FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Cascade Coal Pty Ltd (No 1) [2015] FCA 607

THE COURT:

1.    GRANTS leave to the seventh and eighth respondents to file electronically:

(a)    An Interlocutory Application dated 18 June 2015 in which those respondents seek suppression orders pursuant to s 37AF(1) of the Federal Court of Australia Act 1976 (Cth) in respect of certain parts of the applicant’s Statement of Claim filed in this proceeding on 22 May 2015 (the Obeids’ Interlocutory Application);

(b)    The affidavit of Moses Edward Obeid sworn on 18 June 2015; and

(c)    The affidavit of Paul Edward Obeid sworn on 17 June 2015.

2.    ORDERS that the Obeids’ Interlocutory Application and affidavits be so filed by no later than 4.00 pm on 19 June 2015.

3.    Pursuant to r 2.32(3)(b) of the Federal Court Rules 2011, ORDERS that each of the said affidavits referred to in subpar 1(b) and subpar 1(c) above not be made available for inspection by any person or entity without the prior leave of a Judge.

4.    ORDERS that the Obeids’ Interlocutory Application be dismissed.

5.    NOTES that the Court has declined to make any order for costs in respect of the Obeids’ Interlocutory Application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The Australian Competition and Consumer Commission (Commission) commenced this proceeding on 22 May 2015 by filing an Originating Application and a Statement of Claim.

2    In this proceeding, the Commission seeks declaratory relief in respect of alleged contraventions of ss 45(2)(a)(i), 45(2)(b)(i) and 44ZZRK of the Competition and Consumer Act 2010 (Cth) (CCA) by the respondents in connection with the acquisition by the first respondent (Cascade) of a mining Exploration Licence which related to a mining tenement at Mt Penny in the State of New South Wales. The Commission alleges that the present case is a classic example of bid-rigging in respect of the acquisition of that Licence. The Commission also seeks a civil pecuniary penalty against each of the respondents pursuant to s 76 of the CCA in respect of the same alleged contraventions. Finally, the Commission seeks pursuant to s 86E of the CCA orders disqualifying each of the respondents who is a natural person from managing corporations for such period as the Court deems appropriate. An order for costs is sought against all respondents.

3    This proceeding was first returned before the Court yesterday (18 June 2015).

4    At yesterday’s listing, Moses Obeid and Paul Obeid, who are respectively the seventh and eighth respondents, applied to the Court for an order pursuant to s 37AF(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) that, until further order, there be no publication or other disclosure (except by the parties for the purpose of preparing and presenting their cases in this proceeding) of:

(a)    the contents of paragraph [165] or paragraph [167] (in each case after the word ‘resolved’) or of paragraph [170] or paragraph [171] (in each case in its entirety) of the Statement of Claim;

(b)     the contents of paragraphs 4 and 5 of the affidavit deposed by the seventh respondent on 18 June 2015; or

(c)    the contents of paragraphs 4 and 5 of the affidavit deposed by the eighth respondent on 18 June 2015.

5    I shall refer to this application as “the Obeids’ suppression application”. Although subpar 3(c) of that application refers to an affidavit sworn by Paul Obeid on 18 June 2015 the relevant affidavit was, in fact, sworn on 17 June 2015.

6    The two affidavits referred to in subpar (b) and subpar (c) of par 3 of the Obeids’ suppression application are affidavits which were made available to me yesterday. Neither affidavit has been filed. In pars 4 and 5 of each of those affidavits, the deponent sets out the reasons advanced by that deponent in support of the Obeids’ suppression application.

7    Paragraphs 165, 167, 170 and 171 of the Statement of Claim all appear in a section of that pleading headed “Distribution of the Coal & Minerals Payments”.

8    The reference to “Coal & Minerals” in that heading is a reference to a corporation called Coal & Minerals Group Pty Ltd, the fifth respondent in this proceeding. That corporation is alleged to be under the control of Richard Poole, the ninth respondent.

9    In order to appreciate the significance of the suppression order now sought by the Obeids, it is necessary to explain the immediate context in the Statement of Claim in which the relevant paragraphs are found.

10    Immediately before par 164 in the Statement of Claim, the Commission has pleaded facts and matters relevant to two topics appearing under the following headings: “Payments by Coal & Minerals” and “Deed of Variation” respectively.

