Australian Securities and Investments Commission v Westpac Banking Corporation (No 2)
[2021] FCA 1007
•26 July 2021
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) [2021] FCA 1007
File number: NSD 386 of 2021 Judgment of: LEE J Date of judgment: 26 July 2021 Catchwords: PRACTICE AND PROCEDURE – provision of transcripts procured through cooperation between the Australian Securities and Investments Commission (ASIC) and the Hong Kong Securities and Futures Commission (SFC) pursuant to a standard discovery order – where ASIC has provided undertaking to SFC to use transcripts in a certain way – whether Westpac should give an undertaking to similar effect upon receipt of the transcripts – sufficient for the transcripts to be produced to the Court and subject to conditions upon access Legislation: Australian Securities and Investments Commission Act 2001 (Cth) s 12CB
Corporations Act 2001 (Cth) ss 1043A and 912A(1)
Federal Court Rules 2011 (Cth) r 20.14
Securities and Futures Ordinance (Hong Kong) cap 571 s 186
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 11 Date of hearing: 26 July 2021 Counsel for the Plaintiff: Dr C Button QC with Ms C van Proctor Solicitor for the Plaintiff: Holding Redlich Counsel for the Defendant: Mr M Darke SC with Mr J Williams SC and Mr J Burnett Solicitor for the Defendant: Allens Solicitor for PMC Treasury Limited: Squire Patton Boggs ORDERS
NSD 386 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
PlaintiffAND: WESTPAC BANKING CORPORATION ACN 007 457 141
DefendantPMC TREASURY LIMITED
Interested Person
ORDER MADE BY:
LEE J
DATE OF ORDER:
26 JULY 2021
THE COURT ORDERS THAT:
Further and better particulars
1.On or before 29 July 2021, ASIC is to provide Westpac with:
(a)the trading data (other than trading data obtained from third parties) evidencing the trades identified in Part A and Part D of Annexure A to the originating application filed 5 May 2021; and
(b)the trading data obtained from third parties evidencing the trades identified in Part B and Part C of Annexure A to the Originating Application filed 5 May 2021 – in respect of which orders 11 to 17 of these Orders are to apply.
2.On or before 29 July 2021, ASIC is to provide Westpac with any response to Westpac’s further request for particulars of the concise statement, dated 5 July 2021.
3.On or before 6 August 2021, Westpac is to provide ASIC with a response to ASIC’s request for particulars of the response to the concise statement.
Discovery of further transcripts and records of interviews/examinations
4.By 4 pm on 29 July 2021, PMC Treasury Ltd (PMC) is to notify Westpac of the parts of each transcript of voluntary interview of persons who were employees of PMC as at October 2016 (which ASIC has produced to Westpac), which it identifies as being confidential and the basis for the claim for confidentiality (PMC Confidential Information), with orders 3 to 5 of the Orders dated 16 June 2021 to apply to any PMC Confidential Information.
5.As soon as practicable, but by no later than 4pm on 30 July 2021, ASIC to provide Westpac with:
(a)with the exception of any documents or parts of documents that are the subject of a claim for legal professional privilege and the transcript of the examination conducted by the Hong Kong Securities and Futures Commission (SFC) on 2 November 2020 (SFC Transcript), transcripts of examinations, or in the absence of transcripts, any other contemporaneous records of interviews (together with all documents referred to therein) conducted as part of the investigation which resulted in the proceeding with the individuals identified in the letter sent from Allens to Holding Redlich on 2 July 2021; and
(b)all transcripts of examinations, or interviews, of persons conducted in relation to ASIC’s investigation which resulted in this proceeding (Investigation), including examinations or interviews conducted by foreign regulators (at the request of, or attended by, representatives of ASIC) together with copies of documents referred to in those examinations or interviews, except for the SFC Transcript.
6.ASIC is to provide notice of orders 5 to 8 and 13 to 17 in accordance with order 7 to:
(a)all persons in respect of whom examinations or interviews were conducted and ASIC is required to produce documents by reason of order 5 (Relevant Examinees);
(b)each Relevant Examinee’s employer as at October 2016 (except where the employer is Westpac); and
(c)each person who produced to ASIC the documents that are being produced in accordance with order 5 (except where the producing party is Westpac) (Third Parties).
