Reported Decision : 63 NSWLR 13 New South Wales Supreme Court CITATION : Penrith Rugby League Club Ltd v Brown [2004] NSWSC 932 revised - 09/11/2004 HEARING DATE(S) : 6 October 2004 JUDGMENT DATE : 8 October 2004 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : There should be declarations that the report of the findings of an inquiry under s 41X of the Registered Clubs Act 1976 may not include a finding that there has been corrupt or other improper conduct by any person and that the Director of Liquor and Gaming may not determine as a matter that is to be the subject of such an inquiry whether or not there has been corrupt or improper conduct by any person. CATCHWORDS : ASSOCIATIONS AND CLUBS [9] - General matters - Other matters - Registered clubs - Allegation about any corrupt or other improper conduct in relation to a registered Club - Inquiry arranged under s 41X of the Registered Clubs Act 1976 by the Director of Liquor and Gaming - Whether inquiry may make finding in terms of corrupt or other improper conduct - Whether Director may determine as a matter that is to be the subject of an inquiry whether or not there has been corrupt or improper conduct by any person. Interpretation Act 1987 s 33 LEGISLATION CITED : Registered Clubs Act 1976 Div 6 Part 4A , ss 41X, 41Y, 41Z & 41ZA Registered Clubs (Amendment) Act 2003 Royal Commissions Act 1923 Balog v Independent Commission Against Corruption (1990) 169 CLR 625 Chairperson, Aboriginal and Torres Strait Islander Commission v Commonwealth Ombudsman (1995) 63 FCR 163 CASES CITED : Corporate Affairs Commission of NSW v Yuill (1991) 172 CLR 319 In the Matter of an Application for a Writ of Certiorari against the Anti-Corruption Commission; Parker v Anti-Corruption Commission WASC Parker J 27 August 1998 unreported Parker v Miller Full Court of Western Australia 8 August 1988 unreported Penrith Rugby League Club Ltd (1P) Penrith District Rugby League Football Club Ltd (2P) PARTIES : Kenneth Maxwell Brown (1D) Ian Douglas Temby (2D) Roger Maxwell Cowan (3D) FILE NUMBER(S) : SC 4553/04 B A J Coles QC & T M Lynch (Ps) COUNSEL : P F Singleton (1D) Submitting appearances (2 & 3Ds) Back Schwartz Vaughan (Ps) SOLICITORS : I V Knight (1 & 2Ds) John de Mestre & Co (3D) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J FRIDAY, 8 OCTOBER 2004 4553/04 PENRITH RUGBY LEAGUE CLUB LTD & ANOR v KENNETH MAXWELL BROWN & ORS JUDGMENT 1 HIS HONOUR: The questions for decision in this case are whether in an inquiry under Division 6 of Part 4A of the Registered Clubs Act 1976 ("the Act") a finding (in terms) may be made that a person engaged in corrupt or other improper conduct and whether the Director of Liquor and Gaming ("the Director") may determine that one of the subject matters of such an inquiry should be whether a person engaged in corrupt or other improper conduct. There are certain ancillary questions which are dealt with below. 2 The relevant provisions were inserted in the Act by the Registered Clubs (Amendment) Act 2003. Section 41X of the Act provides: "41X Inquiry may be held (1) For the purposes of investigating an allegation about any corrupt or other improper conduct in relation to a registered club, the Director may arrange for the holding of an inquiry to be presided over by a person appointed by the Director. (2) The Director is to determine the following: (a) the matters that are to be the subject of an inquiry, (b) the procedures to be adopted at an inquiry (including whether the inquiry is to be held in public or in private), (c) the time within which the person presiding at the inquiry is required to report to the Director on the findings of an inquiry. (3) The matters that may be the subject of an inquiry may include matters relating to the termination of employment of members of staff of a registered club. (4) Evidence may be taken on oath or affirmation at an inquiry, and for that purpose: (a) the person presiding at the inquiry may require a person appearing at the inquiry who wishes to give evidence to take an oath or to make an affirmation in a form approved by the person presiding, and (b) a member of staff of the Department of Gaming and Racing may administer an oath or affirmation to a person so appearing at the inquiry. (5) The person presiding at an inquiry is not bound by the rules or practice of evidence and may inform himself or herself on any matter in such manner as the person considers appropriate." 3 Section 41Y confers on the person presiding certain of the powers and immunities of a Royal Commissioner under the Royal Commissions Act 1923. Additional powers are conferred if the person presiding is a Supreme Court Judge or a legal practitioner of not less than seven years standing. 