Supreme Court New South Wales

• Medium Neutral Citation: Levi v Australian Securities Investments Commission (No 2) [2013] NSWSC 932
• Hearing dates: Written Submissions
• Decision date: 16 July 2013
• Jurisdiction: Common Law
• Before: Rothman J

Decision

(1) The non-publication order issued on 3 April 2013 be vacated;

(2) The plaintiff shall pay the first defendant's costs of and incidental to the proceedings, as agreed or assessed, including the proceedings relating to the non-publication order and costs;

(3) Proceedings dismissed.

• Catchwords: PRACTICE AND PROCEDURE - COSTS - follow the event - defendant successful - raised two grounds one of which unsuccessful - event was not altered - no unreasonable argument point - SUPPRESSION ORDER - jurisdiction available against Commonwealth officer - order refused on merits
• Legislation Cited: Administrative Decisions (Judicial Review) Act 1977; Civil Procedure Act 2005; Court Suppression and Non-Publication Orders Act 2010; Evidence Act 1995; Judiciary Act 1903 (Cth); Supreme Court Act 1970; Uniform Civil Procedure Rules 2005
• Cases Cited: Aytugrul v The Queen [2012] HCA 15; (2012) 215 A Crim R 501; Fairfax Digital Australia & New Zealand Pty Ltd v Ibrahim [2012] NSWCCA 125; (2012) 263 FCR 211; Latoudis v Casey [1990]; HCA 59; (1990) 170 CLR 534; ML v Australian Securities Investments Commission [2013] NSWCA 109; NSW Crime Commission v Lee [2012] NSWCA 276; Ohn v Walton (1995) 36 NSWLR 77; R v Kwok [2005] NSWCCA 245; (2005) 64 NSWLR 335; R v Yates [2002] NSWCCA 520; Re R v Dorel Goia [1988] FCA 302
• Category: Consequential orders
• Parties: Mark Darren Levi (Plaintiff); Australian Securities and Investment Commission (First Defendant); Companies Auditors and Liquidators Disciplinary Board (Second Defendant)
• Representation: Counsel: R F Sutherland SC / B Hatfield (Plaintiff); N J Williams SC / PD Herzfeld (First Defendant); Submitting appearance (Second Defendant); Solicitors: Armstrong Legal (Plaintiff); Australian Securities and Investment Commission (First Defendant); Australian Government Solicitor (Second Defendant)
• File Number(s): 2012/354424
• Publication restriction: None

Judgment

1 On 3 April 2013, the Court, as presently constituted, issued orders (hereinafter, "the first judgment"), the effects of which were to dismiss the proceedings and order that the plaintiff pay the first defendant's costs of the proceedings. The substantive proceedings sought a stay of proceedings before the Companies Auditors and Liquidators Disciplinary Board (hereinafter, "the Board") brought by Australian Securities Investments Commission (hereinafter, "ASIC").

2 On the plaintiff's application at the time that the first judgment issued, a further order issued preventing the publication of the name of the plaintiff or any information that would identify the plaintiff, from anything done or arising from these proceedings (hereinafter, "the suppression order"). The suppression order was made without the benefit of any considered submission from the first (or any other) defendant, because of the lack of notice. The suppression order was in the following terms:

"No person shall publish any information arising from this judgment, these reasons for judgment or the proceedings that identifies the plaintiff or leads to his identification, including publication of his name."

3 Liberty was granted to each of the parties to agitate for any special or different order for costs and in relation to the suppression order. The plaintiff seeks a different order as to costs and the first defendant seeks to have the suppression order vacated.

4 The first judgment was the subject of appeal proceedings and a motion for an interim stay of the disciplinary proceedings commenced by ASIC. A judgment on that motion issued on 2 May 2013: see ML v Australian Securities Investments Commission [2013] NSWCA 109, per Basten JA (hereinafter, "the appeal judgment"), which dismissed the application for a stay.

Costs

5 Essentially, the bases for the plaintiff's agitation of a different order for costs are: that the issue of the jurisdiction of the Court to make the orders sought was raised by the first defendant and the Court in the first judgment determined the matter favourably to the plaintiff; and, secondly, that the proceedings are analogous to proceedings for a stay of criminal proceedings, for which a costs order would not ordinarily issue.

6 The analogy to a stay of criminal proceedings does not, in my view, withstand scrutiny. First, a stay of criminal proceedings is sought in criminal proceedings, for which costs do not ordinarily run and which are not governed by either the Civil Procedure Act 2005, or the Uniform Civil Procedure Rules 2005 (hereinafter, "UCPR").

7 Secondly, the proceeding before the Board is not a criminal proceeding. To the extent that the plaintiff relies on the principles applied by the Full Court of the Federal Court in Re R v Dorel Goia [1988] FCA 302, those principles depended on the ordinary rule in criminal proceedings. In Dorel Goia, the Court was dealing with an appeal from an order of the A.C.T Supreme Court granting costs of a stay application. The Federal Court overturned the order and issued no order in relation to the costs of the proceeding before it.

8 There is no general or ordinary rule that costs are not, or ought not be, awarded in disciplinary proceedings. Disciplinary proceedings are not criminal proceedings; they are civil proceedings.

9 Further, the proceedings before this Court are even more remote, because they are civil proceedings being a collateral attack on the disciplinary proceedings. The rule applying to costs in civil proceedings ought apply and nothing in this ground satisfies the Court that justice dictates a different view. This ground for a different costs order must fail.

10 The major basis for a variation of the costs order is, as already stated, that the issue of jurisdiction, raised by ASIC, was determined against ASIC. The plaintiff's submission implicitly, at least, accepts that ordinarily costs follow the event, but argues that there were two events, the jurisdictional issue and the merits issue, which were determined differently.

11 I acknowledge that both jurisdiction and merits were argued before the Court in the proceedings that led to the first judgment. Further, I accept, without deciding, that each ground took about one half the time in the proceedings (at least after the evidence was concluded). Does that mean costs should be shared either equally or otherwise?

12 The Civil Procedure Act (s 98) gives the Court a wide discretion to award that costs be paid by a party and the basis of the assessment of those costs. The discretion is not unfettered. The Court must exercise the discretion judicially.

13 Costs are neither a reward, nor a punishment. An award of costs is part, or all, of the compensation for the loss associated with enforcing or defending one's rights. In that sense, costs are compensatory: Latoudis v Casey [1990]; HCA 59; (1990) 170 CLR 534 at 543 per Mason CJ; Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ.

14 Ordinarily, costs follow the event: UCPR r 42.1. Here, the plaintiff sought a stay of the Board proceedings and he failed. ASIC has been successful. I accept that ASIC relied on two major bases to convince the Court that the orders sought ought not issue, but that does not detract from the proposition that ASIC was successful. The "event" was the dismissal of the proceedings; the dismissal of the only relief claimed.

15 ASIC's submission on jurisdiction was not unreasonable or unarguable. Indeed, it seems, at least on a preliminary view, to have found favour with Basten JA. On one view, the Court need not have determined the jurisdictional issue. On the other hand, if there were no jurisdiction to issue the orders sought, the Court could never have proceeded to deal with the merits. The Court is required to be satisfied of its own jurisdiction before embarking on a consideration of the merits of the matter before it. The earlier judgment did not deal with different issues; it dealt with two grounds for refusing one claim.

16 Nothing in the manner in which ASIC conducted the proceeding deprives it of the ordinary entitlement to be compensated for its taxable costs in successfully defending the action. The order for costs will remain unaltered from that which formed part of the first judgment. For reasons that will become obvious, those costs will include the costs of the suppression order and these subsequent proceedings.

Suppression order

17 Again there are two grounds upon which the first defendant relies to seek the setting aside of the suppression order. The first ground is jurisdictional; the second is discretionary.

Jurisdiction

18 I should, before dealing in detail with each of these grounds, deal briefly with that which Basten JA said in relation to jurisdiction. It is with unfeigned respect that I would differ from his Honour only in very limited circumstances. His Honour's experience and expertise in administrative law is second to none.