7.The notice to be given pursuant to order 6 is to occur:
(a)forthwith in respect of those Relevant Examinees and Third Parties in relation to whom ASIC has existing contact details; and
(b)as soon as practicable (but no later than 30 July 2021) in respect of the Relevant Examinees and Third Parties in relation to whom ASIC does not have existing contact details.
8.Any Relevant Examinee or Third Parties seeking the imposition of confidentiality obligations, in respect of any documents or parts of documents that ASIC is required to provide to Westpac in accordance with order 5, is to notify ASIC and Westpac within 5 business days of receiving the notice under order 7 (Third Party Notification). The Third Party Notification must identify the specific documents or parts of documents over which it seeks confidentiality obligations (Third Party Confidential Information).
Discovery
9.On or before 25 August 2021, Westpac is to provide standard discovery, excluding documents produced by Westpac to ASIC in the course of ASIC’s Investigation. Westpac is not required to itemise in Part 2 of its list of documents each document in respect of which privilege from production is claimed, but must describe the nature of the documents in respect of which privilege from production is claimed.
10.Subject to order 12, ASIC is required to provide standard discovery, including documents which ASIC believes are or may be in Westpac's possession but excluding documents produced by Westpac to ASIC in the course of its Investigation, in accordance with order 2 of the orders made on 19 May 2021:
(a)in tranches on a fortnightly basis commencing no later than 4pm on 29 July 2021; and
(b)with the final tranche to be produced no later than 4pm on 28 September 2021.
11.When providing discovery of any third party documents in accordance with order 10, ASIC will notify the party who produced those documents to ASIC (Third Party) of the discoverable documents, these orders and order 2 made on 19 May 2021 (ASIC Notice). ASIC will provide a copy of the ASIC Notice to Westpac on the same day it is provided to the Third Party.
12.Any Third Party seeking the imposition of confidentiality obligations in respect of any documents or parts of documents identified in the ASIC Notice is to notify ASIC and Westpac within 10 business days of receiving the ASIC Notice (Third Party Notification). The Third Party Notification must identify the specific documents or parts of documents over which it seeks confidentiality obligations (Third Party Confidential Information) and the basis of its claim.
13.Subject to further order, if ASIC or Westpac intends to disclose any of the Third Party Confidential Information to a person other than to ASIC staff and members, a barrister or external solicitor (or their support staff) engaged for the purposes of this proceeding or an internal solicitor who holds a current practicing certificate, that person must:
(a)have the legal consequences of giving an undertaking to the Court explained to them by a solicitor for either ASIC or Westpac (depending upon the identity of the party providing the information); and
(b)following such advice, have executed a confidentiality undertaking substantially in the form of Annexure A (in the presence of the solicitor providing the explanation).
14.If ASIC or Westpac propose to file a document with the Court which discloses the contents of the Third Party Confidential Information and which can be inspected in accordance with FCR 2.32(2), that party will provide notice to the Third Party (as applicable) (Second Notification).
15.Any Third Party or client of a Third Party seeking the imposition of a suppression order in respect of any documents or parts of documents identified in the Second Notification is to make any application to the Court and serve that application on ASIC and Westpac at least 2 weeks prior to date of the pre-trial case management conference in order 32 (Third Party Application). The Third Party Applications must identify the specific documents or parts of documents over which a suppression order is sought and the basis for the claim.
16.The Third Party Application will be heard and determined by the Court at the pre-trial case management hearing referred to in Order A.32 below or as otherwise listed by the Court.
17.The Third Parties have liberty to apply in respect of Orders 6 to 16 above only.
Statement of Agreed Facts
18.On or before 18 August 2021, ASIC is to provide Westpac with a proposed statement of agreed facts.
19.On or before 8 September 2021, Westpac is to provide ASIC with a response to ASIC’s proposed statement of agreed facts
20.Following conferral between the parties with a view to reaching agreement on a proposed statement of agreed facts, by 29 September 2021, the parties are to file a statement of agreed facts to the extent that any agreement has been reached.
