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Australian Prudential Regulation Authority v Siminton [2006] FCA 140 (10 January 2006)

Last Updated: 24 February 2006

FEDERAL COURT OF AUSTRALIA

Australian Prudential Regulation Authority v Siminton [2006] FCA 140

BANKING AND FINANCE – interlocutory orders – whether serious question to be tried that respondent carrying on banking business, or using words ‘bank’, banker’ or ‘banking’ in relation to a financial business – whether balance of convenience favours grant of injunction – evidence of attempted flouting of previous order – whether assets should be frozen – whether funds should be available for living expenses and legal fees

Banking Act 1959 (Cth) ss 7, 8, 11, 66
Judiciary Act 1903 (Cth) s 78B
Federal Court Rules O 40 r 8

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY v DAVID ROBERT SIMINTON
VID 1607 of 2005

GRAY J
10 JANUARY 2006
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1607 of 2005

BETWEEN:	AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY APPLICANT
AND:	DAVID ROBERT SIMINTON RESPONDENT
JUDGE:	GRAY J
DATE OF ORDER:	10 JANUARY 2006
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. Until the hearing and determination of the proceeding, or further order, the respondent, whether by himself, his servants or agents, be restrained from:

(a) receiving money from members of the public by way of deposit in the Terra Nova Cache or the Principality of Camside;

(b) assuming or using the words ‘bank’, ‘banker’ or ‘banking’, or any words or phrases of like import, in relation to his, their, or its business;

(c) advertising, representing or stating that he, they or it will carry on banking business;

(d) selling, transferring, dealing with, disposing of or otherwise encumbering or removing from Australia, or causing to be removed from Australia, any money (including, but not restricted to, cash), property or other assets he has, whether held alone, jointly, or in conjunction with others (including any accounts or property held in the name of the Principality of Camside or the Terra Nova Cache);

(e) dealing with, withdrawing or disposing of, or giving any instructions in
relation to the disposition or transfer of, all or part of the moneys standing to the credit of the respondent or his nominee in any account (whether held alone, jointly, or in conjunction with any other person, including any accounts or property in the name of the Principality of Camside or the Terra Nova
Cache and any account in relation to which the respondent is a signatory or which the respondent otherwise has authority to operate, whether or not the respondent is named as an account holder and any account which may be
operated for the benefit of the respondent, the Principality of Camside, or the Terra Nova Cache) in any bank, building society, or other financial institution and, without limiting the generality of the foregoing, account number
3162 1027 8861, in the name of Principality of Camside, with the
Commonwealth Bank of Australia;

(f) dealing with, withdrawing, disposing of, or giving any instructions in relation to the disposition or transfer of, any assets or moneys transferred to or received by Silverstone Global Investments ACN 109 672 095, or any of its subsidiaries or associates, from or on behalf of the respondent, the Principality of Camside, the Terra Nova Cache, or any client or purported client of the Terra Nova Cache;

save that, with the consent in writing of the applicant, previously given, the respondent may do any of the things referred to in (d), (e) or (f) in the manner and for the purpose for which the applicant has so consented.

2. The respondent have liberty to apply, on two days’ notice in writing to the applicant,
supported by an affidavit as to his means, for an order that he be permitted to
withdraw moneys for the purposes of paying his own living expenses or paying his legal expenses in relation to the proceeding.

3. Until the hearing and determination of the proceeding, the respondent ensure that there is published on the first page that a user views when he or she accesses:

(a) any current, proposed or future internet site that uses the name ‘Principality of Camside’, ‘Terra Nova Cache’, or any derivation thereof; and

(b) any other internet site controlled by the respondent;

a notice in the form set out in Schedule 1.

4. The notice of motion filed on 29 December 2005 be adjourned to 11.15 am on 30 January 2006, to be heard by the duty judge if the docket judge is unavailable.

5. On or before 23 January 2006, the applicant file and serve on the solicitors for the respondent any further affidavit on which it may seek to rely in support of the notice of motion filed on 29 December 2005.

6. By consent, personal service on the respondent of the notice of motion filed on 29 December 2005, the statement of charge, the affidavits of David John Harley, sworn on 22 December 2005, and Matthew Paul Wylie, sworn on 14 December 2005, 22 December 2005, and 23 December 2005, and any affidavits filed pursuant to paragraph 5 of this order, be dispensed with.

7. On or before 25 January 2006, the respondent file and serve any affidavit on which he may seek to rely in opposition to the notice of motion filed on 29 December 2005.

