Federal Court of Australia

Australian Securities and Investments Commission v Taylor [2023] FCAFC 189

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the costs of the first respondent to be agreed or assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MORTIMER CJ AND ABRAHAM J:

1    This is an appeal from a decision of the primary judge in XY v Companies Auditors Disciplinary Board [2022] FCA 1583 (Primary Judgment or PJ) brought by the Australian Securities and Investments Commission (ASIC, the appellant). The primary judge set aside a decision by the Chairperson of the Companies Auditors Disciplinary Board (Board) not to stay a disciplinary proceeding brought by ASIC against Mr Taylor (the respondent). Mr Taylor sought a stay on the basis that the Commonwealth Director of Public Prosecutions (CDPP) had informed him that he would be charged with criminal offences relating to the conduct the subject of the disciplinary proceeding. By the conclusion of the proceedings before the primary judge, criminal proceedings had been instituted against Mr Taylor.

2    It was accepted by ASIC that the criminal proceedings concern the same subject matter as the disciplinary proceeding. The basis of the stay application was, in summary, that Mr Taylor wished to defend the disciplinary proceeding but faced the risk that in doing so he would be aiding the prosecution’s case against him.

3    In summary, ASIC alleged the primary judge erred in finding:

4    Although ASIC alleges five grounds of appeal, they are all underpinned by what it contends is the proper construction of the relevant statutory scheme. That is, that s 1292(11) of the Corporations Act modifies or abrogates the common law rights of a person relating to the criminal process, such that for a stay of disciplinary proceedings to be granted pursuant to s 1294A(4) of the Corporations Act, prejudice based on something more than a person having been charged with a criminal offence and the consequences that necessarily flow from that must be established. Accordingly, ASIC properly accepted that to succeed on the appeal it must establish that the construction of the statutory scheme it contends for is correct. That argument is encapsulated by the first ground of appeal.

5    For the reasons below, we do not accept that the relevant statutory scheme is to be construed in the manner contended for by ASIC. It follows that the appeal must be dismissed.

Factual background

6    The primary judge accurately summarised the factual background at PJ [25]-[39], from which the following summary is taken.

7    The respondent audited the accounts of an ASX-listed company for the year ended 30 June 2018: PJ [25]. In 2019, the respondent was examined under s 19 of the ASIC Act in relation to an investigation into suspected contraventions by the company of its continuous disclosure obligations: PJ [25].

8    In November 2020, ASIC commenced a disciplinary proceeding against the respondent before the Board under s 1292(1)(d) of the Corporations Act: PJ [26]. The Board is a statutory disciplinary body, established under Part 11 of the ASIC Act, which may cancel or suspend the registration of an auditor if it is satisfied that the auditor has failed to perform his duties: PJ [26]. ASIC, as the moving party in the disciplinary proceeding before the Board, seeks the cancellation or three years suspension of the respondent’s registration: PJ [27]. ASIC alleges he failed to carry out or perform his duties in respect of the relevant audit for the 2018 financial year: PJ [27].

9    In around June 2021, ASIC referred a brief to the CDPP in relation to the respondent: PJ [28]. In August 2021, the respondent applied to the Board for a temporary stay of the disciplinary proceeding pending the conclusion of any criminal prosecution against him: PJ [29].

10    On 25 October 2021, the Chairperson dismissed that application and provided written reasons (First Reasons): PJ [30]. In November 2021, the disciplinary proceeding was listed for a hearing commencing 16 May 2022: PJ [31]. On 14 April 2022, the CDPP confirmed that it was in the process of issuing charges which would be served on the respondent, relating to the same subject-matter as the disciplinary proceeding: PJ [33].

11    On 5 May 2022, the respondent made a further application to the Board for a stay of the disciplinary proceeding pending the conclusion of the criminal prosecution: PJ [36]. The application was dismissed, with the Chairperson publishing reasons on 10 May 2022 (Second Reasons): PJ [36]. The Second Reasons encompassed the First Reasons: PJ [36].

12    On 9 May 2022, an originating application for judicial review was filed by the respondent in this Court inter-alia challenging the principal decision and the ancillary decision: PJ [37].

13    On 22 December 2022, the primary judge allowed the application: PJ [212], ordering the disciplinary hearing be stayed pending the outcome of the criminal proceeding. The primary judge found that: the statutory scheme only abrogated a person’s privilege against self-incrimination and the associated right to silence “in respect of...the actual product of a compulsory examination” under s 19 of the ASIC Act: PJ [107]; s 1292(11) of the Corporations Act did not direct the Board to refuse a stay: PJ [108]; the Board was required to, but did not, give “primacy to the criminal process”: PJ [123]; the Board had failed to take into account the prejudice to Mr Taylor of the proceedings continuing: PJ [124]; and the Board made a finding of prejudice to the public interest in circumstances where any such prejudice would be averted by the undertaking not to perform the duties of an auditor offered by Mr Taylor: PJ [125].

Statutory scheme

14    It is appropriate at the outset to refer to the relevant provisions. The statutory scheme draws from the Corporations Act and the ASIC Act and is accurately summarised by the primary judge at PJ [41]-[60], which ASIC adopted in its submissions. For ease of convenience, we repeat aspects of it below.

15    The Board is established by Part 11 of the ASIC Act, which sets out its constitution: PJ [44]. A panel may be convened to hold a disciplinary hearing: PJ [44]. ASIC is authorised to initiate proceedings before the Board in relation to the conduct of an auditor: PJ [44] citing s 1292(1) of the Corporations Act. The Board must not cancel or suspend the registration of a person as an auditor “unless the Board has given the person an opportunity to appear at a hearing by the Board and to make submissions to, and adduce evidence before, the Board in relation to the matter”, and a corresponding opportunity must be given to ASIC: PJ [47] citing s 1294(1) and (2) of the Corporations Act.

16    Significant for this appeal is s 1292(11) of the Corporations Act:

The Board may exercise any of its powers under this Division in relation to a person as a result of conduct engaged in by the person whether or not that conduct constituted or might have constituted an offence, and whether or not any proceedings have been brought or are to be brought in relation to that conduct (emphasis added).

17    ASIC’s contentions focus in particular on the words in bold.

18    We use the phrase “concurrent criminal proceedings” to refer to “[criminal] proceedings [which] have been brought or are to be brought in relation to” the conduct the subject of the disciplinary proceeding.

19    Division 2 of Part 11 of the ASIC Act addresses hearings by a panel of the Board convened for that purpose, and includes the following:

20    It is important to put the Board’s role in its context. Both ASIC’s and the Board’s functions are directed to ensuring integrity in financial systems, and, pursuant to s 1(3) of the ASIC Act, the ASIC Act must be interpreted in accordance with the objectives set out in s 1(2):

(a)    maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy; and

(b)    promote the confident and informed participation of investors and consumers in the financial system; and

…

(d)    administer the laws that confer functions and powers on it effectively and with a minimum of procedural requirements; and

…

(g)    take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it.

21    It is also appropriate to refer to ASIC’s examination powers under Part 3 of Division 2 of the ASIC Act which includes that: ASIC is authorised to examine persons and may require a person examined to take an oath or make an affirmation: ss 19 and 21 of the ASIC Act; an examinee is required to answer questions put by ASIC even though the answer might tend to incriminate him: ss 63 and 68 of the ASIC Act; a relevant statement made in a compulsory examination of the auditor whose conduct is the subject of the proceedings is admissible in a Board proceeding, subject to legal professional privilege: s 76(1) of the ASIC Act; and ASIC may provide a transcript of a s 19 compulsory examination and any other relevant material to the CDPP: PJ [45].

Submissions

22    ASIC submitted that the preferable construction of the regime is that s 1292(11) of the Corporations Act reveals an intention that the privilege against self-incrimination, and the associated right to silence, are abrogated where they are inconsistent with the statutory scheme. In essence, ASIC submitted that its construction of the statutory scheme should be preferred for the following reasons.

23    First, the statutory regime expressly contemplates that a disciplinary proceeding may continue, and by implication that a person may be compelled to answer questions, whether or not criminal proceedings have been brought or are to be brought in relation to the same conduct: s 1292(11) of the Corporations Act. ASIC submitted that, giving each of the statutory words work to do, s 1292(11) reveals an expectation that conduct might be the subject of concurrent disciplinary and criminal proceedings, and that such a situation is not, of itself, sufficient to prevent the Board from exercising its powers. ASIC made the submission that the expression “whether or not” in s 1292(11) carries its ordinary meaning, being “regardless of whether”, which “requires a discounting of the concurrent criminal prosecution and its consequences”. To that end, it was contended that an exercise of power under Division 3 of Part 9.2 of the Corporations Act cannot turn solely on the coexistence of criminal proceedings, and that the discretion is to be exercised regardless of whether that is the case. That is, the Board can proceed if there are concurrent criminal proceedings and if there are not, the existence of concurrent criminal proceedings, alone, cannot prevent the Board from exercising its powers. Something more is required, being specific prejudice that would not be present in every case where the same conduct was the subject of disciplinary and criminal proceedings.

