Palmer v Australian Securities and Investments Commission (No 3)

Palmer v Australian Securities and Investments Commission (No 3) [2026] FCA 141 is a Federal Court decision about whether a civil proceeding should be paused because it overlaps with a pending criminal prosecution. McElwaine J granted a temporary stay. The Court held that continuing Mr Palmer's civil case against ASIC would fragment the criminal process because the issues he wanted determined in the Federal Court would or might arise in the Queensland criminal prosecution.

The decision is procedural rather than substantive. It does not finally decide whether ASIC lawfully used its compulsory examination powers. Instead, it deals with the proper forum and timing for those arguments. For businesses and directors, that is still important. It shows that once a criminal prosecution is underway, a separate civil challenge to the regulator's investigation may be stopped if it overlaps too closely with issues for the criminal courts.

Mr Palmer had already been charged in Queensland in what the judgment calls the Cosmo prosecution. According to the Federal Court's reasons, an ASIC officer laid a complaint on 6 February 2020 alleging four counts of dishonesty. The prosecution concerned Cosmo Developments Pty Ltd, and or the Palmer United Party and others, as alleged beneficiaries of the conduct. The alleged transactions dated back to August and September 2013. The offences charged were indictable, and at the time of the Federal Court decision a committal hearing had still not occurred.

There was also a related prosecution concerning Palmer Leisure Coolum Pty Ltd. Both prosecutions were being conducted by the Commonwealth Director of Public Prosecutions. Mr Palmer denied the alleged conduct.

Separate from the criminal matters, Mr Palmer had started Federal Court proceedings seeking relief about ASIC's use of compulsory examination powers. His central complaint was that ASIC had unlawfully compelled him to attend examinations under section 19 of the ASIC Act because, contrary to section 49(1), relevant ASIC officers had already formed the view before each examination that he may have committed an offence and ought to be prosecuted. He also argued that ASIC had deployed compulsory powers for an improper purpose.

He sought declarations that ASIC's purported use of the section 19 power was unlawful and that the examination transcripts were unlawfully obtained. He also sought consequential relief, including orders requiring ASIC to identify who received the transcripts and to deliver them up. The judgment notes that for some time the CDPP had been named as a second respondent in the Federal Court proceeding, but it was later removed as a party.

The background pleaded by Mr Palmer was broader than a narrow technical challenge to the examinations. The judgment records his allegations about long-running commercial disputes involving Mineralogy Pty Ltd, CITIC-related parties and what he described as a strategy by others to apply commercial pressure through serious allegations of misconduct. The Court did not determine those allegations on this interlocutory application, but it treated them as part of the pleaded foundation for the relief sought. That mattered because it showed the civil case was not isolated from the criminal prosecution. It emerged from the same investigation and attacked the same chain of events.

The central practical issue was overlap. ASIC argued that the Federal Court proceeding would or might fragment the Cosmo prosecution because the same factual and legal questions would arise in both places. The Court accepted that submission.

The judgment identifies several areas of overlap. They included whether ASIC had been influenced by complaints from third parties, whether ASIC officers were aware of alleged commercial purposes behind those complaints, whether those matters were taken into account in deciding to investigate and prosecute Mr Palmer, and whether ASIC used the examination transcripts to interview other witnesses, gather evidence and formulate the complaint. The Court also referred to evidence that, in the committal proceeding, Mr Palmer had already sought the attendance of witnesses for cross-examination in support of a foreshadowed argument that the investigation leading to the prosecution was improper or unlawful for reasons overlapping with the Federal Court case.

The Court also noted an important statutory point. By operation of section 68(3) of the ASIC Act, the transcripts themselves were not admissible in either prosecution because Mr Palmer had continuously invoked his privilege against self-incrimination. But that did not remove the overlap problem. The issue was not only direct admissibility of the transcripts. It was also whether the transcripts had informed investigative steps, witness interviews and the formulation of the complaint. In other words, derivative use and the broader conduct of the investigation still mattered.

This is a useful reminder for businesses. Parallel proceedings do not need to be identical before a court sees a fragmentation problem. It is enough if the civil relief touches the conduct of the criminal proceeding in a practical way. A party cannot avoid that conclusion simply by framing the civil relief as declarations or delivery-up orders rather than as a direct challenge to the prosecution itself.

The legal question was whether the Federal Court proceeding should be stayed as an abuse of process because it would fragment the pending criminal prosecution. The Court approached that question by looking at substance rather than form. It asked whether the civil relief sought would touch the conduct of the criminal proceeding, overlap with issues likely to arise there, or create a real risk of duplication and inconsistent findings.

Earlier Palmer litigation mattered heavily. In a related proceeding concerning the PLC prosecution, Button J had already granted a stay, and the Full Court had dismissed an appeal from that decision. McElwaine J treated the Full Court's reasoning as materially applicable. The Full Court had explained that fragmentation is assessed in a practical way. A direct collateral attack on the criminal proceeding is not required. Civil proceedings can intersect with criminal proceedings in different ways, and the key point is whether the civil relief touches the criminal process.

