Siminton v Australian Prudential Regulation Authority [2008] FCAFC 88

2008FCAFC0088 - Corrigendum

FEDERAL COURT OF AUSTRALIA

BANKING – appeal against findings of contraventions of sections of the Banking Act – whether appellant was engaged in a “banking business” – where it had been established that the appellant had made a loan – held that the making of the loan by the appellant was enough to establish that the appellant had engaged in the business of banking – held that it need only be established that a person proposes to engage in banking business to enliven s 65A – held that the evidence was sufficient to enliven s 65A – held that orders made under s 65A were appropriate and properly made

CONSTITUTIONAL LAW – appeal from judgment that section 65A of the Banking Act is not unconstitutional – whether s 65A supported by s 51(xiii) of the Constitution (the banking power) – held that s 65A is clearly a valid exercise of the power derived from s 51(xiii) (the banking power) and s 51(xxxix) (the incidental power) of the Constitution

CONSTITUTIONAL LAW – appeal from judgment that section 65A of the Banking Act is not unconstitutional – whether interlocutory restraining orders imposed on the appellant amounted to acquisitions not “on just terms” in contravention of s 51(xxxi) of the Constitution – held that the restraining orders did not amount to an acquisition of property – held that in any case s 51(xxxi) would have no application in this case as to require the provision of just terms in the imposition of restraints would defeat the purpose of the restraint itself

CONSTITUTIONAL LAW – appeal from judgment that section 65A of the Banking Act is not unconstitutional – whether orders imposed under s 65A amount to a conviction of committing contraventions of the Banking Act without criminal trial by jury in contravention of s 80 of the Constitution – held that the appellant has not been convicted of any crime – held that s 65A contains a civil procedure to provide remedies – held that s 80 has no application to procedures of the kind in s 65A

CONSTITUTIONAL LAW – appeal from judgment that section 65A of the Banking Act is not unconstitutional – whether s 65A offends against the separation of powers in the Constitution – held that s 65A does not confer on the Court any legislative function

PRACTICE AND PROCEDURE – appeal against finding that proceedings brought against the appellant were not an abuse of process – whether principal proceedings were brought for a collateral purpose – held that the complaints made do not support the contention – held that there was no abuse of process

Australian Prudential Regulation Authority Act 1998 (Cth)

Banking Act 1959 (Cth) ss 5, 7, 65A, 66

Constitution ss 51(i), 51(xiii), 51(xxix), 51(xxxi), 51(xxxix), 80

Australian Independent Distributors v Winter (1964) 112 CLR 443 applied

Australian Prudential Regulation Authority v Siminton (No 2) [2006] FCA 336 referred to

Australian Prudential Regulation Authority v Siminton (No 4) [2006] FCA 1339 cited

Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608 affirmed

Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 followed

R v Smithers; Ex parte McMillan (1982) 152 CLR 477 applied

Siminton v Australian Prudential Regulation Authority [2006] FCA 1398 cited

Siminton v Australian Prudential Regulation Authority [2008] FCAFC 89 referred to

Siminton v Australian Prudential Regulation Authority [2008] FCAFC 90 referred to

Theophanous v The Commonwealth (2006) 225 CLR 101 cited

Williams v Spautz (1991) 174 CLR 509 cited

Yango Pastoral Company Pty Ltd v First Chicago Australia Limited (1978) 139 CLR 410 considered

DAVID ROBERT SIMINTON v AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

VID 992 of 2007

SPENDER ACJ, LANDER AND BUCHANAN JJ

30 MAY 2008

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 992 of 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

DAVID ROBERT SIMINTON

Appellant

AND:

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Respondent

JUDGES:	SPENDER ACJ, LANDER AND BUCHANAN JJ
DATE OF ORDER:	30 MAY 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. Any submissions which a party wishes to make in respect of costs are to be filed in the Victorian Registry of the Federal Court of Australia and served by 4pm on Wednesday 4 June 2008.

3. Any submissions in reply to submissions filed pursuant to order 2 are to be filed in the Victorian Registry of the Federal Court of Australia and served by 4pm on Friday 6 June 2008.

4. If no submissions are received, pursuant to order 2, by 4pm on Wednesday 4 June 2008, the Court’s order as to costs is:

The appellant is to pay the costs of the respondent of and incidental to the appeal, to be taxed if not agreed.

5. If a submission by any party is filed pursuant to these orders, the Full Court will consider those submissions and will make its order as to costs after considering those submissions.

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 992 of 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

DAVID ROBERT SIMINTON

Appellant

AND:

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Respondent

JUDGES:	SPENDER ACJ, LANDER AND BUCHANAN JJ
DATE:	30 MAY 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE COURT

1 This is an appeal from orders made by Tracey J restraining the appellant in relation to certain conduct and, in particular, in relation to the use of certain monies. The primary judge decided that the appellant had contravened ss 7 and 66 of the Banking Act 1959 (Cth) (Banking Act). His Honour made two sets of orders on 7 November 2008 granting injunctions and appointing a receiver. The orders made were:

1 The Respondent, whether by himself, his servants or agents or otherwise, be permanently restrained from:

a. Receiving money from members of the public by way of deposit in the Terra Nova Cache or the Principality of Camside;

b. Assuming or using the words “bank”, “banker” or “banking”, or any words or phrases of like import, in relation to his business; and

c. Advertising, representing or stating that he will carry on banking business.

