MacDonald v Australian Securities Commission (No 2)

[1994] FCA 41

JUDGMENT No. ,,,~;~,,,,,.m~ ,.m~.%.

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY ) )

1

GENERAL DIVISION )

MATTER NO. NG 3279 OF 1993

BETWEEN:	NEIL ALLAN MACDONALD & FINANCE & MORTGAGE CORPORATION LIMITED
Applicants

m:	AUSTRALIAN SECURITIES COMMISSION Respondent
MATTER NO. NG 3312 OF 1993

BETWEEN:  AUSTRALIAN SECURITIES COMMISSION
Applicant

m:	NEIL ALLAN MACDONALD & FINANCE & MORTGAGE CORPORATION LIMITED
Respondents

I

CORAM: HILL J

PLACE :	SYDNEY
DATED :	8 FEBRUARY 1994

CORRIGENDA

!

I	Amendment to the Reasons for Judgment of his Honour Mr Justice Hill delivered 8 February 1994:
Page 16, line 1 - Delete "corporation. " and insert
"corporation,".
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Page 18, line 9 - Delete "Tribunal's" and insert "Tribunals". Page 23, line-37 - Delete "proceeding" and insert "pending".

23 February 1994

Stuart Bvrne

CATCHWORDS

ADMINISTRATIVE LAW - Judicial Review - whether notices issued under ss.30 and 33 of the ASC Law invalid because issued solely at the behest of another, because the decision to issue was unreasonable or because the decision to issue the notices was invalidly exercised.

CORPORATIONS - corporate character - whether a notice issued to a corporation under s.33 of the ASC Law valid when addressed to a corporation and not to that corporation by its proper officer.

CORPORATIONS - Companies - Australian Securitv Commission Act 1989 (Cth) - whether notices issued under ss.30 and 33 invalid as no reason to suspect contravention of a relevant corporation law or because ambiguous.

CORPORATIONS - Companies - Australian Securitv Commission Act 1989 (Cth) - operation of s.70 - whether pending litigation a reasonable excuse for failure to comply with a s.70 notice.

WORDS & PMUlSES

"person"

Australian Securitv Commission Act 1989 (Cth): ss.30, 33,
37(9), 70.
Administrative Decisions [Judicial Review) Act 1974 (Cth):

s.5(2) (e)

FIELDHOUSE v COMMISSIONER OF TAXATION (1989) 25 FLR 187;
applied.
PENN-TEXAS CORPORATION V MURAT ANSTLAT !N0.2) [l9641 2 QB 647;

considered.

v AUSTRALIAN i3ECURITIES COMMISSION and AUSTRALIAN SECURITIES

NEIL ALLAN MACDONALD & FINANCE h MORTGAGE CORPORATION LIMITED

COMMISSION v NEIL MACDONALD & FINANCE & MORTGAGE
CORPORATION LIMITED

Nos: NG 3279 of 1993 and NG 3312 of 1993 respectively

CORAM:	HILL J
PLACE :	SYDNEY
DATED :	8 FEBRUARY 1994

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY ) 1

)

GENERAL DIVISION )

MATTER NO. NG 3279 OF 1993

BETWEEN:	NEIL ALLAN MACDONALD & FINANCE & MORTGAGE CORPORATION LIMITED
Applicants

m:	AUSTRALIAN SECURITIES COMMISSION Respondent
MATTER NO. NG 3312 OF 1993

BETWEEN:  AUSTRALIAN SECURITIES COMMISSION
Applicant

AND:	NEIL ALLAN MACDONALD & FINANCE & MORTGAGE CORPORATION LIMITED
Respondents

CORAM :	HILL J
PLACE :	SYDNEY
DATED :	8 FEBRUARY 1994

MINUTES OF ORDER

THE COURT ORDERS IN MATTER NO. NG3279/93 THAT:

1.    The application be dismissed.

2.    The applicants pay the respondent's costs.

THE COURT ORDERS IN MATTER NO. NG3312/93 THAT:

3.   The respondents each produce to Mr Quirk of the applicant, within 7 days of this order taking effect, the documents specified in the schedule to each of the notices dated 28 September 1993, copies of which are annexed and marked "A" and "B" respectively to the affidavit of Neil Allan MacDonald sworn 23 November 1993.

4.    The operation of order 3 be stayed until 1 March 1994 at 4.15 pm, or further order.

5.  The matter be placed in the list for directions on 1 March 1994 at 9.30 am.

4.    The respondents pay the applicant's costs.

Note:  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

I -

JUDGMENT NO.

