Federal Court of Australia

Australian Securities and Investments Commission v Dunjey (No 2) [2023] FCA 610

ORDERS

THE COURT NOTES THAT:

A.    For the purposes of these orders the 'Scheme' and 'Liquidator' have the meanings given in the orders of Justice Feutrill dated 21 April 2023 in this proceeding (April Orders).

THE COURT ORDERS THAT:

Appointment of receivers

1.    Pursuant to section 57 of the Federal Court of Australia Act 1976 (Cth), Mr Matthew James Donnelly and Mr Sean Holmes be appointed, jointly and severally, as receivers and managers (Receivers), without security, of all property (as defined in the Corporations Act 2001 (Cth)), whether within or outside the State of Western Australia, of:

(a)    the second defendant;

(b)    the Ascent Trust (formerly the Dunjey Family Trust) (Trust);

(c)    the Scheme (together, the Property).

2.    The need for the Receivers to file a guarantee under rr 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with.

3.    To the extent it has not already occurred, the second defendant is to immediately give over possession of all its property (as defined in the Corporations Act), whether within or outside the State of Western Australia and whether it be held on trust or in its own right, together with all books and records relating to that property to the Receivers.

4.    The Receivers have the following powers:

(a)    the power to do all things necessary or convenient to be done, in Australia and elsewhere, for or in connection with, or as incidental to the attainment of the objectives for which the Receivers are appointed including, without limitation, for the identification, preservation and securing of all of the Property for the benefit of creditors;

(b)    the powers set out in section 420 of the Corporations Act provided that wherever in that section the word 'corporation' appears, it shall be taken to refer to the second defendant, the Trust and the Scheme; and

(c)    the power to require, by request in writing, the first defendant and any employee, agent, banker, solicitor, stockbroker, accountant, consultant or other professionally qualified person who has provided services or advice to the first defendant or the second defendant to provide such reasonable assistance (including access to any documents, books or records to which the first defendant or second defendant has a right of access or control) to the Receivers as may be required from time to time.

5.    Upon being called upon to do so, the Receivers must deliver up that part of the Property that is property of:

(a)    the second defendant, to the liquidators appointed pursuant to order 3 of the April Orders;

(b)    the Scheme, to the liquidators appointed pursuant to order 5 of the April Orders; and

(c)    the Trust, to the receivers appointed pursuant to order 8 of the April Orders.

Receivership remuneration and indemnity orders

6.    The Receivers shall be entitled to reasonable remuneration properly incurred in the performance of their duties arising in connection with their appointment and in the exercise of their powers as may be approved by the Court on the application of the Receivers, together with all costs, expenses and disbursements.

7.    The Receivers' remuneration is to be calculated on the basis of time reasonably spent by the Receivers and any partner or employee of the firm to which the Receivers are attached, at the standard rates of the Receivers' firm from time to time for work of that nature.

8.    The Receivers' remuneration, costs, expenses and disbursements are to be paid from the Property.

9.    The Receivers be indemnified from the Property against any claim, liability, proceedings, cost, charge or expense however arising and whether past, present or future, fixed or ascertained, actual or contingent, known (actually or contingently) or unknown which they may incur or be subject to as a result of or in connection with their appointment.

10.    The above orders are not to affect the rights of any prior encumbrances over the Property, including the rights of any secured creditor.

11.    For the avoidance of doubt, the entitlement of the Receivers to be paid or indemnified from the Property under orders 8 and 9 is not restricted or in any way limited by whether they are acting as receivers of property of the first defendant, the second defendant, the Trust or the Scheme and they are entitled to treat the Property as a single combined pool of property for those purposes.

12.    The Receivers' costs in respect of the above orders be payable from the Property.

13.    The Receivers have liberty to apply on 48 hours' written notice.

Dissolution of non-publication order

14.    The interim non-publication order made at paragraph 14 of the April Orders is dissolved.

15.    Paragraph 14 of today's orders is stayed until 4.15pm on 2 June 2023 (AWST).

16.    The first defendant has liberty to apply to the Court to extend the stay referred to in paragraph 15 of these orders.

