FEDERAL COURT OF AUSTRALIA Australian Prudential Regulation Authority v Siminton (No 12) [2008] FCA 101 PRACTICE AND PROCEDURE – Notice of motion on behalf of the receiver – Application seeking further funds to be included in the receivership, an extension of time of the receivership and for the respondent to attend for examination and file an affidavit of documents – Whether respondent should be excused in limine from swearing affidavit or attending for examination – Whether examination or affidavit of documents would expose respondent to self incrimination - Application granted in part WORDS AND PHRASES – "in limine objection" Banking Act 1959 (Cth) ss 7 and 66 Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608 referred to Refrigerated Express Lines (A/sia) Pty Ltd v Australian Meat and Live-stock Corporation (1979) 42 FLR 204 followed Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 referred to Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 referred to AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY v DAVID ROBERT SIMINTON VID 1607 OF 2005 TRACEY J 21 FEBRUARY 2008 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1607 OF 2005 BETWEEN: AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY Applicant AND: DAVID ROBERT SIMINTON Respondent JUDGE: TRACEY J DATE OF ORDER: 6 FEBRUARY 2008 (ORDERS 1-3); 21 FEBRUARY 2008 (ORDERS 4-6) WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The following funds be included in the funds described as Schedule A of the Orders made herein on 7 November 2007: (a) the amount of $43,950.73 which was previously in Technocash Pty Ltd account number 6276 2747 3470 5861 in the name of Agios/Lionsgate Savings & Loans and was transferred to McGrathNicol Appointment Trust Account (account number 032 000 584 911) on or about 15 November 2007; (b) the amount of $70.50 which was previously in Technocash Pty Ltd (account number 6276 2735 2556 2101) in the name of Agia and which was transferred to the McGrath/Nicol Appointment Trust Account on or about 15 November 2007; (c) the amount of US$31,010 held in Technocash Pty Ltd account number (6276 2792 0407 2783) in the name of Platinum Continental Limited; (d) any funds held on behalf of the Respondent, the Principality of Camside or the Terra Nova Cache in Anglo Irish Bank (Austria) AG account number (304814) in the name of the Respondent; and (e) any funds held on behalf of the Respondent, the Principality of Camside or the Terra Nova Cache in Adelaide Bank account number (070787941 (BSB 610‑101)) in the name of Dale and Karen Holzheimer. 2. The period of the Receiver's appointment pursuant to paragraph 1 of the Orders made on 7 November 2007 be extended to 7 April 2008; 3. The time within which the Receiver is required to prepare and file the report referred to in paragraph 12 of the Orders made on 7 November 2007 be extended to 10 March 2008. 4. The Respondent file, by 4:00 pm on 29 February 2008, an affidavit: (a) listing the documents relating to monies received from members of the public for deposit in the Terra Nova Cache ("the Documents") he has in his possession, custody or power; (b) listing the Documents he once had, but now does not have, in his possession, custody or power; (c) setting out, in respect of the Documents referred to in sub-paragraph (b) above, what has become of those Documents and where they are now located; and (d) setting out, to the extent that he claims that any of the Documents referred to in the sub-paragraphs above are subject to a claim in respect of privilege, the basis for the claim of privilege. 5. The Respondent provide to the Receiver, within seven days of a written request being made by or on behalf of the Receiver, a copy of the Documents listed in the affidavit (other than documents for which privilege is claimed) referred to in paragraph four above. 6. Liberty to apply is reserved generally and in relation to the description of any particular document or documents appearing in any affidavit prepared in compliance with paragraph four above. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1607 OF 2005 BETWEEN: AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY Applicant AND: DAVID ROBERT SIMINTON Respondent JUDGE: TRACEY J DATE: 21 FEBRUARY 2008 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 By order made herein dated 7 November 2007 I appointed Mr Colin Nicol as receiver to deal with certain funds which had been held in the names of the respondent, the Terra Nova Cache and the Principality of Camside. The circumstances in which the receiver came to be appointed are explained in my judgment in Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608. Mr Nicol entered on his task promptly. He has discovered various funds which are additional to those which are identified in Schedule A of the order made on 7 November 2007. He has also identified a large number of persons who claim to have made deposits in the Terra Nova Cache. He has sought the co-operation and assistance of the respondent in identifying depositors and the whereabouts of moneys contributed by them. He has received very little assistance from the respondent in response to these requests. 2 By an Amended Notice of Motion dated 4 February 2008 Mr Nicol seeks various orders to assist him in the performance of his duties. I heard argument on the Amended Notice of Motion on 6 February 2008. Following argument I indicated that I would make orders in the terms of paragraphs 1, 2 and 3 of the Amended Notice of Motion and would publish reasons for doing so at a later date. I reserved judgment on whether orders in the terms proposed in paragraphs 4, 5 and 6 of the Amended Notice of Motion should be made. What follows are my reasons for making orders 1 to 3 and my reasons, following further consideration, for determining that orders in the terms proposed in paragraphs 5 and 6 (with some minor variations) should be made. 3 The first order sought by Mr Nicol is the addition of a number of funds to those identified in Schedule A of the order which I made on 7 November 2007. The evidence established, in each case, a reasonable basis for the conclusion that the source of the moneys in those funds was contributions made to the Terra Nova Cache or the Principality of Camside. Counsel for the respondent did not direct any specific argument to the question of whether order 1 should or should not be made. It is appropriate that the order should be made. 4 Proposed Order 2 sought an extension of the period of Mr Nicol's appointment to 7 April 2008. Mr Nicol sought a third order extending the time within which he was required to prepare and file a report to 10 March 2008. Mr Nicol deposed that he needed the additional time sought in order properly to perform his duties. Counsel for the respondent did not take issue with Mr Nicol's evidence as to his reasons for requiring additional time. Rather he contended that the extension should not be granted because the receiver had failed to perform his duties. 