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )
)
GENERAL DIVISION	)

-

MATTER NO. NG 3279 OF 1993

BETWEEN:	NEIL ALLAN MACDONALD & FINANCE & MORTGAGE CORPORATION LIMITED
Applicants

m:	AUSTRALIAN SECURITIES COMMISSION Respondent
MATTER NO. NG 3312 OF 1993
AUSTRALIAN SECURITIES COMMISSION
Applicant
NEIL ALLAN MACDONALD & FINANCE & MORTGAGE CORPORATION LIMITED
Respondents

CORAM :	HILL J.
PLACE	: SYDNEY
DATED :	8 FEBRUARY 1994

REASONS FOR JUDGMENT

On 28 September, 1993, a Mr John Qulrk, a staff

member of the Australian Securities Commission ("the Commission") issued two notices, one under s.30, and the other under s.33 of the Australian Security Commission Act 1989

(Cth) ( "the ASC Law" ) addressed to Mr Neil Allan MacDonald and

to Finance and Mortgage Corporation Limited ("the Corporation"). The notice addressed to Flnance and Mortgage Corporation - - - Limited . .-.- is hereafter referred to as "the	. . .- - .. -.-	- - .	-- - .	- . .-. ---	-. -	.
Corporation Notice".

Each notice stated that it was issued:

"In relation to an -investigation under Dlvision 1 part 3 of the ASC Law of suspected contraventlons of sections 263 and 267 of the Companies (New South Wales) Code and sections 229, 289 and 335 of the

Corporations Law during the period

2 August 1989 to 12 February 1993 by

persons assoclated wlth PROJECT EQUITY

FINANCE LIMITED. "

The schedule to each notice was the same. It is reproduced as Attachment "A" to this judgment.

Mr MacDonald and the Corporation, ("the applicants") commenced proceedings by way of application to this court under the provisions of the Administrative Decisions Judicial Review Act 1977 (Cth) ("the ADJR Act") for review of the

decisions to issue the respective notices. The application

claimed interlocutory relief enjoming the respondent Commission from taking action to enforce the notices. An injunction was initially granted by Beazley J. ex parte to

continue until 6 October 1993.	When the matter was finally	!
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I '

argued before Whitlam 3. on 8 October 1993, his Honour	I
l
dissolved the injunction notlng an undertaking on behalf of	I
the Commission not to enforce compliance with the notices	, . . .
I

within seven days.	The hearing before me is the final hearing	,	P
1 .
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of the application brought under the ADJR Act.	t
l ;. ,
On 27 October 1993, the Commission commenced its own Law, claiming that pursuant to s.70(3), of the Law, the court	I
I

- - .--.---. procee-dirigs by - wa.y -of '-anl -a-~~plc~at-i6n-.n-nli-n-dei , ' -d'f -tlie-- -I-- - - i

inquire into the failure of the applicants produce the books	i .
referred to in the schedule to the notlces and for an order
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requiring production of the books within seven days of the	l
! .. . ,
date of the order.	C
:, ,
Each of these two applications were heard together and I ordered that unless specifically ordered, the evidence	I
. .
in the one be taken as evidence in the other. Subject to one
8 .
matter, to which I will later refer, counsel for the
applicants conceded that if the applicants were unsuccessful
in the ADJR Act proceedings I should make the order sought by
the Commission requiring production of the books specified
although staying the order pending an appeal. It is however	I .
, .
agreed that I should first decide the application under the
ADJR Act before dealing with the proceedings brought under the	I
ASC Law.	, '
The AD JR Act application, as ultimately particularised by senior counsel for the applicants, raised	_I
four separate Issues before a later application for amendment.
I '
First it was alleged that the decisions to issue the notlces
were invalid because the investigations referred to in the	, ,
notices was embarked upon simply by dint of the lodging of a complaint without a proper exercise of discretion. Second and alternative to the first ground is a ground raised under

invalid as belng decisions made solely at the behest of the person whose complaint initiated the investigation. Ln essence these two grounds ralse the same matter.

The third ground raised in the application is that the schedule to each notice was ambiguous and that this ambiguity operated to invalidate the notlces. Finally, a separate argument was raised in respect of the Corporation Notice that it was void because it was addressed directly to Finance and Mortgage Corporation Limited rather than to that corporation by its proper officer.

Subsequently, the applicants moved to amend the application by adding a further two grounds. This motion followed upon my refusing to set aside a notice to produce any complaint that had been lodged with the Commission which led either to the commencement of the investigation referred to in the notices or the issuing of the notices. Separate reasons have already been given for that refusal. Pursuant to the notices to produce the Commission produced a letter from an informant dated 20 November l991 whlch read as follows:

"This letter is to inform you that Neil Alan MacDonald of Proleet Equity Finance Ltd (Company Director) of Floor 2, 203 New South Head Road, Edgecliff 2027, N.S.W. was declared Bankrupt, by the Federal

Bankruptcy Court on Tuesday 19/11/91 in

the presence of Registrar Inge.

