FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission, in the matter of Richstar Enterprises Pty Ltd (ACN 099 071 968) v Carey (No 2) [2006] FCA 407

PRACTICE AND PROCEDURE  - media access to affidavits in evidence – affidavits filed in ex parte proceedings for interim preservation orders – exhibiting transcripts of examinations under s 19 of the ASIC Act – principle of open justice – objections based on speculative risks – access permitted

Corporations Act 2001 (Cth) s 1323(3)

Federal Court of Australia Act 1976 (Cth) s 50

Australian Securities and Investments Commission Act (Cth) ss 19, 68

Australian Securities and Investments Commission v Rich [2001] NSWSC 496  cited

Seven Network Ltd v News Limited (No 9) [2005] FCA 1394 cited

R v Davis (1995) 57 FCR 412 cited

John Fairfax Publications Pty Ltd v Ryde Local Court [2005] NSWCA 101 cited

Gangemi v Australian Securities and Investments Commission (2003) 129 FCR 284 cited

Federal Court Rules O 46 r 6

IN THE MATTER OF RICHSTAR ENTERPRISES PTY LTD (ACN 099 071 968); WESTPOINT REALTY PTY LTD (ACN 050 218 954); BOWESCO PTY LTD (ACN 008 915 357); REDCHIME PTY LTD (ACN 117 947 805)

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v NORMAN PHILLIP CAREY, GRAEME JOHN RUNDLE, CEDRIC RICHARD PALMER BECK, JOHN NORMAN DIXON, RICHSTAR  ENTERPRISES PYT LTD

(ACN 099  071 968), WESTPOINT REALTY PTY LTD (ACN 050 218 954) and BOWESCO PTY LTD (ACN 008 915 357) and REDCHIME PTY LTD

(ACN 117 947 805)

WAD 83 OF 2006

FRENCH J

11 APRIL 2006

PERTH

IN THE MATTER OF RICHSTAR ENTERPRISES PTY LTD (ACN 099 071 968)

WESTPOINT REALTY PTY LTD (ACN 050 218 954)

BOWESCO PTY LTD (ACN 008 915 357)

REDCHIME PTY LTD (ACN 117 947 805)

THE COURT ORDERS THAT:

1.         John Fairfax Holdings Limited, Nationwide News Ltd and West Australian Newspapers Ltd have leave to inspect the following documents filed in these proceedings:

            (i)         The affidavits of Richard Warren Gomm sworn on 29 March 2006.

            (ii)        The affidavit of Oran Zohar sworn on 29 March 2006.

            (iii)       The affidavit of Kevin Chin sworn on 30 March 2006.

            (iv)       The affidavit of Marcus Essex Claridge sworn on 30 March 2006.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF RICHSTAR ENTERPRISES PTY LTD (ACN 099 071 968)

WESTPOINT REALTY PTY LTD (ACN 050 218 954)

BOWESCO PTY LTD (ACN 008 915 357)

REDCHIME PTY LTD (ACN 117 947 805)

RULING ON APPLICATION BY NON-PARTIES

FOR ACCESS TO AFFIDAVITS

Introduction

1                     The Australian Securities and Investments Commission (ASIC) has commenced proceedings in this Court for the appointment of receivers to the property of various persons and companies associated with the Westpoint Property and Finance Group of Companies.  On 30 March 2006, Siopis J made orders, on an ex parte application, for the interim preservation of the defendants’ assets and other incidental orders.  The substantive application for the appointment of receivers is to be heard tomorrow.  Certain media organisations have requested leave to inspect the affidavits filed to date including those relied upon in the ex parte proceedings.  That access is opposed by the defendants.  For the reasons now published I will allow the media organisations to inspect the affidavits in evidence in the ex parte proceedings. 

Background

2                     On 30 March 2006 Siopis J heard an ex parte application by the Australian Securities and Investments Commission (ASIC), brought under s 1323(3) of the Corporations Act 2001 (Cth), for the appointment, on an interim basis, of receivers to the property of the defendants.  In the alternative, ASIC sought interim asset preservation orders against each of the defendants and orders prohibiting the first to fourth defendants from leaving Australia. 

3                     In the proceedings before his Honour on 30 March 2006 ASIC relied upon the following affidavit evidence:

1.         Two affidavits sworn on 29 March 2006 by Richard Warren Gomm an officer of ASIC.

2.         An affidavit sworn on 29 March 2006 by Oran Zohar, one of the two joint and several receivers and managers of Westpoint Corporation Pty Ltd (Westpoint).

