Federal Court of Australia

Australian Securities and Investments Commission v Maxi EFX Global AU Pty Ltd [2020] FCA 1263

ORDERS

THE COURT ORDERS THAT:

1.    On or before 1 October 2020, the defendant comply with the notice dated 20 December 2019 issued by the plaintiff pursuant to s 33(1) of the Australian Securities and Investments Commission Act 2001 (Cth) by producing to the plaintiff all documents in its possession which fall within the descriptions in paragraphs 4, 5, 6, 8, 12 and 19 of the Schedule to that notice.

2.    The defendant pay the plaintiff’s costs.

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

REASONS FOR JUDGMENT

WIGNEY J:

1    The Australian Securities and Investments Commission (ASIC) is conducting an investigation into the affairs and conduct of a financial services licensee, Union Standard International Group Pty Ltd (USG), two of its corporate authorised representatives, Maxi EFX Global AU Pty Ltd trading as EuropeFX and BrightAU Capital Pty Ltd trading as TradeFred, and the directors, officers, employees and agents of each of those corporations. On 20 December 2019, ASIC issued a notice to EuropeFX pursuant to s 33 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) which required EuropeFX to produce specified “books” to a named ASIC officer on 17 January 2020 (the Notice). EuropeFX produced some books to ASIC in compliance with the Notice. Four months later, however, following extensive, and at times vituperative, correspondence between EuropeFX’s solicitors and ASIC concerning the scope and extent of EuropeFX’s production pursuant to the Notice, ASIC certified to the Court, pursuant to s 70 of the ASIC Act, that EuropeFX had failed to comply fully with the Notice. By originating process filed in this Court on 22 April 2020, ASIC sought an order which, in effect, required EuropeFX to comply with the Notice.

2    EuropeFX opposed the order sought by ASIC. It contended that the Notice was invalid and that, even if the Notice was valid, it in any event did not have “possession”, within the meaning of that expression as used in s 33 of the ASIC Act, of many of the books that ASIC claimed that had not been produced in answer to the Notice. Those books were said to be in the physical possession of various third party service providers who were domiciled in various exotic locations overseas. EuropeFX also suggested that some of those service providers had failed or refused to provide or return the documents to it, which gave it a reasonable excuse for not producing those books. EuropeFX also submitted that the Court should in any event decline to exercise to order that it comply with the Notice because such an order would, in the circumstances, be “meaningless and sterile”.

3    The controversy between ASIC and EuropeFX concerning compliance with the Notice ultimately raised five main issues for resolution: first, whether the Notice was invalid because it lacked sufficient clarity or was unreasonably broad; second, whether the word “possession”, in the context of s 33(1) of the ASIC Act, is limited to physical possession, or whether, by reason of the combined operation of ss 5(2) and (3) of the ASIC Act and ss 9 and 86 of the Corporations Act 2001 (Cth), a thing could be said to be in a person’s possession if it was in the person’s custody or control; third, if “possession”, for the purposes of s 33 of the ASIC Act, included custody or control, whether EuropeFX had possession, custody or control of books which were said to be in the physical possession of the third party service providers overseas; fourth, whether EuropeFX nevertheless had a reasonable excuse for not producing some or all of the books that it was required to produce, but had not produced, in answer to the notice; and fifth, whether the Court should decline to exercise its discretion to order EuropeFX to comply with the Notice even if all of the other questions were answered adversely to it.

4    Before addressing each of those issues, it is necessary to briefly consider the background facts and the evidence insofar as compliance with the Notice was concerned.

FACTS AND EVIDENCE

5    Section 13 of the ASIC Act provides that ASIC may “make such investigation as it thinks expedient for the due administration of the corporations legislation … where it has reason to suspect that there may have been committed”, amongst other things, “a contravention of the corporations legislation”. On 30 July 2019, ASIC commenced such an investigation into the affairs and conduct of USG, EuropeFX and BrightAU. On 9 December 2019, the investigation was expanded to include the conduct of the directors, officers, employees and agents of those corporations. The essential basis of the investigation was said to be that ASIC had reason to suspect that contraventions of various provisions of the Corporations Act had been committed in the conduct of the financial services business carried on by USG, EuropeFX and BrightAU in the period commencing in or around January 2017.

6    The provisions of the Corporations Act that ASIC suspected may have been contravened by some or all of USG, EuropeFX, BrightAU and their directors, officers, employees or agents included: s 180, which provides that a director or other officer of a corporation must exercise their powers and discharge their duties with care and diligence; s 911A, which provides that a person who carries on a financial services business in this jurisdiction must hold an Australian financial services licence covering the provision of the financial services; s 912A, which provides, amongst other things, that a financial services licensee must do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; s 991A, which provides that a financial services licensee must not, in or in relation to the provision of a financial service, engage in conduct that is, in all the circumstances, unconscionable; s 1041E, which provides, in summary, that a person must not make a statement, or disseminate information, that is knowingly or recklessly false in a material particular or is materially misleading in circumstances where the statement or information is likely to induce persons to apply for financial products; s 1041F, which provides, in summary, that a person must not induce another person to deal in financial products by, amongst other things, knowingly or recklessly making a false, deceptive or misleading statement, or dishonestly concealing material facts; s 1041G, which provides that a person must not, in the course of carrying on a financial services business, engage in dishonest conduct in relation to a financial product or financial service; and s 1041H, which provides that a person must not engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive, or is likely to mislead or deceive.

7    The provisions of the ASIC Act that ASIC suspected may have been contravened included: s 12CB, which provides, in summary, that a person must not, in trade or commerce, in connection with the supply of financial services, engage in conduct that is, in all the circumstances, unconscionable; s 12DA, which provides that a person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive, or is likely to mislead or deceive; and s 12DB, which in summary provides that a person must not, amongst other things, make false or misleading representations in connection with the supply or possible supply of financial services.

8    It can readily be seen that the scope of ASIC’s investigation is extremely broad and wide-ranging and that the suspected contraventions are extremely serious.

9    On 12 December 2019, the Court, on ASIC’s application, made various orders pursuant to s 1323 of the Corporations Act against, amongst others, EuropeFX and its director, Mr Pedro Sasso. Those orders included asset preservation orders the effect of which was, relevantly, to prevent EuropeFX and Mr Sasso from dissipating their assets. EuropeFX was also required, in that context, to file an affidavit which, in summary, disclosed its financial position and certain information concerning its financial services business. The asset preservation orders have been varied on a number of occasions.

Issue of the Notice

10    Subsection 33(1) of the ASIC Act provides as follows:

ASIC may give to a person a written notice requiring the production to a specified member or staff member, at a specified place and time, of specified books that are in the first-mentioned person’s possession and relate to:

(a)    affairs of a body corporate; or

(ab)    affairs of a registered scheme; or

(b)    a matter referred to in any of paragraphs 31(1)(g) to (m), inclusive; or

(c)    a matter referred to in paragraph 32A(c) or (d).

Note:    Failure to comply with a requirement made under this section is an offence (see section 63).

11    The matters referred to in s 31(1)(g) to (m) include, relevantly and in summary, dealing in financial products, advice given about financial products and the character or financial position of a business carried on by a financial services business.

12    On 20 December 2019, Mr Mathew Lamble, who was a delegate of ASIC, issued the Notice pursuant to s 33(1) of the ASIC Act. The Notice was addressed to EuropeFX and provided as follows:

In relation to an investigation into suspected contraventions of sections 180, 911A, 912A, 991A, 1041E, 1041F, 1041G and 1041H of the Corporations Act 2001 (Cth), and sections 12CB, 12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (ASIC Act), in relation to the conduct of Union Standard International Group Pty Ltd ACN 117 658 349 and its corporate authorised representatives, Maxi EFX Global Au Pty Ltd trading as Europe FX and BrightAU Capital Pty Ltd trading as TradeFed [sic], their directors, officers, employees and / or agents during the period January 2017 to current, you are notified that, under s33 of the ASIC Act, you are required to produce

to:    Mathew Lamble

at:    5:00 pm

on:    17 January 2020

at:    Level 5, 100 Market Street, Sydney NSW 2000

the following books:

All books described in the Schedule attached to this Notice.

13    Given the nature of the arguments advanced by EuropeFX about the validity of the Notice, it is necessary to set out the terms of the Schedule in full:

Definitions

“BrightAU” means BrightAU Capital Pty Ltd trading as TradeFred ACN 619 685 120.

“Client” means any person or entity from whom payment for services were received by the Company or any Representative of the Company.

“Client Account” means an account held by a Client with the Company or any Representative of the Company.

“Client Agreement” means any written agreement, contract or deed between the Company or any Representative of the Company and one or more of the Clients under which the Company or any Representative of the Company provided Financial Services during the Relevant Period.

“Company” means Maxi EFX Global AU Pty Ltd trading as EuropeFX ACN 625 283 785.

“Communications” means:

(i)    any written communications, including but not limited to file notes, memoranda, reports, letters, email communications, short message services (SMS) text messages, and any other instant message regardless of the service used to compile, transmit or receive; and

(ii)    any oral communications, including but not limited to recorded telephone conversations.

“Maxi EFX” means Maxi EFX Global AU Pty Ltd trading as EuropeFX ACN 625 283 785.

“Relevant Period” means the period from 1 January 2017 to the date of this notice, inclusive.

“Relevant Persons” means any of:

i.    John Carlton Martin;

ii.    James Edward Clinnick;

iii.    Pedro Sasso;

iv.    Shay Zakhaim

v.    Darren Anthony Bums;

vi.    Soe Hein Minn;

vii.    Anthony Alexander Anderson; and

viii.    any other employee or Representative of Union Standard, Maxi EFX or BrightAU.

“Representative” has the meaning given by s 910A of the Corporations Act 2001 (Cth)

“Review” includes any completed checklist, internal or external review, periodic review, audit, investigation, inspection and reporting arising in relation to complaints received from a Client.

“Union Standard” means Union Standard International Group Pty Ltd ACN 117 658 349.

Books required to produce

1.    All books recording or referring to the structure of the Company including without limitation, organisation charts applicable during the Relevant Period identifying the Company’s directors, management, personnel and/or Company staff,

 2.    All books recording or referring to:

a.    The structure of the Company;

b.    The Company’s relationship to United [sic] Standard;

c.    The Company’s relationship to BrightAU;

d.    The Company’s relationship to Union Standard Group International Holdings Limited;

e.    The Company’s relationship to any other persons or entities providing regular services to the Company during the Relevant Period;

f.    The Company’s relationship to any other persons or entities receiving any payment in excess of $100,000 from the Company during the Relevant Period;

3.    All Books recording or referring to the remuneration policy of directors, officers, employees or agents of the Company, including information pertaining to incentives, commissions and/or bonus structures paid or payable.

