Johns v Australian Securities Commission

[1992] HCATrans 197

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M29 of 1992

B e t w e e n -

IAN MALCOLM JOHNS

Applicant

and

AUSTRALIAN SECURITIES

COMMISSION

First Respondent

ANTHONY GEOFFREY HARTNELL

Second Respondent

NOREEN CLAIRE MEGAY

Third Respondent

ALBERT EDWARD WOODWARD

Fourth Respondent

DOUGLAS GILBERT WILLIAMSON

Fifth Respondent

THE HERALD AND WEEKLY TIMES LTD

Johns 1 25/6/92

Sixth Respondent

AUSTRALIAN BROADCASTING

CORPORATION

Seventh Respondent

THE STATE OF VICTORIA

Eighth Respondent

Application for special leave

to appeal

BRENNAN J

TOOHEY J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 25 JUNE 1992, AT 10.19 AM

Copyright in the High Court of Australia

MR R. MERKEL, QC: If the Court pleases, I appear with my

learned friend, MR L. KAUFMAN, on behalf of the

applicant. (instructed by Arnold Bloch Leibler)

MR A.J. MYERS, QC:  May it please the Court, I appear with

MR G.D. HOLLEY on behalf of the first, second and

third respondents. (instructed by Regional General

Counsel for Victoria, Australian Securities

Commission.

MS E. WENTWORTH: If the Court pleases, I appear on behalf

of the fourth and fifth respondents. (instructed by

Clayton Utz)

MR M.A. DREYFUS: If the Court pleases, I appear for the

sixth respondent. (instructed by Arthur Robinson &

Hedderwicks)

MR R.N. GALLAGHER:  May it please the Court, I appear for

the seventh respondent. (of Blake Dawson Waldron)

MR R.A. FINKELSTEIN, QC (Acting Solicitor-General for

Victoria): May it please the Court, I appear with

my learned friend, MR R.M. GARRETT, for the eighth

respondent. (instructed by the Victorian Government

Solicitor)

BRENNAN J:  Mr Merkel, you can take it that the Court has

read, but not mastered, the judgments of the Full

Court.

MR MERKEL: Yes, Your Honour. Your Honour, could I hand up

to the Court the book of authorities. If the Court

pleases, there are four main issues that arise in respect of the application: the first relates to the question of whether there has been an improper

or excessive use and exercise of power under the

Australian Securities Commission Act; the second

relates to the question of whether, as a matter of

Johns 25/6/92

law, any confidentiality arises in respect of

evidence or information obtained under Part III by

the use of coercive powers - under Part III, I
should say, of the Australian Securities Commission

Act.

The third relates to the statutory provisions

empowering the Court to grant relief under the

Administrative Decisions (Judicial Review) Act and

at common law against what I will call, loosely,

third parties; that is parties who were not

parties to the particular decision under the AD(JR)

Act. The fourth relates to the question of the
role of vilification of the character of an accused
awaiting trial and the question of contempt in that
regard, where the vilification does not relate to
the subject-matter of the charge. And we say that

all four questions are raised as matters of

importance in the present case, and if I can now

deal with them in that order.

The question of an improper use or exercise of

power, in our submission, brings directly into play

what was said by Their Honours Justices Stephen and

Aickin in Bunning v Cross and that is case number 3 in our folder at page 77. At the time we had not

photocopied the whole of the case, it is just the
passages we will be seeking to refer to and I hope

that is not inconvenient to the Court. We say that

the issue raised fairly and squarely in the present
case was discussed by Their Honours at page 77,

where Their Honours spoke in the last eight or nine

lines:

The liberty of the subject is in increasing

need of protection as governments, in response

to the demand for more active regulatory

intervention in the affairs of their citizens,

enact a continuing flood of measures affecting
day-to-day conduct, much of it hedged about

with safeguards for the individual. These

safeguards the executive, and, of course, the

police forces, should not be free to

disregard. Were there to occur wholesale and

deliberate disregard of these safeguards its

toleration by the courts would result in the

effective abrogation of the legislature's

safeguards of individual liberties,

subordinating it to the executive arm. This

would not be excusable however desirable might

be the immediate end in view, that of

convicting the guilty. In appropriate cases

it may be "a less evil that some criminals

should escape than that the Government should

play an ignoble part".

Johns 25/6/92

Their Honours were referring, of course, to the

contest between the executive power and unlawful

use of executive power and the necessity of

evidence in criminal proceedings being able to be

adduced by the Crown. We do not have any such

competing or countervailing interest in the present

case in the sense that we are not talking here of

the unlawful use of evidence proposed to be

tendered by a court. We are talking, in our

submission, about the unlawful use of evidence

proposed to be used in an executive inquiry, which

is investigating allegations of improper conduct

concerning Tricontinental.

The problem that brings into play that

question arises in the following way, and having

regard to what Your Honour Mr Justice Brennan said

to me about having read the judgments but not

mastered the detail of the facts, if I could just

briefly elucidate what has occurred here that

brings into play the question of unlawful use or

excessive use of power on the part of the ASC.

Initially, the Tricontinental Royal Commission was

established with three independent sources of power

conferred on the Royal Commissioners. They were
conferred with the prerogative power of the State

of Victoria to conduct a Royal Commission using the

powers conferred on them under the Evidence Act,

which enabled them to summons witnesses, but they

could not override the privilege against

self-incrimination under that Act.

The second source of power was that they were

appointed as inspectors under the Companies Code

Part VII, which gave them the right to conduct

hearing in private and take evidence in private and

in doing so, they could override the privilege

against self-incrimination in Part VII hearings.

The third source of power was that they were

conferred with the powers of the National Companies

under section 36 of that Act, which had the effect	and Security Commission to conduct public hearings
of enabling to carry out public hearings throughout
Australia, which they could not have done under
either Part VII or under the Evidence Act, which
would be confined to Victoria, and they could
override the privilege against self-incrimination under the NCSC Act. They did not exercise the
Part VII Companies Code power or the NCSC hearing
power and they conducted their hearings - I think
there were two days of hearings - in public, prior
to the end of the 1990 year, and on 1 January 1991 the ASC Act became operative.

So that what the government and the relevant

agencies, being the NCSC at that time, did was

Johns 4 25/6/92

confer upon the Royal Commissioners power to

conduct their Royal Commission into, in effect, the

collapse of Tricontinental, using a wide array of

power, all conferred directly on the

Royal Commissioners themselves, who were to conduct

the investigation. After the ASC Act came into

effect, minds within the ASC and the Royal

Commission were turned to the question of how these

powers would operate into 1991 under the new

statutory regime.

By the end of January, the Royal Commission

staff were well and truly in place. A number of

people who had been working with the NCSC had been
seconded to the Royal Commission, so that former
officers of the NCSC, who were solicitors working

with the Commission, in effect became the investigative staff employed by the Royal

Commission and paid by the State of Victoria.

So Ms Megay, who was one of the defendants,

became the director of investigations, and her role

was to work with her staff, who were other former

employees of the NCSC, in effect to prepare the

investigative material required by counsel

assisting and the Royal Commissioners for the

conduct of the Royal Commission. And the Royal

Commission was going to cover a very wide area and

its terms of reference, which are set out in the

application book, were extremely wide indeed;

covered, in effect, any investigation of any

improper conduct by any person in relation to

Tricontinental, covering auditors, officers and

anyone else.