4 Sections 41Z and 41ZA provide: "41Z Findings of inquiry and referral of certain matters (1) The person presiding at an inquiry is required to report to the Director on the findings of the inquiry (including any information obtained in the course of the inquiry). (2) If the Director is satisfied that any matter contained in the report: (a) relates or may relate to a breach of a law of the State (including this Act) or of another State or Territory or the Commonwealth, or (b) constitutes or may constitute grounds for taking proceedings of any kind (including a complaint under this or any other Act) against a registered club, the Director may refer the matter to a law enforcement agency or to any other person or body who may have an interest in the matter. (3) In this section: law enforcement agency has the same meaning as in section 12A of the Royal Commissions Act 1923 . 41ZA Orders in relation to registered clubs (1) The Director may, if satisfied that the findings of an inquiry justify doing so, make either or both of the following orders: (a) an order requiring the registered club that is the subject of the inquiry to provide each member of the club with information about the findings of the inquiry within such time as is specified in the order, (b) an order requiring the club to hold an election of the governing body of the club within such time as is specified in the order. (2) A registered club must comply with any such order. Maximum penalty: 100 penalty units. (3) An order under this section has effect despite any other provision of this Act or the rules of the registered club concerned." 5 The Director by an instrument of appointment dated 30 April 2004 ("the instrument of appointment") appointed the second defendant, a legal practitioner of at least seven years standing: "… to preside over an inquiry pursuant to section 41X of the Registered Clubs Act 1976 for the purposes of investigating certain allegations about corrupt or improper conduct in relation to the Penrith Rugby League Club Limited ('the Club') ... The matters to be the subject of the inquiry are allegations that: (a) the board of the Club aborted the March 2002 board election because of an apprehension that the election, if carried through to conclusion, would or might lead to loss of power by the existing board; (b) constitutional changes were then effected with a view to, or which had the effect (direct or indirect) of, enabling proxies to vote, enabling Club employees to vote, and precluding all Club ordinary members from directly voting in the board election held later in 2002, and subsequent elections; (c) the Club, by its board and/or Mr Roger Cowan, misled members of the clubs with which the Club amalgamated between 1998 and 2003 as to the continuing voting rights of members of those clubs; (d) Mr Cowan misled the board of the Club as to those voting rights; (e) Information as to the remuneration package of Mr Cowan, and the financial dealings between Phyro Holdings Pty Limited and the Club, and benefits flowing to Mr Cowan and that company whether directly or indirectly from the position he holds and from those financial dealings, have since at least 1 June 1994 been withheld from the Club's board and its members; (f) The Club is, and has since at least 1 June 1994 been, to a large extent run by and for the benefit of Mr Cowan and his close associates, including members of his family and Phyro Holdings Pty Limited, and not in good faith for the benefit of all members of the Club; and that such allegations involve corrupt or improper conduct. If in the course of your inquiry you become aware of any other matter concerning the Club which in your view could usefully be examined, you are required to advise me of such matter in writing, so that I can consider extending the terms of this Instrument of Appointment." The date at present fixed for the inquiry to report is 1 November 2004. 6 The second defendant entered upon the inquiry and in the course of conducting it, on 23 July 2004, propounded a document entitled "Issues Paper as at 13 July 2004", which proposed 13 questions. Each of those questions proceeded by inquiring as to whether there was impropriety or whether a named person behaved improperly in a specified regard. In bringing forward the issues paper, of which he declared himself the author, the second defendant said: "I want to stress that this issues paper is my document. Its purpose is to identify the issues upon which I will be looking to counsel assisting and counsel for the club and maybe others for assistance, but it is not intended to limit in any way the submissions that any counsel wishes to make to the inquiry. That is entirely up to them." 7 The plaintiffs have submitted to the second defendant that he cannot make findings cast in those terms. The first defendant contends that he can and ought make findings in terms as to whether corrupt or improper conduct has been established. Although the second defendant has not yet ruled on those submissions, it is plain that there is an issue between the plaintiffs and the first defendant as to the correct interpretation of the Act and there are real questions to be determined by this Court in that regard, which enliven this Court's jurisdiction to grant declaratory relief. 