Australian Securities Commission v Dalleagles Pty Ltd

[1992] FCA 444

Re: AUSTRALIAN SECURITIES COMMISSION
And: DALLEAGLES PTY LTD; LAWRENCE ROBERT CONNELL and ELIZABETH JOAN CONNELL
No. WA G3017 of 1991
FED No. 444
Corporations
(1992) 10 ACLC 1104
(1992) 8 ASCR 109
(1992) 108 ALR 305
(1992) 27 ALD 281

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Corporations - investigations - notice to produce documents - documents in custody of solicitors - whether in legal possession of clients recipients of notices - whether claim of legal professional privilege available - whether issue of notice and compliance proceedings abuse of process - related and antecedent Supreme Court proceedings.

Australian Securities Commission Act 1989

Companies (Western Australia) Code

The Companies (Acquisition of Shares) (Western Australia) Code

The Securities Industry (Western Australia) Code

The Companies (Queensland) Code

The Companies (Acquisition of Shares) (Queensland) Code

The Companies (New South Wales) Code

The Securities Industry (New South Wales) Code

The Companies (Victoria) Code

The Companies (Acquisition of Shares) (South Australia) Code

Administrative Decisions (Judicial Review) Act 1977

Corporations Act 1989 (Cwth) ss.5, 6

The Corporations (Western Australia) Act 1990 (WA)

Towers and Co. Ltd v. Gray (1961) 2 QB 351

Sullivan v. Earl of Caithness (1976) 2 WLR 361

SA Brewing Holdings Ltd v. Baxt (1989) 89 ALR 105

Greenough v. Gaskell (1833) 1 My and K. 98

Grant v Downs (1976) 135 CLR 674

Sorby v The Commonwealth (1983) 152 CLR 281

Baker v Campbell (1983) 153 CLR 52

Federal Commissioner of Taxation v. Citibank Limited (1989) 85 ALR 588

Corporate Affairs Commission of New South Wales v Yuill (1991) 172 CLR 319

O'Reilly v The Commissioners of the State Bank of Victoria (1983) 153 CLR 1

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

HEARING

PERTH

#DATE 24:6:1992

Counsel for the Applicant: Mr C. Zelestis QC and Ms K. Choules

Solicitors for the Applicant: Kulandra Ratneser, Regional General

Counsel for Western Australia, Australian Securities Commission

Counsel for the Respondent: Mr W. Martin

Solicitors for the Respondent: Jackson McDonald

ORDER

THE COURT ORDERS THAT:

1. Each of the first, second and third respondents comply with the applicant's notices requiring the production of books dated 11 November 1991 within seven (7) days of the date of this order provided that production of the documents into the custody of the Court until further order shall be sufficient compliance for the time being.

2. The cross-claim be dismissed.

3. The respondents pay the applicant's costs of the application and the cross-claim.

4. There be liberty to apply on the disposition of the documents after their production to the Court.

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

JUDGE1

Factual Background

Dalleagles Pty Ltd is a company incorporated in the State of Western Australia and is trustee of a trust of which Lawrence Robert Connell and his wife, Elizabeth Joan Connell, are beneficiaries. Jackson McDonald is a firm of solicitors which acts for the company and the Connells and has acted for them since at least March 1989. Prior to that time and through 1988 another legal firm, L. Musca and Co., carried on legal work for them which included the provision of advice and opinions and the drawing up of commercial documents. In carrying out that work the firm brought into existence related letters, notes, memoranda and other papers. Some of these documents were kept in a file which bore the number 16370. In March 1989 L. Musca and Co. delivered that file and other documents to Jackson McDonald who, since that time, have acted for the company and the Connells. They still have the file and other documents on their premises.

1. On 22 February 1991 the Regional Director of the Australian Securities Commission in Perth, Mr M.J. Allen, acting as a delegate of the Commission, made a determination under s.13(3) of the Australian Securities Commission Act 1989 ("the ASC law"). After considering the report of Mr M.J. McCusker QC, an inspector appointed under the former Companies (Western Australia) Code, to investigate the affairs of Rothwells Ltd, he determined that there was reason to suspect that contraventions of various statutes may have been committed in relation to the affairs of Rothwells Ltd between 1 January 1983 and 31 December 1988. He also suspected contraventions in relation to the affairs of various other corporations insofar as they related to or were connected with the affairs of Rothwells in that period. The statutes thought to have been contravened were the Companies (Western Australia) Code, The Companies (Acquisition of Shares) (Western Australia) Code, The Securities Industry (Western Australia) Code, The Companies (Queensland) Code, The Companies (Acquisition of Shares) (Queensland) Code, The Companies (New South Wales) Code, The Securities Industry (New South Wales) Code, The Companies (Victoria) Code and The Companies (Acquisition of Shares) (South Australia) Code. The various corporations referred to were listed in Schedule A to the determination and included Dalleagles Pty Ltd and Katanning Holdings Pty Ltd.

2. On 22 May 1991, Paul Raymond Frankel, an investigator with the Australian Securities Commission, issued a notice under s.30 of the ASC law to Neil Gentilli, a partner in the firm of Jackson McDonald. The notice was served on the same day. It was expressed to relate to:
   

"... an investigation of the affairs of Katanning Holdings Limited... in so far as they relate to or are connected with the affairs of Rothwells Limited between 1 January 1983 and 31 December 1988."