The way in which the task of conferral of

power was undertaken was fairly simple. Because of

the ministerial direction that existed under the

Companies Code under Part VII appointing the Royal

Commissioners as inspectors, the counterpart was

considered under the ASC Act, which enabled the ASC

to delegate to appointed consultants or under

regulation the conferral of power of the ASC on

individuals to exercise ASC's functions. So in

correspondence I will briefly take the Court to in

a moment, the ASC was informed by the director of

investigations of the Royal Commission, Ms Megay,

that the Royal Commissioners were happy to, in

effect, assume that role under the ASC Act, and

steps had to be taken to, in effect, pass to
ministerial regulation to enable them to be
appointed as delegates and therefore conduct the

ASC powers under the ASC Act, which they could then do in the same way as they were empowered to do as

inspectors under the previous Act.

Johns 25/6/92

For some reason, which was never ever offered in evidence, that was never done; it was raised in

the correspondence at the end of January, but

nothing further was ever heard of it, and the Royal

Commissioners were never appointed as delegates,

therefore were never conferred with the powers that
the ministerial direction under section 291 of the

Companies Code intended them to be conferred with

and directed that they be conferred with.

The correspondence showed that at that point of time, the ASC itself was conducting a number of

its own investigations into companies which were

borrowers and had significant relationships with

Tricontinental, and there was reference to an

overlap between those specific investigations and

the general conduct of the Tricontinental Royal

Commission. And to avoid, in effect, that overlap,

what was said to be a co-operative arrangement was

then entered into between the ASC and the Royal

Commission, by which the Royal Commission staff

were appointed as delegates of the ASC for the

purpose of exercising the powers and functions of

the ASC, in effect for the benefit and for the

purposes of the Tricontinental Royal Commission.

So that if, for example, particular investigations

were being carried out by the Tricontinental Royal

Commission, they could, in effect, pursue those

investigations and do so in the context of the

Royal Commission, and no doubt at a later point of

time, if it became of any relevance or use, use the material so gained for whatever purpose the ASC may

wish to use it.

And we say that any fair reading of the

evidence and the correspondence shows that the

delegation was then conferred in the broadest and

most general terms to a wide range of staff

'starting with the director of investigations,

Ms Megay, and her assistants down - there are about

12 officers of the Royal Commission, who were all

appointed as delegates of the ASC under Part 3, and

Part 3 is the part that enables all the coercive

powers of the ASC to be used. Those coercive
powers go to the subpoenaing of witnesses, the

requirement that evidence be given, prosecution

resulting in imprisonment for refusal to answer

and, in the context of sections 68 and 69, that the

power overrides the privilege against self-

incrimination and legal professional privilege, as

a result of Yuill's case. So that the executive

power conferred on these delegates as staff members

of the Royal Commission was as extensive a

conferral of coercive and intrusive power in the

rights of the citizenry as one could imagine,

limited only by the topic in respect of which the

powers were to be conferred and exercised, namely

Johns 6 25/6/92

an investigation into the affairs of the
Tricontinental corporation.

Now, what then happened was that those powers were conferred, including the power to pass on

information obtained to the Royal Commissioners.

There is a power under section 127 to give

information to an agency of a State and that, one
would assume, becomes an authorized function which

would override the confidentiality that might

otherwise obtain to this information. That became

a little of a problem because there was so much

information being generated that to get specific

consent from the chairman of the ASC, who was the

person to give that consent under section 127,

became cumbersome. So, in effect, in the end

result, Noreen Megay, as director of investigations

of the Tricontinental Royal Commission, was
conferred with total discretionary power to pass on
information obtained by her and her numerous staff
- I think there are about 12 people conferred

directly with ASC power and function under Part 3 -

to just pass information on to the Royal Commission

and consent to its publication by public tender in

the hearings held in public of the Royal

Commission.

Now, of course, her sole employment and duty of fidelity was to the Royal Commission.

BRENNAN J: Is that so?

MR MERKEL:  Yes, we say that, subject to one matter,

Your Honour. She was employed as director of investigations of the Royal Commission; she was

subject to the direction of counsel assisting and

the Royal Commissioners in the fulfilment of her
tasks. As a delegate - and that is the subject to
the one matter which I indicated, Your Honour - of
the ASC, she was subject to direction under the ASC

Act of the ASC in respect of the performance of her

functions as an ASC delegate. But I should say

there is no evidence that at any point of time any

direction was given to her specifically as what I

might call an ASC direction, as opposed to

fulfilling her function as director of

investigations.

BRENNAN J:	Is there a requirement of reporting to the ASC?
MR MERKEL:	No, Your Honour, not on a day-to-day basis, but

there was an arrangement by which the ASC were to

be kept informed of what was, in fact, being done

by the exercise of the ASC powers.

BRENNAN J:  I thought there was a monthly requirement for her to report to the ASC.

Johns	7	25/6/92
MR MERKEL:	There was a reporting basis, Your Honour;	I

cannot recall the precise words.	I will point out
to Your Honour where these matters are recorded.	I
should say all of these matters are recorded in
documents and there is not really - - -

BRENNAN J: Yes. The first proposition is the scope of

Ms Megay's powers, is it not?

MR MERKEL: 

Yes, Your Honour.

BRENNAN J: 

The validity of the instrument by which they are

conferred or the transaction by which they are
conferred and the scope of those powers.

MR MERKEL: 

Yes, Your Honour.

BRENNAN J: Well, now, does that turn upon the construction

of the instruction given by the minister under

section 291 of the Code and under section 292 of

the Code and the operation of section 14A in

comparison with section 13 of the ASC Law?

MR MERKEL:  Not as simply as that, Your Honour. It is - - -

BRENNAN J: But that is the nature of the problem; perhaps

you could come to it quickly as may be.

MR MERKEL:  Yes, Your Honour, that is the nature of the

problem, but the way in which that problem was

analysed by His Honour Mr Justice Davies would see

that as somewhat of an oversimplification of what

in fact occurred, and we do not put our application

in the first instance on the narrower basis that

really looks at the statutory provisions and says,

were they strictly capable of being complied with.

We ·say that what in fact occurred, Your Honour, is

what His Honour referred to, and indeed this Court

referred to, in O'Reilly's case, as an excessive

use of power, and that what His Honour found - and

we say is inescapable from the facts which were not

in issue between the parties because they are in

documentary form - what we say is inescapable is

that whatever may have been the ability to confer

power arising under the relevant statutory

provisions, the fact was that the power was

conferred upon Ms Megay and her staff for the

purpose of assisting and aiding the investigation

by the Royal Commission.

As a matter of reality, there was no

investigation into the Tricontinental group of

companies by the ASC and His Honour

Mr Justice Davies pointed out the absurdity of any

contrary proposition. There was only one

investigation at any time in respect of the

Tricontinental group of companies and that was the

Johns 25/6/92

investigation being carried out by the Royal

Commissioners. There were investigations by the

ASC into particular companies, which from time to

time would overlap, and to that extent there may have been some co-operation that was permissible. But all four of Their Honours that have considered

this matter have not regarded the exercise of power

by the ASC as being confined to any particular

investigation.

So that the central point of His Honour's approach to the matter, that is Mr Justice Davies,

which we say is correct, raises the question quite

critically: is it a permissive use of power under

the ASC Act for the ASC to appoint as delegates,

investigators of another State or government agency

for the purpose of pursuing their investigations in

the interests for and on behalf of that State

agency, because we say that is what has occurred

here; nothing less than that.

BRENNAN J: 

Do you not have to identify precisely the power

which has been exercised which, in your submission,
has been exercised without authority?

MR MERKEL: 

Yes, Your Honour.

BRENNAN J: There are two questions there, it seems to me:

one is the power of the ASC itself to confer a power upon Ms Megay; the second is Ms Megay's

exercise of power. Now, you are challenging both,

as I understand it, is that right?

