Otter Gold Mines Ltd v Deputy President G L McDonald of the Administrative Appeals Tribunal & Ors [1997] FCA 694

FEDERAL COURT OF AUSTRALIA

ADMINISTRATIVE LAW - Administrative Appeals Tribunal - Documents produced to Tribunal pursuant to summons procured by party - Determination of proceeding before Tribunal - Appeal to Federal Court - While appeal pending party applies to Tribunal for leave to use documents in another proceeding - Tribunal declines to deal with application on ground that appeal pending and documents transmitted to Court - Application to Federal Court to review decision - Whether decision of administrative character - Implied undertaking of party procuring production of documents to Court not to use for another purpose - Whether applies to documents produced to Tribunal on summons - Whether Tribunal has power to release party from undertaking.

Administrative Appeals Tribunal Act 1975, ss3(2)(b), 7(1), 40(1A)(c), 61(1), 63(d)

Harman v Home Office [1983] 1 AC 280

Pancontinental Mining Ltd v Burns (1994) 124 ALR 471

Kimberley Mineral Holdings Ltd v McEwan [1980] 1 NSWLR 210

Riddick v Thames Board Mills [1977] QB 881

Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684

Sweetman v Australian Thoroughbred Finance Pty Ltd (unreported, 23 July 1992)

Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (unreported, 28 August 1996)

Complete Technology Pty Ltd v Toshiba (Aust) Pty Ltd (1994) 124 ALR 493

Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10

Halcon International Inc v Shell Transport and Trading Co [1979] RPC 97

Tassilo Bonzel & Schneider (Europe) AG v Intervention Ltd [1991] RPC 43

Re Environmental Images Pty Ltd (1996) 23 AAR 439

Parsons v Martin (1984) 5 FCR 235

Jackson v Sterling Industries Ltd (1987) 162 CLR 612

Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 110 ALR 685

OTTER GOLD MINES LIMITED v DEPUTY PRESIDENT G L McDONALD OF THE ADMINISTRATIVE APPEALS TRIBUNAL, VICTORIAN DISTRICT REGISTRY and AUSTRALIAN SECURITIES COMMISSION and BEACONSFIELD GOLD N L and BURDEKIN RESOURCES N L

VG 160 of 1997

SUNDBERG J

MELBOURNE

30 JULY 1997

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY ) No VG 160 of 1997

)

GENERAL DIVISION )

BETWEEN: OTTER GOLD MINES LIMITED

(ARBN 003 082 773)

Applicant

AND: DEPUTY PRESIDENT G L McDONALD OF THE ADMINISTRATIVE APPEALS TRIBUNAL, VICTORIAN DISTRICT REGISTRY

First Respondent

and

AUSTRALIAN SECURITIES COMMISSION

Second Respondent

and

BEACONSFIELD GOLD N L

(ACN 057 793 834)

Third Respondent

and

BURDEKIN RESOURCES N L

(ACN 059 326 519)

Fourth Respondent

JUDGE: SUNDBERG J

PLACE: MELBOURNE

DATED: 30 JULY 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The decision constituted by the Tribunal's failure to determine the application made by letter dated 3 March 1997 be set aside.

2. The matter be remitted to the Tribunal to be dealt with in accordance with the reasons of the Court.

3. The fourth respondent pay the applicant's taxed costs of the application.

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

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY ) No VG 160 of 1997

)

GENERAL DIVISION )

BETWEEN: OTTER GOLD MINES LIMITED

(ARBN 003 082 773)

Applicant

AND: DEPUTY PRESIDENT G L McDONALD OF THE ADMINISTRATIVE APPEALS TRIBUNAL, VICTORIAN DISTRICT REGISTRY

First Respondent

and

AUSTRALIAN SECURITIES COMMISSION

Second Respondent

and

BEACONSFIELD GOLD N L

(ACN 057 793 834)

Third Respondent

and

BURDEKIN RESOURCES N L

(ACN 059 326 519)

Fourth Respondent

JUDGE: SUNDBERG J

PLACE: MELBOURNE

DATED: 30 JULY 1997

REASONS FOR JUDGMENT

BACKGROUND

The third respondent ("Beaconsfield"), two of its subsidiaries, and two subsidiaries of Allstate Explorations NL ("Allstate") are involved as joint venturers in a gold mining project in Tasmania. Allstate manages the joint venture. The applicant, Otter Gold Mines

Limited ("Otter"), holds an entitlement to shares in Allstate through itself and certain wholly owned subsidiaries, associated companies and an associated person. Otter has held board and management control of Allstate for more than ten years. At all times during the period December 1995 to April 1996 Otter had an entitlement to 46.32% of Allstate's shares. On 18 April 1996 Allstate made a placement of 1,266,000 shares and 422,000 options to persons other than Otter, its subsidiaries and associates. This diluting placement had the effect of reducing Otter's entitlement to 43.21%.

