CATCHWORDS Administrative Law - Judicial review ~ Investigative hearing by National Companies And Securities Commission - Whether within NCSC's power - Statutory obligation to observe rules of natural justice ~- Content of rules where hearing is investigating possible breach ~- Whether accused company entitled to be present, cross-examine, call witnesses and make submissions ~ Relevance of NCSC practice of publishing its reasons for decisions ~ Relevance of decision's absence of effect on legal rights. Administrative Decisions (Judicial Review) Act 1977 ss.5,6. Companies Act 1981 ss.12, 16A, 137, 138, 296. Companies (Acquisition of Shares) Act 1980 ss.11, 45(1). National Companies And Securities Commission Act 1979, s.6 Pt. VI. *. THE NEWS CORPORATION LIMITED & ORS v NATIONAL COMPANIES AND SECURITIES COMMISSION N.S.W. Glé6é20f 1983 CORAM: Bowen C.J., Fisher and Sheppard J.J. 28 October 1983 Sydney IN_THE FEDERAL COURT OF AUSTALIA DISTRICT REGISTRY OF NEW SOUTH WALES No. G.162 of 1983 ~ eye vyw GENERAL DIVISION BETWEEN : THE NEWS CORPORATION LIMITED, MIRROR NEWSPAPERS LIMITED, NATIONWIDE NEWS PTY. LIMITED and CONTROL. INVESTMENTS PTY. LIMITED Appellants AND: NATIONAL COMPANIES' AND SECURITIES COMMISSION Respondent ORDER CORAM: Bowen CJ, Fisher and Sheppard JJ WHERE MADE: Sydney DATE : 28 October 1983 THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The orders of 3 June 1983 be set aside. . 3. The appellants and their legal representatives he permitted to be present throughout the hearing before the respondent. 4. That subject to paragraph 38(1)(a) of the National Companies and Secur:ties Commission Act 1979 (a) the appellants or their legal representatives be permitted to cross-examine witnesses called at the hearing (b) the appellants or their legal representatives be, permitted to call evidence in reply prior to the 1 conclusion of the hearing \ (c) the appellants or their legal representatives be eermitted to make submissions to the respondent concerning the subject matter of the hearing before the respondent makes any findings relating my to the appellants. ' ve | The respondent pay to the appellants their costs of this appeal and of the proceedings before the primary Judge. IN THE FEDERAL COURT _ OF AUSTRALIA DISTRICT REGISTRY OF NEW SOUTH WALES No. G.162 of 1983 we enw rnr GENERAL DIVISION BETWEEN: THE NEWS CORPORATION LIMITED, MIRROR NEWSPAPERS LIMITED, NATIONWIDE NEWS PTY. <IMITED and CONTROL INVESTMENTS PTY.° ; . LIMITED Appellants \ AND: 1 NATIONAL COMPANLES AND SECURITIES COMMISSION Respondent CORAM: Bowen CJ, Fisher and Sheppard JJ DATE: 28 October 1983 REASONS FOR JUDGMENT '' This 1s an appeal from a decision of a single 'judge of this Court dismissing an application of the appellants (to which we shall refer as "News Corporation") under the Administrative Decisions (Gudicial Review) Act 1977 ("Judiczal Review Act"). News Corporation had sought a review of certain decisions and certain conduct of the National Companies and Securities 'ommission ("Commission"). The decisions were sought to be reviewed under s.5 of the Judicial Review Act and the conduct, being conduct in which it was said the Commission ocroposed to engage, under s.6 of that Act. The facts are not in dispute and can be shortly stated. The Commission operating, in its contention, pursuant to the provisions' of s.16A of the Companies Act 1981 (Cth) and Part VI of the National Companies and Securities Commission Act 1979 ("N.C.5.C. Act") issued 'and served on the solicitors: for News Corporation a notice dated 17 March 1983 and titled "Notice of Hearing". It is as follows: "NATIONAL COMPANIES AND SECURITIES COMMISSION ACT 1979 OF THE COMMONWEALTH NATIONAL COMPANIES AND SECURITIES COMMISSION IN THE MATTER of Thomas Nationwide Transport Limited and 1, IN THE MATTER of the Companies (Acquisition of Shares) Act 1980 and IN THE MATTER of the Companies Act 1981 NOTICE OF HEARING WHEREAS the NATIONAL COMPANIES AND SECURITIES COMMISSION ("the Commission") has reason to suspect that persons may have contravened the statutory ovorovisions set forth in Schedules A and B AND WHEREAS the Commission may commence proceedings in respect of the said contraventions THE COMMISSION HEREBY GIVES NOTICE that it will holda hearing pursuant to section 36 of the Natzonal Companies and Securities Commission Act 1979 at its offices, 17th floor, 31 Queen Street, Melbourne, in the State of Victoria, commencing at 9.30 a.m. on Tuesday, 19 April 1983: (a) aun rveiation to the matters enumerated in Schedule A, for the purpose of the performance of 1ts functions or the exercise of its powers that are conferred or expressed to be conferred upon the Commission by or under - (i) section 16A of the Companies Act 1981 to make such investigations as the Commission thinks expedient for the due administration of the Companies (Acquisition of Shares) Act 1980, and {i2) sub-section 45(1) of the Companies (Acquisition of Shares) Act 1980 to apply to the Supreme Court of the Australian Capital Territory for one or more of the orders therein set out where a person has acquired shares in a company in contravention of section 11 of the Companies (Acauisition of Shares) Act 1980 (b) in relation to the matters enumerated in Schedule B, for the purpose of the performance of 1ts functions or the exercise of its powers that are conferred or expressed to be conferred upon the Commission by or under - (1) section I16A ot the Companies Act 1981 to make such investigations as the Commission thinks expedient ' for the due administration of the Companies Act 1981 and (ii) sub-section 146(1) of the Companies Act 1981 to apply to the Supreme Court of the Australian Capital Territory for one or more of the orders therein set out where a person has been a substantial shareholder and has farled to comply with sections 137 and 138 of the Companies Act 1981. SCHEDULE A The acquisitions of shares between 1 September 1981 and 5 October 1982 1n Thomas Nationwide Transvort Limited ("TNT") by the News Corvoration Limited ("News"), Ansett Transport Industcies Limited ("ATI"), McIlwraith McEacnarn Limzted ("MML") , INT Superannuation Cy. Limited C"TNTS"), Associated