19 His Honour reiterated that a State court has "no power to exercise federal jurisdiction unless conferred by a valid law of the Commonwealth": appeal judgment at [11]. I accept and agree that this Court cannot exercise federal jurisdiction without a basis for such exercise in Commonwealth law. I prefer not to express the view by reference to the power of the Court. Rather, it is an issue of jurisdiction.

20 Even though prerogative relief may not lie against a State Supreme Court, such courts have jurisdictional limits associated with the nature of Australian federal democracy. It is not the exercise of federal jurisdiction for this Court to punish for or restrain contempt, even if the proceedings to which the contempt relates were federal.

21 The jurisdiction to restrain the Commonwealth (or an agency or officer thereof) from a contempt of this Court (or from interfering in a fair trial) may, to the extent that it involves an injunction against an officer of the Commonwealth, involve federal jurisdiction: see s 75(v) of the Constitution; or in the case of the Commonwealth itself, s 75(iii) of the Constitution. The jurisdiction to deal with such matters is conferred by a combination of provisions, being s 38 and s 39 of the Judiciary Act 1903 (Cth), together with the provision granting original jurisdiction and s 79 of the Judiciary Act.

22 As explained in the first judgment, the general jurisdiction conferred on this Court by s 39 of the Judiciary Act is subjected to the limitations in s 9 of the Administrative Decisions (Judicial Review) Act 1977 (hereinafter, "ADJR Act"). This is consistent with the approach of Basten JA in the appeal decision: see appeal decision at [12]. Although, in that paragraph, Basten JA does not expressly refer to that jurisdiction exercisable by the High Court under s 75(v) of the Constitution in relation to criminal prosecutions or criminal related prosecutions, that issue is a matter of detail with which his Honour was not concerned.

23 The difference, with respect, I have with the analysis of Basten JA is that contained in the appeal judgment at [6]. The definition of "review" in the ADJR Act does not include "injunction"; it includes "a review by way of ... injunction". In other words, not every injunction against a Commonwealth officer is a review, the jurisdiction for which is denied to State courts. It is only where the injunction is being used as a remedy to effect a review that s 9 of the ADJR Act applies to deny to this Court the jurisdiction it otherwise possesses.

24 The circularity of the definition of "review" in s 9(2) of the ADJR Act (i.e. defining "review" as a "review" of a certain kind) has two effects: first, it renders the sub-paragraphs of the definition words of limitation; and, secondly, it requires that the word "review", where second appearing, be given its ordinary and natural meaning.

25 As I sought to explain in the first judgment (at [12]-[20]), the summons did not seek a review. The cause of action upon which it depended ran independently of any decision of any officer of the Commonwealth.

26 As to the suppression order, ASIC has not provided any basis for suggesting that a valid Commonwealth law required the publication of material from these proceedings and I consider that there is no jurisdictional limitation on the capacity of this Court to restrain publication (or republication) of its judgment or any part of its contents. Further, there is no limitation on the power of this Court to restrain publication of material or evidence in the Court of a particular kind. Were it otherwise, material produced in these proceedings by the plaintiff on subpoena (or its equivalent) could be published by ASIC, without regard to the laws of contempt.

Merits

27 The terms of the order (reiterated at [2] above) are not those recited by ASIC in its submission, but still bear the hallmarks of infelicitous expression occasioned by the ex tempore nature of the order, its intended limited duration and the lack of notice to ASIC of the application.

28 The terms of the order, recited by ASIC in its submission, would, on one view, prevent the plaintiff's name being published in the telephone book. That was not the Court's intention. The order was intended to relate only to that which connected the plaintiff to the proceedings in this Court and information derived from these proceedings. The Court did not intend to stop the Board from publishing its decision, as and when it thought appropriate. It was also intended to be interim, until such time as ASIC could consider its position.

29 An order under the Court Suppression and Non-Publication Orders Act 2010 (hereinafter, "the Act") can issue where it is "necessary to prevent prejudice to the proper administration of justice" or "it is otherwise necessary in the public interest ... [where] ... that public interest significantly outweighs the public interest in open justice."