17.    The first defendant is to pay the plaintiff's costs of the first defendant's interlocutory application for suppression and non-publication orders.

General

18.    The time for Western Australian Newspapers Limited, an interested non-party, to comply with paragraph 18 of the April Orders to file and serve its submissions, and any affidavit material, in opposition to the first defendant's application for a suppression and non-publication order is extended to Friday 26 May 2023.

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

REASONS FOR JUDGMENT

FEUTRILL J:

1    On 21 April 2023, I made orders and delivered reasons on the plaintiff's originating application: Australian Securities and Investments Commission v Dunjey [2023] FCA 361. At the time the orders were made and reasons were delivered, I made a non-publication order under s 37AI of the Federal Court of Australia Act 1976 (Cth) by which declarations of contraventions of ss 601ED(5) and 911A of the Corporations Act 2001 (Cth) as well as parts of a preamble to the orders describing the managed investment scheme that had been operated by the second defendant and the reasons were not to be published. The orders also made provision for the parties, interested non-parties and interested news publishers to provide further evidence and submissions as to whether the non-publication order should be continued or dissolved. The orders also reserved aspects of the payment of the remuneration, costs and expenses of the liquidators and receivers and managers appointed under those orders.

2    On 1 June 2023, I made further orders dealing with the remuneration, costs and expenses of the liquidators and receivers and managers. I also made an order dissolving the non-publication order. These are my reasons for dissolving the non-publication order. There is no need to provide reasons for my further orders dealing with remuneration, costs and expenses as these were largely given in Dunjey.

3    As was explained in Dunjey at [148]-[153], I was not satisfied that the declarations the plaintiff had requested that the Court make against the second defendant should not be made on the basis that there was a possibility of criminal prosecution of the first defendant for an unspecified and unknown offence. While I was also not satisfied, on the information then available, that a suppression or non-publication order was necessary, I considered that there was, at least, a serious question to be considered in that regard. For that reason, I made an order under s 37AI of the Federal Court Act and made provision for evidence and submissions to be provided on that question: Dunjey at [154].

4    Section 37AF(1) of the Federal Court Act provides that the Court may, by making a suppression order or non-publication order, prohibit or restrict the publication or other disclosure of, amongst other things, information that relates to a proceeding before the Court and is information that comprises evidence or information about evidence or information lodged with or filed in the Court. Relevantly, s 37AG(1)(a) provides that the Court may make a suppression or non-publication order on the ground that the order is necessary to prevent prejudice to the proper administration of justice. Section 37AA provides that a non-publication order means an order that prohibits or restricts the publication of information (but that does not otherwise prohibit or restrict the disclosure of information) and a suppression order means an order that prohibits or restricts the disclosure of information (by publication or otherwise).

5    The principles applicable to making a suppression or non-publication order were summarised in Country Care Group Pty Ltd v Director of Public Prosecutions (Commonwealth) (No 2) [2020] FCAFC 44; (2020) 275 FCR 377 as follows:

8    Suppression or non-publication orders should only be made in exceptional circumstances: Rinehart v Welker (2011) 93 NSWLR 311 (Rinehart v Welker) at [27]; Rinehart v Rinehart (2014) 320 ALR 195 (Rinehart v Rinehart) at [23]. That is both because the operative word in s 37AG(1)(a) is "necessary" and because the court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: Rinehart v Welker at [32]; Rinehart v Rinehart at [25]. The paramount consideration is the need to do justice; publication can only be avoided where necessity compels departure from the open justice principle: Rinehart v Welker at [30]; Rinehart v Rinehart at [26].

