that admissible evidence will be forthcoming to support an allegation can be sufficient to justify its being made. I am not persuaded that there is an adequate basis for inferring some impropriety on the part of APRA in its early pleading in this matter. 10 Mr Sharp's submission regarding the proper construction of s 65A, and particularly the term "damages" in s 65A(11), seems to me to be without merit. I see no reason why statutory damages of the kind contemplated in that provision should not encompass restitution of monies paid by depositors who were misled by Mr Siminton's use of the term "bank" in connection with his business. That is not to say that any such depositors were misled. It may be, as Mr Sharp submitted, that they all went into this venture with their eyes entirely wide open. If that is so, the assurances given by APRA regarding the ultimate disposition of the funds presently frozen provide adequate safeguard for Mr Siminton's interests, as well as those of participating depositors. 11 Mr Sharp's constitutional argument may, or may not, have merit. I agree with Tracey J that the time for that argument to be raised is after the affidavits have been filed, and all interlocutory processes have been completed. There should be a proper defence drawn, relying upon s 51(xxxi), and proper opportunity for submissions. At this stage, I am not persuaded that Tracey J's approach to this issue was attended with any error. Accordingly, I would not grant leave to appeal on this point. 12 Nor would I grant leave to appeal upon the basis of the matters raised by an offer made by Mr Siminton to settle the proceeding on terms set out in a letter dated 30 August 2006. APRA's rejection of that offer in no way renders the primary proceeding an abuse of process. 13 It follows that I would refuse leave to appeal from Order 1 of the Orders made by Tracey J on 6 October 2006, dismissing Mr Siminton's notice of motion dated 27 September 2006. 14 I should add that Mr Sharp also sought to agitate the correctness, or otherwise of a further order made by Tracey J on 6 October 2006, requiring Mr Siminton to report to the Nunawading Police Station each Thursday between 9 am and 5 pm commencing on 12 October 2006. That order was not the subject of the formal application for leave to appeal before me today. However, APRA did not object to my dealing with Mr Sharp's challenge to that order. Indeed, APRA indicated that it did not object to my vacating the order entirely, having regard to the fact that Mr Siminton presently is not facing any charge of contempt, and is not in immediate danger of imprisonment. In those circumstances, I am prepared to vacate that order, and will do so. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.