Kirk, P.J. v Australian Securities Commission

[1994] FCA 484

JUDGMENT No. .A ,-.,,,. 9 4

CATCHWORDS

ADMINISTRATlVE LAW - stay of proceedings pending judicial review of decision

by ASC to give notices to produce books - undertaking by ASC to enforce notices
only by invoking statutory powers of Court to order compliance - whether irreparable

injury to applicant if stay not granted.

. . . .

-ve D e w IJu dicial Re view) Act 1977 s 15(1)
1989 ss 30, S 63, S 70

vs Ltd v. South Australia (1986) 161 CLR 148

MacDonald v. Aus&&~ Securities Commksio~l (unreported, Hill J, 8 February 1994)

a1 Go vernmen t and Ethnic Affairs v. Msilanu (1992) 34

FCR 169

PETER JEFFREY KIRK and HECTOR JAMES MATTOCK v AUSTRALIAN

SECURlTlES COMMISSION

PRINCIPAL

No. NG 176 of 1994

Coram:	Whitlam J
Place:	Sydney
Date:	6 April 1994

RECEIVED

27 JUL 1994
FEMRAL CWRT OF
AUSIRAUA

Limited Distribution

FEDFRAL COURT OF AUSTRALIA 1 1

NEW DISTRICT	REGISTRY	1	NG 176 of 1994
1
GENF&U, DIVUON	)

PETER JEFFREY KIRK

First Applicant

HECTOR JAMES MATTOCK

Second Applicant

AUSTRALIAN SECURITIES

COMMISSION

Respondent

Coram:	Wh~tlam	J
Place:	Sydney

Date:  6 April 1994

ONS FOR JUDGMENT

The applicants commenced this proceeding for judicial review of the decisions of the respondent to give to each of them a notice under S 30 of ,4ustral1an Securities

. .

1989 ("the ASC Law"). Each notice stated that it was issued:

"In relation to an investigation of a suspected contravention or contravention of sections 565, 269(7)(c), 269(8A) and /or 269(10) of the Companies (South Australia) Code I981 in relation to the management, affairs and accounts for the year ended 30 June 1990 of The Adelaide Steamship Company Limited PAdsteam") and its subsidiaries."

The applicants are partners of the firm of Deloltte Touche Tohmatsu, chartered accountants, which were Adsteam's auditors at the relevant tlme. Each notice required production of books specified as follows:

"I. AN professional indemnity insurance policies and any endorsements to those policies current at the time that the recipient notijied his insurer or broker of a claim or a potential claim arising in respect of the audit of the accounts of Adsteam for the jinancial year ended 30 June 1990 ("the I990 Adsteam Audit").

2.         All correspondence behveen the recipienr and his profmswnal indemnity insurer or broker suace 29 September 1991 bz any way relating to the 1990 Adsteam Audit.

3.         In the event that rhe recipient has not notified his insurer or broker of a claim or potential claim arising in respect of the 1990 Adsteam Audit, all professional indemnity insurance policies and any endonements to thosepolicies current as a the date of this notice."

Each notice requued such production on 10 March 1994. This date for production

has now been adjourned untll this afternoon.

In their application to the Court the applicants claim an order, by way of interlocutory relief under s 15(1) of the Adrnin~strative Decisions (Judicial Review) Act

1977 ("ADJR Act"), "suspending the operation of the decisions in relation to each of the

Notices and staying the examination proceedings of each of the applicants in so far as

those examination proceedings relate to matters the subject of the notices, pending

further order of the Court!' The reference to examination proceedings 1s to examinations

of each of the applicants pursuant to notices given under s 19(2) of the ASC Law, which were originally scheduled for 10 March 1994 and have also been adjourned until this afternoon.

At the hearing of this clalm for interlocutory relief counsel for the respondent

gave an undertaking not to seek to enforce the s 30 notices except by proceedings

pursuant to s 70 of the ASC Law, whlch provides:

"70(1) Thk section applies where the Commission is satisfied that a person has, without reasonable excuse, failed to comply with a requirement made under this Part (other lhan D i W n 8).