On 16 May Otter applied to the second respondent, the Australian Securities Commission ("the ASC"), pursuant to s730(1) of the Corporations Law ("the Law") for relief from s618 of the Law to enable it to restore itself to the position in which it would have been but for the diluting placement, and accordingly to regain its entitlement to shares in Allstate following the dilution, and to acquire an additional 3% entitlement as permitted by s618. On 31 May the ASC made a declaration pursuant to s730 granting Otter relief from s618 ("the first modification"). Otter thereafter continued acquiring shares in Allstate, resulting in its holding an entitlement to 46.12% of Allstate's shares by 30 November.

On 20 December Otter applied to the ASC for a further declaration pursuant to s730(1). This was sought to overcome a possible unintended consequence of the first modification, namely that shares acquired by Otter in reliance on the first modification would be taken into account for the purpose of calculating the "VA2" component of the formula in s618(1)(b) of the Law. On 10 January 1997 a further declaration was made by the ASC modifying the Law to provide the relief sought ("the second modification"). Since November 1996 the fourth respondent ("Burdekin") has acquired shares and options in Allstate. As at 10 January 1997 the shareholding interests in Allstate were approximately as follows:

Otter 46.69%

Beaconsfield 38.56%

Burdekin 5.00%

Other 9.75%

TRIBUNAL PROCEEDINGS

On 20 January 1997 Beaconsfield commenced proceedings in the Administrative Appeals Tribunal seeking a review of the second modification, and an order under s41(2) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") staying the implementation of the second modification pending the review ("the Tribunal proceedings"). On 28 January the Tribunal heard Beaconsfield's application for a stay. On 19 February the Tribunal issued a summons to Burdekin at the request of Otter. Pursuant to the summons Burdekin produced documents to the Tribunal. On Burdekin's application the Tribunal made an order prohibiting publication of certain of the documents pursuant to s35(2) of the AAT Act. On 26 February the Tribunal heard Beaconsfield's application for review of the second modification. On 7 March 1997 the Tribunal set aside the second modification. On 17 March Otter appealed to this Court against the Tribunal's decision ("the appeal").

PROPOSED DIVESTITURE PROCEEDING

Otter proposes to commence proceedings against Beaconsfield and Burdekin (and certain companies associated with Burdekin) seeking, inter alia, a declaration of association between Burdekin and Beaconsfield and an order for divestiture of the shares and options in Allstate acquired by Burdekin ("the proposed proceeding"). It will be Otter's contention in the proposed proceeding that Burdekin and Beaconsfield have been acting in concert with respect to the acquisitions by Burdekin in the period since November 1996, or are otherwise associates within the meaning of the Law.

APPLICATION TO USE DOCUMENTS

By letter dated 3 March Otter applied to the Tribunal for a direction that the documents produced by Burdekin (other than those the subject of the publication order) ("the Burdekin documents") and certain other documents be available to Otter for use in connection with the proposed proceeding. The application was heard by the Tribunal on 13 March. The application was opposed by Burdekin. Beaconsfield submitted that no direction of the Tribunal was required. The ASC took no part in the hearing of the application. On 27 March the Tribunal declined to make the direction sought by Otter.