MR MERKEL:  Yes, Your Honour.

BRENNAN J: Well, it is not very helpful to conflate the two

if we have got separate problems.

MR MERKEL:  Yes, Your Honour. I accept that, Your Honour,

but what we say is the starting point in the

documentation is an identification that there is a

co-operative arrangement being entered into by

which ASC powers are to be conferred on Royal

Commission staff, we say for the purpose of

assisting the investigation of the Royal

Commission. We go to Part 3 and we see in

section 13 there is no such power, because that

only empowers the conferral of specific

investigatory power in respect of contraventions of

the Act. We go to section 14, which deals with an

investigation through section 14A, which is carried

over from the previous Companies Code, which

empowers the ASC to continue an investigation which

was the subject of ministerial direction in

accordance with the direction.

Johns 25/6/92

The direction in this case was a direction by

the minister which required the Royal Commissioners

to conduct the investigation, and that was

mandatory and a statutory obligation. The

continuance of that direction could have been

achieved and was intended to be achieved when one

looks at the relevant letter of 31 January - and I

will come to that in a moment - by the three

Royal Commissioners being appointed as delegates.

That never occurred, therefore the power could not

have been exercised under section 14A because the

basis for it as a matter of law, and also of fact,

was never established.

BRENNAN J: Well, that in turn depends on whether one takes

the subject of the investigation as defined under
section 291 of the Code as descriptive of the

character or the essence of the investigation, or

whether one takes the mode of investigation

prescribed under section 292 as being essential to

its character.

MR MERKEL:  Yes, Your Honour, that I think is the essence of

the question of whether the investigation had to be

carried out by the three Royal Commissioners and

whether it would lapse.

BRENNAN J: Well, in the court below - correct me if I am

wrong, because, as I say, it is not be taken that
we have mastered these judgments - the view was

that which was prescribed by the minister under the	taken that the subject of the investigation was
old Act, that the scope of the investigation was
precisely the same as the scope of the
Royal Commission's terms of reference, and that
that investigation was one which the ASC was bound
to carry out under the new Act as it was under the
old, the difference being that under the old Act there was a direction under section 292 to do it by
way of the appointment of the named inspectors, and
under the new Act that was not possible. Question: does that mean that 14A has no application?

MR MERKEL:  Your Honour, we say that conflating three

different points, yes. I say the three different

points because, firstly, Your Honour, the question
was: is that in accordance with the ministerial
direction? The second is: did the circumstances
require that the three Commissioners not carry it
out, because section 14A only permitted such

modifications the circumstances require and there

is no evidence the circumstances required that it

not be carried out; indeed, the only evidence is

that the Commissioners were happy to carry it out.

The third, Your Honour, is that in fact

Ms Megay was not conferred with the section 14A

Johns 10 25/6/92

investigatory power. When one reads what she was

conferred with; as a matter of fact she was not conferred with that power, Your Honour, because

when you look at the conferral of power in the

letter, it was seen to be intended that she be

conferred with power in respect of overlapping

investigations, and a fair reading of the letter

does not lead one to the result that anyone had in
mind the conferral of 14A power or anyone other

than the Royal Commissioner. So I will have to

take Your Honour to that paragraph, because it is

quite critical, but that relates to what I will

call the first question on power, and they are the

issues that arise on whether the delegation was

misconceived from the start.

The second aspect, Your Honour, as Your Honour

pointed out to me, was the question of the manner

in which the power was in fact used. And the only

evidence - Ms Megay was never called as a witness -

before the court was a memorandum of hers, just

before the ASC powers were about to be used. The

way in which the Royal Commission proceeded was

that its first hearings, if I can call it that,

were directed to questions of overall
responsibility for the conduct of Tricontinental;

the role of government in general terms and the

general structural problems that led to the

collapse of Tricontinental. In July,

investigations started into twelve specific
transactions which were selected, in effect, as

indicative of why Tricontinental collapsed, and

they were the investigations that related to the
conduct of individuals and it is in respect of

those matters that the ASC powers were in fact

used.

The only evidence before the court, we say, in

that regard is twofold: one is her memo which was

written by her and tendered under the Evidence Act,

in effect, as a business record, which showed her

state of mind prior to the issue of the relevant

summonses, which was all very much directed to

section 13 powers and specific contraventions being

used by her as an aid to the Royal Commission, and

I will come back to that, if I may, in a moment.

Then, for example, Mr Johns was called and in his

first examination he was told by her that there was

a suspicion of a contravention of the Act and he

was then called up. And then, the powers were just

exercised under Part 3 in respect of numerous

witnesses and also documents, all under the heading

of an investigation into the affairs of

Tricontinental. What we say occurred in respect of

the use of power - and His Honour Mr Justice Davies

puts it very succinctly, based on that evidence,

and all judges held there was no basis for a

Johns 11 25/6/92

section 13 use of power in the way in which it was

used - is that she was in effect misusing her

power, she had a limited power if her original

delegation was valid to investigate under section

13, but in fact did not; she investigated, in

effect, in the terms of the Royal Commission.

But it is of very fundamental importance, we

say, to come in effect to the third point, as the

conferral of power, its exercise, and then looking

at the matter, if one stands back from it, and

says, looking at all that occurred: the

ministerial direction, the delegation and conferral

of power in February 1991 and then the exercise of

power, and we say the conclusion is inescapable

that what Mr Justice Davies found was correct;

there was no separate independent investigation by

the ASC into the collapse of Tricontinental. There

was only one investigation by the Royal Commission

and all her powers and functions were directed

towards that end.

I do not want to digress, but can I just jump

a little ahead to the confidentiality problem.
Mr Johns in fact, as he was entitled to do, claimed

the privilege against self-incrimination in respect

of all of his evidence in respect of specific

transactions. That was able to be used for limited

purposes under the ASC Act. He, in fact, had his

evidence tendered in public hearing. It was first
of all used by the investigators for the purpose of

preparing evidence in the Royal Commission and the

unchallenged evidence is that proofs of evidence,

not from Mr Johns alone, but from most significant

witnesses, were first obtained under the ASC Act;

they were then used, in effect, as proofs of

evidence for the purpose of leading witnesses in
chief through their evidence under the Victorian

Evidence Act. It was then used as cross-examination and then used where there were

inconsistent answers.

So in this way, the use of the ASC powers

eventually permeated through the Royal Commission
and then Mr Johns' transcripts were in fact
tendered in public hearing, without any resort to

him or without any question of him being asked

whether he consented to it, and the reason why this

case actually arose was that finally when he was

given legal assistance, which did not occur until

November 1991 when the hearings were, in effect,

winding down and he was essentially the last

witness, he exercised his right to claim privilege

against self-incrimination under the Victorian

Evidence Act. This was in respect of the atoll

transaction.

Johns 12 25/6/92

He was directed by the Royal Commissioners to

answer the questions; he did not. The Royal

Commission, through the Attorney-General, then

issued summonses in the supreme court to compel him

to answer those questions. Mr Justice Marks

dismissed that application by the Attorney,

upholding the privilege and it was then appreciated
- this was at the end of January 1992 - that the

very subject-matter in respect of which those questions had been asked was tendered through

transcripts taken in private hearing back in July.

So that the anomaly that had been created by

the use of ASC powers, in effect as if they were
the investigation of the Royal Commission, reached its ultimate height in that end result, where they

were exercising - that is the Royal Commissioners -

coercive power under the Evidence Act, when in fact

the very evidence in respect of which those powers

were exercised was already before them as part of

their conduct of the Royal Commission.