4.    All books recording or referring to account opening details for each of the Client Accounts, including but not limited to personal details of Clients.

5.    All books recording or referring to Client Agreements entered into between a Client and the Company.

6.    All books showing or recording trading on each Client Account during the Relevant Period, including but not limited to account trading statements.

 7.    All books recording statements of account for each Client Account

8.    All books recording or referring to Communications with Clients during the Relevant Period.

9.    Email accounts in its possession of the Company, including books in its custody or control, that have been used by the Relevant Persons during the Relevant Period, including but not limited to all emails archived, received, sent and drafted. Note, books produced under this section should be produced in Native File Format, retaining all metadata and original folder structure.

10.    All books recording or referring to Communications made during the Relevant Period which include one or more of the Relevant Persons.

11.    All books comprising of recording drafts and final versions of the following documents which were created, made available and or provided by the Company to a Client during the Relevant Period, including:

a.    Financial Services Guides,

b.    Product Disclosure Statements

c.    financial needs analysis;

d.    risk profile assessment;

e.    call scripts or documents to advise Clients;

f.    policy and procedure documents for Client communications;

g.    statements of advice and records of advice.

12.    All books referring to or recording complaints received by or on behalf of the Company during the Relevant Period, including but not limited to any resolution or closing of the complaint whether generated internally or by any other external entity.

13.    All books recording or referring to the Company’s complaint and/or dispute management procedures in place during the Relevant Period.

14.    All books recording or referring to the monitoring and supervision of the Company by or on behalf of United [sic] Standard during the relevant period.

15.    All books recording or referring to reports or Reviews conducted into complaints received from Clients, including but not limited to any resolution or closing of the complaint.

16.    All books recording or referring to the Company’s planning, development and/or implementation of Client identification policies and procedures, including but not limited to initial contact scripts.

17.    All other books recording or referring to policies and procedures in place within the Company during the Relevant Period, including but not limited to policies and procedures with respect to account opening, the provision of advice, trading, margin calls, withdrawal of funds by Clients, withdrawal of funds by the Company, and the closure of accounts.

18.    Books relating to the agreements and/or contracts between the Company and

a.    Bright AU;

b.    Union Standard;

c.    Fuyu International Technology Limited;

d.    Phoenix Tree Technology.

19.    All books recording or referring to:

a.    the promotion or marketing of the Company during the Relevant Period, including but not limited to radio and television scripts, recordings of commercials, print media advertisements, search engine optimisation agreements with any other party, Google analytics, advertisements on websites, brochures, pamphlets, fact sheets, pro forma letters, editorials and pro forma emails to brokers or consumers;

b.    the media schedule, scheduled screenings or scheduled publications of advertisements or promotional material used to promote the Company during the Relevant Period;

c.    the procedure for approving advertisements promoting the Company or its products during the Relevant Period, including compliance manuals, guidelines, checklists and policies and

   d.    drafts of promotional material.

14    As will be seen, the paragraphs of the Schedule that ASIC contends EuropeFX have not fully complied with are paragraphs 4, 5, 6, 8, 12 and 19. For the sake of brevity, those paragraphs of the Schedule will be referred to generally as categories 4, 5, 6, 8, 12 and 19 of the Notice respectively.

15    The Notice was sent by email to EuropeFX’s solicitors, Piper Alderman, on 20 December 2019.

Correspondence between the parties concerning the Notice

16    As has already been noted, the service of the Notice on EuropeFX provoked a flurry of correspondence, but not much else, in the weeks that followed. Much of that correspondence was unhelpful and unedifying. It is, nevertheless, necessary to set out some of it so as to put ASIC’s commencement of this proceeding, and the arguments advanced by EuropeFX in opposition to the relief sought by ASIC, in their proper context.

17    On 9 January 2020, Piper Alderman sent a letter to ASIC about the Notice. That letter asserted that while service of the Notice “ha[d] not been effected”, the solicitors had nonetheless been instructed to “respond … in relation to the substance and form of the Notice”. It was also suggested that the Notice had been issued under an “incorrect provision of the ASIC Act 2001 (Cth)”. As will be seen, those contentions were, perhaps not surprisingly, ultimately not pursued or pressed by EuropeFX.

18    Perhaps more significantly, Piper Alderman’s letter of 9 January 2020 also asserted that the Notice was invalid because it was both oppressive and constituted an abuse of process. That was said to be because the categories of books referred to in the Schedule were “broad and general in nature” and “not relevant to the purpose set out in Form 2 of the Notice”. The reference to the “purpose” was presumably a reference to the scope of the investigation as particularised in the body of the Notice. It was also asserted that the Notice would require EuropeFX to “engage in an unduly burdensome and very extensive exercise given the broad nature of the documents sought” and that the requirement to produce in effect sought to “circumvent” the asset preservation orders which had been made by the Court on 12 December 2019. The latter assertion was based on the fact that the Notice required production prior to the date that EuropeFX had been required to file an affidavit pursuant to the asset preservation orders. It was also contended, in that context, that the Notice required production of a broader range of documents than was required to be produced for the purposes of the affidavit.

19    It should perhaps be noted that, while it was asserted that the Notice was overly broad and general, Piper Alderman did not specifically raise any issue concerning the use of the words “recording or referring to” or “referring to”. As will be seen, the use of those words in the Notice was central to EuropeFX’s arguments about the validity of the Notice in opposition to the orders sought by ASIC.

20    ASIC’s lawyers, Clayton Utz, replied to Piper Alderman’s letter on 10 January 2020. In that letter, it was made clear that ASIC rejected the contentions that had been made on Europe FX’s behalf concerning the validity of the Notice. In particular, ASIC rejected the contentions that there was any issue concerning service, that the Notice was issued under an incorrect provision of the Corporations Act, that the Notice was in any sense oppressive and that the Notice was an abuse of process. It was pointed out, in relation to EuropeFX’s contention that the Notice was oppressive, that ASIC was conducting a “significant investigation into, amongst things, EuropeFX and its officers” and that it was not for “EuropeFX to say what is relevant and what is not in relation to the investigation”. As for the question of timing, ASIC indicated, through its solicitors, that it was “prepared to take a practical and cooperative approach”. EuropeFX was requested, in that context, to put forward a “proposal for staged production of the books requested in the notice”.

21    ASIC’s fairly emphatic rejection of EuropeFX’s contentions concerning the validity of the Notice did not mollify or satisfy EuropeFX or its solicitors. On 16 January 2020, Piper Alderman replied to Clayton Utz’s letter and advised that EuropeFX maintained that the Notice was not valid. It was again contended, in that context, that the Notice was “clearly oppressive, burdensome and overly broad”, though this time some specificity was provided in relation to that contention. Relevantly, it was pointed out that categories 3 to 8 of the Notice “seek documents relating to all clients of EuropeFX and not only those who have made some allegation or complaint”. The implicit contention was that it was somehow improper or oppressive for ASIC to seek documents concerning EuropeFX’s clients who had not made an “allegation or complaint” against it.

22    As will be seen, the contention made on EuropeFX’s behalf that ASIC was only lawfully permitted to require EuropeFX to produce documents relating to clients that had made an allegation or complaint against it was never expressly withdrawn or abandoned. It remained at the very core of the dispute between ASIC and EuropeFX in relation to compliance with the Notice, at least until the commencement of this proceeding. Perhaps more significantly, there could be little or no doubt that EuropeFX did not produce, and has not produced, documents to ASIC in respect of clients who were not known to have made complaints against it despite the fact that the Notice required it to do so.

23    It should also be noted that in its letter dated 16 January 2020, Piper Alderman stated that it was not their “client’s intention to be obstructive or non-compliant”. The accuracy of that statement may fairly be said to be somewhat questionable, to say the least, in light of the subsequent correspondence and events.

24    On 21 January 2020, Clayton Utz, on behalf of ASIC, sent a reply to Piper Alderman’s most recent letter. That letter, amongst other things, conveyed ASIC’s response to the complaint that categories 3 to 8 of the Notice should be limited to clients who had made an allegation or complaint against EuropeFX and that ASIC was not entitled to demand the production of documents beyond that. It was noted, in that context, that “categories 4 to 8 of the notice purposefully seek documents which relate to all clients of EuropeFX” because “not all aggrieved persons will have made a complaint”. It was also pointed out that category 3 did not relate to clients. The letter also noted that no proposal for a staged production had been received by ASIC and that if ASIC did not receive “meaningful engagement from [Europe FX] regarding compliance with the notice” it would “consider court action to enforce the notice”.

25    ASIC’s response once again did not satisfy EuropeFX or its solicitors, or persuade them that the Notice was valid. In a letter to ASIC’s solicitors dated 24 January 2020, Piper Alderman, on behalf of EuropeFX, once again asserted that the Notice was “overly broad” and sought “material” which was “not relevant to ASIC’s investigation”. It was claimed on this occasion that ASIC’s “insistence on requiring production of documents in relation to all customers where there is no evidence that those customers have made a complaint is tantamount to a fishing expedition”. That was, presumably, a reference to the somewhat unhelpful metaphor that is often used in the context of subpoenas. It is a metaphor which is particularly inapt when one is considering whether a notice issued under s 33 of the ASIC Act is oppressive or overly broad such that it is beyond power.

26    Importantly, it was also stated in Piper Alderman’s letter of 24 January 2020 that EuropeFX was “prepared to provide documents which fall within categories 4 to 10 and 14 on the basis that those categories are restricted to relate to only those customers who have made complaints” (emphasis added). Thus, EuropeFX, through its solicitors, effectively unilaterally decided to only partly comply with the Notice. That was so despite ASIC’s insistence that its investigation extended to include all of EuropeFX’s clients. It should also be noted in this context that if EuropeFX or its solicitors genuinely considered that ASIC was not lawfully entitled to require the production of documents beyond those relating to EuropeFX’s clients who had made an allegation or complaint against it, it would have been open to EuropeFX to commence proceedings challenging the validity of the Notice. That was never done.