It required the production of documents described as:

"1. L. Musca and Co. File No's 1644, 16320, 16411 and 16370 with respect to the funding and purchase by Katanning Holdings Ltd of shares in Rothwells Ltd from Bond Brewing Investments Pty Ltd in October 1988.

2. All other L. Musca and Co. files with respect to the funding and purchase by Katanning Holdings Ltd from Bond Brewing Investments Pty Ltd in October 1988 and with respect to the loan of moneys to Katanning Holdings Ltd in October 1988 by L.R. Connell and/or associated entities."

Jackson McDonald produced documents in answer to this notice on 30 May 1991, but retained others, including the documents which are the subject of these proceedings.

1. On 10 June 1991, Frankel issued a further notice, this time directed to the firm Jackson McDonald, seeking production of the same documents as those specified in the notice issued to Mr Gentilli in person. It relied upon s.33 of the ASC Law rather than s.30. On the same day the Regional Commissioner varied his determination of 22 February 1991 by a further determination extending its scope to "take in the affairs of Rothwells Ltd between 1 January 1989 and 31 July 1989".

2. On 12 June 1991 Dalleagles, the Connells and Jackson McDonald commenced proceedings in the Supreme Court in action number 1950 of 1991 to determine whether the documents which had not been produced in answer to the first notice were privileged and whether they were required to be produced in answer to the second notice.

3. On 4 July 1991, a set of three s.33 notices was issued to Dalleagles and the Connells by Robert Byrne, an employee of the Commission. Each of these required the production of 25 listed documents described in the notice as:
   

"Taken from L. Musca and Co. file No's 1644, 16411 and 16370 with respect to the funding and purchase by Katanning Holdings Ltd of shares in Rothwells Ltd from Bond Brewing Investments Pty Ltd in October 1988, and L. Musca and Co. files with respect to the funding and purchase by Katanning Holdings Ltd from Bond Brewing Investments Pty Ltd in October 1988 and with respect to the loan of moneys to Katanning Holdings Ltd in October 1988 by L.R. Connell and/or Associated entities, being those books as described in items 1 to 25 listed below:..."

These documents included those which were the subject of the notices to Gentilli and Jackson McDonald. On 8 July, Dalleagles and the Connells instituted further proceedings in action number 2111 of 1991 in the Supreme Court of Western Australia to determine the question of privilege in relation to such of the documents referred to in the notice as had been retained by Jackson McDonald in answer to the earlier notice to Mr Gentilli. However on 10 July the Commission advised the company and the Connells that it would take no action to enforce the notices of 8 July. This advice was contained in a letter sent to Jackson McDonald and letters in similar, although not identical terms, to the recipients of the notices. The letter sent to Jackson McDonald on 10 July 1991 was signed by Soraya Mir and was in the following terms:

"I refer to the notices issued to Mr L.R. Connell, Mrs E.J. Connell and Dalleagles Pty Ltd by Mr Robert Byrne on 4 July 1991, requiring production of certain files of L. Musca and Co. relating to the affairs of Katanning Holdings Limited.

As agreed between Mr Gentilli and Mr Ainslie of Malleson Stephen Jaques on 9 July 1991, the Commission will take no further action to enforce these notices and it may be assumed by Mr L.R. Connell, Mrs E.J. Connell and Dalleagles Pty Ltd that they are not required to comply with these Notices. You will find enclosed copies of letters sent to Mr L.R. Connell, Mrs E.J. Connell and Dalleagles Pty Ltd confirming the above."

1. On 11 November 1991, Mr Frankel issued further s.33 notices to Dalleagles and the Connells. The terms of each of the notices were identical. They were expressed to relate to an investigation of:
   

"1. The affairs of Rothwells Ltd between 1 January 1983 and 31 July 1989; and

2. The affairs of Katanning Holdings Limited and Dalleagles Pty Ltd in so far as they relate to or are connected with the affairs of Rothwells Ltd between 1 January 1983 and 31 December 1988."

The notices were delivered to Mr Gentilli at the offices of Jackson McDonald on 11 November 1991. They required production of the books specified in them at 10 am on Thursday, 14 November 1991. On 12 November 1991, Mr Gentilli informed Mr Frankel by telephone that he had instructions to accept service of the notices on behalf of Dalleagles and Mr Connell and on 13 November 1991 that he had instructions to accept service on behalf of Mrs Connell. A letter dated 13 November 1991 was also sent from Jackson McDonald to Mr Frankel in the following terms:

"We confirm our telephone advice that we have accepted service of these notices on behalf of all three parties to whom they are directed. As foreshadowed, we have instructions to commence proceedings to determine whether the notices are effective.

We anticipate being able to institute these proceedings by Monday 18 November, 1991 at the latest. We will contact Mr Warnick regarding service as soon as the writ is ready for service."

However, on 14 November 1991 Mr Leigh Warnick, a solicitor, wrote to Jackson McDonald on behalf of the Australian Securities Commission acknowledging receipt of the letter of 13 November and confirming telephone advice that the Commission proposed to use the procedure prescribed in s.70 of the ASC law to request the Federal Court to:

"... inquire into your clients' failure to comply with the notices, and to request an order from the Court that the notices be complied with within a period to be fixed by the Court."