2 The Respondent cause to be published on the first page that a user views when he or she enters:

a. Any current, proposed or future internet site controlled by David Robert Siminton (whether by himself, his servants or agents or otherwise) that uses the words “Terra Nova Cache”, “Principality of Camside” or any derivation thereof; and

b. Any current, proposed or future internet site controlled by David Robert Siminton (whether by himself, his servants or agents or otherwise) that relates to a financial business;

a notice in the form set out in Schedule 1 hereto.

3 That orders 1(a), 1(b), 1(c), 2 and 3 made by Gray J on 10 January 2006 be set aside.

4 That orders 1(d), 1(e) and 1(f) made by Gray J on 10 January 2006 continue in force until further order.

5 That the proceeding be adjourned to a date to be fixed to allow the Court to monitor completion by the Court appointed receiver of his tasks in accordance with the receiver orders made by the Court on 7 November 2007 and from time to time as required.

6 The Respondent pay the applicant’s costs, including reserved costs.

2 There is no need to set out the notice in the Schedule to these orders or the orders appointing the receiver. It will be necessary to refer to Gray J’s orders.

3 This appeal was heard at the same time as two other appeals brought by the same appellant from findings of contempt for breach of interlocutory orders made by Gray J on 10 January 2006.

4 In 2002 the appellant registered a business name “Principality of Camside”. He later set up a website which purported to establish the Principality of Camside as a country and advertised on that website that “the country” had a “bank” called the “Terra Nova Cache”.

5 The appellant addressed a number of meetings, at which the public was present, for the purpose of encouraging members of the public to deposit funds with the “bank” in return for payment of a high interest rate. A number of people were seduced into investing in the bank and more than $1.5 million was raised. Some investors were paid interest for a period of time, while others received no interest. Some investors who sought repayments of their deposits were unsuccessful.

6 The Principality of Camside and the Terra Nova Cache consisted only of a post box, a registered business name and a website.

7 The respondent is established by the Australian Prudential Regulation Authority Act 1998 (Cth). It has been established for the purpose of regulating bodies in the financial sector in accordance with other laws of the Commonwealth that provide for prudential regulation and for other matters: s 8(1). It performs the functions provided for in s 9 of that Act and any other functions which are conferred upon it under a law of a State or Territory if the conferral of the functions or powers is in accordance with the provisions of s 9(a) of that Act. Specifically, it has been empowered by s 65A(6) of the Banking Act to apply for injunctions against persons who have or propose to engage in conduct which contravenes certain sections of the Banking Act.

8 On 14 December 2005 the respondent commenced a proceeding against the appellant seeking orders in the nature of injunctions pursuant to s 65A of the Banking Act.

9 On 15 December 2005 Sundberg J made interim orders. On 10 January 2006 Gray J made a number of interlocutory orders which were designed to stay in place until the disposal of the proceeding. We set out the relevant orders:

1. Until the hearing and determination of this proceeding or further order, the Respondent, whether by himself, his servants or agents or otherwise, be restrained from:

(a) receiving money from members of the public by way of deposit in the Terra Nova Cache or the Principality of Camside;

(b) assuming or using the words “bank”, “banker” or “banking”:, or any words or phrases of like import, in relation to his, their or its business;

(d) selling, transferring, dealing with, disposing of or otherwise encumbering or removing from Australia or causing to be removed from Australia any money (including, but not restricted to, cash), property or other assets he has whether held alone, jointly or in conjunction with others (including any accounts or property held in the name of the Principality of Camside or the Terra Nova Cache);

(e) dealing with, withdrawing or disposing of, or giving any instructions in relation to the disposition or transfer of, all or any part of the moneys standing to the credit of the Respondent and/or his nominee in any account (whether held alone, jointly or in conjunction with any other person, including any accounts or property in the name of the Principality of Camside or the Terra Nova Cache and any account in relation to which the Respondent is a signatory or which the Respondent otherwise has authority to operate, whether or not the Respondent is named as an account holder and any account which may be operated for the benefit of the Respondent, the Principality of Camside or the Terra Nova Cache) in any bank, building society or other financial institution and, without limiting the generality of the foregoing, account number 3162 1027 8861 in the name of the Principality of Camside with the Commonwealth Bank of Australia;

(f) …

SAVE THAT with the consent in writing of the Applicant previously given, the Respondent may do any of the things referred to in (d), (e) or (f) in the manner and for the purpose for which the Applicant has so consented.

10 During the period between the making of the interim orders and the final disposal of this proceeding, the respondent brought three motions for contempt alleging on each occasion that the appellant had been guilty of contempt in breaching the orders made by Sundberg J and Gray J. On 30 March 2006 Merkel J found the appellant guilty of contempt and on 10 April 2006 sentenced him to be imprisoned for a period of four months. The appellant appealed from that order. On 19 July 2006 the Full Court upheld the finding of contempt but discharged the order for imprisonment and, in lieu thereof, made an order that the appellant pay a fine of $50,000 within 60 days of the order. The Full Court made an order that the District Registrar apply to a judge of the Court for directions concerning enforcement if the appellant defaulted in payment.

11 On 18 September 2006, the last day of the time allowed by the Full Court for the payment of the fine, the appellant requested in writing that the District Registrar extend the time within which to pay the fine for a further three months. On the same day the District Registrar extended time for a fortnight to 2 October 2006.

12 On 2 October 2006 the appellant sought a further extension of time within which to pay the fine but that request was not granted.