8 The plaintiffs by their amended summons seek the following relief: "1 A declaration that on the true construction of Part 4A Division 6 of the Registered Clubs Act 1976 (RCA), the Second Defendant, in the course of the Inquiry ("Inquiry") being conducted by him pursuant to section 41X RCA, is not entitled to make any finding or express a conclusion or opinion that there has been corrupt or other improper conduct in relation to the First Plaintiff. 2 A declaration that on the true construction of Part 4A Division 6 RCA, the Second Defendant, in any Report by him pursuant to s41Z RCA, is not entitled to make any finding or express a conclusion or opinion that there has been corrupt or other improper conduct in relation to the First Plaintiff. 3 An order that the Second Defendant in the course of the Inquiry be restrained from making any finding or expressing any conclusion or opinion that there has been corrupt or other improper conduct in relation to the First Plaintiff. 4 An order that the Second Defendant in any report by him, pursuant to s41Z RCA or otherwise, be restrained from making any finding or expressing any conclusion or opinion that there has been corrupt or other improper conduct in relation to the First Plaintiff. 5 A declaration that on the true construction of Part 4A Division 6 RCA, the Second Defendant is not authorised to publish any report of his Inquiry to any person or agency other than to the First Defendant. 6 A declaration that on the true construction of Part 4A Division 6 RCA, the First Defendant may not determine that any of the matters to be the subject of an inquiry pursuant to s41X RCA, should include a matter of whether there has been corrupt or improper conduct in relation to a Club registered under the RCA. 7 A declaration that on the true construction of Part 4A Division 6 RCA, the First Defendant may not determine that that person appointed by him to preside over any Inquiry arranged by him pursuant to that section should in any report of such inquiry make any finding or express any conclusion or opinion that there had been corrupt or other improper conduct in relation to the First Plaintiff. 8 A declaration that on the true construction of Part 4A Division 6 RCA, the Second Defendant in his report of his inquiry, pursuant to S41Z RCA or otherwise, is not entitled to make any findings or to express any conclusion or opinion about any matter other than those matters in paragraph (a) to (f) of the Instrument of Appointment from the First Defendant to the Second Defendant dated 30 April 2004. 9 A declaration that on the true construction of Part 4A Division [sic] RCA the First Defendant is not empowered to arrange for the holding of an inquiry thereunder other than: (a) upon his receiving an allegation about corrupt or other improper conduct in relation to a registered club, and (b) in respect of any such allegation. 10 A declaration that in respect of the Inquiry the First Defendant had not received any allegation about corrupt or other improper conduct about the matters or any matter the subject of the Inquiry." The second and third defendants have filed submitting appearances. 9 It is clear that the Act does not specify the findings which may be made on the inquiry. The first defendant contends that they are at large and may encompass findings of corruption and impropriety. He says that the Act should be given a purposive interpretation pursuant to the Interpretation Act 1987 s 33. The very purpose of the inquiry is demonstrated by s 41X(1) to be the investigation of corrupt and other improper conduct. The utility of the inquiry will be reduced if the first defendant is not able to receive from the second defendant specific findings as to whether or not there was corrupt or other improper conduct. 10 The plaintiffs contend that the pattern of the provisions shows that findings of corrupt or other improper conduct are not to be made by the second defendant. His function is to investigate. He is to gather material. He may make findings of fact concerning the matters referred. After receipt of the report the Director may make orders under s 41ZA. It is for him to decide under s 41Z if he is satisfied if a matter contained in the report may relate to a breach of a law, or constitute grounds for taking proceedings, whereupon he may refer the matter to a law enforcement agency, which will exercise its own discretion as to whether or not to commence proceedings. There is a substantial analogy to the Act which was the subject of the decision of the High Court in Balog v Independent Commission Against Corruption (1990) 169 CLR 625. 