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

(3) If the Commission does so, the Court may inquire into the case

and may order the person to comply with the requirement as specified

in the order."

In M t e r for I m a t i o n . Local Government and Ethnic Affairs v MS-

(1992) 34 FCR 169 the Full Court of th~s Court determ~ned that the principles to be

applied in claims for interlocutory rel~ef under s 15 of the ADJR Act were those enunciated by Mason CJ. in Castlemaine Toohevs Ltd v. South Australia (1986) 161 CLR 148. In that case Mason CJ said (at 153):

"The principles governing the grant or refkal of interlocutory injunctions in private law 1Sigation have been applied in public law

factors arise for consideration. In order to secure such an injunction

cases, including constituiional cases, notwithstanding that different

the plaintiff must show:

(I)	that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that the triul of the action the plaintiff will be held entitled to reliej
(2)	that he will suffer irreparable injury for which damages will not

be an adequate compensation unless an injunction is granted;

and

(3) that the balance of conveniazce favours the granting of an
injunction."

In the case at bar counsel for the respondent concede for the purposes of the present application that there is a serlous question to be tned. Notwithstanding this

concession, counsel for the applicants felt obllged to develop at some length what they contended was the strength of the applicants' case. I do not think it is necessary or desirable that I express a preliminary view on this question.

What is important (and is not gainsaid by counsel for the respondent) is that the
documents which are the subject of each of the s 30 notices relate to the affalrs of

Deloitte Touche Tohmatsu and contain, no doubt, commercially sensitive and confidential

information in relation to the firm's insurance arrangements. However, the disclosure

of any such information will now only occur if the Court makes an order under s 70(3) of the ASC Law. The Court plainly will not do so if the decisions to give the notices are invalid since the applicants will not have falled to comply wlth the notices for production

"without reasonable excuse." The apphcants' claim for judicial revlew can conveniently

. .

be heard at the same time as was recently done in MacDonald v. Australian Secuntles

. .

(unreported, Hill J, 8 February 1994). In view of the undertaking of the

respondent, no irreparable injury by way of the disclosure of confidential information will

be suffered by the apphcants.

The applicants submit that, quite apart from the question of any injury flowing

from production of the books sought in the s 30 notlces, they are exposed to the risk of

prosecution under s 63 of the ASC Law. It may be assumed that the respondent's

undertaking in relation to S 70 proceedings extends to not inltlating meanwhile any such prosecution itself. But the Director of Public Prosecutions has under the &ector pf

P r o s e c u u 1983 his own discretion and responsibhty in relabon to prosecutions. The immediate answer to any such concern is that there is simply no evidence to

suggest such prosecution is imminent. If it were, there would be another answer. That is that nothing in the ADJR Act prevents the substance of the matters raised by the

applicants in the instant proceeding being pursued by way of a defence to such a prosecution. Put another way, I cannot perceive any irreparable injury being suffered by

the applicants. They either have a good defence, namely that the s 30 notices are invalid, or they do not. There will be no restriction on such a collateral attack in any prosecution. It may well be, of course, that if the present proceeding has not been determined, there may be some advantage in having the hearing of any prosecution

postponed until the question has been decided by this Court. Those are questions that

do not presently arise.

I think that the position of the applicants is safeguarded from irreparable injury

by the undertaking given by the respondent and that, accordingly, the claim for

interlocutory relief must be refused.

I certify that this and the preceding four pages are a

true copy of the Reasons for
Honourable Mr Justlce AP. Whitla

Counsel for the applicant:	R.B.S. MacFarlan QC and I. L. Ha~vey
inawned by	M a d p c k Partners
Counsel for the respondent:	P.G. Hely QC and S J. Rushton
iaSvUcted by	Mr Beat Sidhu (Australian Securities Commiss~on)
Date of hearing:	29 March 1994