--- Mr %-v---- -------

- MacD6nala ' may-aaZoo 37jea-tiFeZtdF >

other companies if he has'nt (sic)

reslgned from them slnce Tuesday

19/11/91".

Counsel for t h e Commission d i d not object t o t h e

addition o f t h e fur ther grounds indicating t h a t no fur ther I

evidence was required t o be called t o answer t h e matters alleged i n t h e proposed amendment. Accordingly I allowed t h e

applicants t o amend	t h e application b y adding t h e following
particulars	i n respect o f grounds 4 and 2 respect ively o f t h e
application.

Re ground 4: "The decislon o f t he

Respondent t o i s sue Notices under Sections 30 and 33 w a s an lmproper exercise o f i t s power i n that it w a s an exercise o f a power tha t i s so unreasonable tha t no reasonable person could have so exercised the power because the lnvest igat lon by the Respondent glvlng r i s e t o the Notices arose from a complaint t o the Respondent dated 20 November 1991 advislng it tha t t h e first Applicant was declared bankrupt on 19 November 1991. "

Re ground 2 : "The declsion t o i s sue Notices under sectlon 30 and 33 pursuant t o an invest igat ion w a s not authorised by the enactment i n pursuance o f which it w a s

purported t o be made i n t h a t the complaint

r e c e ~ v e d by the Respondent on 20 November 1991 could not give r i s e t o a reason t o suspect that there may have been committed any contravention o f a Corporations law

V I Z .	S 229 o f tha t law."
~ l t h o u g h	two matters were raised by these amendments

t h e two matters were argued as involving substant ial ly t h e

same matter. -- - - - - - . . . - . - - . -- -- ~- --.-d. --.--S-

Consequent also upon production of the letter of complaint the applicants sought further discovery of documents before the Commission based upon an argument that under s.13 of the ASC Law an investigation could only be commenced in respect of offences actually committed and that the letter wrltten one day after Mr MacDonaldls bankruptcy could not have disclosed the commission of any offence of acting as a director of a corporation while bankrupt let alone any of the other offences in the notice. This argument is, of course, that particularised in the two amendments.

I declined to allow further discovery indicating

that I would incorporate my reasons for so doing in the present judgment. I did so for two reasons. First, in my view, the application came at a time too late in the proceedings and as a matter of discretion the discovery at that stage should not be granted. Indeed, the timing of the application suggested that the applicants were seeking the discovery to dredge up a case for the Commission to answer.

judgment in the matter relatlng to discovery make it clear	Second, in my view, the authorities referred to in my earlier
that before discovery will be ordered in a case such as the present, the person seeking that discovery must do more than merely assert that these is a case. To adopt the words of Wilcox J. in Nestle Australia Limited v Commissioner of Taxation (1986) 10 FCR 78 at 83: I I

"[There must be some] ... evidence to ground a suspiclon that the applicant has a good case, proof of whlch is likely to be aided by discovery."

I should say that even if it be only necessary to produce some evidence of an arguable case that, in my view, was lacking.

The evidence consisted of a conversation between Mr MacDonald and Mr Quirk referred to in my earlier judgment in whlch, in reply to two questions as to why Mr Quirk was lnvestlgating Project Equity Finance Limited, Mr Quirk had said words to the effect:

"There has been a complaint lodged. Pie
have to make an investigation."

It will be apparent from the date of the letter of complaint that it had been lodged many months before the

notices addressed to the applicants were issued in September

1993.

There is no evidence as to what happened in the
meantime, but accepting the submission that the combined

effect of ss.13, 28, 30 and 33 of the ASC Law required, in the

r

present case, that the notices be in aid of investigation into	I
the commission of an existing offence or offences, the

- - i

evidence dogs not - siiggest an- arguable'case thxt. the- %ol,e Gveit

which not only precipitated an initial investigation but also

k

precipitated the examination of the commission of the offences	I
specified in the notices was the lodging of the complaint.	L
For example, it is more probable than not that a search of the Commission's register, at some time after the complaint had
-
been made, showed the non-flling of the annual return and
precipitated the commencement of an investigation into the
commission of an offence in that regard.
I turn now to deal with the submission in relation to the first two grounds. It may be disposed of quickly.	I
There was no evidence from which it could be inferred that	l
there was no exercise of independent discretion by Mr Quirk.	~,
The onus lies on the applicants and the evidence, consisting	! .
only of the conversation with Mr Quirk, falls far short of
showing on the balance of probabilities (especially
considering the lapse of time between the complaint and the
issue of the notice) that the investigation was commenced	I ,
simply because there was a complaint made without any
independent exercise of discretion.

The two new grounds put fail for similar reasons.
There is no reason to infer that the complaint was the sole

matter before the Commission when the notices were issued.