24    Second, nothing in the relevant legislative scheme restricts the Board’s ability to proceed with a matter where there are concurrent criminal proceedings. ASIC argued that any requirement that proceedings be stayed must come from an implied limitation on the Board’s powers, and that such an implication would be inconsistent with the express terms (in particular, s 1292(11)) and purpose of the Corporations Act, which is to maintain integrity in financial systems. ASIC submitted that is clear from s 1(2) and (3) of the ASIC Act. Further, it was noted that s 218(1) of the ASIC Act requires that proceedings before the Board be conducted with minimal formality and technicality, and with expedition.

25    Third, the regime imposed by the legislative scheme displaces the relevant person’s common law rights. A disciplinary proceeding before the Board arises in a context where ASIC may conduct an examination of an auditor under s 19 of the ASIC Act, and the auditor must answer questions even though those answers may incriminate them. However, ASIC submitted that the primary judge erred by stating that the sole abrogation of Mr Taylor’s fundamental common law rights related to evidence obtained during his s 19 examination and argued that the abrogation under the statutory scheme is broader. ASIC noted that transcripts of s 19 examinations are admissible in a proceeding before the Board, subject to legal professional privilege: s 76(1) of the ASIC Act. Moreover, while the Board has no power to compel a person the subject of a disciplinary proceeding to appear at a hearing, if that person elects to give evidence, ss 217(2), 219(2)(b), 219(2A) and 68(1) of the ASIC Act empower the Board to compel that person to answer questions under oath, even though an answer may tend to incriminate them. Under s 68 of the ASIC Act, a statement made by a person under compulsion at a hearing is not generally admissible in a criminal proceeding if (before the statement is made) privilege against self-incrimination is asserted. ASIC contended that the immunity provided by s 68 eliminates a major effect that a disciplinary proceeding might have on a concurrent criminal proceeding and thereby removes a key foundation for any implication that Parliament did not mean to curtail accusatorial rights in proceedings before the Board.

26    It was also submitted that part of the context for s 1292(11) is that the legislation limits the extent to which a disciplinary proceeding may affect a pending criminal trial in ways other than through the direct use of evidence obtained by compulsion. In particular, it was noted that the Board must take all reasonable measures to protect from unauthorised use or disclosure information given to it in confidence in connection with the performance of its functions or the exercise of its powers: s 213 of the ASIC Act; a hearing of the Board takes place in private, unless a request is made by a person entitled to appear at the hearing (other than ASIC or the Australian Prudential Regulation Agency): ss 216(2) and (3) of the ASIC Act; and the Board’s decision and reasons only become public if the Board makes an adverse determination: s 1296(1), (1A) and (1C) of the Corporations Act.

27    Fourth, it was submitted that the history of the legislative regime, as summarised at PJ [61]-[67], supports ASIC’s construction. The provision that is now s 1292(11), formerly s 27(14) of the Companies Act 1981 (Cth) (Companies Act), was introduced alongside s 27(25) of the Companies Act, which provided that evidence given in proceedings before the Board “shall not be admitted in evidence in criminal proceedings against that person …”. Although s 27(25) has since been repealed, it was contended that the introduction of those provisions together, and addressed by the same paragraph of the explanatory memorandum: PJ [64], suggests that s 1292(11) was intended to limit inconsistent common law rights. ASIC made the submission that the legislature’s attention was directed to whether the former s 27(14) abrogated fundamental rights, and it deliberately elected to do so. ASIC submitted that, as a consequence, read in its proper context, s 1292(11) evinces a clear intention that the statutory regime displaces relevant common law rights, and the express reference to overlapping conduct in s 1292(11) indicates that its purpose is to allow Board proceedings to go ahead regardless of the same conduct being the subject of criminal proceedings. ASIC contended that purpose must logically extend to inherent aspects of criminal proceedings, such as accusatorial rights.

28    ASIC also submitted that, contrary to PJ [89], the language of s 1292(11) of the Corporations Act puts the legislation in this case closer to the legislation considered in Onley v Commissioner of Australian Federal Police [2019] NSWCA 101; (2019) 367 ALR 291 (Onley), than that considered in Commissioner of the Australian Federal Police v Zhao [2015] HCA 5; (2015) 255 CLR 46 (Zhao) and X7 v Australian Crime Commission [2013] HCA 29; (2013) 248 CLR 92 (X7). ASIC argued that, on the primary judge’s construction, the words “whether or not that conduct constituted or might have constituted an offence, and whether or not any proceedings have been brought or are to be brought in relation to that conduct” have no work to do. If accusatorial rights are not abrogated by s 1292(11) of the Corporations Act, it was contended, then a stay would surely be granted every time a person is subject to concurrent criminal proceedings. ASIC submitted that would undermine the apparent purpose of s 1292(11), which provides that the Board’s discretionary power remains “whether or not” there are concurrent criminal proceedings. The “necessary intendment”, if not the “express words”, of the statute indicates that proceedings, including the power of compulsion in s 219 of the ASIC Act, are to continue regardless of the existence of concurrent criminal proceedings. In ASIC’s submission, the difficulty with the primary judgment is its failure to give the clear words of s 1292(11) a sensible operation.

29    ASIC accepted that the issue as to whether a stay is to be granted is one of discretion. Despite ASIC’s submission as to the construction of s 1292(11), it accepted in oral submissions that matters such as whether criminal charges had been laid, and whether the person had been the subject of a s 19 examination, were matters which were relevant and could be taken into account in the exercise of that discretion.

30    The respondent submitted that nothing in the text, context, or legislative history evinces a clear intent that the statutory regime displaces relevant common law rights or supports ASIC’s submission that s 1292(11) was intended to limit inconsistent common law rights. The respondent made the submission that the legislative scheme abrogates the common law rights of an accused only to a limited extent, namely in respect of the product of any compulsory examination which has been conducted by ASIC prior to the disciplinary proceeding under s 19 of the ASIC Act. The respondent argued that apart from that limited abrogation, the common law rights of an accused are preserved and remain intact. Indeed, while the auditor may voluntarily choose to adduce evidence at a disciplinary proceeding, the auditor cannot be compelled to do so, such that the abrogation of privilege operates only to the extent that the auditor elects to give evidence in the disciplinary proceeding.

31    Moreover, the respondent noted that s 68(1) of the ASIC Act abrogates privilege only in the information that was disclosed in answers given during the s 19 examination. There is no abrogation of rights in respect of information that ASIC may have obtained – but did not obtain – through the examination. Relevantly, the respondent emphasised that ASIC’s s 19 examination of Mr Taylor had not covered the field of the matters alleged in the disciplinary proceeding, and that ASIC’s power to conduct an examination which did was now spent, given that the disciplinary and criminal proceedings had commenced.

32    The respondent also contended that s 1292(11) of the Corporations Act does not mandate how the discretion to stay should be exercised. The respondent explained that the words “whether or not” in s 1292(11) simply mean that there is a choice between two alternatives – proceeding with the disciplinary proceeding or granting a stay: citing Minister for Immigration and Citizenship v SZJGV [2009] HCA 40; (2009) 238 CLR 642 at [10]. On the respondent’s submission, in a case such as this, where the accused and the auditor who is the subject of the disciplinary proceeding are one and the same person, the Board’s assessment of prejudice must take into account the prejudice to the auditor’s fundamental common law rights as an accused. It was argued that where the balance lies will differ from case to case depending, among other things, on: (a) the nature and gravity of the claim against the auditor (including whether ASIC alleges dishonesty and/or that the auditor is not fit and proper); (b) the extent of the overlap between the disciplinary proceeding and the criminal proceeding; (c) the risk to the public posed by an auditor continuing to practice during the stay period (including whether an undertaking not to practice has been proffered); and (d) the extent to which the auditor has already disclosed their defence. As to the last of these matters, it was noted that Mr Taylor did not disclose his defence to the criminal prosecution; his s 19 examination by ASIC was not directed to that topic, and he declined to attend the formal interview to which he had been invited prior to the referral of the brief to the CDPP. The respondent submitted that the exercise of discretion in this way would not result invariably in a stay, and that whether a stay is granted depends on where the interests of justice lie in the particular case.

33    Finally, the respondent submitted that ASIC’s reliance on Onley was misplaced. The respondent observed that the relevant provision in Onley expressly directed how the stay discretion was to be exercised and forbade the staying of a proceeding on the ground of overlapping criminal proceedings.

Board decision

34    As explained above, ASIC accepted during the hearing that to succeed on the appeal it must establish that the construction of the statutory scheme it contends for is correct, even if error is otherwise established in the reasoning of the primary judge as to the construction of s 1292(11) of the Corporations Act.