3.         An affidavit sworn on 30 March 2006 by Kevin Chin, an officer of ASIC.

4.         An affidavit sworn on 30 March 2006 by Marcus Essex Claridge, also an officer of ASIC.

The application before Siopis J was brought urgently as ASIC had been informed that the fifth defendant had entered into a contract for the sale of property in New South Wales which was due to settle on 31 March 2006.  ASIC was concerned that unless orders were made the monies paid on the settlement of the contract would be dissipated.  Siopis J made interim asset preservation orders and incidental orders affecting the ability of the defendants to leave Australia at the conclusion of the hearing on 30 March 2006 and published his reasons for those orders on 5 April 2006.

4                     In publishing the reasons his Honour referred to the affidavit material before him and referred specifically to evidence in the affidavits of Messrs Zohar, Gomm and Chin.  I infer that his Honour relied upon all of the affidavit evidence placed before him.

5                     The orders made by his Honour having been made ex parte and on an interim basis, the matter came back for consideration on 7 April 2006 at which time the various defendants were represented.  The interim orders were extended until the substantive hearing of the application for the appointment of receivers on Wednesday 12 April 2006.  On 10 April 2006 a formal written request for Access to Documents was lodged in the Court on behalf of John Fairfax Holdings Limited, Nationwide News Ltd and West Australian Newspaper Ltd.   The description of the documents requested was thus:

‘All affidavits filed in the above proceedings, including the affidavits of:

1.         Mr Oran Zohar

2.         Mr Gomm

3.         Mr Chin

4.         Mr Claridge

Counsel for the second to eighth defendants have filed written submissions opposing media access to the affidavit material.  It is necessary now to rule upon the question whether that material may be inspected by the media.

Statutory framework

6                     In relation to affidavit material which is evidence in proceedings before the Court the position is governed by O 46 r 6 of the Federal Court Rules.  I note in passing that no order restricting publication has been made under s 50 of the Federal Court of Australia Act 1976 (Cth) and none has been sought. 

7                     Order 46 r 6 provides, inter alia:

‘6(1)    A person may search in the Registry for, and inspect, a document in a proceeding that is specified in subrule (2) unless the Court, or a Judge, has ordered that the document is confidential.

6(2)     For the purposes of subrule (1), the documents are:

            (a)        an application or other originating process;

            (b)        a notice of appearance;

            (c)        a pleading or particulars of a pleading;

            (d)        a notice of motion or other application;

            (e)        a judgment;

            (f)        an order;

            (g)        a written submission;

            (h)        a notice of appeal;

            (i)         a notice of discontinuance;

            (j)        a notice of change of solicitors;

            (k)        a notice of ceasing to act;

            (l)         in a proceeding to which Order 78 applies:

                       (i)         an affidavit accompanying an application, or an amended application, under section 61 of the Native Title Act 1993;

                       (ii)        an extract from the Register of Native Title Claims received by the Court from the Native Title Registrar;

            (m)      reasons for judgment.

6(3)     Except with the leave of the Court or a Judge, a person who is not a party to a proceeding must not inspect any of the following documents in the proceeding:

            (a)       an affidavit (other than an affidavit mentioned in subparagraph (2)(l)(i));

            (b)       an unsworn statement of evidence filed in accordance with a direction given by the Court or a Judge;

            (c)        interrogatories or answers to interrogatories;

            (d)       a list of documents given on discovery;

            (e)        an admission;

            (f)        evidence taken on deposition;

            (g)       deleted

            (h)       a subpoena or document lodged with the Registrar in answer to a subpoena for production of a document;

            (i)        a judgment, order, or other document that the Court has ordered is confidential.

6(4)     Except with the leave of the Court or a Judge, or with the permission of the Registrar, a person who is not a party to a proceeding must not inspect any document in the proceeding that is not referred to in subrule (2) and (3).

6(5)     Except with the leave of the Court or a Judge, a party to a proceeding or other person must not search in the Registry for, or inspect:

            (a)       a transcript of the proceeding; or

            (b)       a document filed in the proceedings to support an application for an order that a document, evidence or thing be privileged from production.

6(6)     A party to a proceeding or other person may copy a document in the proceeding if:

            (a)       the document is produced by the Court, a Judge or the Registrar for inspection by the party or other person; and

            (b)       the Registrar gives the party or other person permission to copy the document; and

            (c)        the party or other person has paid the prescribed fee.’