So that that is in fact what happened; the

anomaly thereby created of having only one

investigation brought about results that we say

could never have been within the powers conferred

under the ASC Act.

BRENNAN J:  In the light of your exposition over the

problems, can we identify the legal issues that

arise?

MR MERKEL:  Yes, Your Honour.

BRENN~ J: And you will bear in mind, I take it, that we

are concerned with an appeal under the AD(JR) Act,

and so it would be incumbent on you, I would have

thought, to identify the decisions to which that

Act applied which are said to have been in some way

invalid or ultra vires?

MR MERKEL:  Yes, Your Honour. May I say this, Your Honour:

the appeal is not confined to the AD(JR) Act; it
is also an appeal against the abuse of statutory

power in so far as it relates to Mr Johns at common

law, but I appreciate the force of what Your Honour

says.

Your Honour, the document in the application

book that sets out an answer to Your Honour's

questions is at page 98 in volume 1. At page 99

what was given to the Full Court was an answer to

Your Honour's question, that each of the decisions

made under the AD(JR) Act was identified, and what

was set out under each decision was the section of

the Act which could be used as an arguable or

possible source of the power. The case being put

Johns 13 25/6/92

by the applicant that there was no base, for

example taking the first decision, Your Honour,

there was a decision to enter into the arrangement

with the Royal Commission in the terms set out in

the relevant documents.

BRENNAN J:	Was that an exercise of statutory power?
MR MERKEL:	We say, Your Honour, it depends entirely on the

characterization of those particular documents.	We
say that, properly understood, what was intended
there was to confer ASC power under Part 3 to
Ms Megay for the purpose of aiding the Royal

Commission's investigation, and it is the exercise
of power that does not exist.

BRENNAN J: But was any power conferred on Ms Megay thereby?

MR MERKEL:  Yes, Your Honour. She was given-

BRENNAN J:	No, by this decision to enter into an arrangement?
MR MERKEL:	Your Honour, the arrangement is embodied in the

documents that are identified. The relevant

documents are embodied - - -

BRENNAN J: Let it be so; what is the decision?

MR MERKEL:  The decision, Your Honour, is to be found in - I

probably should take Your Honour straight to it.

The decision is to be found in the documents

referred to. There are, essentially, three

documents, Your Honour. The first is the minutes

of the meeting at page 302.

BRENNAN J:	Is that an exercise of statutory power?
MR MERKEL:	Yes, Your Honour, the resolution delegates to

Ms Megay and her staff the powers of the ASC for the purpose of conducting their investigations.

BRENNAN J: Are powers exercised by resolution? Was there

not an express delegation signed by - - -

MR MERKEL:  In one of the resolutions, Your Honour.

BRENNAN J: What was that?

MR MERKEL: There was a resolution delegating, and then an

instrument appointed pursuant to the resolution.

BRENNAN J: The specific exercise of the power was the

instrument, was it not?

MR MERKEL:  That was the specific exercise of the delegation

power.

Johns 14 25/6/92

BRENNAN J: And that is the instrument, the validity of

which you challenge?

MR MERKEL:  Yes, the decision.

BRENNAN J: And the resolution is the evidence which you

rely on?

MR MERKEL:  Yes, Your Honour, although we put it in two

ways. We say there is a decision to delegate the

power. The resolution, we say, is the decision

under the enactment. But we put it either way,

Your Honour. If the instrument is the decision

under the enactment, then the resolution is the

conduct in relation to the decision which can be
challenged and was challenged on the same basis.

If I could go, Your Honour, to how it in fact

proceeded because it is rather difficult to talk in

terms of these decisions, what we have done in that

document is to identify every decision that

constituted the conferral of power to aid the Royal

Commission and the exercise of that power. The

complexity of the document, or its length, is only

because the power in fact conferred and exercised

was so extensive, in other words, unparalleled in

respect of investigatory power, and we have

attacked it at its source and in its exercise at

each stage. But could I go, Your Honour, to how

this came about so the Court can understand how

these issues have arisen.

Your Honour, the relevant documents are in

volume 2. I should say, Your Honour, lest there be

any doubt about it, we believe it is an accurate

comment to say that there was no suggestion, apart

from the document I will take you to, that

section 14A was the source or basis upon which

power was exercised until these proceedings arose.

In other words, it appeared to all concerned and in all the documents that section 13 was being relied

upon and, indeed, when these matters were

·challenged at the Royal Commission, the Commission

itself in its rulings indicated that the powers

were being exercised under section 13.

BRENNAN J:  That may be so. I mean, the question is whether

or not there was power to do what was done.

MR MERKEL:  Yes, Your Honour. Your Honour, could I go

firstly to page 298. The evidence at this stage is

Ms Megay and Mr Menzies, who was in effect her

counterpart, had meetings and that letter arose as

a result of the meetings. In paragraph 2,

Your Honour, there is a reference to the intention

to enter into:

Johns 15 25/6/92

arrangements designed to ensure that the

respective activities -

of the two bodies "are coordinated". And then in

the next sentence, Your Honour, in the second

paragraph:

Such coordination seems particularly necessary

where the ASC has commenced investigations

into the affairs of a particular company -

Then they put a proposal for co-operation on that basis to the Royal Commissioners. Paragraph (1)

refers to the then "current investigations";

paragraph (2) indicates that there will be certain

overlaps between the two activities. There is a

problem referred to in paragraph (4), which I need

not trouble you with, about private and public

hearing, and then the critical paragraphs,

Your Honour, are paragraph (5), (6) and onwards.

In paragraph (5) there is a recognition of 14A deeming the NCSC direction:

to continue as if the Royal Commission were an investigation under the ASC Act. I understand

that the Royal Commissioners are happy to

continue to give effect to that investigation.

However, it is necessary that the ASC delegate

to the Royal Commissioners powers of

investigation. This delegation by the ASC is

permitted under section 102 of the Act to

staff members (which term would not include

the Royal Commissioners), and to other persons

with the Minister's approval. Unless you wish

some other procedure, the ASC will seek the

approval of the Minister to a delegation of

investigative powers under section 102 to the

Royal Commissioners.

Can I just stop there, Your Honour.

Mr Justice Davies found, and we say correctly, that

that matter left as it was there showed that there

was a recognition in law, we say correctly, but in

fact that the investigation in accordance with the ministerial direction was to continue by the Royal

Commission as the Royal Commission's investigation

by the Royal Commissioners. And we stress,

Your Honour, that it was central to the

co-operative arrangement in September 1990 that the

Royal Commissioners, and only they, be conferred

with all these powers so they could conduct this

investigation as one investigation using various

sources of powers - not anyone else, just them.

Johns 16 25/6/92

Then, Your Honour, there is a reference to

what we would submit became specific - possibly

specific investigations - where Mr Menzies said:

However, I assume that any delay in obtaining

that approval will not jeopardise the

activities of the Royal Commission to the

extent that delegations can be made to

employees of the Royal Commission, who are

also "staff" of the ASC for the purposes of
the Act, as described below.

(6) I understand that the Royal Commissioners would like Messrs Megay, Christie and Holmes,

each of whom are staff of the ASC (presently

on unpaid leave and seconded to the Royal

Commission) to be delegated powers of

investigation. The ASC is prepared to make

that delegation of authority, subject to the
agreement of the Royal Commissioners as to
appropriate procedures to ensure that the ASC

is properly responsible for the acts of its

staff members. It seems appropriate that the

ASC ..... can monitor and, if necessary

supervise, the actions of staff to whom

authority is delegated under section 102. And then there are conditions, and could I take

Your Honour to the first point at the top of

page 300:

(a) All procedures for investigations adopted

by the ASC are complied with by such

delegates -

The "investigations adopted by the ASC" is a

reference to the earlier investigations they are

carrying on in respect of which it is suggested

there will be an overlap -

(c) To the extent that the delegate is

exercising delegated powers, the delegate remains subject to direction by the ASC -

and that arises under the Act -

In addition, the ASC will authorise the other ten employees of the Royal Commission

nominated by you to exercise power under

section 29.