Steamships Pty. Limited Staff Superannuation Fund ("ASS"), Mirror Newsvapers Limited ("Mirror"), Nationwide News Pty. Limited ("Nationwide"), Control Investments Pty. Limited ("Control") and CBSH Custedians Pty. Timited -4- ("CBBH") or some or one of them which constitute or may constitute a contravention of the provisions of section ll of the Companies (Acquisition of Shares) Act 1980. SCHEDULE B The failure by ITNT, News, ATI, MML, TINTS, ASS, Mirror, Nationwide, Control and CBBH or some or one of them between l July 1982 and 5 October 1982 to give to TNT a notice in accordance with sections 137 and 138 of the Companies Act 1981 which constitutes or may constitute a failure to comply with the said provisions. AND TAKE NOTICE that any party to these proceedings may be represented 1n the manner set out in sub-section 38(2) of the National Companies and Securities Commission Act 1979. DATED this 17th day of March 1983 Contact: R J Schoer Executive Director 616 1732 842 7459" By piecing together the body and the schedules to the Notice i) it can be seen that the Commission proposed to hold a hearing under 8.36 of the N.C.S.C. Act for the following purposes - (a) to investigate under s.16A of the Companies Act whether News Corporation and others acquired shares in Thomas Nationwide Transport Limited ("T.N.T.") in contravention of s.1l of the Companies (Acquisition of Shares) Act 1980 ("Acquisition of Shares Act") in that thev acquired more than 20 per cent of the voting shares. (bd) to determine whether it should under s.45(1) of the Acquisition of Shares Act apply to the Supreme Court of the Australian Capital Territory for certain orders consequent upon the contravention of s.1l1 of the Act. (c) to investigate under s.16A whether News' Corporation and others have contravened 5.137 and s.138 of the Companies Act by failing to give notices required of them as substantial shareholders. (d) to determine whether it should under s.146(1) of the Companies Act apply to the Supreme Court for certain orders consequent upon the failure to give the substantial shareholders' notices. On 19 April 1983 News Corporation attended before the Commission in public hearing. The Commission announced that 1t proposed to conduct the hearing in private and that News Corporation was not entitled to participate. News Corporation requested of the Commission certain information and that the hearing be conducted, as far as it was concerned, in a certain way. These requests were before the Commission in writing and were as follows: A statement of the Matters facts and circumstances which cause the Commission to have reason to suspect that News has committed an offence under the legislation, or some other specification of the substance of the case which News may be required to meet at the hearing. ' Access to documents pursuant to the Freedom of Information Act. Directions: (a) That News and its legal representatives are entitled to be present throughout the whole of the hearing, or (bd) That News be permitted to intervene in the proceedings constituted by the hearing. (c) That subject to s.38:1)(a) bf the NCSC Act legal representatives of News be permitted to cross examine witnesses called at the hearing. (d) That subject to s.38(1)(a) of the NCSC Act News Ltd. be permitted to call evidence in reply. (e) That subject to s.38(1l)(a) of the NCSC Act News of 1ts leaqal representatives are entitled to make submissions fo the NCSC concerning the subject matter of the hearing before the NCSC makes any findings concerning News or exercises any of its powers or functions referred to in the notice of hearing and if the NCSC is inclined to make or publish any finding or decisicn prejudicial to or critical of News, to afford News an opportunity to comment further before doing so." -7- The Commission refused these requests and subsequently gave ats reasons in writing. It stated. at the conclusion of the reasons that: "...if, at the conclusion of the hearing, it proposed to publish any matter adverse to or critical of 'any person, 1t will afford him or it an opportunity to be heard and call evidence on such matters before proceeding further." News Corporation sought the review of these decisions and this proposed conduct of the hearing pursuant to the Judicial Review Act and also contended that the Commission was not empowered by s.16A of the Companies Act to conduct a hearing under s.36' of the N.C.S.C. Act for the purpose of investigation. The Judge at first instance dismissed the applications and News Corporation has appealed to this Court. The content of and interaction between s.36 of the N.C.S.C. 'Act and s.16A of the Companies Act are of importance. But first s.6 of the N.C.8.C. Act should be mentioned. It provides: "6(1) The Commission has such functions and powers as are conferred upon it by any Act that isa law of a kind referred to in section 122 of the Constitution. (2) The Commission shall perform any functions and May exercise any powers that are conferred or expressed to be conferred upon it by any State Act. Section 36 appears in Part VI of the N.C.5.C. Act, being that portion of the Act dealing with hearings before the Commission. The relevant portions are as follows: "36(1) The Commission may hold hearings for the purpose of the performance of any of its functions or the exercise of any of its powers. (2) Subject to this section, where the Commission 1s required or decides to hold a hearing, the Commission may either direct that the hearing take place in public or direct that the hearing take place in private. (3) Subject to sub-sections (4) and (6), 1f a person who 1s entitled under an Act or a State Act to be afforded the opportunity by the Commission to appear at a hearing before the Commission requests that the hearing take place in public, the Commission shall direct that the hearing take place in public. (4) Where the Commission holds a hearing under a provision of an Act or a State Act that requires the hearing to take place in private, the Commission shall direct that the hearing take place in private. (5) Where the Commission directs that a hearing to be held by it take place in