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Federal Court of Australia |
Last Updated: 5 November 2007
FEDERAL COURT OF AUSTRALIA
Ludolphs v
Australian Prudential Regulation Authority [2007] FCA 1629
APPEAL - Application for leave to appeal from refusal to make
suppression orders - whether interim suppression orders should be made
pending
hearing of application for leave to appeal.
John Fairfax Publications Pty
Ltd v Local Court of New South Wales (1992) 26 NSWLR
131
Administrative Appeals Act 1975 (Cth), ss 35(2),
41(2)
Federal Court of Australia Act 1976 (Cth), s 50
Insurance
Act 1973 (Cth) ss 25A(1), 63(2), 63(4),
63(7)
HENNING LUDOLPHS and JUERGEN
GRAEBER v AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY
NSD1904 OF
2007
SACKVILLE J
26 OCTOBER 2007
SYDNEY
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AND:
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THE COURT ORDERS THAT:
1. The applicants file and serve by 5 pm on 26 October 2007 any application for leave to appeal from the orders made by Lindgren J on 25 October 2007. Any such application is to be returnable before the Duty Judge at 10.15 am on 1 November 2007, without prejudice to the applicants’ entitlement to approach the Duty Judge earlier if so advised.2. If no application for leave to appeal is filed by the time specified in Order 1, the application for leave to appeal will stand dismissed with costs.
3. The applicants’ motion for interim suppression orders be dismissed.
4. The applicants pay the respondent’s costs of the motion for interim suppression orders.
Note: Settlement and entry of
orders is dealt with in Order 36 of the Federal Court Rules.
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BETWEEN:
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HENNING LUDOLPHS
First Applicant JUERGEN GRAEBER Second Applicant |
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AND:
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AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY
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JUDGE:
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SACKVILLE J
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DATE:
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26 OCTOBER 2007
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PLACE:
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SYDNEY
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REASONS FOR JUDGMENT
1 Two motions are before the Court. The applicants seek what have been described as interim suppression orders pending the hearing of their applications for leave to appeal from an interlocutory judgment of Lindgren J. In that judgment, his Honour dismissed the applicants’ motions seeking interim suppression orders pending the final hearing in the proceedings before him.
THE PROCEEDINGS BEFORE LINDGREN J
2 Each applicant has appealed to the Court from a decision of the Administrative Appeals Tribunal (‘AAT’) that it did not have power under s 35(2) of the Administrative Appeals Act 1975 (Cth) to prohibit publication of the names of the parties, or to describe the parties by pseudonyms for the purposes of proceedings being heard by it. The applicants say that the AAT erred in law in making this decision. Lindgren J has listed the appeals from the AAT’s decision on the so-called suppression orders for hearing on 12 November 2007. (Although designated ‘appeals’, the proceedings are in the original jurisdiction of the Court.)
3 The interlocutory relief sought by the motions filed by the applicants in the proceedings before Lindgren J included orders pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) (‘Federal Court Act’) that:
• the applicants be described by pseudonyms for the purposes of the Federal Court proceedings; and• publication of the applicants’ names or other material tending to identify them be restricted to certain persons or classes of persons.
4 Lindgren J gave short oral reasons for dismissing the motions at the conclusion of the interlocutory hearing on 23 October 2007, although he did not make formal orders at that time. His Honour stated that if either party wished him to prepare formal written reasons, that party should advise him. The applicants duly requested formal reasons. Accordingly, on 25 October 2007, his Honour published brief written reasons. His Honour made orders dismissing the motions at the same time as he published his written reasons.
5 In his reasons for judgment, Lindgren J noted that the applicants’ case for a suppression order was that, if no such order was made and they succeeded in their appeal from the AAT’s decision, the purpose of the proceedings would be frustrated, since their identities would be made known. His Honour said that he had been initially attracted to this argument, but on reflection he did not think it was right, for two reasons:
‘It is important to remember that O 46 r 6 of the Federal Court Rules does not permit persons other than parties to inspect affidavits filed (I include exhibits to the affidavits) without the leave of a judge. Accordingly, all that a member of the public would know, in the absence of a suppression order, is the true names of the applicants as applicants in these proceedings, and, by inspecting the notices of appeal, that the issue between them and the Australian Prudential Regulation Authority is the question of law whether the Tribunal has power to suppress their names. These present proceedings will not involve any evidence of the underlying facts. On the hearing I will simply be taken to legislation and earlier decisions.