The Court also emphasised the High Court's statement in Gedeon that declaratory relief should be exercised sparingly where the declaration would touch the conduct of criminal proceedings. The general principle is that fragmentation of the criminal process is to be actively discouraged.

Mr Palmer argued that the Cosmo prosecution could be distinguished from the earlier PLC matter. He relied on delay, alleged disclosure failures, and a referral of human rights questions to the Supreme Court of Queensland under the Human Rights Act 2019 (Qld). He submitted, in substance, that these matters meant the prosecution was so affected by delay and procedural difficulty that the Federal Court should allow his civil case to continue despite the overlap.

The Court rejected that position. It accepted that the prosecution had been affected by delay and satellite litigation, but it was not persuaded that those matters created exceptional circumstances or compelling reasons to let the Federal Court determine overlapping issues at this stage. Complaints about delay, disclosure and abuse of process were matters open to be raised in the Queensland criminal courts.

McElwaine J granted ASIC's interlocutory application to the extent pressed in submissions and ordered a temporary stay. The Federal Court proceeding was stayed pending the hearing and final determination, including any appeals, of the criminal prosecution brought against Mr Palmer by complaint dated 6 February 2020 in the Magistrates' Court of Queensland, or until further order.

The Court also ordered the parties to inform the Court when the criminal matter is determined, listed the matter for later case management after that determination, gave liberty to apply on 3 days' notice, and ordered Mr Palmer to pay ASIC's costs of the interlocutory application on a party and party basis forthwith, with the amount to be agreed or otherwise determined by a Registrar as a lump sum.

The reasoning was direct. The Court found there was no principled basis for the Federal Court to determine matters that will or are likely to be traversed in the criminal courts in Queensland. The potential to undermine the criminal process was real. The continuation of the civil proceeding while the criminal proceedings remained unresolved was therefore an abuse of process.

The Court was not persuaded by the arguments based on delay, disclosure problems or the human rights referral. It said complaints of delay could be made in the prosecution itself. It also rejected the submission that the referral of questions of law to the Supreme Court of Queensland meant the prosecution was effectively hypothetical or stayed in a way that removed the fragmentation problem. On the contrary, the referral illustrated the risk of overlapping and inconsistent findings if the Federal Court case continued at the same time.

For most businesses, this case is not a ruling on the full scope of ASIC's examination powers. It is a warning about litigation structure. If a regulator's investigation has already led to criminal proceedings, a court may insist that challenges to the investigation be dealt with in the criminal forum rather than through a separate civil case.

That matters because businesses often want quick declaratory relief when they believe a regulator has overreached. But if the same issues are likely to arise in a criminal prosecution, a separate civil proceeding may be seen as duplicative and disruptive. That can mean a stay, extra cost and lost time.

The case also shows that overlap is broader than direct admissibility. Even where a transcript itself may not be admissible, arguments about how it informed the investigation, witness interviews, charge formulation or derivative evidence can still create enough connection to the criminal process for a stay.

From a practical perspective, businesses and directors should coordinate strategy early. If there is a possibility of criminal charges, map out which issues belong in the criminal court, which records need to be preserved, and how compulsory examination material may later be argued about. Keep a careful chronology of regulator communications, notices, examinations, transcript handling and disclosure issues. If there are concerns about delay, abuse of process or disclosure, this case suggests those complaints may need to be pursued in the criminal proceeding itself.

Finally, the decision is a reminder that courts are reluctant to let parties run overlapping satellite litigation around a criminal case. Even where a civil claim is regularly commenced in a court of competent jurisdiction, that principle may give way where the criminal process would otherwise be fragmented.

The judgment was delivered on 24 February 2026. The stay ordered by the Federal Court is temporary, not final. It remains in place pending the hearing and final determination of the Queensland criminal prosecution, including any appeals, or until further order.

That means the Federal Court proceeding has not been dismissed outright. It has been paused. If and when the criminal matter is finally resolved, the Federal Court proceeding may return for case management and any further steps that remain open.

For readers following the case, that distinction matters. A stay preserves the proceeding but stops it from moving forward for now. It is different from a final ruling on the merits of Mr Palmer's claims about ASIC's conduct.

This page is based on the Federal Court judgment in Palmer v Australian Securities and Investments Commission (No 3) [2026] FCA 141, delivered by McElwaine J on 24 February 2026. The judgment was delivered ex tempore and revised from transcript. It records the orders made, the procedural history, the overlap identified between the civil and criminal proceedings, and the Court's reliance on earlier Palmer decisions and authorities including Gedeon and Sankey v Whitlam.

The allegations described in the judgment were contested. The Court's decision was confined to whether the civil proceeding should continue while the criminal prosecution remained unresolved.