27    The exchange of correspondence between Piper Alderman, on behalf of EuropeFX, and Clayton Utz, on behalf of ASIC, continued throughout February and into March 2020. It is unnecessary to refer to the content of much of that correspondence. It suffices to note that, on 12 February 2020, Clayton Utz sent a letter to Piper Alderman which made it clear that ASIC rejected EuropeFX’s proposal to provide only documents responsive to categories 4 to 10 and 14 of the Notice on the basis that those categories would be read as being restricted to documents in respect of only those clients who have made complaints. For its part, Piper Alderman maintained, in numerous subsequent letters, that EuropeFX would only produce documents subject to that unilaterally imposed limitation or restriction.

28    Ultimately, on 3 April 2020, Clayton Utz wrote to Piper Alderman and advised that, in light of EuropeFX’s “continued refusal to produce all documents responsive to categories 4, 5, 6 and 8 of the s 33 notice … beyond those that concern complainants known to it”, ASIC intended to commence proceedings pursuant to s 70 of the ASIC Act to obtain orders requiring EuropeFX to comply with the Notice.

Production pursuant to the Notice

29    There was no dispute that, despite the intransigence displayed in its solicitors’ correspondence, EuropeFX had produced a large quantity of documents to ASIC pursuant to the Notice. There was, however, a dispute concerning the extent of that production. Regrettably, the evidence adduced by both ASIC and EuropeFX in relation to that dispute was unsatisfactory in many respects. ASIC adduced affidavit evidence from one of its external solicitors, Mr Frederick Michael Prickett, a partner at Clayton Utz, as well as affidavit evidence from a senior ASIC investigator, Mr Nicholas Damien Klooger, who performed a largely managerial or supervisory role in relation to the relevant ASIC investigation. Mr Prickett’s evidence was mostly formal or simply annexed relevant correspondence. For its part, EuropeFX adduced affidavit evidence from one of its solicitors, Ms McKenzie Dove Moore, a partner at Piper Alderman. Much of the evidence of both Mr Klooger and Ms Moore was objected to and rejected on the basis that it was hearsay or conclusionary.

30    Fortunately, for the reasons that will shortly become apparent, it is unnecessary to decide many of the factual disputes between the parties concerning EuropeFX’s production pursuant to the Notice. The following facts concerning EuropeFX’s production appeared to be fairly common ground, or at least not substantially in dispute.

31    On 14 February 2020, EuropeFX produced, through Piper Alderman, the following documents or types of documents: its then current Terms of Business (in response to category 5); 94 waivers in relation to complaints by various customers (in response to category 12); other books recording or referring to agreements entered into between EuropeFX and clients (in response to category 12), but only in respect of clients who were known by EuropeFX to have made a “formal complaint” against it; and other books referring to or recording complaints received by or on behalf of EuropeFX (in response to category 12), but again only in respect of clients who were known by EuropeFX to have made a “formal complaint” against it. A formal complaint, in this context, was said by EuropeFX to be a formal complaint made either through the Australian Financial Complaints Authority, USG or directly to EuropeFX.

32    In her affidavit read in this proceeding, EuropeFX’s solicitor, Ms Moore, referred to EuropeFX’s clients who were known by EuropeFX to have made formal complaints as the “Known Complainants”. It is convenient to adopt and utilise that shorthand expression in these reasons when referring to the documents that were or were not produced in response to the Notice. That is not to suggest that there was any valid reason to distinguish between clients of EuropeFX who had made formal complaints and those that had not, let alone any proper basis upon which to limit production to documents relating to Known Complainants.

33    It should be noted in this context that Ms Moore’s evidence was that EuropeFX had approximately 14,060 clients, but that it was aware of only 110 Known Complainants. It is tolerably clear that the so-called Known Complainants represented only a very small fraction of EuropeFX’s clients.

34    Other documents responsive to categories 2, 11, 13 and 18 were produced by EuropeFX on 14 February 2020. It is unnecessary to detail those documents because ASIC does not contend that EuropeFX’s production of documents in response to any of those categories was deficient.

35    On 26 February 2020, EuropeFX produced earlier versions of its Terms of Business (in response to category 5). Other documents within categories 1, 2, 3 and 11, the detail of which it is again unnecessary to address, were also produced on that day.

36    On 13 March 2020, EuropeFX produced over 12,000 documents, including 107 account trading statements (in response to category 6), and 12,355 recordings of telephone communications between EuropeFX and clients (in response to category 8). In both cases, the documents produced related only to Known Complainants.

37    On 19 March 2020, EuropeFX produced a single document in answer to category 19 of the Notice. That document was an email which attached what appeared to be a list of search term results for a Google advertising campaign.

38    On 15 April 2020, EuropeFX produced over 10,000 documents responsive to categories 4, 8, 12 and 13 of the Notice. Those documents again related only to Known Complainants. It would also appear that the documents related to only 105 out of the 110 Known Complainants.

39    On 19 May 2020, EuropeFX produced another 103 documents in response to category 8. Those documents again related only to Known Complainants.

40    The critical point to be made concerning this summary of EuropeFX’s production pursuant to the Notice is that it was effectively common ground that EuropeFX had only produced documents responsive to categories 4, 5, 6 and 12 in relation to Known Complainants; clients who EuropeFX was aware had lodged formal complaints against it through the Australian Financial Complaints Authority, USG or directly to EuropeFX. It follows that if ASIC is right and those categories of the Notice extend to all of EuropeFX’s clients, not just those clients who had made complaints, let alone “formal” complaints, against EuropeFX, it must follow that, regardless of many documents it has produced, EuropeFX has not fully complied with categories 4, 5, 6 and 12 of the Notice.

41    As will be seen, EuropeFX did not appear to maintain or contend, in its defence or opposition to ASIC’s application, that the Notice could only lawfully call for the production of documents relating to Known Complainants. If it did, it was an argument that was only faintly pressed. Instead, EuropeFX advanced two new arguments that had not previously been raised in the extensive correspondence between its solicitors, ASIC and the regulator’s solicitors.

42    The first new argument was that, despite the fact that it had not produced documents in respect of all of its clients in response to categories 4, 5, 6, 8, 12 and 19, it had nonetheless complied with the Notice because it was not relevantly in “possession” of any further documents within those categories. That was said to be because any further documents were in the physical possession of its third party service providers who were all domiciled overseas.

43    The second new argument was that, even if it could be said that it was in possession of those further documents, it had a reasonable excuse for not producing them. That reasonable excuse was said to be that it was unable to procure or compel its third party service providers to produce them.

44    Before addressing those arguments and the evidence relevant to them, including the evidence relating to EuropeFX’s third party service providers and their possession of relevant documents, it is necessary to address briefly what appeared to be some other areas of dispute concerning EuropeFX’s production in response to the Notice.

45    ASIC endeavoured to prove, through the evidence of Mr Klooger, that EuropeFX had not even produced all documents which were required by categories 4, 5, 6, 8, 12 and 19 in relation to Known Complainants. Much of Mr Klooger’s evidence concerning EuropeFX’s production of documents within those categories, however, was ultimately ruled inadmissible as hearsay. So too was much of the evidence of Ms Moore which was relied on by EuropeFX in response to Mr Klooger’s evidence.

46    Ultimately, with three minor exceptions, the evidence before the Court is not capable of supporting ASIC’s contention that EuropeFX’s compliance with the Notice was deficient even in respect of Known Complainants. The three minor exceptions were: first, there was some evidence that EuropeFX had indicated, in a schedule annexed to a letter dated 26 February 2020, that it would produce further documents within category 5 in relation to Known Complainants, but no further documents were ever produced; second, there was some evidence to suggest that EuropeFX had not produced all documents recording or referring to communications with at least one Known Complainant as required by category 8; and third, EuropeFX had produced only one document responsive to category 19, which in summary required the production of documents recording or referring to marketing and promotion, yet in Mr Klooger’s experience as in investigator there was reason to believe that EuropeFX would have more documents to produce within that category.

47    That is not to say that the evidence was otherwise capable of establishing that EuropeFX had fully complied with the Notice in respect of documents relating to Known Complainants. That was not the case. While there is no doubt that EuropeFX has produced a large volume of material relating to Known Complainants, the evidence of Ms Moore, such as it was, was insufficient to establish that, but for the issue concerning production of documents relating to clients who were not Known Complainants, EuropeFX had fully complied with the Notice.

48    Ultimately, the issue concerning whether EuropeFX had produced all documents required by the Notice in relation to Known Complainants was somewhat of a side-issue. Putting aside the issue concerning the validity of the Notice, which will be addressed shortly, the main issues that need to be resolved concern production of documents within categories 4, 5, 6, 8 and 12 relating to clients who were not Known Complainants. It is fair to say that, were it not for the issue concerning EuropeFX’s refusal or failure to produce documents relating to clients who were not Known Complainants, ASIC may have had difficulties persuading the Court to make the orders it sought based only on the three minor deficiencies established by Mr Klooger’s evidence.

EuropeFX’s third party service providers

49    As has already been noted, EuropeFX’s arguments in opposition to ASIC’s application ultimately relied heavily on its contention that any documents relating to clients who were not Known Complainants were not relevantly in its possession. Rather, those documents were said to be in the possession of various overseas entities who it was claimed had provided services to EuropeFX in the conduct of its business. It was also contended that EuropeFX was unable to compel those third party service providers to produce documents which were in their possession.

50    Putting to one side the legal question of the meaning of “possession”, which will be addressed shortly, the evidence adduced by EuropeFX concerning the possession of relevant documents by third party service providers was scant and somewhat unsatisfactory. The main difficulty or deficiency was that EuropeFX did not adduce any evidence from its director, Mr Sasso. Much of the evidence it sought to adduce in respect of this issue through Ms Moore was excluded on the basis that it was inadmissible hearsay. The evidence that remained was essentially documentary. As will be seen, in the absence of evidence from Mr Sasso, or any other officer or employee of EuropeFX, much of that correspondence was open to be seen as somewhat contrived, self-serving and deserving of limited weight.

