Johns v Connor and Others

Re: MALCOLM NELSON JOHNS
And: PETER J. CONNOR; WILLIAM PURDON; ALLAN SCADDEN and AUSTRALIAN SECURITIES
COMMISSION
No. N G3061 of 1992
FED No. 246
Corporations Law
(1992) 10 ACLC 774, (1992) 7 ACSR 519
(1992) 107 ALR 465
(1992) 35 FCR 1
(1992) 27 ALD 25

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Corporations Law - validity of "notice to attend" for examination - whether one or more inspectors can issue a notice to attend and conduct examination - degree of specificity required in a notice to attend - meaning of "matter" being investigated - meaning of "affairs" of a company.

Australian Securities Commission Act 1989: ss. 13, 19, 20, 21, 22, 23.

Acts Interpretation Act (Cth) 1901: s. 23.

HEARING

SYDNEY

#DATE 7:5:1992

Counsel for the Applicant : D.F. Rofe QC

J.V. Agius

Solicitors for the Applicant : Gadens Ridgeway

Counsel for the Respondents : J.T. Gleeson

Solicitors for the Respondents: Australian Securities

Commission

ORDER

The Court declares that:

1. The notice addressed to the applicant dated 3 April 1992 requiring appearance at an examination or reasonable assistance in connection with an investigation is not authorised by the provisions of Division 2 of Part 3 of the Australian Securities Commission Act 1988 and is invalid.

The Court orders that:
1. The respondents be restrained from taking any further steps upon or in relation to the said notice.

2. The respondent, Australian Securities Commission, pay the costs of the applicant of the proceeding including any reserved costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

On 3 April 1992 Malcolm Nelson Johns, the applicant, was served with a notice ("the notice") in the following terms:

" FORM 1 AUSTRALIAN SECURITIES COMMISSION REGULATIONS AUSTRALIAN SECURITIES COMMISSION NOTICE REQUIRING APPEARANCE AT AN EXAMINATION OR REASONABLE ASSISTANCE IN CONNECTION WITH AN INVESTIGATION

TO: Malcolm Johns

Level 12 Skygarden

77 Castlereagh Street Sydney NSW 2000

In relation to an investigation into the affairs of Hotel and Immobilien Development A.G. ('HMI') covering the period 20 December 1991 to 31 March 1992 you are hereby notified that under subsection 19(2) of the ASC Law you are required:

(a) to appear at 10.00a.m. on the 10 of April, 1992 at the office of the Australian Securities Commission, Level 10, 135 King Street, Sydney before Peter Connor, William Purdon and Allan Scadden for examination on oath or affirmation and to answer questions put to you in relation to the investigation: and

(b) to give the Australian Securities Commission all reasonable assistance in connection with the investigation. Please note the provisions of subsection 23(1) of the ASC Law (relating to legal representation) and section 68 of the ASC Law (relating to self-incrimination). The effect of those provisions is set out at the end of this form.

Dated this 3rd day of April 1992 Signature of persons authorised by the Commission to conduct the examination Signed Peter J Connor

Signed Allan Scadden

Signed William Purdon

NOTICE OF RELEVANT STATUTORY PROVISIONS

1. Subsection 23(1) of the ASC Law provides that a person who is required to submit to an examination is entitled to have his or her lawyer attend the examination. It also provides that the person's lawyer may address the inspector or ask questions about matters raised with the person by the inspector.

2. Section 68 of the ASC Law relates to self-incrimination. It provides, in part, that a person is not entitled to refuse to comply with a requirement made of the person by the Commission or an inspector by a notice of this kind on the grounds that to do so might tend to incriminate the person or make the person liable to penalty. However, a person may claim, before making an oral statement, signing a record of producing a book, that the statement, record or book might tend to incriminate the person or make the person liable to penalty. Where the person does this, neither the statement, the fact that the person signed the record or produced the book, nor any information, document or thing obtained as a result, is admissible in evidence against the person in a criminal proceeding or a proceeding for the imposition of penalty, other than a proceeding in respect of the falsity of the oral statement or a written statement in the record."