8. On or before 13 January 2006, the respondent serve any notice raising an issue of a kind referred to in s 78B of the Judiciary Act 1903 (Cth), in accordance with that section.

9. The costs of today be reserved.

Schedule 1

PLEASE TAKE NOTE:

TERRA NOVA CACHE is NOT authorised to carry on banking business in Australia. Amongst other activities which it is not authorised to do, it is not authorised by Australian law to receive moneys on deposit or lend moneys.

THE PRINCIPALITY OF CAMSIDE is NOT authorised to carry on banking business in Australia. Amongst other activities which it is not authorised to do, it is not authorised by Australian law to receive moneys on deposit or lend moneys.

It is an offence under section 7 and section 66 of the Banking Act 1959 for a person to carry on banking business in Australia without authorisation.

It is an offence under section 8 and section 66 of the Banking Act 1959 for a corporation to carry on banking business in Australia without authorisation.

NEITHER TERRA NOVA CACHE NOR THE PRINCIPALITY OF CAMSIDE nor any associated entity has permission under the law of Australia to use the word ‘bank’, ‘banking’ or ‘banker’ in connection with its business.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1607 of 2005

BETWEEN:	AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY APPLICANT
AND:	DAVID ROBERT SIMINTON RESPONDENT

JUDGE:	GRAY J
DATE:	10 JANUARY 2006
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 The application before me today is an application for interlocutory orders, to be made pending the hearing and determination of the proceeding. The proceeding came before Sundberg J on 15 December 2005, when his Honour made a number of orders that were sought, and made, without notice to the respondent. Among those orders was an order that the applicant apply again today to the duty judge for interlocutory orders. In the meantime, notice of the proceeding has been given to the respondent.

2 On 23 December 2005 Merkel J as duty judge made orders, preventing the respondent from leaving Australia, and requiring him to deliver up any passport held by him. Subsequently, on 29 December 2005, a notice of motion was filed in the Court, seeking to punish the respondent for contempt of Court in contravening the orders made by Sundberg J on 15 December 2005. That notice of motion is not before me today, because the applicant and the respondent both desire time to file further material in relation to it, and I have determined to adjourn it to 30 January 2006, to be dealt with by the duty judge if the docket judge should be unavailable.

3 It is necessary, therefore, to deal with the question whether any interlocutory orders should be made pending the hearing and determination of the proceeding in its entirety. Counsel for the respondent has made a number of submissions, including the submission that the orders made on 15 December 2005 ought not to have been made. I do not sit as an appeal court from Sundberg J and I therefore do not deal with that submission. The question for me is whether orders should be made that will cover the situation from now until the hearing and determination of the proceeding. In order to determine that question, I am required to apply the twin test of whether there is a serious question to be tried, and whether the balance of convenience favours the granting of injunctive relief.

4 Plainly, there is a serious question to be tried as to whether the respondent has acted in breach of ss 7 and 66 of the Banking Act 1959 (Cth) (‘the Banking Act’). Section 7 creates an offence of carrying on any banking business in Australia, not being a body corporate, and without an order in force under s 11 determining that the section does not apply to the person. The offence created by the section is a fresh offence on each day on which it occurs. Section 66 of the Banking Act, in substance, prohibits a person from assuming or using in Australia the words ‘bank’, ‘banker’ or ‘banking’ in relation to a financial business, or words of like import.

5 There is no doubt that there is evidence to establish a serious question to be tried as to whether the respondent has contravened both of those sections. The respondent has represented himself to be involved with an entity he calls the Principality of Camside. By means of a webpage, or webpages, on the internet, he has represented to the public that the Principality of Camside is able to accept deposits from members of the public. The websites have used the words ‘bank’, ‘banker’ and ‘banking’, or words of similar import, that make it clear that the purpose of the operation, which is known as the ‘Terra Nova Cache’, is to receive deposits and to use them to give financial returns to the members of the public who have contributed to them.

6 There is evidence that such funds as have been collected by way of deposit have been conveyed to an organisation called Silverstone Global Investments ACN 109 672 095, for the purpose of investment. There is nothing to indicate that the transfer of funds to Silverstone Global Investments has been anything other than by way of loan from the recipient of the deposits.

