Re News Corporation Limited; Mirror Newspaper Limited; Nationwide News Pty Limited and Control Investments Pty Limited v National Companies and Securities Commission [1983] FCA 109; (1983) 66 FLR 461; 7 Aclr 966 (3 June 1983)

FEDERAL COURT OF AUSTRALIA

Re: THE NEWS CORPORATION LIMITED; MIRROR NEWSPAPER LIMITED; NATIONWIDE NEWS
PTY. LIMITED and CONTROL INVESTMENTS PTY. LIMITED
And: NATIONAL COMPANIES AND SECURITIES COMMISSION [1983] FCA 109; (1983) 66 FLR 461
No. G84 of 1983
Administrative Law - Companies
[1983] FCA 109; 7 ACLR 966

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Administrative Law - Judicial review - Decision of National Companies and Securities Commission to conduct investigative hearing regarding share acquisitions - Whether hearing under Part VI of National Companies and Securities Commission Act 1979 may be held in aid of investigative power conferred by s.16A of the Companies Act 1981 - Nature of hearing under Part VI - Powers of Commission.

Administrative Decisions (Judicial Review) Act 1977

National Companies and Securities Commission Act 1979 Part VI

Companies (Acquisition of Shares) Act 1980 ss. 11, 45,

Companies Act 1981 ss. 16A, 18, 20, 65, 66, 137, 138, 146 166, 167

Securities Industry Act 1980, ss. 40, 62

Companies - Decision of National Companies and Securities Commission to conduct investigative hearing regarding share acquisitions - Judicial review - Nature of hearing under Pt VI of National Companies and Securities Commission Act 1979 - Whether hearing under Pt VI may be held in aid of investigative power conferred by s. 16A of Companies Act 1981 - Powers of Commission - Natural justice - Administrative Decisions (Judicial Review) Act 1977 (Cth), s. 5 - National Companies and Securities Commission Act 1979 (Cth), Pt VI - Companies (Acquisition of Shares) Act, 1980 (Cth), ss. 11, 45 - Securities Industry Act 1980 (Cth), ss. 40, 62 - Companies Act, 1981 (Cth), ss. 16A, 18, 20, 65, 66, 137, 138, 146, 166, 167. The National Companies and Securities Commission (the Commission) gave notice of hearing under s. 36 of the National Companies and Securities Commission Act 1979 stating that it had reason to believe that persons may have contravened the Companies (Acquisition of Shares) Act 1980 and the Companies Act 1981 arising out of the acquisition of shares between 1st September, 1981, and 5th October, 1982, in Thomas Nationwide Transport Ltd. (T.N.T.) by certain companies including the applicant companies.

At the commencement of the hearing, the applicants unsuccessfully sought directions as to the conduct of the proceedings, which were said to be required by the rules of natural justice. The applicants sought an order of review of this decision of the Commission pursuant to the Administrative Decisions (Judicial Review) Act 1977.

Held: (1) The Commission may hold a hearing under s. 36 of the National Companies and Securities Commission Act 1979 to enable it to investigate whether suspected breaches of s. 11 of the Companies (Acquisition of Shares) Act, 1980 or the Companies Act, 1981 have occurred. The holding of a hearing by the Commission for the purpose of performing its investigative functions or exercising its investigative powers under s. 16A of the Companies Act falls squarely within the terms of s. 36(1) of the National Companies and Securities Commission Act.

Norwest Holst Ltd. v. Secretary of State for Trade (1978) 1 Ch 201, distinguished.

(2) The notice of hearing did not assert that s. 45(1) of the Companies (Acquisition of Shares) Act 1980 and s. 146(1) of the Companies Act, were sources of power independent of s. 16A of the Companies Act and sufficient in themselves to invoke the power in s. 36 to hold a hearing but rather that the object of the investigation was to enable the Commission to decide whether proceedings should be commenced.

(3) The applicants did not have the rights claimed in respect of the hearing claimed. The proceeding before the Commission was not in the nature of a proceeding between adversaries nor were the applicants in truth parties to the proceedings.

(4)(a) The applicants did not have to be informed of the basis of the suspicion of the Commission that a person had committed a relevant offence. (b) The applicants were not entitled to be present throughout the whole of the hearing by the Commission with their legal representatives.

(5) Application dismissed.

HEARING

Darwin, 1983, June 3. 3:6:1983
APPLICATION.

The applicants sought an order of review under the Administrative Decisions (Judicial Review) Act 1977 to review certain decisions of the National Companies and Securities Commission.

P.G. Hely Q.C. and J.J. Spigelman, for the applicants.

A. Chernov Q.C. and J.H. Karkar, for the respondent.
Cur. adv. vult.

Solicitors for the applicants: Dawson Waldron.

Solicitor for the respondent: B.J. O'Donovan, Commonwealth Crown Solicitor.
T.J. GINNANE

ORDER

1. The application be dismissed.

2. The applicants pay the respondent's costs of the application. Orders accordingly.

DECISION

This application under the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") raises for the first time questions as to the construction and operation of Part VI of the National Companies and Securities Commission Act 1979 (Cth.) ("the N.C.S.C. Act") relating to hearings before the National Companies and Securities Commission ("the Commission").