The notice describes the company, the affairs of which are under investigation, as "Hotel and Immobilien Development A.G.". It was agreed between the parties that this is incorrect and that the notice should have referred to "Hotel Und Marina Immobilien Development A.G. ("HMI")". Counsel for the applicant informed the Court at the commencement of the hearing of the matter that no point was taken by the applicant with respect to the incorrect reference to the company in the notice, so the case proceeded on that basis.
The applicant is a solicitor and the principal of the firm of solicitors Messrs Malcolm Johns and Company ("the firm") carrying on practice in Sydney.
On 6 April 1992 the firm sent a letter to the Australian Securities Commission ("the ASC"), one of the respondents, referring to the notice of 3 April 1992. The letter said:

"We refer to the above Notice served upon our Mr Malcolm Johns on Friday afternoon, 3 April, 1992.

This Notice purports to be issued pursuant to Section 19 of the ASC Act and to require the writer to appear at 10.00 a.m. on 10 April, 1992 at the office of the Commission before:- 'Peter Connor, William Purdon and Allan Scadden for examination on oath or affirmation and to answer questions put to you in relation to the investigation ...' As you are aware, we are the Solicitors acting for HMI in relation to its several takeover bids of the ordinary shares in Horizon Properties Limited ('HPL') and for the ordinary and contributing shares in IMT Limited ('IMT'). Since December 1991 we have engaged in considerable correspondence with the Commission in an endeavour to have the requisite Part A Statements and proposed Offers registered with the Commission pursuant to Section 644 of the Corporations Law ('Law'). By reason of the fact that our client Company is incorporated in Austria and has no office or officers and conducts no business activity in Australia it has been necessary to seek from the Commission from time to time extensions of time within which to make the takeover bids pursuant to Section 746(4) of the Law. Throughout this time neither our overseas client nor ourselves have been aware that the Commission was conducting any investigation into the affairs of HMI.

In this regard we would ask you to advise whether the investigation is being made pursuant to Section 13(1) and/or 13(2) of the ASC Law. If made pursuant to Section 13(1), please specify what contraventions of a national law scheme and/or of a law of the Commonwealth, State or Territory concerning the affairs of HMI or involving fraud or dishonesty relating to HMI does the Commission have reason to suspect may have been committed?

If the investigation is made pursuant to Section 13(2), please specify what 'unacceptable circumstances' within the meaning of Part 6.9 of the Law the Commission has reason to suspect have or may have occurred? As Solicitors for HMI, we have sought to fully co-operate with the ASC in relation to the above takeover bids. Hence we are at a loss to know why the issue of the purported Section 19 Notice was necessary. Section 69(1) of the ASC Act (dealing with Legal Professional privilege) would clearly limit the information which the writer as Solicitor for HMI could be required to give any at examination and it would be the writer's duty to invoke the application of this Section.

However, without prejudice to Counsel's advise that the purported Notice is invalid (infra), we suggest the following course of conduct in lieu of further proceeding upon such Notice:-

(a) The Commission forthwith write to this firm setting out the information it seeks to obtain from the writer concerning the affairs of HMI which it is investigating.

(b) The writer agrees to provide such particulars as he is required to provide pursuant to Section 69(3) of the ASC Act and will seek the consent of the client Company to furnish such further information (otherwise the subject of legal professional privilege) as Counsel may advise should be furnished. It is Counsel's view that the purported Notice is deficient and invalid and our instructions are to test this matter should the Commission seek to further rely on such Notice. In any event, the writer seeks the Commission's agreement to defer the date of any examination of the writer to a mutually convenient date. In the meantime, this letter is to request that the Commission:-

(a) advise that it does not propose to proceed with the examination in accordance with the purported Notice;

(b) furnish to this firm as Solicitors for HMI:-

(i) the information sought above as to the bases of the investigation;

(ii) the information sought by the Commission from the writer relating to the affairs of HMI. In default of the Commission giving the writer the advice sought in (a) above by noon tomorrow (Tuesday, 7 April 1992) our instructions are to approach the Federal Court of Australia to seek appropriate declarations and orders invalidating the purported Notice and for costs.