13 On 3 October 2006, the fine not having been paid, the District Registrar applied for directions concerning enforcement of the orders of the Full Court of 19 July 2006.

14 On 6 October 2006 Tracey J ordered the appellant to produce documents and attend for an oral examination. That order was vacated on 6 November 2006. On 15 December 2006 the District Registrar, at the direction of Tracey J, applied for orders that the appellant be committed to prison or otherwise punished for contempt of court for failing to pay the fine imposed by the Full Court on 19 July 2006 within the time stipulated and extended.

15 On 7 November 2007 Tracey J found the appellant to be guilty of contempt for failing to pay the fine imposed by the Full Court. On 28 November 2007 he ordered that the appellant be committed to prison for a period of four months. The order finding the appellant guilty of contempt was the subject matter of one of the two other appeals heard with this appeal. That appeal was today allowed and the notice of motion of 15 December 2006 dismissed: Siminton v Australian Prudential Regulation Authority [2008] FCAFC 89. The dismissal of that notice of motion does not relieve the appellant of the obligation to pay the fine.

16 On 14 December 2006 the respondent brought a separate contempt proceeding against the appellant alleging that the appellant had been guilty of contempt in breaching the orders made by Gray J between 2 May 2006 and 26 September 2006. That matter was also considered by Tracey J who, on 7 November 2007, found that the appellant had been guilty of a number of contempts and, on 28 November 2007, in relation to those contempts, sentenced the appellant to 12 months imprisonment. Those findings of contempt were the subject matter of the third appeal which was heard with this appeal. Today the Court has given its reasons for dismissing that appeal: Siminton v Australian Prudential Regulation Authority [2008] FCAFC 90.

17 On this appeal the appellant contends that s 65A of the Banking Act is not valid; that the proceeding brought by the respondent was an abuse of process; and that, if s 65A were valid and the proceeding was not an abuse of process, the primary judge erred in finding that the appellant was in the business of banking.

18 The appellant argued that s 65A was invalid for a number of reasons. First, because it was not supported by the banking power. Secondly, because orders of the kind which were made by Gray J on 10 January 2006 constituted an acquisition of property on other than just terms. Thirdly, s 65A permitted a trial without a jury contrary to s 80 of the Constitution. Fourthly, s 65A vests legislative power in the Court contrary to Chapter 3 of the Constitution.

19 In our opinion, none of the grounds upon which invalidity is claimed is made out.

20 Section 65A of the Banking Act provides that the power to grant injunctions may be invoked if the person has engaged, is engaging or proposes to engage in conduct that will constitute a contravention of ss 7 and 66 of the Banking Act.

65A Injunctions

Restraining injunctions

(1) If a person has engaged, is engaging or is proposing to engage, in conduct that constituted, constitutes or would constitute:

(a) a contravention of a provision of section 7, 8, 66, 66A or 67, or a condition imposed under section 64; or

(b) attempting to contravene the provision or condition; or

(d) inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene the provision or condition; or

(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of the provision or condition; or

(f) conspiring with others to contravene the provision or condition;

the Federal Court of Australia may grant an injunction in accordance with subsection (2).

(2) The injunction:

(a) may restrain the person from engaging in the conduct; and

(b) may also require that person to do a particular act or thing, if the Court thinks it desirable to do so.

The Court may grant the injunction on such terms as it thinks appropriate.

(3) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and

(b) whether or not the person has previously engaged in conduct of that kind; and

(c) whether or not there is an imminent danger of substantial damage to any other person if the person engages in conduct of that kind.

Performance injunctions

(4) If a person has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do an act or thing that the person is required:

(a) by a provision of section 7, 8, 66, 66A or 67 to do; or

(b) by a condition on a consent given under subsection 63(1);

the Court may grant an injunction requiring the person to do that act or thing. It may grant the injunction on such terms as the Court thinks appropriate.

(5) The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised:

(a) whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing; and

(b) whether or not the person has previously refused or failed to do that act or thing; and

(c) whether or not there is an imminent danger of substantial damage to any other person if the person refuses or fails to do that act or thing.

Who may apply for an injunction

(6) The Court may only grant an injunction on the application of:

(a) APRA—in all cases; or

(b) the Treasurer—in the case of a contravention of a condition imposed under section 64; or

(c) ASIC or a member of the ADI—in the case of a contravention of a condition imposed under section 64 that has been imposed in relation to a demutualisation of an ADI.

In this subsection, demutualisation has the same meaning as in section 63.

Consent injunctions

(7) If an application for an injunction under subsection (1) or (4) has been made, the Court may, if the Court thinks it appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied that the subsection applies.

Interim injunctions

(8) The Court may grant an interim injunction pending determination of an application under subsection (1).

Variation or discharge of injunctions

(9) The Court may discharge or vary an injunction granted under subsection (1), (4) or (7).

Damages undertakings

(10) APRA, ASIC and the Treasurer cannot be required, as a condition of granting an interim injunction, to give an undertaking as to damages.

Damages orders

(11) If the Court has power under this section to grant an injunction restraining a person from engaging in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of the injunction, order that person to pay damages to any other person.

(12) The powers conferred on the Court by this section are in addition to any other of its powers, and do not derogate from its other powers.

21 Sections 7 and 66 provide:

7 Person other than a body corporate must not carry on banking business

(1) A person is guilty of an offence if:

(a) the person carries on any banking business in Australia; and

(b) the person is not a body corporate; and

Maximum penalty: 200 penalty units.

Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

(2) An offence against subsection (1) is an indictable offence.

(3) If a person carries on banking business in circumstances that give rise to the person committing an offence against subsection (1), the person is guilty of an offence against that subsection in respect of:

(a) the first day on which the offence is committed; and

(b) each subsequent day (if any) on which the circumstances that gave rise to the person committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

66 Restriction on use of certain words and expressions

(1) A person is guilty of an offence if:

(a) the person carries on a financial business, whether or not in Australia; and

(b) the person assumes or uses, in Australia, a restricted word or expression in relation to that financial business; and

(d) APRA did ot consent to that assumption or use of that word or expression; and

(e) there is no determination in force under section 11 that this subsection does not apply to the person.

Maximum penalty: 50 penalty units.

Note 1: For the meanings of restricted word or expression, assume or use and financial business, see subsection (4).

Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 3: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(1AA) If a person assumes or uses a word or expression in circumstances that give rise to the person committing an offence against subsection (1), the person is guilty of an offence against that subsection in respect of:

(a) the first day on which the offence is committed; and

(b) each subsequent day (if any) on which the circumstances that gave rise to the person committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(1AB) It is not an offence against subsection (1) for the Reserve Bank to assume or use the words bank, banker or banking in relation to its financial business.

(1AC) It is not an offence against subsection (1) for an ADI to assume or use the word banking in referring to the fact that it has been granted an authority under this Act.

Note: For example, an ADI may, in its letterhead, refer to itself as being authorised under the Banking Act 1959 to carry on banking business.

(1B) A consent may be expressed to apply to a particular person or to persons included in a class of persons.

(2) APRA may, at any time:

(a) impose conditions, or additional conditions, on a consent; or

(b) vary or revoke conditions imposed on a consent; or

(2A) The form of the granting of a consent, or the taking of action under subsection (2) in relation to a consent, is to be as follows:

(a) if the consent applies to a particular person—notice in writing served on the person;

(b) if the consent applies to a class of persons—notice in writing published in the Gazette.

(2B) If APRA:

(a) grants a consent; or

(b) takes action under subsection (2) in relation to a consent;

APRA must give ASIC notice of the granting of the consent or the taking of the action.

(3) A person is guilty of an offence if:

(a) the person has been given a consent under this section; and

(b) the person contravenes a condition to which the consent is subject; and

Maximum penalty: 50 penalty units.

Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(3A) If a person does or fails to do an Act in circumstances that give rise to the person committing an offence against subsection (3), the person is guilty of an offence against that subsection in respect of:

(a) the first day on which the offence is committed; and

(b) each subsequent day (if any) on which the circumstances that gave rise to the person committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(4) In this section:

(a) a reference to a restricted word or expression is a reference to:

(i) the word bank, banker or banking; or

(ii) the expression building society, credit union or credit society; or

(iii) any other word or expression specified in a determination in force under subsection (5); or

(iv) any other word or expression (whether or not in English) that is of like import to a word or expression covered by any of the previous subparagraphs; and

(b) a reference to a word or expression being assumed or used includes a reference to the word or expression being assumed or used:

(i) as part of another word or expression; or

(ii) in combination with other words, letters or other symbols; and

(i) consists of, or includes, the provision of financial services; or

(ii) relates, in whole or in part, to the provision of financial services.

(5) APRA may, by legislative instrument, determine that a specified word or expression is to be a restricted word or expression for the purposes of this section.

22 The purpose of the Banking Act was considered in Yango Pastoral Company Pty Limited v First Chicago Australia Limited (1978) 139 CLR 410. Gibbs ACJ said at 414:

There is no doubt that Pt II of the Banking Act, in which s. 8 appears, was enacted partly at least for the protection of depositors, or that one object of s. 8 is the protection of the public.

Mason J said at 422:

The provisions of the Act, though indirectly providing some safeguard to depositors, are principally designed to ensure that the Government and its agencies are equipped with accurate and detailed information as to the financial position of the banks as important financial institutions in the community and with supervisory powers and powers to determine matters relevant to financial policy in the interests of regulating the Australian economy. The Act is not a statute whose primary object is to define and regulate the relationship which exists between banker and customer or to regulate the rights and liabilities of banker and customer inter se. The Act in regulating the carrying on of banking business in Australia does so, not only as a means of protecting the customers of, or the depositors with, banks, the provisions of Div. 2 of Pt III having this object in view, but as an element in regulating the Australian economy.

Jacobs J said at 434:

A primary purpose of the Banking Act is to protect against loss depositors of money with a corporation which by accepting that money and safeguarding it and lending it out again thereby carries on the business of banking. That purpose is defeated if the depositors’ money, lent out by the corporation, is thereby irrevocably lost to the corporation and consequently to the depositors. The avoidance of the contract would cause grave injury to depositors, particularly those who had deposited their money without the knowledge that the corporation had no authority to carry on the banking business. Their right to recovery of their money would be of no avail to such depositors if the corporation could not recover the money which it had in turn lent. I find this a sufficient reason of public policy, based as it is on the scope and purpose of s. 8 itself, to decline to apply any rule of public policy that a contract made in association with an illegal purpose cannot be sued on.