No documents were produced in answer to the notices of 11 November.

1. On 15 November 1991, Mr Frankel signed certificates pursuant to sub-s.70(2) of the ASC law in respect of the company and the Connells. The certificates were in like terms. That relating to Dalleagles was as follows:
   

"The Australian Securities Commission, being so satisfied, hereby certifies that DALLEAGLES PTY LTD has, without reasonable excuse, failed to comply with a requirement made under Part 3 of the ASC Law in that it has, without reasonable excuse, failed to produce certain books pursuant to and described in a notice dated 11 November 1991 under s.33 of the ASC Law requiring the production of the books."

The present proceedings were instituted by the Commission on the same day.

The Present Proceedings

1. By its application filed in this Court on 15 November 1991, the Commission requests that the Court "inquire into this case" and claims an order that Dalleagles and the Connells comply with the notices of 11 November 1991 within 7 days of the date of such order. A claim is also made for costs. Various directions hearings and interlocutory motions followed upon the filing of the application. On 10 February 1992, leave was given to Dalleagles and the Connells to cross-claim against the Commission and Mr Frankel for relief under the Administrative Decisions (Judicial Review) Act 1977 and time was extended for that purpose. On 25 February 1992, a notice was filed in the cross-claim requiring the Commission and Frankel to give discovery of documents within 10 days after service. On 27 February 1992, for reasons then published, it was ordered that neither was required to give discovery pursuant to the notice. The application was listed for hearing on 11 May 1992. The hearing proceeded upon an agreed statement of facts and affidavit evidence from Mr Gentilli, Mr Frankel and Miss Choules, a solicitor acting for the Commission. None of the deponents was cross-examined.
   The Issues in the Case

2. Dalleagles and Mr and Mrs Connell contend that they should not be required to act upon the notices of 11 November 1991 because:
   

1. The documents although in the custody of the respondents' solicitors are not in the possession of the respondents for the purposes of the ASC Law.

2. The documents the subject of the notices are protected by legal professional privilege which constitutes a reasonable excuse for their non-production.

3. The circumstances surrounding the issue of the notices including the issue of previous notices and the Supreme Court proceedings mean that the present application is an abuse of process and provides the respondents with a reasonable excuse for non-production of the books.

These contentions reflect the three issues on which the case turns. Before addressing them, it is necessary to sketch out the statutory framework within which they fall to be considered.

Statutory Framework

1. The principal provisions of relevance to the present case are to be found in the Australian Securities Commission Act 1989, as applied to the State of Western Australia. The Act, which is a law of the Commonwealth, applicable in the Australian Capital Territory, provides in s.1C(2) that:
   

"Where a law of a jurisdiction other than the Capital Territory contains provisions corresponding to sections 5 and 6 of the Corporations Act 1989 and also provides for provisions of this Act to apply as law of that jurisdiction, those provisions of this Act, as so applying, are the ASC Law of that jurisdiction."

Sections 5 and 6 of the Corporations Act 1989 (Cwth) apply the Corporations Law and Regulations made under it to the Australian Capital Territory. The Corporations (Western Australia) Act 1990 (WA) has corresponding provisions in ss.7 and 8. Section 7 provides for the Corporations Law to apply as a law of the State and s.8, for the Regulations to so apply. Section 58(1) of the State Act provides that:

"58(1) The ASC Act, other than the excluded provisions:

(a) applies as a law of Western Australia; and

(b) as so applying, may be referred to as the ASC Law of Western Australia."

The excluded provisions are not relevant for present purposes. The ASC Law, save for those elements, therefore applies in Western Australia as a law of the State.

1. Part 3 of the ASC Law contains the bulk of the sections relevant to the present case. Section 13 confers on the Commission the authority to make such investigations as it thinks expedient for the due administration of the national scheme law of Western Australia where it has reason to suspect that there may have been committed:
   

"(a) a contravention of a national scheme law; or

(b) a contravention of a law of the Commonwealth or of a State or Territory, being a contravention that:

(i) concerns the management or affairs of a body corporate; or

(ii) involves fraud or dishonesty and relates to a body corporate, securities or futures contracts."

1. Division 3 of Part III relates to the inspection of books. Section 28 provides, inter alia:
   

"28. A power conferred by this Division (other than sections 29, 35 and 36) may only be exercised:

(a) for the purposes of the performance or exercise of any of the Commission's functions and powers under a national scheme law of this jurisdiction; or

(b) for the purposes of ensuring compliance with a national scheme law of this jurisdiction; or

(c) in relation to:

(i) an alleged or suspected contravention of a national scheme law of this jurisdiction; or

(ii) an alleged or suspected contravention of a law of this jurisdiction, being a contravention that concerns the management or affairs of a body corporate, or involves fraud or dishonesty and relates to a body corporate, securities or futures contracts; or

(d) for the purposes of an investigation under Division 1."

Section 30 authorises the issue to bodies corporate or "eligible persons" of notices to produce books:

"30. The Commission may give to:

(a) a body corporate that is not an exempt public authority; or

(b) an eligible person in relation to such a body corporate;

a written notice requiring the production to a specified member or staff member, at a specified place and time, of specified books relating to the affairs of the body."