9    The critical question is whether the making of a suppression or non-publication order is "necessary to prevent prejudice to the proper administration of justice". The word "necessary" in that context is a "strong word": Hogan v Australian Crime Commission (2010) 240 CLR 651 (Hogan) at [30]. It is nevertheless not to be given an unduly narrow construction: Fairfax Digital Australia and New Zealand Pty Ltd v Ibrahim (2012) 83 NSWLR 52 (Ibrahim) at [8], citing Hodgson JA in R v Kwok (2005) 64 NSWLR 335 at [13]. The question whether an order is necessary will depend on the particular circumstances of the case. Once the court is satisfied that an order is necessary, it would be an error not to make it: Hogan at [33]. There is no exercise of discretion or balancing exercise involved: Australian Competition and Consumer Commission v Air New Zealand Ltd (No 3) [2012] FCA 1430 at [21].

6    The first defendant applied for both non-publication and suppression orders. He requested the Court, in substance, make a non-publication order continuing the effect of the non-publication order made on 21 April 2023. He also requested that the Court make a suppression order the effect of which would be to prohibit the disclosure of the information the subject of the non-publication order to any contributor of the Scheme (as described in the preamble to the orders made on 21 April 2023). He requested that the non-publication and suppression orders continue until the earlier of the conclusion of any criminal proceedings against him or confirmation that criminal proceedings will not be brought against him.

7    The first defendant made written and oral submissions in support of his application and relied on an affidavit of Mr Damien Peter Bristol sworn 5 May 2023. The plaintiff made written and oral submissions in opposition to the first defendant's application and relied on an affidavit of Ms Brieanna Kirsty Mercer affirmed 19 May 2023. In accordance with the orders made on 21 April 2023, West Australian Newspapers Limited filed a notice as an interested news publisher and it made written and oral submissions in opposition to the first defendant's application.

8    The first defendant submitted that the requested non-publication and suppression orders were necessary to prevent prejudice to the proper administration of justice. He submitted that while it is not yet known whether he will face charges, or what those charges may be, the prospect of criminal prosecution of him is real and not fanciful or hypothetical.

9    There was affidavit evidence before the Court that the plaintiff is investigating the first defendant. Further, these investigations may result in criminal prosecution of the first defendant for contraventions of s 409 of the Criminal Code 1913 (WA) (fraud), s 1041E (false or misleading statements) and s 1307 (falsification of books) of the Corporations Act. The first defendant submitted that while the precise manner in which any offence may be particularised was not known, there was a real prospect that the alleged facts upon which any criminal prosecution would be based would overlap to a significant extent with the facts upon which the declarations of contraventions of ss 601ED(5) and 911A were made in respect of the second defendant. The potential for overlap arises, so the first defendant submitted, because he was a director of the second defendant and his conduct as an officer of the second defendant formed part of the factual foundation for the declarations made.

10    The first defendant submitted that a person who reads the preamble to the orders of 21 April 2023 may infer from the description of the managed investment scheme that the first defendant made dishonest misrepresentations to contributors. He submitted that such an inference may arise from the description of the managed investment scheme in paras A – C, F and G of the preamble to the orders whereby the first defendant made representations to contributors that funds would be used for investment activities of the second defendant, but a considerable portion of the funds received from contributors was not used for that purpose and a portion was used for paying for personal expenses of the first defendant or people or entities related to him.

11    I accept that the submitted inference is open. However, it is also equally open to infer facts consistent with an honest or innocent use of the funds for other purposes. Considerably more information and detail would be necessary for an inference of 'dishonest misrepresentation' to be capable of excluding other inferences available that are consistent with honesty or innocence. Nonetheless, I accept that a person could form an adverse impression of the first defendant based, in part, on the description of the Scheme in the preamble to the orders of 21 April 2023.