The submissions of the parties

8                     The defendants variously submit against access by the media to the affidavits on the following bases:

1.         Future criminal and/or civil claims that may arise out of or incidentally to any matters dealt with in the affidavits may be prejudiced by media coverage of the contents of any affidavit filed in the matter. 

2.         A large part of the evidence exhibited to the affidavits consists of transcripts of compulsory examinations under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth)(ASIC Act).  These are subject to directions that the examinees not reveal any part of their evidence or the documents put to them at the examinations.  These directions have not been varied by ASIC in any way.

3.         In the event that the present proceedings are properly characterised as interlocutory in nature, they will inevitably lead to proceedings for imposition of penalties which would have the effect, pursuant to s 68(3)(b) of the ASIC Act that the transcripts of the s 19 examinations would not be admissible in evidence.  It is therefore at least arguable that Mr Chin’s affidavit in so far as it annexes transcripts of examinations and deals with matters by reference to those transcripts, is inadmissible. 

9                     It is further submitted on behalf of the third and fourth defendants that they are not now in a position to make detailed submissions regarding all affidavits in the proceedings and that any determination of the question of access by the media to the affidavits should await the hearing listed for Wednesday 12 April 2006.

10                  On behalf of the media organisations requesting access it was submitted that the principle of the open administration of justice requires that the proceedings be conducted in public which in turn enables fair and accurate reports of the proceedings to be published.  The risk of dissipation of assets is a fundamental consideration when an application is made under s 1323 of the ASIC Act.  The principle of open justice, it was said, requires the evidence for the cause of the apprehension to be made available unless there are specific and compelling reasons for suppressing it.  In this respect reliance was placed upon Australian Securities and Investments Commission v Rich [2001] NSWSC 496 per Austin J at [36]. 

11                  In answer to the defendants’ arguments about the admissibility of the s 19 transcripts, the media organisations contended that the issue of admissibility was not relevant to the question of access. It was submitted that s 68(3) of the ASIC Act would apply in circumstances where before the making of the statement or signing of a record the person claims the statement or signing of the record may tend to incriminate that person.  Reliance was placed upon s 68(2) of the ASIC Act in that respect. 

12                  In answer to the contention that the transcripts should not be available for inspection because ss 22 and 25 of the ASIC Act had indicated a legislative intention to protect the secrecy of the examination, it was submitted that the fact a process conducted under statute prescribes privacy does not mean that privacy prevails when the matter becomes subject to the jurisdiction of the Court. 

13                  Suggestions that the release of the affidavit material would prejudice future criminal or civil proceedings were said to be merely speculative and irrelevant to the determination of access.  The issue of any prejudice would only arise if criminal proceedings were pending. 

14                  The media organisations submitted that the affidavits the subject of the request were referred to extensively in the judgment of Siopis J who also referred to the s 19 examinations.  The Court had therefore accepted the affidavits into evidence.  The fact that they were relied upon by the plaintiff in seeking ex parte orders and that the defendants had not had an opportunity to respond was not a relevant consideration in determining the issue of access for reporting purposes.

15                    It was submitted that access to the affidavits will ensure a complete report of the proceedings will be made.  As proceedings are ongoing and will continue to attract significant public scrutiny access to the affidavit material will continue to ensure that an accurate report of the proceedings is made.

The governing principles

16                  The principles governing access to affidavits which have been received into evidence were discussed recently by Sackville J in Seven Network Ltd v News Limited (No 9) [2005] FCA 1394, a judgment which was delivered on 5 October 2005.  The point of departure adopted by his Honour was the proposition stated by the Full Court in R v Davis (1995) 57 FCR 412 at 514:

‘Whatever [the media’s] motives in reporting, their opportunity to do so arises out of a principle that is fundamental to our society and method of government: except in extraordinary circumstances, the courts of the land are open to the public.  This principle arises out of the belief that exposure to public scrutiny is the surest safeguard against any risk of the courts abusing their considerable powers.  As few members of the public have the time, or even the inclination, to attend courts in person, in a practical sense this principle demands that the media be free to report what goes on in them.’

His Honour referred to other authorities to like effect. 