Section 33 authorises the issue of a notice to any person to produce a books in that person's possession:

"33. The Commission may give to a person a written notice requiring the production to a specified member or staff member, at a specified place and time, of specified books that are in the first mentioned person's possession and relate to:

(a) affairs of a body corporate; or

(b) a matter referred to in any of paragraphs 31(1)(g) to (m), inclusive, and 32(1)(j) to (p), inclusive."

1. The terms "books" and "eligible person" are defined in s.5 of the ASC Law but that is one of the excluded provisions. These definitions are, however, provided in s.60(1) of the Corporations (Western Australia) Act as follows:
   

"'books' includes:

(a) a register; and

(b) accounts or accounting records, however compiled, recorded or stored; and

(c) a document; and

(d) banker's books; and

(e) any other record of information." "'eligible person' in relation to a person, means a person who:

(a) if the first mentioned person is a body corporate - is or has been an officer of the body within the meaning of a national scheme law or a corresponding previous law; or

(b) in any case:

(i) is or has been an employee, agent, banker, solicitor or auditor of; or

(ii) is acting, or has acted, in any other capacity on behalf of

the first-mentioned person;"

Sub-section 60(2) of the Corporations (Western Australia) Act provides that:

"60(2) Subject to the ASC Law of this jurisdiction, an expression has the same meaning in that Law and in the ASC Regulations of this jurisdiction as in the Corporations Law of this jurisdiction."

That subsection also picks up s. 86 of the Corporations Law applied in Western Australia which provides:

"86. A thing that is in a person's custody or under a person's control is in the person's possession."

1. Where books are produced under a requirement made under Division 3 of Part III, then sub-s.37(1) applies to authorise the person to whom production of the books is made to take possession of them and to inspect and make copies of or take extracts from them. That person may use or permit the use of any of the books for the purposes of a proceeding. Section 63 creates offences relating to failure to comply with requirements under the Act:
   

"63(1) A person shall not without reasonable excuse, fail to comply with a requirement made under s.19, sub-s.21(3), s.30, 31, 32, 33 or 34, sub-s.37(9) or s.38 or 39."

Section 68 provides for privilege against self incrimination. It is not a reasonable excuse for a person to refuse or fail to give information or to sign a record or produce a book in accordance with a requirement made of that person, that the information, signing the record or production of the book as the case may be, might tend to incriminate the person or make the person liable to a penalty.

1. Legal professional privilege is dealt with in s.69:
   

"69(1) This section applies where:

(a) under this Part, Division 3 of Part 10 or Division 2 of Part 11, a person requires a lawyer:

(i) to give information; or

(ii) to produce a book; and

(b) giving the information would involve disclosing, or the book contains, as the case may be, a privileged communication made by, on behalf of or to the lawyer in his or her capacity as a lawyer. 69(2) The lawyer is entitled to refuse to comply with the requirement unless:

(a) if the person to whom, or by or on behalf of whom, the communication was made is a body corporate that is under official management or being wound up - the official manager or liquidator of the body;

(b) otherwise - the person to whom, or by or on behalf of whom, the communication was made;

consents to the order complying with the requirement. 69(3) If the lawyer so refuses, he or she shall, as soon as practicable, give to the person who made the requirement a written notice setting out:

(a) if the lawyer knows the name and address of the person to whom, or by or on behalf of whom, the communication was made - that name and address;

(b) if sub-paragraph (1)(a)(i) applies and the communication was made in writing - sufficient particulars to identify the document containing the communication; and

(c) if sub-paragraph (1)(a)(ii) applies - sufficient particulars to identify the book, or the part of the book, containing the communication.

Penalty: $1,000 or imprisonment for 3 months, or both."

Where there is non-compliance with the section, s.70 of the ASC Law provides:

"70(1) This section applies where the Commission is satisfied that a person has, without reasonable excuse, failed to comply with a requirement made under this Part (other than Division 8).

(2) The Commission may be writing certify the failure to the Court.

(3) If the Commission does so the Court may inquire into the case and may order the person to comply with requirements as specified in the order."

The admissibility of statements made at compulsory examinations and the role of legal professional privilege in respect to such statements, is dealt with in s.76(1) of the ASC Law:

"76(1) A statement that a person makes at an examination of the person is admissible in evidence against the person in a proceeding unless:

(a) the proceeding is:

(i) a criminal proceeding; or

(ii) a proceeding for the imposition of a penalty; (other than a proceeding in respect of the falsity of the statement) and, before making the statement, the person claimed that the statement might tend to incriminate him or her or make him or her liable to a penalty;

(b) the statement is not relevant to the proceeding and the person objects to the admission of evidence of the statement;

(c) the statement is qualified or explained by some other statement made at the examination, evidence of the other statement is not tendered in the proceeding and the person objects to the admission of evidence of the first-mentioned statement; or

(d) the statement discloses matter in respect of which the person could claim legal professional privilege in the proceeding if this subsection did not apply in relation to the statement, and the person objects to the admission of evidence of the statement."