Lay Evidence
21.On or before 10 November 2021 ASIC is to file and serve:
(a)witness statements of all lay witnesses on which it intends to rely; and
(b)an index of a tender bundle in chief of all documents which it intends to tender at the hearing of its claim.
22.On or before 4 March 2022, Westpac is to file and serve:
(a)witness statements of all lay witnesses on which it intends to rely; and
(b)an index of a tender bundle in chief of all documents which it intends to tender at the hearing of ASIC's claim.
23.On or before 8 April 2022 ASIC is to file and serve:
(a)reply witness statements of any lay witnesses upon which it intends to rely in reply; and
(b)an index of a tender bundle in reply of the additional documents upon which it intends to rely at the hearing.
24.On or before 17 June 2022, the parties provide to the Associate to Justice Lee:
(a)a document specifying the disputed or controversial matters in the witness statements upon which the parties propose evidence be given orally in chief;
(b)in the event the parties are unable to reach agreement as to the contents of the document to be prepared in accordance with order 24(a), one version of the draft document with the extent of the disagreement identified in mark-up together with brief submissions explaining the reasons for the disagreement.
Expert Evidence
25.On or before 1 September 2021, each party is to notify the other party of the topics and fields of expertise on which they intend to call expert evidence and the identity of the experts.
26.On or before 30 November 2021, ASIC is to file and serve any expert evidence.
27.On or before 31 March 2022, Westpac is to file and serve any expert evidence.
28.Pursuant to 37P(2) of the Federal Court of Australia Act 1976 (Cth):
(a)by 4pm on 8 April 2022, the parties are to confer and seek to reach agreement as to the form of questions and directions to be provided for the Joint Expert Conference and to thereafter provide to the Associate to Justice Lee a draft order listing questions which are proposed to be dealt with by the Joint Expert Conference with any disputed questions to be the subject of a hearing on a date convenient to the Court after 8 April 2022.
(b)Mr Edward B Cowpe, barrister, be appointed by the Court to act as a facilitator of the Joint Expert Conference (Facilitator).
(c)The experts relied upon by the parties are to:
(i)subject to any hearing as contemplated by order 28(a), attend the Joint Expert Conference by no later than 6 May 2022 and continue the Joint Expert Conference as directed by the Facilitator, until the joint report is complete;
(ii)address the list of questions as ordered by the Court;
(iii)provide a joint report addressing the list of questions ordered by the Court and any other matters which in the experts' opinion needs to be addressed;
(iv)prepare the joint report, to the extent possible, in plain English and which explains the reasoning of the experts in as concise a manner as practicable and which does not incorporate, by reference, sections from prior reports of the experts in the joint report; and
(v)provide the joint report to the Court by 10 June 2022 (Joint Expert Report), after which time it then will be provided to the parties by the Court.
(d)The Joint Expert Conference is to be conducted as follows:
(i)in accordance with the directions of the Facilitator;
(ii)each expert must exercise their independent judgment in relation to the Joint Expert Conference, and is not to act upon any instruction or request to withhold or avoid agreement;
(iii)each expert must endeavour to reach agreement with the other expert(s) on any issue in dispute between them, or failing agreement, endeavour to identify and clarify, with precision, the basis of disagreement on the issues which are in dispute.
(e)The parties and their lawyers are not to attend the Joint Expert Conference and must not have any communication with the experts in relation to the Joint Expert Conference or the joint report (with the intention that all logistical arrangements as to notification of the details of the Joint Expert Conference are to be made by the Facilitator).
29.Following the service of Joint Expert Report, the parties shall:
(a)confer and prepare a consolidated joint index of all documents in the index served by ASIC pursuant to order 21(b), the index served by Westpac pursuant to order 22(b) and ASIC's reply index pursuant to order 23(b) (Consolidated Index), to be filed by 24 June 2022;
(b)Within 7 days of (a), notify any Third Party whose Third Party Confidential Information is contained in a document in the Consolidated Index or in the Joint Expert Reports (Third Notification);
(c)Any Third Party or client of a Third Party seeking the imposition of a suppression order in respect of any documents or parts of documents identified in the Third Notification is to make any application to the Court and serve that application on ASIC and Westpac at least 2 weeks prior to the date of the pre- trial case management conference in order 32 (Third Party Application). The Third Party Applications must identify the specific documents or parts of documents over which a suppression order is sought and the basis for the claim.