private, the Commission may give directions as to the persons who may be present at the hearing. (6) Where, ata hearing by the Commission that is held in public, the Commission is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason, the Commission may - {a) direct that the hearing or a part of the hearing take place in private and give directions as to the persons who may be present; or (b) give directions preventing or restricting the publication of evidence given betore the Commission or of matters contained in documents lodged with the Commission. -9- (7) Nothing in any direction given by the Commission under sub-section (5) or paragraph (6)(a) prevents the presence at a hearing of - (a) a person who is entitled under an Act ora State Act to be afforded the opportunity to appear at that hearing; (b) a person representing, pursuant to sub-section 38(2), a person referred to in paragraph (a); or (c) a person representing, pursuant to sub-section 38(2), a person who, by reason of a direction given by the Commission under sub-section (5) or paragraph 6(a), is entitled to be present at the hearing." It is also necessary tod note the following additional provisions of Part VI. "37.¢(1) A member or an acting member may summon a person to appear before the Commission at a hearing to give evidence and to produce such documents (if any) as are referred to in the summons. 38.(1) At a hearing before the Commission - (a) the proceedings shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of any relevant Act or State Act and a vroper consideration of the matters before the Commission permit; (b) the Commission 15 not bound by the rules of evidence; (c) the Commission may, upon such conditions as 1t thinks fit. permit a verson to intervene in the proceedinas; (d) the Commissicn shall osserve the rules of natural justice; and -10- (e@) section 20 applies, so far as 1t 1s capable of application, as if the hearing were a meeting of the Commission. (2) At a hearing before the Commission - (a) a natural person may appear in person or may be represented by an employee of the person approved by the Commission; (b) a body corporate may be represented by an employee, or by a director or other officer, of the body corporate approved by the Commission; (c) an unincorporated association of persons or a member of an unincorporated association of persons may be represented by a member or officer of the association approved by the Commission; and {d) any person may be represented by a barrister or solicitor of the Supreme Court of a State or Territory or of the High Court. 39.(1) A person served, as prescribed, witha summons to appear as a witness at a hearing before the Commission shall not, without reasonable excuse (a) fail to attend as reauired by the summons; or (b) fail to attend from day to day unless excused, or released from further attendance, by a member or an acting member. (2) A person appearing as a witness at a hearing before the Commission shall not, without reasonable excuse - (a) when required pursuant to section 37 either to take an oath or make an affirmation - refuse or fail te comply with the requirement; -l1l- (b) refuse or fail to answer a question that he 1s required to answer by the member or acting member presiding at the hearing; or (c) yvefuse or fail to produce a document that he was,required to produce by a summons under this Act served on hin as prescribed. 40. A person shall not - (a) insult a member or an acting member in the performance of his functions or the exercise of his powers as a member or acting member at a hearing before the Commission; (b) interrupt a hearing before the Commission; (c) create a disturbance, or take part in creating or continuing a disturbance, in or near a place where the Commission is holding a hearing; or Cd) do any other act that would, if the ' Commission were a court of record, constitute contempt of that court. Penalty: $1,000 or imprisonment for 3 months. oe 42. A hearing before the Commission shall, for the purpose of Part III of the Crimes Act 1914, be deemed to be a@ judicial proceeding." In many respects these provisions of Part VI provide for a hearing which bears the indicia of a quasi judicial proceeding. In Gibbs v National Companies and Securities Commission £1982] Qd R 328 Sheahan J. held that the corresponding provisions of the legislation in Queensland did not empower the Commission to hold a hearing for the purpose of investigating whether there had been a breach of 5.11 of the Acquisition of Shares Act. In his decision of 16 February 1982 Sheahan J, said (at p. 333): "IT cannot persuade myself that the power to hold hearings for the purpose of performance of a function or the exercise of a power, which as I have said, 1s neither conferred expressly or expressed to be conferred on it by the Act includes a power of anquisition, which inquisition is atterided by the powers and disabilities of the Commission and witnesses respectively upon the latters' attendances thereat. foes In conclusion it seems to me that if I am by anv chance correct in my conclusions on law, clearly one would think that this important Commission, so it seems to me, should have its powers clarified and, if necessary enlarged by legislation; but that isa matter, of course, for the Legislature." I: Section 16A was inserted in the Companies Act by the ' Statute Law (Miscellaneous Amendments) Act (No. 1) 1982 assented to on 7 May 1982. It is as follows: "16A. Where the Commission has reason to suspect that a person has committed an offence under a provision of this Act, the Commission may make such investigation as the Commission thinks exvedient for the due administration of this Act." In both §.36 and s.16A reference is made to the pawers and functions of the N.C.S.C. and its obligation to ensure the due administration of the legislation. For this purpose 1t has very wide powers of supervision. These powers and duties fall to be exercised or performed ina variety of circumstances and under an intricate legislative scheme. -13- It 1s significant that prior to the enactment of s.16A the Commission had no general power to require persons