Gadens Lawyers Brisbane and Australian Securities and Investments Commission (Freedom of information)

[2021] AATA 1634

Gadens Lawyers Brisbane  and Australian Securities and Investments Commission (Freedom of information) [2021] AATA 1634 (9 June 2021)

Division:FREEDOM OF INFORMATION DIVISION

File Number(s):2020/3792      

Re:Gadens Lawyers Brisbane  

APPLICANT

Australian Securities and Investments CommissionAnd  

RESPONDENT

AndLiam Walsh

OTHER PARTY

Appeal from:          MR18/00363

DECISION

Tribunal:Deputy President R I Hanger AM QC

Date:9 June 2021

Place:Brisbane

The Tribunal sets aside the reviewable decision and in substitution refuses access to the documents numbered  3, 4, 5, 6, 11, 20, 34, 38. The Tribunal grants access to the remaining documents.

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Deputy President R I Hanger AM QC

CATCHWORDS

FREEDOM OF INFORMATION – Access to documents – Exemption provisions – Whether documents are conditionally exempt under s 47G(1)(a) of the Freedom of Information Act 1982 – Whether disclosure would unreasonably affect lawful business, commercial or financial affairs – Public interest considerations – Whether access to the document would be contrary to the public interest for the purposes of s 11A(5) – The decision granting access to the documents is set aside – Access to certain documents refused.

LEGISLATION

Freedom of Information Act 1982 (Cth)

SECONDARY MATERIALS

FOI Guidelines, Office of the Australian Information Commissioner, Version 1.4, December 2016.

REASONS FOR DECISION

Deputy President R I Hanger AM QC

9 June 2021

1. Mr Sherwin is a white-collar criminal. He was a financial advisor advising clients on investments and superannuation funds. The funds were used without the knowledge and authorisation of his clients by Mr Sherwin and his related entities. By 2009 the Sherwin group of companies were in financial trouble and in January 2013 the group of companies collapsed with debts of nearly $60 million to approximately 400 clients.

2. After an ASIC investigation Mr Sherwin pleaded guilty to 20 counts of fraud and was sentenced to 10 years imprisonment. The applicant, Gadens, is a well-known firm of solicitors and it was involved as solicitors in a great many transactions conducted by Mr Sherman and/or entities he controlled and his clients. In the course of investigating the Sherwin matters ASIC obviously had access to a number of documents that involved the applicant firm.

3. On 11 December 2017 Mr Walsh (‘the Other Party’), a financial journalist, made a request of ASIC for documents under the Freedom of Information Act 1982 (Cth) (‘the Act’). There was some correspondence between the Other Party and the respondent about the scope of the FOI request but ultimately the Other Party confirmed that the request[1] sought disclosure of documents that detailed complaints, responses to complaints or findings about the applicant or its lawyers in matters involving Mr Sherwin and related businesses between 1 December 2012 and 30 June 2017. The respondent subsequently identified 41 relevant documents.

   [1] Exhibit 1, T3.6.

4. The respondent consulted third parties in relation to 40 of those documents. On 8 March 2018 the respondent resolved to grant access to 6 documents in full but refused access to 34 documents in part. The applicant sought an internal review of the decision under section 54B of the Act. The respondent conducted an internal review and affirmed the decision. The applicant sought a review of that decision.

5. On 28 May 2020 the Australian Information Commissioner (‘the Commissioner’) affirmed the internal review decision and decided that the disclosure of the documents would or could reasonably be expected to affect the applicant adversely in respect of its lawful business, commercial or financial affairs, but that it would not unreasonably affect it.

6. The applicant has applied to this Tribunal for review in relation to 39 documents. The issue for this Tribunal is whether to refuse access to 39 documents[2] or whether to grant access to documents in a further redacted form. I have read those documents. I directed copies of them be placed in a sealed envelope on the file.

   [2] The applicant does not oppose release of document 36.

7. The documents fall into two broad categories. One category contains allegations, suspicions, some conjecture, preliminary opinions and conclusions. A second category deals with the respondent’s dealings with the Legal Services Commission. Many of the documents fall into both categories.

