Federal Court of Australia

Australian Securities and Investments Commission v Valvo [2023] FCA 895

ORDERS

THE COURT ORDERS THAT:

1.    The orders made on 1 August 2023 that relate to, inter alia, the suppression of parts of the affidavit of Jessica Susann Seymour affirmed on 5 July 2023 be vacated and in lieu thereof the following orders take effect nunc pro tunc from 1 August 2023.

2.    Until further order of the Court, pursuant to s 37AF(1) of the Federal Court of Australia Act 1976 (Cth) on the grounds specified in 37AG(1)(a) of the Act, the following parts of the affidavit of Jessica Susann Seymour affirmed on 5 July 2023 are suppressed and not to be disclosed (by publication or otherwise) to any person other than the parties, their officers and their legal representatives and any employee of the Federal Court:

(a)    In paragraph 27(a), the number and month that appear after the words “in Malta on”;

(b)    In paragraph 27(b), the address that appears after the words “resides at” and before the words “: and”;

(c)    In paragraph 62, the email address that appears after the words “3 September 2019 from” and before the words “to wealthtrac@wrapinvest.com.au”;

(d)    In paragraph 66, the email address that appears after the words “17 December 2019 from” and before the words “to wealthtrac@wrapinvest.com.au”;

(e)    In paragraph 71, the email address that appears after the words “3 September 2019 from” and before the words “to wealthtrac@wrapinvest.com.au”;

(f)    In paragraph 81, the account numbers that appear in the third column of the table, entitled “Account Number”;

(g)    In paragraph 82, the account number that appears after the words "and numbered" and before the words “, as referred to”;

(h)    In paragraph 83, the account number that appears after the words "and numbered" and before the words “as referred to”;

(i)    In paragraph 105, the account number that appears in the chapeau after the words “Mr Valvo and numbered” and before the words “(as referred to in”;

(j)    In paragraph 118, the account numbers that appear in the second column of the table, entitled “Account Number”.

3.    Until 4.00pm (AEST) on 26 September 2023, pursuant to s 37AF(1) of the Act on the grounds specified in 37AG(1)(a) of the Act, the following parts of the affidavit of Jessica Susann Seymour affirmed on 5 July 2023 are suppressed and not to be disclosed (by publication or otherwise) to any person other than the parties, their officers and their legal representatives and any employee of the Federal Court:

(a)    In paragraph 13, the name that appears after the words “a report from” and before the words “(the Reporter)”;

(b)    In paragraph 39, the entirety of sub-paragraphs (a), (b) and (c) that appear after the chapeau;

(c)    Paragraph 44, in its entirety;

(d)    Paragraph 108, in its entirety;

(e)    Paragraph 117, in its entirety; and

(f)    In paragraph 129(c), the last sentence.

4.    By 2.00pm on 2 August 2023, the Plaintiff is to file and serve (including on Mr Butler) an affidavit which provides the evidentiary basis for the submission advanced by the Plaintiff at paragraphs 7 and 12 of its written submissions dated 31 July 2023.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    On 5 July 2023, I made orders in my capacity as Commercial and Corporations Duty Judge on the ex parte application by the Australian Securities and Investments Commission (ASIC) restraining the first defendant, David Mario Valvo, from leaving Australia without the consent of the Court and interim asset preservation orders against Mr Valvo and the second defendant, Your Financial Freedom Pty Ltd (YFF). Mr Valvo is the sole director and shareholder of YFF. I also made interim confidentiality orders with respect to certain material relied on for the purpose of that application.

2    For the purpose of these reasons it is sufficient to note that Mr Valvo and YFF are presently the subject of investigation under s 13 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) into suspected contraventions of ss 911C and 1041G of the Corporations Act 2001 (Cth) and s 192E of the Crimes Act 1900 (NSW) during the period 1 January 2015 to 30 December 2021.

3    The ex parte hearing on 5 July 2023 was conducted in open court. ASIC moved on an originating process and read an affidavit of Jessica Susann Seymour affirmed 5 July 2023 (Ms Seymour’s affidavit) and tendered Exhibit JSS-1 to that affidavit (Seymour Exhibit), comprised of 39 tabs. Interim confidentiality / suppression orders were made in respect of discrete paragraphs of the Seymour Affidavit, discrete tabs of the Seymour Exhibit and discrete paragraphs of ASIC’s written submissions.