to attend before it and answer questions. It could achieve this end in respect of documents which it had produced to it under s.12 of the Companies Act and it could in some circumstances appoint inspectors who had wide powers of compulsion under s.296 of that Act. The legislature, as a résult of the decision in Gibbs' Case, sought to remedy this defect 'by granting the power to hold a hearing for the additional purpose of investigation. The fact that it did not deal specifically with the power of investigation and compellability of persons to attend before it and answer questions, but instead attempted to use the existing power to hold a hearing 1s at the heart of the difficulties in this matter. On behalf of News Corporation 1t was submitted that the Commission erred in law in refusing to supply particulars of the circumstances which caused the Commission to suspect the contraventions and of the substance of the case it would pve required to meet, and, furthermore, the Commission erred in indicating that at the hearing News Corporation would not be permitted to be present, to intervene or generally to participate. The Commission's refusal amounted in the circumstances to a denial of the rules of natural justice which the Commission was obliged to observe: para. 39(1)(d) of the N.C.S.C. Act. -14- Counsel also submitted that the Commission was not entitled to use a s.36 hearing for the purpose of conducting an investigation under s.16A. This was one of the primary contentions of News Corporation before the primary Judge but on appeal was put in the alternative. Counsel for the Commission made the following submissions: "1. The Commission is investigating pursuant to section '16A_ the transactions set out in Schedules A and B of the Notice and in so doing 1s' performing one of its functions. It is empowered by Section 36 to do this by means of holding a hearing. 2. In conducting the hearing it is required to observe the rules of natural justice which means it must act fairly in all the circumstances. 3. Having regard to the fact that it will be is performing an investigatory function only and in so doing will not alter detrimentally the legal rights of News, its proposed conduct of the hearing amounts to acting fairly and in accordance with the rules of natural justice. 4. In view of this, the Commission'is not required to accede to any of the requests of News." Gibbs' Case and the subsequent enactment of s.16A in our view conclude the alternative submission against News Corporation, It must be accepted that the Commission has power to conduct a hearing under s.36 for an investigative purpose. We turn to the principal ground of apoeal. It is important to emphasise at the outset that this case 18s not one where the -15- question 1s whether the rules of natural justice apply; cf. Testro Bros. Pty. Limited v Tait (1963) 109 C.L.R. 353. Rather it isa case which raises for decision whether a hearing conducted as the Commission proposes to conduct it will afford to News Corporation the natural justice to which it is entitled. There are many circumstances 1n which the Commission is authorised to hold a hearing. In some cases it is obliged to do so; in others it has a discretion. A hearing may be held in public or in private. What the Commission does at the conclusion of the hearing, by way of making and publicising its findings or a report, or whether it does anything at all seems to be completely at large. In some cases what the Commission does will directly affect rights; 1 I see, for example, ss5.18,and 20 of the Companies Act dealing respectively with the registration of auditors and liquidators. In other cases this will not be so. A hearing for the purposes of s.16A of the Companies Act is in this category. The Commission has mo power itself to affect the rights in law of the person whose alleged conduct is the subject of the hearing but it has the Capacity to cast a slur on its commercial reputation and to exert considerable pressure on it to comply with its requirements. The provisions of the Acquisition of Shares Act and the Companies Act are technical and complex. The relationships between the Companies referred to 1n the Notice of Hearing, whether by way -16~ of cross-Shareholdings or otherwise, and the existence of arrangements or agreements between them, are difficult to ascertain, doubtless fluctuated from time to time, and are of course known to the Companies but only to a limited extent to the Commission. The desire of the Commission to question people to ascertain the true facts prior to disclosing 1ts hand is understandable. It is necessary however to determine whether in carrying out this particular investigation in the manner proposed, the Commission is acting in accord with the rules of natural justice. One difficulty is that we are unsure of the extent to which, if at all, the Commission proposes to make public its ultimate findings. Until certain matters were drawn to our attention by Counsel for News Corporation in his submissions in reply, we had been under the impression that the proposed hearing involved the taking of evidence and submissions in private and was merely for the purpose of enabling the Commission to decide whether to institute proceedings. But towards the close of the hearing our attention was drawn to what had been the practice of the Commission in other Similar cases. This was apparently not a matter to which the attention of the primary Judge had been directed. In April 1983 the Commission conducted a hearing pursuant to s.36 of the N.C.S.C. Act in exercise of its powers under s.16A of the Companies Act. Tt concerned an alleged contravention oy Pan -17- d'Or Mining NL of s.1l of the Acquisition of Shares Act arising out of the acaquisition of shares in Murphyores Holdings Limited. The Commission directed that the hearing take place in private and it examined directors of the vendor and the purchaser companies. On 17 May 1983 it published 23 pages of reasons for 1ts decision (N.C.S.C. Manual, Notice 206) which decision was as follows: "76. The Commission has concluded that it would be justified in bringing proceedings under section 45 