5 When asked to identify the duties which it was alleged that Mr Nicol had failed to perform counsel referred to three matters. They were: · Mr Nicol's retention of Clayton Utz, solicitors, to advise him in relation to the performance of his duties; · an alleged lack of impartiality; and · the making by the receiver, of what were said to be unsubstantiated and intimidatory allegations against the respondent's solicitor. 6 Had I been persuaded (which I was not) that any of these complaints had substance, they may have warranted the termination of the appointment of the receiver. They would not have justified a refusal of an extension of time within which the receiver is required to prepare his interim report and complete the important work committed to him. I will, nevertheless, deal briefly with the submissions which were made on behalf of the respondent. 7 The respondent's objection to the retention of solicitors to advise the receiver was, in part, founded on the assertion that the receiver should be sufficiently familiar with relevant legal issues as not to require the advice of solicitors. There was also a suggestion that the use of solicitors would incur unnecessary expense. A significant issue on which solicitor's advice has been sought by the receiver is one which has been raised repeatedly by the respondent, namely, whether the respondent can refuse to co-operate with the receiver by answering questions and producing documents on the ground that to do so would or might incriminate him. The issue is one on which the receiver was plainly entitled to seek appropriate advice. It cannot reasonably be objected that he chose to engage a firm with acknowledged expertise in advising receivers in the performance of their duties. 8 The allegation of a lack of impartiality on the part of the receiver was advanced on the basis of a perceived asymmetry in the manner in which the receiver dealt with the Australian Prudential Regulation Authority ("APRA") and the respondent in the course of performing his duties. The receiver had sought certain information relating to depositors in the Terra Nova Cache from APRA. APRA had advised the receiver that it could not provide the information because of undertakings it had given to individuals who had claimed to have made deposits. APRA had advised the depositors that they should contact the receiver directly should they wish to make any claims. The receiver had obtained the additional information which he had sought from APRA from third parties. Counsel for the respondent contended that the receiver should have pursued APRA and required it to supply the information even though to do so would have involved APRA in a breach of the undertakings given to the depositors. This failure was compared with what was said to be the receiver's pursuit of information from the respondent notwithstanding his repeated claims that he was entitled to the protection of the privilege against self incrimination. 9 The allegation of partisanship lacks substance. The receiver respected APRA's claim that it had given undertakings which should not be breached and obtained the information which he required from other sources. The receiver has also respected the respondent's privilege claims and has done nothing to override such claims. What the receiver has done, on a number of occasions, has been to request the respondent to identify with precision the documents and information in respect of which the privilege claim is made and, in each case, an explanation of why it is said that the answering of questions or the production of documents would constitute an impermissible undermining of the privilege. 10 The unsubstantiated and intimidatory allegations which were said to be made by the receiver against the respondent's solicitor were contained in a preliminary report, made to the Court, by the receiver which is dated 3 December 2007. In notes, subjoined to a table appearing in paragraph 2.2 of that document the receiver stated that two named accounts held by Technocash Pty Ltd "had been set up by Hardy Erhardt of Erhardt & Associates via notification by electronic mail.". This was said by counsel to amount to an allegation that Mr Erhardt had been complicit in criminal offences which had been committed by the respondent. The criminal offences were said to be contraventions of ss 7 and 66 of the Banking Act 1959 (Cth) ("the Banking Act"). Section 7 makes it an offence for an unauthorised person to conduct any banking business. Section 66 makes it an offence for a person who "carries on a financial business" to assume or use the word "bank" in relation to such a business. Technocash Pty Ltd provided a service which enabled account holders to transfer electronically funds held in their accounts. Mr Siminton held an account with the trading name "Principality of Camside" into which funds received from depositors were placed. The fact that Mr Erhardt had opened two other accounts with Technocash Pty Ltd at a later date can not reasonably be understood as suggesting that he played any part in assisting the respondent in the conduct of a banking business or in the misuse of the word "bank". There is no substance in this contention. 