;, ~

Indeed, such a conclusion would be quite unlikely. The inference is justified neither by the conversation between Mr

Quirk ' and Mr MacDonaId --to -whrch reference' has-. already ,b-een- -- ' - ' I ' '

made, nor by the admission constituted by the terms of the notlces to produce and production of the complamt, namely that the letter was the sole complaint lodged with the Commission.

The submission really founds upon an argument that Mr Quirk should be taken as having said that the complaint was the sole matter that led to the investigations undertaken and that the investigations could not have been extended by supervening events. For the applicants to succeed on either of the new grounds it would need to be inferred that nothing had happened from the date of the complaint to the date, many months later, when the notices were issued.

As the matter stands, there is no evidence from which I would conclude elther that the discretion to exercise the notlces was a discretion exercised so unreasonably that no reasonable person could have exercised it nor that there was no reason to suspect a contravention of a Corporation Law at

the time the notices were issued.

The submission that the schedule to each notice fias
ambiguous similarly fails. It was conceded, properly by

counsel for the Commission, that if the schedule were

ambiguous the notices would be bad. So much follows inter . ,

alia from the reasons of all members of the court in

- Fief dhouse- v- CommTssioner-'of Taxati'on- ( 1989 ) 25'-FCR 187;' .--The - - -

!

matter which divided the majority and the minorlty in that case, namely the severabllity of a notice which all members of the court found to be partially invalid, has no significance to the present case. Although Fieldhouse was concerned with s.264 of the Income Tax Assessment Act 1936 (Cth), the principles to be applied in relation to notices issued under ss.30 and 33 are, in my view, no different in the present respect from those applicable to s.264.

The notice, it was submitted, was ambiguous because it was open to alternative constructions. The first was said

to be that there was a requirement to produce the specified

books but only if the books in question concerned the affairs

of the Corporation during the period specified in the second

paragraph of the schedule. The alternative construction was

said to be that the notice required the production of the

specified books whether or not they covered the specified

period because the notice defined the specified books as being

books falllng within the second paragraph whether they did or , .

did not deal with the affairs of the Corporation during the	-
specified period. With respect, I do not see any ambiguity in	?
the notice. Its terms may not be quite as felicitous as one might hope but they lead to no ambiguity.
i '

The second suggested meaning of the notice is, in my

, m

view, just not open. It gives no work at all to do for the , r .

- I-n.-my- -v.i-ew --the- n6t-i-ce- . . "'

" - - -second' paragraph -of -tT'Se-'notZce;-'

!,

requires production of the books listed in paragraphs 1 to 4

but only if they relate to the affairs of the Corporation and	, .
then only if they do so in respect to the period 2 August 1989	!
t
to 12 February 1993.	,
i
I turn now to deal with the more difficult question of the valldity of the Corporation notice.	I
!
When a legal prescription is directed in general terms to a person to do a spec~fied act, it is a question of construction whether that prescription is directed solely at individuals or whether it is directed not only at individuals but also at corporations. A corporation is an abstract legal entity and may only react through some agent. Hence in the context of the requirement of a statute or other prescription empowering the giving of a notice to a person to attend and give evidence on oath, it is obvious that the notice could only be directed to a person and not to a company because a company as an abstraction cannot take an oath: Fieldhouse

at 218. I '

But even where the coercive power may be to require the attendance of a person to produce documents and to be

examined with respect to them, the requirement to produce and

attend may be addressed to a corporation although the

traditional course at least is then to address the requirement !.

- - . - - ---- - - -----.-, , -. :

t o t h e Corporation t o attend	by i t s proper	o f f i c e r , see Penn-
Texas	Cor~orat ion	v MuratAnstalt (No19641 2 QB 647 .

Sectlon 30 o f t h e ASC law i s i n general terms. I t

s ta tes :

"The Commlssion may give t o :

( a ) a body corporate tha t i s not an exempt

public authority; or

(b ) an e l i g i b l e person i n re lat lon t o such

a body corporate;

a wri t ten no t lce requiring the production

t o a spec i f ied member or s t a f f member, a t

a spec i f ied place and tlme o f specified

books re la t lng t o a f f a i r s o f t he body."

The Corporation Notice was issued under s.33 .of t h e

ASC Law which i s framed i n general terms. I t s t a t e s :

I :,

"The Commlssion may give t o a person a wrl t ten no t ice requiring the production t o

a speczf ied member or s t a f f member, a t a

spec i f ied place and t lme, o f spec i f ied

books	t h a t are	i n the flrst-mentzoned
person's possession	and	re la te t o :
( a ) a f f a l r s o f a	body corporate;	o r

(b ) a matter referred t o i n any o f

paragraphs 31 ( l ) ( g ) t o ( m ) , i nc lus i ve , and

3 2 ( 1 ) ( j ) t o ( p ) inclusive."