35    The Board concluded that an application for a stay must establish prejudice over and above that inherent in the statutory scheme and which flows from criminal proceedings; and, absent any such prejudice, the prejudice to Mr Taylor did not outweigh the public interest in the expeditious resolution of the disciplinary proceeding.

36    This is seen, for example, at [32] of the Board’s Second Reasons:

The effect of ss1294(11) is that the Respondent does not have the right to a stay of these proceedings. Further, there must be a circumstance beyond the effect of the provisions of the Statutory Scheme on the Respondent to justify the Board deviating from its usual business of hearing disciplinary matters that come before it in the usual course.

37    It is seen again at [37] of the Second Reasons:

…I do not conclude that this development does alter the balance in favour of exercising my discretion to stay the CADB proceedings. I have formed this view because when viewed in its proper context, which is to take into account the operation of the Statutory Scheme, the Respondent, who has the onus of showing why a stay of these proceedings is warranted, has not done so. The prejudice to which he points is a consequence of the Statutory Scheme which has displaced the common law rights to which he refers. The fact Mr Taylor must make a choice as to whether or not to actively participate in the CADB proceedings is a natural consequence of what flows from Parliament’s intention expressed in s1292(11) that proceedings before the Board may be maintained in the face of potential or actual criminal proceedings and is the proper context for weighing (i) and (j) of the McMahon Guidelines in this matter.

38    The Board refused to grant the stay because Mr Taylor’s common law right of the privilege against self-incrimination (with the related right to silence) was abrogated under the statutory scheme. That accords with the position advanced by ASIC before the Board, and in this Court. If that construction is incorrect, the appeal must necessarily fail.

Consideration

39    Mr Taylor had been informed by the CDPP before the second stay application that criminal charges would be laid against him, and by the time of the decision of the primary judge, they had been. It was accepted that the criminal proceeding concerned the same subject matter as the disciplinary proceeding, the same audit of the same company in the same year, and it was brought at the behest of the same regulator. It was also accepted that although Mr Taylor had been examined pursuant to s 19 of the ASIC Act, he was not questioned in relation to the subject matter the basis of the proceedings.

40    Mr Taylor’s application for a stay of proceedings was not confined to the fact he might wish to give evidence and might then be compelled by the Board to answer questions. Mr Taylor’s concern was that he could not take any steps in defending the disciplinary proceeding without telegraphing his likely defence of the criminal proceeding which would thereby risk assisting the prosecution in its criminal proceeding against him, undermining his fundamental rights as an accused. Those steps include revealing his defence, adducing lay and expert evidence, cross-examining ASIC’s lay and expert witnesses, and taking objections to evidence and the tender of examination transcripts. The respondent submitted that the disciplinary proceeding could be used as a “dress rehearsal” or “test run” for the criminal trial for the prosecution to test and potentially improve the case it would rely on in the criminal proceeding, particularly given ASIC’s reliance on the same expert witness in both the disciplinary and criminal proceedings.

41    The common law rights referred to by the Board, and by the primary judge, are the privilege against self-incrimination, and the associated right to silence. It is important to appreciate that underpinning those concepts is that the prosecution cannot compel a person charged with a criminal offence to assist in the discharge of its onus of proof: see for example, Lee v The Queen [2014] HCA 20; (2014) 253 CLR 455 (Lee v The Queen) at [33]. A fundamental principle of the common law is that it is for the prosecution to prove the guilt of an accused person as “an aspect of the accusatorial nature of a criminal trial in our system of criminal justice”: Lee v The Queen at [32]; see also X7 at [46], [101]-[102], [159]-[160]; IBAC at [44]. This is referred to as the companion principle; it is a companion of criminal trials: IBAC at [46] and is engaged when there is a prosecution pending: IBAC at [48].

42    Parliament may enact legislation which abrogates a person’s common law rights. The principles applicable to statutory construction are well established. The starting point for statutory construction is the text of the provision, having regard to its context and purpose: SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 (SZTAL) at [14], citing Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]-[71]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [47]. Common law rights are to be regarded as abrogated by statute only by language which manifests a clear intention to do so: see for example R v Independent Broad-based Anti-Corruption Commissioner [2016] HCA 8; (2016) 256 CLR 459 (IBAC) at [40]. Therefore, whether a common law right is abrogated or limited is determined by considering whether the statutory language does so “by express words or by necessary intendment”: X7 at [125].

43    It is appropriate to recall at the outset, that in summary, ASIC’s submission, as articulated in writing is that:

The language in s 1292(11) requires the Board to disregard the existence of concurrent criminal proceedings, and any inherent features of those proceedings, to the extent that they might solely motivate the Board to exercise its powers in a particular way.

44    ASIC’s construction, having regard to the text of s 1292(11), considered in its context and given its purpose, cannot be accepted.

45    It is common ground between the parties that the Board has a power to stay disciplinary proceedings. On ASIC’s case, that power is contained in s 1294A(4) of the Corporations Act, which authorises the Chairperson of the Board, on behalf of the Board, to give directions as to the procedure to be followed at or in connection with the hearing. The primary judge appeared to accept that submission at PJ [76]. We note the respondent submitted the power is in s 1292(11). ASIC’s submission is the better construction, but the difference in position is of no real practical consequence in the resolution of this appeal. This is because it was accepted that the scope of the power (whichever provision it is in) will necessarily be limited by the statutory context, which includes s 1292(11).

46    ASIC’s submission, in large part, rests on the presence of the phrase in s 1292(11) that the Board may exercise its powers “whether or not” criminal proceedings have, or are to be, brought in relation to the conduct the subject of the disciplinary proceeding. It is uncontroversial that terms in a statute are to be given their ordinary and natural meaning, “unless it is plain that Parliament intended it to have some different meaning”: see for example Masson v Parsons [2019] HCA 21; (2019) 266 CLR 554 at [26], and see, SZTAL at [14]. So much may be readily accepted. However, that does not assist ASIC’s case.

47    As a starting point, ASIC accepts that s 1292(11) contains a discretion. That is plainly correct.

48    However, the ordinary meaning of the phrase “whether or not” in s 1292(11) is not, as ASIC contends, “regardless of whether” there are criminal offences, charged or pending, such that the “existence of concurrent criminal proceedings, alone, cannot prevent the Board from exercising its powers”. The text of s 1292(11), on its face, does not support such a construction, and as explained below, nothing in the context of the statutory scheme alters that. The subsection confers a discretion; the Board may exercise its powers in those circumstances. The words emphasised by ASIC are not words of limitation; rather, they make clear the circumstances in which a stay may be granted as a matter of discretion. That is, the Board may proceed to conduct a hearing even where there are concurrent criminal proceedings. We do not accept ASIC’s submission that unless s 1292(11) is construed as it contends the reference to concurrent criminal proceedings has no work to do.

49    Section 1292(11) does not mandate that the discretion is not to be exercised to grant a stay in certain circumstances. There is no command in the text of the provision not to exercise the powers on the basis of concurrent criminal proceedings. In that respect, s 1292(11) is to be contrasted with cases which do expressly contain such a provision: see for example, Onley at [38]. We note ASIC submitted that s 1292(11) aligns with or is close to the legislation considered in Onley. We address that submission below when considering the authorities relied on. Suffice to say at this stage, that submission cannot be accepted.

50    The context of s 1292(11) does not alter that plain reading of the text. Contrary to ASIC’s contention, it does not evince a clear intention that the statutory regime displaces relevant common law rights.

51    The principal context relied on by ASIC is that the regime imposed by the legislative scheme is said to displace all of the relevant person’s common law rights. Although it may be accepted that there are some provisions in place which have the capacity to limit the impact a disciplinary proceeding may have on a criminal proceeding (see for example s 68 of the ASIC Act) and there is some abrogation of those common law rights, the abrogation is not complete.

52    An important part of the legislative scheme, on ASIC’s submission, is that before a proceeding arises before the Board, ASIC may conduct an examination of an auditor under s 19 of the ASIC Act in which the auditor must answer questions even though those answers may incriminate them. Transcripts of those examinations are admissible in a proceeding before the Board, subject to legal professional privilege: s 76(1) of the ASIC Act. This plainly abrogates a person’s rights, but it is to be recalled that this examination power is spent before the Board commences any proceedings. ASIC is not required to conduct such an examination, and if it does, it is not required to examine on the topic that later becomes the subject of the disciplinary proceeding. That is illustrated in this case, where although the respondent was examined pursuant to s 19 of the ASIC Act, he was not questioned on the conduct which later became the subject of the disciplinary proceeding.

53    The Board has no power to compel the person the subject of the proceeding to give evidence before it. However, if that person chooses to do so, the Board is empowered to compel that person to answer questions under oath, even though an answer may tend to incriminate them: ss 217(2), 219(2)(b), 219(2A) and 68(1) of the ASIC Act. The ASIC Act provides direct use immunity of any answer given in those circumstances. That is, a statement made by a person under compulsion at a hearing is not admissible in a criminal proceeding if, before the statement is made, privilege against self-incrimination is asserted: s 68 of the ASIC Act. Indirect use may be made of the person’s evidence.