If I were to decide in favour of the applicants on the final hearing, it would be a matter for the Tribunal to decide whether to exercise the power to suppress in the light of the evidence of the background facts that would, in the absence of a suppression order by the Tribunal, be given in public: see Administrative Appeals Tribunal Act 1975 (Cth) s 35(1).
It may be said in answer that members of the public reading the names of the applicants in these proceedings will, in fact, know the general nature of the background facts. This argument could be based on a newspaper account that appeared in February 2007 in which the applicants’ names and some of the background facts were disclosed. But, if the applicants were to rely upon that newspaper publicity as establishing a link between them and the background facts, this would destroy their case for confidentiality in any event.
Indeed, an alternative ground on which I would refuse the present motion is that the identities, that is, the names, of the applicants and the general nature of the background facts concerning them are already in the public domain by reason of that newspaper article.’
6 The newspaper article to which Lindgren J referred was in evidence before me. The article, which was published in the Australian Financial Review of 26 February 2007, included the following material:
‘Two of the men closely involved in providing HIH Insurance with a sham reinsurance policy that allowed it to exaggerate its earnings by more than $200 million in 1999 and 2000 have finally had their identities made public.
Jurgen Graber and Henning Ludolphs, senior executives of German reinsurer Hannover Re, spent almost two years fighting off attempts by the Australian Prudential Regulation Authority to have them disqualified in Australia, even though they are based in north Germany.
They still haven’t been disqualified, although APRA would like to do so.
An APRA spokesman said APRA was "satisfied with the outcome" of the High Court case and the matter would "continue to work through the process".
So why did Mr Graber and Mr Ludolphs insist on being "X and Y, employed by Z" as they took their fight to the High Court? As High Court judge Michael Kirby noted in his contribution to the judgement, the attempt at anonymity had an "air of unreality", given that their real names were not suppressed during the HIH Royal Commission in 2002. The confidentiality order on their identities expired shortly after the judgement was announced on February 21.’
7 The High Court case referred to in this article is X v Australian Prudential Regulatory Authority (2007) 226 CLR 630, judgment in which was delivered on 21 February 2007. The HIH Royal Commission was established to inquire into and report on the collapse of the HIH Insurance Group.
THE MOTIONS
8 The applicants are presently seeking review in the AAT of a decision made by the Australian Prudential Regulatory Authority (‘APRA’) to disqualify each of them from being or acting as the holder of a senior insurance role. It appears that the AAT has stayed each of the disqualification decisions pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (‘AAT Act’) pending a final determination on the application to review APRA’s decision. It was in these review proceedings that the AAT decided that it lacked power to direct APRA not to publish the names of the applicants or to direct that the applicants be described by pseudonyms for the purpose of their AAT applications.
9 Justice Lindgren made interim suppression orders (to use the shorthand expression) on 17 October 2007, but these expired once he made orders on 25 October 2007 dismissing the two motions. At the time his Honour made the formal orders dismissing the motions, he was aware that the applicants’ foreshadowed applications for leave to appeal had been listed for hearing before me that afternoon.
10 When the matter came before me, Mr Greenwood SC, who appeared for the applicants, orally sought leave to appeal from the judgment dismissing the motions. He informed me, however, that he did not wish to proceed immediately to a hearing of the applications for leave to appeal because his clients wanted an opportunity to consider whether they should present evidence in addition to that adduced before Lindgren J. This additional material was said to relate to the prejudice that the applicants would be likely to suffer if their identities were to be disclosed, although a good deal of material directed to that issue had been adduced in evidence before Lindgren J.
11 Mr Stevenson SC, who appeared with Ms Whittaker for APRA, objected to this course, arguing that the applicants were in a position to put their contentions on the leave applications without the need for an adjournment. I took the view, however, that subject to what appears in para 12 of this judgment, it was a matter for Mr Greenwood as to whether the applicants should proceed immediately with their leave applications or whether they preferred to have the hearing adjourned.
12 Section 50 of the Federal Court Act empowers the Court at any time to make such order forbidding or restricting the publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice. The general principle is that proceedings take place in open court. The Court only departs from the general principle when conducting proceedings in open court would frustrate the administration of justice or would detract from the public interest. This applies to cases where pseudonym orders are sought: see John Fairfax Group Pty Ltd v Local Court of New South Wales (1992) 26 NSWLR 131. For this reason, I pointed out to Mr Greenwood that if the applicants chose to have the applications for leave to appeal adjourned, they would need to satisfy me that it was appropriate to make interim suppression orders pending the hearing of the leave applications. Mr Greenwood did not dissent from this proposition.