17                  Open justice was described in John Fairfax Publications Pty Ltd v Ryde Local Court [2005] NSWCA 101 by Spigelman CJ as a principle and not ‘a free-standing right’.  Access by non-parties to documents filed in proceedings in the Court is governed by the provisions of O 46 r 6.  There is a general right to search and inspect documents in the class set out in O 46 r 6(2) unless the Court or a judge has ordered that the document is confidential.  The list of documents specified in subrule 6(2) does not extend to affidavits filed in the proceeding.  Subrule 6(3) requires that the leave of the court or a judge be given before a non-party can inspect such documents.  No distinction is made in that respect between affidavits which have been filed and not read in evidence and affidavits which have been read in evidence.  Nevertheless, it is clear that there will be a far stronger case for access by the public to affidavits which form part of the evidence before the Court than there will be to affidavits which are not in evidence. 

18                  I agree, with respect, with the following observation by Sackville J at [27]:

‘…unless the interests of justice require otherwise, this Court would ordinarily take the view that a non-party should have access to all non-confidential documents and other material admitted into evidence. I say ‘ordinarily’ because the circumstances of each case will vary and the exercise of the discretion under FCR O 46 r 6 will have to take into account the particular circumstances of the case.  I agree … that a convenient touchstone for determining the question of access by non-parties is whether the documents or other material have been admitted into evidence.  In general, the application of this principle will serve the interests of open justice.  In particular, access to the documentary evidence can be expected to be helpful to a person seeking to understand or explain the proceedings, or to evaluate the court’s determination of the issues arising the proceedings (cf Evidence Act 1995 (Cth), ss 55, 56 (stating the test of relevance)).’

His Honour went on to say that in exercising the discretion conferred by O 46 r 6(iv) he considered that considerable weight should be given to the principle of open justice.

19                  In that case however, his Honour recognised that there was a significant risk that if non-confidential exhibits were released to the media as soon as they were admitted into evidence some parties might be subjected to a forensic disadvantage.  Thus the publication in the media of the substance of some exhibits might deprive a party of a legitimate forensic advantage when it came to cross-examination of particular witnesses.

20                  In connection with ex parte proceedings I refer also to the observation by Austin J in Rich at [26] that:

 ‘The principle of open justice entails, in my view, that when the Court makes quite significant orders on an ex parte application, the basis for the making of those orders must be available so that the court is accountable for what it has done after it has considered the information provided to it.  In my view, that is so important a consideration that, unless there is some specific or obvious prejudice of another kind, the mere consideration of prematurity, in the sense that the plaintiff’s evidence has not been tested or answered, is insufficient to prevent the Court from making available to outsiders, including in particular the media, the affidavits relied upon in ex parte circumstances leading to significant relief.’

Whether access should be given

21                  The question whether affidavit evidence relied upon in ex parte proceedings may or may not be admissible in later proceedings or in criminal or penalty proceedings has little bearing, of itself, on the question of access.  There may be issues of unfair prejudice that might be advanced but there is nothing specific upon which to base any such apprehension in this case.  There are no criminal proceedings, nor any penalty proceedings pending.  It is a speculative exercise to weigh the possibility of prejudice by reference to the possibility of such proceedings in the future. 

22                  It is not unusual that criminal proceedings, in matters of great public interest, are preceded by publicity about the events that led to their institution.  To the extent that such proceedings are conducted before a jury, appropriate directions can be given by the judge.  If the publicity is of such proximity in time and of such a character that the prejudice cannot be overcome by judicial direction and that a fair trial is not possible, then a stay can be sought.  It is, however, not a matter for the Court to anticipate, on entirely speculative grounds, that this is an element of a generalised risk which will operate as an effective bar to the application of the principle of open justice in this case.

23                  The privacy of examinations under s 19 of the ASIC Act is principally designed to protect the integrity of the investigative process – Gangemi v Australian Securities and Investments Commission (2003) 129 FCR 284 at [33] and [37].  There was no objection taken by ASIC to the access requested when the matter was raised in Court on 7 April.  And as the transcripts are in evidence, if only for the purpose of the ex parte application, all parties to the proceedings have the right to see them and to discuss them in an unfettered way with their advisors. 

24                  In my opinion the objections taken by the defendants to the inspection of the affidavits relied upon in these proceedings thus far are generic in character and do not identify any particular basis upon which I should refuse access to them. 

25                  As to affidavits subsequently filed and not yet in evidence, I will not allow access until after the hearing tomorrow when their status as evidence or otherwise is clarified. 

Associate:

Dated:              11 April 2006