54    ASIC submitted that the immunity provided by s 68 “eliminates a major effect that a Board proceeding might have on a concurrent criminal proceeding”, citing Hamilton v Oades [1989] HCA 21; (1989) 166 CLR 486 (Hamilton v Oades) at 496. ASIC submitted, adapting the words of Mason CJ in Hamilton v Oades (at 496), that by enacting ss 68(2) and (3) of the ASIC Act:

… without providing such specific protection, Parliament has made its legislative judgment that such action is not required and has limited specific protection to the possible consequences of direct use in evidence of the answers of the witness, thereby guarding against the possibility that the witness will convict himself out of his own mouth – the principal matter to which the privilege is directed.

55    Accepting that for the purposes of argument, it only takes ASIC so far. The statutory scheme in Hamilton v Oades concerned an order made pursuant to s 541(3) of the Companies (New South Wales) Code which empowered the Supreme Court of New South Wales to order that a director of a company be examined relating to the affairs of the company. Mr Hamilton, who had been appointed liquidator of the company, applied to the Supreme Court of New South Wales for an order in relation to Mr Oades, who had been charged with a number of criminal offences arising out of his association with the company. It was held that s 541 manifested a clear intention to abrogate the common law privilege against self-incrimination, with Mason CJ stating at 494 that:

…it is well established that Parliament is able to “interfere” with established common law protections, including the right to refuse to answer questions the answers to which may tend to incriminate the person asked…

56    Significantly, unlike the circumstances in Hamilton v Oades, Parliament has chosen not to give the Board the power to compel the person the subject of the proceeding to give evidence. The extent of any abrogation of common law rights must depend on the statutory scheme. Here, Parliament has not abrogated that person’s right not to answer questions in that hearing by choosing not to give evidence. Once that is appreciated, ASIC’s submission that the statutory scheme completely abrogates that person’s common law rights, cannot be accepted.

57    In that context, the privilege against self-incrimination is preserved. The absence of a power to compel the person the subject of the hearing to give evidence cannot be overcome, as ASIC appears to suggest, on the basis that transcripts of s 19 examinations are admissible in the Board hearings. As explained above, and as illustrated in this case, those examinations might not concern the same subject matter as the Board proceedings.

58    Several of the authorities referred to by ASIC also involve statutory schemes which bear the feature that the person can be compelled to give evidence, as they relate to compulsory examination provisions: see for example X7. Consequently, those cases were not concerned with a factual scenario where a hearing is being conducted with witnesses being called against the person in a context where an adverse finding is sought.

59    Moreover, ASIC’s submission is not strengthened by the fact that the legislation limits the extent to which a disciplinary proceeding may affect a pending criminal trial in other ways, as described above at [19].

60    Similarly, ASIC’s reliance on the legislative history as supporting the Board’s construction does not assist. This history is recited by the primary judge at PJ [61]-[64], to which no issue was taken. It may be accepted that s 1292(11), which was formerly s 27(14) of the Companies Act, was introduced at the same time as s 27(25). It may also be accepted, at a level of generality, that the “legislature’s attention was directed to whether the former s 27(14) abrogated fundamental rights, and it deliberately elected to do so”. But this does not take ASIC very far.

61    ASIC referred to [123] of the explanatory memorandum to the Companies Bill 1981 (Cth) in support of its submission:

The Board will be able to exercise any of its powers under this provision whether or not the conduct engaged in by the person might constitute an offence and whether or not any proceedings have been brought or are pending (CB s—cl. 27(14)). A statement made by a person in a hearing held by the Board will not be admitted in evidence in criminal proceedings against the person, except in respect of the falsity of the statement (CB s— cl. 27(25)).

62    The explanatory memorandum does not suggest, as ASIC contends, an intention to completely abrogate the person’s common law rights. The tender of the transcript of evidence given before the Board in subsequent criminal proceedings would impinge on the person’s common law rights, but there are other aspects not addressed. Abrogating some rights does not lead to the conclusion that, as contended by ASIC, the statutory scheme involves a complete abrogation of the person’s common law rights. We note that ASIC’s construction is dependent on that proposition. We note also for completeness, that s 27(25) was repealed in 1983 when the Corporations Act was amended, and s 30H(5), which is in different terms, was enacted: see PJ [68].

63    In the above context, we turn to consider the authorities relied on.

64    ASIC submitted that the language of s 1292(11) of the Corporations Act is closer to the legislation considered in Onley, than it is to that in Zhao. ASIC also submitted that Lee v New South Wales Crime Commission [2013] HCA 39; (2013) 251 CLR 196 (Lee v NSW Crime Commission) and IBAC support the construction of the statutory scheme for which it contends.

65    In addressing that submission, it is helpful first to refer to Zhao because Onley considered ss 319 and 319A of the Proceeds of Crime Act 2002 (Cth) (POCA), as amended after the High Court decision in Zhao.

66    In Zhao, the High Court considered the application of s 319 of the POCA, which was then in the following terms:

The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings.

67    In Zhao, the High Court observed at [35] that s 319 was unnecessary as “Courts will not grant a stay of civil proceedings merely because related charges have been brought against a person and criminal proceedings are pending. More is required”. The High Court concluded that where the offences and the circumstances relevant to both proceedings were identical, the risk of prejudice was plain. ASIC sought to distinguish Zhao on the basis that, unlike s 1292(11) of the Corporations Act, there was no statutory reference in s 319 to the “conduct” of the person the subject of the civil proceeding as being the same as the “conduct” the subject of the concurrent criminal proceeding. So much may be accepted. However, there are a number of differences between the legislative scheme in this case and in Zhao, including the nature and purpose of the proceedings, and that, under the POCA, there was a power to compel a person to give evidence in an examination which may be held in the proceedings. That said, Zhao illustrates the considerations there applicable given that statutory regime. It does not assist in the construction of s 1292(11).

68    Turning to Onley, it is appropriate to recite ss 319 and 319A of the POCA as amended to illustrate the fallacy of ASIC’s submission:

319 Stay of proceedings

(1)    A court may stay proceedings (the POCA proceedings) under this Act that are not criminal proceedings if the court considers that it is in the interests of justice to do so.

(2)    The court must not stay the POCA proceedings on any or all of the following grounds:

(a)    on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person subject to the POCA proceedings;

(b)    on the ground that criminal proceedings have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against another person in respect of matters relating to the subject matter of the POCA proceedings;

(c)    on the ground that:

(i)    a person may consider it necessary to give evidence, or to call evidence from another person, in the POCA proceedings; and

(ii)    the evidence is or may be relevant (to whatever extent) to a matter that is, or may be, at issue in criminal proceedings that have been, are proposed to be or may be instituted or commenced (whether or not under this Act) against the person or any other person;

(d)    on the ground that POCA proceedings in relation to another person have been, are to be or may be stayed.

(3)    Paragraph (2)(a) applies even if the circumstances pertaining to the POCA proceedings are or may be the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings.

(4)    Paragraph (2)(b) applies even if the subject matter of the POCA proceedings is the same as, or substantially similar to, the matter at issue in the criminal proceedings.

(5)    Paragraph (2)(d) applies even if the staying of the POCA proceedings would avoid a multiplicity of POCA proceedings.

(6)    In considering whether a stay of the POCA proceedings is in the interests of justice, the court must have regard to the following matters:

(a)    that the POCA proceedings, and any criminal proceedings of a kind referred to in paragraph (2)(a) or (b), should proceed as expeditiously as possible;

(b)    the cost and inconvenience to the Commonwealth of retaining property to which the POCA proceeding relates and being unable to expeditiously realise its proceeds;

(c)    the risk of a *proceeds of crime authority suffering any prejudice (whether general or specific) in relation to the conduct of the POCA proceedings if the proceedings were stayed;

(d)    whether any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed may be addressed by the court by means other than a stay of the proceedings;

(e)    any orders (other than an order for the stay of the POCA proceedings) that the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the proceedings were not stayed.

Note: Examples of orders the court could make to address any prejudice that a person (other than a proceeds of crime authority) would suffer if the POCA proceedings were not stayed include an order under section 319A (closed court) or an order prohibiting the disclosure of information.

319A Closed court

A court may order that proceedings under this Act (other than criminal proceedings) be heard, in whole or in part, in closed court if the court considers that the order is necessary to prevent interference with the administration of criminal justice.

