FEDERAL COURT OF AUSTRALIA

Collard v Australian Securities & Investments Commission [2008] FCA 1650

Administrative Decisions (Judicial Review) Act 1977 (Cth)

Australian Securities & Investments Commission Act 2001 (Cth) ss 19, 22, 23

Corporations Act 2001 (Cth)

Judiciary Act 1903 (Cth) s 39B

Australian Securities & Investments Commission v P Dawson Nominees Pty Ltd (2008) 169 FCR 227 referred to

Sankey v Whitlam (1978) 142 CLR 1 followed

Zarro v Australian Securities Commission (1992) 36 FCR 40 considered

DAVID JOHN COLLARD, MIN HUA LI and LI MIN ZENG v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

NSD 1617 of 2008

PERRAM J

23 OCTOBER 2008

SYDNEY

THE COURT ORDERS THAT:

1.                  The hearing listed at 10.15 am on 24 October 2008 be vacated.

2.                  Leave is granted to the respondent to provide to his Honour’s associate by 4 pm on 27 October 2008 an affidavit in a sealed envelope setting out the basis for the claim for public interest immunity in respect of documents 1, 2, 3 and 5.

3.                  The sealed envelope is not to be opened by any person other than Perram J without an order of a judge of the Court.

4.                  The matter be listed for interim judgment at 9.30 am on 28 October 2008.

5.                  The matter be listed for hearing at 10.15 am on 31 October 2008.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     The present Applicants have commenced urgent proceedings seeking to review a decision said to have been made by or on behalf of ASIC.  The Applicants, who are three in number, have been summoned pursuant to s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (“the ASIC Act”) to appear before inspectors and be examined in relation to possible contraventions of the ASIC Actand the Corporations Act 2001 (Cth) by various persons and entities.  The conduct and outcome of those examinations is said to be relevant by ASIC to certain proceedings now pending before the Supreme Court of New South Wales.  I am informed by ASIC, and for present purposes accept, that a delay in the conduct of the examinations is likely to cause it prejudice in the conduct of those proceedings.

2                     Sections 22 and 23 of the ASIC Act provide:

22        Examination to take place in private

(1)       The examination must take place in private and the inspector may give directions about who may be present during it, or during a part of it.

(2)       A person must not be present at the examination unless he or she:

(a)        is the inspector, the examinee or a member; or

(b)        is a staff member approved by ASIC; or

(c)        is entitled to be present by virtue of:

(i)         a direction under subsection (1); or

(ii)        subsection 23(1).

            Penalty:  10 penalty units or imprisonment for 3 months, or both.

(3)       Subsection (2) is an offence of strict liability.

               Note:       For strict liability, see section 6.1 of the Criminal Code.

23        Examinee’s lawyer may attend

(1)       The examinee’s lawyer may be present at the examination and may, at such times during it as the inspector determines:

(a)        address the inspector; and

(b)        examine the examinee;

            about matters about which the inspector has examined the examinee.

(2)       If, in the inspector’s opinion, a person is trying to obstruct the examination by exercising rights under subsection (1), the inspector may require the person to stop addressing the inspector, or examining the examinee, as the case requires.

               Note:       Failure to comply with a requirement made under this subsection is an offence (see section 63).

(3)       An offence under subsection 63(4) relating to subsection (2) of this section is an offence of strict liability.

               Note:       For strict liability, see section 6.1 of the Criminal Code.

3                     Each of the Applicants is represented by Mr Anthony Geoffrey Hartnell.  On 10 October 2008, ASIC indicated to the Applicants that if Mr Hartnell appeared at the first of the three examinations it was proposing to conduct, it would exercise the power in s 22 of the ASIC Act to exclude him from the remainder of the examinations.  The Applicants then on Wednesday 15 October 2008 commenced the present proceeding in this Court seeking relief under s 39B of the Judiciary Act 1903 (Cth) and under the Administrative Decisions (Judicial Review) Act 1977 (Cth) for orders setting aside that decision.  The proceeding came before Emmett J that afternoon.

4                     An interim regime was installed to preserve the status quo and the matter stood over before me for directions on Monday 20 October 2008.  When the matter came before me at that time the Applicants called upon a notice to produce.  ASIC produced a box of documents in partial answer to the call.  Without objection, I granted leave to the Applicants to inspect the contents of that box.  At the same time, ASIC also produced a sealed envelope over which it claimed privilege on the basis of public interest immunity and also legal professional privilege.  I directed that an affidavit making good those claims be filed by 4 pm, Tuesday 21 October 2008.  The issue of whether those claims were made out was stood over to today before me. 

5                     I fixed the hearing of the substantive claim for relief for tomorrow.  When the matter was called on this morning, I granted leave to the Applicants to file in court a notice of motion by which they sought access to the documents produced by ASIC in the sealed affidavit.  For the purposes of these reasons, I have marked the sealed envelope MFI 1.  It is the Applicants’ motion which is now before me.  ASIC read an affidavit of David John McGuinness sworn 20 October 2008.  Mr McGuinness is a senior executive leader at ASIC in its deterrence section.  It did not appear from his affidavit whether he had, in fact, read the documents in question. 