8. The parties agreed that the argument before me turned on the application of the provisions of section 47G of the Act and then in certain circumstances on section 11A(5).

9. Section 47G(1) provides as follows:

   (1)A document is conditionally exempt if its disclosure under this Act would disclose information concerning a person in respect of his or her business or professional affairs or concerning the business, commercial or financial affairs of an organisation or undertaking, in a case in which the disclosure of the information:

   (a)    would, or could reasonably be expected to, unreasonably affect that person adversely in respect of his or her lawful business or professional affairs or that organisation or undertaking in respect of its lawful business, commercial or financial affairs; …

10. If a document is conditionally exempt under section 47G(1) then reference must be made to section 11A(5) which provides:

    (5)The agency or Minister must give the person access to the document if it is conditionally exempt at a particular time unless (in the circumstances) access to the document at that time, would, on balance, be contrary to the public interest.

11. The documents which the applicant argues are conditionally exempt are documents that arise during the course of an investigation by ASIC into the conduct of a third party and related businesses. They deal with the provision of legal services by a body (the applicant), whose role is to provide legal services. It is clear from an examination of documents that they concern the business affairs of the applicant.

12. In order to be satisfied that the documents in question are conditionally exempt, I must decide whether disclosure could unreasonably affect the applicant in respect of its lawful business or professional affairs. The test of whether the disclosure could or would unreasonably affect a person requires an objective assessment of the expected adverse effect.[3] This involves a need to balance public and private interests.[4]

    [3] FOI Guidelines, Office of the Australian Information Commissioner, Version 1.4, December 2016 (‘FOI Guidelines’) [6.188].

    [4] FOI Guidelines, [6.187].

    Applicant’s submissions

13. The applicant submits that the information in the documents is highly prejudicial and damaging to the applicant; that the concerns raised by ASIC in the documents are peripheral to its principal investigation and therefore are of a preliminary nature, one-sided, uncorroborated and intertwined with complaints against the financial adviser and his related entities; that the documents were not prepared by ASIC for public release or court proceedings but were intended for internal and interagency purposes and consequently broadly summarise some of the facts liberally; that the applicant’s integrity and reputation would be publicly undermined and the applicant would be placed at an unfair disadvantage of being unable to properly respond because some of the complaints and allegations are too vague to permit a proper response and in many instances would be restrained by obligations of confidentiality and legal professional privilege.

14. The name of the member of the firm involved in handling the transactions in issue has been redacted in the documents. The fact that his name was redacted has the effect of implicating other members of the firm. The applicant submits that regardless of their age the damage to reputation would be substantial and that alleged misconduct by legal practitioners is normally a matter for the Legal Services Commissioner and the Law Society. ASIC referred its concerns about the practice of the solicitors to the Legal Services Commissioner. There has been no finding of unsatisfactory professional conduct or professional misconduct.

    Respondent’s submissions

15. The respondent submits that the applicant would not be unreasonably affected by the disclosure of the documents. It points out that the documents are all internal ASIC correspondence or ASIC correspondence with the Legal Services Commissioner. It submits that there is a public interest in enhancing transparency around ASIC’s regulatory approach, practices and functions and that the documents at issue clearly relate to the body exercising its powers under the Australian Securities and Investments Commission Act 2001. It submits that releasing the relevant information in the documents in issue advances the following public interest factors: informing the community of the body’s operations, its practices in identifying and referring potential misconduct to other regulatory bodies; informing the community of the reasons for ASIC’s decision to refer the matter to another regulatory body.

    Consideration

16. Reputation is an invaluable commodity as Iago tells us: ‘he that filches from me my good name robs me of that which not enriches him and makes me poor indeed.’ The reputation of a legal firm is of fundamental importance.

17. A large part of the material the subject of the application is already in the public arena. Some is not.

18. An article in The Courier Mail on 24 November 2017 entitled, ‘Complaints against Gadens law firm over alleged role in Brad Sherwin deals’ contained the following:

    Gadens … is the subject of complaints for its alleged role in deals involving clients of crooked financial advisor and Ponzi scheme architect Brad Sherwin.