51    Following is a short summary of the evidence relating to the third party service providers.

52    On 26 August 2019, EuropeFX and a company called MaxiFlex Limited executed a document entitled “Services Agreement”. MaxiFlex was a company apparently incorporated in Cyprus. While there was no evidence about the relationship between EuropeFX and MaxiFlex, it appeared to be common ground that MaxiFlex was EuropeFX’s parent company. In those circumstances, it might be seen as somewhat unusual that the Services Agreement provided that MaxiFlex would provide services to EuropeFX. In any event, those services were extensive and appeared to involve EuropeFX effectively outsourcing the conduct of its entire operation to MaxiFlex. The relevant services to be provided by MaxiFlex included: “Back office services”, which included all “administrative related services” including “settlements, clearances, record maintenance and clients relations issues resolution”; “Dealing services”, which included “control and manage the trading risk of [EuropeFX]”; “Support services”, which included “Technical support to the Company’s clients”; “Marketing services”; “Technology / IT services”; “Billing services”; and “Sales services”. There was no express term in the Services Agreement which dealt with the ownership, possession, custody or control of documents created or received pursuant to, or in pursuance of, the Services Agreement.

53    Ms Moore’s evidence was that “[i]n January 2020, MaxiFlex confirmed with EuropeFX that they will commence the retrieval of books responsive to the Notice”. It was also Ms Moore’s understanding that “because of EuropeFX’s arrangements with MaxiFlex, in relation to managing the services provided by third parties, MaxiFlex was asked to contact” certain entities “to enquire as to documents held by them which might be responsible to the Notice”. Those entities were said to be XYX Media Technologies Ltd, Affilimedia Global Ltd; Antelope Systems Limited, E.M. Coperato Ltd, BAFF Affiliate Networks Limited, Bolacom Limited and Global Win Solutions Ltd. Ms Moore referred to those entitles collectively as the “Providers”.

54    The basis of Ms Moore’s understanding about those arrangements between EuropeFX and MaxiFlex was not explained or elucidated. The arrangement was not reflected in the terms of the agreement between EuropeFX and MaxiFlex, which, as noted earlier, suggested that MaxiFlex itself would provide certain extensive services to EuropeFX. There was nothing in the agreement to suggest that MaxiFlex would in turn outsource those services and then “manage” the services provided by those other “providers”. In any event, Ms Moore also stated, again presumably based on her unexplained understanding, that “EuropeFX requested MaxiFlex to ask Providers for information and documents in relation to only Known Complainants for categories 4 to 10 and 14 of the Notice”. Needless to say, the critical point is that the request was only in respect of documents relating to Known Complainants.

55    It would seem that EuropeFX’s request for MaxiFlex to contact the Providers in relation to the provision of documents relating to Known Complainants was not met with any resistance. Ms Moore’s evidence was that “EuropeFX received tranches of the requested documents from MaxiFlex between February and March 2020 and again in May 2020”. It would thus appear that, at least as at May 2020, there were no apparent difficulties in EuropeFX being able to obtain, apparently through MaxiFlex, copies of documents responsive to the Notice which were in the physical possession of the Providers. There was no suggestion that the Providers had refused to provide the documents if they were not paid to do so.

56    While it was Ms Moore’s understanding that MaxiFlex somehow managed the services that were provided by the Providers, there was also documentary evidence which suggested that EuropeFX had entered into contracts with the Providers directly. There was, however, no evidence from Mr Sasso, or any other officer or employee of EuropeFX, about the circumstances in which those contracts had been entered into or how the services supposedly provided pursuant to them were actually provided. In any event, following is a short summary of those agreements.

57    On 1 July 2018, EuropeFX entered into what was called an “Affiliate Agreement” with Affilimedia, a company apparently incorporated in Belize. The general effect of that agreement was that Affilimedia would use its “best efforts and devote reasonable amounts of [its] time, personnel and resources for the purpose of referring potential Customers to” a website operated by EuropeFX or “any of its related entities”.

58    On 4 May 2018, EuropeFX and Antelope, a company said to be incorporated in Cyprus, executed a document titled “Service Agreement Terms and Conditions”. The general effect of that agreement was that Antelope granted EuropeFX the “right and licence” to access certain software. The software was said to relate to “the business of operating an online financial trading brokerage”. It is worth noting that the agreement provided that, upon termination, Antelope would return to EuropeFX “all or any part of the Personally Identifiable Information in its possession”. On 26 January 2020, EuropeFX and Antelope executed an “Addendum to Service Agreement (Addendum)” the effect of which appeared to be to extend the term of the original agreement for 12 months from 26 January 2020.

59    On 17 October 2018, EuropeFX and BAFF, a company said to be incorporated in Cyprus, executed a document titled “This Marketing Technology Platform Service Agreement Terms and Condition”. The general effect of that agreement was that BAFF granted EuropeFX the “right and licence” to access a “Platform”, which was said to be a “state of an art-web based platform [sic]”, as well as certain “Products” and “Services” which were somehow related to that platform.

60    Ms Moore’s affidavit annexed a document titled “Services Agreement” which purported to be an agreement between EuropeFX and Coperato, a company said to be based in Haifa, Israel. The copy of that document which was in evidence had not been executed by EuropeFX. It would also not be unfair to say that the document was rather poorly drafted. In any event, the agreement appeared to provide, in general terms, that Coperato would provide certain services to EuropeFX. Those services appeared to be “Switchboard package in Cloud”, “Connection of the telephones to the Switchboard”, “Purchase of access numbers”, “Creation of account in the management system” and “Support during the setting up process and ongoing”.

61    On 1 September 2019, EuropeFX and Global Win, a company said to be incorporated in Belize, executed a document titled “Agreement for the Provision of Services”. The general effect of that agreement was that Global Win would provide certain services to EuropeFX. Those services were said to be “[c]onsulting and/or marketing and/or sales services which include providing services via telephone and e-mail to [EuropeFX] and/or its customers which will solely serve for the purposes of optimising [EuropeFX’s] business performance”. The agreement provided that upon termination of the agreement, Global Win would, amongst other things, “hand over in an orderly manner according to a procedure to be determined, the documents and matters under her care to whomever [EuropeFX] shall determine”.

62    On 1 January 2019, EuropeFX and XYX, a company whose registered office was said to be in Tel-Aviv, Israel, executed a document titled “Services Agreement”. The general effect of that agreement was that XYX would provide certain services to EuropeFX. Those services were said to be “call centre services – sales services”. The agreement provided that, upon termination, XYX “shall return” to EuropeFX “all Information, including all records, products and samples received, and any copies thereof, as well as any notes, memoranda or other writings or documentation which contain or pertain to the Information or any portion thereof”.

63    On 18 and 24 April 2019, EuropeFX and Bolacom, a company that was said to be incorporated in Cyprus, executed a document titled “Services Agreement”. The general effect of that agreement was that Bolacom would provide certain services to EuropeFX. Those services were particularised in terms which were almost identical to the particulars of the services that were to be supplied to EuropeFX under the terms of the Services Agreement between EuropeFX and MaxiFlex .

64    The overall effect of the agreements between EuropeFX and the Providers appeared to be that, despite its supposed agreement with MaxiFlex, EuropeFX had effectively outsourced all its operations directly to the Providers. While EuropeFX supposedly conducted a financial services business as a corporate authorised representative of the holder of an Australian financial services licence, according to these agreements virtually everything that it did was done by companies located in Cyprus, Belize and Israel. One wonders if its clients knew that.

65    In any event, Ms Moore’s evidence was that on 6 May 2020, Mr Sasso sent letters by email to each of the Providers and MaxiFlex. Those letters requested the Providers to provide information about what documents they had in their possession on behalf of EuropeFX. The letters were annexed to Ms Moore’s affidavit. So too were the responses to those letters which were apparently received by Mr Sasso, though, as noted earlier, Mr Sasso was not called to give evidence. Following is a brief summary of those responses as recorded in the documentary evidence.

66    A letter supposedly sent by XYX stated that it did not have in its “possession, custody or control any documents” for, or on behalf of, EuropeFX. It was also noted that “[a]s per the Services Agreement between us, all such documents are retained by third party service providers (such as CRM, IT providers)”. That was a curious statement given that the agreement contained no such provision.

67    A letter supposedly from BAFF dated 11 May 2020 stated that BAFF had “no information which is related to you or your clients in our possession”. That too was a somewhat curious statement. It was not suggested that BAFF had returned all documents or records which had been in its possession as a result of its provision of a “platform” to EuropeFX pursuant to the agreement. It follows that, despite the existence of the agreement, BAFF apparently had no information whatsoever relating to EuropeFX. One wonders, in those circumstances, exactly what EuropeFX received for the substantial fees it paid to BAFF, supposedly for its use of the platform.

68    A similar response was received from Global Win. That company simply stated that it did not “possess any information related to [EuropeFX] or customers”. Again, one wonders exactly what Global Win did for the substantial fees that were payable and presumably paid to it by EuropeFX if it held “no information” concerning EuropeFX or its customers. Mr Sasso did not give any evidence to explain that curiosity.

69    MaxiFlex’s response to Mr Sasso’s letter was somewhat more expansive. MaxiFlex confirmed that it had access, in its capacity as administrator of the servers used by EuropeFX, to all email correspondence between EuropeFX’s representatives and its clients. It was estimated that the “volume” of all such emails was 400 gigabytes. MaxiFlex also said that it had access to a server owned by USG on which the trading history of EuropeFX’s clients was recorded. It was estimated that there may be upwards of 14,000 documents which fell within that description stored on the server. Finally, MaxiFlex suggested in its letter that, perhaps surprisingly, it would be necessary to extract manually the emails between EuropeFX’s representatives and its clients from its server and similarly manually extract the trading histories of EuropeFX’s clients from USG’s server. Perhaps even more surprisingly, given that it was supposedly EuropeFX’s parent company, it was suggested that MaxiFlex would require EuropeFX to pay €100 per hour for the time taken by its staff to extract manually the relevant documents from the respective servers. The basis upon which it was supposedly able to levy that charge was not explained.

70    It would seem that Mr Sasso may also have been surprised by MaxiFlex’s suggestion that it would have to extract manually EuropeFX’s emails from its server and would charge for that service. He subsequently sent a letter to MaxiFlex asking it to send EuropeFX the “full set of … email data” so that EuropeFX could “run targeted searches using technology available to it to retrieve the relevant emails”. No reply had been received to that request, at least as far as Ms Moore was aware, as at the date she swore her affidavit.