The Question of Possession

1. The first question for determination is whether, although located in the offices of the respondents' solicitors, the documents are in their possession for the purposes of s.33. No point was made of any distinction between the position of the individual respondents in that respect. It was accepted that it was open to them to require their solicitors to produce the books. They submitted, however, that if they could be compelled by a notice under s.33 to require such production then the protection of legal professional privilege afforded by s.69 would be futile. A claim of privilege raised under that section by a legal practitioner could be overcome by service of a notice on the client. This, it was said, could not have been the parliamentary intention. In this respect, it was said, the Act manifested an intention contrary to the application of the extended definition of possession in s.86.

2. The word "possession" has a number of applications well reflected in its definition in the Shorter Oxford English Dictionary which includes:
   

"the visible possibility of exercising over a thing such control as attaches to lawful ownership; the detention or enjoyment of a thing by a person himself or another in his name; the relation of a person to a thing over which he may at his pleasure exercise such control as the character of the thing admits to the exclusion of other persons..."

The common law or statutory setting in which the word is used will, in the absence of an express definition, determine the way in which it is to be construed - Towers and Co. Ltd v. Gray (1961) 2 QB 351 at 363 (Lord Parker C.J., Winn and Widgery JJ. agreeing). As is recognised in the Oxford English Dictionary definition, the word is capable at law of embracing the relationship between a person and goods which, although not in that person's physical custody are held by another from whom that person can require production - Sullivan v. Earl of Caithness (1976) 2 WLR 361 at 363 (May J., Parke J. and Lord Widgery C.J. agreeing). In this respect a distinction is sometimes drawn between the transitive verb "to possess" and the expression "to have in possession":

"If I say I am "in possession" of a thing, that seems to indicate that I have it in my custody, control, or power, while if I say I "possess" a thing, something more than a mere right of custody or control seems to be intended."

McCaskill v. Marzo (1944) 46 WALR 64 at 72 (Wolff J.)

1. The sense in which "possession" is used in a statute requires a consideration of statutory policy. By s.33 and its associated provisions in Div.3 of Part III of the ASC Law, wide investigative powers are conferred upon the Commission. They must, like all such investigative powers be limited by its legitimate statutory functions. SA Brewing Holdings Ltd v. Baxt (1989) 89 ALR 105 at 116. It is however a minimum requirement of the statutory policy that the investigative power be effective. A limitation of the word "possession" in s.33 to actual physical custody would leave open to persons connected with the corporation whose affairs are under investigation, the possibility of avoidance of the section by the simple artifice of placing sensitive documents in the hands of some third party. Once it is posited that the policy of the statute is not to leave open that possibility then the application of the definition of possession in s.86 of the Corporations Law follows, it being consistent with a minimum requirement for effective exercise of the power under s.33. And if that be right, there can be no basis for saying that the word "possession" as used in s.33, has some different meaning in relation to documents in the hands of a party's lawyer who is required by the client to raise and maintain a claim of legal professional privilege. Whatever the effect of s.69 of the ASC Law, it does not, in my opinion, support a construction of "possession" that shifts according to whether a person holding documents for the recipient of a notice relating to such documents is or is not a lawyer and is or is not asserting legal professional privilege. This conclusion leaves open the question whether, as a matter of statutory construction, legal professional privilege is a "reasonable excuse", within the meaning of ss.63 and 70 of the ASC Law, for non-compliance with a notice directed to a person whose lawyer holds the relevant documents.

2. For these reasons the respondents' contention that they are not in "possession" of the documents the subject of the notice does not succeed.
   The Question of Legal Professional Privilege

3. Legal professional privilege has been characterised by some commentators in recent times as conferring upon legal practitioners an unfair advantage over others such as accountants who are said to be engaged in the provision of services which, in some respects, compete with those offered by lawyers. Whatever the rights and wrongs of that debate, the rationale for the judge made privilege was never the expression of any special tenderness to the legal profession. In 1833 it was explained by Brougham L.C. in Greenough v. Gaskell (1833) 1 My and K. 98 at 103, as follows:
   

"The foundation of this rule is not difficult to discover. It is not (as has sometimes been said) on account of any particular importance which the law attributes to the business of legal professors, or any particular disposition to afford them protection, Though certainly it may not be very easy to discover why a like privilege has been refused to others, and especially to medical advisers. But it is out of regard to the interests of justice, which cannot be upholden, and to the administration of justice, which cannot go on, without the aid of men skilled in juris prudence, in the practice of the courts, and in those matters affecting rights and obligations which form the subject of all judicial proceedings. If the privilege did not exist at all, everyone would be thrown upon his legal resources; deprived of all professional assistance, a man would not bench to consult any skilful person, or would only dare to tell his counsellor half his case. If the privilege were confined to communications connected with suits begun, or intended, or expected, or apprehended, no-one could safely adopt such precautions as might eventually render any proceeding successful, or all proceedings superfluous."

1. From that rationale, which was accepted by the High Court in Grant v. Downs (1976) 135 CLR 674, it follows that the privilege is that of the client and not the lawyer. Whether in modern times it should be retained, excluded or extended is no longer a matter for judges to determine - Grant v. Downs (supra) at 685. It is a matter for Parliaments. In each case in which a statutory power is conferred on some official or public authority to require the disclosure of information or the production of documents, the language of the statute will decide whether or not the power is limited by legal professional privilege. Where the statute is not explicit upon that question it is for a court to construe it as best it can and to ascertain from its words, its policy and its context what is its true effect.