11    The paragraphs in the Statement of Claim which appear under the heading “Payments by Coal & Minerals” are pars 150 to 155. Those paragraphs are in the following terms:

Payments by Coal & Minerals

150.     Between 20 October 2010 and 3 May 2012, Coal & Minerals made cash payments (the Coal & Minerals Payments) to Southeast Investments pursuant to the Transfer Deed as follows:

150.1.     $5,000,000 on or about 20 October 2010;

150.2.     $2,500,000 on or about 25 October 2010;

150.3.     $7,500,000 on or about 25 February 2011;

150.4.     $10,000,000 on or about 16 June 2011;

150.5.     $5,000,000 on or about 3 May 2012.

151.     The payments pleaded at paragraph 150 above were authorised by Richard Poole.

152.     The payments pleaded at paragraph 150 above constituted:

152.1.     a benefit obtained by Southeast Investments which was reasonably attributable to Cascade, Coal & Minerals and Southeast Investments’ contraventions of s 44ZZRK of the CCA within the meaning of s 76(1A)(aa)(ii); and

152.2.     a benefit obtained by Southeast Investments which was reasonably attributable to Southeast Investments’ contraventions of s 45(2)(b)(i) of the CCA within the meaning of s 76(1A)(b)(ii) of the CCA.

153.     From on or about 21 October 2010, Sevag Chalabian caused Southeast Investments to distribute the Coal & Minerals Payments as follows:

153.1.     $5,000,000 on or about 21 October 2010 to a bank account in the name of Obeid Corporation and thereafter held on trust by Obeid Corporation for Obeid Family Trust No. 1;

153.2.     $2,162,000 on or about 1 November 2010 to a bank account in the name of Obeid Corporation and thereafter held on trust by Obeid Corporation for Obeid Family Trust No. 1;

153.3.     $7,450,000 on or about 4 March 2011 to a bank account in the name of Obeid Corporation and thereafter held on trust by Obeid Corporation for Obeid Family Trust No. 1;

153.4.     $9,926,665 on or about 30 June 2011 to a bank account in the name of Calvin Holdings and thereafter held on trust by Calvin Holdings for Obeid Family Trust No. 2;

153.5.     $4,923,000 on or about 4 May 2012 to a bank account in the name of Calvin Holdings and thereafter held on trust by Calvin Holdings for Obeid Family Trust No. 2.

154.     In making the payments to the accounts of Obeid Corporation and Calvin Holdings as pleaded in paragraph 153, Sevag Chalabian acted at the direction of Moses Obeid and/or Paul Obeid, which directions were conveyed to Mr Chalabian directly from Moses Obeid and Paul Obeid or through Hassam Achie, an employee of Obeid Corporation.

Particulars

The instructions included, at least, the following communications:

i.    email from Moses Obeid to Sevag Chalabian dated 20 October 2010;

ii.    email from Sam Achie to Sevag Chalabian dated 4 May 2012.

155.     Approximately $538,335 of the Coal & Minerals Payments was retained by Southeast Investments and/or Lands Legal.

12    The reference to “Southeast Investments” in pars 150 to 155 above is a reference to Southeast Investment Group Pty Ltd.

13    Those paragraphs in the Statement of Claim which appear under the heading “Deed of Variation” address a change in the arrangements between Coal & Minerals and Southeast Investments in respect of the balance of $30,000,000 owing under a document described in the Statement of Claim as “The Transfer Deed”. It is not necessary to say more about those paragraphs or the subject matter of those paragraphs for present purposes.

14    Paragraph 164 is the first of the paragraphs which appear under the heading “Distribution of the Coal & Minerals Payments” in the Statement of Claim. That paragraph is in the following terms:

All of the Coal & Minerals Payments were recorded as income in the accounts of Obeid Family Trust No. 2, with the amounts paid into the accounts of Obeid Family Trust No. 1 recorded as a loan from Obeid Family Trust No. 2 to Obeid Family Trust No. 1.

15    In par 165, the Commission pleads that, on or about 30 June 2011, Calvin Holdings as trustee of the Obeid Family Trust No 2 resolved to do something.

16    Paragraph 167 contains an allegation that, on or about 29 June 2012, Calvin Holdings as trustee of the Obeid Family Trust No 2 resolved to do something.

17    Paragraphs 168 and 169 are in the following terms:

168.    All, or substantially all, of the June 2012 Monies were monies obtained by Obeid Family Trust No. 2 from the Coal & Minerals Payments.

169.    The June 2011 Monies and June 2012 Monies were distributed either in cash or by way of reducing the beneficiary’s then-existing debts to Obeid Family Trust No. 2.

18    The reference in pars 165 and 167 to “Calvin Holdings” is a reference to a corporation called Calvin Holdings Pty Limited which is alleged to have been the trustee of the Obeid Family Trust No 2 at all material times after 29 April 2011.

