Saraceni v Australian Securities and Investments Commission

Counsel for the First Respondent: LB Price

Solicitor for the First Respondent: Australian Securities and Investments Commission

Counsel for the Second, Third and Fourth Respondents: MN Solomon

Solicitor for the Second, Third and Fourth Respondents: Ashurst Australia

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 151 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

MARTIN BRUCE JONES AND JOHN ROSS LINDHOLM AS RECEIVERS AND MANAGERS OF SEAPORT PTY LTD ACN 085 027 176 (RECEIVERS AND MANAGERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF NEWPORT SECURITIES PTY LTD ACN 059 217 439 (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED) AND AS AGENT OF THE MORTGAGEE IN POSSESSION OF THE PROPERTY THE SUBJECT OF CERTIFICATE OF TITLE VOLUME 2069 FOLIO 895 KNOWN AS 3517 CAVES ROAD, WILYABRUP, ALSO KNOWN AS LOT 2 CAVES ROAD, WILYABRUP

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF MAYPORT NOMINEES PTY LTD ACN 070 052 603 (RECEIVERS AND MANAGERS APPOINTED)

JUDGE: MCKERRACHER J DATE OF ORDER: 16 August 2012 WHERE MADE: PERTH

1. The Application for Leave to Appeal be heard by a Full Court of this Court.
2. Subject to any contrary direction of the Full Court, the Application for Leave to Appeal to be heard concurrently with or, alternatively, immediately before the appeal described in the Notice of Appeal to be filed in accordance with Order 4 below.
3. The parties comply with Part 36 of the Federal Court Rules 2011 and Practice Notes APP1 and APP2 of 2011 as though leave to appeal had been granted.
4. By 23 August 2012, the appellant file a notice of appeal.
5. By 30 August 2012, the respondents file any notice of cross-appeal or notice of contention.
6. By 6 September 2012, the appellant submit draft indexes to part A and part B of the appeal book for the Registrar's approval.
7. The costs associated with the making of this direction be in the cause. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 151 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

MARTIN BRUCE JONES AND JOHN ROSS LINDHOLM AS RECEIVERS AND MANAGERS OF SEAPORT PTY LTD ACN 085 027 176 (RECEIVERS AND MANAGERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF NEWPORT SECURITIES PTY LTD ACN 059 217 439 (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED) AND AS AGENT OF THE MORTGAGEE IN POSSESSION OF THE PROPERTY THE SUBJECT OF CERTIFICATE OF TITLE VOLUME 2069 FOLIO 895 KNOWN AS 3517 CAVES ROAD, WILYABRUP, ALSO KNOWN AS LOT 2 CAVES ROAD, WILYABRUP

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF MAYPORT NOMINEES PTY LTD ACN 070 052 603 (RECEIVERS AND MANAGERS APPOINTED)

JUDGE: MCKERRACHER J DATE: 22 AUGUST 2012 PLACE: PERTH

INTRODUCTION 1 The applicant seeks leave to appeal from an interlocutory judgment of the Court in Saraceni v Australian Securities and Investments Commission [2012] FCA 688. He asks that the application be referred to the Full Court. That referral is opposed by the respondents. The primary judge allowed an interlocutory application to dismiss judicial review proceedings commenced by the applicant. The interlocutory application was pursued by the receivers and managers of companies associated with the applicant and supported by the Australian Securities and Investments Commission (ASIC) pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and/or r 26.01(1) of the Federal Court Rules 2011.

BACKGROUND 2 Before the primary judge, the applicant sought orders quashing authorisations given by ASIC to the second, third and fourth respondents and the receivers and managers of companies associated with him. ASIC had authorised each of the receivers and managers as 'eligible applicants' to apply for examination orders under Div 1 of Pt 5.9 of the Corporations Act 2001 (Cth) (CA). Under those authorisations the receivers and managers successfully applied for examination summonses against the applicant. They were served on the applicant on 15 August 2011. The applicant complained that ASIC had denied him natural justice and improperly exercised power in granting the authorisations. The applicant complained that ASIC had failed to accord him natural justice by not giving him notice of its intention to grant the authorisations. He also complained that in granting the authorisations, ASIC improperly exercised its power by failing to take into account relevant considerations or taking into account irrelevant considerations by not regarding the issues he would have raised for consideration by ASIC before it decided to grant the authorisations. 3 It can be seen that the issues are of relatively narrow compass but notwithstanding this, the arguments raised before the primary judge were extensive and gave rise to a considered and careful judgment of some length. In that regard, it is clear that the matters falling for consideration were issues of legal substance, not simply matters of form or procedure. His Honour accepted the arguments advanced by the respondents and dismissed the application in its entirety.