That enables the subpoena of documents.

BRENNAN J:  I notice paragraph (b) contains that reference

to the monthly report.

MR MERKEL:  Yes, Your Honour, that is so:

Johns 17 25/6/92

(7) There would seem to be a public benefit in

an exchange of information obtained by both

the ASC and the Royal Commission pursuant to
the respective investigations.

Again, not the same investigations or the same subject-matter, but the ASC's individual

investigations and the Royal Commission's overall

investigation.

Then there is the problem, in the middle of

the page, arising about disclosure of information, and there is a reference to particular information

relevant to the Royal Commissioners. If the

investigation was section 14A, all information, by

definition, would be relevant to the Royal

Commission because it was the same investigation.

So what was there suggested is that if, in the

course of the particular investigations,

information relevant to Trice was obtained, then

there was an ability to disclose it and pass it on.

And there was a reference to that function being

delegated to Ms Megay, and then at 301 to in effect
show the impossible position Ms Megay was put in -

the two hat situation - in the last sentence of

paragraph (9), this is for the purpose of exchange

of information. Ms Megay was to act, in effect, as

the nominee of the Royal Commission in that regard,

she was acting on behalf of the Royal Commission.

Now, that was the arrangement proposed. The

next document, which is a paper prepared for the

meeting of the ASC, is at page 306, and this is the

material that one can assume was before the ASC
when it passed its resolutions. Page 307,

recommendation (1) was:

That the ASC enter into an arrangement with

the Royal Commission •.... in the terms set

out -

in the draft letter that I just took Your Honours
to;	(3) is a recommendation that the ASC delegate

to the nominated persons:

powers of investigation under

Part 3 •.... subject to the conditions proposed.

And we say that it is inexorable that that was to

give effect to the purpose in paragraph (1); (4)

is a delegation to other staff of the Royal subpoena documents. And then:

Background: The Royal Commission is

investigating the activities of the

Tricontinental Group. That investigation will

Johns 18 25/6/92

concern both the activities of the Bank and

its relationship with various borrowers.

There will be a degree of overlap between the

Royal Commissions investigations and

investigations of the ASC.

The overlap came from the separate investigations

into individual borrowers. If Ms Megay was giving

effect to a section 14A investigation, there was no

overlap at all, because the terms of reference

under the ministerial direction were identical to

the terms of reference of the Royal Commission

under its letters patent.

The arrangements proposed in the draft letter

arise from discussions with the Director of

Investigations for the Royal Commission,

Noreen Megay (an officer of the ASC on unpaid

leave) and are intended to avoid duplication

of efforts -

to the extent of the overlap. "The most important

issue" is the exchange of information, and that

comes up thereafter, "formal" instruments were the:

Delegation under section 127(5) -

which is the provision that says it would be an

offence for unauthorized disclosures, and there is

a delegation for someone to be given the power to

authorize disclosures under the ASC Act.

Mr Whitehouse was given that in respect of

information to the Royal Commission. He was an

official of the ASC, and this becomes relevant to

the question of excess of power. At first it was
thought that 127 would require independent exercise

of ASC discretion and decision making, in effect

not have a decision made to give to the Royal

Commission by its director of investigations.

What then happened is that it became cumbersome and Ms Megay was given that power, as

director of investigations, to determine what

material would go to the Royal Commission.

Then that paper was followed by the resolution

which is at page 304, which is the official Act of

the ASC, and that says, in the first paragraph:

The Commission considered a paper concerning

the Victorian Royal Commission's
investigation ••.•• and the degree of overlap
between its investigations and the

investigations of the ASC and co-operation

between the two agencies.

Johns 19 25/6/92

Then there was the problem of disclosure referred to, and then there were certain amendments to give

effect to that concern, and then over at page 305

the formal decisions were made. And answering

Your Honour the presiding judge's question to me

earlier, we say the proper characterization of each

of these decisions is in the document I took

Your Honour to. We say that whether one subdivides

it up under statutory heads or a decision to

exercise power under Part 3 for the purpose there

identified, we say that either way the purpose

which is accurately identified in the first

paragraph is one that is not a lawful purpose for

which statutory power can be exercised.

TOOHEY J: But, Mr Merkel, is it suggested that each of the

many decisions that are referred to in the minutes
of order, either individually or collectively,

requires examination to determine whether or not

there was an abuse of power?

MR MERKEL:  No, Your Honour, because the facts are much

simpler than that. The facts, in fact, are that

there was no evidence called by Ms Megay as to the

exercise of power, so there was no suggestion by

her she was exercising section 14 power.

Mr Menzies' evidence, in any relevant respect, says

that in January he turned his mind to section 14

but really, apart from his paper, that the rest is

documentary.

What then happened, Your Honour, was that a form of summons was used which is at page 315.

There was never any separate examination of each decision, because the evidence was unchallenged

that after Ms Megay's memo - could I just hand up

to the Court, it is referred to in our affidavit,

but so I can get the chronology in its correct

sequence, Mr Menzies exhibited, through the

business provisions of the Evidence Act, a

memorandum by Ms Megay and this was prepared by

her, it appears, in June and it sets out in effect

as a written record the documentary basis for the

exercise, or proposed exercise of power. She sets

out sections 13(3) and (5); sets out her power

under section 19; says that she has perused

transcript into the Royal Commission, and then at

the third page, fourth-last paragraph:

In the circumstances I have formed the necessary suspicion upon which to base a

series of notices pursuant to subsection 19(2)

of the ASC Act with a view to investigating

for the purposes of the due administration of

the relevant company law.

Now, that is in fact the language of section 13:

Johns 20 25/6/92

I intend to issue notices pursuant to section 19 of the ASC to persons whom I

believe will give information relevant to the

ongoing investigation of the affairs of the
Tricontinental group of companies.

Those notices will be returnable before me. And she annexes to it a similar suspicion under

section 16A which is the counterpart under the

Code.

BRENNAN J:  Mr Merkel, we seem to be going every which way

here. Your first proposition, as I understand it,

and correct me if I am wrong, is that the

resolution that you have taken us to is a
resolution to delegate to Ms Megay powers under

section 13 simpliciter, is that right?

MR MERKEL:  Yes, we say that was the purpose of the resolution.

BRENNAN J: That was the scope of the resolution, is that

what you are saying or not?

MR MERKEL:  We say, Your Honour, the ASC, intending to

confer upon her section 13 powers, had the purpose
of giving her power to investigate, in effect, in

an unfettered manner Intertricontinental. But we

say that the only possible basis -

BRENNAN J:	I am sorry, I do not understand it.
MR MERKEL:	I will rephrase it, Your Honour.  We say that

the only legal basis for the resolution in February

was section 13.

BRENNAN J.:  Why do you say that?

MR MERKEL: Because, Your Honour, that is all that was being

referred to and intended by that resolution because

appointing the Royal Commissioners. The proper	section 14A was to await the ministerial regulation
construction of what was the purpose of the
resolution of the documents referred to,
Your Honour, was to enable Ms Megay and the Royal Commission staff to exercise powers for specific
investigations and the delegation for that purpose,
which is the section 13 power. Your Honour, the difficulty I have in answering Your Honour's question is that no evidence was called by anyone
from the ASC to say that our discussion at this
meeting was that we will turn our minds to the
specific investigations or we will do anything else. All that was placed before the court,
Your Honour, were the resolutions.