TRIBUNAL'S REASONING

The Tribunal noted the implied undertaking attaching to a party to proceedings in a court of record not to disclose in any other forum the contents of any document produced in that proceeding without the consent of the party who produced it or the leave of the court. Cf Harman v Home Office [1983] 1 AC 280. The Tribunal concluded that the implied undertaking attaches to a party to proceedings in the Tribunal, and that it had power to release the party from the undertaking. The Tribunal then said:

“In the instant case, time has overtaken the application now before the Tribunal. An appeal has been lodged in the Federal Court against the Tribunal's decision of 26 February 1997. Pursuant to s46(1)(a) of the AAT Act the Tribunal is required to forward all of the documents "in connection with the proceeding to which the appeal ... relates" to the Court. The Tribunal is informed by the Registrar that that transmission is now in process of occurring. In those circumstances it would not be appropriate for the Tribunal to reach a ruling on documents which are now before the Federal Court. In Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684 Burchett J commented (at 685) that, in the case of courts, proceedings should ordinarily be commenced in the court in which the implied undertaking was given. However, his Honour determined in that case that, as all of the relevant proceedings in both cases were commenced in the Federal Court, and the parties had consented to the Federal Court resolving the problem at hand, that the Court was empowered to proceed. The case before the Tribunal contains some important differences. The Tribunal no longer holds the documents, and the parties have commenced an appeal against the Tribunal's decision in the Federal Court. The Federal Court now has the documents and certainly has the inherent power
to reach a determination on the present issue. Otter and Beaconsfield have also declared that they wish to commence the second proceedings in that Court. Accordingly, it would seem more appropriate for the applicant to apply to that Court for the leave sought.

For the reasons stated, it is not appropriate for the Tribunal to reach a decision on the application before it.”

APPLICATION FOR REVIEW

Otter seeks review under the Administrative Decisions (Judicial Review) Act 1977 of what it describes as the Tribunal's "decision ... to decline" Otter's application for a direction that the Burdekin documents be available to it for use in the proposed proceeding. Four grounds are relied on. The first is that the Tribunal erred in law in finding that this Court had jurisdiction in the appeal to entertain Otter's application. The second is that the Tribunal erred in law in deciding that Otter was subject to an implied undertaking not to make use in other proceedings of documents produced to the Tribunal. The third is that the Tribunal's failure to reach a decision was so unreasonable that no reasonable person could have so exercised the power to grant leave. The fourth ground is that the Tribunal took into account irrelevant considerations, namely that Otter had appealed to this Court, the Tribunal was in the course of forwarding all documents to the Court, and that Otter intended to commence the proposed proceeding. The relief sought is an order setting aside the Tribunal's decision and a declaration that Otter may make use of the Burdekin documents in connection with the proposed proceeding. Otter also seeks, under s35B of the Judiciary Act 1903, mandamus directing the Tribunal to make a decision on its application.

OBJECTION TO COMPETENCY

Burdekin contended that the Tribunal had not made a decision of an administrative character. It was submitted that a decision has that character only when it is made in aid of the conduct of the Tribunal's review of the decision before it. The decision not to order the release of the documents had nothing to do with the administrative function being exercised by the Tribunal, namely the review of the ASC's decision. It was said that a decision to release the documents would not have been of an administrative character for the same reason.

In Pancontinental Mining Ltd v Burns (1994) 124 ALR 471 it was argued that the Tribunal's refusal to set aside summonses to witnesses to give evidence was not a decision of an administrative character. von Doussa J rejected the argument. His Honour said at 481:

“Whilst it is the particular decision of the tribunal to refuse to set aside the summonses which must be categorised as a ‘decision of an administrative character' to attract the jurisdiction of the court, it is necessary to consider that decision in the context of, and as part of, the process in which the refusal occurred. The phrase ‘decision of an administrative character' is to be given a wide construction to reflect that ‘administration' is not, as a rule, if ever, an isolated end but is part of a process: Evans v Friemann
(1981) 35 ALR 428 at 435. Here the process under way before the tribunal was the review of administrative decisions by a tribunal empowered to exercise all the powers and discretions that are conferred by the relevant enactment on the person who made the decision under review: s43(1) of the AAT Act. The power of review is an administrative power. The issue of the summonses by the registrar of the tribunal was plainly an administrative act in aid of the conduct of the review. The refusal to set aside those summonses by the tribunal was a decision made in the course of the exercise of the administrative power of the tribunal. It was a step in that process, and was an administrative function ....”

The issue of the summons to produce the documents in the present case was an administrative act in aid of the conduct of the review of the ASC's decision. For the purposes of the present discussion it may be assumed that the production of the documents under compulsion gave rise to an implied undertaking of confidentiality. Assuming also a power in the Tribunal to grant a release from the undertaking, the exercise of power was a step in the process of the exercise of administrative power, because it was the other side of the undertaking coin.