THIS APPLICATION 4 The Court has a discretion to direct that an application for leave to appeal be heard and determined by the Full Court. Section 25(2)(e) of the FCA Act and r 35.11 of the Federal Court Rules 2011 provide for those options. Section 25(2) of the FCA Act precludes automatic access to the Full Court. The parties accept that there is a presumption that a single judge would ordinarily hear such an application. An applicant who seeks that the matter be dealt with by the Full Court bears the onus of satisfying the Court that this is the appropriate course. 5 Amongst the factors which have been considered on the authorities in relation to whether or not an application for leave should be referred to a Full Court are the following: the novelty and importance of the issues raised; whether the matter is simply a 'minor interlocutory squabble' or a matter of practice and procedure; what is the most efficient disposition of the application having regard to factors such as those referred to above; what will be the most cost effective means of considering leave; the important question of whether or not the application for leave is apparently hopeless or unarguable; and other factors relevant to the justice of the particular case. 6 As to the first two points, the applicant argues that matters going to the question of whether the application for leave to appeal should be heard by a single judge or the Full Court include the following: (a) the summonses for examination were issued without his having any notice or opportunity to be heard by ASIC or in the Supreme Court of Western Australia; (b) the second, third and fourth respondents have refused, despite requests, to disclose the material submitted to ASIC or to the Court and ASIC will not release any material without the consent of the other respondents; (c) the application for judicial review was dismissed summarily without the applicant having the opportunity to exercise any of the forensic rights associated with litigation in the Court and when an application for discovery by ASIC was pending; (d) the application for leave to appeal contends that there was an issue squarely raised before the primary judge which was not dealt with by his Honour; and (e) if the application for leave to appeal was determined by a single judge and leave was refused, it may be argued that the applicant had no right of appeal.

CONSIDERATION 7 It cannot be said that this is a clear cut case for the grant or refusal of leave. Such a case should usually be dealt with by a single judge. To exhaustively evaluate the basis upon which issues of substance, novelty and general importance warranting consideration of the Full Court are identified in the application for leave and the proposed appeal would defeat the purpose of referring the matter to the Full Court. But, in summary, the points of substance falling for consideration (which must be read against the background of the primary decision) are said to be: (a) Who is entitled to be granted eligible applicant status by ASIC for the purposes of s 596A and s 596B CA? (b) Whether the two stage process for the issue of a summons for examination described in Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 is still appropriate following amendment of the relevant provisions of the CA? (c) What matters (if any) is ASIC required to take into account in deciding whether to grant a person eligible applicant status (particularly under s 596A CA)? and (d) Whether ASIC's decision to grant eligible applicant status is an exception to the general rule that legislation will not be construed as displacing the presumption that procedural fairness must be observed in the exercise of public power, particularly where fundamental rights are compromised, unless the intention not to require procedural fairness is clearly expressed: Kioa v West (1985) 159 CLR 550 per Mason J at 585. 8 It is clear in my view that the issues to be raised fall well outside the ambit of an interlocutory squabble or a mere matter of practice and procedure. The determination of the issues raised has the capacity for significant consequences not only for the parties but also more generally. The nature and extent of the opposition advanced to leave being granted at all, in itself (which necessarily overlaps to a degree with opposition on the substantive issues if leave were to be granted), does indicate that this application is not in the category of the straightforward. The complexity of the matters is such that it is inevitable that the matters to be covered during the hearing of the application for leave to appeal will embrace many of the substantive issues for the appeal if leave is granted. 9 Additionally, for a final judgment (albeit one determined at an interlocutory level) but on reasonably complex issues, there is some merit in the matter being considered by three judges rather than one. 10 If I were to determine the leave question alone, I would be inclined to grant leave. I can appreciate that the respondents have all raised arguments as to why the leave and the appeal grounds have no prospects and ultimately they may be right but I am not satisfied at this stage that such a conclusion could be reached. It suffices to say for present purposes that, in light of the complexity of the matters, it cannot be said with any degree of confidence that the present application or the appeal is hopeless. Obviously, hopeless applications should not be referred to the Full Court, let alone allowed: Allphones Retail Pty Ltd v Weimann [2009] FCA 849 (at [13]). 11 The more efficient and appropriate course is to refer the application for leave to appeal to be heard by the Full Court, together with the appeal, if leave is granted. That was the view I also took in Allphones (at [32]). 12 Nothing in the preceding assessment should be taken as expressing a view as to the merits of the application for leave, let alone the appeal. 13 I have notified the parties of my intention and as a result, the following consent orders have been proposed and will be made: 1. The Application for Leave to Appeal be heard by a Full Court of this Court. 2. Subject to any contrary direction of the Full Court, the Application for Leave to Appeal to be heard concurrently with or, alternatively, immediately before the appeal described in the Notice of Appeal to be filed in accordance with Order 4 below. 3. The parties comply with Part 36 of the Federal Court Rules 2011 and Practice Notes APP1 and APP2 of 2011 as though leave to appeal had been granted. 4. By 23 August 2012, the appellant file a notice of appeal. 5. By 30 August 2012, the respondents file any notice of cross-appeal or notice of contention. 6. By 6 September 2012, the appellant submit draft indexes to part A and part B of the appeal book for the Registrar's approval. 7. The costs associated with the making of this direction be in the cause. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.