Other pre-trial orders
30.By 1 July 2022, counsel briefed to appear at the hearing confer and attempt to agree on and produce:
(a)a document entitled "Agreed Background Facts" which, in narrative form, identifies relevant facts in respect of which there is agreement or no contest between the parties;
(b)a document entitled "Factual and Legal Issues for Determination" (Issues Document) which document:
(i)identifies each substantive contested factual issue in respect of which the parties consider it is necessary for the Court to make findings (Principal Contested Facts in Issue); and
(ii)identifies each contested legal issue in respect of which the parties consider it is necessary for the Court to determine at the hearing, cross referenced to the pleadings (Contested Legal Issues).
(c)a template for opening submissions (Submission Template), which document, when completed will:
(i)provide an overview of each party's case in summary form (Part A);
(ii)identify that party's summary contentions in relation to each of the Principal Contested Facts in Issue to the extent they relate to that party (Part B);
(iii)identify that party's summary contentions in relation to each of the Contested Legal Issues to the extent they relate to that party (Part C).
31.By 8 July 2022, the parties provide to the Associate to Justice Lee:
(a)the agreed documents prepared in accordance with order 30; or
(b)in the event the parties are unable to reach agreement as to the contents of any of the documents to be prepared in accordance with order 30, one version of the draft agreed document with the extent of the disagreement identified in mark-up together with brief submissions explaining the reasons for the disagreement.
32.There be a pre-trial case management hearing of the type referred to in Central Practice Note CPN-1 at 10:00am on 15 July 2022, which will deal with the matters referred to in paragraph 13.3 of the Central Practice Note, resolve any disagreement notified in accordance with orders 24(b) and 30(b) and at which any final interlocutory applications will be heard.
33.8 weeks prior to the commencement of the final hearing, ASIC file and serve their opening submissions (and provide a Microsoft Word version of those submissions by email to the Associate to Justice Lee).
34.6 weeks prior to the commencement of the final hearing, Westpac file and serve their opening submissions (and provide a Microsoft Word version of those submissions by email to the Associate to Justice Lee).
35.5 weeks prior to the commencement of the final hearing, ASIC provide their reply to Westpac's opening submissions, by way of including, in a revised opening submission, any material in reply and file and serve their revised opening submissions (and provide a Microsoft Word version of the revised opening submissions by email to the Associate to Justice Lee).
36.The submissions filed by the parties in accordance with these Orders are to follow the Submissions Template, are to refer to any authorised report of any cases referred to or cited (or in the absence of an authorised report, any unauthorised report and the medium neutral citation), and are not to include footnotes.
37.4 weeks prior to the commencement of the final hearing, the parties deliver to the Associate to Justice Lee a Court Book which:
(a)as Part A contains the final version only of the Concise Statement, Response to the Concise Statement and any particulars not included in those documents to be relied upon, and the final versions of the Agreed Background Facts and the Issues Document;
(b)as Part B contains the final versions of the opening submissions of each party (updated to contain cross references to Part C of the Court Book to the extent a document is the subject of reference);
(c)as Part C contains, in chronological order, one paginated copy only of the documents for tender notified by each party (being only documents to which a party proposes to refer to in submissions) and, in this regard, if only part of a document is to be relied upon, only that part of the document should be reproduced (additionally, in relation to any email, the email "chain" should not be reproduced but only one copy of each individual email communication should be extracted and then placed in the bundle chronologically by reference to when it was sent);
(d)as Part D contains any of the lay affidavit material proposed to be relied upon by any party (without any annexures or exhibits) and, to the extent the affidavit refers to any document, a cross reference to Part C of the Court Book;
(e)as Part E contains any of the expert affidavit and report material proposed to be relied upon by any party (without any annexures or exhibits) and, to the extent the affidavit and report material refers to any document which is to be referred to by a party in submissions, a cross reference to Part C of the Court Book; and
(f)as Part F contains any Joint Report(s) of an expert or any report of any referee adopted (or any report of any referee, which any party proposes be adopted by the Court at the trial).