The applicant 's submission i s t h a t i n t h e present

case t h e Corporation Notice should have been addre,ssed t o t h e

Proper Of f i ce ; o f tiie --CoTT6rati6E--rXEh%? -thaii-- just - tXr.thF---'---

Corporation, really involves potentially, as counsel for the Commission submitted, the answer to three questions. First is

the question whether as a matter of construction s.33 should be construed so that the reference to "person" refers only to a natural person. Second, and perhaps a related question which arises only if the first question is to be answered "no" is whether, nevertheless, there is some requirement to be

found outside s.33 that additionally a notice to be valid has to be addressed to a corporation by reference to its proper officer so that the failure to refer to the proper officer invalidates the notice.

Finally, there is the questlon whether, lf the first question is to be answered in the affirmative, s.33 authorises the giving of a notice to the proper officer of a body corporate to produce the books which are in the possession of the body corporate itself.

The first question turns not merely upon the language of s.33 itself but upon the language of related	sections, particularly ss.37(9), 38, 39, 63 and 84 of the ASC
Law. Of itself, s.33 is expressed in terms of generality for it uses the word "person", a word applicable equally to
corporations or to natural persons. Section 33 requires the
production to be at a particular time and place. That requirement is neutral as to whether the notice may be given
to a-corporation- or merely to a natyral person. -Rowever'a . . -

corporation, although an abstract legal e n t l t y can, through .agents, comply wi th a requirement t o produce documents a t a particular time and place.

The submission t h a t t h e word "person" i n s.33 i s

r e s t r i c t ed t o a natural person obtains however some support

from t h e terms o f s s . 3 7 ( 9 ) , 38 and 3 9 . These sect ions provide

as fo l lows:

"37(9) I f paragraph ( l ) ( a ) or ( b ) appl les , the person, o r a person In to whose possession the person de l i ve r s any o f the books under subsection ( 8 ) , may require:

( a ) i f paragraph ( l ) ( a ) appl ies - a person who

so produced any o f t he books; o r

(b) In any case - a person who was a party to the compilation o f any o f the books;

t o explain t o t he bes t	o f h i s o r her knowledge	and
b e l l e f any matter about	t h e compilation	o f any o f
t he books or t o which	any o f t h e books	re la te . "

"38 Where a person f a l l s t o produce part icular books i n compliance with a requirement made b y another person under t h l s Dlvlslon, t he other person

may require the first-mentioned person t o s t a t e , t o

the bes t o f h i s o r her knowledge and b e l i e f :

( a ) where the books may be found; and

(b ) who l a s t had possession, custody or

control o f t he books and where tha t person

may be found." a .

"39 A person who has power under t h i s Division t o require another person t o produce books re la t lng t o

a f f a i r s o f a body corporate may,	whether o r not	t h a t
power	i s exercised, require the other person,	so f a r

a s the other person can do so:

( a ) t o l d e n t l f y property o f the body; and

- - .- - .. . - - --------.-U-..-

. .

L

(b) to explaln how the body has kept account of that property. "

The ability to compel an explanation, by force of s.37(9), to the best of the knowledge and belief of the person producing the document does suggest, at least prima facie, that the subsection is dlrected rather to natural persons than

corporations. The gender specific words, his or her, and the

reference to the best of knowledge and belle£ of the person producing the documents conveys more readily the idea of an individual than a corporate abstraction.

I should say that s.37(9) should not be construed so that the producer of the books is to be taken merely as the person who physically delivers them to the officer of the

Commission issuing the s.33 notice. It could hardly be

suggested that if goods were sent by a courier whether by a corporation or by a natural person that the courler could face an interrogation under s.37(9). Sections 38 and 39 present

they concern what might generically be called the supply of	less difficulty to the submuisions for the Commission in that
information although they do so by requiring the person referred to in the section to "state" or to "identify" or to "explain".

In Fieldhouse at 218, discussing an argument raised

under s.264 of the 1936 (Cth), that

- - - . . . . . - .- - . - . - .-

a notice to produce documents could not be addressed to a'

corporation. I said i n a judgment with whlch on t h i s aspect

Burchett J . agreed:

"The f inal submission advanced i n favour o f t he i n v a l i d i t y o f t he not ices w a s that the no t ices were addressed t o a company and that a no t ice addressed t o a company

t o supply information w a s bad .

This submission sought t o found upon what

was s a ~ d by Stephen J. i n Smorqon v

Bankino Group L t d ( 1 9 7 6 ) 134 CLR 475 a t

481-485 i n the context o f t he

imposs ib i l i t y	o f a	company	attending	and
giving	evidence	and	the	consequent

i n v a l i d i t y o f a no t ice under s . 2 6 4 ( 1 ) ( b )

requiring it t o do so. For the purposes

o f h i s submission the Commissioner

accepted that the no t ices were i n fact addressed t o the relevant company although the form o f each not ice made tha t an

arguable i s sue .