4    The first order was in the nature of a confidentiality order — it applied to Tab 12 of the Seymour Exhibit, which is comprised of the record of the compulsory examination of Mr Valvo under s 19 of the ASIC Act. This part of the Seymour Exhibit was marked as “Confidential: No Access without leave of a judge of the Court” and is relevantly not to be disclosed to any person other than the parties, their officers, legal representatives and staff of the Court unless otherwise ordered on application under r 2.32(4) of the Federal Court Rules 2011 (Cth).

5    The second order was a non-publication or suppression order under s 37AF(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) — it required that parts of the following documents be redacted and are not to be disclosed (by publication or otherwise) to any person (apart from any employee of the Federal Court), including the defendants:

(1)    paragraphs 59, 60, 91(a) and 108(a) of ASIC’s submissions dated 5 July 2023;

(2)    paragraph 46 of the Ms Seymour’s affidavit and the corresponding Tab 15 of the Seymour Exhibit; and

(3)    paragraph 126 of the Ms Seymour’s affidavit and the corresponding Tab 39 of the Seymour Exhibit.

6    The matter was returned on an inter partes basis on 7 July 2023. On that occasion, Mr Valvo was represented by counsel and his solicitor had filed a notice of appearance. There was no appearance for YFF, and counsel then appearing for Mr Valvo confirmed that neither he nor his solicitor held instructions for YFF. The ex parte orders made against Mr Valvo were continued on a without admissions basis. The ex parte orders made against YFF were made in default of its appearance, upon my being satisfied that service in accordance with the orders made on 5 July 2023 had occurred. For present purposes, it is relevant to record that notwithstanding that the ex parte orders and the originating process and supporting affidavit had been served at this stage, the interim confidentiality / non-publication / suppression orders were continued.

7    On 10 July 2023, Ben Butler, a journalist at News Corp, requested via the Court’s relevant form, access to the originating process and the Seymour Affidavit, excluding the material which is subject to the interim confidentiality orders made on 5 July 2023. Mr Butler records his reason for seeking access as being to “Prepare fair and accurate report of matter of court proceeding in a matter of public importance, being a freezing order and travel ban over a person who is or has been a financial adviser.”

8    Recognising that there might be some contest as to whether access should be granted to those documents, I caused the parties to be asked for their respective positions in respect of Mr Butler’s request by 4.00pm on 14 July 2023. Mr Valvo and ASIC sent a joint email to my Chambers seeking that the portion of the originating process containing Mr Valvo’s address for service be redacted and also provided a schedule of redactions to the Seymour Affidavit that the parties sought to have protected by confidentiality orders on the basis that disclosure may “cause prejudice to innocent individuals or may be used for nefarious purposes; cause embarrassment; or prejudice the proper administration of justice.” The scope of the material that ASIC and Mr Valvo sought to have protected by further confidentiality orders was broader than the interim orders obtained on 5 July 2023, when the affidavit was read in open court.

9    I requested the parties provide a short joint submission as to the specific bases upon which ASIC and Mr Valvo submitted that it was necessary to make the further suppression or non-publication orders sought by them under s 37AF of the FCA Act. As a result, the scope of the orders sought narrowed somewhat. ASIC and Mr Valvo provided joint submissions and proposed consent orders for my consideration on 21 July 2023. On reviewing those submissions, I convened a case management hearing, at which I expressed two concerns, in relation to the approach taken by the parties.

10    My first concern was that, in their joint submission, the parties had inverted the correct approach by asking whether there was a public interest in disclosure, rather than starting from the principle that open justice requires disclosure, unless it is necessary to make an order under s 37AF(1) on one of the grounds in s 37AG(1) of the FCA Act.

11    My second concern was that the parties sought to obtain additional suppression orders over material that had been read in open court on the basis that to fail to do so would undermine the efficacy of an interim suppression order. The interim suppression order made on 5 July 2023 relates to the suppression of a part of a confidential exhibit to Ms Seymour’s affidavit, not to the affidavit itself. The existence of that interim order does not justify its continuance, nor does it justify extending confidentiality over Ms Seymour’s affidavit in circumstances where the affidavit was read in open court. Moreover, in circumstances where the order of 5 July 2023 was an interim order, an anterior question as to the justification for continuing that order arises. Having regard to the principle of open justice and the effect of ss 37AF and 37AG of the FCA Act, I informed the parties that in the face of a request for access they should justify why it was necessary to continue the interim orders that had been made, originally, in the ex parte stage of the property preservation application.