It was not disputed that the Tribunal had made a decision. According to its formal record of decision, it declined to grant the direction sought; ie it refused to direct that the documents be available to Otter for use in the proposed proceeding. According to the passage I have quoted from its reasons, the Tribunal refused to reach a decision on the application before it. Either way, it made a decision. See s3(2)(b) - refusing to give a direction - and s7(1) - failing to make a decision.

IS THERE AN IMPLIED UNDERTAKING?

In dealing with the objection to competency I have assumed the existence of an implied undertaking. Otter contends that the implied undertaking applicable to documents disclosed in court proceedings does not apply to documents disclosed before the Tribunal. This was said to be because the foundation of the implied undertaking in curial proceedings is the inherent power of a court to prevent abuse of its process: Kimberley Mineral Holdings Ltd v McEwan [1980] 1 NSWLR 210 at 216. The Tribunal is not a court of record and has no inherent jurisdiction. Further, it was said that unlike a court, the Tribunal has no power to enforce the undertaking, either by injunction (cf Riddick v Thames Board Mills [1977] QB 881 at 896) or in proceedings for contempt (cf Harman at 310, 312). But when in Kimberley Mineral Holdings Hope and Glass JJA spoke of the inherent power, they were speaking of their own court. It has never been suggested that the Federal Court, which as a creature of statute does not have inherent power, lacks the facilities to prevent abuse of its own process. See Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684; Sweetman v Australian Thoroughbred Finance Pty Ltd (unreported, 23 July 1992); Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (unreported, 28 August 1996); and Complete Technology Pty Ltd v Toshiba (Aust) Pty Ltd (1994) 124 ALR 493 at 500-502. In Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 37 Brennan J did not appear to doubt the existence of an implied undertaking in relation to documents produced on discovery in this Court.

The true basis of the implied undertaking lies in the fact that the documents, whether produced on discovery, subpoena or under any other order of the court, are produced under compulsion. In Esso Australia Resources at 32-33 Mason CJ, with whom Dawson and McHugh JJ agreed, said:

“Over a century ago, Bray on Discovery stated:

‘A party who has obtained access to his adversary's documents under an order for production has no right to make their contents public or communicate them to any stranger to the suit ...'.

... It would be inequitable if a party were compelled by court process to produce private documents for the purposes of the litigation yet be exposed to publication of them for other purposes.”

His Honour then said that a similar obligation arises in relation to documents disclosed for the purposes of an arbitration, but "consistently with the principle as it applies in court proceedings, the obligation of confidentiality attaches only in relation to documents which are produced by a party compulsorily pursuant to a direction by the arbitrator". See also Halcon International Inc v Shell Transport and Trading Co [1979] RPC 97; Tassilo Bonzel & Schneider (Europe) AG v Intervention Ltd [1991] RPC 43 at 46-48; and Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd at 3.

The documents in question here were produced pursuant to a summons under s40(1A)(c) of the AAT Act which empowers the Registrar to summon a person to appear before the Tribunal at the hearing of a proceeding to produce books and documents in the possession, custody or control of the person that are mentioned in the summons. Failure to comply with the summons without reasonable excuse is an offence under s61(1), and an offence under s63(d) - doing an act or thing that would, if the Tribunal were a court of record, constitute a contempt of that court. It is true that the Tribunal cannot itself deal with a person for contempt or enforce the implied undertaking by injunction. But when in Riddick v Thames Board Mills [1977] QB at 896 Lord Denning MR spoke of enforcing the undertaking by injunction, and in Harman [1983] 1 AC at 312 Lord Scarman spoke of taking proceedings for contempt of court, their Lordships were not stating why it is that the implied undertaking arises. Rather, Lord Denning was explaining how a court of record goes about enforcing the undertaking, and Lord Scarman how the party for whose benefit it is exacted can bring about its enforcement. They were not postulating that direct enforcement powers are a condition of the implication of the undertaking.

For those reasons, I reject the submission that Otter gave no implied undertaking to the Tribunal.

TRIBUNAL'S POWER TO RELEASE FROM UNDERTAKING

It was contended for Burdekin that the Tribunal had no power to release Otter from its implied undertaking. The Tribunal followed an earlier decision of the Tribunal, Re Environmental Images Pty Ltd (1996) 23 AAR 439, where it was assumed that there was power to release. The contrary appears not to have been argued. The basis of the contention that the Tribunal lacked power to grant a release was that the Tribunal has no
inherent powers. Its powers are those set out in the AAT Act, and that Act makes no provision for release. It may immediately be said that if this submission be correct, it will apply to the Federal Court, a statutory court without inherent powers whose statute makes no provision for release. Yet the Court has that power. See Holpitt, Sweetman, Complete Technology and Lake Cumbeline.