    Complaints have been made to Queensland’s Legal Services Commission about Gadens, The Courier-Mail can reveal.

    Some victims of Brisbane based Sherwin … have claimed Gadens acted for them in property deals.

    Some deals allegedly involved Sherwin clients being both the buyer and seller of property, or borrower and lender on property – and Gadens acting for both parties in some instances.

    …

    But some clients claimed they were unaware they had been represented by Gadens, or that Gadens was acting for both parties in deals. Gadens and the Legal Services Commission declined to comment.

19. The reputation of the firm would likely have been affected by the original publication of the article by Mr Walsh. The documents in question are from four to nine years old. The significance of the age is that from one point of view the applicant can deal with any adverse publicity arising from disclosure by drawing attention to the fact that it all happened a long time ago; but on the other hand to accede to the request by the other party has the potential to reopen old wounds.

20. The applicant also submits that the newspaper article does not contain all of the matters raised in the documents in issue. The documents in issue arose in the process of investigation and in effect contain more detail than the matters that are alleged in the newspaper article. I am satisfied that the essence of the matters involved in the documents in question is contained in the newspaper article. There are also matters raised in the documents that are not to be found in the newspaper articles.

21. ASIC was at the time investigating Mr Sherwin and his entities. It was not actually investigating the applicant. The concerns about the conduct of the solicitors were peripheral. They are concerns only and not established facts. The concerns were referred to the Legal Services Commissioner in Queensland and a great many of the documents in question deal with and demonstrate the relationship between the state appointed Legal Services Commissioner and ASIC.

22. The applicant argues that all solicitors at the firm at the time are inferentially implicated in the documents. That appears to be correct, but that observation also can be made about the newspaper article and therefore is already in the public domain.

23. On the other hand the documents in question demonstrate to the public the way in which the respondent works, how it works with another agency, and how it refers the matter to another agency. I am satisfied that the documents that indicate the interagency cooperation and which inevitably disclose a number of concerns which were already in the public arena are not such that disclosure of them could reasonably be expected to unreasonably affect the applicant’s business. Those documents are number  1, 2, 7, 8, 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 35, 36, 37, 39, 40. They  are not conditionally exempt.

24. The remaining documents deal with the inquiries, conjecture, points for consideration, questions from one officer to another, speculation, reports of some allegations and concerns of ASIC in relation to the behaviour of the applicant. Those documents are numbers 3, 4, 5, 6, 11, 20, 34, 38.

25. In looking at the matter objectively I am satisfied that disclosure of the documents in question would, or could reasonably be expected to, unreasonably affect the applicant in its lawful business or professional affairs. In reaching this conclusion I am looking at it objectively and weighing up the interest of the applicant and the public interest. I am satisfied that the firm’s reputation would be affected. I take into account that the matters involved are very old and that the allegations involved are serious; that they were peripheral to the respondent’s central investigation and that the applicant was not given a chance to respond to them. In making that finding I make no criticism of the respondent. The matters are also generally expressed as ‘concerns’.

26. I also take into consideration that allegations of misconduct by solicitors are the responsibility of the Legal Services Commissioner in Queensland. No suggestion was made in the hearing that the Legal Services Commissioner successfully prosecuted the firm or any member of it. Hence we are left with very old, unsubstantiated allegations or concerns in relation to behaviour that was peripheral to the investigation being conducted in relation to Mr Sherwin and his businesses.

27. The documents 3, 4, 5, 6, 11, 20, 34, 38 are conditionally exempt pursuant to the provisions of section 47G(1). I have not descended into a sentence by sentence analysis of these documents with a view to dissecting each document into particular sentences that are conditionally exempt and particular sentences that are not conditionally exempt. To embark on that kind of hair-splitting exercise would render many of the documents largely meaningless. Furthermore I accept a submission of the applicant that in some of these documents statements may not appear to have an adverse impact on the applicant if read in isolation, but combined with statements in other documents they have the potential to create such an impact.

