AWB Limited v ASIC

Case [2008] FCA 1877

FEDERAL COURT OF AUSTRALIA

AWB Limited v Australian Securities and Investments Commission
[2008] FCA 1877

PRIVILEGE – whether Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act) abrogates legal professional privilege – where ASIC decides pursuant to s 127(4) of the ASIC Act to share with another agency information gathered in the course of an ASIC investigation from persons who may have inadvertently or voluntarily disclosed communications subject to legal professional privilege of a third party – whether ASIC is required to give the third party a reasonable opportunity to assert legal professional privilege before sharing information – when corporate employee may assert or waive privilege belonging to corporation

Australian Securities and Investments Commission Act2001 (Cth) ss 13, 19, 22, 23, 68, 76, 127

Evidence Act 1995 (Cth) s 122

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 cited
Annetts v McCann (1990) 170 CLR 596 cited
British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 3 All ER 816 cited
Cadbury Schweppes Pty Ltd v Amcor Ltd (2008) 246 ALR 137 cited
Commodity Futures Trading Commission v Weintraub 471 US 343 (1985) cited
Cowell v British American Tobacco Australia Services Ltd [2007] VSCA 301 discussed
DanielsCorporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 applied
Federal Commissioner of Taxation v Citibank Ltd (1989) 20 FCR 403 disapproved
Gangemi v Australian Securities and Investments Commission (2003) 129 FCR 284 cited
In re Grand Jury Proceedings 469 F3d 24 (1st Cir 2006) cited
JMA Accounting Pty Ltd v Commissioner of Taxation (2004) 139 FCR 537 followed
Johns v Australian Securities Commission (1993) 178 CLR 408 referred to
Mann v Carnell (1999) 201 CLR 1 cited
May v Deputy Commissioner of Taxation (1999) 92 FCR 152
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1985) 162 CLR 24 cited
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 cited
MM v Australian Crime Commission (2007) 244 ALR 452 considered
Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1188 cited
NP Generations Pty Ltd v Feneley (2001) 80 SASR 151 cited
Rochfort v Trade Practices Commission (1982) 153 CLR 134 considered
United States v Western Electric Corp Inc 1990-1 Trade Cases ¶ 68,939; 1990 WL 39129 (DDC 1990) cited
Wrench LLC v Taco Bell Corporation 212 FRD 514 (WD Mich 2002) cited

Australian Law Reform Commission, Privilege in Perspective, ALRC Report No 107 (2007)
S McNicol, Law of Privilege (1992)

AWB LIMITED v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

VID 719 0F 2008

GORDON J
11 DECEMBER 2008
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 719 0F 2008
BETWEEN:

AWB LIMITED
Applicant
AND:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Respondent

JUDGE:

GORDON J

DATE OF ORDER:

11 DECEMBER 2008

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The applicant pay the respondent’s costs of the proceeding, to be taxed in default of agreement.

Note:Settlement and entry of orders is dealt with…

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AGLC
AWB Limited v ASIC [2008] FCA 1877
Case
[2008] FCA 1877
Decision Date

CaseChat Overview and Summary

In the case of AWB Limited v ASIC, the primary dispute centred around whether the Australian Securities and Investments Commission (ASIC) was obliged to observe the rules of natural justice when disclosing certain information to the Australian Federal Police (AFP). AWB argued that ASIC had failed to provide it with an adequate opportunity to be heard and had breached the principles of natural justice by disclosing privileged information without its consent. The case was heard in the Federal Court of Australia, where Justice Bromberg examined the arguments presented by both parties.

The central legal issues before the court were whether ASIC had a duty to adhere to the principles of natural justice, whether there was an error of law in ASIC's decision-making process, and if ASIC had taken into account irrelevant considerations. Specifically, AWB argued that ASIC should not have disclosed privileged information without its consent and that the disclosure would undermine its rights to confidentiality. Additionally, AWB contended that ASIC failed to properly consider the balance between the need for protection of its privilege and the need for an efficient and timely investigation.

The court found that AWB had been given a sufficient opportunity to be heard, as it was provided with the chance to make submissions opposing the disclosure. The court further held that ASIC was not required to provide AWB with an opportunity to protect its rights in the first instance, as the information was obtained lawfully and without compulsion of the privilege-holder. The court also determined that ASIC had not erred in law by considering the balance between the need for protection of AWB's privilege and the need for an efficient and timely investigation. The contentions that ASIC took into account irrelevant considerations were also rejected, as AWB had not been given the opportunity to assert its rights against ASIC.

Ultimately, the court concluded that none of AWB's grounds of review were valid, and the application was dismissed. The court ordered that AWB pay ASIC's costs of the proceeding.