71    Antelope responded to Mr Sasso’s letter by letter dated 12 May 2020. It stated that it held the following types of documents on behalf of EuropeFX: the financial questionnaire which was completed by EuropeFX’s clients upon registration; the “KYC” [Know Your Client] documents provided by EuropeFX’s clients; and the “personal information” of EuropeFX’s clients. Antelope also asserted that it would take “around 400 hours … to manually extract, analyse, prepare, run quality control tests on the Documents, and then sort and copy the Documents in to a new server”. Exactly why Antelope considered that it needed to do all those things, why it was necessary for it to do them manually and why it would supposedly take 400 hours was not explained. Also not explained was the basis of Antelope’s assertion that it was somehow entitled to charge EuropeFX €120 per hour to give it back its documents. It did not, for example, point to any provision of its agreement with EuropeFX which entitled it to charge anything for doing so.

72    Mr Sasso sent a further letter to Antelope concerning the nature of the relevant data held by it. He did not, however, question the basis upon which Antelope asserted that it was able to charge €120 per hour to retrieve its documents, or why it had to do that task manually or why it would supposedly take 400 hours. Instead, he queried whether Antelope would require EuropeFX to pay an outstanding invoice prior to “processing” its request. That “Dorothy Dixer” provoked a fairly predictable response from Antelope. Not only did Antelope say that it required its previous invoice to be paid, it asserted that EuropeFX was in breach of the agreement and threatened legal action.

73    Bolacom replied to Mr Sasso’s letter by email sent on 11 May 2020. In that email, a person named “Stamatis” advised that Bolacom was “not in possession of any documents that belong or contain any information that is related to [EuropeFX]”. It was also suggested that “all of the services that were provided by [Bolacom] were transferred to Maxiflex LTD”.

74    Ms Moore’s evidence was that she had been informed by Mr Sasso and believed that he had not received any response from Coperato or Affilimedia.

75    Ms Moore herself provided some evidence concerning her estimate of the cost to EuropeFX of producing further documents in accordance with the Notice. It is unnecessary, for present purposes, to delve into the detail of that evidence. It suffices to note that Ms Moore had calculated the amount demanded by and supposedly payable to the Providers, presumably based on the correspondence received by Mr Sasso from the Providers, as totalling approximately $700,000. Added to that was the costs of retaining an “e-Discovery” provider, which was estimated at approximately $30,000 for the first month and $5,000 each month thereafter for “hosting charges”. Ms Moore also estimated that the additional costs of reviewing the data, presumably by solicitors or other employees of her firm, would “far exceed” the $130,000 incurred by EuropeFX in respect of the documents produced thus far.

Certification that the Notice was not complied with

76    Section 70 of the ASIC Act provides as follows:

(1)    This section applies where ASIC is satisfied that a person has, without reasonable excuse, failed to comply with a requirement made under this Part (other than Division 8).

 (2)    ASIC may by writing certify the failure to the Court.

(3)    If ASIC does so, the Court may inquire into the case and may order the person to comply with the requirement as specified in the order.

77    On 20 April 2020, ASIC forwarded a document to the Court the body of which was in the following terms:

Notice issued to Maxi EFX Global AU Pty Ltd under s 33 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act)

On 20 December 2019, I issued on behalf of the Australian Securities and Investments Commission (ASIC) a notice to Maxi EFX Global AU Pty Ltd (trading as EuropeFX) under s 33 of the ASIC Act.

ASIC hereby certifies that EuropeFX has failed to comply with paragraphs 4 to 6, 8, 12 and 19 of the notice. ASIC is satisfied that EuropeFX has failed to do so without reasonable excuse.

78    EuropeFX did not dispute that this document constituted certification by ASIC pursuant to s 70 of the ASIC Act such that the Court’s jurisdiction to “inquire into the case” was engaged.

inquiry under s 70(3) of the asic act – RELEVANT PRINCIPLES

79    Certification by ASIC pursuant to s 70(2) of the ASIC Act enables, rather than obliges, the Court to inquire into the case: Insurance and Superannuation Commissioner v Glaser (1997) 79 FCR 505 at 509F-G. Certification will ordinarily provide a sufficient reason for the Court to conduct the contemplated inquiry into whether the notice had been complied with, at least in the absence of any attack on the bona fides of the certifying officer: Glaser at 510. There was no such attack in this matter.

80    Having embarked on such an inquiry, the Court has a discretion whether or not to make an order under s 70(3) of the ASIC Act that the person comply with the requirement: Australian Securities Commission v Kutzner [1997] FCA 1453; 25 ACSR 723 at 729. Amongst other things, the Court can consider whether the person has a “‘reasonable excuse’ for not complying with the requirement”: Kutzner at 729. The Court may also decline to make such an order if to do so would be a futile exercise of power, or if the order would not promote the objects of the statute: Kutzner at 730-732.

81    The person who has been found to have failed to comply with a requirement bears the evidential burden of demonstrating a reasonable excuse for non-compliance: Aurora Construction Materials Pty Ltd v Victorian WorkCover Authority [2017] VSC 573 at [82] (appeal dismissed and reasonable excuse not addressed: Aurora Construction Materials Pty Ltd v Victorian WorkCover Authority [2018] VSCA 165 at [4]-[5]).

82    In Australian Securities and Investments Commission v Albarran (2008) 169 FCR 448, Jacobson J (at [81]-[83]) distilled three principles from Hely J’s comprehensive analysis of the relevant authorities concerning the scope of a “reasonable excuse” in this context in Bank of Valletta PLC v National Crime Authority [1999] FCA 791; 164 ALR 45 at [36]. Those principles are:

First, the question of what constitutes “reasonable excuse” is to be determined from the terms and structure of the particular statute and the circumstances of each particular case: Valletta 164 ALR 45 at [39], [47].

Second, reasonable excuse is not confined to physical or practical difficulties in complying with the statutory prescription. It includes any excuse which would be accepted by a reasonable person as sufficient to justify non-compliance, but it is necessary to bear in mind the importance of the particular statutory prescription to the overall statutory regime: Valletta 164 ALR 45 at [42].

Third, the question of what constitutes reasonable excuse involves an objective determination in all the circumstances. These include the adverse consequences to an individual of being compelled to answer and the adverse consequences to an inquiry if the questions are not answered: Valletta 164 ALR 45 at [44], [47].

83    The expense and inconvenience in complying with a notice issued under s 33 of the ASIC Act, or similar provisions in other enactments, or the fact that the notice could be said to be burdensome or oppressive because of the work and expense involved in complying with it, will not ordinarily provide a reasonable excuse for non-compliance: Riley McKay Pty Ltd v Bannerman [1977] FCA 51; 15 ALR 561 at [13]; Melbourne Home of Ford Pty Ltd v Trade Practices Commission (No 3) [1980] FCA 115; 31 ALR 519 at 529; Pyneboard Pty Ltd v Trade Practices Commission [1982] FCA 18; 39 ALR 565 at 572; Dunlop Olympic Ltd v Trade Practices Commission [1982] FCA 31; 40 ALR 367; Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [165].

ISSUES RAISED IN OPPOSITION TO ASIC’S APPLICATION

84    As has already been noted, EuropeFX raised four main arguments in opposition to the relief sought by ASIC pursuant to s 70(3) of the ASIC Act.

85    The first argument was that the notice was invalid because it did not convey to EuropeFX, with sufficient clarity, the documents that it was required to produce. That was said because categories 4, 5, 8, 12 and 19 of the Notice all use the “connecting compound term ‘recording or referring’” in describing the documents required to be produced.

86    The second argument raised an issue concerning the proper construction or interpretation of the word “possession” in s 33 of the ASIC Act. It was submitted that “no sensible construction of s 33(1) would construe ‘possession’ to mean something broader such as ‘possession, custody or control’”. The main basis for that submission was that, whereas s 33(1) provides only for the issue of a notice requiring production of a document in a person’s “possession”, s 33(3) of the ASIC Act, which provides for the issue of notices requiring production of documents relating to “the question whether a registered liquidator has complied with liquidator requirements, within the meaning of subsection 30B(3)”, uses the expression “possession or control”. It was submitted that if “possession” in s 33(1) was to be construed as meaning “possession, custody or control”, the word “control” in s 33(3) would be “superfluous and have no work to do”. It was also noted that the expression “possession, custody or control” was specifically employed in ss 25, 26, 38 and 39A of the ASIC Act.

87    EuropeFX contended that if “possession” in s 33 of the ASIC Act cannot be taken to mean “possession, custody or control”, it cannot be concluded that it has not fully complied with categories 4, 5 and 6 of the Notice. That was said to be because the evidence showed that any further documents that might exist within those categories, including documents concerning clients who were not Known Complainants, were not relevantly in its possession. Rather, the evidence revealed that those documents were in the possession of one of the Providers, most likely Antelope. Indeed, EuropeFX went so far as to contend that even if “possession” in s 33(1) included “possession, custody or control”, the evidence showed that it was not in control of any documents that were held by Antelope.

88    The third argument was that, if it is concluded, contrary to the first two arguments, that the Notice is valid and that EuropeFX has not fully complied with it, EuropeFX nonetheless has or had a reasonable excuse for not fully complying. While it was somewhat unclear, the reasonable excuse was said to arise from or relate to the fact that any documents which had not been produced were held by the Providers, or at least Antelope, and that they were demanding that they be paid large amounts of money before they took any steps to provide documents which fell within the terms of the Notice.

89    The fourth argument, which was similar to the third, was that it would in any event be futile or fruitless to make the order sought by ASIC because EuropeFX was unable to compel any of the Providers who held any further documents within the terms of the Notice to provide those documents to it so it could comply fully with the Notice. An order that EuropeFX comply with the Notice would accordingly be “meaningless and sterile”.

VALIDITY OF THE NOTICE

90    It may readily be accepted that the expression “specified books” in s 33(1) of the ASIC Act imports a requirement that the documents which are required to be produced be identified in the notice with sufficient clarity and precision to enable the recipient to know what documents come within the terms of the notice and to form a view about what must be produced so as to comply with the notice: Pyneboard at 570; Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd (1979) 143 CLR 499 at 525 (FCT v ANZ); Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187 at 221-222; Re Bill Express Ltd (in liq) (ACN 090 059 564) [2010] VSC 101; 77 ACSR 556 at [29]-[31]; Harris v Mathieson (in his capacity as an authorised officer under the Water Management Act 2000 (NSW)) [2019] NSWSC 1064 at [24(a)]; Integrated Financial Group Pty Ltd v Australian Securities and Investments Commission [2004] WASC 75; 183 FLR 8 at [57]-[60]; see also NAAO v Secretary, Department of Immigration and Multicultural Affairs (2002) 117 FCR 401 at [32]. It may equally be accepted that a notice which is “couched in such wide and general terms that a proper exercise of the investigatory power could not support the requirement in question” would therefore be invalid: Melbourne Home of Ford at 531.