30 The first aspect of the foregoing is the meaning of the term "prejudice". In this context, namely, applying to the proper administration of justice, the term "prejudice" is not confined to "unfair prejudice": cf s 137 of the Evidence Act 1995 and R v Yates [2002] NSWCCA 520 at [252]; Aytugrul v The Queen [2012] HCA 15; (2012) 215 A Crim R 501 at [6]; and does not relate to a party, but to the administration of justice. Thus material may be prejudicial to a party, or embarrassing, without it prejudicing the proper administration of justice.

31 In the present context, in order to "prejudice ... the proper administration of justice" the material sought to be suppressed must significantly (i.e. other than ephemerally or insignificantly) affect the fairness of a subsequent trial in a manner that cannot be negated by appropriate orders in the trial, or, at least, carry a substantial risk of being unable to be overcome so that a fair trial is at some significant risk.

32 As to the meaning of the term "necessary" in this context, I refer to NSW Crime Commission v Lee [2012] NSWCA 276 and Fairfax Digital Australia & New Zealand Pty Ltd v Ibrahim [2012] NSWCCA 125; (2012) 263 FCR 211. In Ibrahim at [8], Bathurst CJ said:

"[8] An order designed to protect the proper administration of justice, without impinging upon the principle of open justice, may well be considered necessary as long as it is reasonably appropriate and adapted to achieve its perceived purpose: Hogan v Australian Crime Commission [2010] HCA 21; 240 CLR 651; Thomas v Mowbray [2007] HCA 33; 233 CLR 307 referred to."

33 In Ibrahim, Basten JA (with whom relevantly Bathurst CJ and Whealy JA agreed), at [46], said:

"[46] The meaning of 'necessary' depends on the context in which it is used. In s 8(1), it is used in relation to an order of the court, or, in practical terms, a proposed order, because it identifies a standard as to which the court must be satisfied before making an order. In each paragraph of that provision, the word 'necessary' is used to describe the connection between the proposed order and an identified purpose. It may not take the same place on the variable scale of meaning in each case. In paragraph (a), the purpose of the order will be 'to prevent prejudice to the proper administration of justice'. That language will, in its turn, have a colour which will depend upon the circumstances. The prejudice may be a possibility or a certainty; its effect, if it eventuates, may be minor or it may cause a trial to miscarry. Similarly, prevention will involve matters of degree: the proposed order may diminish a risk of prejudice or it may obviate the risk entirely. All of these variables may affect what is considered 'necessary' in particular circumstances."

34 In my view, "necessary" should also be construed in the same way as one uses that term when determining the implied powers of a lower court or orders that may issue under s 23 of the Supreme Court Act 1970, which are orders "necessary for the administration of justice". In relation to the former (i.e. implied powers in the District Court), the High Court (Gaudron, Gummow and Callinan JJ) said:

"[50] ... Dawson J concluded that recognition of the existence of the powers which an inferior court must possess by way of necessary implication will be called for:

'whenever they are required for the effective exercise of a jurisdiction which is expressly conferred but will be confined to so much as can be "derived by implication from statutory provisions conferring particular jurisdiction".'

[51] The term 'necessary' in such a setting as this is to be understood in the sense given it by Pollock CB in Attorney-General v Walker, namely as identifying a power to make orders which are reasonably required or legally ancillary to the accomplishment of the specific remedies for enforcement provided in Div 4 of Pt 3 of the District Court Act. In this setting, the term 'necessary' does not have the meaning of 'essential'; rather it is to be 'subjected to the touchstone of reasonableness'." (Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; (1999) 198 CLR 435.)

35 The primary consideration in the proper administration of justice must be the public interest in open justice. The very fabric of Australian democracy depends on the rule of law, which includes the propostion that, with a small number of important exceptions, justice is to be dispensed in public and the courts are to be conducted under public scrutiny.