2. In the process of construction courts resort to principles such as that enunciated in Sorby v. The Commonwealth (1983) 152 CLR 281 at 309-310 that a statute will not be construed to take away a common law right unless a legislative intent to do so clearly emerges whether by express words or necessary intendment. It was in the application of that principle that Wilson J. in Baker v. Campbell (1983) 153 CLR 52 at 95 said of legal professional privilege in relation to search warrants issued under the Crimes Act 1914:
   

"The multiplicity and complexity of the demands which the modern State makes upon its citizens underlines the continued relevance of the privilege to the public interest. The adequate protection according to law of the privacy and liberty of the individual is an essential mark of a free society and unless abrogated or abridged by statute the common law privilege attaching to the relationship of solicitor and client is an important element in that protection."

In that regard I adhere to the view I expressed in Federal Commissioner of Taxation v. Citibank Limited (1989) 85 ALR 588 at 614:

"Australia is a liberal democracy with a broad tradition of at least nominal resistance to encroachment upon established rights and freedoms. That view is reinforced by its adherence to the International Covenant on Civil and Political Rights, which relevantly provides in Art 17, inter alia, that: "No-one shall be subject to arbitrary or unlawful interference with his privacy, family, home or correspondence...". The nature of this society, and its tradition of respect for individual freedoms, will support an approach to construction which requires close scrutiny and a strict reading of statutes which would otherwise remove or encroach upon those freedoms. But where the natural meaning of the words is clear, the will of the Parliament must be respected."

I should add that where the High Court has construed a statute closely analogous to that under consideration and concluded that the privilege is excluded, there may be little room for the expression of any different view in relation to the application of that reasoning in cases in which it is plainly applicable. This is so in relation to the decision of the High Court concerning the operation of certain provisions of the Companies (New South Wales) Code in Corporate Affairs Commission of New South Wales v. Yuill (1991) 172 CLR 319. In Yuill's case the High Court concluded by a majority that the power of an inspector to compel production of documents under s.295(1) of the Companies (New South Wales) Code was not subject to legal professional privilege. That section provided:

"295(1) An inspector may, by notice in writing containing the prescribed matters given in the prescribed manner, require an officer of a corporation affairs of which are being investigated under this Part-

(a) to produce to the inspector such books of the corporation and other books relating to the affairs of the corporation as are in the custody or under the control of the officer;

(b) to give to the inspector all reasonable assistance in connection with the investigation; and

(c) to appear before the inspector for examination on oath or affirmation and to answer questions put to him, and may administer an oath or affirmation to that officer."

It was to be read in conjunction with sub-s.296(2) of the Code:

"296(2) A person shall not, without reasonable excuse, refuse or fail to comply with a requirement made under s.295. Penalty: $10,000 or imprisonment for 2 years or both."

Section 308 of the Code related to privileged communications in the following terms:

"308. Where in the exercise of his powers under section 295 an inspector requires a duly qualified legal practitioner to disclose a privileged communication made by or on behalf of or to that legal practitioner in his capacity as a legal practitioner, the legal practitioner is entitled to refuse to comply with the requirement unless the person to whom or by or on behalf of whom the communication was made or, if the person is a body corporate that is under official management or in the course of being wound up, the official manager or the liquidator, as the case may be, agrees to the legal practitioner complying with the requirement but, where the legal practitioner so refuses to comply with the requirement, he shall if he knows the name and address of the person to whom or by or on behalf of whom the communication was made, forthwith furnish that name and address in writing to the inspector.

Penalty $1,000 or imprisonment for 3 months, or both."

The parallels between ss.295, 296 and 308 of the Code on the one hand, and ss.33, 63 and 69 of the ASC Law on the other, are apparent.

1. Reference should also be made to s.299 of the Code, the close equivalent of which is found in s.76 of the ASC Law. Section 299 provided:
   

"299(1) Except as provided by subsection (2), any statements made at an examination of a person under this Part are admissible in evidence in any criminal or civil proceedings against the person. 299(2) Evidence of a statement made by a person at an examination under this Part shall not be admitted in evidence in criminal or civil proceedings against the person if-

(a) where the statement is an answer given by the person to a question - the proceedings are criminal proceedings (other than proceedings for an offence against subsection 296(2), (3) or (4) or other proceedings in respect of the falsity of the answer) and, before answering the question, the person claimed that the answer might tend to incriminate him;

(b) the statement is not relevant to the proceedings and the person objects to the admission of the evidence;

(c) the statement is qualified or explained by some other statement made at the examination, evidence of the other statement is not tendered in the proceedings and the person objects to the admission of the evidence of the first-mentioned statement; or

(d) the statement disclosed matter in respect of which a claim of legal professional privilege could be made by the person in the proceedings if the provisions of this Division did not apply in relation to that evidence, and the person objects to the admission of the evidence."

1. The majority in Yuill had regard to the fact that the provisions of the Code then under consideration had been enacted prior to the judgment of the Court in Baker v. Campbell (supra) and against the background of the law as stated in O'Reilly v. The Commissioners of the State Bank of Victoria (1983) 153 CLR 1, which confined the operation of legal professional privilege to lawyer/client communications in judicial or quasi judicial proceedings. Baker v. Campbell had held the privilege not to be so confined and not to be overridden by the widely expressed provisions of s.10 of the Crimes Act 1914 which authorises the issue of search warrants in relation to offences against Commonwealth and Territory laws.

