Siminton v Australian Prudential Regulation Authority [2007] FCA 2098 (10 December 2007)

Banking Act 1959 (Cth) ss 7, 11, 65A
Federal Court of Australia Act 1976 (Cth) ss 23, 57(1)

Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608 cited
Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 followed

DAVID ROBERT SIMINTON v AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY
VID 992 OF 2007

GRAY J
10 DECEMBER 2007
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 992 OF 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	DAVID ROBERT SIMINTON Appellant
AND:	AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY Respondent

JUDGE:	GRAY J
DATE OF ORDER:	10 DECEMBER 2007
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The motions, the subject of the notice of motion filed on 21 November 2007,
be dismissed.

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 992 OF 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	DAVID ROBERT SIMINTON Appellant
AND:	AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY Respondent

JUDGE:	GRAY J
DATE:	10 DECEMBER 2007
PLACE:	MELBOURNE

1 On 26 October 2007, Tracey J delivered judgment in proceeding number VID 1607 of 2005. The judgment is published under the designation Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608. In the proceeding in which that judgment was given, the Australian Prudential Regulation Authority ("APRA") sought, among other things, relief by way of a permanent injunction against the respondent, Mr Siminton, pursuant to s 65A of the Banking Act 1959 (Cth) ("the Banking Act"). Section 65A provides that the Court may grant an injunction restraining a person from engaging in conduct, or requiring the person to do a particular act or thing, in such terms as the Court thinks appropriate, if there is a contravention or threatened contravention of the Act.

2 The particular provision to which attention was directed in that proceeding was s 7 of the Banking Act, which effectively prohibits carrying on the business of banking without a licence. Tracey J was satisfied that Mr Siminton had collected money by way of deposits from members of the public, as a result of his solicitation of those deposits, and had promised returns at a very high level, 40 or 50 per cent, described as a "profit share", rather than interest. His Honour was satisfied that Mr Siminton did not fall within s 11 of the Banking Act, which would have entitled him to carry on banking business and that, therefore, he was in contravention of s 7. A significant part of his Honour’s findings about the carrying on of the business of banking related to the proposition that Mr Siminton had lent money, in the sum of $100,000, from the moneys deposited with him, to an institution called Technocash, and had promised those from whom he solicited funds that moneys would be available for loans in the future.

3 In determining what relief should be granted, his Honour decided to make permanent some injunctions that had previously been granted on an interlocutory basis. At [72]-[75] of his reasons for judgment, his Honour also proposed that the case would be one appropriate for the appointment of a receiver, under either s 57(1) or s 23 of the Federal Court of Australia Act 1976 (Cth). His Honour invited submissions from the parties on a subsequent date, 7 November 2007, in relation to the terms of appropriate orders and any additional relief. Submissions were made. On 7 November 2007, his Honour made an order that included an order appointing a receiver to give effect to the judgment and orders of the Court in proceeding number VID 1607 of 2005, by ensuring that moneys, which the Court had found to have been received by Mr Siminton in contravention of the Banking Act, were returned to depositors. The order recited that the Court had found that the Terra Nova Cache that was established by Mr Siminton was a bank, operating in conjunction with an entity called the Principality of Camside, and that members of the public were encouraged to make deposits in Terra Nova Cache in return for promised high interest payments.

4 The order appointing the receiver is some 19 paragraphs long, including a reservation of liberty to apply. It is unnecessary for present purposes to recite all of the provisions of the order, but it is necessary to refer to some specific provisions. In para 4, the Court ordered that:

7 On the same day as those orders were made, 7 November 2007, Mr Siminton, by his counsel, applied to Tracey J for a stay of those orders, pending appeal. His Honour adjourned that application to 15 November 2007, when submissions were made and his Honour rejected the application for a stay. The only indication of his Honour’s reasons is in the transcript of the oral reasons for judgment delivered on that day, in which his Honour canvassed proposed grounds of appeal, and did not find that they would be likely to succeed. His Honour dealt with arguments that a stay ought to be granted on the basis that the receiver would incur expenses in the course of performing his duties, and that those expenses would be thrown away if and when the appeal were determined favourably to Mr Siminton. His Honour also rejected an argument that the power to require Mr Siminton to provide information and documents would amount to a denial of his right to the privilege against self-incrimination.