38.The Court Book must contain double sided printing and, to the extent filed Court documents are reproduced, the Notice of Filing form is to be reproduced at the end of the relevant Court document.
39. 3 weeks prior to the commencement of the final hearing, each party notify each other party of the objections which the notifying party has to material contained in Parts C, D and E of the Court Book and, in respect of each objection, the grounds of the objection.
40. By 1 week prior to the commencement of the final hearing, junior counsel briefed by each party confer and endeavour to resolve all objections.
41. 2 days prior to the commencement of the final hearing, ASIC file, serve and provide to the Associate to Justice Lee a consolidated list of objections that contains a list of those objections that are pressed and, in respect of each such objection, the grounds of the objection and the response to those grounds provided by the counter-party.
Hearing
42.The hearing listed to commence on 7 February 2022 with an estimate of 10 weeks be vacated.
43.The matter be listed for hearing commencing on a date to be fixed by the Court.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Delivered ex tempore, revised from the transcript)
LEE J:
In this proceeding, an order has been made requiring the Australian Securities and Investments Commission (ASIC) to give standard discovery pursuant to rule 20.14 of the Federal Court Rules 2011 (Cth).
In compliance with its discovery obligations, ASIC proposes to give discovery of a Transcript recording the statements of a person (Statement Maker) in respect of whom it made a request for assistance to the Hong Kong Securities and Futures Commission (SFC). The request was to compel the Statement Maker to give explanations, statements, further particulars or answers to questions in relation to the then current investigation into possible breaches of ss 1043A and 912A(1) of the Corporations Act 2001 (Cth) and s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth).
On the material before the Court, it is apparent that the SFC decided, pursuant to s 186 of the Securities and Futures Ordinance (Hong Kong) cap 571 (SFO), and the International Organization of Securities Commissions (IOSCO) “Enhanced Multilateral Memorandum of Understanding” (EMMOU), to lend assistance to ASIC to compel the Statement Maker to attend before an investigator of the SFC and give explanations, statements, further particulars or answers to questions in relation to the matters under investigation by ASIC.
Further, it is also apparent that if a person is required under the relevant provisions of the SFO to provide information as required by an authorised person, answers could be sought which might abrogate any privilege against self-incrimination of the person making the statement. The relevant regime in Hong Kong appears to be that the authorised person is not to provide evidence of the relevant answers to an authority, regulatory organisation or companies’ inspector outside Hong Kong for use in criminal proceedings against the maker of the statement in another jurisdiction. I am informed that, understandably, the SFC wishes to ensure that any transcripts provided to ASIC are dealt with in accordance with the provisions of Hong Kong domestic law in this regard.
Against this background, ASIC, in consideration of the SFC providing assistance to it, gave an undertaking through one of its “Senior Specialist Lawyers, Markets Enforcement” (whom I presume is an employed solicitor at ASIC), over a year ago. That undertaking was in the following terms:
Undertaking provided by Australian Securities and Investments Commission in connection with the provision of explanations or statements or further particulars or answers by [the Statement Maker]
…
In consideration of the SFC providing assistance to ASIC, ASIC undertakes to the SFC as follows:
1. In respect of each Statement, ASIC shall only use it for the following purposes:
a.for investigation into possible breaches of securities laws and/or corporations laws of Australia;
b.for consideration of whether to institute proceedings of any kind in relation to possible breaches of securities laws and/or corporations laws of Australia; or
c.for use in proceedings in relation to possible breaches of securities laws and/or corporations laws of Australia, but does not include any criminal proceedings directed against the Statement Maker, whether singly or jointly with another person, or proceedings where any punitive sanction is sought against the Statement Maker.
2.Where ASIC intends to use any Statement for a purpose that is not listed in paragraph 1 above, it shall seek the SFC’s prior written consent.
3.In respect of each Statement, ASIC may only disclose it to any person not employed by or acting on behalf of ASIC for a purpose set out in paragraph 1 above.
4.Where ASIC intends to make such disclosure, it shall seek the SFC’s prior written consent, unless such disclosure falls within the permissible uses stipulated in Article 6 of the EMMOU.