2. The circumstance that the Companies Code was drafted after O'Reilly and before Baker v. Campbell led Brennan J. to conclude, at 323, that the absence of any express exclusion of legal professional privilege could not support an argument that it was intended to limit the power conferred by s.295(1). But Dawson J. (with whom Toohey J. agreed) said at 330 that even if the legislature, in enacting the relevant provisions of the Code, had thought the doctrine of legal professional privilege confined to judicial or quasi judicial proceedings, that would not lead to the conclusion that it intended to exclude the doctrine:
   

"For it is one thing to say that the legislature accepted the law as it thought it to be; it is quite another thing to speculate upon whether the legislature would have sought to change the law had it realised that it went as far as Baker v. Campbell held it did."

At 331, his Honour went on:

"The absence of an express provision excluding a claim for legal professional privilege in an investigation under Pt. VII may be accounted for by the view of the law which the legislature took at the time the legislation was passed: cf Annetts v. McCann ((1990) 170 CLR 596 at p 600). And if the legislation otherwise evinces a sufficiently clear intention to exclude the doctrine, then effect must be given to that intention: see Bropho v. Western Australia

((1990) 171 CLR 1 at p 23). It should, however, be emphasised that in the absence of an express exclusion, any implication to that effect must be a necessary requirement, for legal professional privilege is a doctrine of a fundamental kind which is not to be abrogated except in the clearest terms: see Baker v. Campbell ((1983) 153 CLR at p 123); Sorby v. The Commonwealth ((1983) 152 CLR 281 at pp 289, 309-310, 316); Balog v. Independent Commission Against Corruption ((1990) 169 CLR 625)."

1. Both of their Honours nevertheless proceeded to consider the provisions of the Code to determine what Brennan J. called "the indicia of legislative intent". He observed that the court does not enter upon an inquiry under s.297 unless an inspector has certified that a person has failed to comply with a requirement under s.295 "without reasonable excuse". It would be unlikely that an inspector contemplating the issue of a certificate should have to form an opinion whether a claim of legal professional privilege had been validly made either by a solicitor or by a client. That logic applies with equal force to the certification process under the ASC Law.

2. Next Brennan J. considered s.308 of the Code noting that it made a specific exemption which entitled solicitors to refuse to comply with a notice issued under s.295 where compliance would involve a breach of legal professional privilege, the exemption being conditioned on the furnishing of the client's name and address. His Honour observed at 324:
   

"The enactment of s. 308 would be otiose and the specifying of a condition governing the solicitor's excuse for non-compliance would be futile if the observance of legal professional privilege were a reasonable excuse for non-compliance, for a solicitor who is bound to observe legal professional privilege would be entitled to refuse to comply with a notice issued under s. 295 without satisfying such a condition (Reg. v. Bell; Ex parte Lees ((1980) 146 CLR 141 at pp 144-145)) otherwise than by identifying the client whose privilege is asserted: Southern Cross Commodities v. Crinis ((1984) VR 697). The apparent purpose of the statutory condition is to ensure that a client can be located and required to disclose communications protected by legal professional privilege although the solicitor may be excused from disclosing them."

This reasoning applies with like force to s.69 of the ASC Law.

1. His Honour also referred to s.299 of the Code providing for the admission in civil or criminal proceedings of statements made by a person at an examination by an inspector. The general rule in favour of admissibility was subject to the exception contained in s.299(2)(d) protecting matter in respect of which a claim of legal professional privilege could be made and continued (at 324-325):
   

"As the admission in evidence of a statement pursuant to sub-s. (1) would destroy any claim of privilege, sub-s. (2)(d) is enacted to restore, sub modo, the privilege which would have been available to protect the matter disclosed under compulsion on examination by the inspector had ss. 295 and 296(2) not overridden the privilege. Thus it appears that an assertion of legal professional privilege is not a "reasonable excuse" where the requirement is to answer questions. It would be a curious asymmetry to treat an assertion of the privilege as a "reasonable excuse" for non-compliance with a requirement to produce books, for the contents of the books could be ascertained in any event by compelling oral disclosure by any person who has knowledge of them."

At 326 his Honour observed that the protection accorded to oral evidence by s.299(2)(d) was probably to be explained by the legislature's unwillingness to compel a person to furnish out of his own mouth evidence which might be used against him on a criminal trial even though compulsory disclosure of privileged communications might lead to the discovery of other admissible evidence. That consideration did not inhibit the compulsory production of books which might be used in evidence for they are real evidence which speak for themselves, unlike oral evidence which comes into existence only in response to an exercise of investigative power. And again it may be said that those considerations apply with equal force to s.76 of the ASC Law.

1. The other statutory indicium of legislative intention taken into account by his Honour was the purpose of instituting special investigations under Pt.VII of the Code. He noted that it would frequently be impossible in practice for an inspector to discharge the duty laid upon him by s.305 to form an opinion on the affairs of a corporation and to report that opinion and the facts on which it is based if he were unable to compel disclosure of professional communications between legal advisors and those who had played some part in a corporation's affairs.