23 The power of the Commonwealth to make laws in relation to banking is derived from s 51(xiii) of the Commonwealth Constitution which provides:

(xiii) banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money;

24 Sections 7 and 66 of the Banking Act are a valid exercise of the power derived from s 51(xiii) of the Constitution. Those sections clearly relate to banking. It is a valid exercise of the power to make a law prohibiting a natural person from carrying on banking business (s 7 of the Banking Act), or from using words associated with banking (s 66 of the Banking Act). The appellant did not contend otherwise.

25 Section 65A has been enacted to provide a machinery for the enforcement of the prohibitions contained in ss 7 and 66. That also, in our opinion, is clearly a valid exercise of the power derived from s 51(xiii) and from the incidental power: s 51(xxxix). Similar provisions to s 65A were considered by the High Court in R v Smithers; Ex parte McMillan (1982) 152 CLR 477 in relation to customs legislation. The Court was concerned with s 243B of the Customs Act 1901 (Cth) which empowered the Minister, the Commissioner of Police or the Comptroller of Customs to institute proceedings in the Federal Court of Australia for an order that a person pay a pecuniary penalty to the Commonwealth in respect of a particular prescribed narcotics dealing or prescribed narcotics dealings engaged in by him or her during a particular period. It was contended by the prosecutor in that case that s 243B was not a valid law of the Commonwealth because it was not supported by either the trade or commerce power (s 51(i)), or by the external affairs power (s 51(xxix)). It was contended that whilst the Parliament could prohibit the importation of narcotic goods or make it an offence to have possession of them or deal with them when they have been imported in contravention of the Act making them liable to seizure and forfeiture, the Parliament was not empowered to make laws which would pose a further civil penalty in relation to the importation of those goods. The High Court said at 485:

We do not agree. It would be a legitimate exercise of the power — and this is conceded — to make it an offence to engage in dealing in narcotic goods, being prohibited imports, that have been imported in contravention of the Act and to impose severe penalties in respect of that offence. Similarly it would be a legitimate exercise of the power to make that conduct the occasion for liability to a civil action for penalties of the traditional kind. Section 243B, in providing for the imposition of pecuniary penalties of the class provided for in Div. 3, stands in no different position. It penalizes dealings in narcotic goods that have been imported in contravention of the Act. In so doing it constitutes a deterrent to importation in breach of the statutory provisions and provides a further sanction with a view to ensuring compliance with the statutory provisions governing importation. Its importance in this respect is that it seeks to deprive the dealing in narcotic goods of the considerable financial rewards which are the chief inducement for importing them into Australia and for dealing in them.

26 The purpose of s 65A is plain. Whilst ss 7 and 66 create offences, those sections cannot by themselves do anything to protect members of the public dealing with people who continue to breach those provisions. Whilst a person who commits an offence under those sections is liable for prosecution, the prosecution itself will not necessarily protect those members of the public who might be misled into conducting business with a person offending under those sections. Section 65A is designed to provide a civil procedure to restrain a person from continuing to commit the offences provided for in ss 7 and 66 by putting in place an order preventing the person carrying on the business of banking and advertising that the person is conducting a banking business.

27 Next, it was contended by the appellant that the form of orders made by Gray J offended the constitutional injunction contained in s 51(xxxi) of the Constitution because the orders amounted to an acquisition otherwise than on just terms. Although the appellant contended that the orders of Gray J were not valid, in fact, that is not a complaint that can be made on this appeal because the appellant has not appealed from those orders and, indeed, now could not because those orders have been discharged. The relevant orders are those made by Tracey J on 7 November 2007 and, in particular, paragraph 4 of those orders which continued in force the orders of Gray J, about which complaint is made. In his oral submissions the appellant’s counsel argued that the “proviso” to paragraph 1 of Gray J’s orders amounted to an acquisition of the appellant’s property. The “proviso” is in the following terms:

28 That contention is rejected. First, the orders did not amount to an acquisition of any property of any kind. The orders merely restrained the appellant from dealing with the monies until trial. Secondly, the “proviso” is merely facultative. It allows the parties to come to terms in relation to the assets, the subject of the orders without requiring the parties to approach the Court.

29 Even if there had been an acquisition of property, s 51(xxxi) would have no application. A law which permits a court to impose a restraint on access to property until such time as it is determined whether that property was obtained in contravention of a prohibition is clearly, as we have already said, incidental to the prohibition. If the regulating authority was required to provide just terms for the restraint, it would defeat the purpose of the restraint itself and would be inconsistent or incongruous in a relevant sense: Theophanous v The Commonwealth (2006) 225 CLR 101 at 126 [60], 127 [64]. The contention is also inconsistent with the decision of the High Court in R v Smithers; Ex parte McMillan (1982) 152 CLR 477.

30 Next, the appellant contended that s 65A was invalid because “the appellant has been, in effect, convicted of committing a number of crimes, including committing a contravention of the Banking Act s 7, committing a contravention of the Banking Act s 66 and committing a contravention of the Banking Act s 65 namely proposing to contravene s 7.”

31 Thus, it was contended, by the appellant’s counsel, that the appellant’s conviction has resulted, not from a criminal trial, as required by law for conviction for a crime, but rather, from a civil trial.

32 From those two propositions, neither of which we accept, the appellant contended that s 65A was invalid because it did not require trial by jury: s 80 of the Constitution.