5.Where ASIC discloses a Statement pursuant to paragraph 3 above, it shall ensure that prior to the disclosure, an undertaking is given by the recipient(s) to the effect that:
a.the recipient(s) will not make onward disclosure of the Statement to any third party;
b.the recipient(s) will only use the Statement for the purpose(s) specified in paragraph 1 above, and comply with any conditions or restrictions specified by the SFC from time to time; and
c.the recipient(s) will not use the Statement against the Statement Maker in any criminal proceedings or any proceedings where a punitive sanction is sought against the Statement Maker.
(Bolding and underline in original).
Accordingly, when the matter came before me today, ASIC sought an order that it would only be obliged to provide the Transcript pursuant to its discovery obligations upon the provision of the following undertaking being given by Westpac:
In consideration of [ASIC / Westpac] providing me with a copy of the transcript of the examination conducted by the Hong Kong Securities and Futures Commission of [the Statement Maker] on 2 November 2020 (Transcript), I [name] of [address], undertake to the Australian Securities and Investments Commission that:
1.I will only use the Transcript for the purpose of the Proceedings.
2.I will comply with any conditions or restrictions specified by the SFC from time to time.
3.I will not disclose the Transcript to any other person, including any person employed by Westpac or representing Westpac in these proceedings.
4.I will not use the Transcript against [the Statement Maker] in any criminal proceedings or any proceedings where a punitive sanction is sought against [the Statement Maker].
I indicated to senior counsel appearing on behalf of ASIC that notwithstanding it is apparent that ASIC is seeking to be faithful to the undertaking that it provided to the SFC, I am not prepared to make an order requiring production of the Transcript to Westpac on the conditions proposed in the undertaking. Apart from anything else, it would be quite wrong for this Court, as a condition of the provision of documents to a party in litigation or a third party, to require that party, by way of an undertaking to this Court, to comply with unspecified conditions or restrictions of a foreign body that it might impose “from time to time”. It is a tad surprising that it was thought appropriate by ASIC to provide an understanding in such a form when it knew it would be seeking a mirror undertaking to be given by any person to whom the Transcript is provided. Is it really to be suggested by ASIC that it is appropriate for an expert or other witness shown the Transcript being at risk of contempt of this Court by reason of that expert or other witness failing to comply with an undertaking, which purports to require future compliance with conditions potentially imposed unilaterally by a foreign body? All of this might be dismissed as unrealistic, but undertakings given to this Court are solemn things and should not be sought, or be given, unnecessarily or in inappropriately expansive terms.
I accept, however, that this issue does raise matters which transcend this proceeding. Obviously enough, there is a clear public interest in ASIC securing the cooperation of overseas authorities and ensuring that the legitimate expectations of those lending assistance to ASIC will be respected by not only those to whom information is provided, but also by the Court which, in receiving such information, is likely to be assisted in quelling controversies.
Rather than requiring Westpac to accept an undertaking which, in my view, is inappropriate, the preferable course is to make an order requiring production of the Transcript to the Court. This means that access to the Transcript will not be given to any person unless approved, and if approved, my intention is that such access will be conditional. Indeed, I propose to make plain the substantive legal obligation which would have existed in any event if the Transcript had been provided by way of discovery. That is, the Transcript will only be used for the purpose of this proceeding and cannot be used in any criminal proceeding or proceeding where a private sanction is sought against the Statement Maker. I will also require that the Transcript not be disclosed to any person other than for the purpose of this proceeding. An order of this type seems to me to protect adequately the legitimate interests of the SFC in ensuring that there is no risk that the Transcript might be used inappropriately.
ASIC has requested that I defer making such an order to allow there to be a discussion between ASIC and the overseas regulator. There is no imminent hearing date, nor is there any prejudice to Westpac, in allowing this to occur. Indeed, this will ensure there is no misunderstanding that this Court and ASIC are prepared to do what they can to make sure the Transcript is used only for legitimate purposes within this jurisdiction.
I note that the orders that accompany these revised reasons are those ultimately entered in the light of all matters determined at the interlocutory hearing on 16 June 2021.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee. Associate:
Dated: 24 August 2021
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