8 The application today for a stay of the appointment of a receiver is effectively the same application that was made to Tracey J. As a judgment dealing with an interlocutory application, his Honour’s judgment refusing a stay gives rise to no res judicata estoppel or issue estoppel against Mr Siminton, but, in the circumstances, unless I am convinced that his Honour was fundamentally wrong, or unless any new material is raised before me, I ought to follow what his Honour said and refuse to grant the application.

9 The proper test for the granting of a stay of orders made by the Court pending appeal is laid down by the Full Court in Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 at 66, where the Full Court rejected the test of special circumstances, which had been applied by Victorian courts and adopted the test applied in New South Wales. That test is that the applicant for a stay needs to demonstrate a reason, or an appropriate case, to warrant the exercise of the discretion in favour of the applicant.

10 Counsel for Mr Siminton attempted to persuade me that Tracey J was fundamentally wrong in his reasons for judgment, given on 26 October 2007, in that there was no evidence that Mr Siminton was carrying on the business of banking. In particular, the argument was that there was no evidence of loans made by Mr Siminton. His Honour dealt with that issue at some length. His Honour certainly found as a fact that there was evidence of one loan to Technocash. His Honour also found as a fact that, in the course of soliciting deposits from members of the public at public meetings, Mr Siminton had made it clear that in due course loans would be available. Indeed, it is difficult to envisage that funds raised in this manner could be invested in any sort of a broad investment portfolio without loans to other institutions and parties being involved. Counsel for Mr Siminton said that returns of the magnitude proposed could be generated by investment in currency markets and commodity markets. Whether or not this is so, I still think that it is difficult to imagine that no loans would ever be involved. In any event, I cannot be satisfied that Tracey J was fundamentally wrong in the view that he took, or fundamentally wrong to take the view that injunctive relief and the appointment of a receiver were warranted.

11 The next argument on behalf of Mr Siminton was an argument that Tracey J also dealt with on 15 November 2007, when he rejected the application for a stay of the appointment of the receiver. This argument was that the expenses claimed by the receiver, and fees claimed by the receiver, under para 17 of the order, would diminish the amount made available to the depositors if the appeal were to be allowed. Counsel for Mr Siminton was inclined to put this in terms of an argument that the appeal would be rendered nugatory. Of course, it will not. Even if some money goes to the receiver, there will still be other money available to the depositors, or to be returned to Mr Siminton if his appeal succeeds. It is not possible to render an appeal partially nugatory.

12 The question is whether the appointment of a receiver can be justified in the circumstances. The circumstances are such that it is unknown to what extent there are funds that have been gathered by Mr Siminton in the course of his venture that is unlawful under the Banking Act. In schedule A to the order made on 7 November 2007 appointing the receiver, there is a list of the locations of funds that were known to the Court at the time that order was made. It does seem probable that there are other funds, but Mr Siminton will not say where they are. In the circumstances, that alone justifies the appointment of a receiver and is a strong argument against staying the order pending any appeal.

13 The privilege against self-incrimination is a privilege that can be either claimed or waived by a person. If the receiver were to put questions to Mr Siminton, the answers to which might incriminate him, or were to require him to produce documents, the information in which might incriminate him, he would, on a question by question or request by request basis, have the right to refuse to answer those questions or comply with those requests if he were able to say that to give an answer or to comply with the request might incriminate him. It is wrong to assume in advance that anything that the receiver might request, or any question that the receiver might ask, might require that Mr Siminton incriminate himself. Any issue of self-incrimination must be dealt with on a question by question or request by request basis, in the context of the reasonableness of the likelihood of criminal proceedings.

14 Given that Mr Siminton prefers his own interests to those of the depositors and refuses to divulge to the Court, and may refuse to divulge to the receiver, where any additional funds are, there is every reason to require that the receiver have a role in preserving and protecting funds insofar as the receiver is able to find them. It also should be pointed out that para 4(b) of the order that was made, appointing the receiver, is apt to permit the receiver to require, by request in writing, persons other than Mr Siminton to provide reasonable assistance, and that power will no doubt be of great importance in assisting the receiver to ascertain where any funds might be held.