69    In Onley, the Court concluded that the prejudice which arose by nature of the legislative scheme was “not sufficient of itself to warrant the grant of a stay”, and that more was required: see for example Onley at [231], [369]-[372]. For example, at [369] Basten JA stated:

The Proceeds of Crime Act differs in precisely this respect from the legislation considered in X7. As was explained in Elzein, s 319(2)(a) provides that the court “must not stay” proceedings, for example, pursuant to examination orders, “on the ground that criminal proceedings have been … instituted … against the person subject to the POCA proceedings”. That prohibition applies “even if the circumstances pertaining to the POCA proceedings are … the same as, or substantially similar to, the circumstances pertaining to the criminal proceedings”: s 319(3). That is to say, a characteristic form of prejudice (systemic prejudice) which is a universal characteristic of the circumstances identified in s 319(2), must not constitute the ground of a stay. Thus, in its present form, s 319(2) provides a clear statement in precisely the terms which might have been envisaged in order to comply with the condition explained at [125] in X7.

70    ASIC made the following submission:

The language of s 319(3) of the POC Act is similar to the language in s 1292(11). It expressly provides for a situation where there is a direct overlap in conduct. That s 312(2)(a) contains an express prohibition on a stay, and s 1292(11) has no equivalent express prohibition, is not material. That is because the words “whether or not” in s 1292(11) contemplate the existence or otherwise of criminal proceedings. The language in s 1292(11) requires the Board to disregard the existence of concurrent criminal proceedings, and any inherent features of those proceedings, to the extent that they might solely motivate the Board to exercise its powers in a particular way.

71    That submission cannot be accepted. Even the briefest consideration of the amended s 319 reveals obvious differences of significance between it and s 1292(11); see for example, s 319(2) of the POCA. Its terms expressly prohibit a stay being granted on the basis that criminal proceedings have been, are proposed to be, or may be, instituted or commenced; and where a person may consider it necessary to give or call evidence which is or may be relevant (to whatever extent) to a matter that is or may be, at issue in any subsequent criminal proceedings: s 319(2)(a) and (c). Its terms indicate that a person charged with an offence which is relevant to civil proceedings brought under the POCA must do more than point to the existence of criminal proceedings in order to obtain a stay of the civil proceedings. ASIC’s submission does not address, and therefore fails to grapple with, the phrase “must not stay” in s 319 of the POCA; a statutory command absent from s 1292(11) of the Corporations Act.

72    ASIC also referred to Lee v NSW Crime Commission and said that case supported its construction of the statutory scheme. Lee v NSW Crime Commission considered s 63 of the Criminal Assets Recovery Act 1990 (NSW) (CAR Act). That provision is recited at [7] of Lee v NSW Crime Commission and states:

The fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which the Supreme Court may stay proceedings under this Act that are not criminal proceedings.

73    Section 63 of the CAR Act also has obvious similarity to the provision considered in Onley. The legislature forbade a stay based on overlapping criminal proceedings, which s 1292(11) of the Corporations Act does not. There are also further differences between the legislative schemes. In the CAR Act there is, for example, the power to compel a person to give evidence in an examination which may be held in the proceedings. In that context, the privilege against self-incrimination was abrogated.

74    It is appropriate also to refer to Edelsten v Richmond (1987) 11 NSWLR 51 (Edelsten), a case relied on by ASIC. The relevant provision under consideration in that case stated:

A complaint may be referred to a Committee or the Tribunal, and dealt with by the Committee or Tribunal, even though the registered medical practitioner about whom the complaint is made is the subject of proposed or current criminal or civil proceedings relating to the subject-matter of the complaint.

75    As can be seen, this provision does have similarities to s 1292(11) of the Corporations Act.

76    In its written reply, ASIC cited the following passage by Hope JA in Edelsten (at 61), and made the submission that the observations were apposite:

The section clearly confers upon the Tribunal a discretionary power to continue proceedings before it even though there are current criminal proceedings against the medical practitioner relating to the subject matter of the complaint. On the submissions made for Dr Edelsten, either the discretion could never be exercised in favour of continuing the disciplinary proceedings while criminal proceedings were current, or they could be continued only where it was known that the medical practitioner did not propose to give evidence. Such a construction would practically read the section out of the Act.

77    ASIC submitted that Mr Taylor similarly seeks to limit the scope of s 1292(11) of the Corporations Act to an extent that is simply not supported by the plain words of the provision, and that the construction proposed by Mr Taylor renders illusory the discretionary character of the Board’s power to grant a stay.

78    There are two observations to be made about that submission. First, the submission advanced by Dr Edelsten was to limit the provision in such a way that the proceedings would not take place if he was likely to want to give evidence in defence of the disciplinary proceeding which coincided with the criminal charges. Second, following from that, Hope JA concluded at 61 that:

In the context of the Medical Practitioners Act and the important matters with which it deals, the purpose of the section is clear enough. Despite the concern that the law has long had to protect persons accused of criminal offences in relation to the making of self-incriminating statements, the right to silence, as it is called, Parliament must have considered that there was a public interest in the investigation of a complaint against a medical practitioner which, in a particular case, might outweigh the public interest in the right to silence. The section does not contemplate that every disciplinary proceeding will continue notwithstanding the existence of criminal proceedings but equally it does not contemplate that the existence of criminal proceedings will preclude the disciplinary proceedings from continuing. The discretion given to the Tribunal involves a balancing of the public interest in the investigation of the complaint with the public interest in the observance of the right to silence. This involves, among other things, a consideration of the nature and gravity of the complaint and of the criminal charge, and of the circumstance that while the medical practitioner cannot be required to give a self-incriminating answer, he may be embarrassed in his defence to the complaint if he does not do so, and, if he does give evidence, he may be prejudiced in relation to the criminal proceedings. There are doubtless other matters relevant to the exercise of the discretion, but undoubtedly these are the more important factors.

79    The passage recited above at [76] must be read in this context. That passage does not support ASIC’s construction, which requires the Board to disregard the fact of the criminal proceeding. The discretion is to be exercised on the particular facts of the case.

80    We note also that the discussion in Edelsten highlighted the context in which the provision there under consideration was enacted, which included inter alia, a view held at that time that so long as criminal proceedings had been instituted, or were pending, it was generally considered undesirable that disciplinary proceedings be dealt with: Edelsten at 59 citing inter alia, Re a Solicitor (1938) 55 WN (NSW) 110. This also provides some context against which the enactment of s 27(14) of the Companies Act occurred in 1981 (later to be s 1292(11) of the Corporations Act). Edelsten also considered the impact of decisions such as Hammond v The Commonwealth [1982] HCA 42; (1982) 152 CLR 188 and Sorby v The Commonwealth [1983] HCA 10; (1983) 152 CLR 281, which addressed the circumstances of compelling a witness to give evidence in an inquiry where criminal proceedings have been instituted or are pending: see Edelsten at 58.

81    It is unnecessary to address the detail of the authorities of X7, Lee v The Queen and IBAC, as there is no issue with the general principles, or with their application. Each case turns on the construction of the particular legislation in issue, all of which differ from the statutory regime considered in this case.

82    Finally, it is necessary to observe that there was an inconsistency in ASIC’s submission. It stemmed from ASIC’s contention, recited above at [43] and [70], that:

[t]he language in s 1292(11) requires the Board to disregard the existence of concurrent criminal proceedings, and any inherent features of those proceedings, to the extent that they might solely motivate the Board to exercise its powers in a particular way.

83    To put it another way, ASIC contended that prejudice more than arises from the co-existence of criminal proceedings was required to establish that a stay should be granted.

84    ASIC accepted it would be a relevant consideration in this case that Mr Taylor had not been examined pursuant to s 19 of the ASIC Act on the topic of the proceedings. However, ASIC variously then submitted that although that factor can be taken into account, the Board is entitled to disregard it. ASIC also submitted that the Board was not obliged to take that factor into account, but it was not prevented from doing so. Ultimately, ASIC accepted that that factor, if the Board were satisfied of it, may be sufficient to grant a stay. That is because Mr Taylor’s actions in defending the disciplinary proceeding before the Board have the potential to reveal his defence, which ASIC was not otherwise aware of through the s 19 examination.

85    ASIC also ultimately accepted that the fact that witnesses who give evidence against the respondent in the Board proceedings in its case against the respondent (who are also to be witnesses in the criminal proceeding) would know the strengths or weaknesses of their position (by reference to the cross-examination and the defence case) before the criminal trial, was a relevant matter which could be taken into account, and which may result in a stay being granted.

86    These examples encompass factual considerations which flow from the co-existence of criminal proceedings.

87    Those concessions, which we consider to be properly made, do not sit with the stark construction of s 1292(11) for which ASIC contends. Rather, they reflect a position, consistent with the language of s 1292(11) considered in its context and given its purpose, that a matter may proceed even if there are concurrent criminal proceedings, and any application for a stay will involve a weighing of the factual matters particular to that case. These may include factual matters as to the impact of the Board proceedings on the criminal proceedings. The matters relied on by the respondent at [32] above are such matters. Of course, given Mr Taylor was seeking a stay, he bore the onus of establishing factually and legally, that a stay should be granted.