11 The Amended Notice of Motion sought further orders that: "5. [T]he Respondent file, by 4.00 pm on 13 February 2008, an affidavit: (a) listing the documents relating to moneys received from members of the public for deposit in the Terra Nova Cache ("the Documents") he has in his possession, custody or power; (b) listing the Documents he once had, but now does not have, in his possession, custody or power; (c) setting out, in respect of Documents referred to in sub-paragraph (b), what has become of those documents and where they are now located; and (d) setting out, to the extent that he claims that any of the Documents referred to in the sub-paragraphs above are subject to a claim in respect of privilege, the basis for the claim of privilege; 6. [T]he Respondent provide to the Receiver, within 7 days of a written request being made on or behalf of the Receiver, a copy of the Documents listed in the affidavit referred to in paragraph 5 above; …" At the hearing counsel for the receiver agreed that any order founded on paragraph six should have the words "(other than documents for which privilege is claimed)" added after the word "affidiavit". 12 I reserved my decision on whether such orders should be made. I did so in order to consider various authorities on which counsel for the respondent had relied in opposing the making of such orders. 13 Counsel for the receiver argued that these orders should be made because the respondent had, during the period of the receivership, failed to respond to requests made by the receiver that he provide relevant documents to the receiver. In particular the receiver relied on the failure of the respondent to comply with paragraph five of the orders made on 7 November 2007 which required the respondent to provide to the receiver "all bank statements, books of accounts, receipts, invoices, correspondence or other documents in his possession, custody, power or control relating to monies received from members of the public for deposit in the Terra Nova Cache." The receiver's solicitor had written on numerous occasions to the respondent requesting that he comply with the Court's order. The respondent had not done so. He had, through his solicitors, made general claims that he could not be required to produce any documents because of the protection afforded him by the privilege against self incrimination. In one letter the respondent acknowledged that he had three documents (bank statements) which fell within the terms of the order. He also provided the receiver with a copy of documentary evidence tendered in the course of the trial of the principal proceeding in which the order appointing the receiver was made: see Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608. The respondent has failed to advise the receiver whether there are additional documents, which although not in his possession, are within his power or control. 14 Counsel for the respondent opposed the making of the proposed orders. He made what he described as "an in limine objection" to the making of any order that would require the respondent to swear an affidavit of documents or discover any documents on the ground that to do so would infringe his right to protection against self incrimination. 15 In making the in limine objection counsel for the respondent relied on an affidavit, sworn by the respondent, in which he deposed that: "3. It has been alleged that with respect to the Principality of Camside and Terra Nova Cache, I am in breach if the Banking Act, sections 7 and 66, which are respectively an indictable offence and an offence. Such allegations have already been tried herein and found proven on a civil basis, and it has been maintained by APRA, a Commonwealth instrumentality, that the right to bring criminal charges against me with respect of the alleged breaches of the relevant sections remains extant. 4. The documents requested clearly relate to the alleged breaches of the Act and, accordingly, I object to producing the same pursuant to the right against self incrimination." It is noted that the respondent makes an in limine objection to production. He does not identify the documents for which a privilege claim is made. He does not explain why their production would tend to incriminate him. Moreover he offers no reason why he should not be required to swear an affidavit of documents. 16 Counsel acknowledged that the circumstances in which an in limine objection to making an affidavit of documents, in a case such as the present, might be upheld are extremely rare. He contended that the circumstances of the present case brought it within the rare exception, the existence of which was recognised by Deane J in Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live Stock Corporation (1979) 42 FLR 204. In Refrigerated Express Deane J held that, in a criminal proceeding or a proceeding in which the imposition of a pecuniary penalty was sought, a Court should not order a respondent to give discovery or produce documents for inspection. In other forms of proceeding his Honour recognised that the general rule was that a party ought not to be excused, in limine, from giving discovery on the ground that production might tend to expose him to a penalty. His Honour held that there might exist "exceptional" cases in which "the only means of protecting the right against self incrimination … [would be] to excuse a party in limine from discovery …" (at 211) (Emphasis added). His Honour said that such cases would be "rare indeed." He said (at 211) that: "The cases where the making of an order for discovery or interrogatories will, in itself, involve exposing a party to self incrimination … must, however, be rare indeed in view of the fact that the party will remain entitled to refuse to answer questions asked or produce documents discovered if the answers or production might tend to incriminate him or expose him to a penalty." Deane J's judgment was referred to in the joint judgment of Mason A.C.J., Wilson and Dawson JJ in Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 336. Their Honours noted that: "There [in Refrigerated Express] his Honour drew a distinction between discovery in a mere action for a penalty and discovery in an action which was not for a penalty the result of which might be used to establish a party's liability to a penalty in other proceedings (50). In the first situation, the court should, in the absence of statutory provision to the contrary, refuse to make any order for discovery, production of documents or the provision of information for the reason that an intended consequence of the discovery, production of documents or provision of information is the imposition of the penalty, this being the object of the action … But in the second situation the order will be made and the party against whom the order is made may object to the production of particular documents or to the provision of particular information on the ground that it may tend to expose him to a penalty." 