6                     That will have some significance for reasons which will become apparent.  His affidavit refers to ASIC’s confidentiality obligations and reveals that there are five documents in MFI 1.  All but one is the subject of a claim for public interest immunity and a number are subject to a claim for legal professional privilege as well.  It was agreed that the issue of public interest immunity would be dealt with in the first instance so that only afterwards would the claim for legal professional privilege be addressed.  This was because a conclusion adverse to the Applicants on public interest immunity would largely resolve the debate in practical terms. 

7                     Ms Collins, who appeared for the Applicants, submitted first that the Court should examine the documents in MFI 1 for itself to determine the claim.  On the other hand, Mr Halley SC, who appeared with Ms Allars for ASIC, submitted that in the first instance the Court should determine the matter on the affidavit of Mr McGuinness and only if it proves not possible to determine the claim should the Court look at the material.  In the event that the claim was not obvious from that process, the Court should permit further evidence to be put on.  Mr Halley drew particular attention to that which had fallen from Gummow J in the decision of the Full Federal Court in Zarro v Australian Securities Commission (1992) 36 FCR 40 at 61:

Where a claim has not been propounded in proper form, the court has various avenues open to it before taking its final decision in the matter.  It may order that unless within a specified time a further affidavit be sworn within a specified time which shows the claim to privilege with greater particularity, the documents in question should be produced for inspection … The court may call for a further affidavit from the same deponent to clarify some point or amplify the claim; or it may require the tender of an affidavit sworn by a more senior officer or the relevant Minister.

8                     Mr Halley says that the documents contained in MFI 1 are pertinent to an ongoing investigation and that, generally speaking, they would be covered by public interest immunity.  In my opinion, Mr Halley’s submissions on this are to be preferred.  Generally, if a claim for public interest immunity can be substantiated without the Court seeing the material, that is the preferable course.  This is particularly so in relation to certain classes of documents such as cabinet documents.  In view of the exigencies of the present situation, if that affidavit does not suffice, however, I will inspect the documents myself, notwithstanding what was said by Gummow J in Zarro.  If that does not suffice, then I will permit a further affidavit to be filed.

9                     Ms Collins then submitted that a balancing exercise was involved, essentially between the forensic significance of the material and the harm that would be done to the public good by disclosure.  In essence, Mr Halley accepted that proposition the correctness of which is borne out by a recent judgment of the Full Court of this Court in Australian Securities and Investments Commission v P Dawson Nominees Pty Limited (2008) 169 FCR 227 at 232 [22].  The Full Court (Heerey, Moore and Tracey JJ) set out the well known passage from Sankey v Whitlam (1978) 142 CLR 1 at 38-39, which was in these terms:

The court must decide which aspect of the public interest predominates, or in other words whether the public interest which requires that the document should not be produced outweighs the public interest that a court of justice in performing its functions should not be denied access to relevant evidence.

10                  Quite apart from the Full Court’s decision to that effect, I am, of course, bound by what was said in Sankey v Whitlam.  Ms Collins then submitted that I should take into account the clear relevance of the material to the present proceedings.  She submitted that the relevance was plain from the terms of the notice to produce.  The notice to produce was in the following terms: 

1.         All documents provided to Mr David McGuinness on or before 10 October 2008 in relation to the decision or opinion recorded in the letter from Ms Dodds and Mr Astar to Atanaskovic Hartnell dated 10 October 2008 that it will not be possible for the First, Second and Third Applicants to have the same legal representatives, or different representatives each from Atanaskovic Hartnell, at their examinations under section 19 of the ASIC Act (“the Decision”).

2.         All documents provided to Mr McGuinness in relation to the Reasons for the Decision pursuant to s.13 of the Administrative Decisions (Judicial Review) Act Re: Legal Representation of Mr Collard, Ms Li and Ms Zeng at their Examinations pursuant to s.19 of the ASIC Act signed by him and dated 22 October 2008.

ASIC produced MFI 1 in answer to both paragraphs of that notice to produce.  In Ms Collins’ submission, it followed that the relevance of the material was established.

11                  Mr Halley submitted, broadly speaking, that perhaps not that much could be gleaned from production, particularly where the issues in the proceedings were effectively about whether a particular administrative decision should be set aside.  I approach the matter on the basis that the documents are relevant.  However, beyond that, there is little that can usefully be said.  Ms Collins submitted that the balancing exercise should take into account the possibility that a confidentiality regime could be fashioned which would limit access to the Applicants’ advisors.  In her submission, it was significant that Mr McGuinness did not say in his affidavit that such a regime could not work.

12                  Mr Halley submitted that disclosure to the legal representatives should not occur due to the risk of inadvertent disclosure.  Further, he submitted that a legal representative holding such information might be compromised even if only subconsciously.  I do not read too much into the fact that Mr McGuiness did not deal with the possible alternative of a confidentiality regime, particularly where it was agreed that he should not be cross-examined.  I do think that there may be risks of unintended subconscious disclosure.  However, the extent of the risk is difficult to discern without viewing the documents.  Ms Collins then submitted that to the extent that informers were involved, their names and any other identifying aspects of the materials could be redacted.

13                  Mr Halley submitted that the redaction might have to go further, since identification can happen for reasons other than mere naming.  Ms Collins correctly accepted this to be the case.  I turn to the documents as described by Mr McGuinness and without inspection.  

Document 1

14                  Mr McGuinness identified the first document as an email from Mr Harker to Ms Hayden and others dated 3 September 2008.  Ms Hayden is a senior lawyer within the Commission.  Mr McGuinness was concerned that disclosure of that email might reveal the existence of certain lines of inquiry being pursued and might cause the Applicants, in consequence, to destroy the documents.   He said that the documents attached material which was obtained by ASIC in confidence and using its compulsory powers. 

15                  By itself, I do not think that this explanation is sufficient for me to form a view that the documents are the proper subject of a claim for public interest immunity.  More is that so where it does not appear from Mr McGuinness’ affidavit that he has, in fact, examined the documents himself.  I propose, therefore, to examine this document in due course.  I am fortified in that approach by what was said by Lockhart J in Zarro v Australian Securities Commission (1992) 36 FCR 40 at 50-51:

In these days with large government instrumentalities and agencies involved in time consuming and extensive investigations into possible irregularities and offences, great care is required by the bodies themselves in ensuring both that the correct person within the structure of the organisation (that is, a person who knows the facts, has seen the documents and who is preferably at a high level within the organisation) swears the appropriate affidavit claiming public interest immunity and that the claim is not made too widely so as to sweep within its net documents that are not legitimately an essential integer in the investigative process.  This also calls for vigilance by the courts lest documents are shielded from public scrutiny or inspection by parties to litigation under an unduly broad umbrella of public interest immunity.

Document 2

16                  Document 2 is an email from Ms Hayden to Ms Dodds of 4 September 2008, attaching a spreadsheet.  Ms Dodds is a solicitor within the Commission.  Mr McGuinness says that the email contains the work of an ASIC officer, which work is derived from the information in document 1.  He says that it should be the subject of a public interest immunity claim on that basis.  For the same reasons which obtain in the case of Document 1, I propose to examine document 2.

Document 3

17                  Document 3 is a file note of Ms Dodds of 8 September 2008, recording a conversation she had with members of the public.  Ms Collins sought clarification during the course of the hearing that they were not the same discussions of which evidence, apparently, has already been filed in Supreme Court proceedings.  ASIC gave that assurance.  The information in the document was obtained voluntarily in circumstances where its donors would not have appreciated that their information would be given to the Applicants.  Disclosure would imperil the future gathering of such information.  Mr McGuinness also thought that if this information was known to the Applicants they may be able to tailor their evidence in response.  It might also tip them off as to the line of inquiry being pursued.

18                  Again, it is difficult to know precisely how strong this claim is for the purpose of weighing it against the relevance of the document to the proceedings without seeing it.  I therefore propose to examine it.

Document 5

19                  Document 5 is a set of undated file notes of Ms Hayden.  It consists of four pages extracted from a booklet of Ms Hayden’s.  The pages apparently summarise the factual materials which ASIC had become aware of during the investigation.  Mr McGuinness says that disclosure would permit inferences to be drawn by the Applicants about the kind of allegations being considered by ASIC and permit them to tailor their evidence accordingly.  I propose, for the same reasons as set out above, to examine that document.

Examination of documents

20                  I will not describe in any detail the content of document 1.  Mr McGuinness says these documents have a tendency to reveal the course of the investigation. I am, unfortunately, unable to tell from looking at them the extent of the truth of that proposition.  The same may be said of documents 2, 3 and 5.  For present purposes, I have resealed MFI 1 and I direct that it not be opened by any person apart from myself or as ordered by another judge of this Court.  Having regard to what was said by Gummow J in Zarro, I propose to allow ASIC to provide to the Court a confidential affidavit setting out what it is that is in documents 1, 2, 3 and 5 that makes them the subject of a proper claim for public interest immunity.  That affidavit is to be given to my associate in a sealed envelope by 4 pm tomorrow.

21                  The envelope is not to be opened by any person other than myself or as directed by another judge of the Court.  The affidavit is not to be served on the Applicants nor filed through the registry.  I will deliver a separate judgment at 9.30 am on Monday 27 October 2008.

[ There was further discussion with counsel. ]

22                  I amend the deadline in respect of the affidavit to be 4 pm on Monday 27 October 2008.  I will deliver judgment at 9.30 am on Tuesday 28 October 2008.  I vacate the hearing fixed for tomorrow and I fix the matter for hearing on Friday 31 October 2008.

Associate:

Dated:         7 November 2008