15 Counsel for Mr Siminton went so far as to argue that, if the funds were left in Mr Siminton’s care pending the hearing and determination of the appeal, they would be better safeguarded than in the care of the receiver. In the light of the history, this suggestion can only be described as ludicrous. Mr Siminton has already been found guilty of contempt of court in attempting to move more than $600,000 through the bank account of a friend, following the making of orders freezing his assets by this Court. He was originally sentenced to a term of imprisonment for that contempt of court. His term of imprisonment was overturned by a Full Court which substituted a fine; a fine which Mr Siminton apparently has not paid. He has not chosen to put forward any material that might identify any of his own funds, amongst the assets that are frozen by injunction, so that he would be able to pay the fine. I am informed by counsel for APRA that Mr Siminton has been sentenced to a term of imprisonment for having failed to pay the fine by the due date. There can be no doubt that to install a receiver and to give the receiver responsibility for taking care of the funds will be more beneficial to the depositors than leaving them in the care of Mr Siminton.

16 There was some suggestion that the funds have not borne any interest for two years and that the depositors have thereby suffered. On exploration, it seems that the effect of the injunction so far has been to leave the funds wherever they were at the time the injunction was granted, except to the extent that Mr Siminton has managed to evade the effect of the injunction by moving them. To the extent to which the funds were in interest-bearing deposits at that time, they will have continued to bear interest. The injunctions granted do not at all affect the holders of those funds and whatever obligations they have to pay interest on the funds they hold. In addition, the power in para 4(c) of the order appointing the receiver is apt to ensure that, insofar as the receiver is able to gather funds, they can be invested for the benefit of the depositors in some interest-bearing account.

17 For these reasons, it is very clear that the application for a stay must fail. It does not differ in any significant respect from the application made to Tracey J. Far from being satisfied that Tracey J was fundamentally wrong, I am satisfied that his Honour was right to refuse to grant a stay, and therefore, this application must be dismissed.

18 I should also say that, in para 1.2 of the notice of motion filed on 21 November 2007, there is an order sought that there be a stay of payment by Mr Siminton of the fines imposed on him by the Full Court in proceeding number VID 376 of 2006, pending the hearing and determination of the appeal in which the notice of motion is filed. The notice of motion is filed in proceeding number VID 992 of 2007, which is an appeal from the orders made by Tracey J on 15 November 2007. The fines in respect of which the stay is apparently sought are fines that were imposed, as I have already said, by the Full Court in lieu of a sentence of imprisonment for an earlier breach of the injunctive orders made by the Court. Counsel for APRA has informed me, and I do not understand it to be contested, that the order made by the Full Court has been perfected. Accordingly, there would appear to be no power in the Court to stay the operation of that order any further. In any event, the application is made in the wrong proceeding. It appears that it relates, in reality, to an appeal from the judgment of Tracey J sentencing Mr Siminton to a term of imprisonment for failure to pay the fine by a particular date. There is a party to that appeal, not a party to this proceeding, who would be a necessary party to an application for any order relating to that appeal. Accordingly, that order cannot be made.

19 I should also mention that counsel for Mr Siminton attempted to raise issues of the timing of the settling of the index to the appeal book in this appeal, with a view to having this appeal and two others that are pending heard together or consolidated, with a single set of material in an appeal book. The suggestion that there be a single set of papers is obviously a wise one. The suggestion that all three appeals be heard by the same Full Court, either together or consecutively, also appears to be a good one, but there is no need for the Court to make any orders about those matters today. These are issues that can be resolved between the parties and by negotiation with the registrars of the Court.

20 The orders I make are as follows:

1. The motions, the subject of the notice of motion filed on 21 November 2007,
be dismissed.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.

Counsel for the Appellant:	Mr D Sharp

Solicitor for the Appellant:	Erhardt & Associates

Counsel for the Respondent:	Ms D Mortimer SC & Mr S Hibble

Solicitor for the Respondent:	Australian Prudential Regulation Authority

Date of Hearing:	10 December 2007

Date of Judgment:	10 December 2007