The ASC replied by letter of 7 April 1992 saying in essence that it proposed to proceed with the examination in accordance with the notice and declining by implication to accede to any of the requests of the firm.
The applicant filed an affidavit in which the background to the matters which have given rise to the notice are stated. I state them in summary form as follows. HMI was incorporated in Austria on 5 November 1991 as an unlisted stock corporation and currently has an issued share capital of 25 million Austrian schillings. All of the directors and officers of HMI are resident in Austria and the office of HMI is located in Vienna. HMI is not a registered foreign company in Australia, has no office here and conducts no business here.
The instructions to the firm from HMI were in relation to separate takeover offers for the ordinary shares in Horizon Properties Limited ("HPL") and for the ordinary and contributing shares in IMT Limited ("IMT") other than the ordinary shares already held by HPL.
Since receiving instructions from HMI in November 1991 in relation to the takeover offer, the firm has been involved together with management consultants, Howarth Services, retained by HMI, in the processing of the requisite Part A statements and proposed offer documents. There has been an exchange of a considerable amount of correspondence between the firm and the ASC in relation to the proposed Part A statements and proposed offers. On 10 February 1992 HMI caused to be lodged with the ASC for registration, the Part A statements, the proposed offer documents and the explanatory memoranda with respect to the takeover bids as required by the relevant provisions of the Corporations Law (s. 637 and s. 644).
On 12 February, the ASC informed HMI that the registration of the Part A statements and proposed offers was refused. A number of requests for extensions of time and various amendments were proposed over a course of correspondence which extended into early April.
On 7 April 1992 the applicant commenced this proceeding by filing an application seeking a declaration that the notice is invalid and an order that the respondents be restrained from taking any further steps upon or in relation to the notice. The first three respondents (Peter J. Connor, William Purdon and Allan Scadden) are the three signatories to the notice and the three persons who are named in the body of the notice as the persons before whom the applicant is required to appear.
The matter was heard by consent on a final basis by the Court on 14 and 15 April 1992.
The notice stated that the applicant was required to attend for examination on 10 April 1992. When the matter was mentioned before me on 8 April 1992 and then adjourned to 14 April, it was agreed between the parties that the ASC did not require compliance with the notice before 14 April 1992.
During the hearing before the Court, the ASC, by its counsel, undertook to the Court that the respondents would not hold the examination of the applicant pursuant to the notice prior to 10 a.m. on the fifth day after judgment was given by the Court.
The applicant asserts that the notice is invalid on either of two grounds. The first alleged invalidity is that the relevant provisions of the Australian Securities Commission Act 1989 ("the ASC Act") (Division 2 of Part 3) do not authorise the ASC to issue notices requiring attendance for examination before more than one person. It was conceded by counsel for the applicant, and rightly so, that s. 23 of the Acts Interpretation Act 1901 applies so that, unless the contrary intention appears, words in the singular number include the plural. It was argued that the reference to the "inspector" in the relevant provisions of the ASC Act is to one inspector and not to a plurality of inspectors. Reliance was placed in particular upon other provisions of the ASC Act which were said to stand in marked contrast to the provisions of Division 2 of Part 3. The sections referred to included ss. 48, 58, 59 and 188. Section 48 relates to the right of a person to legal representation when the person is making disclosures to the ASC pursuant to a requirement made under Division 4 of Part 3 of the ASC Act (which relates to the statutory requirements to disclose information about securities or futures contracts). Sections 58 and 59 concern the power to summon witnesses and take evidence and prescribe the conduct of proceedings at hearings before the Commission under Division 6 of Part 3. Section 188 is directed to the holding of hearings by the Corporations and Securities Panel established by s. 171. Counsel for the applicant submitted that the effect of these and other provisions was that, where the legislature intended there be a plurality or the capacity for a plurality of persons to conduct examinations of persons under the ASC Act, it said so. It was argued that the absence of that plurality and the consistent reference to the singular by the use of the word "inspector" in Division 2 of Part 3 evinced a contrary intention for the purposes of s. 23 of the Acts Interpretation Act.
The second ground of alleged invalidity of the notice is based on the form of this particular notice. It was argued that, as s. 19(3)(a) requires that the relevant notice state "the general nature of the matter referred to in" s. 19(1) (that is the matter that the ASC is investigating or is to investigate under Division 1 of Part 3), the notice failed to comply with this statutory requirement because all it said, so far as relevant to this argument, was that the requirement of the applicant to attend was "In relation to an investigation into the affairs of" (HMI) "covering the period 20 December 1991 to 31 March 1992". It was argued on behalf of the applicant that the word "affairs" is a word of the widest import and reliance was placed upon s. 53(a) of the Corporations Law which defines by an inclusive definition the "affairs" of a body corporate in very wide terms.
I turn first to the question whether the notice is invalid by requiring that the applicant attend before more than one person for examination on oath. It was not argued that the notice was invalid because it was signed by the three persons before whom the examination was to be conducted other than as consequentially in that, if the applicant succeeded on its primary argument that only one inspector could conduct the examination, it must follow, so it was said, that the three persons named in the notice could not sign the notice. Whether the premise on which this argument was founded is sound will require analysis only if the applicant succeeds in its primary argument that one inspector only may examine him.
The relevant part of the ASC Act with which this case is concerned is Part 3 entitled "Investigations And Information-Gathering" which commences with s. 13 in the following terms:

"13(1) The Commission may make such investigation as it thinks expedients for the due administration of a national scheme law of this jurisdiction where it has reason to suspect that there may have been committed:

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

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

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

(ii) involves fraud or dishonesty and relates to a body corporate, securities or futures contracts. 13(2) Where the Commission has reason to suspect that unacceptable circumstances within the meaning of Part 6.9 of the Corporations Law of this jurisdiction have, or may have, occurred, the Commission may make such investigation as it thinks expedient:

(a) for the purposes of determining whether or not to make an application under subsection 733(1) or 734(2) of that Law; or

(b) otherwise for the due administration of a national scheme law. 13(3) Where the Commission has reason to suspect that a contravention of a relevant previous law of this jurisdiction may have been committed, the Commission may make such investigation as it thinks appropriate.

13(4) ...

13(5) ..."

The expression "national scheme law" is defined in s. 5(1) of the ASC Act to mean:-

"(a) the following:

(i) The Corporations Act 1989;

(ii) The Corporations Law of the Capital Territory;

(iii) This Act; or

(b) a law of another jurisdiction that corresponds to an Act or Law referred to in paragraph (a);"

The expression "national scheme law of this jurisdiction" is defined in s. 5(1) to mean:

"an Act or Law referred to in paragraph (a) of the definition of 'national scheme law' in this subsection."

The authority for the issue of a notice of the kind involved in this proceeding is s. 19 which provides:

"19(1) This section applies where the Commission, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1. 19(2) The Commission may, by written notice in the prescribed form given to the person, require the person:

(a) to give to the Commission all reasonable assistance in connection with the investigation; and

(b) to appear before a specified member or staff member for examination on oath and to answer questions. 19(3) A notice given under subsection (2) shall:

(a) state the general nature of the matter referred to in subsection (1); and

(b) set out the effect of subsection 23(1) and section 68."

Section 20 provides:

"The remaining provisions of this Division apply where, pursuant to a requirement made under section 19 for the purposes of an investigation under Division 1, a person (in this Division called the 'examinee') appears before another person (in this Division called the 'inspector') for examination."

Section 21 empowers the inspector to examine the examinee on oath and it provides:

"21(1) The inspector may examine the examinee on oath or affirmation and may, for that purpose:

(a) require the examinee to either take an oath or make an affirmation; and

(b) administer an oath or affirmation to the examinee.

21(2) The oath or affirmation to be taken or made by the examinee for the purposes of the examination is an oath or affirmation that the statements that the examinee will make will be true.

21(3) The inspector may require the examinee to answer a question that is put to the examinee at the examination and is relevant to a matter that the Commission is investigating, or is to investigate, under Division 1."

Sections 22 and 23 state:

"22(1) The examination shall take place in private and the inspector may give directions about who may be present during it, or during a part of it.

22(2) A person shall not be present at the examination unless he or she:

(a) is the inspector, the examinee or a member;

(b) is a staff member approved by the Commission; or

(c) is entitled to be present by virtue of:

(i) a direction under subsection (1); or

(ii) subsection 23(1). Penalty: $1,000 or imprisonment for 3 months, or both.

23(1) The examinee's lawyer may be present at the examination and may, at such times during it as the inspector determines:

(a) address the inspector; and

(b) examine the examinee; about matters which the inspector has examined the examinee.

23(2) If, in the inspector's opinion, a person is trying to obstruct the examination by exercising rights under subsection (1), the inspector may require the person to stop addressing the inspector, or examining the examinee, as the case requires."