Orders

Orders of the court

1. The application be dismissed.

2. The applicant pay the respondent’s costs of the proceeding, to be taxed in default of agreement.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GORDON J
The present case, however, concerns not the examinee but AWB, the employer or previous employer of each examinee. In Johns, McHugh J said (at 472) that “the need to preserve the confidentiality of ASIC’s investigation does not exclude procedural fairness, but reduces its content, perhaps in some circumstances to nothing”. Here, the question of whether or not ASIC was obliged to observe the rules of natural justice in the case of AWB did not arise. Although AWB was not told by ASIC of the proposed disclosures to the AFP, it learned of that fact, was “given the opportunity to put submissions before [ASIC] relating to matters requiring the non-disclosure of information by [ASIC]” (Johns at 472) and took advantage of that opportunity by making numerous submissions opposing the disclosure. AWB might have persuaded ASIC to accept or adopt its submissions. It did not. In the circumstances, it is not necessary to pursue McHugh J’s observation to its end to determine precisely how much the content of procedural fairness may have been reduced with respect to AWB; I need only find (and do find) that the opportunity to be heard that was given to AWB was sufficient. CONCLUSIONS It follows from what I have just said that none of AWB’s grounds of review is made out. The specific grounds are disposed of as follows.Constructive failure to exercise jurisdiction and absence of power - ss 5(1)(c) and (d) of the ADJR Act There was no and could be no constructive failure to exercise jurisdiction or an absence of power contrary to ss 5(1)(c) and (d) of the ADJR Act. AWB’s contentions that ASIC was “[not] empowered by the ASIC Act to obtain confidential and privileged communications from persons other than the holder of the privilege in circumstances where the holder has not expressly or by implication waived the privilege” is too broad a proposition. ASIC is not empowered to compel production from the privilege-holder and did not do so. However, as noted earlier, although ASIC cannot directly compel the production of legally privileged communications, that does not mean that ASIC cannot receive such communications otherwise than through compulsion of the privilege-holder. Moreover, s 127(4) expressly confers power upon ASIC to disclose information properly obtained to third parties.Error of law and failure to take into account relevant considerations - ss 5(1)(e), (f) and (j) of the ADJR Act AWB’s contentions that the conduct of the delegate constituted a breach of s 5(1)(e) of the ADJR Act is also rejected. The contentions proceed on a factual misconception that the delegate did not inspect the AWB Information. The delegate did (see [14] of the Decision). Moreover, the allegations that the delegate failed to consider whether the act of disclosure by ASIC to the AFP constituted a use of confidential and legally privileged communications and would destroy the confidentiality that AWB was entitled to maintain assume that it was necessary for ASIC to consider those matters. With respect to the first matter (use of confidential and privileged information), it was not necessary for ASIC to do so because, as noted earlier, “the fact that the [communication] was and remains privileged does not of itself prevent [a party] from making use of that document”: see [33] above. With respect to whether confidentiality would be destroyed, the delegate carefully considered that issue and imposed conditions on the disclosure to the AFP designed to preserve confidentiality and limit any further disclosure or use of the information. In this connection, it is also important to reiterate that because any privilege belonging to AWB still exists and has not been waived, it is still open to AWB to oppose, on the ground of legal professional privilege, the use against it in any legal proceeding of the AWB Information. Taking into account irrelevant considerations – s 5(1)(e) of the ADJR Act

Ratio Decidendi

Legal Principle Established

Established by: GORDON J

AWB’s contentions that the conduct of the delegate constituted a breach of s 5(1)(e) of the ADJR Act is also rejected. The contentions proceed on a factual misconception that the delegate did not inspect the AWB Information. The delegate did (see [14] of the Decision). Moreover, the allegations that the delegate failed to consider whether the act of disclosure by ASIC to the AFP constituted a use of confidential and legally privileged communications and would destroy the confidentiality that AWB was entitled to maintain assume that it was necessary for ASIC to consider those matters. With respect to the first matter (use of confidential and privileged information), it was not necessary for ASIC to do so because, as noted earlier, “the fact that the [communication] was and remains privileged does not of itself prevent [a party] from making use of that document”: see [33] above. With respect to whether confidentiality would be destroyed, the delegate carefully considered that issue and imposed conditions on the disclosure to the AFP designed to preserve confidentiality and limit any further disclosure or use of the information. In this connection, it is also important to reiterate that because any privilege belonging to AWB still exists and has not been waived, it is still open to AWB to oppose, on the ground of legal professional privilege, the use against it in any legal proceeding of the AWB Information. Taking into account irrelevant considerations – s 5(1)(e) of the ADJR Act This contention proceeded on the assumption that the conditions imposed by ASIC under s 127(4) “fall short of protecting the rights which AWB had not been given the opportunity to assert against ASIC”. AWB’s “rights” were to prevent the inadvertent or deliberate disclosure of privileged information which may have been included in the AWB Information. For the reasons explained above (see [30] to [37] above), there was no obligation on ASIC to provide AWB with any opportunity to protect those “rights” in the first instance (ie the right to be present at the examinations or otherwise interject privilege objections), and in any event, AWB did not challenge ASIC’s decision to exclude it from the information-gathering process. ASIC obtained the information other than by compulsion of the privilege-holder. It is entitled to use it. AWB is still entitled to protect its rights in the manner described above (see [38] to [39]).Denial of natural justice - s 5(1)(a) of the ADJR Act AWB contended that it was not given an opportunity to be heard on the “balance” between the need for protection of AWB’s privilege and the need for an efficient and timely investigation, which the delegate considered relevant to the Decision, or on whether the conditions imposed by the delegate would protect against further undermining of the confidentiality in any privileged communications. In my view, there was no denial of natural justice. AWB was “given the opportunity to put submissions before [ASIC] relating to matters requiring the non-disclosure of information by [ASIC]” (Johns at 472) and took advantage of that opportunity by making numerous submissions opposing the disclosure. As I have found, this opportunity to be heard was enough to satisfy any requirements of natural justice in the circumstances: see [47] above. Moreover, it is of the utmost importance to recall that in a proceeding of this nature it is neither necessary nor right to decide the merits of the decision.