11 However, when a question of statutory construction arises it is important that it be decided upon the terms of the statute to be construed, rather than by reference to decisions upon statutes in different terms. Balog was a case on the Independent Commission Against Corruption Act 1988, which in its then form specified findings which might be made, not including findings of corruption (except in the case of matters referred by Parliament, in respect of which that power was expressly conferred). The maxim expressum facit cessare tacitum assisted the High Court to its conclusion. That element is absent here, where there is no specification of the findings which may be made. 12 However, there are passages in the High Court's judgment which are of assistance in the resolution of the present questions. The first is at 632: "Since the broad function of the Commission under s 13(1)(c) is to communicate the results of its investigations concerning corrupt conduct to appropriate authorities, it is apparent that its primary role is not that of expressing, at all events in any formal way, any conclusions which it might reach concerning criminal liability." The consequence of that is spelt through in the second passage at 636: "The Commission is primarily an investigative body whose investigations are intended to facilitate the actions of others in combating corrupt conduct. It is not a law enforcement agency and it exercises no judicial or quasi-judicial function. Its investigative powers carry with them no implication, having regard to the manner in which it is required to carry out its functions, that it should be able to make findings against individuals of corrupt or criminal behaviour." A further relevant principle was stated as follows at 635 - 636: "Were the functions of the Commission to extend to the making of findings, which are bound to become public, that an individual was or may have been guilty of corrupt or criminal conduct, there would plainly be a risk of damage to that person's reputation and of prejudice in any criminal proceedings which might follow. If the legislation admits of a wider interpretation than that which we have given to it (and we do not think that it does), then the narrower construction is nevertheless to be adopted upon the basis that where two alternative constructions of legislation are open, that which is consonant with the common law is to be preferred: Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475, at p 487. See also Hamilton v Oades (1989) 166 CLR 486, at p 494; Potter v Minahan (1908) 7 CLR 277, at p 304; Wade v New South Wales Rutile Mining Co Pty Ltd (1969) 121 CLR 177; and Baker v Campbell (1983) 153 CLR 52, at p 123." See also Corporate Affairs Commission of NSW v Yuill (1991) 172 CLR 319 per Dawson J at 331; Gaudron J at 338. 13 Balog was followed by the Full Court of Western Australia in Parker v Miller 8 August 1988 unreported. This was another case in which particular findings which might be made were specified by the statute. See also In the Matter of an Application for a Writ of Certiorari against the Anti-Corruption Commission; Parker v Anti-Corruption Commission WASC Parker J 27 August 1998 unreported. Balog was also followed in the Federal Court in Chairperson, Aboriginal and Torres Strait Islander Commission v Commonwealth Ombudsman (1995) 63 FCR 163. 14 Turning to the terms of the statute under consideration, the pattern of that statute is as follows. Section 41X(1) provides that the Director may arrange for the holding of an inquiry "for the purposes of investigating an allegation about any corrupt or other improper conduct". The Director's power is to arrange an inquiry. In my view, subsection (1) does not state the purpose of the inquiry, but states the occasion which enlivens the power of the Director to arrange an inquiry, that is, the Director must have before him or be aware of an allegation which he characterises as an allegation "about any corrupt or other improper conduct". Upon arranging an inquiry the Director must determine the matters that are to be the subject of the inquiry: s 41X(2)(a). The person presiding at the inquiry must report to the Director on the findings of the inquiry (including any information obtained in the course of the inquiry): s 41Z(1). If the Director feels satisfaction that any matter contained in the report relates or may relate to a breach of a law or constitutes or may constitute grounds for taking proceedings of any kind he may refer the matter to a law enforcement agency, or any other person or body who has an interest in the matter: s 41Z(2). The law enforcement agency or such other person or body will then exercise a discretion as to what if any further steps should be taken. If the Director feels satisfaction that the findings of an inquiry justify doing so, he may make orders under s 41ZA. There is no provision for appeal from or review of the inquiry's findings. 15 It seems to me upon a consideration of the pattern of these legislative provisions that it was not intended by the legislature that it be any part of the function of the person presiding at the inquiry to make findings that particular conduct constituted corrupt or other improper conduct, and equally that it is not appropriate for the Director to refer to the inquiry a question couched in those terms. The purpose of the inquiry is to investigate particular factual matters referred to it by the Director and to make a report (including appropriate factual findings) to the Director concerning them. He is also to include in the report (or send with it) any information obtained by him in the course of the inquiry. 