Johns 21 25/6/92

BRENNAN J: They did not have any onus of proof, did they?

I mean, you are challenging an exercise of power and the onus is on you to show that it is invalid.

Now, your first proposition is that the purported delegation to Ms Megay of power was excessive.

MR MERKEL:  Yes, Your Honour.

BRENNAN J: Now, to make that, the first question is: what

was the scope of the delegation?

MR MERKEL:  Yes, Your Honour, we say the scope of the

delegation was an intent to confer specific

investigatory power on her, in respect of
particular investigations, as a vehicle to achieve

the purpose of using those powers to aid the Royal

Commission. So that there was an ability,

lawfully, to confer upon her specific investigatory

power in respect of the nominated investigations,
but not for the purpose of aiding the Royal

Commission. The purpose of a section 13

investigation is to determine whether there was a

contravention and take appropriate steps as an

investigative body to enforce the law in respect of

the contravention. But what was intended, and this

is where this matter went, in effect, in the wrong

direction, they did not really intend her to carry

on an investigation into those companies which the

ASC was carrying on. They used those companies as

the umbrella under which she was to exercise power

nominally in those investigations, but for the
purpose of aiding the Royal Commission to the
extent that it was overlapping in its

investigations with those companies.

That is the proper characterization of what

that document did. So, therefore, it was an excess

of power because it was being given to a person who

was not herself investigating those companies, but

was really an aid to the Royal Commissioners'

investigation into a different company, namely, the

Tricontinental Group.

BRENNAN J:	Why was she not investigating those companies?
MR MERKEL:	No, Your Honour, she -
BRENNAN J:	Why do you say she was not?
MR MERKEL:	In the letter, Your Honour, they were current

ASC investigations. She had been seconded from the NCSC the previous September to the Royal Commission

and was working full time as director of

investigations for the Royal Commission. She

continued doing that and presently, I believe,

still is doing that. She was not herself

investigating anything; she was acting as director

Johns 22 25/6/92

of investigations in her capacity as a State
employee.

BRENNAN J:  But why is this dichotomy raised there; why can

she not be doing both?

MR MERKEL:  She could be doing both, Your Honour, but she

was not. There was no evidence that suggested she

had any connection, at any time, with the nominated

companies in paragraph (1) of that letter.

BRENNAN J: But she was given the powers to do the

investigation and she exercised those powers, did

she not?

MR MERKEL:  Your Honour, going back to the February

resolution, she was given power to investigate

those companies as part of her role as director of

investigations into Tricontinental to avoid the

overlap. She never, Your Honour, exercised that

power as such; she thereafter exercised power for

the purpose of aiding the Royal Commission.

BRENNAN J: Your proposition, if I understand it correctly,

is that because she was given power which she

exercised, but exercised it in order to aid the

Royal Commission, that that factor vitiated the

exercise of the power.

MR MERKEL:  Yes, Your Honour, that is one of the

propositions.

BRENNAN J: Let us just pause, let me try to grapple with

that one for a moment. To make that proposition

good, you must show that it vitiates the exercise

of a power validly conferred if one of the purposes

for its exercise is to assist the agency of the

Royal Commission.

MR MERKEL: But, Your Honour, that is moving from the

conferral to the exercise.	We say the conferral
had that illegitimate object as its purpose and,

therefore, the conferral was invalid.

BRENNAN J:  Let us go back to that. Your proposition then

is that to confer power on Ms Megay, being a power

which, of course, is to be exercised under the

statute and for the purpose for which the statute

provides, that to endeavour to confer that power

upon her so to be exercised, understanding that it

would be exercised in aid of the Royal Commission,

is something which vitiates the delegation of that

power.

MR MERKEL:  Yes, Your Honour, to be used for the general

purposes of the Royal Commission.

Johns 23 25/6/92

BRENNAN J:	Why?
MR MERKEL:	Because, Your Honour, we say that if one goes to section 13 - does Your Honour have section 13 of
the ASC Act?

BRENNAN J: Yes. The point is this, is it not, we are not

talking about a court case here or the exercise of

rights or res judicata or anything of that kind;

we are talking about investigations being carried

on. That means A asks Ba question, and it would

be folly to have A and C both asking B the same

question. So that if A is going to ask the

question, it then becomes unnecessary for C to ask

it and vice versa. Why is it that to confer power

on A to ask Ca question, understanding that the

answer will be transmitted to C, vitiates the

exercise of the power to ask B the question?

MR MERKEL:  Your Honour, because it requires an answer to

the first question. That is correct, Your Honour,

in respect of a specific question and answer in a

specific situation. That was not what was the

subject-matter of the resolution. What was the
subject-matter of the resolution, Your Honour, is
for her to use her specific investigatory power for

the purposes of the Royal Commission. Those

purposes, Your Honour, are identified at pages 283

to 284, and for present purposes I need go no

further, Your Honour, than to say that those

matters go far beyond what I will call the

section 13 investigatory purposes, and if I go to

section 13 her power, Your Honour, under that
section was under subsection (3).

BRENNAN J: What page is that?

MR MERKEL:  It is at page - does Your Honour have the CCH?

BRENNAN J: The CCH volume 2 third edition?

MR MERKEL:  Yes, Your Honours, it is at page 63,301. We

say, Your Honour, the investigatory power under

section 13(3) is in respect of a contravention and

it must, by definition, be for the purpose of

giving effect to the powers to prosecute or to take

such other remedial steps in respect of a

contravention under a relevant Act. So that there

is no wide-ranging function other than to

investigate for the purpose of bringing a

prosecution or bringing civil proceedings or

exercising a specific statutory power under the

Code.

GAUDRON J: But is not your problem this: one assumes, let

us say, for the purposes of your argument, that

there are both such purposes. One does not assume

Johns 24 25/6/92

that they do not have the purpose as well of
carrying out the functions you say are necessary

for section 13(3). They have got some additional

purpose. Why does that vitiate the decision?

MR MERKEL: Because, Your Honour - - -

GAUDRON J: It is a purpose which is not itself improper.

MR MERKEL:  Your Honour, it comes up this way - and we say

that either way the case against the ASC on these

matters on our case would succeed - if the purpose

of the original delegation was a proper one in that

it was to confer exercise of section 13 power and

to also aid the Royal Commission, and if the latter

purpose was improper but the former was a

substantial purpose, then the former purpose could

survive and save the delegation. But what then

happened, Your Honour, is that the power was never

exercised in accordance with its original

parameters. All three judges - - -

GAUDRON J:	We do not know.
MR MERKEL:	We do, Your Honour, the - - -

GAUDRON J: Other things might yet occur, might yet develop.

MR MERKEL: I am moving ahead, Your Honour. If the original

delegation was valid because it was intended to be

operative in respect of section 13, all three

judges in the Full Court held that that section did

not warrant and could not warrant the exercise of

power that in fact occurred.	I am not
confined - - -

GAUDRON J: But I do not understand why that should be so.

MR MERKEL: Because, Your Honour, Their Honours examined

what Ms Megay did and the summonses and the manner

in which she exercised the power and they said that

her power, in fact as exercised, was one which was

not for the purpose of a section 13 investigation

but was for the purpose of the investigation by the

Royal Commission. That was a finding on the

evidence by all members of the Full Court, and that

section 13 could not justify what she did.