13 Mr Greenwood asked me to make interim suppression orders for the purposes of preserving the applicants’ position pending the hearing of their applications for leave to appeal. The precise orders that Mr Greenwood sought are the following:
‘1. Pending the hearing of the applicants’ application for leave to appeal, pursuant to section 50 of the Federal Court of Australia Act 1976 (Cth), the first applicant be described by the pseudonym "X" and the second applicant be described by the pseudonym "Y" for the purpose of this proceeding.
2. Pending the hearing of the applicants’ application for leave to appeal, no person shall have access to the contents of the Court file other than a Judge of the Court and the Judge’s Associate and Executive Assistant, the parties and their legal representatives.
3. Pending the hearing of the applicants’ application for leave to appeal, publication of the name of the applicants and of any material tending to identify them, or their employer, or any entities in which they have an interest, be restricted to members and staff of the Court, the parties and their legal representatives, and professional advisers, and staff of Auscript.
4. Pending the hearing of the applicants’ application for leave to appeal, the reasons of Deputy President Block in Administrative Appeals Tribunal proceedings 2007/4450 and No 2007/4453 given on 19 September 2007 not be published.
5. Pending the hearing of the applicants’ application for leave to appeal, the first applicant be described by the pseudonym "X" and the second applicant be described by the pseudonym "Y" for the purpose of Administrative Appeals Tribunal proceedings 2007/4450 and No 2007/4453.
6. Pending the hearing of the applicants’ application for leave to appeal, publication of the name of the Applicants and of any material tending to identify them, or their employer, or any entities in which they have an interest, be restricted to members and staff of the Administrative Appeals Tribunal, the parties and their legal representatives, and professional advisers, and staff of Auscript.’
REASONING
14 In his submissions, Mr Greenwood emphasised that unless interim orders were made the applicants would suffer prejudice. This would flow, so he argued, from publication of their names and of the fact that they had sought review in the AAT of APRA’s disqualification decisions. The publication of these matters would lead observers to conclude that APRA had made decisions to disqualify the applicants and that they were seeking to overturn those decisions in the AAT.
15 As I discussed with Mr Greenwood in argument, it seems to me that there are at least three major difficulties with this contention, although the three matters are inter-related.
16 The first is that the Australian Financial Review article of 26 February 2007 has published to the world the identities of the applicants. The same article stated that APRA was seeking to have the applicants disqualified by reason of matters that had arisen in the HIH Royal Commission. Moreover, the article linked the applicants to the High Court’s decision in X v APRA, handed down five days earlier. In that case, as the headnote in the Commonwealth Law Reports records, the High Court held that:
‘s 6M of the Royal Commissions Act did not prohibit APRA from relying on evidence given by a person at a Royal Commission when considering whether that person should be disqualified from acting as a senior manager or agent of a foreign general insurer under the Insurance Act on the ground that he or she was not a fit and proper person so to act.’
17 The joint judgment of six members of the High Court, although adopting pseudonyms to describe the present applicants, recorded (at 633-634, [2]-[8]) that they held senior management positions with a German reinsurer carrying on business in Australia as a ‘foreign general insurer’; that they had given evidence to the HIH Royal Commission; that a Senior Manager of APRA had written letters to the applicants giving them the opportunity to make submissions as to why APRA should not decide to disqualify them under s 25A(1) of the Insurance Act; that the Senior Manager had stated his ‘preliminary view’ that neither applicant was a fit and proper person to be the holder of senior insurance roles; that the Senior Manager’s letter made detailed reference to evidence provided to the HIH Royal Commission (a complete transcript of the hearings of the Royal Commission being available on the internet); that the applicants’ solicitors had provided detailed replies noting that any decision to disqualify the applicants was subject to internal review by APRA and review by the AAT; and that the solicitors were concerned that publication of the initial decisions:
‘would cause detriment to their clients, including the need to meet obligations to inform regulatory authorities in other countries.’
18 Anyone reading the Australian Financial Review article and the judgment of the High Court would know the identities of the applicants and would also know that APRA’s Senior Manager had formed the preliminary view that both should be disqualified from acting in senior insurance roles by reason of matters revealed to the HIH Royal Commission. The reader would infer that APRA would consider whether to make a decision to disqualify the applicants, after giving them an opportunity to advance submissions as to why that course should not be taken.