of the Companies (Acquisition of Shares) Act for orders x directing the disposal of the shares in Murphyores Holdings Limited purchased by Pan d'Or Mining NL x restraining the exercise of the voting rights attached to those shares * restraining voting rights attached to all shares in Murphyores still held by J.P. Murphy Investments Limited insofar as the voting rights attached to the latter shares may be exercised in favour of any resolution for election or re-election as directors of Murphyores of any person who is also a director of Pan a'Or Mining NL. 77. The Commission would also consider acting pursuant to section 60 of the Companies (Acauisition of Shares) Act in respect of any purchase of further shares by Pan d'OQr Mining NL from J.P. Murphy Investments Limited whether on-market or otherwise at a price of 75 cents at any time before the end of February 1984 if at that time the market price of the shares is less than 75 cents. 78. The Commission would be prepared in lieu of institution of proceedings under section 45 to accept an undertaking from Pan d'Or Mining NL that it will not exercise until the end of February 1984 any right to vote attached to the shares purchased by 1t from J.P. Murphy Investments Limited in November 1982, together with an undertaking ov J.P. Murphy Investments Limited that it W2lil net -18- exercise the right' to vote attached to the balance of the shares held by it in support of the election of directors who are also directors of Pan d'Or Mining NL. 79. The Commission can give no indication whether proceedings may be brought against any person for an offence against the Act." In its reasons the Commission set out in question and answer form much of the evidence given by the directors. Although the hearing started as private, by reason of this publication it did not remain so. The Commmission earlier in 1ts reasons said: "17. The purpose of the Commission's hearing was to investigate whether there was evidence of any contravention of the Companies (Acquisition of Shares) Act 1980, and if so whether it should refer that evidence to the Commonwealth Attorney-General for consideration of prosecution or whether it should institute proceedings under section 45 of the Act, or take both such courses of action. 18. The Commission's hearing thus did not involve its entering a finding which could of itself determine any issue of right binding upon any person. One corollary in a hearing of this kind is that the Commission does not regard the rules of matural justice requiring any witness to have access to the evidence of any other witness for the purpose of cross examination: this would be a right which would accrue in any subsequent legal proceedings which may be brought. The Commission however as a matter of practice puts such questions to parties summoned to give evidence as would enable them to give evidence of their view of material from which adverse inferences might be drawn and affords them an opportunity to put submissions at the hearing to rebut any such adverse inferences. Both steps were taken in the course of this hearing. After making its findings on the evidence and stating 1ts view of the relevant law the Commission made this comment cn the -~19- 'evidence prior to announcing its decisions set out above: "75. Much of the evidence gathered by the Commission would not be admissible in criminal proceedings and the Commission has no view as to whether the conclusions it has reached by drawing inferences upon all information available to it are such as to.warrant proceedings in respect of any possible offence by any person." Earlier on 10 October 1982 the Commission released its reasons for decision consequent upon a s.36 hearing into the acquisition of shares in Grace Bros. Holdings Limited (N.C.S.C. Manual, Notice 202). This hearing also took place in private although the reasons were made public as was what the Commission considered the most relevant evidence, much of 1t in question and answer forn. In this respect again the matter did not remain private. When setting out what it saw as preliminary issues the Commission made the following statements as to its objectives and procedures. "26. While the published objective of the Commission's hearing in relation to acquisition of shares 1n Grace Bros was to enable it to determine whether it should exercise its powers under section 60, if the evidence given at the hearing had disclosed a contravention of the legislation, there 1s no statutory rule which would preclude the Commission from instituting civil proceedings in relation to a contravention of the Code as an alternative or additional course of action. 27. Similarly, the Commissicn should not be limited in 1uts capacity to take into account, or even to use in legal proceedings, 2vidence gained at a hearing convened for another purpose, since a -20- decision by the Commission to institute legai proceedings is not determinative af the issue of contravention of the law. While the Commission is required to act in accordance with the rules of natural justice such requirement does not confer on a party the right to be heard on the issue of whether proceedings should be instituted. As Gibbs C.d. said in. Wainneke v Builders Labourers Federation (High Court 16 December 1981): 'A man is not put on trial when there 1s a mere inquiry which cannot lead to judgment. To adopt the words of Townley J. in the Royal Commission into Certain Crown Leaseholds (No. 2), at p.249, the Commissioner was acting in a purely inquisitorial capacity, giving no ' judgment, entering no conviction, imposing no sentence, and making no findings which could found any judgment of any description. He has no parties before him. No finding of his will be determinative of any right or issue or be binding on any person. No person is 'put to answer' before the Commissioner.' 