GAUDRON J:  Now you have moved again to exercise. You must

go to conferral at this stage. Now, if it is

conferred on Ms Megay, so that at the end of the

day the information and so on that she obtains will be available to the ASC for the enforcement of laws which have been breached and, in the meantime, it

will be available to the Royal Commission, what is

the problem about the delegation or the conferral?

Johns 25 25/6/92

MR MERKEL:  Your Honour, if it were a substantial

purpose - - -

GAUDRON J: And why does it have to be substantial?

MR MERKEL:  We say that if the substantial purpose of the

resolution is an improper one, the resolution will

fail.

GAUDRON J: But it is not improper in itself.

MR MERKEL:  Your Honour, if the substantial purpose was to

confer section 13 investigatory power and that was
lawful, then the resolution would not fail and the

delegation to give effect to that purpose would not

fail. May I say this: the ASC will not pursue

that case because the court found, and

Mr Justice Davies referred to an apparent concession by the ASC to this effect, that in

fact - if I can now, having answered Your Honour's

question, that if the purpose was a section 13

purpose, thereafter that the exercise of the power

so conferred was never a section 13 exercise in
fact, and Their Honours all found that the exercise
was invalid.

Now, for our purposes, we say that there is no

two stools to fall between. If the original
purpose of the conferral is valid under section 13
or by reason of section 13, the subsequent exercise

of power is invalid because it was not by reference

to - it was not able to be based on section 13, so
the exercise of each step taken under the Act was

invalid. So that is our fall-back position. Our

first position is that the proper characterization

of what I have taken you to in February is a

substantial purpose to use investigative power to

?id the Royal Commission.

I accept that under section 127 if, as an

incident of the proper exercise of power, you wish

only makes good the main proposition that if the	to assist a State agency, you can, but we say that
primary purpose, rather than the incidental
purpose, is to assist the State agency, that is an invalid exercise of power.

GAUDRON J: What are the relevant provisions of the AD(JR)

Act in this regard? What is it in that Act that

you would say would bring the decision undone?

MR MERKEL:  Your Honour, we say, going to section 5 - is

Your Honour now talking of the decisions to exercise the power?

GAUDRON J:  No, I am talking about the decision to confer the power.

Johns 26 25/6/92

MR MERKEL:  Yes, Your Honour, we rely upon, again on the

basis that it was not - I can say this: if it is

based upon purpose, Your Honour, we say - - -

LTL16 as a lifting of the condition. Neither of

them is expressed in terms of an instrument arising

under a contract, but rather instruments executed

in the exercise of statutory powers.

MR FINKELSTEIN:  I am not suggesting that what was attempted

to be done here was something in the nature of a

private arrangement; I am merely suggesting that

condition - because the statute does not allow the

Johns 85 MR FINKELSTEIN, QC 25/6/92

imposition of conditions at least when section 127

is being availed of, the imposition of conditions
is the thing which is beyond power, so that the

recipient of the document or the information that

is handed over, when the power to hand it over is

section 127, takes it free of conditions unless

there is a private arrangement.

BRENNAN J:  Then if the documents were handed over in

purported exercise of an unspecified statutory

power but on conditions, the inference would be

that section 25(3) supported it.

MR FINKELSTEIN: Correct.

BRENNAN J: That being so, there must be another exercise of

statutory power to lift the condition.

MR FINKELSTEIN: That is so.

BRENNAN J:  Now, if the second exercise of statutory power

of lifting the condition is invalidated, for

whatever reason, for a purpose alien to the purpose

for which the power was conferred or however it

might be put, where does leave the recipient of the

documents who then deals with them on the footing

that the condition has been validly lifted?

MR FINKELSTEIN:  In our submission, the only way in which

the recipient of the document or information can be

dealt with is if a person who has an interest in

that document has a means of protecting it, that

is, a means which is one which it can articulate as

a cause of action at law so that, if a person can

claim ownership of the document he can bring an

action detinue. If a person can show that the

document constitutes information which a court of

equity would treat as confidential information, he

can bring a suit in equity to restrain the use of

the information but, by whatever means, it must

fall within some recognizable justiciable cause of

action and he must have a defendant against which

he can run the course.

BRENNAN J:  Why is it then that the Royal Commissioners in

this instance are not, in respect of the disclosure

publicly of the information, amenable to a

restraining order in equity?

MR FINKELSTEIN:  There are two reasons why that would be so

or why the answer is that they are not amenable.

The first requires the information to be of a type

which the law would treat as confidential and in

some circumstances information which may be

compulsorily acquired is intended to be

confidential and relevantly interested persons can

protect the confidence. In this case, however, the

Johns 86 MR FINKELSTEIN, QC 25/6/92

legislation itself, shows that the information

which is gathered by the Commission is information
which can be made available to third parties so

that the statute itself shows you that there is no

intention that compulsorily acquired information is

intended to have the necessary qualitative

confidence. So that the first reason why there is

no justiciable cause against the Royal

Commissioners is because the relevant notion of confidence or attributes of confidence would not operate in respect to his particular information.

The second though is something else. There is

a middle ground; there is three. The second one is

if it was confidential, its disclosure, that is,
its tendering in evidence, would mean that whatever

was confidential loses its confidential character,
which is to say no more than a document or

information remains confidential, if it has the

requisite attributes, until some event occurs where

the confidence is lost, and the best way of losing the confidential nature of something that may have

been confidential is tendering it either in court

or in a public hearing. That is what happened in

this case in respect of those particular

transcripts about which the applicant still makes

complaint. So, if it was confidential it lost its

confidential character.

The third reason is that Royal Commissioners,

at least in Victoria are given, by statute, by

section 21A of the Evidence Act of Victoria, the

same immunities as a superior court judge, and that

means that they are immune from suit in respect of

causes of action such as breach of confidence.

Just like a supreme court judge in Victoria cannot be restrained by injunction from receiving in

evidence a document which may be the confidential

property of somebody else, likewise with Royal

Commissioners. And the immunity from suit

but they did not need to deal with the issue in operates, as we sought to argue in the Full Court	their judgment, not only in respect of claims and
damages but for actions in equity, injunctions and
declarations. And it is another point to deal with
under the contempt issue as well.

So that there would not be a justiciable cause

because of the facts, and there is not a

justiciable cause because the suit cannot be

maintained against the Royal Commissioners because

they have statutory immunity from the suit. And

the same point - while I am dealing with it -

exists in relation to the fourth question that the proceed in public in view of the criminal trial.

What the complaint is, as articulated in the

Johns 87 MR FINKELSTEIN, QC 25/6/92

statement of claim against the Royal Commissioners,

is apprehended contempt of the County Court trial

fixed February next. Contempt is a proceeding in

respect of which the Royal Commissioners have

immunity because of section 21A of the Evidence

Act. The fact that contempt, or an action in

contempt is the subject of the immunity is an issue

that was decided in the Court of Appeal in New

South Wales, Yeldham v Rajski, (1989) 18 NSWLR 48,

by all the members of the Court of Appeal.

BRENNAN J:  Do you have copies of that?

MR FINKELSTEIN:  Yes I do. So that dealing with the last

issue, the first point, of course, is that the

Royal Commissioners are immune from suit. They

cannot be sued in any form of proceedings for

contempt. Might I also at the same time hand to

the Court a copy of the relevant parts of the it is not the whole of the Act, it is only the

relevant division dealing with Royal Commissioners

and boards of inquiry.

BRENNAN J: Thank you. I take it this question of immunity

was canvassed before the Full Court?