91    There is, however, no proper or reasonable basis upon which to conclude that the Notice lacked sufficient clarity or precision to enable EuropeFX to know or form a view about what documents fell within it and were required to be produced. Nor is there any basis upon which to conclude that the Notice was couched in such wide and general terms that s 33 of the ASIC Act could not support the requirement to produce the documents specified in the Notice.

92    The requirement of clarity is not to be applied in a precious, over-technical or hypercritical way: Harris at [24(d)]; Fieldhouse at 212; Pyneboard at 570-571; Currency Brokers (Aust) Pty Ltd v Corporate Affairs Commission (NSW) (1986) 5 NSWLR 483 at 489; Integrated Financial Group at [63]-[65]. Notices requiring the production of documents, such as notices under s 33 of the ASIC Act, are “to be reasonably, not preciously, construed and the terms used in notices will ordinarily take their meaning from the commercial circumstances in which the notices are given”: Melbourne Home of Ford at 531. The validity of notices should not be approached “carpingly by engaging in a narrow analysis of each word in an attempt to find some latent ambiguity in it”: Fieldhouse at 208.

93    The use of expressions such as “relating to” does not mean that a notice lacks sufficient clarity or precision; much will depend on the context in which the expression is used: Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 929 (in the context of subpoenas). Exactly the same can be said about expressions such as “referring to” or “recording”.

94    The use of the expression “referring to” or “referring to or recording” in the Notice does not invalidate the Notice. Read reasonably and not hypercritically or preciously, the Notice specifies the documents which are required to be produced with sufficient clarity and precision to enable EuropeFX to form a view about whether a document does or does not need to be produced to comply with the Notice. While EuropeFX may have to examine a document to ascertain whether or not it does or does not refer to or record a particular topic or subject-matter as specified in one or more of the categories of the Notice, that does not mean that the Notice lacks clarity or precision.

95    Nor, contrary to the submission advanced on behalf of EuropeFX, does the fact that EuropeFX may have to produce a document that contains only a passing or fleeting reference to that topic. The question whether the reference is material or not is a matter for ASIC. In any event, the mere fact that the Notice might require the production of documents that may ultimately be considered to be irrelevant to the investigation does not mean that the Notice is impermissibly broad: A v Independent Commission Against Corruption (2014) 88 NSWLR 240 at [34].

96    There is accordingly no merit in EuropeFX’s contention that the Notice did not specify the documents required to be produced with sufficient clarity or specificity. There is no basis for finding that the Notice is invalid.

97    It should also be noted, in the context of a consideration of the validity of the Notice, that EuropeFX did not appear to contend, in its defence or opposition to the relief sought by ASIC, that the Notice was invalid because some of the categories of documents sought in the Notice required the production of documents in relation to all its clients, not just those who had made formal complaints about it. Nor did it appear to contend that ASIC could not lawfully require the production of such documents pursuant to s 33 of the ASIC Act. While those contentions had been advanced in some of the early correspondence between EuropeFX’s solicitors and ASIC’s solicitors, ultimately they were not pursued or developed in EuropeFX’s submissions in opposition to the relief sought by ASIC.

98    Had those submissions been advanced, they would in any event have been rejected as being without foundation. To the extent that it was suggested that the requirement to produce documents relating to clients who had not made a complaint against EuropeFX could not have been a proper exercise of the investigative power in s 33 of the ASIC Act, the problem for EuropeFX is that, as discussed earlier, ASIC’s investigation into the conduct of EuropeFX and its officers is extremely broad and wide ranging. It includes, amongst other things, an investigation into whether EuropeFX or its officers engaged in unconscionable conduct in relation to the provision of financial services, or in connection with the supply of financial services: s 991A of the Corporations Act; s 12CB of the ASIC Act. That may involve a consideration of whether “a system of conduct or pattern of behaviour” was unconscionable: s 12CB(4)(b) of the ASIC Act; see also Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631 at [103]-[153]; Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liq) (No 3) [2020] FCA 208; 380 ALR 27 at [380]-[393]. That aspect or feature of the ASIC investigation alone would provide a proper basis for ASIC to seek documents that extend beyond Known Complainants.

99    To the extent that EuropeFX contended that the fact that the Notice required production of documents relating to all its clients, not just documents relating to Known Complainants, meant that ASIC was engaging in an impermissible “fishing expedition”, a notice under s 33 of the ASIC Act is not akin to a subpoena. It is in that context that the “fishing expedition” metaphor is commonly applied to denote a subpoena which requires production of documents which have no apparent relevance to the issues in the relevant litigation. A notice under s 33 of the ASIC Act is not analogous to a subpoena, or discovery or interrogatories in litigation. In Melbourne Home of Ford, the Full Court stated (at 530):

… There is no analogy to be made with interrogatories in litigation. Rules which are entirely appropriate to limit discovery with respect to issues defined by pleadings provide no sure guide to the manner of exercise of a power to ascertain facts which may or may not result in litigation. The investigative power may properly be exercised by inquiring into the existence of facts which do not themselves constitute a contravention or deny the possibility of a contravention. The power may properly be exercised to ascertain facts which may merely indicate a further line of inquiry, or which may tend to prove circumstances from which an inference can be drawn as to the existence of other facts which have a more immediate and proximate relationship to the matter under investigation.

100    There is, in all the circumstances, no basis upon which to conclude that, by requiring the production of documents relating to all its clients, not just those who had made formal complaints, ASIC had abused or misused its power under s 33 of the ASIC Act.

101    Finally, to the extent that it may have been contended that the Notice was invalid because, to the extent that it required production of documents relating to all of EuropeFX’s clients, compliance with it would excessively be burdensome and oppressive, it may be accepted that the exercise of complying with the Notice will involve considerable work and expense on the part of EuropeFX. As discussed earlier, however, that itself, however, does not provide a basis for objecting to the Notice so long as there is a proper relationship between the investigation and the documentation requested. For the reasons already given, that is no sound basis for concluding that there is no proper relationship between ASIC’s investigation and the documents requested in the Notice.

POSSESSION OF THE DOCUMENTS

102    EuropeFX’s submissions concerning the meaning of “possession” in s 33(1) may have had some merit were it not for the combined operation of s 5(2) of the ASIC Act and ss 9 and 86 of the Corporations Act.

The meaning of “possession” in s 33(1) of the ASIC Act

103    The word “possession” is not defined in the ASIC Act. Subsection 5(2)(b) of the ASIC Act, however, relevantly provides that, unless the contrary intention appears, an expression that is used but not defined in the ASIC Act, is not defined in s 761A of the Corporations Act and is used in the Corporations Act, has the same meaning in the ASIC Act “as in the Corporations Act”. The word “possession” is used in the Corporations Act but is not defined in s 761A of that Act. Section 9 of the Corporations Act, which contains a dictionary of expressions used in the Corporations Act, relevantly provides that the word “possession” has “a meaning affected by section 86”. Section 86 of the Corporations Act provides that a “thing that is in a person’s custody or under a person’s control is in the person’s possession”. It follows that the word “possession” in s 33 of the ASIC Act has the extended meaning provided in s 86 of the Corporations Act. In effect, it means “possession, custody or control”.

104    In Australian Securities Commission v Dalleagles Pty Ltd (1992) 36 FCR 350, French J rejected a submission that the definition of “possession” in s 86 of the Corporations Act did not apply to the word “possession” as used in s 33(1) of the ASIC Act (then the Australian Securities Commission Act 1989 (Cth) (1989 Act)). His Honour said (at 359):

The sense in which “possession” is used in a statute requires a consideration of statutory policy. By s 33 and its associated provisions in Div 3 of Pt III of the [1989 Act], wide investigative powers are conferred upon the Commission. They must, like all such investigative powers, be limited by its legitimate statutory functions: see SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 at 369-370. It is, however, a minimum requirement of the statutory policy that the investigative power be effective. A limitation of the word “possession” in s 33 to actual physical custody would leave open to persons connected with the corporation whose affairs are under investigation the possibility of avoidance of the section by the simple artifice of placing sensitive documents in the hands of some third party. Once it is posited that the policy of the statute is not to leave open that possibility then the application of the definition of possession in s 86 of the Corporations Law follows, it being consistent with a minimum requirement for effective exercise of the power under s 33.

105    EuropeFX submitted that Dalleagles was of “limited application” and was distinguishable. That was said to be because it was concerned with the 1989 Act, not the current ASIC Act, and because s 33 of the 1989 Act did not include the equivalent of s 33(3) of the ASIC Act. It was also said that the facts of Dalleagles, which related to the possession of the relevant person’s books by its solicitor, were “unique and readily distinguishable” from the facts of this case.

106    Those submissions are rejected. So too is EuropeFX’s associated submission that the presence of s 33(3) of the ASIC Act now supplies a “contrary intention” that the definition of possession in ss 9 and 86 of the Corporations Act does not apply to s 33(1) of the ASIC Act.

107    The only relevant difference between the 1989 Act and the ASIC Act is the presence of s 33(3) in the ASIC Act. That subsection was inserted in the ASIC Act in 2016 by the Insolvency Law Reform Act 2016 (Cth) (ILRA). That was an Act which, as the name suggests, made amendments to various provisions in various Acts which dealt with personal and corporate insolvency. The express inclusion of the word “control” in relation to the very specific type of notice able to given by ASIC under s 33(3) does not indicate any legislative intention to narrow the operation of the more general provision in s 33(1) of the ASIC Act, which was not amended by the IRLA. It can readily be seen why the legislature considered it prudent to include the additional express reference to documents being in a person’s “control” in relation to the requirement to produce documents which relate to the question whether a registered liquidator had complied with liquidator requirements, particularly given the likelihood, in that context, of persons having documents in their control, but not their possession.

108    Parliament may be presumed to have been aware of the combined operation of s 5(2) of the ASIC Act and ss 9 and 86 of the Corporations Act and to the construction of s 33(1) of the ASIC Act in Dalleagles. The fact that Parliament saw fit to include express reference to “control” in s 33(3) does not support an inference of legislative intention to narrow the operation of s 33(1) of the ASIC Act as construed in Dalleagles.