In Parsons v Martin (1984) 5 FCR 235, a case concerned with the powers of Courts of Petty Sessions in Western Australia, Bowen CJ, Northrop and Toohey JJ said at 241:

“In our opinion a court exercising jurisdiction conferred by statute has powers expressly or by implication conferred by the legislation which governs it. This is a matter of statutory construction. We are of the opinion also that it has in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred.

In view of the way in which the phrase ‘inherent jurisdiction' is used in many of the cases, it seems advisable generally to avoid the use of it to refer to this incidental and necessary power of a statutory court.”

See also Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 630-631 per Toohey J. At 623-624 in that case Deane J, with whom Mason CJ agreed, approved the observation of Bowen CJ in the Full Court of this Court that "the implied power [of a statutory court] ... to prevent abuse of its process, is similar to, if not identical with, inherent power".

The power to release from the implied undertaking of confidentiality is incidental to the power to require the documents to be produced. Production under compulsion gives rise to the undertaking. The power to release is intrinsically associated with that undertaking. It is the other side of the coin.

TRIBUNAL'S REASONS FOR NOT REACHING A DECISION

The Tribunal's principal reason for declining to reach a decision on Otter's application was that the documents had been forwarded to this Court pursuant to s46(1)(a) of the AAT Act. It was not appropriate for the Tribunal to rule on documents that were before the Court. But as the Tribunal noted, in the case of courts, an application for release from the undertaking should be made in the proceeding in which the undertaking was given: Holpitt at 685. The Tribunal gave three reasons for distinguishing Holpitt. The first was that the Tribunal no longer held the documents. That seems to me to be an irrelevant consideration. The implied undertaking attaches to the copies in Otter's hands. It is because Otter has obtained copies of the documents on discovery that it is taken to have given the undertaking. That the Tribunal no longer holds the originals is neither here nor there. The second reason for distinguishing Holpitt was the institution of the appeal against the Tribunal's decision. That too seems to me to be no reason for the Tribunal to decline to reach a decision. The undertaking was given to the Tribunal. It does not arise out of the proceedings in the appeal, and none of the issues raised in the appeal concerns the undertaking. The third reason was that Otter intends to commence the proposed proceeding in this Court. For the reason I have given for rejecting the second ground for distinguishing Holpitt, this ground must be rejected.

GROUNDS FOR RELEASE

In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 110 ALR 685 at 693, speaking of the "special circumstances" required to justify releasing a party from the implied undertaking, Wilcox J said:

“For ‘special circumstances' to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court's discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors. But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.”

I was urged by Otter's counsel to determine for myself whether special circumstances existed, and to decide whether Otter should be released from its undertaking. It was submitted that the documents were potentially important to the determination of the proposed proceeding, and that there was significant commonality of subject matter between the proposed proceeding and that in the Tribunal. These contentions were controverted by counsel for Burdekin. The documents were before me. There are seventy one of them. I was not taken through them with a view to persuading me of their relevance, though I was told that twenty one identified documents were more relevant than the others. I do not propose to wade through the documents in an attempt to assess their significance to the proposed proceeding, about which I know little, or to form a view on the commonality issue. The Tribunal is familiar with the documents, and the appropriate course is to remit the matter to it to determine, in the light of the factors mentioned in Springfield and any other matters relevant to the exercise of its discretion, whether Otter should be released from its undertaking.

CONCLUSION

Otter has made out its contention that the Tribunal's refusal to decide the application was an improper exercise of power in that it took into account an irrelevant consideration. The decision constituted by the Tribunal's failure to determine the application is set aside and the matter is remitted to the Tribunal to be dealt with in accordance with these reasons. Burdekin should pay the costs of the application.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of the Honourable Justice Sundberg

Associate:

30 July 1997

Counsel for the Applicant: C M Maxwell

Solicitors for the Applicant: Mallesons Stephen Jaques

Counsel for the Fourth Respondent: G P Harris

Solicitors for the Fourth Respondent: Clayton Utz

Date of Hearing: 24 June 1997

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