16 These conclusions are reinforced by what was said by the High Court about the consequences to reputation of a finding such as that which the first defendant presses that it is open to the second defendant to make and the curious situation prevailing if a prosecution subsequently fails but a finding of this character stands. The statute is certainly not clear in its terms as to what findings may or may not be made. The lack of clarity should be resolved in favour of the interpretation that preserves the rights and reputations of individuals. 17 I should make two further observations. I do not think the utility of the report is utterly or even seriously compromised by the lack of findings in terms of corruption or impropriety. The Director will still have the benefit of the investigative procedure, together with findings as to particular factual matters and the material gathered in the investigation to use in the performance of his further functions conferred by the Act. 18 The other observation is that I appreciate the fineness at times of the distinction between findings in terms of corrupt or other improper conduct and findings of fact which may be discreditable to particular persons. Nonetheless, as observed by the High Court in Balog at 635, it is a distinction that is able to be made in practice, mostly readily. In any event, it is in my view a distinction the necessity for which is imposed by the statutory scheme. 19 The consequence of the views that I have expressed is that there should be appropriate declarations in general terms along the lines of prayers 2 and 6 in the amended summons. So far as prayer 2 is concerned, the declaration should be refined to include words such as "a statement of" findings of the relevant sort (see Balog at 636). The precise terms of the appropriate declaration may be debated when short minutes are brought in to give effect to my decision. So far as the subject matter of prayer 6 is concerned, I should say that the inclusion of words relating to corrupt and other improper conduct after head (f) in the notice of appointment does not breach this principle; on their proper construction those words are part of the definition of the allegations that are the subject of the inquiry and do not require the making of findings of an inappropriate sort. 20 Most of the other prayers in the amended summons may be shortly dealt with. I do not think that a declaration in satisfaction of prayer 1 is called for on the material before me. I am not prepared to grant injunctions as sought by prayers 3 and 4, as I do not see the faintest evidence of any threat that the second defendant will act otherwise than in accordance with his public duties as declared by this Court. Equally, I do not see any occasion on the evidence for a declaration to satisfy prayer 5. Nor do I see that the first defendant has made any determination or requirement that would require a declaration to satisfy prayer 7. 21 So far as prayer 8 is concerned, it was put to me that it appeared from the terms of the issues statement that the second defendant was contemplating making findings on factual matters outside terms (a) to (f) in the instrument of appointment. I do not think it at all clear on the small amount of evidence available before me that the second defendant is contemplating any such course. Not having sought the expansion of the terms of reference under the relevant provisions of the notice of appointment, he cannot, of course, go outside the original terms of reference, but I do not think it clear on the material before me that he is contemplating doing so, rather than formulating potential issues that relate to matters within the terms of reference. In those circumstances, I do not propose to make any declaration satisfying prayer 8. 22 Prayers 9 and 10 of the amended summons give rise to different considerations. They do not fall within the subject matter of the trial conducted before me. They were added to the summons by an amendment for which leave was given when these proceedings were called on for hearing before me. Mr Singleton, of counsel for the first defendant, consented to the amendment, but on condition that it should not involve an adjournment of the hearing. Upon it becoming apparent that the trial of those issues would necessitate an adjournment, I ordered pursuant to Part 31 of the Supreme Court Rules 1970 that the questions arising under prayers 9 and 10 should be tried separately from and after the determination of the other questions in the proceedings. The plaintiffs gave an undertaking that they would not contend that the second trial must be held before the same Judge as the first trial. I have placed this aspect of the matter in Gzell J's Expedition List today. 23 The result of the above is that, aside from the making of the declarations I have foreshadowed, the claims made by prayers 1 to 8 in the amended summons should be dismissed. 24 It would seem that the costs of this trial should inevitably follow the event, that is, that the first defendant should pay the plaintiffs' costs of the proceedings to date. If there is any contrary submission, it may be put at the time the short minutes are brought in. ********** Last Modified: 11/09/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.