17 In Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 Lindgren J reviewed a series of cases in which Deane J's decision in Refrigerated Express had been applied or followed. He summarised his conclusions as follows (at 388): "Although the course of authority since Refrigerated Express is not all one way, there has been a strong disposition in a proceeding not itself concerned with the imposition of a penalty for an offence or a civil penalty, in favour of ordering discovery, reserving the issue of self incrimination to the stage of production for inspection, and also reserving liberty to apply in relation to the degree of specificity with which a document is to be described in the individual's list of documents." 18 The present case is not one in which criminal conduct is alleged against the respondent or a civil penalty sought in respect of anything done by him. Judgment was given in the principal proceeding on 26 October 2007 and the receivership order was made on 7 November 2007 following submissions as to the form of relief which should be granted. The orders presently sought by the receiver, whilst being made in the proceeding, are sought to facilitate the performance of his role in remedying the mischief which the respondent has been found to have perpetrated. It follows that the present circumstances are not such as to admit, in the normal case, the making of an in limine objection to an order of the kind which is being sought by the receiver. 19 As already noted counsel for the respondent sought to argue that the circumstances which confronted the respondent in this case were such as to bring it within the exceptional category which Deane J referred to in Refrigerated Express. I invited counsel to articulate with precision the rare and exceptional circumstances which rendered the present case one which fell within the exception to the ordinary rule. He submitted that his client had been found, in Siminton (No 6), to have contravened ss 7 and 66 of the Banking Act. These findings had been made on the civil standard. His client apprehended that he might, at some time in the future, be charged with having committed criminal offences by contravening those provisions. He contended that the mere acknowledgement by the respondent that he had in his possession, custody or control documents of the character referred to in the proposed order could be used in evidence against him in such a criminal proceeding. 20 I do not consider that the making of the orders sought and compliance with them would expose the respondent to self incrimination. The proposed orders require no more than that the respondent swears and files an affidavit which lists documents in his possession, custody or power which relate to moneys received from members of the public for deposit in the Terra Nova Cache. If there are such documents that are not in his possession, custody or power any longer he is asked to identify them and indicate (if he is able) where they are presently located. The order would also require him to identify any claims of privilege he might wish to make in respect of any of these documents. The orders do not require him to produce any document for which a claim of privilege is made. 21 What the proposed orders will achieve is substantial compliance with the requirements of paragraph five of the orders made on 7 November 2007. The receiver will be made aware of whether or not the respondent holds documents which may assist the receiver in performing his duties. The respondent will be able to identify any documents or any part thereof in respect of which he wishes to make a privilege claim. The receiver will be appraised of the reason why the claim is made in respect of any particular documents (or part thereof). 22 It is possible that an issue may arise as to whether the description of a particular document or documents in the proposed affidavit might, if particularised in too much a detail, tend to expose the respondent to self incrimination. If those advising him exercise care I doubt that such a problem will arise. However, the orders should make provision for the respondent to have liberty to apply if such a problem arises. 23 The receiver sought the making of a further order under O 33 rule 13 of the Federal Court Rules that the respondent be required to attend before him for the purpose of being examined by the receiver's solicitors. I was told, from the bar table, that the respondent had attended before the receiver to answer questions on 5 February 2008. As I indicated at the hearing I do not consider that the making of such an order at this stage is warranted. There was no evidence before the Court as to whether or not the receiver had received the assistance which he sought from the respondent during the oral examination. Moreover, the making of the affidavit of documents which I have determined to order may well obviate the need for a further oral examination. I specifically reserved the right of the receiver to make application for an order for oral examination at a later time should that be necessary. 24 I will hear the receiver and the respondent on the question of what, if any, orders should be made as to the costs of the receiver's notice of motion. I certify that the preceding twenty four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. Associate: Dated: 21 February 2008 Counsel for the Applicant: Ms M Vannitamby Counsel for the Respondent: Mr D Sharp Solicitor for the Respondent: Erhardt & Associates Solicitor for the Receiver: Clayton Utz Date of Hearing: 6 February 2008 Date of Judgment: 21 February 2008