88    Section 1292(11) of the Corporations Act, considered in its context and given its purpose, does not constrain the exercise of the Board’s discretion in the manner contended for by ASIC.

89    Given that conclusion, it is unnecessary to consider the remaining grounds of appeal, as each are premised on an acceptance of ASIC’s construction of the provision.

90    That said, it is appropriate to make three further observations.

91    First, this matter proceeded on the basis that the stay application was to be determined by applying what is referred to as the “McMahon Guidelines”. That is a reference to guidelines propounded by Wootten J in McMahon v Gould (1982) 7 ACLR 202 (McMahon). In that case, Wootten J was considering an application for a stay of civil proceedings (brought by liquidators) on the basis that Mr Gould had been charged with criminal offences, some of which related to the same sums of money which were the subject of the civil proceedings. The “McMahon Guidelines” are merely guidelines that Wootten J said he used to approach the decision of the application before him: see McMahon at 206. They ought not be elevated to something they are not. They cannot be seen as exhaustive of what might be relevant considerations in determining an application for a stay. Significantly, these guidelines were identified in 1982. There have been very many decisions of appellate courts, including the High Court, which have in more recent years addressed relevant considerations, including in relation to the circumstances where the issue is an application to stay civil proceedings pending criminal proceedings being finalised. A consideration of the guidelines, read in the context of the judgment in McMahon, indicates that some are outdated, and do not reflect the current understanding of certain concepts, and their significance in the administration of justice. This is particularly evident in Wootten J’s discussion of the extent or breadth of the relevant common law rights and the impact of civil or other proceedings on criminal proceedings. It is a judgment reflecting its time. As has been recognised by later Courts, although the guidelines may be of some assistance, any reference to them must be read in light of subsequent cases: see for example, Impiombato v BHP Group Limited [2020] FCA 350 at [123]. That said, it is the considerations and principles as articulated in recent appellate authorities which are to be considered and applied.

92    Second, the primary judge concluded that when weighing competing interests on a stay application, primacy must be afforded to criminal proceedings: PJ [142], and that that primacy had not been displaced by the statutory scheme: PJ [146]. Care ought to be taken in using terms such as primacy or approaching the issue of a stay by asking whether that concept has been displaced by the relevant legislation as, depending on the circumstances, it may be apt to distract. That is not to gainsay the importance of criminal proceedings (including relative to other proceedings), but rather is to reflect the need to focus on the question to be determined on a stay application. Taken literally, on the primary judge’s observations, a stay would always be granted unless there is complete abrogation of the common law rights when there is a concurrent criminal proceeding. That would not be the correct approach. As observed in Zhao at [35], recited above at [67], regardless of the provision there being considered (s 319 of the POCA as it was then), “Courts will not grant a stay of civil proceedings merely because related charges have been brought against a person and criminal proceedings are pending. More is required”. That does not mean civil proceedings cannot or would not be stayed. What weight is to be given to the relevant considerations is to be determined in the individual case by reference to the enabling legislation: IBAC at [76]-[77].

93    Third, the Board discounted Mr Taylor’s offer of an undertaking not to perform the duties of an auditor until the conclusion of the disciplinary proceeding, and for that undertaking to be noted on the register of auditors kept by ASIC under s 1285(1) of the Corporations Act. The effect of the undertaking was that the public interest would be protected. Leaving that aside, the Board’s reasoning, that the undertaking was not a substitute to finalising the proceeding, presupposed an adverse outcome to Mr Taylor. The undertaking is plainly a relevant consideration to any stay application. Accepting, as ASIC submitted, that the legislation contemplates expedition, that expedition is no doubt motivated by a need to protect the public if the conduct is established. It is difficult to understand the prejudice said to impact the disciplinary proceeding by delay for resolution of the criminal proceeding, in the circumstances of this case. Indeed, the resolution of the criminal proceeding may impact on the conduct of the disciplinary proceeding.

94    The proposition that civil proceedings may prejudice concurrent criminal proceedings in respect to the same subject matter is uncontroversial. As observed in Zhao at [47], that such prejudice may require a stay of the civil proceeding is hardly novel. The issue for the Board was whether the respondent had established that a stay of the civil disciplinary proceeding should be granted pending the resolution of the criminal proceeding in his case. That decision was made on an erroneous construction of s 1292(11).

Conclusion

95    ASIC properly accepted that to succeed on the appeal it must establish that the construction of the statutory scheme for which it contends is correct. For the reasons above, we do not accept that the relevant statutory scheme is to be construed in the manner contended for by ASIC. The primary judge was correct to so find.

96    It follows that the appeal must be dismissed.

Associate:

Dated:    6 December 2023

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

97    I have had the considerable advantage of reading the draft reasons of Mortimer CJ and Abraham J. I agree with their Honours’ conclusion that the appeal from the decision of the primary judge in XY v Companies Auditors Disciplinary Board [2022] FCA 1583 (Primary Judgment or PJ) must be dismissed and with the reasons expressed for reaching that conclusion. However, there are some additional observations I wish to add about:

(a)    the decision made by the Chair of the Companies Auditors Disciplinary Board (Board) refusing a stay of the proceeding brought against the respondent, Mr Taylor;

(b)    the proper construction of s 1292(11) of the Corporation Act 2001 (Cth) (Corporations Act), and why the Board erred in the manner in which it construed and applied s 1292(11) in the decision concerning Mr Taylor; and

(c)    the relief granted by the primary judge.

98    In what follows, I gratefully adopt their Honours’ recitation of the background facts and the relevant legislative provisions.

The Board’s Decision

99    As the reasons of the primary judge disclose, ASIC commenced a disciplinary proceeding against Mr Taylor before the Board under s 1292(1)(d) of the Corporations Act in November 2020. The disciplinary proceeding concerns Mr Taylor’s involvement in the audit of the financial report of the consolidated entity comprising iSignthis Ltd (ACN 075 419 715) and its subsidiaries for the year ended 30 June 2018. In the disciplinary proceeding, ASIC seeks an order that the Board cancel Mr Taylor’s registration as a company auditor or, in the alternative, an order that Mr Taylor’s registration be suspended for a period of 3 years or such other period as the Board determines.

100    Mr Taylor twice applied for a stay of the disciplinary proceeding.

101    The first application was made in August 2021. At that time Mr Taylor faced the threat of criminal proceedings being instituted against him in respect of the same conduct that is the subject of the disciplinary proceeding. On 25 October 2021, the Chair of the Board dismissed that application and provided written reasons (First Reasons). That decision was not the subject of legal challenge. However, the reasons given for refusing the stay are relevant in so far as they are incorporated by reference into the written reasons given for the second stay decision.

102    On 14 April 2022, the Commonwealth Director of Public Prosecutions (CDPP) confirmed that it was in the process of issuing charges which would be served on Mr Taylor. The CDPP subsequently informed Mr Taylor that criminal proceedings against him would be made returnable in the Magistrates Court in July 2022, and that accordingly the relevant charges would be served in about June 2022. It is uncontroversial that the impending charges related to Mr Taylor’s involvement in the audit of iSignthis Ltd and its subsidiaries for the year ended 30 June 2018.

103    Mr Taylor made a second application to the Board for a stay of the disciplinary proceeding, which was heard on 5 May 2022. Following the hearing, the Chair refused the application and delivered reasons for that decision on 10 May 2022 (Second Reasons).

104    The central question in dispute before the Board was whether proceeding with the disciplinary hearing would adversely affect Mr Taylor’s common law rights, particularly his right to silence and the companion principle that it is for the prosecution to prove the guilt of an accused person (as per R v Independent Broad-based Anti-corruption Commissioner (2016) 256 CLR 459 at [46]), and whether those circumstances were relevant considerations in the exercise of the discretion to grant a stay.

105    The Board concluded that the “effect of the Statutory Scheme” is to substitute statutory protections for the common law right to silence and the privilege against self-incrimination. The Board identified the statutory protections as including the direct use immunity (given by ss 68(2) and (3) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act)) and the right of a respondent to choose not to submit any evidence or submissions to the Board before a hearing takes place (which is implicit from s 1294 of the Corporations Act and ss 216(8) and 216(9) of the ASIC Act), which the Board described as “not dissimilar in effect to a right of silence” (Second Reasons [29]).

106    Based on that understanding of the “effect of the Statutory Scheme”, the Board construed s 1292(11) as a stipulation that a respondent does not have the right to a stay of proceedings and that “there must be a circumstance beyond the effect of the provisions of the Statutory Scheme on the Respondent to justify the Board deviating from its usual business of hearing disciplinary matters that come before it in the usual course” (Second Reasons [32]). The Board concluded that Mr Taylor had not demonstrated that a stay was warranted, because the prejudice he relied upon was “a consequence of the Statutory Scheme”. The Board reasoned (Second Reasons [37]):

… when viewed in its proper context, which is to take into account the operation of the Statutory Scheme, the Respondent, who has the onus of showing why a stay of these proceedings is warranted, has not done so. The prejudice to which he points is a consequence of the Statutory Scheme which has displaced the common law rights to which he refers. The fact Mr Taylor must make a choice as to whether or not to actively participate in the CADB proceedings is a natural consequence of what flows from Parliament’s intention expressed in s1292(11) that proceedings before the Board may be maintained in the face of potential or actual criminal proceedings and is the proper context for weighing (i) and (j) of the McMahon Guidelines in this matter.