In Division 2 of Part 3 the person upon whom the power is conferred to conduct the examination is called the "inspector"; and the singular is consistently used throughout the relevant sections in that Division. Section 23 of the Acts Interpretation Act applies so that, unless the contrary intention appears, the use of the singular "inspector" includes more than one inspector. The question is whether a contrary intention appears from the ASC Act.
The purpose of s. 23 and the principles that govern its application have been referred to in many cases; but the following oft cited passage from the judgment of the Judicial Committee of the Privy Council in Blue Metal Industries Limited v Dilley (1970) AC 827 at 846-7 is apt:

"By section 21 of the Interpretation Act, 1899

(NSW), it is enacted that in all Acts, unless the contrary intention appears, words in the singular shall include the plural and words in the plural shall include the singular. Such a provision is of manifest advantage. It assists the legislature to avoid cumbersome and over-elaborate wording. Prima facie it can be assumed that in the processes which lead to an enactment both draughtsman and legislators have such a provision in mind. It follows that the mere fact that the reading of words in a section suggests an emphasis on singularity as opposed to plurality is not enough to exclude plurality. Words in the singular will include the plural unless the contrary intention appears. But in considering whether a contrary intention appears there need be no confinement of attention to any one particular section of an Act. It must be appropriate to consider the section in its setting in the legislation and furthermore to consider the substance and tenor of the legislation as a whole. (See Sin Poh Amalgamated (H.K.) Ltd. v. Attorney-General of Hong Kong (1965) 1 WLR 62.) In that case a test was indicated which often may be helpful. In the judgment of the board delivered by Lord Pearce it was said, at p 67: 'The Interpretation Ordinance was intended to avoid multiplicity of verbiage and to make the plural cover the singular except in such cases as one finds in the context of the legislation reason to suppose that the legislature, if offered such amendment to the bill, would have rejected it.' "

I see no indication in Division 2 of Part 3 of the ASC Act which would render an examination by more than one inspector unworkable. Nor would the rights of an examinee be more affected by an examination by two or more persons than by one person: c.f. Wouters v Deputy Commissioner of Taxation (1988) 20 FCR 342 at 348-349 with respect to notices issued pursuant to s. 264(1)(b) of the Income Tax Assessment Act 1936.
The matters that are likely to arise in the course of the conduct of an examination under Division 2 of Part 3 of the ASC Act can be dealt with as readily by two or more persons as they can by one. The ASC Act empowers the person conducting the examination to administer an oath or affirmation to the examinee (s. 21). If there is more than one inspector then they may decide among themselves who will administer the oath or affirmation. If a question arises as to whether the examinee's lawyer is being obstructive (s. 23(2)) and a division of opinion occurs amongst the inspectors then, in the absence of a majority view the requisite finding of obstruction could not be made. It is true that the ASC Act does not make express provision for those matters when the examination is being conducted by more than one inspector; but its absence does not point to the unworkability of an examination being conducted by more than one inspector. Nor does it assist a conclusion that the legislature intended that there be only one person capable of conducting an examination of this kind.
It is a well-established principle of interpretation of statutes that a power conferred by a legislature carries with it the power necessary for its performance or execution. The express power impliedly authorises everything which can fairly be regarded as incidental or consequential to the power itself: Re Sterling Ex parte Esanda Limited (1980) 30 ALR 77 per Lockhart J. at 83; Dunkel v Deputy Commissioner of Taxation (1990) 27 FCR 524 per Sheppard J. at 528 and the cases cited in both judgments.
In s. 23 itself, reference is made to the right of "the examinee's lawyer" to be present at the examination, to address the inspector and examine the examinee. Plainly the examinee would be entitled to have a barrister and solicitor to appear for him or a Queen's Counsel and a junior together with the solicitor. It could hardly be suggested that the use of the singular in this context was an indication of an intent of the legislature to exclude a plurality. I mention this as indication of the care which must be exercised when construing statutes of the Parliament before finding that the use of the singular number evidences a legislative intention to exclude the plural where the statutes of the Parliament operate in the context of a legislative regime which includes the Acts Interpretation Act.
There are sound reasons why more than one person may be required to conduct an examination under Division 2. With the increasing complexity of corporate activities, the scope of an inquiry under Part 3 may be large and call for expertise of inspectors in more than one field, for example, takeovers and insolvency. It would be a curious result if a plurality of notices had to be issued to the one examinee to appear on separate occasions before different inspectors in relation to the same subject matter.
Other sections of the ASC Act such as ss. 48, 58, 59 and 188 to which reference was made earlier, are examples of specific provision being made by the legislature for more than one person to conduct proceedings; but that is because the legislature has decided that proceedings of the kind to which those sections are directed must be conducted by more than one person. It does not follow that a provision in the same Act for the examination of a person by an inspector, in the singular, evinces an intent to exclude the conduct of the examination by more than one person. Certainly it recognises that one person may conduct the examination, but it does not support a conclusion that more than one person cannot.
The predecessor of the Corporations Law was the Companies Code 1981, s. 289(3) which provided that:

"Where two or more inspectors have been appointed under this Part to investigate affairs of a corporation, each of those inspectors may exercise his powers or perform his functions under this Part independently of the other inspector or inspectors."