19 The second difficulty facing the applicants is that the Chairman of the Executive Board of their German employer stated in an affidavit filed in the AAT that he had been ‘stunned’ to learn in early 2005 that APRA had forwarded notices to the applicants that contained ‘serious, adverse and unfounded conclusions about [their] conduct and a recommendation that [they] be disqualified’. The Chairman stated that he ‘regarded this as an extremely serious matter’ and that he wanted to restrict publication of these ‘adverse conclusions’ because publication would affect the company’s reputation. In other words, he expressed concern about the impact of the preliminary views expressed by APRA’s Senior Manager being publicly disclosed. Yet that is precisely what the Australian Financial Review article, when read with the High Court judgment in X v APRA, did.
20 The third difficulty facing the applicants is that they have adduced no evidence to show that publication of the fact of the disqualification decisions, having regard to the present circumstances, would affect their respective reputations or ability to conduct commercial dealings to any greater extent than publication of the facts already revealed to the world by the newspaper article. It is to be remembered that the initial disqualification decision is subject to reconsideration by APRA itself (Insurance Act, s 63(2), (4)) and, if APRA confirms the decision (as it has), to review on the merits by the AAT (Insurance Act, s 63(7)). The applicants, as is their right, have sought merits review of APRA’s decision. In the meantime, the disqualification decisions have been stayed.
21 In the absence of evidence, I cannot conclude that publication of the applicants’ identities and the other material they seek to suppress would involve greater harm to them than the matters already revealed by the Australian Financial Review article, when read with the judgment of the High Court (which, of course, was publicly available immediately upon being delivered). No doubt it is possible that publication of the applicants’ identities, coupled with reports of the proceedings in this Court (including the hearing before me), would lead an observer to conclude that APRA had made a decision to disqualify the applicants (as distinct from requiring the applicants to show cause why such an order should not be made). But the observer would know that the decision was subject to merits review in the AAT and that it might be overturned.
22 Mr Greenwood did not identify any material which suggested that the applicants’ reputation or commercial freedom would suffer harm by the publication of the matters to which I have referred, over and above the harm flowing from the circumstances already in the public arena. I should add that if the applicants are obliged to inform overseas regulatory authorities of APRA’s disqualification decisions notwithstanding that the decisions have been stayed (a matter as to which there is no evidence), they would hardly be justified in withholding that information because of suppression orders made by this Court.
23 When I indicated to Mr Greenwood that the applicants had not satisfied me that publication of their identities in the Federal Court proceedings would occasion them any significant prejudice, Mr Greenwood submitted that I should make the interim suppression orders to preserve the applicants’ legal entitlements independently of any question of prejudice. He argued that to refuse the orders would render the appellate process nugatory.
24 If the applicants succeed in obtaining leave to appeal from Lindgren J’s interlocutory orders and ultimately succeed on the appeal itself, the AAT would be required to reconsider the applications for the suppression orders that it had previously decided it lacked the power to make. The applicants would then need to satisfy the AAT that it was an appropriate exercise of the AAT’s discretion conferred by s 35(2) of the AAT Act, to make the suppression orders sought by them. If the applicants succeed in their appeal to this Court, it will be open to them, if so advised, to press their claims for suppression orders in the AAT, whether in the form originally sought or in some amended form.
25 In the absence of any demonstrable prejudice to the applicants arising from the publication of their names or of the other material they have asked the AAT to suppress, it is difficult to envisage the AAT making the suppression orders. But on the material available to me, the applicants are unlikely, in any event, to be able to show that disclosure of the fact that they are challenging APRA’s disqualification decisions in the AAT will cause them significant prejudice. If there is some other basis for the AAT making the orders sought by the applicants (or some amended form of orders), they will have the opportunity to ask the AAT to do so unimpeded by any incorrect ruling relating to the powers of the AAT.
CONCLUSION
26 It is for these reasons that I am not satisfied that the orders sought by the applicants are necessary to prevent prejudice to the administration of justice.
27 At the conclusion of the hearing before me, I made orders dismissing the
applicants motions for interim suppression orders, with
costs, and made orders
for the further conduct of the applications for leave to appeal. These are my
reasons for dismissing the
motions.
Associate:
Dated: 26
October 2007
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Solicitor for the Applicant:
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Counsel for the Respondent:
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Solicitor for the Respondent:
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Date of Hearing:
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Date of Judgment:
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