Gray v Australian Securities & Investments Commission [2002] FCA 745

FEDERAL COURT OF AUSTRALIA

Gray v Australian Securities & Investments Commission [2002] FCA 745 ADMINISTRATIVE LAW – judicial review – grounds for judicial review – improper exercise of power – scope of authority of respondent – whether respondent authorized to release information to third party – whether statute creates relationship of confidentiality between the parties Australian Securities and Investments Commission Act 2001 (Cth) ss 13, 19, 25, 127 Administrative Decisions (Judicial Review) Act 1977 (Cth) s 5 Corporations Law s 184 Queensland Criminal Code s 408C

Johns v Australian Securities Commission (1992-1993) 178 CLR 408 referred to DAVID ANTHONY GRAY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Q 18 OF 2002 DOWSETT J 14 JUNE 2002 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 18 OF 2002

BETWEEN: DAVID ANTHONY GRAY

APPLICANT

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

RESPONDENT

JUDGE: DOWSETT J

DATE OF ORDER: 14 JUNE 2002

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. The application be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 18 OF 2002

BETWEEN: DAVID ANTHONY GRAY

APPLICANT

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

RESPONDENT

JUDGE: DOWSETT J

DATE: 14 JUNE 2002

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 Pursuant to s 13 of the Australian Securities and Investments Commission Act 2001 (Cth) (the "Act"), the respondent ("ASIC") may, where it has reason to suspect contravention of specified legislation, make such investigations as it thinks expedient. Section 19 provides: (1) This section applies where ASIC, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1. (2) ASIC may, by written notice in the prescribed form given to the person, require the person: (a) to give to ASIC all reasonable assistance in connection with the investigation; and (b) to appear before a specified member or staff member for examination on oath and to answer questions. (3) A notice given under subsection (2) must: (a) state the general nature of the matter referred to in subsection (1); and (b) set out the effect of subsection 23(1) and section 68. 2 Section 13 is in Division 1. 3 At some time prior to 11 December 2000, ASIC was investigating possible breaches of s 408C of the Queensland Criminal Code and s 184 of the Corporations Law. The suspected offenders were Mr L G Daswani and the "Daswani Group of Companies". The suspected offences were thought to have occurred between 1 July 1999 and 11 December 2000. The applicant had acted as solicitor for one or more of the "suspects". On 11 December 2000, ASIC issued to the applicant a notice requiring him to appear on 18 December 2000 for examination pursuant to subs 19(2) of the Act. At the same time it served a notice requiring him to produce certain documents, which notice was authorized by s 33 of the Act. Subsequently, the date of the examination was changed and a new s 19 notice issued. However it was in substantially the same form as that of 11 December 2000. The applicant was examined and a record of that examination prepared. 4 Section 25 of the Act provides: (1) ASIC may give a copy of a written record of the examination, or such a copy together with a copy of any related book, to a person's lawyer if the lawyer satisfies ASIC that the person is carrying on, or is contemplating in good faith, a proceeding in respect of a matter to which the examination related. (2) If ASIC gives a copy to a person under subsection (1), the person, or any other person who has possession, custody or control of the copy or a copy of it, must not, except in connection with preparing, beginning or carrying on, or in the course of, a proceeding: (a) use the copy or a copy of it; or (b) publish or communicate to a person, the copy, a copy of it, or any part of the copy's content. Penalty: 10 penalty units or imprisonment for three months, or both. (3) ASIC may, subject to such conditions (if any) as it imposes, give to a person a copy of a written record of the examination, or such a copy together with a copy of any related book. 5 The term "books" is defined in s 5 of the Act as including: (a) a register; and (b) financial reports or financial records, however compiled, recorded or stored; and (c) a document; and (d) banker's books; and (e) any other record of information. 6 Five different parties (the "notifying parties") have indicated to ASIC that they wish to acquire copies of the record of examination. ASIC has decided to provide such records to their legal advisers pursuant to subs 25(1). The applicant applies for review of that decision pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the "ADJR Act"). It is common ground that the ADJR Act authorizes such application. The amended application appears to rely upon pars 5(1)(e), (f), (h) and (j) of the ADJR Act. Although oral submissions took a somewhat different form, the ground covered was much the same as that identified in the amended application. 7 The various grounds depend substantially upon the correctness of a construction of subs 25(1) advanced by the applicant. In effect, he submits that the sub-section should be given a very narrow operation by reference to ss 13 and 127 of the Act. Section 127 relevantly provides: (1) ASIC must take all reasonable measures to protect from unauthorised use or disclosure information: (a) given to it in confidence in or in connection with the performance of its functions or the exercise of its powers under the corporations legislation (other than the excluded provisions); or (b) that is protected information. … 8 The applicant submits firstly, that any disclosure pursuant to subs 25(1) must be for a purpose incidental to the role of ASIC, pointing to the decision of the High Court in Johns v Australian Securities Commission (1992-1993) 178 CLR 408 as establishing this proposition. However that case primarily concerned subs 25(3). Although there are other passing references to subs 25(1), the only reference of any substance is at 468 where McHugh J observed: Section 25(1) authorizes the giving of a copy of a written record of the examination to a person's lawyer if the ASC is satisfied that a person is carrying on or is contemplating in good faith a proceeding in respect of a matter to which the examination related. A record handed to a lawyer pursuant to the terms of s 25(1) must be regarded, therefore, as an authorized disclosure for the purpose of s 127(3). 9 This proposition is beyond dispute, but it in no way supports the applicant's submission. In my view, ASIC is entitled to provide a copy of the record of examination to a lawyer acting for any person who is carrying on, or contemplating, in good faith, a proceeding of the type described. The applicant's second construction point concerns the identification of the proceedings which meet that description. This argument has two aspects. It is firstly submitted that there must be "direct correspondence between the contemplated proceeding and the subject matter of the examination". The argument focuses upon the reference in subs 25(1) to "a proceeding in respect of a matter to which the examination related" and the requirement in s 19(1) that before issuing a notice, ASIC must believe that a person can give information "relevant to a matter that it is investigating, or is to investigate …". The applicant's submission is that a "matter" for the purposes of subs 25(1) must also be a "matter" for the purposes of subs 19(1), namely a matter which it may investigate pursuant to Division 1. For present purposes such matters are suspected contraventions of the corporations legislation and of relevant state law. The question is whether the proceedings or contemplated proceedings for the purposes of subs 25(1) must be "in respect of" one or other of those matters. 10 It is only the use of the word "matter" in both subsections which suggests that outcome. Were it not for the use of that word in s 19, the expression "a matter to which the examination related" in subs 25(1)would be appropriate to describe any subject which was addressed in the course of the examination. The word "matter" must take its meaning from the context in which it appears. The contexts of s 19 and subs 25(1) are quite different. I see no reason to conclude that the word describes the same subject matter in each case. Provided the proceedings or contemplated proceedings are in respect of a matter addressed in the course of the examination, then the requirements of subs 25(1) are satisfied. It is not necessary that such proceedings be "in respect of" the subject matter of the ASIC investigation pursuant to s 19. I expect, however, that in the vast majority of cases there will be such a relationship simply because the expression "in respect of" is so broad and because the subject matter of the examination will be limited by its purpose. Secondly, it is submitted that subs 25(1) does not authorize the release of a record other than to facilitate proceedings for a contravention of a law mentioned in s 13. There is no textual justification for this view. Clearly, the proceedings contemplated by subs 25(1) include civil proceedings. 11 My construction of subs 25(1) disposes of most of the other grounds raised in the amended application. However some further comments are necessary. I will follow the sequence adopted in that document.