33 We reject both the propositions and the contention. The appellant has not been convicted of any crime. He has been found, relevantly, to have contravened ss 7 and 66, but that does not make him guilty of any offence for which he has been convicted. The procedure in s 65A is clearly a civil procedure designed to provide civil remedies to protect people who might be misled into dealing with a person who has or may commit criminal offences. Section 80 has no application to procedures of the kind provided for in s 65A of the Banking Act.

34 Lastly, it was contended by the appellant that s 65A was invalid because it offended against the separation of powers and, in particular, the separation of judicial power provided for in Chapter 3 of the Constitution.

35 It was contended that the provisions of s 65A(11) gave the Court power to formulate causes of action against a person who the Australian Prudential Regulation Authority claim was contravening ss 7 and 66. The argument was, at least as we understand it, that because s 65A(11) does not indicate who might be entitled to damages or how damages are to be assessed power must have been given to the Court to determine those matters.

36 We reject the argument. The intent of s 65A(11) is to invest the Court with the power to compensate people who might have been misled into investing with or dealing with persons who wrongly hold themselves out to be a bank and purport to conduct a banking business. Section 65A(11) would be engaged if the regulatory authority could identify the person or persons who had dealt with and suffered loss as a result of contraventions of those sections mentioned in s 65A(1).

37 Section 65A, and in particular s 65A(11), do not confer upon the Court any legislative function and, in those circumstances, is not invalid. Section 65A is a similar provision to that found in other Commonwealth statutes such as s 80 of the Trade Practices Act 1974 (Cth) and s 1324 of the Corporations Act 2001 (Cth). Indeed, as the respondent contended, s 65A shares many of the features of s 23 of the Federal Court of Australia Act 1976 (Cth).

38 We reject the appellant’s contentions that s 65A is invalid.

39 Next, the appellant contended that the principal proceedings should have been dismissed as an abuse of process.

40 It is not easy to understand the appellant’s argument in relation to this ground of appeal but we think it to be that principal proceedings are an abuse of process because they have been brought for a collateral purpose being to seek information and evidence to substantiate or justify the allegation of criminal offences. As we understand the argument, the appellant relies on Williams v Spautz (1991) 174 CLR 509 at 526-527.

41 The respondent has in its written submissions carefully identified the circumstances which, from time to time, including in the notice of appeal the appellant has relied upon to justify this claim and we set them out seriatim:

1 APRA did not accept an offer by the Appellant to agree to certain forms of injunction (ground 3.2(a));

2 APRA’s statement of claim did not plead any cause of action for damages (ground 3.2(b));

3 A supposed concession by APRA that it did not have evidence of lending by the Appellant (and thus of the Appellant engaging in “banking”) (ground 3.2(c));

4 No charges have been brought against the Appellant for contraventions of the Banking Act (ground 3.2(d));

5 The alleged paucity of evidence linking Mr Siminton to any breach of s 66 of the Banking Act (ground 3.2(e));

6 APRA applied for ancillary orders before Gray J that his Honour declined to make (cf ground 3.2(f));

7 The commencement of contempt proceedings against the Appellant, which were heard before the trial of the substantive issues before Tracey J (ground 3.2(g) and (j));

8 APRA’s attempt to obtain discovery against the Appellant, its seeking particulars of the Appellant’s defence, and its application to have the Appellant file witness statements before the trial (ground 3.2(h));

9 The fact that order 2 of the orders made by Gray J on 10 January 2006 gave the Appellant liberty to apply on notice in writing to APRA for permission to withdraw monies for the purposes of living and legal expenses (AB 3:1016) (cf ground 3.2(i)); and

10 APRA communicated with the District Registrar of this Court in a related proceeding on the question of whether to extend the time for payment of the Appellant’s fine, without (it is falsely said by the Appellant) informing or involving the Appellant or Tracey J (ground 3.2(j)).

42 The same complaints have been put and rejected on three previous occasions by judges of this Court. Justice Merkel rejected the argument: Australian Prudential Regulation Authority v Siminton (No 2) [2006] FCA 336. Justice Tracey first rejected the argument in Australian Prudential Regulation Authority v Siminton (No 4) [2006] FCA 1339. He rejected the argument for the second time at the trial of this matter.

43 The appellant sought leave to appeal from orders made by Tracey J in Australian Prudential Regulation Authority v Siminton (No 4) [2006] FCA 1339 but leave was refused by Weinberg J: Siminton v Australian Prudential Regulation Authority [2006] FCA 1398.

44 It can be seen, when the particulars of the complaint are articulated, that the complaint is without substance. There is no need to address each of the complaints made because they self-evidently do not support the contention of an abuse of process. We shall, however, deal with the last complaint because we think it should not have been made.

45 On 18 September 2006 when the appellant’s solicitors wrote to the District Registrar seeking an extension of time within which to pay the fine they did not advise the respondent of the application. The District Registrar extended the time for payment until 2 October 2006 without first consulting the respondent. On 21 September 2006 the respondent’s solicitors wrote to the District Registrar advising that it had learned that the time for payment of the fine had been extended until 2 October 2006. In that letter the respondent’s solicitors advised that the respondent had not been notified by the appellant’s solicitors or by the Court as to the making of the application and the respondent was therefore unable to make representations on its hearing. The respondent’s solicitors sought a copy of the material upon which the application was founded and any transcript of the application and the reasons for the decision. A copy of that letter was sent to the appellant’s solicitors.