28. That is to say, the rules of natural justice do not preclude the Commission from proceeding according to law in relation to any material that comes to its notice 1n the course of a hearing convened primarily for a different purpose. To | take any other view would be disruptive of the process of hearings, since it would always bea Matter of uncertainty what the legal consequences of the evidence might be. It 1s'of course accepted that the Commission should not publish criticisms of a person without first putting those criticisms to him and affording him the opportunity to rebut them." Counsel's purpose in referring to these decisions was to show us that it was likely that the Commission's procedures in the present case would be the same. Much more was involved than a private hearing in order to ascertain whether proceedings should be instituted. The likelihood was that there would be voublished reasons for decision which would contain much of the getail of the -21- evidence given in private, findings of fact and conclusions as to whether particular provisions of the' legislation had been contravened by one or more of the companies concerned. True their legal rights could not be affected by anything which the Commission did or found in its reasons. But there could well follow From the Commission's findings creiclusions which would adversely affect the reputations of the companies and their directors. We emphasise the formality of the publication of the reasons in the earlier cases. The releases are described as notices. They bear the name of the company which has been the subject of investigation and they are entitled, "Reasons for Decision". The circulation of the notices is obviously intended to be wide, They if 1 are published in full in Australian Company Law and Practice vol.3 -see Cases No. 79-405 and 79-425. Presumably the releases are made available to the financial press or may be obtained by it if it wishes to have access to them. In a sense counsel's reference to these decisions raised new matter and was not strictly in reply. For this reason we invited Counsel for the Commission to make submissions about then. One purpose of this was to ascertain whether the Commission did intend to follow the course it had taken in the Murphyores and Grace Bros. matters. Counsel was unable to assist us at the time and sought leave to make further submissions in writing to be lodged after we -22- had adjourned. We granted leave accordingly and also granted 'leave to Counsel for News Corporation to make submissions in reply. In due course written submissions were received from both parties. The submissions received from Counsel for the Commission do not expressly say whether the Commission proposes to follow the _course it adopted in the Murphyores ana Grace Bros. cases of publishing reasons for its décision. But in the absence of a clear statement that 'it does not intend to do so we think that we should make the assumption that that is the course which it will follow. Thus there is to be a private hearing of an investigative nature to enable the Commission to determine whether one or more of the subject companies is in breach of the Act and, if so, whether it should institute proceedings. There is also ainvoived the likelihood, if not the certainty, that when the Commission has reached conclusions it will publish extensive reasons, including 'findings of fact. It will also refer to evidence which has been taken in private. Its reasons are likely to have a wide circulation and will be available to the financial press. It is patent from what the Commission has said in its submissions that it considers itself justified in taking the course 1t has because nothing it may do during the course of the hearing or in its actual decision can affect the ieqgal rights of News Corporation. Furthermore, the Commission justifies 1ts Sractice of -23- publishing findings and reasons at the conclusion of private investigative hearings on the ground that it has an educational role to perform. It considers this practice a valuable means of informing the commercial world of its policy and views. We are not concerned to say that the Commission is incorrect in this view. Indeed Counsel for News Corporation supported the course which the Commission follows. But he contended that that had little to do with the question whether the procedure proposed fbr the hearing in this case was adequate to afford News Corporation natural justice. It seems likely that the Commission's view that it is obliged to do no more than it has offered to do stems from its application to the circumstances of the present case, and cases like it, of what was said by the High Court in the Testro Case (supra). Even in the dissenting judgments of Kitto and Menzies JJ there are to be found statements which suggest that the rules of natural justice will not apply unless what is done may affect legal rights. Thus Kitto J said (at p.366) that if, like a report of a Royal Commission, an inspector's report was "a report and nothing more, so that whatever its terms it cannot affect the leqal situation of the company...., the inspector 1s not engaged upon a proceeding to which the principle here invoked applies". The princiole to which his Honour referred was that which bound persons empowered to affect legal rights to act fairly in reaching their decisions. -24- But as we have earlier emphasised the inquiry here is not whether the rules of natural justice apply. It 1s whether the Commission, bound'as it is to apply them, will do so if it follows its intended procedure. For that reason Testro's Case is not decisive of what the outcome of this matter should be. It 1s not to the point to say that the rules of natural justice should not apply unless the Commission's decision may affect legal rights. It is bound to afford natural justice inall its hearings. As we have earlier remarked many will be hearings which cannot lead to any effect on legal rights. But the legislature has drawn no distinction between hearings in which legal rights may be affected and those in which they may not. In all, natural justice is to be afforded.