12    I set the matter down for argument and gave the parties an opportunity to address the concerns I had raised. Mr Butler was informed of the listing and given leave to make submissions, which he did. ASIC provided additional short submissions on 31 July 2023. Both ASIC and Mr Valvo were represented at the hearing on 1 August 2023.

APPLICABLE PRINCIPLES

The making of suppression orders and non-publication orders

13    Section 37AF of the FCA Act provides:

Power to make orders

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

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

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

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

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

(iii)    information produced under a subpoena; or

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

14    Section 37AG(1) of the FCA Act provides the grounds pursuant to which the Court may make a suppression or non-publication order under s 37AF as follows:

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

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

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

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

15    In Australian Securities and Investments Commission v Atkins, in the matter of Magnolia Capital Pty Ltd (in liquidation) [2023] FCA 714 at [16] to [20], Stewart J provided the following useful summary of the principles applicable to the decision to grant a non-party access request:

16.    The Court’s general approach to access to documents on the court file is set out in the Access to Documents and Transcripts Practice Note (GPN-ACCS) dated 10 February 2023. The Practice Note recognises the following (drawing on [2.1]-[2.3]).

17.    The principle of “open justice”, including justice being seen to be done and ensuring that nothing is done to discourage the making of fair and accurate reports of proceedings, is an overarching principle which guides the Court in its judicial and procedural operations. This principle, which extends to questions of access to Court documents, is reflected in s 17 of the FCA Act and in the provisions of the Rules referred to above.

18.    However, the Court recognises that the principle of open justice is not absolute, and must be balanced with the need of the Court to act at all times in the “interests of justice” and avoid prejudice to the proper administration of justice or other potential harm.

19.    “Interests of justice” is a broad concept that gives rise to many matters that the Court must consider when assessing a request for access, including the interests of all parties (eg, questions of confidentiality and privacy), the community, the application of any Commonwealth law, and any reasonably necessary requirements to ensure the just and fair administration of justice. Further, the Court must consider whether a request may be unreasonably burdensome on the administration of justice.

20.    In considering a request for access, the Court will consider a range of factors, including, but not limited to:

(1)    whether the applicant for access is a party or non-party;

(2)    whether the documents fall initially within a restricted or unrestricted category;

(3)    the context surrounding, and purpose underpinning, the request;

(4)    the nature of the documents sought (eg, whether the documents have been admitted into evidence or read out in open court, whether the documents are confidential, restricted from publication, the subject of legal privilege, contain scandalous material, etc); and

(5)    the principles identified above, including whether the request may result in an undue burden on the Court (or, I would add, any particular party).

(See [4.27] of the Practice Note.)

16    In addressing the particular considerations in Magnolia Capital, Stewart J made the following observations, which, although arising in different circumstances, are apposite in the present case:

32.    First, the orders that were made against the defendant are draconian and exceptional. They severely infringe on the defendant’s ordinary liberty to travel. They were not lightly made, nor could they have been. That also means that there is a significant public interest in the Court being open to public scrutiny of what it did. Were the orders justified? Is this what courts should be doing? Was ASIC justified in seeking such orders? Should the legislation even empower a court to make such orders? Those are all important questions that can only properly be answered if there is full access to what was before the Court.

33.    Secondly, the defendant’s conduct has, on ASIC’s case, left scores of people without their investments. They have a keen interest in being able to follow what is going on in ASIC’s efforts to protect them.

34.    Thirdly, there is the defendant’s interest in having his personal affairs kept private. That is an important interest. However, as mentioned, he does not say that disclosure of the information will prejudice him. Moreover, the affairs in question are not really private affairs. They are affairs that affect many other people and in which there is a great public interest in openness and disclosure.

Non-party access requests

17    Rule 2.32(2) of the Rules sets out the categories of unrestricted documents that a non-party is entitled to inspect after the first directions hearing or final hearing of a proceeding. An originating application is an unrestricted document: r 2.32(2)(a). Rule 2.32(3) provides that a non-party may not inspect a document that the Court has ordered (a) be confidential; or (b) is forbidden from, or restricted from publication to, the person or class of persons of which the person is a member.