12    The first defendant submitted that the conclusions expressed in paras [96]-[97] of the reasons in Dunjey were prejudicial and there was a real prospect these conclusions would overlap with any prosecution of him. In these paragraphs of Dunjey I expressed the view that it was very likely that the defendants operated a 'Ponzi scheme' and it was also likely that the vast majority of the funds that contributors deposited with the second defendant has not been used for genuine investment activities of the kind represented to contributors. However, I qualified these observations in para [98] of Dunjey by indicating that while I considered those matters likely, on the evidence before the Court, I was not able to make a positive finding in regard to those matters. Put another way, I was not satisfied on the evidence that the defendants had, in fact, operated a 'Ponzi scheme' or that the vast majority of the funds had not been used for genuine investment activities. The likelihood was relevant to the question of what orders should be made on the plaintiff's application including winding up the second defendant and the Scheme and the appointment of liquidators of the second defendant and the Scheme, but it was not necessary to make findings of these matters to conclude that the second defendant operated an unregistered managed investment scheme contrary to s 601ED(5) of the Corporations Act.

13    The observations in paras [96]-[98] of Dunjey convey that I was not satisfied on the evidence that the defendants had operated a Ponzi scheme or that the vast majority of funds had not been used for genuine investment activities. Therefore, on the face of them, these observations may be considered favourable to the first defendant. Nonetheless, I accept that judicial statements about the likelihood of these matters could have a prejudicial influence on the deliberations of a person (who has read the reasons) who is a member of any jury empanelled in respect of any criminal prosecution of the first defendant for charges connected to alleged fraudulent, false or misleading representations made to contributors of the Scheme.

14    The first defendant also submitted that the conclusion at para [95] of Dunjey to the effect that the second defendant's financial statements do not accurately reflect its financial position, may overlap with any charges in connection with falsification of books. While there is the potential for a degree of overlap, unlike the observations concerning representations made to contributors and operation of the Scheme, the reasons in Dunjey concerning the accuracy of the second defendant's financial statements do not draw on the first defendant's conduct and have no colour of impropriety. I do not accept the conclusion in para [95] has any real prejudicial effect.

15    It follows that I accept that if a juror were to read the orders and reasons of 21 April 2023 at or around the time of a criminal prosecution of the first defendant there is a risk that such a juror would be influenced to the detriment of the first defendant in any criminal prosecution involving allegations of fraud or false or misleading statements made in connection with obtaining funds from contributors to the Scheme. I also accept that these proceedings have attracted media attention both within Western Australia and nationally and it is to be expected that there will be fair reporting of the orders and reasons of 21 April 2023 and that reporting will be published in newspapers and other forms of media in circulation or within the area from which potential jurors will be drawn. Thus, the question is whether suppression or non-publication orders are necessary to prevent prejudice to the proper administration of justice and, in effect, to ensure that the first defendant receives a fair trial in the future.

16    I am not satisfied that a non-publication order is necessary largely for the reasons identified in the plaintiff's submissions (which were supported by WAN). The risk of prejudice to a fair trial in any future potential criminal prosecution is remote. Further, to the extent a risk of a juror becoming aware of prejudicial, but ultimately irrelevant, information derived from the reasons in Dunjey is adequately mitigated by the directions usually given to juries in criminal trials. In reaching these conclusions I have taken the following matters into account.

(1)    The first defendant has not been charged with any offence in connection with the operation of the Scheme. On the evidence before the Court, it is not known if there will be any criminal prosecution. While it may be possible to characterise the possibility of criminal prosecution as real or not fanciful, in truth, such characterisation is no more than speculation.

(2)    The evidence before the Court suggests that it will be, at least, a year before the plaintiff's investigation is complete, any brief is referred to the Commonwealth Director of Public Prosecutions, any decision is made to prosecute the first defendant and any jury is empanelled for a trial. While historical media publications are likely to remain available and accessible, memories of publications viewed or read at or around the time of publication of the orders and reasons in Dunjey will have significantly faded in the mind of any potential jurors who happened to view or read those publications by the time of any criminal prosecution. Otherwise, I am not satisfied that any prospective juror is likely to search for and read Dunjey before the commencement of any trial for similar reasons that the Full Court was not satisfied of similar matters in Country Care Group at [16].