46 On the same day the respondent’s solicitors spoke to a Deputy Registrar and were advised that no reasons had been given. The respondent’s solicitors were further advised that any further dealing by the Court would be by an application of the District Registrar in accordance with the default mechanism spelt out in the Full Court order. Both the Deputy Registrar and the respondent’s solicitor made a note of the conversation.

47 The appellant’s counsel claimed that it was inappropriate for the Deputy Registrar to speak to the appellant’s solicitor and that a disinterested bystander might think there has been an abuse of process. We think the argument confuses the test for apprehended bias with a claim of an abuse of process. In any event, it was not inappropriate for the Deputy Registrar to speak to the appellant’s solicitor and advise that no reasons had been given and that the Registrar would act in accordance with the Full Court order. It is to be noted that it was not the District Registrar who had the conversation with the respondent’s solicitor and it was the District Registrar who was charged with the responsibility of the default mechanism in the Full Court order. We think there is nothing in this complaint at all and it would have been better if it had not been made. We should say, for completeness, that the appellant sought to tender the file notes at the hearing for penalty for contempt but Tracey J rejected the tender. He did not err in doing so. The notes were simply not relevant to any issue then before him.

48 At the hearing of the appeal further complaints were made to justify the claim of abuse of process. The appellant’s counsel contended that the respondent had been one day late in the filing of the statement of claim. He said that the respondent had brought its first charge of contempt one day early. He said that the plea in paragraph 4 of the statement of claim that Mr Vella and Mr Provan were members of the public was false. He said there were no particulars of the damages claimed in paragraph 17. He said those further matters were further evidence of the respondent using the principal proceedings as an abuse of process. The procedural complaints do not advance the argument. The reference in the statement of claim to Messrs Vella and Provan is in fact correct. Messrs Vella and Provan were members of the public notwithstanding it was claimed they were also involved in commodity trading with the respondent. The absence of particulars in paragraph 17 of the statement of claim is not evidence of an abuse of process.

49 The appellant relied upon a decision of the High Court in Australian Independent Distributors v Winter (1964) 112 CLR 443 (Winter) for the proposition that the appellant was not conducting a banking business.

50 “[B]anking business” is defined in s 5 of the Banking Act to mean:

(a) a business that consists of banking within the meaning of paragraph 51(xiii) of the Constitution; or

(b) a business that is carried on by a corporation to which paragraph 51(xx) of the Constitution applies and that consists, to any extent, of:

(i) both taking money on deposit (otherwise than as part-payment for identified goods or services) and making advances of money; or

(ii) other financial activities prescribed by the regulations for the purposes of this definition.

51 Section 51(xiii) has been set out above: [23].

52 Although the Constitution speaks only of banking, not the business of banking, the High Court held in Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 that banking relates to the business of banking and covers all the functions which a banker undertakes.

53 In Melbourne Corporation,Rich J said (at 64-65):

While the word “banking” is sometimes used in a colloquial and crude sense to mean the payment of money to the credit of a customer’s account at a bank, the word in its normal and ordinary signification denotes the business of banking. Some assistance in defining “banking” can be obtained from the Bills of Exchange Act 1909-1936. In this Act the word “‘banker’ includes a body of persons, whether incorporated or not, who carry on the business of banking,” and though banking is not defined in this Act it seems reasonable to believe that one legislative interpretation of the word would be the business carried on by a banker. In the case of Commissioners of State Savings Bank of Victoria v Permewan, Wright & Company Limited Isaacs J … said: “the fundamental meaning of the term” (banking) “is not, and never has been, different in Australia from that obtaining in England. Various writers attempt various definitions, more or less discordant, and many of them referring to functions that are now very common and convenient, and even prominent, as if they were indispensable attributes. The essential characteristics of the business of banking are, however, all that are necessary to bring the appellants within the scope of the enactments” (s 83 of the Victorian Instruments Act 1890 and s 88 of the Bills of Exchange Act 1909) “and these may be described as the collection of money by receiving deposits upon loan, repayable when and as expressly or impliedly agreed upon, and the utilization of the money so collected by lending it again in such sums as are required. These are the essential functions of a banker as an instrument of society.”

See also Starke J at 69, and Williams J at 97.

54 In Winter, the question for consideration was whether a friendly society was carrying on the business of banking. The Court approved the dicta of Isaacs J referred to by Rich J in his reasons in Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 quoted above.

55 At 455, the Court treated what Isaacs J had said as constituting a definition of the business of banking. The Court said:

If that definition is applied to the present case, as we think it should be, it is apparent that the second of these essential characteristics is absent. The power to lend money conferred on the Society by Rule 7 was limited to the making of loans to its members to enable them to acquire land or buildings to be used for residential or business and residential purposes and in fact none of the Society’s moneys was used for the making of loans for that or any other purpose.

56 The appellant contended that the second characteristic that was identified in Winter and found to be lacking in that case was also lacking in this case.

57 However, contrary to that submission, the respondent did establish that a loan of $100,000 had been made to Technocash Pty Ltd (Technocash) on 18 November 2005. The loan was made three days after the appellant had by email offered a short term loan of that amount to Technocash.

58 Justice Tracey found that that loan was sufficient to satisfy the second characteristic identified in Winter.

59 There was evidence which supported the finding made by Tracey J. We agree that the loan which was made by the appellant was enough to establish that the respondent had engaged in the business of banking and thereby contravened s 7 of the Banking Act.