MR FINKELSTEIN: Yes, it was, and before the trial judge and

nobody has wanted to say anything about it at all,

thus far. The further points that we want to make

on the issue of contempt and whether or not there

is any real question to be decided by this Court,

all of the members of the Full Court below applied

the relevant principles in relation to the law of

contempt from Hinch, Glennon and BLF. An

examination of the judgments of all of the members

of the court, the majority from page 202 on and

Mr Justice Davies from 243 on, show the various

issues that were taken into account. The very

issue sought to be articulated here was argued and

addressed by the court below, as appears from the

application book, page 201, last paragraph, where	the Court sets out counsels' argument, complaining
about the trial judge ignoring the effects of final
submissions:

namely that this would involve the creation of

a general atmosphere of prejudice against

Mr Johns in the public mind, such as to

amount, in effect, to a public vilification of

him.

That was a submission that was made at trial.	The
trial judge did not reject that as a relevant

principle to inquire, but rejected it as a matter

of practical application in the facts of this case.

The same submission was made to the Full Court.

Johns 88 MR FINKELSTEIN, QC 25/6/92

The Full Court took cognizance of the principle; did not reject it as a relevant principle, but

looked at the evidence which was before it, and

came to the conclusion that whatever prejudice

might be caused was not sufficient to constitute a

contempt of court, and set out all of the reasons

why that was so.

So it is not a case where the Full Court ignored what might otherwise be a relevant

principle, but merely in the context of all of the

facts, having regard to the nature of the

submissions that were going to be made against

Johns, having regard to the nature of the trial

that he was facing in the County Court, which was a

secret commission's case, and bearing in mind the
fact that the Royal Commissioners had said, in
respect of one other, or two other, potential set

of facts which would be similar to the secret

commission's charge that Johns was facing in the
County Court, they would not deal with those issues

in public because they felt that it would be

unreasonable or unfair to Johns having regard to

the criminal trial to do so, but were dealing with

other matters unrelated in kind to the

subject-matter of the criminal charge, the court,

at all levels, discounted the possibility of an

unfair prejudice on jurors at the criminal trial.

The court applied the correct principles and

of course, we would say, came to the right result,

but at all levels, fairly and squarely, took

account the complaint about the possible

vilification and the effect that that might have in

the minds of jurors at the trial next year. So

that there is no error in principle. There was not

an error in principle at the trial, and we would

say, no error in principle demonstrated at all

before the Appeal Court.

There is one issue that the Court should also

be told about, and that is the limited use that the

Royal Commissioners intend to make of the

information that they received. If the Court looks

at page 197 of the application book, that is

volume 1, there is a reference to what the

Royal Commissioners said on their ruling of

14 February, and the relevant part of the ruling is

at page 344, in volume 2. The Royal Commissioners

ruled that, "no further use" of Johns' records of

examination would be made by the Royal Commission

in order that there be no publication of those

already tendered.

Previously having decided that those which had

not been tendered to that time should not be, and

in their ruling, saying this:

Johns 89 MR FINKELSTEIN, QC 25/6/92

Having regard to the limited extent of the material contained in Mr Johns' ASC

transcripts, we feel that in most cases they

are now of marginal value for the Commission's

purposes.

That is paragraph 18 of the ruling, at 343 of the

application book.

Now, in a sense, this of course does not go to

power, it goes to the exercise of discretion and

whether or not the Full Court of the Federal

Court's stated position about that, that is, that

they would not enjoin the Royal Commissioners is

right or wrong, the relief that is sought by the

application is, in effect, to restrain the

Royal Commissioners making any adverse comments

about him at all based on the material. It is

clear from what the Royal Commissioners have said

that they have had very marginal assistance from the material and most of what they got they said was not going to be used in any event.

The one issue that I wanted to deal with probably by way of explanation more than submission

in relation to comments that Justice Gaudron raised

about why the contempt proceeding is in the

Federal Court in any event:	rightly or wrongly the
view that we came to was this.	The contempt was a

contempt of the County Court; the Supreme Court has

got jurisdiction to deal with contempts of inferior

courts - the County Court being a court created by

statute is an inferior court. Somewhere in the

pleadings, I cannot point precisely where, the

applicant relies on the cross-vesting legislation,

to cross-vest whatever is necessary to cross-vest

from the State Court to the Federal Court. So that

we assume that, for at least the contempt and maybe

for other causes of action, it was an instance of

the Federal Court exercising State jurisdiction and

we treated it as a State court for that purpose.

We would accept the suggestion or proposition,

if it ever became relevant, that the contempt was

not relevantly part of the matter that was
otherwise before the Federal Court from the federal

legislation, but because - it is paragraph 4.6 of

the application, which appears at page 7 of the

application book, where what was sought - although

no order was made, an order was sought:

cross-vesting in the Federal Court of

Australia such jurisdiction of the

Supreme Court of Victoria in relation to this

proceeding as is appropriate -

Johns 90 MR FINKELSTEIN, QC 25/6/92

We did not want multiplicity of proceedings ourselves, did not go through the formality of obtaining a relevant order, but on the basis that the Federal Court had the power to exercise the

State jurisdiction under that particular

legislation. That might be a good reason or a bad

reason, but it was easier to leave it in the

Federal Court rather than to run the separate point

in a State court because everybody was pressed for

time, and the quicker that it came on, the better

it was for everybody. But anyhow, that is how the

contempt got into and stayed in the Federal Court.

I was just asking my learned junior whether

there is one other point that I should raise with

the Court, and I have some diffidence in doing it.

One of the submissions we made on the contempt

point, both at trial and before the Full Court of

the Federal Court, was if there was a contempt it

would not be a contempt committed by the

Royal Commissioners but by those who publish what

the Royal Commissioners say. I say "with

diffidence" because I know Your Honour the learned

presiding Judge expressed in ELF a tentative

different view, and two other members of the Court

expressed a view that would support our position,

but that is, of course, another point to bear in

mind, and that way we have got 2:1 our favour, but

all tentative. They are the only submissions we

desire to make, if the Court please.

BRENNAN J: Yes, thank you, Mr Finkelstein. The Court

proposes to adjourn at this hour until 9.15

tomorrow morning, but perhaps I could ask counsel

for the other respondents how long they expect to

take. In your case, Mr Dreyfus, how long do you

think you would be?

MR DREYFUS:  I do not propose to take a great deal of time.

If it please the Court. Most of what I desire to say has already been said by my learned friend,

Mr Myers, and my learned friend the Acting

Solicitor-General. There is one matter which has

not been raised by either of them and, if it was convenient to the Court, what I propose to do is

hand to the Court now some material that deals with

the extent of dissemination of these transcripts.

What my instructing solicitor has done is to swear

an affidavit which exhibits the two affidavits

dealing with this matter that were before the trial

judge. If I might hand those to the Court now.

BRENNAN J: Yes. That would be of assistance, thank you.

And it may be of assistance also if you could

outline, not to us necessarily, but to Mr Merkel

the broad nature of your submissions now so that he

Johns 91 MR FINKELSTEIN, QC 25/6/92

can have an opportunity of preparing for his reply

after you have completed your submissions.

MR DREYFUS: If it please the Court, I will do that.

BRENNAN J:	Now, in your case, Mr Gallagher?
MR GALLAGHER:	The seventh respondent's interests are

essentially those that would be outlined in the

sixth respondent's response, and I do not

anticipate our position would take more than a few

minutes.

BRENNAN J: Yes, very well.

MR GALLAGHER:	Thank you.
BRENNAN J:	In that case the Court will adjourn until 9.15

tomorrow morning.

AT 5.05 PM THE MATTER WAS ADJOURNED

UNTIL FRIDAY, 26 JUNE 1992

Johns 92 25/6/92