7 There is ample evidence that the respondent has at least a high degree of power to control the activities of the Principality of Camside and the Terra Nova Cache, and that he is the one who has actively solicited deposits of funds from members of the public. Members of the public have deposited funds. There is plenty of evidence, on information and belief, to that effect. Counsel for the respondent has objected to the receipt of such evidence, saying that those who have provided statements to investigators from the applicant should be required to give their evidence on oath. It is clear that evidence of a hearsay nature, given on information and belief, with the source of the information, is admissible on an application of this nature. I am content to receive the evidence, and to give it such weight as it deserves.

8 There is abundant evidence that there is no authorisation of the respondent, the Principality of Camside, or the Terra Nova Cache, to carry on the business of banking in Australia, or to use the words the use of which is prohibited by s 66 of the Banking Act. Nor is there in force any determination under s 11 of the Banking Act that s 7 does not apply to the respondent.

9 There can be no doubt, also, that the balance of convenience favours the grant of injunctive relief. The respondent, as part of the selling point for soliciting deposits, has sought to suggest that in some way the funds so deposited can be placed outside the scope or authority of Australian laws, for taxation and other purposes. There is no doubt that there is an element of misleading of the public in the seeking of deposits. There is also evidence that, since the making of the orders of 15 December 2005, freezing the assets over which the respondent has control for the protection of the depositors, the respondent has attempted to withdraw a substantial sum of money, in defiance of those orders. The sum of $500 000 was transferred into the bank account of a friend of the respondent, and the respondent then became an authorised signatory to that account.

10 The question then is, what orders would be appropriate? I am satisfied that it would be appropriate to enjoin the respondent from receiving money from members of the public, by way of deposit in the Terra Nova Cache or the Principality of Camside, from assuming or using the words ‘bank’, ‘banker’ or ‘banking’ or any words or phrases of like import in relation to his business, and from advertising or representing or stating that he will carry on the business of banking.

11 It is also appropriate, in my view, to make orders endeavouring to ensure that any assets over which the respondent does have control will be frozen effectively. With one exception, I propose to make the orders sought today by the applicant in that respect. The applicant was prepared to make concessions that would have allowed the respondent to withdraw $500 a week from whatever funds would otherwise be available to him, but for the freezing orders, for his living expenses, and his reasonable legal expenses in defending the proceeding. I have some disquiet about that, because the material before me is absolutely silent as to what other sources of funds the respondent may have available to him, and as to what means he may have of meeting his legal costs and of discharging his living expenses, without resort to any of the frozen assets. I therefore decline to adopt those concessions.

12 What I will do is to make a general exception that the applicant may consent in writing to allow the respondent to make withdrawals from assets for various purposes, one of which would obviously be for the repayment of deposits to members of the public who have provided the money. I appreciate that the applicant is unwilling to be involved in arbitrating the extent to which living expenses should be allowed, but it has been prepared to allow $500 a week. If the amount requested is no more than that, then the applicant could well be persuaded to approve it. As an alternative, I propose to reserve liberty to apply, so that the respondent can apply to the Court, supported by an affidavit as to his means, for an order that he be permitted to withdraw money for the purposes of living expenses and legal expenses.

13 I propose also to make an order similar to one made by Sundberg J, requiring that, on any webpage dealing with the Principality of Camside or the Terra Nova Cache, the respondent ensure that a notice appears, stating in clear terms: that the Terra Nova Cache is not authorised to carry on banking business in Australia and not authorised to receive moneys on deposit or lend moneys; that the Principality of Camside is also not so authorised; that it is an offence under ss 7 and 66 of the Banking Act to carry on banking business without authorisation, and an offence under ss 8 and 66 of the Banking Act for a corporation to carry on banking business in Australia without authorisation; and that neither the Terra Nova Cache nor the Principality of Camside has any authorisation or permission to use the word ‘bank’, ‘banker’ or ‘banking’ in connection with its business.

14 Otherwise I propose to make orders that will facilitate the hearing of the notice of motion for contempt on 30 January 2006. Those orders will be by way of timetabling of the filing of material. They will include a dispensation from the provision, found in O 40 r 8 of the Federal Court Rules, requiring personal service of a notice of motion, a statement of charge and supporting affidavits, in a case of contempt of court. That dispensing order is made by consent. Counsel for the respondent has indicated that he proposes to raise in the proceeding a constitutional issue of the kind that requires the service on each of the Attorneys-General for the Commonwealth, the States and the Territories of a notice pursuant to s 78B of the Judiciary Act 1903 (Cth).

15 The orders I make will make provision for the service of that notice at an early date, so that there can be sufficient time for the Attorneys-General to reply before 30 January 2006, and the proceeding may continue on that date.

16 The orders that I make, therefore, are as follows: