Aboriginal Legal Service Ltd v Australian Securities Commission
[1996] FCA 646
•24 SEPTEMBER 1996
CATCHWORDS
ADMINISTRATIVE LAW - investigation by Australian Securities Commission - whether procedural fairness afforded to persons who might be adversely affected by investigation - whether Commission obliged to provide entire transcripts of examinations conducted by Commission investigators.
Administrative Decisions (Judicial Review) Act 1977 s6(1)(a)
National Companies and Securities Commission v News Corporation Limited (1984) 156 CLR 296
Bond v Sulan (1990) 26 FCR 580
Youseff v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 550
Minister for Immigration, Local Government and Ethnic Affairs v Pashmforoosh (1989) 18 ALD 77
Roderick v Australian and Overseas Telecommunications Corporation Ltd (1992) 39 FCR 134
Bond v Australian Broadcasting Tribunal (1988) 19 FCR 494
No. NG 673 of 1996
ABORIGINAL LEGAL SERVICE LIMITED AND ANOR -v- AUSTRALIAN SECURITIES COMMISSION AND ORS
MOORE J
SYDNEY
24 SEPTEMBER 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 673 of 1996
)
GENERAL DIVISION )
BETWEEN: ABORIGINAL LEGAL
SERVICE LIMITED
First Applicant
PAUL THOMAS COE
Second Applicant
AND: AUSTRALIAN SECURITIES COMMISSION
First Respondent
ALAN CAMERON
Second RespondentARTHUR WILLIAM WALLWORK
Third Respondent
JONATHAN PETER CADDICK
Fourth Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 24 September 1996
ORDER OF THE COURT
THE COURT ORDERS THAT:
The application is dismissed.
The applicants pay the respondents costs.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 673 of 1996
)
GENERAL DIVISION )
BETWEEN: ABORIGINAL LEGAL
SERVICE LIMITED
First Applicant
PAUL THOMAS COE
Second Applicant
AND: AUSTRALIAN SECURITIES COMMISSION
First Respondent
ALAN CAMERON
Second RespondentARTHUR WILLIAM WALLWORK
Third Respondent
JONATHAN PETER CADDICK
Fourth Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 24 September 1996
REASONS FOR JUDGMENT
On 16 August 1996 an application was filed by the Aboriginal Legal Service Limited ("ALS") and Mr Paul Thomas Coe. The application sought relief under the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") and Section 39B of the Judiciary Act 1903, though the basis upon which the application was made was not entirely clear from the application itself. The second to fourth respondents are, respectively, the Chairperson and two officers of the
Australian Securities Commission ("ASC").
At the hearing the scope of the application was clarified by counsel appearing for the ALS and Coe. The issue raised is a narrow one. The ASC has undertaken an investigation into the ALS and has reached a point where a report is being prepared of the type referred to in s17 of the Australian Securities Commission Act 1989 ("the Act"). A copy of the report is likely to be given to the Minister on, or shortly after, 24 September 1996 as contemplated by s18 of the Act. It was common ground that s6(1)(a) of the ADJR Act applied to the preparation of the report by the ASC. Section 6(1)(a) provides:
"6(1)Where a person has engaged, is engaging, or proposes to engage, in conduct for the purpose of making a decision to which this Act applies, a person who is aggrieved by the conduct may apply to the Court for an order of review in respect of the conduct on any one or more of the following grounds:
(a)that a breach of the rules of natural justice has occurred, is occurring, or is likely to occur, in connection with the conduct.
(b)..."
The issue raised by the ALS and Coe is whether the ASC, in engaging in conduct in preparing the report has breached the rules of natural justice, that is, has failed to afford the ALS and Coe procedural fairness.
The factual background is not complex. The examination of a number of individuals took place under Division 2 of Part III of the Act over a period commencing in mid-January 1995 and concluding in early March 1995. The individuals examined were either officers or employees of the ALS. Each examination was recorded and a transcript created as provided for in s24 of the Act.
On 10 July 1996, letters were sent by the ASC to the board of directors of ALS and Coe informing them that a draft report was in the process of being prepared. The letters are in evidence and refer to parts of the draft report which were enclosed with the letters. The parts are referred to as "the parts of the draft report which could affect the rights or interests of ALS or persons associated with ALS". While the enclosures to the letters are not in evidence, it was not in issue that extracts of the draft report were provided with each letter. It was also not in issue that accompanying the extracts of the draft report were extracts from the transcripts of the examinations. The letters made plain that both the ALS and Coe could comment on the draft report and any conclusions expressed in it and should do so by 12 August 1996.
The letter to Coe resulted in a letter dated 6 August 1996 from Craddock Murray and Newman, solicitors, requesting the entire transcript of the examinations undertaken by the ASC. This was met by a response from the ASC which indicated that care had been taken to identify relevant material to put to Coe. The letter went on to indicate that some transcript referred to in the draft report had not been included in one of the annexures. The letter also corrected a typographical error which had misstated a page number of the transcript in the extract of the draft report. The ASC also said it had provided all the material which adversely affected Coe and that it did not propose to provide the full transcript of the examinations.
Craddock Murray and Newman replied by letter dated 8 August 1996 that the failure to provide the entire transcripts constituted a breach of the rules of natural justice. The ASC responded by letter dated 8 August 1996, denied that assertion and noted that the concerns about the provision of transcript were only raised towards the end of the period in which comment had been invited by ASC, namely by 12 August 1996. A further letter from Craddock Murray and Newman dated 9 August 1996 asserted that Coe was entitled to any exculpatory material and to the transcript in its entirety so that he may be satisfied that there are no other relevant matters in it. The letter concluded with an intimation that legal proceedings would be commenced if the request for the transcripts in their entirety was not met. I should refer to one further letter dated 23 August 1996 from the ASC to the ALS. It identified a further matter it proposed to include in its report and an extract of the transcript of one of the examinations.
The applicants did not tender the draft report and all that is in evidence is a brief extract from it together with the transcript that is referred to in that brief extract. The extract would indicate that the form the report will take is one in which there will be a detailed examination of the facts and a footnote for each material fact. The footnotes will refer to pages of the transcript of one or a number of examinations which will be identified as annexures to the report. I accept, as was submitted by senior counsel on behalf of the ASC, that an inference cannot be drawn from the limited evidence before the Court that transcript exists which bears upon material facts identified in the draft report, or conclusions in it, other than the pages of transcript referred to in the footnotes. Nor can an inference be drawn that the transcript does or might contain material tending to disprove material facts identified in the draft report or undermine conclusions reached in it.
Though I have already referred to some relevant sections of the Act, it is desirable to describe further the legislative framework in which the examinations took place and in which the report is being prepared. Part 3 of the Act confers on the ASC a power to undertake investigations for the purposes identified in s13, that is, to ascertain whether there might have been a contravention of the national scheme of corporations law or the contravention of a Commonwealth, State or Territory law concerning the management of a corporation or concerning fraud or dishonesty in relation to, relevantly, a corporation. An investigation may arise from Ministerial direction. How it arose in this case is not apparent from the evidence. An investigation may lead to an interim report in certain circumstances: s16, or a final report: s17. Section 17(3) deals with the contents of the report and provides:
A report under this section shall set out:
(a)the Commission's findings about the matters investigated;
(b)the evidence and other material on which those findings are based; and
(c)such other matters relating to, or arising out of, the investigation as the Commission thinks fit or the Minister directs."
The ASC is obliged to give a copy of the report to the Minister: s18(1) and if it relates to a serious contravention of the law, it may be given to nominated law enforcement agencies: s18(2). Section 18(4) authorises the Minister to print and publish a report.
Division 2 confers powers on the ASC exercisable when conducting investigations under Division 1. A person may be given a notice to attend an examination which may be on oath or affirmation: s21. It is in private: s22(1). The inspector undertaking the examination may authorise a record to be made of the examination: s24(1). If requested, a copy must be given to the examinee: s24(2)(b), and it may be given to the examinee subject to conditions: s24(2)(b). A copy can be given to a lawyer with a requisite interest: s25(1), though limits are placed on the use that may be made of the transcript: s25(2). A copy may be given to others: s25(3) though conditions may be imposed: s25(3). Breach of these limits or any conditions imposed under ss24 or 25 are an
offence which may lead to imprisonment: ss25(2) and 26. Section 27 requires the record of an examination to accompany a report about the investigation in which it took place. Section 68 denies examinees the opportunity to refuse to answer questions on the ground that it might incriminate them though a statement made is not admissible in criminal proceedings against the person. A certified report made under s17 is prima facie evidence of facts found to exist by the ASC other than in criminal proceedings: s81, though subject to qualifications found in s82. Lastly s127(1) provides:
"The Commission shall take all reasonable measures to protect from unauthorised use or disclosure information given to it in confidence in or in connection with the performance of its functions or the exercise of its powers under a national scheme law of this jurisdiction."
It can be seen that a report critical of a person or corporation may, potentially, have at least two adverse effects of substance. It may be published by the Minister and, to the extent that it contains findings of fact, it may be used as a means of proving them in civil proceedings.
It was not in issue that ASC was obliged to provide both the ALS and Coe with procedural fairness. The essence of the case of ALS and Coe, indeed their case in its entirety, is that the whole of each transcript of the examination of each individual should be provided. They contended it was not sufficient that the ASC provided only those parts viewed by ASC as relevant and by reference to which an adverse finding might be made by it. The entire transcript should be provided, it was submitted, to permit the ALS and Coe both to assess whether the transcript contains other material bearing upon the facts or contains exculpatory material that either might wish to rely on. In support of this contention counsel for the ALS and Coe referred, in particular, to a well known passage from the judgment of Brennan J in Kioa v West (1985) 159 CLR 550 at 629:
"Nevertheless in the ordinary case where no problem of confidentiality arises an opportunity should be given to deal with adverse information that is credible, relevant and significant to the decision to be made. It is not sufficient for the repository of the power to endeavour to shut information of that kind out of his mind and to reach a decision without reference to it. Information of that kind creates a real risk of prejudice, albeit subconscious, and it is unfair to deny a person whose interests are likely to be affected by the decision an opportunity to deal with the information. He will be neither consoled nor assured to be told that the prejudicial information was left out of account."
However his Honour was there referring to "adverse material" of a particular character. In the present case, as stated earlier, I am not satisfied that such material does or may exist which has not been disclosed to the ALS and Coe. Any denial of procedural fairness must thus be based on any deficiency in a process in which the identification of the adverse material provided for comment was undertaken by the ASC.
In National Companies and Securities Commission v News Corporation Limited (1984) 156 CLR 296, the High Court considered what was required of the National Companies and Securities Commission to ensure procedural fairness to a company whose conduct, along with the conduct of others, was under investigation. The investigation might have lead to an application to a Supreme Court for orders concerning the acquisition of shares by, amongst others, the company. It was viewed as sufficient that the Commission itself identify matters that might result in adverse conclusions and criticism of a company, notify the company of them, and seek comment: see Gibbs CJ at 316 and Mason, Wilson and Dawson JJ at 324. However, of significance, the Commission's role was an investigative one only and there was no express power conferred on the Commission to publish a report resulting from the investigation. The Court doubted the existence of such a power. The limited nature of the investigative process was viewed by the Court as relevant in determining how the Commission might act so as to afford procedural fairness.
In Bond v Sulan (1990) 26 FCR 580 an inspector was undertaking an investigation into the affairs of several companies and was directed by the National Companies and Securities Commission to furnish a report dealing with, amongst other things, offences that might have been committed. An issue arose as to what information should be provided to three executive directors of one company under investigation who were also directors of many of the other companies being investigated. The approach adopted by the investigator was reflected in three letters, extracts of which were set out in the judgment of Gummow J at 587 (in two letters of 9 October 1990) and 588 (in a letter of 12 October 1990).
His Honour set out at 587 the following extract from the second letter of 9 October 1990, in which the investigator said:
"When I have gathered sufficient material to permit me to reach tentative conclusions as to the findings I might make, I will then give consideration as to the extent to which (if at all) those findings are adverse to your clients such that your clients should be afforded an opportunity to make further representations to me or to adduce further evidence in the way that you propose.
At that time, I will take into account the nature of the tentative findings, the extent to which your clients have had a prior opportunity to address the matters the subject of such findings, either on examination or otherwise, and all of the other circumstances of the inquiry as they then appear."
Having set out the course proposed by the investigator, Gummow J went on to consider several English authorities including Re Permagon Press Ltd (1971) CR 388 and, from that authority, quoted at 588 the following passage from the judgment of Buckley CJ:
"If inspectors are disposed to report on the conduct of anyone in such a way that he may in consequence be proceeded against, either in criminal or civil proceedings, the inspector should give him, if he has not already had it, such information of the complaint or criticism which they make of him in their report and of their reasons for doing so, including such information as to the nature and effect of the evidence which disposes them so to report, as is necessary to give the person concerned a fair opportunity of dealing with the matter, and they should give him such an opportunity."
Gummow J went on to observe that the application of the rules of natural justice may vary from case to case even though the same power is being exercised. His Honour's conclusion in Bond v Sulan is found in the following passage at 590:
"I appreciate the significant impact an investigation under Pt
VII may have upon the interests and standing of the applicants. It would not be correct to read passages in the English cases, dealing as they do with different legislation and different circumstances, as necessarily controlling the procedure to be adopted by the respondent in the present investigation. But in my view, the respondent has not done so. If the correspondence be given a fair reading, the plain result is that he has not fallen into such an error. Further, at this stage of the investigation, it would be quite wrong for the respondent to circumscribe his future conduct by giving the unqualified undertaking sought of him in the letter of 11 October 1990."
Thus his Honour was satisfied that the provision of adverse material, based on the investigator's assessment of what material was of that character, was sufficient. By that process in that matter, procedural fairness was afforded to those under investigation and in respect of whom adverse findings might be made in a report.
I was not referred to, nor am I aware of, any authority where a denial of procedural fairness arose because an investigator made the assessment of what material might result in adverse conclusions or comment and then invited a comment on that material from the person affected. Different considerations may arise where the decision maker disavows being influenced by material which is adverse: see Youseff v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 550, Minister for Immigration, Local Government and Ethnic Affairs v Pashmforoosh (1989) 18 ALD 77 and Roderick v Australian and Overseas Telecommunications Corporation Ltd (1992) 39 FCR 134 at 145.
In the present case, the ASC appears to have followed a process where, with some care, it has identified material that might result in adverse findings of fact in the final report and conclusions based on them and has then provided both the conclusion and findings in a draft form and the primary material, in so far as it is transcript of an examinee, upon which the findings will be based. In this context, the observations of Wilcox J in Bond v Australian Broadcasting Tribunal (1988) 19 FCR 494 at 512 are apt:
"The question whether, in a particular case, an investigator has left a party "in the dark" as to the risk of an adverse finding being made upon a particular subject must depend upon the whole of the circumstances of the relevant inquiry. It is a question not capable of determination by the application of rules devised for the conduct of a different type of proceeding. Rarely will it be appropriate for the court to intervene upon this ground prior to the conclusion of an inquiry, and then only where it is clear that, left to its own devices, the Tribunal will leave a party in doubt as to the nature of the inquiry or the risk which it faces. That is not this case. Counsel for the Tribunal, who are the counsel assisting the Tribunal at the inquiry, expressly accept that their client has an obligation to bring to the notice of the applicants any provisional views which it may form, upon relevant matters of fact or as to the consequences of any such findings, in any case where the omission to do so might expose the applicants to an adverse finding upon an unforeseen issue, or in some other way might deprive them of an opportunity to deter the Tribunal from making that finding."
The applicants have failed to make out the ground in s6(1)(a) of the ADJR Act. I dismiss the application with costs including the costs of the hearing of the interlocutory application.
I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.
Associate: ........ ........ ......
Dated: 24 September 1996
APPEARANCES
Counsel for the Applicants: Mr G Corr
Solicitor for the Applicants: Aboriginal Legal Service Ltd
Counsel for the Respondents: Mr A Emmett QC with
Mr C Erskine
Solicitor for the Respondents: Australian Government Solicitor
Dates of Hearing: 16 September 1996
Date of Judgment: 24 September 1996
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