Thus, the Companies Code specifically envisaged that inspectors (in the plural) could conduct investigations if required. Although the Corporations Law is cast in the language of the singular and the Companies Code in the plural, this does not support a finding that the legislature intended that only one inspector can conduct an examination under Division 2 of Part 3 of the Corporations Law. I discern no rationale for such an intention.

I was referred in argument to a number of cases relating to notices addressed to persons for examination under other statutes: for example, notices issued by the Commissioner of Taxation pursuant to s. 2641(b) of the Income Tax Assessment Act 1936 (Dunkel's Case and Wouters' Case), notices under s. 316 of the Commonwealth Electoral Act 1918 (Hare v Gladwin (1988) 82 ALR 307). But I agree with the statement of Sheppard J. in Hare's Case at 328 that:

"One has to be careful, in drawing upon cases decided in relation to sections of other Acts, not to apply them too slavishly even if they appear to be of some assistance. It is the construction of s. 316 (of the Commonwealth Electoral Act) which is involved here and that must be kept firmly in mind."

One of the cases to which I was referred was the judgment of Davies J. in Little River Goldfields NL v Moulds (1991) 6 ACSR 299 where a notice was issued under s. 19(2) of the ASC Act requiring the examinee to attend for examination before two named persons. Although the validity of the notice was challenged before Davies J. on more than one ground, no challenge was made on the basis that the notice named a plurality of inspectors and therefore his Honour did not say anything about this question.
This first attack on the validity of the notice fails.
I turn to the second ground of alleged invalidity of the notice, namely, that, contrary to the command of s. 19(3), it failed to "state the general nature of the matter referred to in sub-section (1)", namely, the "matter that it (the ASC) is investigating, or is to investigate, under Division 1."
Section 13 (of Division 1) tells us what that matter is, namely, whether there may have been committed a contravention of a national scheme law or other law of the Commonwealth or of a State or Territory of the kind mentioned in s. 13 or "unacceptable circumstances" within the meaning of Part 6.9 of the Corporations Law relating to takeovers. That is the matter that the ASC is investigating. The matter is not the fact that the ASC has reason to suspect that there may have been committed a contravention of any such laws; that is the necessary condition that must exist before the ASC may make an investigation pursuant to the authority conferred by s. 13(1).
The meaning to be attributed to the word "matter" has been considered in more than one statutory context, including, of course, the Constitution. The meaning of "matter" in s. 155(1) of the Trade Practices Act 1974 has been considered in a number of the reported cases. Section 155(1) refers to "furnishing information, producing documents or giving evidence relating to a matter that constitutes of may constitute, a contravention of this Act". In that context the word "matter" has been held to refer to the body of facts which constitute or may constitute a contravention. In W A Pines Pty Limited v Bannerman (1980) 30 ALR 559 Brennan J. said at 565-566:

" 'Matter', said Franki and Northrop JJ. in Melbourne Home of Ford Pty Ltd v Trade Practices Commission (1979) 5 TPC 26 at 47; ATPR 40-107 at 18,097 'is to be construed in its ordinary sense of an affair or a thing'. It refers to a body of facts, a body of facts which 'constitute' or may constitute; a contravention. A contravention is constituted by the conduct of persons (whether corporate or natural) and the factual circumstances attendance upon conduct, so the 'matter' to which s. 155(1) refers comprehends the conduct of persons and the circumstances attendance upon it. Whether or not the relevant body of facts constitutes a contravention is a matter of law, and that question does not turn upon the perception or knowledge of the facts held by the Chairman or any other person. But when the section speaks of a matter which 'may constitute' a contravention, it speaks not of the relevant and entire body of facts as they exist or have existed - for that body of facts either does or does not constitute a contravention - but of a body of facts which are not fully known and which, if and when they are fully known, may reveal themselves as constituting a contravention. A 'matter that may constitute a contravention' is the facts being investigated, some of which are not known by the Commission, the Chairman or the Deputy Chairman. However, a 'matter that may constitute a contravention' does not take its character from the belief of the Commission, the Chairman or the Deputy Chairman, but from the nature and quality of the facts as they are or have been and as they may reasonably be suspected to be or to have been. A matter which 'may constitute' a contravention also encompasses future facts, that is, facts which will occur or the future occurrence of which may reasonably be suspected. The character of the matter is determined objectively, and if it could be shown that a contravention would not be constituted by a concatenation of facts which exist or have existed and facts which might reasonably be suspected to exist or to be about to exist or to have existed, there would be no 'matter' relating to which a person could furnish information etc, as provided for by s. 155(1)."