(3)    It is to be expected that the judge presiding over any criminal prosecution will provide directions to the jury when any trial commences to the effect that the jurors are not to search for information or conduct their own research in relation to the trial. I doubt that any juror would disobey such a direction for similar reasons to those the Full Court gave in Country Care Group at [17] for seriously doubting that any person selected on the jury would search for and read the judgment the subject of that decision.

(4)    The findings of fact in Dunjey concerned the second defendant and its conduct of an unregistered management investment scheme and unlicensed financial services business. The relevant findings of fact, that are largely reproduced in the preamble to the orders of 21 April 2023, while involving conduct of the first defendant, were made at a high level of generality as these relate to operation of a managed investment scheme and financial services business. Findings of fact of that nature are unlikely to have any direct relevance to any criminal prosecution of the first defendant.

(5)    Likewise, the observations made in paras [96]-[98] of Dunjey are of no direct relevance to any criminal prosecution. As explained earlier in these reasons, these observations are irrelevant because the conclusion reached is that the Court was not satisfied of the relevant matters. Therefore, these observations do not involve any finding of fact against the second defendant or first defendant.

(6)    The extent of any potential prejudice is unknown and speculative. As already noted, it is not known if there will be any criminal prosecution or, if so, the nature of the allegations that will be made. Therefore, the extent of any overlap between the findings of fact referred to in Dunjey and any criminal prosecution is unknown and a matter of conjecture. Further, as has already been noted, the findings of fact in Dunjey concern the second defendant and are not directly findings of conduct and contraventions of the first defendant.

17    The first defendant also requested that a suppression order be made on the basis that the contributors to the Scheme are likely to be material witnesses of fact in any criminal trial and there is a real danger that the recollections of those contributors may be affected by the findings of fact and evidence referred to in Dunjey. He submitted that it is inevitable that contributors will read Dunjey due to their personal interest in the proceedings.

18    In my view, the first defendant has not established any such 'real danger'. He has not identified any particular finding of fact or evidence that has or may have the potential to influence the recollection of any particular witness. The first defendant's submission of 'real danger' is a bare assertion; it is mere speculation. As noted earlier, the findings of fact in Dunjey are of a general nature. Where relevant evidence is referred to in Dunjey it is by way of reference to particular contributors and the documentary or other evidence relating to those contributors. The general conclusions of fact about representations made to contributors referred to in the reasons in Dunjey were largely drawn from documentary evidence and what was inferred from the contents of documents. Nonetheless, I accept that a contributor who reads the reasons in Dunjey will be exposed to reasoning and discussion of evidence concerning other contributors. To an extent, that raises a risk of a witness who has read the reasons in Dunjey being influenced by extraneous material. However, in any criminal trial, the first defendant would have the opportunity to cross-examine any witness about those matters in the same way that a witness may be cross-examined about other potential reasons that the witness's evidence-in-chief is not an accurate or genuine recollection. In my view, the risk of 'tainted' evidence arising from reading the reasons in Dunjey is more theoretical than real and, in any case, is mitigated by the ability of the first defendant to test evidence by cross-examination.

19    Further, it is to be expected that any investigation of potential criminal offences will be conducted in accordance with appropriate ethical standards. Investigators and prosecutors can be expected to take appropriate steps to guard against the risk of witnesses' evidence becoming influenced by extraneous sources that may affect the witnesses' independent recollection of facts. In my view, the risk of the recollection of a potential witness being influenced by the reasons in Dunjey so as to affect recollection of facts is remote. The potential for such an influence to result in the first defendant not receiving a fair trial is yet more remote.

20    Further, the form of order the first defendant has requested would prevent and prohibit the plaintiff (or anyone else) from disclosing 'information' contained in Dunjey to a contributor to the Scheme. In terms, that would prevent disclosure of 'information' even if it directly related to a contribution made by the relevant contributor. Thus, if orders were made in the terms requested, there is a real danger of the order having the effect of hindering or inhibiting the plaintiff's investigation of potential criminal offences. That is, the requested orders have the potential to hinder not advance the administration of justice.