109    As for the suggestion that the facts in Dalleagles were materially different to the facts in this case, there is nothing to suggest that French J’s construction of s 33(1) of the 1989 Act turned in any way on the facts of the case. Rather, his Honour’s reasoning turned primarily on contextual considerations and the fact that s 33(1) was part of suite of wide investigative powers conferred on ASIC (then the Australian Securities Commission) by Div 3 of Pt III of the 1989 Act. The same reasoning applies to s 33(1) of the ASIC Act. The construction given to the word “possession” hinges to a large extent on the particular statutory context in which the word is used: Comptroller-General of Customs v Zappia (2018) 265 CLR 416 at [30] (per Kiefel CJ, Bell, Gageler and Gordon JJ) and [43]-[45] (per Nettle J). The context in which the word “possession” appears in s 33(1) of the ASIC Act compels a conclusion that the legislative intention was that the broader meaning of “possession” given in s 86 of the Corporations Act was to apply.

110    It follows that EuropeFX’s contention that it does not have “possession” of any further documents which fall within the scope of the Notice simply because any such documents are in the physical possession of the Providers must be rejected. That then raises the question whether any documents which may be in the physical possession of the Providers can nevertheless be said to be in the possession, custody or control of EuropeFX in all the circumstances.

Possession, custody or control

111    In Zappia, which was a case concerned with whether a person relevantly had the “possession, custody or control” of dutiable goods for the purposes of s 35A(1) of the Customs Act 1901 (Cth), it was emphasised that those words had to be read in context, that none of them had a fixed legal meaning and that the “statutory collocation” connotes a degree of power or authority in relation to the relevant thing. The plurality said (at [30]):

The critical reference within the description to “the possession, custody or control” must be read in that context, recognising that none of the terms “possession”, “custody” or “control” has a fixed legal meaning and that the power or authority of a person in relation to a thing connoted by any one or more of those terms in statutory collocation is a question of degree. The individual terms, used disjunctively, serve to indicate both that the requisite degree of power or authority is not closely confined and that the requisite degree of power or authority can arise from such a range of sources that, depending on the circumstances, one term might be more appropriate to use than another.

(Footnote omitted.)

112    Nettle J also emphasised the importance of context and referred (at [45]) to the “end points of the range of contexts” being, at one end, statutory provisions having the object of obtaining production of something in a person’s custody or control, and, at the other end, statutory provisions having the object of attributing an intent to sell to a person in possession, custody or control of specified goods. His Honour gave the case of FCT v ANZ as an example of the former case. This case and s 33(1) of the ASIC Act is also such a case. His Honour stated that in such a case, the statutory context implied that custody or control extended to “persons having de facto power of disposition over the thing which is sought to be produced”.

113    In FCT v ANZ, it was held that a bank had control over documents which it held in a safe deposit box, within the meaning of a statutory provision which empowered the Commissioner of Taxation to require a person to produce documents “in his custody or under his control”. Gibbs ACJ reasoned (at 520), in that context, that the aim of the relevant provision was a “practical one of having documents produced” and that it was not concerned with the “legal relationship of the person to whom the notice is given to the documents which he is required to produce”, but rather with “the ability of the person to whom the notice is addressed to produce the documents when required to do so”. The question, therefore, was “has the person to whom the notice is given such custody or control as renders him able to produce the documents?”.

114    The same can be said about s 33(1) of the ASIC Act. It is “concerned with the ability of the person to whom the notice is addressed to produce the books when required to do so”: see Integrated Financial Group at [70]. The question, then, is effectively whether EuropeFX has de facto power over the documents held by the Providers, or is otherwise able to produce those documents.

Is EuropeFX in possession, custody or control of documents held by MaxiFlex or the Providers?

115    As has already been noted, it appeared to be common ground, or at least not in dispute, that MaxiFlex and at least Antelope held documents relating to clients other than Known Complainants that fell within categories 4, 5, 6, 8 and 12 of the Notice. ASIC contended that any such documents that were held by MaxiFlex or the Providers, including Antelope, were relevantly in EuropeFX’s possession, custody or control. EuropeFX, however, contended to the contrary, and claimed that it was unable to compel either MaxiFlex or the Providers to provide the documents to it so it can produce them in compliance with the Notice.

116    The evidence, such as it was, is sufficient to establish that EuropeFX relevantly has possession, custody or control of any documents that were generated in the course of its business but may be physically held by MaxiFlex or one or more of the Providers. The evidence is certainly insufficient to demonstrate, as EuropeFX effectively contended, that any such documents were not in its possession, custody or control. That is so for a number of reasons.

117    First, as for documents which fall within the scope of the Notice to which MaxiFlex has access, there could be little, if any, doubt that MaxiFlex holds those documents on behalf of, or on account of, EuropeFX. They are plainly documents relating to EuropeFX’s business. According to MaxiFlex’s letter to Mr Sasso dated 12 May 2020, the documents held on servers which MaxiFlex is able to access include emails relating to EuropeFX’s clients which were sent or received by EuropeFX’s representatives and the trading histories of EuropeFX’s clients. It may be inferred that MaxiFlex has access to servers which store those documents either pursuant to the Services Agreement between EuropeFX and MaxiFlex or some other agreement or arrangement between the two companies. As noted earlier, it was common ground, or not in dispute, that EuropeFX was a subsidiary of MaxiFlex.

118    In those circumstances, the apparent suggestion that EuropeFX is in no position to request or require MaxiFlex to return or provide those documents to it has no merit. It is also unsupported by any cogent or reliable evidence. The evidence, at its highest, is that MaxiFlex’s letter dated 12 May 2020 asserts that MaxiFlex will charge EuropeFX for the time it takes its staff to extract manually the relevant documents and that it requires pre-payment of its estimated costs. The legal and factual basis upon which MaxiFlex is said to be entitled to charge its subsidiary for returning its documents is entirely unexplained. It was apparently not questioned by Mr Sasso on behalf of EuropeFX. For the reasons given later, that documentary evidence should be given little, if any, weight.

119    Second, effectively the same can be said concerning any documents which fall within the scope of the Notice which are held by the Providers. There could be little, if any, doubt that, to the extent that any of the Providers hold documents that fall within the scope of the Notice, they hold those documents on behalf of, or on account of, EuropeFX. They are plainly documents relating to EuropeFX’s business which the Providers apparently hold simply because they provided services to EuropeFX in respect of the conduct of EuropeFX’s business. It is difficult to see why, in those circumstances, EuropeFX would not have a right to request or require the Providers to return to it the documents held by them on its account.

120    The documentary evidence, such as it was, tends to support the contention that EuropeFX has the right to request or require the Providers to return its documents to it. That is clearly the case in respect of Antelope, which is one of the Providers who is said to hold, or have access to, documents responsive to the Notice. As discussed earlier, the Service Agreement Terms and Conditions between EuropeFX and Antelope contains an express term (clause 7.4) which provides that upon termination, Antelope was required, at EuropeFX’s request, to either “return” to EuropeFX, or “archive, erase or destroy”, information which was referred to as “Personally Identifiable Information”. The definition of “Personally Identifiable Information” in the agreement indicates that it would include information relating to EuropeFX’s clients. There would appear to be nothing in the agreement which would permit Antelope to charge EuropeFX for the return of that information.

121    As was the case with the documents held by MaxiFlex, EuropeFX relied on letters, said to have been sent by Antelope and received by Mr Sasso, to suggest that it did not have possession, custody or control of the relevant documents. The first of those letters, which is dated 12 May 2020, indicates that Antelope holds “on behalf of” EuropeFX documents which were completed or supplied by EuropeFX’s clients. That would appear to be a concession that the documents are EuropeFX’s documents which Antelope holds on its behalf, presumably because it provided services to EuropeFX pursuant to the Services Agreement Terms and Conditions. Antelope also asserts, in that letter, that it is entitled to charge EuropeFX, pursuant to the terms of the Services Agreement Terms and Conditions, an hourly rate to “manually extract, analyse, prepare, run quality control tests … and then sort and copy the Documents”. It does not refer to the clause of the agreement pursuant to which it asserts that it is entitled to levy those charges in order to comply with its contractual obligation under clause 7.4. Mr Sasso, in his response to this letter, does not ask Antelope to clarify the basis upon which it is entitled to levy the charge.

122    For the reasons that follow shortly, the documentary evidence relied on by EuropeFX is deserving of little, if any, weight. That is all the more so given the absence of any evidence from Mr Sasso.

123    Third, the apparent suggestion by EuropeFX that it is not in possession, custody or control of the documents held on its behalf by MaxiFlex and the Providers would appear to be of fairly recent origin. It did not feature at all in any of the initial correspondence between Piper Alderman, on behalf of EuropeFX, and ASIC or its lawyers. Perhaps more significantly, the evidence clearly indicates that EuropeFX had no difficulties whatsoever in initially retrieving documents from MaxiFlex and the Providers, albeit documentation which was intentionally restricted to the Known Complainants. Ms Moore’s evidence was that someone, presumably Mr Sasso, requested MaxiFlex to ask the Providers to return to EuropeFX any documents responsive to the Notice in relation to Known Complainants. In due course, those documents were produced, presumably as a result of that request. There was no suggestion of any unwillingness, on the part of either MaxiFlex or the Providers, to comply with the request to provide those documents. Nor was there any suggestion that MaxiFlex or the Providers demanded that they be paid for their time in complying with the request, let alone paid in advance.

124    There was no evidence which explained the supposed change in attitude of MaxiFlex and the Providers when Mr Sasso subsequently wrote to them concerning the provision of documents held by them which extended to clients who were not Known Complainants. The absence of any evidence from Mr Sasso generally, and in respect of this topic specifically, was and is telling. It casts considerable doubt on the reliability and genuineness of the documentary evidence now relied on by EuropeFX. Indeed, the available inference, in all the circumstances, is that the letters from MaxiFlex and the Providers are little more than a self-serving contrivance and that the real reason why the documents have not been returned is an unwillingness or disinclination on the part of Mr Sasso to press genuinely for the return or provision of the relevant documents.

125    It may also be observed, in this context, that the entire way that EuropeFX structured and carried on its business, at least according to the documentary evidence, appeared to be highly dubious and questionable. As has already been discussed, the documents suggested that EuropeFX outsourced virtually all of its operations to a number of businesses located in Cyprus, Belize and Israel, pursuant to a series of poorly drafted and highly questionable service agreements. Despite being the authorised representative of the holder of an Australian financial services licence, it appears to have done nothing, and retained no business records, in Australia. Its director, Mr Sasso, may have been able to give evidence and explain this business structure. He apparently chose not to do so.