In Australian Securities Commission v Graco (1991) 29 FCR 491 Jenkinson J. discussed the meaning of the word "matter" where it appears in Divisions 1 and 2 of Part 3 of the ASC Act, in particular ss. 19(3) and 14. After citing the passage from Brennan J.'s judgment in W A Pines Pty Limited to which reference has just been made his Honour said at 497-8:

"In Divs 1 and 2 of Pt 3 of the Australian Securities Commission Act the word has, in my opinion, another of its meanings: a subject, as of discussion or debate or for consideration or investigation. The language of s. 14 in my opinion gives no indication that that sense of the word would not comprehend 'the affairs, or particular affairs, of a corporation.'."

I agree in substance with what Jenkinson J. said. The language of sub-ss. (1) and (3) of s. 19 indicate to me that the "matter" to which they are referring is the subject of the investigation by the ASC; and that is defined by s. 13(1) as an investigation by the ASC as to whether a contravention of the kind to which the section is directed may have been committed.
It follows that in order to comply with s. 19(3) the notice must state the general nature of that matter and the question in this case is whether the notice has done this.
It will be recalled that the notice described the "general nature" of such matter in these terms:

"In relation to an investigation into the affairs of ... (HMI) covering the period 20 December 1991 to 31 March 1992".

"Affairs" is a word of very wide import. In its ordinary meaning "affairs" in relation to a corporation includes the activities, business or concerns of the corporation. As Jenkinson J. observed in Graco (at 496), if the notice in that case had stated that the investigation was of the affairs of the company, it would have added "very little" to the statement which in fact appeared in the notice, namely, that the notice was "in relation to an investigation of Titan Hills Australia Limited". The subject matter of the investigation to which the notice in this case refers is described as "... the affairs of ... HMI covering the period 20 December 1991 to 31 March 1992." The use of the word "affairs" in the notice does little, if anything, to specify or identify what the investigation is about. The only words of limitation appearing in the notice are those of temporality.
I agree, however, with Jenkinson J. where he said in Graco at 495 that the requirement imposed by s. 19(3) that the notice shall state the "general nature of the matter" referred to in s. 19(1) "invites both comprehensiveness and brevity in description of the matter, and gives no encouragement to definitional particularity."
The extent of the knowledge of the ASC of matters which may constitute a contravention of the relevant law to which s. 13 is directed will of course vary from case to case. The purpose of an investigation under Division 2 of Part 3 is to find out facts and gather documents to put the ASC into a position where it will be able to make an informed assessment about whether a contravention of relevant law may have occurred and to enable it to decide whether charges should be brought against corporations or persons arising therefrom. An inquiry of this kind is essentially of an inquisitorial nature, and the ASC ought not to be unduly fettered in the execution of its investigative functions.
It is legitimate to have regard to the factual background which led to the issue of the notice. This shows that HMI is making several takeover bids for the ordinary shares in HPL and for the ordinary and contributing shares in IMT other than the ordinary shares already held by HPL. These events occurred during the period stated in the notice, namely, 20 December 1991 to 30 March 1992. It seems likely that the circumstances to be investigated by the ASC and which will be the subject of the examination of the applicant are facts and circumstances which relate to the several takeover bids of HMI. But the notice is silent about the ambit of the investigation save for temporal constraints.
I agree with Jenkinson J. in Graco at 495 that a notice issued pursuant to s. 19 of the ASC Act does not have to state matters designed to provide a means of determining the relevance of questions for the purpose of s. 21(3) (which empowers the inspector to require the examinee to answer relevant questions put to him at the examination). A notice is not a pleading. But some general hint must be given in the notice itself of the nature of the matter to be investigated by the inspector. In some cases this will call for the statement of the possible offence with reference to the section of the particular statute; in other cases this may not be necessary, though generally it would be. The notice the validity of which was challenged before Davies J. in Little River Goldfields NL (but not on any point relevant to the present proceeding) referred to "an investigation of suspected offences which may have been committed pursuant to s. 128 of the Securities Industry (NSW) Code in respect of dealings in securities of Little River Goldfields NL during the period February 1988 to February 1990 inclusive" (at 303). This is the kind of statement that one would expect to find in a notice given pursuant to s. 19 and would generally be a sufficient, though minimal, statement of the "general nature of the matter referred to in subsection (1)" as required by s. 19(3). After all, the ASC must have reason to suspect that there may have been committed a contravention of the relevant law before its power to conduct an investigation pursuant to s. 13(1) is enlivened. It is not asking too much that it states the general nature of the matter that it is investigating in the notice itself.