60 It was contended by the respondent on the appeal that the decision of Winter should be confined to its facts and it was not necessary to establish that a person had engaged in making loans for it to be found that that person was carrying on the business of banking. It was contended that the definition in the Banking Act did not require that banking services be offered to the public.

61 We do not need to decide that issue because the uncontradicted evidence was that a loan had been made by the respondent on 18 November 2005.

62 Whilst the respondent did establish that the appellant had received investments and had made a loan which was enough to establish that the appellant was conducting a banking business, the respondent did not need to go so far.

63 Section 65A is engaged not only when a person has engaged or is engaged in a contravention of the sections in s 65A(1), but also when it is established that a person is proposing to engage in conduct of that kind.

64 In those circumstances, the respondent needed only to establish that the appellant proposed to engage in the carrying on of banking business in Australia or that the appellant carries on a financial business and had used a restricted word, being “bank” or “banking”.

65 The respondent established that the appellant had used the word “bank” or “banking” and therefore was entitled to the relief in s 65A. The respondent also established that the appellant had held himself out through the business name, Principality of Camside as a person who proposed to engage in the banking business.

66 The appellant’s counsel boldly contended that it had not been established that the appellant proposed to engage to carry on the business of banking. The submission is contrary to the evidence which was contained in documents published by the appellant on the Principality of Camside’s website and in documents given to investors. It is also contrary to the uncontradicted evidence of a number of investors who deposed that Mr Siminton said at various public meetings that Terra Nova Cache was a bank.

67 The appellant announced on the website and in its documents that “On 1 December 2003 HM Government of Camside opened stage 1 of its new banking facilities”. It said that the bank would be known by the name Terra Nova Cache. It continued:

We often found ourselves having to remind ourselves, that the planning of our new bank’s future operations, should not be based upon unconstitutional and illegal banking law standards, illegally established by existing world banks. Otherwise, this would have caused us to duplicate the current world banking behavioural rules accepted by most as the norm, rather than offering our citizens a new and legal banking alternative.

Terra Nova Cache will rapidly become known world wide as it sets the precedent of a bank of its type in the history of our planet.

68 It continues:

Benefits of Banking with Terra Nova Cache

01. Depositors automatically become owners of the bank.

02. Depositors funds are guaranteed repayable to them, at any time they call upon them, regardless of any “financial crash” that may be in progress.

03. Depositors funds will be backed by 100% equivalent values of precious metals.

04. Terra Nova Cache will not engage in fractionalized banking practices.

05. Terra Nova Cache will not engage in lending funds in excess of its legitimate deposit asset holdings.

06. Terra Nova Cache will not charge interest, account or transaction fees.

07. As depositor’s funds are cleared into Terra Nova Cache, these funds or precious metal equivalents will be stored outside any existing world bank or financial institution facilities.

08. Owner/Depositors will receive pro-rata profit share on the distributable profit earnings of Terra Nova Cache.

09. Terra Nova Cache will not affiliate with any other banks or financial institutions, and will report it’s trading activities to only H.M. Government of Camside.

10. All accounts held with Terra Nova Cache wil be numbered accounts, which will not carry any account name details.

11. Soon Terra Nova Cache will be offering an opportunity to be trained and employed as Bank Treasury Traders. This business opportunity will offer Citizens, financial freedom, and a tax free home income earning business employment opportunity with the bank.

12. It is envisaged that the next stage of Terra Nova Cache’s development, once deposits are established, profitably traded and fully precious metal backed, that the bank will be offering interest free loans to its depositor/owners.

69 The rest of the document is replete with references to Terra Nova Cache being a bank.

70 In those circumstances, the appellant’s contention that the respondent did not make out a breach of s 66 flies in the face of the evidence which was not contradicted at the trial. The respondent established that the appellant carried on a financial business and it used in Australia restricted words, “bank” or “banking”. In those circumstances, the respondent made out the contravention of s 66(1) because the appellant made numerous references to “bank” and “banking” which are the restricted words in s 66(4)(a)(i).

71 The respondent also made out by the tender of the document to which we have referred and the other evidence of statements made by the respondent that even if the respondent had not commenced a banking business because no monies had been lent, the appellant proposed to do so. In those circumstances, s 65A was engaged in relation to s 7 of the Banking Act.

72 The appellant sought to avoid the consequences of this result by contending that if s 65A was engaged in circumstances where the appellant proposed to conduct a banking business, the orders made by the primary judge were inappropriate. He argued that orders of the kind made by the primary judge should not be made restraining the appellant from the use of the investments before the party actually engaged in the banking business. That contention is rejected. If the appellant has, as has been established, received investments which he proposes to use in a banking business, then s 65A is engaged and the use of those investments should be restrained prior to the commission of the offence under s 7 of the Banking Act. The orders are consistent with the purpose of the Banking Act and the decision of the High Court in Yango Pastoral Company Pty Limited v First Chicago Australia Ltd (1978) 139 CLR 410.

73 For those reasons, all of the grounds of appeal fail. The appeal will be dismissed with costs.

I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of this Honourable Court.

Associate:

Dated: 30 May 2008

Counsel for the Appellant:	Mr D Sharp

Solicitor for the Appellant:	Erhardt & Associates

Counsel for the Respondent:	Ms D Mortimer SC with Mr S Hibble & Mr G Hill

Solicitor for the Respondent:	Australian Prudential Regulation Authority

Date of Hearing:	26, 27 May 2008

Date of Judgment:	30 May 2008

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