\ f For similar reasons we donot find the dictum from the judgment of Gibbs CJ in State of Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1981) 41 A.L.R. 71 at p.86 relied upon by the Commission in para. 27 of its reasons in the Grace Bros. case of direct relevance. There again the question was not what content, in the circumstances of the case, the rules of natural justice were to be given. The essential difficulty in this case is to determine what procedure on the part of the Commission will be sufficient. Is ita Procedure such as 1s foreshadowed by the Commission, a procedure -25- such as that demanded by News Corporation or 1s the answer somewhere between those two extremes? The question is never easy of resolution. In Ridge v Baldwin £1964] A.C. 40 Lord Reid referred (at pp.64-65) to "the perennial fallacy that because something cannot be cut and dried or nicely weighed or measured therefore it does not exist". He continued (at p.65), "The idea of negligence 1s equally insusceptible of exact definition, but what a reasonable man would regard as fair procedure in particular circumstances and what he would regard as negligence in particular circumstances are equally capable of serving as tests in law,..... "The question here to be determined is what is to be regarded as fair procedure in these particular circumstances. We have earlier 'said that the publication of adverse findings and conclusions may have a serious effect on the reputation of the companies and their directors. In the public eye the companies stand accused by the Commission of alleged breaches of the legislation. That the proceedings are investigative only is a point of distinction which not all will perceive. The Commission is the statutory authority charged with the administration of the legislation which 1s involved. It 21s a serious matter for a company to be accused of a breach of the provisions of it. St1il more us that the case if the Commission expresses the opinion that a breach has occurred. ' * ram ne ~26- This sort of consideration was referred to by the Court of Appeal in In re Pergamon Press Limited £19717 Ch 388. Lord Denning M.R.'' said (at p.399) the fact that the inspectors in a company investigation determined nothing should not lead the Court to minimise the significance of their task. He continued: "They have to make a report which may have wide repercussions. They may, if they think fit, make ' findings of fact which are very damaging to those whom they name. They may accuse some; they may condemn others; they may ruin reputations or careers. Their report may lead to judicial proceedings. It may expose persons to criminal prosecutions or to civil actions..... " Sachs L.J. referred (at p.402) to the fact that 1t was by no means uncommon to find in the reports criticisms of the way in which hy andividtal directors or agents of the company had acted. He said that the contents of a report might 1n certain cases prove highly defamatory of persons who manage the affairs of the company. The statements of the two judges are directed more to criticism of individuals than of the companies of which they are directors or agents. We would add that decisions published by the Commission may contain damaging criticism of companies themselves. We do not say that such criticism may not be justified. What we stress 1s that hearings of a purely investigative nature followed by published reasons for decision may lead to criticism. It 1s in our opinion material to take that into account in determining how the Commission 1s to proceed. -27- There are various other matters which should be taken into account. There: is the need to ensure that the Commission will retain flexibility and will not be hampered or frustrated by a set of rigid rules cast upon it in an endeavour to ensure that i1t observes the rules of natural justice. It is important that it be able to act, as the legislature has intended, with expedition. A , balance has to be struck between the need to afford persons likely to be affected by the outcome of a hearing a fair opportunity to put their cases and the need for the Commission's investigation not to be stultified by a procedure so inflexible that it will not allow the Commission to act properly. Another matter to be kept in mind is that the Commission will often have, initially, no material to work on and may have to gather information, often on a confidential basis, before being ina position to assess whether facts exist which could give rise either to criticism of the company's officers or evidence upon which action may be taken against the company (see Pergamon Case, supra, per Sachs L.J. at 9.401). On the other hand it is important to have in mind not only that the Commission is bound to observe the rules of natural justice; ait 1s so bound in the context that what 1t 1s conducting isa nearing. The ordinary understanding of that expression when used in legislation, not only in relation to courts but also in relation to administrative tribunals, is that it usually denctes a hearing at which evidence and submissions from persons lixely to he affected are heard. The tribunal may decide to take these either orally or in writing, but more often than not part at least of the hearing will involve oral presentation; cf. Re Attorney-General of Manitoba and National Energy Board (1974) 48 D.L.R. (3d) 73 at pp.88-89, and see Req. v Deputy Industrial Injuries Commissioner ex parte Moore £19651 1 Q.B. 456 at pp.487-488. ) Finally 1t should be observed that the hearing will be most 'likely to affect the company or companies who are notified of the _hearing and whose name or names appear in the notice ina context similar to that in which the names of the companies here involved appear. Paragraph 38(1)(d) of the N.C.S.C. Act speaks generally of the rules of natural justice. It is for the Commission to observe them in the context of each individual case. But the position will usually be that their observance will be required to protect the interests of those into whose actions an investigation is being conducted. It may be appropriate to permit legal representation on behalf of a witness during a hearing. But a more relevant question will usually be whether such representation should not be made available throughout' the nearing to those at whom the Commission's notice is pointing. That is one of the questions Which arises directly in this case. It 1s appropriate now to deal with the requests made on behalf of News Corporation to the Commission as to the way 1f should -29- proceed. These are set out earlier at pp.5-6. First it asked for "a statement of the matters which cause the Commission to have reason to suspect that News Corporation has committed an offence under the legislation...." In our opinion News Corporation is not entitled to be given this 'statement. The hearing is in the nature of an unvestigation. It is significant that there is no contention that the Commission has acted in bad faith, as it would if it proceeded under s.16A of the Companies Act without having "reason to suspect that a person has committed an offence". This being the case,'the Commission, acting in good faith, is under no obligation to disclose "the material (it) has before (it), or the reasons for the enquiry"; Norwest Holst Limited v Secretary of State for Trade {£19781 Ch.201. There is no obligation upon the Commission to supply this information. News Corporation also requested in the alternative "some other specification of the substance of the case which News may be required to meet at the hearing." It appears to us that the notice given to News Corporation sufficiently identifies the issues which are to be the subject of enquiry. News Corporation also requested access to documents pursuant to the Freedom of Information Act but this request was not pursued before us. It remains to consider the requests concerning the manner in which the Commission should proceed. Certainly the Commission states its concern that 1t should not sublish criticisms of a person without first putting those criticisms to him and affording him the -30- opportunity to rebut them. In the case of criticism of a witness, where the grounds for the criticism have arisen in an adventitious way during the hearing, the giving of such an opportunity may be falr, even generous. But in the case of proceedings of an accusatory nature, brought to investigate whether a person has contravened the law, leading to possible publication of the Commission's findings set forth with a statement of the evidence and the 'Commission's reasons in the manner of reasons for judgment of a Court, the suggested procedure appears to us to be inadequate. Indeed, where contraventions are found but no legal proceedings are instituted the published decision stands with considerable authority as the official pronouncement on the matters raised. fe The right to call rebutting evidence and to make submissions after the Commission has formed its views in the absence of the accused, falls well short of the rights ordinarily afforded toa person accused of a breach of the law. Ordinarily an accused person 1s permitted to hear what 1s said against him, including the manner of its saying, to cross-examine witnesses, to call evidence and make submissions. What the Commission wishes to substitute for this 1s a procedure whereby it will hear evidence in private in the absence of the accused and reach conclusions. It will then give any company against whom it proposes to make an adverse finding an opportunity to call evidence and make submissions. in our opinion this is not, in the circumstances of this case, sufficient. It places sucha -31L- company in the position of having to call evidénce and make Submissions in an endeavour to persuade the Commission to change its mind and reverse the conclusion arrived at on evidence which only the Commission has heard. Human experience teaches that such a course imposes a heavy burden. Minds which have reached conclusions, however tentative, may not be closed totally, but the > task of prising them open will not be a light one. In the circumstances of this matter, namely that News Corporation is "accused" of having contravened s.11 of the Acquisition of Shares Act and ss.137 and 138 of the Companies Act it is in our opinion entitled to be present throughout the hearing provided it does not frustrate the Commission's obligation to conduct the investigation in accordance with para. 38{1){a) of the N.C.S.C. Act. Paragraph 38(1) (a) directs the Commission to conduct the hearing with "as little formality and technicality, and with as much expedition" as possible in the circumstances and News Corporation must not impede the attainment of this objective. News Corporation also sought three directions concerning cross-examination, calling evidence in reply and making submissions, each of which was expressed as subject to para. 38(1)(a). We regard the rules of natural justice as entitling it to have the hearing conducted in this manner. It is proper that News Corporation or its legal representatives be permitted to examine witnesses and call -32- evidence in reply. It should also be allowed to make submissions before the Commission makes its findings. In our opinion News Corporation does not in addition need to have a right later to be informed of proposed adverse findings before they are published and 1 to make submissions or call evidence in relation to them. The Commission's offer that it might do so'was in substitution for the other rights at a stage where those were denied. We make the following orders and directions: 1. The appeal be allowed. 2. The orders of 3 June 1983 be set aside. 3. The appellants and their legal representatives be permitted to be present throughout the hearing before the respondent. 4. Subject to paragraph 38(1)(a) of the National Companies and Securities Commission Act 1979 (a) the appellants or their leqal representatives be permitted to cross-examine witnesses called at the hearing (b) the appellants or their legal representatives be permitted to call evidence 1n reply prior to the conclusion of the hearing (c) the appellants or their leqal cepresentatives be permitted to make submisszons to the respondent concerning the subject matter of the hearing before . t, -" -33- the respondent makes any findings relating to the appellants. The respondent pay,.to the appellants their costs of this appeal and of the proceedings before the primary Judge. | certify that this and the 42, preceding pages are a true copy of the reasons for Judgment herein of the Court VA) Died 25 Ochbey ([4e3. Poe eg Awa