In my vlew the submission i s misconceived.

There i s no impediment t o a company !

supplying information.	Of course, a	I ,
.

company can only a c t through i t s agents

but it does not follow from tha t truism

that t he company cannot supply information

any more than that it cannot be required

t o furnish documents. The reason why a

company cannot be requlred t o attend and	, -
give evldence i s tha t a company belng an	, .

abstract legal e n t i t y cannot attend

anywhere - nei ther can it take an oath or

give evidence. Only an individual may I

attend, take an oath and give evidence.

Nothing i n what h i s Honour s a i d i n Smorqon	m ,
or the cases c i ted i n the very careful analysis undertaken by h i s Honour supports

t he submission sought t o be advanced." . .

Despite t h e prima fac ie construction t o which

s .37(9) might lead, i n my view ss.38 and 39 a t l e a s t should be construed merely as requiring t h e supply o f information and . - - - . . - - - - - - -

- - . - . . . - - . -. ..

consis tent ly wl th my	judgment	i n m,	there i s nd	b
i
i

difficulty in a notice addressed to a corporation requiring

the corporation to supply information. Section 37(9) need not be construed as limited to natural persons and indeed so to construe it would lead to the conclusion that the legislature intended a large hole to be left in the ASC Law and indeed to bring about a result different from that which seems to me to have been the case under the prevlous legislation where

corporations were dealt with specifically.

The gender specific references can be read as extending to a corporation: see s.23 of the Acts Inter~retation Act 1901 (Cth) made applicable subject to context by s.5(5) of the ASC Law. Of course, "person" is also subject to context, to be read as including a company, see S. 85A of the Cor~orations Law and S. 5 subs. (2) and (3) of the

ASC Law.

There is little assistance to be gained, however,

from s.84.

In my view, there is no need, as a matter of

construction to construe s.33 as limited to empowering notices
only if they be addressed to individuals.

Indeed, the submissions of senior counsel for the applicant appeared rather to concede this as the real argument

was not that- a notice could not be -addressed to -a-.corporation	-
as such but rather that a notice addressed to a corporation needed to be addressed to that corporation requiring production by its proper officer. Senior counsel for the applicants relled, in dealing with the second of the two questions, upon a number of decisions. At the heart of these is the decision of the Court of Appeal in England in D2.m.k Texas (No.2) to which I have already referred.

That case concerned the construction of the Foreian

Tribunal's Evldence Act 1856 (UK) which empowered a court to

order a wltness to attend for the purpose of being examined or
the production of any writings or other documents.

It was submitted before the Court of Appeal that the context of thls legislation required that an order for production of documents could only be given to a person who was a witness and was to be examined. That is to say the power to compel production was only ancillary to the power to compel a person to glve evidence. Thus it was argued that

required to produce documents. The Court of Appeal was of the	slnce a corporation could not give testimony it could not be
view that that conclusion did not follow. In the context of subpoenas a person subpoenaed to produce documents and give evidence could be examined at least to a limited extent and was properly described as a witness. It followed from this, as Lord Denning said at 663 that a corporation could be

-. -, - - . - - * . - . - - - .- F-. .- .

compelled t o produce documents. His Lordship said o f

documents i n the possession o f a company:

"How i s the court t o compel production o f

them? One thing i s qu i te c lear . I t i s no good serving a subpoena duces tecum on any o f t he o f f i c e r s or servants o f the company: for each o f them can say tha t he has no authority from the company t o produce them, and t h a t would be an end o f any proceedings against him: see Crowther v Appleby (1873) LR 9 C P 23 and Eccles &

v Louisvi l le and Nashville Railroad Co. [l9121 1 KB 135. The only th ing t o do i s t o serve a subpoena duces tecum on the company i t s e l f , requiring i t , by i t s

proper o f f i c e r , t o give evidence and

produce the documents. That i s what was

done i n v [ l 9 0 8 1 2 KB 333 DC.