126    Fourth, the fact that EuropeFX had the capacity to procure MaxiFlex and the Providers to return or provide it with outstanding documents responsive to the Notice so it could produce those documents to ASIC was effectively conceded by EuropeFX when it made an open offer, at the commencement of the hearing, to consent to various orders. That offer was not accepted by ASIC as it was not content with the proposed orders for various reasons that it is unnecessary to consider. The proposed consent orders were, however, subsequently tendered and admitted into evidence. The proposed orders were plainly premised on the fact that EuropeFX was able to cause all outstanding documents responsive to categories 4, 5, 6, 8 and 12 which were held by Antelope, Coperato and MaxiFlex to be produced to ASIC. It is difficult to see how EuropeFX could have considered consenting to the proposed orders had it not relevantly been in possession, custody or control of the documents such that it was in a position to comply with them.

127    It should be noted, in this context, that the production of documents held by Antelope pursuant to the proposed consent orders was conditional on EuropeFX paying what was said to be an outstanding invoice and the anticipated costs of producing the documents. Such payments had to be approved by ASIC as a result of the asset preservation orders made pursuant to s 1323 of the Corporations Act: see Australian Securities and Investments Commission v Union Standard International Group Pty Ltd [2020] FCA 603. While there was no evidence in this proceeding that ASIC had refused to approve the remission of monies overseas to pay the amounts claimed by Antelope, it is not difficult, in all the circumstances, to understand why ASIC might be reluctant to do so. Even if ASIC had refused to authorise any such payment, that would not demonstrate that EuropeFX does not relevantly have the possession, custody or control of the documents held by Antelope. Indeed, if anything, the inclusion, in the proposed consent orders, of a requirement that ASIC approve the payment fortifies the inference that the documentary evidence relied on by EuropeFX amounts to little more than a self-serving contrivance.

128    In all the circumstances, EuropeFX’s contention that it did not have possession, custody or control of the outstanding documents responsive to categories 4, 5, 6, 8 and 12 of the Notice which related to clients other than Known Complainants is rejected. The evidence, such as it was, supported the inference or conclusion that EuropeFX had such custody or control as was necessary to enable it to produce those documents. To the extent that the documents were in the physical possession of MaxiFlex and the Providers, at the very least EuropeFX had the right, power or capability of requiring those entities to return or provide those documents to it so it could produce them to ASIC. The documentary evidence which tended to suggest otherwise was deserving of little weight.

REASONABLE EXCUSE

129    EuropeFX bore the evidential burden of establishing that it had a reasonable excuse for not having fully complied with the notice. It did not discharge that burden.

130    The only reasonable excuse that was articulated by EuropeFX appeared to relate to the fact that the outstanding documents were in the physical possession of MaxiFlex and one or more of the Providers and its supposed inability to procure or compel those entities to return or provide those documents to it. The evidence relied on by EuropeFX in relation to that supposed excuse was almost entirely documentary. Its director, Mr Sasso, did not give evidence. Nor did any other officer or employee of EuropeFX, if there was one. For the reasons already given, the documentary evidence relied on by EuropeFX should be given little, if any, weight.

131    In the absence of any evidence from Mr Sasso to explain why EuropeFX had not produced any documents relating to clients other than the so-called Known Complainants, it cannot be accepted that EuropeFX has any excuse, let alone a reasonable one, for its failure to comply fully with the Notice to date. The Notice was issued and sent to EuropeFX in late December 2019. It required production of the documents specified in the Schedule to the Notice by 17 January 2020. Instead of taking immediate steps to produce documents, EuropeFX appears to have instructed its solicitors to raise a series of mostly spurious complaints and contentions about the validity of the Notice, most of which were ultimately not pressed or pursued. When EuropeFX did begin to produce documents pursuant to the Notice, it unilaterally restricted its production of documents in respect of certain categories to documents that related to only so-called Known Complainants. There was no proper basis for it to do so.

132    It was only after ASIC commenced this proceeding, months after the date by which EuropeFX ought to have complied with the Notice, that EuropeFX raised the argument that it did not possess the outstanding documents relating to clients other than Known Complainants and that it could not require or compel MaxiFlex and the Providers who were said to have physical possession of the documents to provide them to it so it could fully comply with the Notice. The correspondence between Mr Sasso, on behalf of EuropeFX, and MaxiFlex and the Providers must be considered in that context. In the absence of any evidence from Mr Sasso to explain fully and justify this sorry history of compliance, it cannot be accepted that EuropeFX has or ever had a reasonable excuse for its non-compliance.

133    It should also be noted that, to the extent that EuropeFX relied on Ms Moore’s evidence concerning the inconvenience and expense involved in fully complying with the Notice, as discussed earlier, it is tolerably clear that mere inconvenience and expense would not ordinarily provide a reasonable excuse for non-compliance. Even putting that principle to one side, the fact of that matter is that if compliance with the Notice is burdensome and expensive for EuropeFX, that would appear to be in large part due to the way it chose to conduct its business. It is difficult to imagine that compliance with the Notice would have been particularly burdensome or expensive had EuropeFX not apparently chosen to outsource virtually all its operations and administration to entities domiciled in such far-flung places as Cyprus, Belize and Israel. It is hardly reasonable, in those circumstances, for it to now complain about the trouble and expense involved in it producing documents relating to its operations to ASIC.

HAs EUROPEFX FAILED TO COMPLY WITH THE NOTICE?

134    ASIC has made good its case that EuropeFX has failed to comply fully with the Notice. EuropeFX has not produced all documents within its possession, custody or control, which fall within categories 4, 5, 6, 8 and 12 of the Schedule to the Notice. That is because it has not produced documents that fall within those categories that relate to clients who were not Known Complainants. EuropeFX’s contention that those outstanding documents were not within its possession, custody or control is rejected. EuropeFX has also not demonstrated that it had a reasonable excuse for not complying fully with the Notice.

135    One final matter should be noted for more abundant caution. It was submitted, on behalf of EuropeFX, that while this is a civil proceeding, it is part of a “regime” that may lead to criminal liability. That was presumably a reference to the fact that it is an offence for a person to intentionally or recklessly fail to comply with a requirement made under, inter alia, s 33 of the ASIC Act: s 63(1) of the ASIC Act. Commission of that offence carries a penalty of imprisonment for 2 years. It was submitted, in that context, that the principles in Briginshaw v Briginshaw (1938) 60 CLR 336 applied. That principle, shortly stated, is that the “seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved”; and that, where an action involves serious allegations which may give rise to penalties or other serious consequences, satisfaction on the balance of probabilities is not achieved by “inexact proofs, indefinite testimony, or indirect inferences”: Briginshaw at 362 (Dixon J).

136    The principles in Briginshaw are, to a certain extent at least, reproduced in s 140(2) of the Evidence Act 1995 (Cth), which relevantly provides that, in considering whether a party has proved its case on the balance of probabilities, the court is required to take into account the nature of the cause of action, the nature of the subject-matter of the proceeding and the gravity of the matters alleged. Regardless of whether it is entirely accurate to say that this proceeding is part of a regime that may lead to a criminal conviction, it is undoubtedly necessary for the Court to have regard to and apply s 140(2) of the Evidence Act. It may also be accepted that the allegation that EuropeFX had failed to comply fully with the Notice is of a serious nature and that, to that extent at least, the principles in Briginshaw applied. That said, the only consequence of the finding, in this proceeding, that EuropeFX had not complied fully with the Notice is the making of an order under s 70(3) of the ASIC Act. What happens next will, to a large extent, depend on what EuropeFX does in response to that order. It might also be added that the submission based on Briginshaw may have had more resonance had Mr Sasso, or some other officer or employee of EuropeFX, chosen to give evidence.

137    In any event, it cannot be said that ASIC’s case concerning EuropeFX’s non-compliance was based on inexact proofs, indefinite testimony or indirect inferences. And, while the allegation that EuropeFX had failed, to date, to comply fully with the Notice was a serious allegation which may ultimately have serious implications for EuropeFX, the Court is nonetheless comfortably satisfied, having regard to the principles in Briginshaw and s 140(2) of the Evidence Act, that ASIC’s allegation in that regard has been made out on the balance of probabilities.

EXERCISE OF the DISCRETION to order compliance

138    It remains to consider EuropeFX’s submission that the Court should not, in any event, exercise its discretion to make the order sought by ASIC because to do so would be futile. EuropeFX’s submission, in that regard, was premised on the acceptance of its contention that it was unable to require or compel MaxiFlex and the Providers who were said to have the physical possession of the documents to return or provide those documents to it.

139    For the reasons already given, EuropeFX’s contention in that regard cannot be accepted. Indeed, the available inference from the evidence, considered as a whole, is that, if anything, the failure of EuropeFX to produce the outstanding documents to date is a result of the unwillingness or disinclination of EuropeFX to press genuinely Maxiflex and the Providers for the return of the relevant documents. It cannot, in those circumstances, be accepted that the making of an order, pursuant to s 70(3) of the ASIC Act, that EuropeFX comply with the Notice within a specified period of time would be futile, sterile or meaningless, as was contended by EuropeFX.

140    It should finally be noted that the order sought by ASIC was to the effect that EuropeFX comply fully with the Notice within seven days of the order or “such other date as the Court sees fit”. In all the circumstances, a requirement that EuropeFX produce all outstanding documents within seven days is perhaps unrealistic. While EuropeFX’s delay to date in producing documents pursuant to the Notice has been unsatisfactory, inexcusable and regrettable, the Court’s order that EuropeFX comply with the Notice must be reasonable and realistic and allow sufficient time for EuropeFX to retieve the outstanding documents from the Providers and produce them to ASIC. In all the circumstances, EuropeFX should be given 28 days from the date of the order to comply fully with the Notice.

CONCLUSION AND DISPOSITION

141    ASIC has made good its contention that EuropeFX has, without reasonable excuse, failed to comply with the Notice. An order will be made pursuant to s 70(3) of the ASIC Act requiring EuropeFX to comply with the Notice by producing the books pursuant to paragraphs 4, 5, 6, 8, 12 and 19 of the Notice within 28 days. EuropeFX should pay ASIC’s costs of the application.

Associate:

Dated:    3 September 2020