107    In reaching its decision, the Board expressly incorporated by reference its reasoning from the first stay decision (see Second Reasons [22], [29], [33], [35], [36] and [40]) and included those reasons as an annexure to the second stay decision. Relevantly to this appeal, the Board expressed the following conclusions in the First Reasons with respect to the relevance of common law rights to the exercise of the Board’s discretion:

(a)    The Board rejected the submission that the common law immunities remain relevant for the reason that “they have been abrogated by the enactment of the Statutory Scheme and are not a relevant consideration to exercising the discretion under ss 1292(11)” (First Reasons [48(b)]).

(b)    The Board rejected the submission that, by giving evidence in the disciplinary proceedings, Mr Taylor would effectively be giving up his right to silence in future criminal proceedings which would potentially assist his criminal prosecution by allowing access to information which could be used to adjust the prosecution’s case to meet the anticipated defence (First Reasons [48(c)]).

(c)    The Board accepted ASIC’s submission that to establish grounds for a stay, some prejudice must be pointed to that is different from what flows naturally from “Parliament’s alteration to the common law immunities” as that alteration reflects the balance that Parliament considered appropriate between public and private interests. The fact Mr Taylor may need to make a forensic choice as to whether or not to actively participate in the disciplinary proceedings is not “something more” but a natural consequence of what flows from Parliament’s intention that proceedings before the Board may be maintained in the face of potential criminal proceedings (First Reasons 48(c)]).

(d)    The Board rejected the submission that the right of the accused to require the prosecution to prove its case without the accused’s assistance must be preserved is a matter that is relevant for the Board to consider (First Reasons [48(g)]).

108    Thus, the Board interpreted s 1292(11) as stating a legislative intention that the adverse effects on Mr Taylor’s right to silence and the companion principle (that it is for the prosecution to prove the guilt of an accused person) that may result from continuing with the disciplinary hearing is not a relevant consideration, and could be disregarded, when deciding whether or not to adjourn the disciplinary hearing. That is a strong interpretation, by which I mean the interpretation gives a force and meaning to s 1292(11) that does not arise naturally from the text. The Board reached that conclusion on the basis that the effect of the “statutory scheme” (governing the disciplinary hearing and any investigation that preceded the disciplinary hearing) is to substitute statutory protections for the common law right to silence and the privilege against self-incrimination.

The proper construction of s 1292(11)

109    Section 1292(11) provides as follows:

The Board may exercise any of its powers under this Division in relation to a person as a result of conduct engaged in by the person whether or not that conduct constituted or might have constituted an offence, and whether or not any proceedings have been brought or are to be brought in relation to that conduct.

110    It is common ground that s 1292(11) is expressed in a permissive, not mandatory form, and thereby confers a discretion on the Board. Relevantly in the present context, s 1292(11) permits the Board to hear and determine a disciplinary proceeding brought under s 1292(1) against a person as a result of conduct engaged in by the person whether or not:

(a)    that conduct constituted or might have constituted an offence; and

(b)    any proceedings have been brought or are to be brought in relation to that conduct.

111    It is also common ground that the circumstances facing Mr Taylor are circumstances that are within the purview of s 1292(11). Disciplinary proceedings have been brought against Mr Taylor in respect of his involvement in the audit of iSignthis Ltd and its subsidiaries for the year ended 30 June 2018, and Mr Taylor is facing criminal charges in respect of that same conduct.

112    It is also common ground that the Board has a discretion whether, in these circumstances, to continue with the disciplinary hearing or adjourn or stay that proceeding until the completion of the criminal prosecution. There is no real dispute that the Board’s power to adjourn or stay the disciplinary proceeding can be found in s 1294A.

113    ASIC defended the Board’s interpretation of s 1292(11), submitting that the ordinary meaning of the phrase “whether or not” is “regardless of whether”. ASIC argued that the ordinary meaning of s 1929(11) is that the Board may decide to proceed with a disciplinary hearing regardless of (in other words, without regard to) concurrent criminal proceedings. ASIC submitted that that is the only interpretation of s 1292(11) that gives the text a sensible operation.

114    ASIC’s submissions should be rejected. The ordinary meaning of the phrase “whether or not” in s 1292(11) is not “regardless of whether” in the sense submitted by ASIC. The ordinary meaning of that phrase is “even if”. Section 1292(11) stipulates that the Board may hear and determine a disciplinary proceeding against a person in respect of conduct engaged in by the person even in circumstances where the conduct constituted or might have constituted an offence, and even in circumstances where proceedings have been brought or are to be brought in relation to that conduct.

115    The foregoing interpretation of s 1292(11) is supported by reference to its legislative history, in particular the pre-existing law at the time of its enactment. It is uncontroversial that a statutory provision is to be construed against the background of the pre-existing law at the time of its enactment, including the common law: Sorby v The Commonwealth (1983) 152 CLR 281 at 288 per Gibbs CJ; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ.

116    As observed by the primary judge, the predecessor to s 1292(11) was originally enacted in all but identical terms in s 27(14) of the Companies Act 1981 (Cth) (PJ [61]). At the time of enactment of s 27(14), it was an established principle of the common law that to proceed with a non-judicial enquiry or proceeding in circumstances where there would be a risk of interference with the administration of justice may constitute a contempt of court. The non-judicial enquiry or proceeding could be enjoined in that event. The principle was stated in Clough v Leahy (1904) 2 CLR 139 by Griffith CJ at p 156:

Nor can the Crown interfere with the administration of the course of justice. It is not to be supposed that the Crown would do such a thing; but, if persons acting under a Commission from the Crown were to do acts which, if done by private persons, would amount to an unlawful interference with the course of justice, the act would be unlawful, and would be punishable.

and at p 161 his Honour said:

Any interference with the course of the administration of justice is a contempt of Court, and is unlawful. If, therefore, any person, purporting to act under the authority of a Royal Commission, were to do an act amounting to an interference with the course of justice, he could not claim any protection on the plea that he was acting for the Crown.

117    Similarly, in McGuinness v Attorney-General (Vic) (1940) 63 CLR 73, Latham CJ stated the principle as follows (at p 85):

If, for example, a prosecution for an offence were taking place, the establishment of a Royal Commission to inquire into the same matter would almost certainly be held to be an interference with the course of justice and consequently to constitute a contempt of court. There are other circumstances in which such an inquiry might prejudice proceedings in the civil or the criminal courts. It is neither necessary nor desirable to attempt to enumerate in an exhaustive manner the circumstances which might raise a case of contempt of court. But it is important, I think, that there should be no doubt with respect to two propositions – (1) the executive government cannot by the exercise of the prerogative create new courts; and (2) the executive government cannot by any exercise of the prerogative interfere with the due course of the administration of justice.

118    As was made clear in those cases, and in the subsequent High Court decisions in Victoria v The Australian Building Construction Employees’ and Builders Labourers’ Federation (1982) 152 CLR 25 and Hammond v The Commonwealth (1982) 152 CLR 188, the question whether a non-judicial enquiry or proceeding has the potential to interfere with the administration of justice and thereby constitute a contempt of court is fact specific and requires an evaluation of all the circumstances. While those cases were decided shortly after the enactment of the predecessor of s 1292(11), the principles stated were well-established before that time.

119    The statutory provision considered by the New South Wales Court of Appeal in Edelsten v Richmond (1987) 11 NSWLR 51 (Edelsten) is in a similar form to s 1292(11). Section 32W of the Medical Practitioners Act 1938 (NSW), which was enacted in 1987 against the same common law background, provided as follows:

A complaint may be referred to a Committee or the Tribunal, and dealt with by the Committee or Tribunal, even though the registered medical practitioner about whom the complaint is made is the subject of proposed or current criminal or civil proceedings relating to the subject-matter of the complaint.

120    In construing that provision, Hope JA discussed the common law principles applicable to the conduct of a non-judicial disciplinary proceeding in circumstances where related criminal proceedings have been or will be instituted. In addition to the common law principles referred to above, Hope JA observed (at 59) that views had been expressed that, so long as related criminal proceedings may be instituted or are pending, it is generally undesirable that disciplinary proceedings should be dealt with, citing Re a Solicitor (1938) 55 WN (NSW) 110 and Re Levy; Ex parte Incorporated Law Institute of New South Wales (1887) 8 LR (NSW) 347. His Honour also referred to the statement of McHugh JA in Herron v McGregor (1986) 6 NSWLR 246 at 266 that, while criminal proceedings are pending, it was only proper that disciplinary proceedings should not be brought on for hearing. Again, the common law principles referred to by Hope JA were well-established before the enactment of the predecessor of s 1292(11).