And it seems t o me t o be the only way i n which a company can be compelled t o produce documents which are i n i t s possession o r custody. The command or requirement on the company i s comparable t o an order on a company, by i t s proper o f f i c e r , t o f i l e an a f f i d a v i t o f documents or t o answer in t e r roga tor~es . The o f f i c e r answering must make inquir ies o f the other o f f i c e r s a s t o the documents and must then

produce	them on behalf o f the company."
Pearson	L J . expressed t h e view t h a t there was no

impediment t o reading t h e Foreian Tribunals Evidence Act	1 8 5 6
( U K ) as	authorising t h e i s sue o f a subpoena against a company
t o produce documents.	His Lordship made no reference t o t h e

need or otherwise o f a "proper o f f i c e r " . Salmon L J . agreed wi th both and sald merely tha t a corporation could be compelled t o glve evidence and produce documents by i t s proper o f f i c e r . O f t he case two things may be sald. F i r s t , t h e conjunction, o f the- requirement t o give evidence- and produce -

I

documents may suggest the need for the corporatlon to comply	8	,
! '
I.

through an authorised person, a proper officer.	Second, the	.	=	I
I

court dld not declde, nor did it need to declde, whether a	, .
!
subpoena dlrected at a corporatlon wlthout reference CO a	I
publlc offlcer would be bad.
The subpoena in Penn-Texas (No.21 was in fact addressed to the corporatlon by 1ts proper officer. So too was the subpoena referred to by Beaumont J. In Re TPC v Arnotts, unreported, Federal Court of Australia, 24 August
1989. The issue of the validlty of a notice addressed to a
corporatlon wlthout reference to a publlc offlcer arose for decislon before Street J. In Re Llndsav Toole & CO (Wool) Pty Llmited (1966) 84 WN (Pt 1) NSW 318. In that case chere were two notices the validlty of whlch were challenged, the one addressed lust to the corporation, the other addressed to the corporation by its proper officer.
the notlce merely addressed to the corporatlon was valld. Hls Hls Honour found it unnecessary to declde whether	Honour did express the n e w at 321 that it was, to use his
Honour's words:

"Far preferable for the summons to issue

to a company "by rts proper officer"."

However, since the notlce was redundant there was no

- .. . - - - - - - -. . -. --- - -- -----C-IL_.--- ---- __-_-_

1       I

need to declde the matter.

Apart from the fact that the cases dealing with subpoenas are inconclusive, it must also be sald that the particular context in which they are decided differs from the present. There are many cases where there is no requirement to attend or to be a witness where orders to produce documents are commonly made against corporations wlthout reference to a public officer. No-one has ever suggested that orders could not be made by a court against a party being a corporation to give inspection of documents and indeed such orders are commonly made, cf Federal Court Rules, 015, r10 and 13.

Nor is there great assistance to be obtained from the cases decided under s.541 of the Com~anies (New South Wales) Code to which I was also referred. In M & H Plumbinq v DHD Constructions (1989) 7 ACLC 1266, an attack was made on orders obtained under s.541 of the Com~anies (New South Wales1

Code directed at the production of certain documents by the

proper officer of certain companies. The orders were not set aside. In refusing so to do, Cohen J. followed the decislon	of Nicholson J. in Re Rothwell's Limited (No.2) (1989) 7 ACLC	576 and also what was sald by Mason J., albeit in a slightly
different context, in Rochfort v Trade Practices Commiss~on (1982) 153 CLR 134 at 146.
However, in none of these cases was it decided that where power was given to require a corporation to produce

-. - -.

do-c'uments' the notice enlivening the,.obligation wasYrequilred' to
be addressed to the corporation by its proper officer. In
Fieldhouse the notlces in question were in fact addressed to
the publlc offlcer of the corporation. As Lockhart J.
observed in that case at p.198, it was conceded in the case
that the notices in question were to be read as directed to
the companies themselves. If therefore it were a requirement
that reference be made in a notice issued under s.264 that
such notlce be lssued to the corporation by its proper officer
or to the proper officer, there was in that case compliance.

So far as the researches of counsel have revealed, the matter is left without authority. In my view, however, once the requirement to produce is divorced from the requirement to give evidence as in the context of subpoenas or equivalent coercive powers there is no need to read into s.33 the additional requirement that the notice, which by force of the section is to be addressed to a person including within that expression a corporation, must nominate that compliance is to be by the proper officer. Notices are in practice	regularly given under s.264 addressed to a company without any	reference to a proper officer. So too are notices issued
under the ASC Law, see for example, v (1992) 10 ACLC 11: where the notice in question was addressed directly to the Westpac Banking Corporation Limited and so to with notices issued under s.155 of the Trade Practices Act 1974 (Cth), see SA ~rewina Holdinas Limlted v (1989) 89 ALR 105, the

. . .. . . . - . - . - .- -- - - .- ,

notice in that case belng addressed directly to SA Brewlng CO
Limited (without refexence to a "proper officer").

In my view there is no reason to read into s.33 the requirement that a notice to be valid under that section must be issued to a named corporation requiring compliance by its proper officer.

Havlng regard to my answers to the flrst and second questions posed, it becomes unnecessary to answer the remaining thrrd question. It follows that I would dismlss the applicatlon brought by Mr MacDonald and Flnance and Mortgage Corporation Limited, and order the applicants to that applicatlon to pay the costs of it.

I turn now to deal wlth the Commission's application

under s.70 of the ASC Law. Senlor counsel for the addressee
of the notices, the respondents to the Commission's
application, submitted that during such time as litigation was

proceeding, and that included potential appeals, the	Commission could not properly be satisfied that there was no
reasonable excuse and so could not give the certificate under s.70(2) of the ASC Law which enlivens the court's jurisdiction.
This was either a submission in aid of my dismissing the Commission's application altogether or at least adjourning, it to a later time when all appeals had been disposed of. In my view this subrnisslon is without substance. Section 70 provides as follows: . ..

70. (1) Thls section applies where the Commission

1s satisfled that a person has, without reasonable

excuse, failed to comply with a requirement made

under thls Part (other than Division 8).

(2) The Commlsslon may by wrltlng certlfy the

failure to the Court.

(3) If the Commlssion does so, the Court may

lnquire Into the case and may order the person to comply wrth the requirement as specified in the

order. "

It will be observed that the satisfaction of the Commlssion brings s.70 into operation and authorises the Commission to proceed with the certification of failure to comply which in turn gives the court lurlsdiction to inquire into the case and make an order requiring compliance with the notices.

Although s.70(2) gives no particular evidentiary status to the certificate when tendered it is at least some evidence that the Commission has formed the necessary state of mind. The section does not contemplate that in every case evidence must be given, presumably through resolutions and the like, of the actual state of mind of the Commlssion. If the court's lurlsdictlon were to be challenged on the basis that there was as a matter of fact no satisfaction reached by the ..- -.

- - - --. . - - . . - ..

Commission then evidence would need to be led by the addressees of the notice.

If the addressees of the notice wish to challenge the certificate on the basis that the lssue of the certificate was vitiated in some way then such a challenge would presumably proceed under the ADJR Act. In the absence of any evldence other than the certificate and the common ground of the parties that no documents in fact have been produced by the notlces and no suggestion of any excuse other than the litigation which has to date been unsuccessful, it is hard to see how the Respondents to the Commission's application can succeed. The mere fact the litigation is current at the time the certificate is given does not constitute in my view reasonable excuse. This must be particularly so where the grounds for that litigation have now been found by me to be ill founded.

I should add that there was no suggestion on the part of counsel for the Commission that the applicant's	application to review the decision to issue the notices
addressed to them was brought frivolously or otherwise was an abuse of the process of the court.
I would accordingly order that Mr MacDonald and Finance and Mortgage Corporation Limited each produce to Mr Quirk' within seven days of this order taking effect the documents specified in the schedule to each of the notices
dated 28 September 1993, copies of which are annexed marked A and B respectlvely to the affidavit of Neil Allan MacDonald sworn on 23 November 1993. I would however stay the operation of this order untll 4.15 on 1 March 1994 or further order to permit the respondents to the Commission's application to appeal if so advlsed. The matter will be placed in the list on that day before me for further consideration. It should not be assumed that argument could be heard on that day should there be debate as to the continuance of a stay. I would order the respondents to the application brought by the Commission to pay the Commission's costs.
I certify that this and the preceding twenty-five (25) pages are a true copy of the Reasons for Judgment herein of his Honour Mr ~ustice
Associate: ,
Date : js-/C&luy

c/

Counsel and Solicltors	Mr T K Tobln Q.C. with Mr T J
for Applicant:	Goldring instructed by Maurice Freidman & Company
Counsel and Solicitors	Mr J T Gleeson instructed by
for Respondent:	Mr P Stepek
Date of Hearing:	7 & 8 February 1993  ,
Date Judgment Delivered:	8 February

Attachment "A"

SCHEDULE

This is the Schedule to the notice requiring the production of books dated 28 September 1993 issued pursuant to section 30 of the ASC Law and addressed to Neil Allan Macdonald, 1 Cross Street Rozelle NSW 2039.

The following specifled books which relate to the affairs of PROJECT EQUITY FINANCE LIMITED during the period 2 August 1989 to 12 February 1993.

1.    All books of Project Equity Finance Llmlted being:

Register of directors, principal executive officers
and secretaries
Register of director's shareholdings
Register of shareholders
Register of members
Minute books
Cash payment books
Cash recelpt books
General ledgers

Debtors ledgers

Creditors ledgers

General journals
Wages books
Balance Sheets
profit and loss accounts
Cheque books, cheque butts
Bank deposit books
Bank statements

2.   All books being diaries maintained by you in your capacity as an officer of Project Equity Finance Limited.

3.   All books belng correspondence between Project Equity

Finance Limited relating to the holding of any annual Finance Llmited and the shareholders of Prolect Equity

general meetlngs of members of Project Equity Finance
Limited.

4.    All books being copies of any Annual Returns of Project Equlty Finance Limited or any drafts of any such books.