19    The portions of pars 165 and 167 which are sought to be suppressed specify the subject matter of each of the resolutions made by Calvin Holdings on or about 30 June 2011 and on or about 29 June 2012 respectively. To a reader of the Statement of Claim who does not have knowledge of the full text of par 165 and par 167, it is perfectly plain that the relevant resolutions concern the distribution of funds which are alleged to be funds comprising or sourced from the Coal & Minerals payments referred to at pars 150 to 155 of the Statement of Claim.

20    Paragraphs 170 and 171 of the Statement of Claim set out with greater particularity the ultimate destination of some (but not all) of the Coal & Minerals payments.

21    In pars 150 to 155 of the Statement of Claim, the Commission alleges that Mr Poole caused Coal & Minerals to make five payments totalling $30,000,000 to Southeast Investments which then paid $29,461,665 out of that $30,000,000 to two Obeid family trusts (the Obeid Family Trust No 1 and the Obeid Family Trust No 2).

22    The essence of par 164 of the Statement of Claim is that $29,461,665 (being most of the $30,000,000 paid by Coal & Minerals to Southeast Investments) was treated by the two Obeid family trusts referred to in par 153 of the Statement of Claim as moneys belonging to the Obeid Family Trust No 2.

23    The material sought to be suppressed in pars 165 and 167 constitutes a general averment as to the ultimate destination of the said amount of $29,461,665 as well as a relatively small amount of other funds. The material sought to be suppressed in pars 170 and 171 of the Statement of Claim provides more detail as to the identity of the ultimate beneficiaries of some of those moneys and the amount paid to each of those beneficiaries in turn.

24    The reasons advanced by each of Moses Obeid and Paul Obeid in their affidavits for seeking the suppression orders which they seek are substantially the same. First, each of them describes in very general terms occasions when they and members of their family have been verbally abused by members of the public as a consequence of considerable media attention focussed upon them and their families as a result of investigations carried out by the New South Wales Independent Commission Against Corruption (ICAC). Second, each of them expresses a fear or concern that, if the material in respect of which they seek a suppression order is made available to the public, they and their families may be subjected to more intense verbal abuse and may even be subjected to acts of violence. Third, they express fears of even more serious potential action that might be carried out against them and their families by disgruntled members of the public.

25    Sections 37AE, 37AF and 37AG of the FCA Act provide:

37AE    Safeguarding public interest in open justice

In deciding whether to make a suppression order or non-publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

37AF    Power to make orders

(1)    The Court may, by making a suppression order or non-publication order on grounds permitted by this Part, prohibit or restrict the publication or other disclosure of:

(a)    information tending to reveal the identity of or otherwise concerning any party to or witness in a proceeding before the Court or any person who is related to or otherwise associated with any party to or witness in a proceeding before the Court; or

(b)    information that relates to a proceeding before the Court and is:

(i)    information that comprises evidence or information about evidence; or

(ii)    information obtained by the process of discovery; or

(iii)    information produced under a subpoena; or

(iv)    information lodged with or filed in the Court.

(2)    The Court may make such orders as it thinks appropriate to give effect to an order under subsection (1).

37AG    Grounds for making an order

(1)    The Court may make a suppression order or non-publication order on one or more of the following grounds:

(a)    the order is necessary to prevent prejudice to the proper administration of justice;

(b)    the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security;

(c)    the order is necessary to protect the safety of any person;

(d)    the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in a criminal proceeding involving an offence of a sexual nature (including an act of indecency).

(2)    A suppression order or non-publication order must specify the ground or grounds on which the order is made.

26    I do not doubt that I have power to make the orders which the Messrs Obeid seek. The question is whether I should do so.

27    The only grounds which might potentially serve as a proper basis for the orders sought are the grounds described in subs (1)(a) and subs (1)(c) of s 37AG.

28    In Hogan v Australian Crime Commission (2010) 240 CLR 651 at 664 [30], the High Court said, in respect of the use of the word “necessary” in s 50 of the FCA Act, the predecessor to Pt VAA that it is “a strong word”. The Court observed that the collocation of necessity to prevent prejudice to the administration of justice and the necessity to prevent prejudice to the security of the Commonwealth suggests that the Parliament is not dealing with trivialities. The Court went on to hold that:

“the administration of justice” spoken of in s 50 is that involved in the exercise by the Federal Court of the judicial power of the Commonwealth; this is a more specific discipline than broader notions of the public interest.