The power to issue a s. 19 notice may have very serious consequences to the person to whom it is addressed or to other persons or corporations. As Mason J. said in O'Reilly v Commissioners of the State Bank (Vic) (No. 1) (1982) 153 CLR 1 at 19, with respect to s. 264 of the Income Tax Assessment Act, "The power to issue a s. 264 notice may have a great impact on the affairs of individual persons". See also Wouters' Case at 348.
In my opinion the notice does not state the "general nature of the matter referred to in subsection (1)" as required by s. 19(3). It says nothing about any possible contravention that some company or person may have committed or the particular "affairs" that are the subject of investigation. It may be contrasted with the form of the notice issued in Little River Goldfields N.L.
Counsel for the respondents relied upon Jenkinson J.'s decision in Graco as being authority for the proposition that, provided there are temporal boundaries to the subject of an investigation expressed in a notice issued pursuant to s. 19 of the ASC Act, the notice need state no more than that it is in relation to an investigation into a company named in the notice. That does appear to be the conclusion reached by Jenkinson J. on the facts in Graco. In that case the respondent was served with a notice under s. 19 requiring him to assist the ASC with an investigation and to appear before an officer of the ASC for an examination on oath. It appears that the notice described the matter under investigation as being an investigation "in relation to Titan Australia Limited" and nothing more. The respondent failed to appear and the ASC took proceedings for an inquiry under s. 70(3) of the ASC Act as to whether the respondent should be ordered to comply with the requirement made of him by the ASC. The respondent argued before Jenkinson J. that the notice which he had received under s. 19(3) was deficient as it did not give adequate particulars of the matter under investigation. Jenkinson J. thought that the absence of some temporal boundaries of the subject of the investigation led to the conclusion that there was a failure to comply with the requirement of s. 19(3)(a).
Before Jenkinson J. there was evidence from an officer of the ASC that he had formed the view that there was reason to suspect that breaches of certain sections of the Corporations Law, which were specified in the evidence, may have been committed by the directors of certain companies and that it was this which led to the commencement of the investigation pursuant to s. 13 of the ASC Act. There was, however, no direct evidence that the ASC or its delegate had conceived the suspicion described in s. 13(1) or that the ASC or its delegate had reason to conceive such suspicion. His Honour said (at 498) that findings to that effect "must rest on the unsatisfactory basis of inference". His Honour was exercising the Court's discretion under s. 70(3) and he found that the few facts disclosed by the evidence provided no basis for the exercise of that discretion in the ASC's favour and dismissed the proceeding.
Graco is in my view distinguishable from the present case. The primary submission of counsel for the respondent is Graco appears to have been that for a notice to comply with s. 19(3)(a) it must describe "the general nature of the matter referred to in sub-section (1)" sufficiently to enable the examinee to determine the relevance of questions put to him by the inspector (see 494-5 of the report). It was that submission which Jenkinson J. was considering. As I understand his Honour's reasons for judgment he intended to confine his observations about the sufficiency of the notice to the facts of that case in light of the submissions made by counsel for the respondent in Graco.
In my opinion the notice in the present case fails to comply with s. 19(3).
The Court declares that the notice addressed to the applicant and dated 3 April 1992 requiring the appearance of the applicant for examination and to give reasonable assistance in connection with an investigation is not authorised by the provisions of Division 2 of Part 3 of the ASC Act and is invalid.
The Court orders that the respondents be restrained from taking any further steps upon or in relation to the said notice.
The Court orders that the respondent, the ASC, pay the costs of the applicant of the proceeding including any reserved costs.

[1992] FCA 246

07 MAY 1992