Shipley v Masu Financial Management Pty Ltd - [2008] NSWSC 1187

Reported Decision:
68 ACSR 412

New South Wales

Supreme Court

CITATION: Shipley v Masu Financial Management [2008] NSWSC 1187

HEARING DATE(S): 21/10/08

JUDGMENT DATE :
22 October 2008

JURISDICTION: Equity

JUDGMENT OF: White J

EX TEMPORE JUDGMENT DATE: 22 October 2008

DECISION: Refer to paras 41-43 and 45-47 of judgment.

CATCHWORDS: PRACTICE AND PROCEDURE – subpoenae – subpoena issued on ASIC following examinations – legitimate forensic purpose – on the cards that material will assist the plaintiffs’ case – claim for confidentiality outweighed by the interests of the plaintiffs and the public – subpoena not set aside but production limited in the first instance to legal representatives - CORPORATIONS – ASIC – examinations – confidentiality of examinations – s 127(1)(a) ASIC Act requires ASIC to take all reasonable measures to protect confidentiality of information elicited in examinations against unauthorised use or disclosure – whether ASIC required to assert claims of privilege and inspection pursuant to Court’s order not an unauthorised use or disclosure production to the Court – ASIC not a party – evidence did not establish that ASIC could have claimed privilege – not established that ASIC failed to take all reasonable measures to protect the confidentiality of the information

LEGISLATION CITED: Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
Federal Court of Australia Act 1976 (Cth)

CASES CITED: Johns v Australian Securities Commission (1993) 178 CLR 408
Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 138; (2000) 18 ACLC 609
Saleam v R (1989) 16 NSWLR 14
National Employers' Mutual General Insurance Association Ltd v Waind and Hill [1978] 1 NSWLR 372
R v Saleam [1999] NSWCCA 86
Attorney General (NSW) v Chidgey [2008] NSWCCA 65
DPP v Selway [2007] VSC 244
Ragg v Magistrates’ Court of Victoria [2008] VSC 1

PARTIES: James Shipley and Patricia Shipley in their own right and as representative for the persons in Sched A to the Originating Process
v
Masu Financial Management Pty Ltd

FILE NUMBER(S): SC 1817/07

COUNSEL: Plaintiffs: R G Forster SC & A J Abadee
Defendant: D L Williams SC

SOLICITORS: Plaintiffs: Slater & Gordon
Defendants: Gilchrist Connell

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Wednesday, 22 October 2008

1817/07 James Shipley and Patricia Shipley in their own right and as representative for the persons in Sched A to the Originating Process v Masu Financial Management Pty Ltd

JUDGMENT

1 HIS HONOUR: The plaintiffs issued a subpoena to the Australian Securities and Investments Commission (“ASIC”) for the production of records of examinations conducted under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”) of directors, officers or agents of the defendant, and any related books.

2 ASIC produced 19 folders of documents in response to the subpoena. The defendant and three of its officers, who were examined under s 19 of the ASIC Act, seek to restrain the plaintiffs from having access to the transcripts of the examination…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWSC 1187
Decision Date: 22 October 2008

CaseChat Overview and Summary

In the case of Shipley v Masu Financial Management Pty Ltd, the plaintiffs sought the issuance of a subpoena for documents obtained by the Australian Securities and Investments Commission (ASIC) during examinations conducted under the ASIC Act. The dispute centred around the confidentiality of these documents and whether they should be disclosed to the plaintiffs, potentially breaching the obligations imposed on ASIC to protect such information. The matter was heard in the Federal Court of Australia, where the plaintiffs argued that the documents were necessary for their case and the potential benefits of disclosure outweighed the need for confidentiality.

The court was required to determine whether the issuance of the subpoena was justified given the statutory obligation of ASIC to protect the confidentiality of information obtained during examinations. A key issue was whether compelling ASIC to assert claims of privilege and inspection pursuant to the court's order constituted an unauthorised use or disclosure of the information. The court also needed to consider whether ASIC had failed to take all reasonable measures to protect the confidentiality of the information as required by section 127(1)(a) of the ASIC Act.

The court ruled that while the plaintiffs had demonstrated a legitimate forensic purpose and that there was a strong likelihood the material would assist their case, the claim for confidentiality was outweighed by the interests of the plaintiffs and the public. The court decided not to set aside the subpoena but limited the initial production of the documents to the legal representatives of the parties. ASIC was found not to be a party to the proceedings, and it was not established that ASIC could have claimed privilege. The evidence did not demonstrate that ASIC had failed to take all reasonable measures to protect the confidentiality of the information.

The final orders included a direction that the documents be produced to the Court initially for inspection by legal representatives only, pending further orders. This decision highlights the balancing act between the need for confidentiality in regulatory examinations and the interests of justice in individual cases.

Orders