29    The Court continued at [31]–[33] as follows:

31    It is insufficient that the making or continuation of an order under s 50 appears to the Federal Court to be convenient, reasonable or sensible, or to serve some notion of the public interest, still less that, as the result of some “balancing exercise”, the order appears to have one or more of those characteristics (A statement by Fullerton J to like effect, with respect to the powers of the Supreme Court of New South Wales, was approved by Hodgson JA (Hislop and Latham JJ concurring) in Attorney-General (NSW) v Nationwide News Pty Ltd (2007) 73 NSWLR 635 at 641).

32    If it appears to the Federal Court, on the one hand, to be necessary to make a particular order forbidding or restricting the publication of particular evidence or the name of a party or witness, in order to prevent either species of prejudice identified in s 50, or, on the other hand, that that necessity no longer supports the continuation of such an order, then the power of the Federal Court under s 50 is enlivened. The appearance of the requisite necessity (or supervening cessation of it) having been demonstrated, the Court is to implement its conclusion by making or vacating the order. The expression in s 50 “may … make such order” is to be understood in this sense.

33    It may tend to distract attention from the particular terms of s 50 to describe the Federal Court as embarking upon the exercise of a “discretion” when entertaining an application under s 50 (Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124 at 138-139 [40]). Once the Court has reached the requisite stage of satisfaction, it would be a misreading of s 50 to treat it as empowering the Court nevertheless to refuse to make the order, or to leave in operation the now impugned order. It would, for example, be an odd construction of s 50 which supported the refusal of an order under s 50 notwithstanding that it appeared to the Court to be necessary to make an order to prevent prejudice to the security of the Commonwealth.

30    The threshold which a suppression order applicant must satisfy is high. Mere embarrassment, inconvenience, annoyance or unreasonable or groundless fears will not suffice.

31    Here, the Obeids’ application does not meet the exigencies of s 37AG(1) of the FCA Act. The disclosure of the material which the Obeids seek to suppress will not prejudice the administration of justice in the sense in which that expression is used in s 37AG(1).

32    There is no doubt that the activities of the Obeid family in connection with the acquisition by Cascade of the Mt Penny Exploration Licence have received considerable publicity as a result of the ICAC investigations into that matter. That publicity has extended to revealing the fact that an amount of $30,000,000 is said to have been paid to Obeid family interests in connection with the acquisition of that licence. I presume that this is why the present application for suppression orders does not include an application to suppress the contents of pars 150 to 155 of the Statement of Claim.

33    Given those circumstances, I find it very difficult to accept that the disclosure of the additional details now sought to be suppressed as to the destination of most of the $30,000,000 paid by Coal & Minerals to Southeast Investments could potentially add to the risk of more serious verbal abuse and physical harm to members of the Obeid family. I have to say that I think the fears apprehended by Moses Obeid and Paul Obeid in this regard are unlikely to become reality. The additional information that will be disclosed if the suppression orders are not granted is unlikely to cause a fresh round of more serious verbal abuse or lead to physical harm.

34    In particular, I do not think that the disclosure of the identity of the ultimate recipients of some of those funds, even if, as I am told, some of those recipients are minor children, is likely to exacerbate the existing hostility felt by some towards the Obeid family. There is, of course, no suggestion being made in this proceeding that any minor children have contravened the CCA or otherwise broken the law.

35    In any event, the evidence contained in the two affidavits relied upon in support of the claimed suppression orders is of the most general kind and does not constitute persuasive evidence supporting the making of the orders sought.

36    I am not at all satisfied that the orders sought are necessary to protect the safety of any person nor am I satisfied that they are necessary to prevent prejudice to the proper administration of justice.

37    In coming to these conclusions, I have firmly kept in mind the terms of s 37AE of the FCA Act. In my judgment, the primary objective of the administration of justice of safeguarding the public interest in open justice is best served in the present case by refusing the application.

Conclusions

38    For the above reasons, I decline to make the orders sought. The Obeids’ suppression application will be dismissed.

39    I do not think any party was overly inconvenienced by the Obeids’ suppression application. No special listing was required in order for the Court to deal with that application. The Commission was agnostic about the application although, when pressed, it did suggest that there was no proper justification for making the orders sought. For these reasons, I do not propose to make any order for costs in respect of that application.

40    I will, however, make an order preventing each of the affidavits relied upon by the Obeids in support of the present application from being inspected by any person without the prior leave of a Judge. Although the evidence set out in those affidavits is, as I have already said, of the most general kind and not particularly confidential, no public interest will be served by making those affidavits available for inspection by any person. Those affidavits have nothing to do with the subject matter of the present proceeding.

41    There will be orders accordingly.

Associate:

Dated:    19 June 2015