21    It follows that I am not satisfied that the requested suppression order is necessary to prevent prejudice to the proper administration of justice.

22    In reaching my conclusions that suppression and non-publication orders are not necessary, I am mindful of the observations of O'Bryan J in Australian Competition and Consumer Commission v Bluescope Steel Ltd [2019] FCA 1532, where his Honour said:

32    As observed by the High Court in Hogan v Australian Crime Commission (2010) 240 CLR 651 at [30] (with respect to the predecessor provision to s 37AG(1)(a) - s 50 - which was in substantially identical terms), "necessary" is a strong word and it is insufficient that the making of a suppression or non-publication order appears to be "convenient, reasonable or sensible". Accepting that "necessary" is a strong word, it nevertheless has shades of meaning which reflect the context in which it is used: Fairfax Digital Australia and New Zealand Pty Ltd v Ibrahim (2012) 83 NSWLR 52 (Ibrahim) at [8] per Bathurst CJ and [45] per Basten JA. In the context of s 37AG(1), the test of necessity must be applied on a forward looking basis to criteria which are broadly defined (administration of justice, national security, safety of a person and undue distress and embarrassment). In the context of s 37AG(1)(a) specifically, the prejudice to the administration of justice that may be caused by the publication of information may be a possibility or a certainty; the effect of publication may be minor or serious; and the effect of a suppression or non-publication order may diminish the risk of prejudice or obviate it altogether: Ibrahim at [46] per Basten JA. The difficulties of making predictions about the effect that publication of information may have on such matters in the future was described by Basten J (as his Honour then was) in an earlier decision as engaging "an atypical aspect of the judicial function" involving "the application of ill-defined and imprecise conflicting principles, on the basis of speculation as to future consequences": Commissioner of Police (NSW) v Nationwide News Pty Ltd (2007) 70 NSWLR 643 at [85].

23    I have also not overlooked that suppression and non-publication orders are a recognised mechanism for preserving the integrity of a criminal trial process and that it may be preferable to restrict publication of information instead of relying on the effectiveness of jury directions: News Digital Media Pty Ltd v Mokbel [2010] VSCA 51; (2010) 30 VR 248 at [73], [90]. Further, directions to a jury are not always an appropriate means of curing contamination of a jury pool: Nationwide News Pty Ltd v Qaumi [2016] NSWCCA 97; (2016) 93 NSWLR 384 at [71]-[72]. See, also, Bluescope Steel [13]-[15], [34], [39]. However, against these observations, equally, juries should not be considered as fragile or prone to prejudice: John Fairfax Publications Pty Ltd v District Court of New South Wales [2004] NSWCA 324; (2004) 61 NSWLR 344 at [103]-[110]. The mere possibility of exposure to prejudicial, but ultimately irrelevant, information before a trial will not ordinarily deprive an accused of a fair trial even in the 'internet age' where historic publications are readily available: R v Glennon [1992] HCA 16; (1992) 173 CLR 592 at 603; Bluescope Steel at [35]-[36].

24    Further, as the Full Court observed in Country Care Group at [29], s 37AE of the Federal Court Act makes it clear that 'the public interest in open justice is a primary consideration in deciding whether to make a suppression or non-publication order. The principle of open justice is "one of the overarching principles in the administration of justice" which "lies at the heart of the exercise of judicial power as part of the wider democratic process": Minister for Immigration and Border Protection v Egan [2018] FCA 1320 (Egan) at [4]. The principle involves justice being seen to be done. While the principle as not an "absolute concept", an order restricting the ordinary open justice approach is "not lightly made": Egan at [4].'

25    It follows that while there is some risk of prejudice to the first defendant receiving a fair trial in any future criminal prosecution, that risk is remote and adequately mitigated. In short, the first defendant has not demonstrated that a suppression or non-publication order is necessary to prevent prejudice to the proper administration of justice.

Associate:

Dated:    8 June 2023