18    An affidavit is a document referred to in r 2.32.(4) of the Rules — that is, a document that a person (not being a party to a proceeding) is not entitled to inspect but in respect of which they may apply to the Court for leave to inspect. The usual practice of this Court is that access to a restricted document which is an affidavit will generally be given where the document has been read in open court.

CONSIDERATION

19    The position taken by ASIC in its most recent submissions was less ambitious than in its initial joint submissions prepared with Mr Valvo. In a nutshell, ASIC’s final position was to seek that certain of the existing suppression orders only continue, or where newly made, only operate, for an eight week period subject to any further application to extend that period.

20    The first order the parties sought pursuant to s 37AF(1) on the grounds in s 37AG(1)(a) was an order to suppress the defendants’ respective addresses for service, including what appears to be Mr Valvo’s residential address and business email address, from the originating process until further order of the Court. Mr Butler did not seek access to those details in the originating process. Having regard to the early stage of the proceedings and the serious allegations made against Mr Valvo, I was satisfied that the appropriate balance was struck by making an interim order in relation to those limited parts of the originating process. Accordingly, I made an order to that effect during the hearing on 1 August 2023.

21    The second order the parties sought was an order pursuant to s 37AF(1) on the grounds in s 37AG(1)(a) to suppress some 25 different portions of Ms Seymour’s affidavit. This material broadly included (1) references to aspects of Mr Valvo’s ASIC examination; (2) information relating to Mr Valvo’s medical history; (3) the name of a relevant real estate agent; and (4) the names of various third parties. The parties originally sought that the second order remain in place until further order of the Court, however ASIC’s position changed such that the material disclosing the substance of the transcript of Mr Valvo’s ASIC examination (Examination Transcript Material) be subject to suppression for a period of eight weeks to facilitate ASIC completing, interviewing and taking statements from Mr Valvo’s former clients as part of its ongoing investigation. ASIC pressed for orders suppressing, until further order of the Court, the balance of the material other than the Examination Transcript Material.

22    Mr Butler’s application to inspect Ms Seymour’s affidavit is made under r 2.32(4) of the Rules. Mr Butler’s stated reason for his request is as follows:

The affidavit appears to have been read and relied upon by the court in making the orders of 5-Jul-23. In addition, as no statement of claim has been filed the affidavit is likely to be the only document that describes the dispute before the court, making it vital for preparing a fair and accurate report.

23    ASIC relies upon s 37AG(1)(a) of the FCA Act and contends it is “necessary” for the suppression orders to be made to “prevent prejudice to the administration of justice”. In its submissions of 31 July 2023, ASIC now acknowledges that, as the applicant for the order, it bears a “heavy onus”: Azimitabar v Commonwealth of Australia [2023] FCA 760 at [303]. Further, acknowledging that the test is more demanding than merely establishing what is “convenient, reasonable or sensible”: (Hogan v Australian Crime Commission [2010] HCA 21; 240 CLR 651 at 664 ([30] to [31])), ASIC submits that the proper administration of justice may extend to cover the potential for an ongoing investigation being performed by a Commonwealth agency to be adversely impacted by reason of the recollection of witnesses being affected: Australian Competition and Consumer Commission v BlueScope Steel Limited [2019] FCA 1532 at [40].

24    In the context of s 1323(1) of the Corporations Act, McKerracher J said in Australian Securities and Investments Commission v Marco [2019] FCA 466 at [10], [16] to [18] (emphasis added):

10.    Some of the extensive material put before the Court was treated on a confidential basis. It contained information that if released would disclose the identity of potential witnesses or informants were it to be prematurely released to a non-party. Such disclosure, I was satisfied, may have had the potential to compromise the effectiveness of ASIC’s ongoing investigations and any subsequent criminal or civil penalty proceedings which may result from such an investigation. I was also satisfied on the other hand that none of this confidential material was precluded from access by the defendants. Confidentiality orders were made for reasons discussed from [13] below.

…

16.    In Australian Securities & Investments Commission v Rich (2001) 51 NSWLR 643, Austin J said (at [26]):

It appears to me that the principle of prematurity, though a valid and weighty consideration, especially where evidence has been filed but not used for any purpose, is displaced in circumstances such as those existing last Friday. The principle of open justice entails, in my view, that when the Court makes quite significant orders on an ex parte application, the basis for the making of those orders must be available so that the court is accountable for what it has done after it has considered the information provided to it. In my view, that is so important a consideration that, unless there is some specific or obvious prejudice of another kind, the mere consideration of prematurity, in the sense that the plaintiff’s evidence has not been tested or answered, is insufficient to prevent the Court from making available to outsiders, including in particular the media, the affidavits relied upon in ex parte circumstances leading to significant relief.