121    Against that common law background, Hope JA explained the purpose and meaning of Section 32W of the Medical Practitioners Act 1938 (NSW) as follows (at 61, Clarke JA agreeing):

In the context of the Medical Practitioners Act and the important matters with which it deals, the purpose of the section is clear enough. Despite the concern that the law has long had to protect persons accused of criminal offences in relation to the making of self-incriminating statements, the right to silence, as it is called, Parliament must have considered that there was a public interest in the investigation of a complaint against a medical practitioner which, in a particular case, might outweigh the public interest in the right to silence. The section does not contemplate that every disciplinary proceeding will continue notwithstanding the existence of criminal proceedings but equally it does not contemplate that the existence of criminal proceedings will preclude the disciplinary proceedings from continuing. The discretion given to the Tribunal involves a balancing of the public interest in the investigation of the complaint with the public interest in the observance of the right to silence. This involves, among other things, a consideration of the nature and gravity of the complaint and of the criminal charge, and of the circumstance that while the medical practitioner cannot be required to give a self-incriminating answer, he may be embarrassed in his defence to the complaint if he does not do so, and, if he does give evidence, he may be prejudiced in relation to the criminal proceedings. There are doubtless other matters relevant to the exercise of the discretion, but undoubtedly these are the more important factors.

122    Priestley JA expressed the same view (at 65, emphasis in original):

I agree with Hope JA that this section confers discretionary power upon the Medical Tribunal to deal with a complaint before it against a medical practitioner even though the medical practitioner is the subject of current criminal proceedings relating to the subject matter of the complaint. I further agree with him that it does not follow from the existence of the Medical Tribunal's power that it must deal with every such complaint irrespective of the currency (or imminence) of the related criminal proceedings. The section does however, in my opinion, clearly give the power to the Medical Tribunal to deal with the complaint during the pendency of criminal proceedings notwithstanding the practical consequences that following that course may have for the medical practitioner's right against self-incrimination, a right which is itself untouched by the Medical Tribunal's power. It will be for the Medical Tribunal to decide whether to exercise the power in a particular case, and if it does exercise it, it will be for the medical practitioner to decide in defending the complaint either to waive the privilege against self-incrimination or to rely upon it. This may present the medical practitioner with difficult choices, but s 32W seems clearly designed, in parliament's view of the general public interest, to permit that situation to arise if the Medical Tribunal thinks the complaint against the medical practitioner is of sufficient seriousness to warrant the Medical Tribunal in proceeding to deal with the complaint during the pendency of the criminal proceedings.

123    In my view, the foregoing statements are equally applicable to s 1292(11) of the Corporations Act. When read in light of the pre-existing law at the time of its enactment (in the form of s 27(14) of the Companies Act 1981 (Cth)), the purpose and meaning of s 1292(11) is clear. The section empowers the Board to proceed with a disciplinary proceeding against a person in respect of conduct engaged in by that person even though the conduct constituted or might have constituted an offence and even though proceedings have been brought or are to be brought in relation to that conduct, with the consequence that the person may face “difficult choices” (adopting the language of Priestley JA in Edelsten). The difficult choices arise from the fact that the relevant person subject to the disciplinary proceeding would be forced to make an election either to participate or not participate in the disciplinary proceeding. Participation in the disciplinary proceeding would be likely to assist the prosecution in any pending or potential criminal proceeding. By adducing evidence, cross-examining other witnesses and making submissions (including by taking objections), the relevant person would reveal their defence to the alleged misconduct and potentially reveal weaknesses in the case that is made against them. Thus, their right to silence and the companion principle would be undermined. On the other hand, failing to participate in the disciplinary proceeding would deprive the relevant person of the opportunity to answer the allegations of misconduct in that forum.

124    While s 1292(11) empowers the Board to proceed with a disciplinary proceeding in the circumstances referred to in the section, the Board is not required to proceed. The use of permissive language indicates that the Board has a discretion whether or not to proceed. Further, and relevantly for present purposes, there is nothing in the statutory text that directs the Board to disregard the circumstances referred to in the section when exercising its discretion. I respectfully adopt (and adapt) the conclusion of Hope JA in Edelsten that the section does not contemplate that every disciplinary proceeding against an auditor will continue notwithstanding the existence of criminal proceedings – the discretion given to the Board involves a balancing of the public interest in the conduct of the disciplinary proceeding with the public interest in the protection of the right to silence.

125    ASIC did not identify any sound reason why this Court should not apply the reasoning of the New South Wales Court of Appeal in Edelsten to the construction of s 1292(11). For the reasons explained in the judgment of Mortimer CJ and Abraham J, ASIC’s preferred construction is not assisted by more recent decisions of the High Court such as Lee v New South Wales Crime Commission (2013) 251 CLR 196 and R v Independent Broad-based Anti-Corruption Commissioner (2016) 256 CLR 459 or the decision of the New South Wales Court of Appeal in Onley v Commissioner of Australian Federal Police [2019] NSWCA 101; (2019) 367 ALR 291.

126    It necessarily follows that, in refusing to stay the disciplinary proceeding against Mr Taylor, the Board made an error of law by misconstruing s 1292(11). The Board acted on the erroneous understanding that s 1292(11) stated a legislative intention that the adverse effects on Mr Taylor’s right to silence and the companion principle (that it is for the prosecution to prove the guilt of an accused person) that may result from continuing with the disciplinary hearing is not a relevant consideration, and could be disregarded, when deciding whether or not to adjourn the disciplinary hearing.

The question of relief

127    In the proceeding below, Mr Taylor sought judicial review of the Board’s decision to refuse a stay under both the Administrative Decisions (Judicial Review) Act 1977 (Cth) and the Judiciary Act 1903 (Cth). Mr Taylor alleged that the Board’s decision involved errors of law and a breach of the rules of natural justice. The primary judge correctly found that the Board’s decision was vitiated by an error of law in the construction of s 1292(11) and, as a consequence of the erroneous construction, failing to take account of relevant considerations (amongst other errors).

128    By his originating application, Mr Taylor sought an order quashing or setting aside the Board’s decision (refusing the stay) as well as an injunction restraining the Board from proceeding with the disciplinary proceeding.

129    In the context of an application for judicial review, there are obvious difficulties with Mr Taylor’s application for an injunction. The proceeding was not founded on a claim, and no conclusion was reached by the primary judge, that to proceed with the disciplinary hearing would be a contempt of court or otherwise contrary to law. Nor was the proceeding founded on a claim, and no conclusion was reached by the primary judge, that in the circumstances of the case the Board was legally required to stay the disciplinary proceeding. It was common ground, and the primary judge concluded, that the Board had a discretion whether to stay the disciplinary proceeding (PJ [109], [120], [127], [136]). The discretion must be exercised in accordance with law, but it is for the Board to exercise the discretion, not the Court.

130    In his reasons, the primary judge expressed the view that, having regard to the circumstances, the disciplinary proceeding should be stayed (PJ [195]). Those circumstances included the facts that Mr Taylor had offered an undertaking not to practise as an auditor pending the resolution of the disciplinary proceeding (PJ [7] and [185]), charges had been laid against Mr Taylor (PJ [192]), there was very substantial overlap between the criminal proceeding and the disciplinary proceeding (PJ [193]), and the prejudice to Mr Taylor if he were to participate in the disciplinary proceeding was very real (PJ [196]). However, ASIC submitted that the appropriate relief was that the decision should be remitted to the Board (PJ [201]). In giving judgment in the proceeding on 22 December 2022, the primary judge deferred the question of relief and invited the parties to make further submissions on that question.

131    On 20 February 2023, the primary judge made orders quashing the decision of the Board refusing the stay and made an order in the following form:

The Disciplinary Proceedings be stayed until the final determination of Magistrates’ Court of Victoria Proceeding No N11711951 against the applicant (including any appeals therefrom) (the Criminal Prosecution) or further order of this Court.

132    The effect of the order was to restrain the Board from proceeding to hear and determine the disciplinary proceeding pending the outcome of the related criminal proceeding against Mr Taylor.

133    At the hearing of the appeal, Senior Counsel for ASIC stated that the final orders made by the primary judge were the subject of negotiation between the parties, and that ASIC agreed to the form of orders, including the restraining order. None of the grounds of appeal raised by ASIC were directed to the form of relief granted by the primary judge as a standalone issue. It is apparent that, having agreed to the form of orders, ASIC correctly considered that it could not challenge those orders on the appeal (unless it was successful in its challenge to the primary judge’s reasoning). In those circumstances, this Court is not required to reconsider the restraining order.

Associate:

Dated:    6 December 2023