28. It is necessary therefore to turn to the provisions of section 11A(5) which provides that a person must be given access to a conditionally exempt document unless in the circumstances access to the document at that time would on balance be contrary to the public interest. Factors which favour access, and irrelevant factors are set out in section 11B(3) and (4):

    Factors favouring access

    (3)Factors favouring access to the document in the public interest include whether access to the document would do any of the following:

    (a)    promote the objects of this Act (including all the matters set out in sections 3 and 3A);

    (b)    inform debate on a matter of public importance;

    (c)    promote effective oversight of public expenditure;

    (d)    allow a person to access his or her own personal information.

    Irrelevant factors

    (4)The following factors must not be taken into account in deciding whether access to the document would, on balance, be contrary to the public interest:

    (a)    access to the document could result in embarrassment to the Commonwealth Government, or cause a loss of confidence in the Commonwealth Government;

    (b)    access to the document could result in any person misinterpreting or misunderstanding the document;

    (c)    the author of the document was (or is) of high seniority in the agency to which the request for access to the document was made;

    (d)    access to the document could result in confusion or unnecessary debate.

29. Section 11B(5) provides:

    (5)In working out whether access to the document would, on balance, be contrary to the public interest, an agency or Minister must have regard to any guidelines issued by the Information Commissioner for the purposes of this subsection under section 93A.

30. The underlying object of the act is in favour of disclosure.

31. Guideline 6.8 provides:

    The pro-disclosure principle declared in the objects of the FOI Act is given specific effect in the public interest test, as the test is weighted towards disclosure. If a decision is made that a conditionally exempt document should not be disclosed, the decision maker must include the public interest factors they took into account in their statement of reasons under s 26(1)(aa) …

32. In dealing with public interest factors that weigh against disclosure of documents, Guideline 6.22(b) refers to documents that ‘could reasonably be expected to prejudice the fair treatment of individuals and the information is about unsubstantiated allegations of misconduct or unlawful, negligent or improper conduct’.

33. Guideline 6.22(k) refers to documents that ‘could reasonably be expected to harm the interests of an individual or group of individuals’.

34. I am satisfied that the documents that I have found are conditionally exempt are such that they could reasonably be expected to prejudice the fair treatment of individuals because they implicate all members of the applicant solicitors and the allegations in the documents are unsubstantiated allegations, or perhaps better described as, concerns of unlawful, negligent or improper conduct; and that they could reasonably be expected to harm the interests of an individual or group of individuals’.

35. I also take into account that conduct referred to in the documents was appropriately referred to the Legal Services Commissioner and the Law Society. They are the appropriate bodies to take action in respect of improper or unprofessional conduct. There is no evidence of any adverse finding against an individual or the members of the firm. I also take into account the fact that the documents are very old and the matters with which they deal are older still. It is reasonable to assume that the Legal Services Commissioner and/or The Law Society will not take any action on any conduct referred to in the documents after such length of time. I observe specifically that I have not taken into account that the documents might be misinterpreted or misunderstood.

36. The respondent submits that disclosure would promote the objects of the act, inform debate on a matter of public importance and advance the fair treatment of individuals. It submits that it would inform the community of the respondent’s operations and practices. I am not satisfied that disclosure would inform debate on a matter of public importance or advance the fair treatment of individuals. Obviously disclosure would inform the community about the respondent’s operations and practices. But that submission would be relevant in every matter. In respect of the documents I have decided are conditionally exempt,  it takes this matter no further.

37. In all the circumstances I am satisfied that granting access to the documents numbered 3, 4, 5, 6, 11, 20, 34, 38 would on balance be contrary to the public interest.

38. The decision of the Commissioner dated 28 May 2020 is therefore set aside. In substitution I refuse access to documents numbered  3, 4, 5, 6, 11, 20, 34, 38. The Other Party should be given access to a copy of the remaining documents.

I certify that the preceding 38 (thirty-eight) paragraphs are a true copy of the reasons for the decision herein of Deputy President R I Hanger AM QC

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Associate

Dated: 9 June 2021

Date of hearing:	15 February 2021
Counsel for the Applicant:	Polina Kinchina
Solicitors for the Applicant:	Gadens Lawyers Brisbane
Solicitors for the Respondent:	Australian Securities & Investments Commission