17.    Generally speaking, the courts have shown a reluctance to compromise a criminal investigation by requiring the premature disclosure of information concerning that investigation. This is apparent from cases such as Barnes v Boulton (2004) 139 FCR 356 per Finn J (at [25]), citing National Companies and Securities Commission v News Corp Ltd (1984) 156 CLR 296 (at 323–324).

18.    There was a proper basis for granting such suppression orders. Further, given the early stage at which ASIC’s investigation had reached, the potential for that investigation to be impeded or compromised in the event that the identity of the 300 or so potential investors then identified by ASIC became known to non-parties before ASIC had the opportunity to interview them, the non-publication and suppression orders sought by ASIC in respect of certain bank statements of the defendants to which the defendants obviously had access, were necessary to prevent prejudice to the proper administration of justice.

25    I indicated to the parties during the hearing that I do not consider that the high threshold of necessity in s 37AG(1)(a) has been met in relation to each paragraph of Ms Seymour’s affidavit that Mr Valvo and ASIC jointly seek to have suppressed. I accept that the very limited personal information including Mr Valvo’s email and residential address, day and month of birth, and bank account numbers included in Ms Seymour’s affidavit should be suppressed until further order of the Court, for the same reasons as I have expressed in relation to the suppression of Mr Valvo’s addresses in the originating process and also taking into account the potential for identity theft. The particular bank account numbers should be suppressed in the usual way to protect against cybercrime.

26    In relation to the Examination Transcript Material, subject to one exception, I was ultimately satisfied that in this case the appropriate balance was struck by acceding to ASIC’s submission that the order be continued for, or made for, a period of eight weeks. Regrettably, ASIC’s evidence was trailing somewhat behind its acknowledgement of the heavy burden it carries to discharge its onus if it is to obtain the orders it seeks. ASIC advanced no evidence to support its submission that a period of eight weeks is necessary in the circumstances of these proceedings. Section 37AJ of the FCA Act provides that “[i]n deciding the period for which an order is to operate, the Court is to ensure that the order operates for no longer than is reasonably necessary to achieve the purpose for which it is made”. Counsel appearing for ASIC submitted that I could infer that eight weeks was an appropriate period but quite properly noted that Ms Seymour’s evidence did not address this issue directly.

27    Mr Butler submitted that ASIC’s written submission as to the nature of Mr Valvo’s s 19 examination means that disclosure of his answers could not, or would be unlikely to, compromise the investigation. I do not agree that this necessarily follows.

28    In the circumstances, I was prepared to make the order in respect of the Examination Transcript Material limited to the eight week period on the basis that suppression for this period is necessary for ASIC to complete taking statements from witnesses as there is a real risk that ASIC’s investigation may be impeded or compromised if non-parties and / or witnesses become aware of the answers given by Mr Valvo during his s 19 examination. But in doing so, I ordered that ASIC provide an affidavit that provides the evidentiary support for the submission advanced by ASIC’s counsel as to why the eight week period was necessary. I further ordered that ASIC had to provide that affidavit (including to Mr Butler) by 2.00pm on 2 August 2023.

29    I informed the parties and Mr Butler that if following ASIC providing the affidavit supporting the necessity of the eight week period any person wished to re-agitate the issues dealt with in these reasons, any such application should be made to the docket judge.

30    The one exception in relation to the Examination Transcript Material is a paragraph in Ms Seymour’s affidavit that recounts anodyne details in relation to Mr Valvo’s background that were sourced to his examination transcript. Those details were relevant to, and relied on to justify making an order that Mr Valvo deliver up his passport. I do not regard suppression of that paragraph as being necessary to protect the integrity of ASIC’s investigation. Accordingly, I am not satisfied that ASIC has established this paragraph should be suppressed on the basis of the ground identified in s 37AG(1)(a).

CONCLUSION

31    For these reasons, I made orders accordingly, on 1 August 2023 which were corrected with effect from 1 August 2023 today.

Associate:

Dated:    2 August 2023