2. Dawson J. said that a necessary statutory implication was required before legal professional privilege could be abrogated. In determining whether such an implication could be drawn from the Companies Code, he began with a consideration of its character or purpose and with reasoning similar to that applied by Brennan J. observed that any investigation was likely to be hampered by a claim of legal professional privilege on the part of an officer of a company being investigated. This was more so when the aims of the investigation included the prosecution of offences and the institution of civil proceedings. Accepting that legal professional privilege may not be claimed even at common law for communications which amount to participation in a crime or fraud, his Honour was of the view that it may nevertheless seriously impede the investigation of those matters.

3. Turning to particular sections, his Honour's conclusion with respect to s.308 of the Code was similar to that reached by Brennan J. Noting that s.308 reflected s.367 of the former Uniform Companies Acts in an amended form, he said at p 334:
   

"Section 308 of the Code represents s.367 in an amended form. It allows the privilege to be waived, but otherwise entitles a legal practitioner to claim privilege against an inspector. Thus s.308 represents (as did s.367 before it) what was thought to be a limited extension of the doctrine of legal professional privilege into the area of company investigation in order to protect the professional confidence of a legal practitioner. At the same time it manifests an intention to extend the protection of legal professional privilege no further; in particular, not to extend it to the client."

1. With respect to s.299(2)(d), his Honour held that it indicated that the legislature assumed that legal professional privilege would be unavailable in the course of an investigation, yet sought to ensure its availability in judicial proceedings but not otherwise. He accepted that it was possible that the provision envisaged a situation in which a claim of legal professional privilege was available during the course of an investigation, but was not made or, having been made, was rejected, but considered it hardly likely that the legislature would seek to restore the privilege if it were not claimed initially. After referring to the provisions of s.296(7) in relation to the privilege against self incrimination, his Honour said at 335-336:
   

"The reason why, in relation to answers to questions, privilege against self-incrimination is expressly denied by s.296(7) would appear to be in order to restore the privilege in relation to a limited class of criminal proceedings. Similarly, when express mention is made of legal professional privilege in relation to statements in s.299(2)(d), it is in order to restore the privilege in relation to criminal or civil proceedings. It is not possible to read into these provisions any intention to cut down the generality of the obligation otherwise imposed by s.296(2) to comply with a requirement under s.295."

1. A number of textual differences between the Code and the ASC Law were relied upon by counsel for the respondents to support the proposition that the Court should look afresh at the question whether under the ASC Law legal professional privilege was abrogated in relation to books required to be produced pursuant to a notice under s.33. In my opinion, however, the generality of the reasoning adopted by the majority of the High Court in Yuill's case is not affected by those textual differences and although I am not strictly bound by the decision, its approach to the question of statutory construction is of the highest persuasive authority. I do not consider that in the present case there is any reason which would justify departing from it in its application to the ASC Law. Applying the reasoning adopted by the High Court, I am led to the conclusion that the provisions of the ASC Law were intended to exclude the operation of legal professional privilege in relation to the production of books under a notice issued pursuant to s.33.
   The Question of Abuse of Power

2. This aspect of the respondent's submissions relied upon the conduct of the proceedings in action number 1950 of 1991 in the Supreme Court of Western Australia. That action was brought by the respondents and Jackson McDonald as plaintiffs in relation to the notice issued to Jackson McDonald on 10 June 1991. It proceeded on a basis outlined by counsel for the respondents appearing on their behalf and on behalf of Jackson McDonald before Anderson J. in the Supreme Court on 20 August 1991. Transcript of some of the opening remarks was in evidence in these proceedings. Counsel explained to his Honour that the sole question that arose for determination was whether documents covered by the notice were in fact the subject of a proper claim of legal professional privilege. The question, it was said, arose in the context of s.69 of the ASC Law. Section 69, it was said, effectively maintained the entitlement to legal professional privilege at common law. Counsel went on:
   

"So for all practical purposes, then, the question before you will simply be whether at common law the documents forming part of the bundle are the subject of a valid claim for privilege. We say in our submission in consequence of that the recent decision of the High Court in Yuill's case, which concerned the construction of provisions of the Companies Code in order to ascertain whether they did in fact preserve the entitlement to claim privilege, is irrelevant because we are here dealing with a statutory provision which expressly maintains the entitlement to claim privilege in these circumstances. The only question before you is essentially whether the documents fall within the ambit of that privilege."

That is the basis upon which the action was fought and it is reflected in his Honour's judgment in which he held that the documents were protected by legal professional privilege. But the question whether the provisions of the ASC Law exclude legal professional privilege in relation to a notice issued to the clients of a lawyer as distinct from the lawyer himself could not have arisen in that case. There is no room in these circumstances for the application of the extended principle of res judicata in Port of Melbourne Authority v. Anshun Pty Ltd (1981) 147 CLR 589 relied upon by counsel for the respondents. Nor does the abandonment of the notices of 4 July 1991 and the consequential abandonment of the respondents' action 2111 of 1991 give grounds in my opinion for any contention that the present proceedings are an abuse of process. They are properly brought on a genuine issue which was not and could not have been decided in respect of the Supreme Court proceedings in action 1950 of 1991 which proceeded to a hearing on the merits.

CONCLUSION

1. For the preceding reasons, I propose to find for the applicant in this case and will make orders accordingly.