36 Any orders qualifying that public scrutiny should be as limited as possible, while achieving the intended purpose. In R v Kwok [2005] NSWCCA 245; (2005) 64 NSWLR 335, Hodgson JA (with whom Howie and Rothman JJ agreed) said:

"[13] The Crown Prosecutor submitted that the non-publication order falls within the implied powers of the District Court to do what is necessary to enable the Court to exercise its jurisdiction effectively and secure the proper administration of justice: John Fairfax v. District Court at [28]-[37]. The implied power of the District Court to make such orders is well-established in relation to informers (Cain v. Glass (No.2) (1985) 3 NSWLR 230 at 246), extortion victims (R. v. Socialist Worker Printers & Publishers Ltd.; Ex Parte Attorney-General [1975] QB 637), and matters of national security (Attorney-General v. Leveller Magazine Ltd. [1979] AC 440). She submitted that the rationale and considerations supporting the implied power in the above categories apply equally to the nominated witnesses in the current case: these include the impediment to the future supply of information, the hardship suffered by the witnesses, and the denial of justice in the absence of such an order (see John Fairfax Group Pty. Ltd. v. Local Court of New South Wales (1991) 26 NSWLR 131 at 141, 161).

...

[16] However, the requirement of necessity is not to be given an unduly narrow construction. I respectfully adopt what was said by Mahoney JA in John Fairfax Group v. Local Court at 161:

'This leads to the consideration of what is meant by "necessary to secure the proper administration of justice" in this context. The phrase does not mean that if the relevant order is not made, the proceedings will not be able to continue. Plainly they can. If the name of an informer is not hidden under a pseudonym, the proceeding will go on: at least, the instant proceeding will. And if the name of a security officer is revealed, the administration of justice or of the country will not collapse. The basis of the implication is that if the kind of order proposed is not made, the result will be - or at least will be assumed to be - that particular consequences will flow, that those consequences are unacceptable, and that therefore the power to make orders which will prevent them is to be implied as necessary to the proper function of the court. The kinds of consequences that, in this sense, will be seen as unacceptable may be gauged by those involved in the cases in which statutory courts have been accepted as having restrictive powers. Thus, there will be hardship on the informer or the security officer or the blackmail victim; the future supply of information from such persons will end or will be impeded; and it will be more difficult to obtain from such persons the evidence necessary to bring offenders before the courts and deal with them. It is not necessary to attempt to state exhaustively the considerations relevant in this regard: it is to considerations of this kind or of an analogous kind on which the principle stated by McHugh JA is based.'

...

[29] The principle that justice must be done openly is of central importance, but it is not absolute and overriding in all cases."

37 In the instant proceedings, the suppression orders are sought in order to ensure the plaintiff has a fair criminal trial, if and when one commences. The fact that the criminal trial has not commenced is a factor to be taken into account in this exercise. Nevertheless, as stated in the first judgment, I consider a criminal prosecution likely.

38 However, orders do not issue to ensure a fair trial. Rather, orders issue to prevent a significant risk of an unfair trial. The risk of unfairness is the publication of the decision of the Board on the internet, including findings of fact therein, and any other mass circulation publicity that may be given to it. That publication or publicity may, in turn, become known to a jury, or members of it.

39 Adverse publicity relating to an accused is not an unknown occurrence. It is dealt with, regularly, by the courts. So too is information on the internet. The material before the Court does not establish a real risk to any subsequent fair trial. If such a risk eventuates, the trial judge can deal with it.

40 If, eventually, there is a criminal prosecution, there may be a plea of guilty. Assuming there were not, the trial judge can assess what, if any, publicity has been given to the decision of the Board, the nature of the findings, the period of time that has elapsed, and the risk, if any, to a fair trial. ASIC is the moving party before the Board. ASIC is also the complainant or prosecutor for any criminal prosecution.

41 ASIC must understand that if, as a result of the Board decision and any publicity given to it, a fair trial in a subsequent prosecution were at risk, in the discretion of the court, any prosecution may be stayed, either permanently or for some time. Yet ASIC is entitled to take that risk. It may well be more in the public interest that an inappropriate person be prevented from practising as a liquidator, than a criminal prosecution be successfully completed.

42 For the foregoing reasons, a suppression order should not be made.

43 The Court orders:

(1) The non-publication order issued on 3 April 2013 be vacated;

(2) The plaintiff shall pay the first defendant's costs of and incidental to the proceedings, as agreed or assessed, including the proceedings relating to the non-publication order and costs;

(3) Proceedings dismissed.

**********

Decision last updated: 16 July 2013