The facts are agreed. On 17 March 1983 the Commission issued a document titled "Notice of Hearing" in the following terms:-

"NATIONAL COMPANIES AND SECURITIES COMMISSION ACT 1979 OF THE COMMONWEALTH
NATIONAL COMPANIES AND SECURITIES COMMISSION

In the Matter of Thomas Nationwide Transport Limited
and
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 provisions 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 hold a hearing pursuant to section 36 of the National Companies and Securities Commission Act 1979 at its offices, 17th Floor, 31 Queen Street, Melbourne, in the State of Victoria, commencing at 9.30 am on Tuesday, 19 April 1983:
(a) in relation to the matters enumerated in Schedule A, for the purpose of the performance of its 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
(ii) 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 (Acquisition of Shares) Act 1980,

(b) in relation to the matters enumerated in Schedule B, for the purpose of the performance of its 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 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 failed 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 in Thomas Nationwide Transport Limited ("TNT") by The News Corporation Limited ("News"), Ansett Transport Industries Limited ("ATI"), McIlwraith McEacharn Limited ("MML"), TNT Superannuation Pty. Limited ("TNT S"), Associated Steamships Pty. Limited Staff Superannuation Fund ("ASS"), Mirror Newspapers Limited ("Mirror"), Nationwide News Pty. Limited ("Nationwide"), Control Investments Pty. Limited ("Control") and CBBH Custodians Pty. Limited ("CBBH") or some or one of them which constitute or may constitute a contravention of the provisions of section 11 of the Companies (Acquisition of Shares) Act 1980.

SCHEDULE B

The failure by TNT, News, ATI, MML, TNT S, ASS, Mirror, Nationwide, Control and CBBH or some or one of them between 1 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 in 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"

On 19 April 1983 the Commission commenced the hearing referred to in the Notice and heard submissions from counsel relating to the conduct of the hearing. Counsel for the applicants applied to the Commission for certain directions to which I shall refer soon and which were said to be required by the rules of natural justice. The Commission refused the application on 19 April and published its reasons for that decision on 20 April. This application was then brought by the applicants against the Commission under the Judicial Review Act. The application, as amended pursuant to leave granted at the hearing, so far as material for present purposes, reads as follows:-

"Application to review the decision of the Respondent and to review conduct in which the Respondent proposes to engage whereby the Respondent:

1. Refused or will refuse:

(a) to inform the Applicants of the matters facts and circumstances which cause the Respondent to have reason to suspect that the Applicants have contravened the provisions of Section 11 of the Companies (Acquisition of Shares) Act 1980 and failed to comply with Sections 137 and 138 of the Companies Act 1981.

(b) To inform the Applicants of the substance of the case which the Applicants may be required to meet at the hearing.

(c) To permit the Applicants and their legal representatives to be present throughout the whole of the hearing.

(d) To permit, subject to Section 38(1)(a) of the National Companies and Securities Commission Act 1979 ("NCSC Act 1979"), legal representatives of the Applicants to cross examine witnesses called at the hearing.

(e) To permit, subject to Section 38(1)(a) of the NCSC Act 1979, the Applicants to call evidence in reply prior to the conclusion of the hearing.

(f) To permit, subject to Section 38(1)(a) of the NCSC Act 1979, the Applicants or their legal representatives to make submissions to the Respondent concerning the subject matter of the hearing before the Respondent makes any findings covering the applicants or exercises any of its powers or functions referred to in the Notice of Hearing.

(g) To permit the Applicants to intervene in the proceeding.

2. Decided to hold a hearing pursuant to s.36 of National Companies and Securities Commission Act 1979 for the purpose of:

(i) An investigation pursuant to s.16A of the Companies Act 1981.

(ii) An application to the Supreme Court of the Australian Capital Territory pursuant to s.45(1) of the Companies (Acquisition of Shares) Act 1980.

(iii) An application to the Supreme Court of the Australian Capital Territory pursuant to s.146(1) of the Companies Act 1981.
. . . . ."

The amended application also seeks consequential orders. The issues fall conveniently into three categories:-

First, can a hearing be held pursuant to s.36 of the N.C.S.C. Act for the purpose of enabling the Commission to investigate whether suspected breaches of s.11 of the Companies (Acquisition of Shares) Act 1980 (Cth.) ("the Acquisition of Shares Act") or ss. 137 and 138 of the Companies Act 1981 (Cth.) ("the Companies Act") have occurred?

Second, can a hearing be held pursuant to s.36 of the N.C.S.C. Act for the purpose of enabling the Commission to decide whether to apply to the Supreme Court of the Australian Capital Territory:-

(a) pursuant to sub-s. 45(1) of the Acquisition of Shares Act for any of the orders therein mentioned where a person has acquired shares in contravention of s.11 of the Acquisition of Shares Act and

(b) pursuant to sub-s. 146(1) of the Companies Act for any of the orders therein mentioned where a person has been a substantial shareholder and has failed to comply with ss. 137 and 138 of the Companies Act?

Third, did the Commission err in holding that the rules of natural justice did not require it to take the steps mentioned in sub-paras. 1(a) to (g) of the amended application?

Although it is convenient to divide the issues into three categories it is important to keep in mind that the matters which arise for consideration in each category overlap, especially as between the first and third categories.

Before turning to these matters I shall describe briefly the legislative framework for the Commonwealth/State scheme for the regulation of companies and the securities industry.

A call for uniformity in Australian company law was evident as early as the 1950s. The Companies Act 1958, (Vic.) which came into operation on 1 April 1959, formed the basis for Australian uniform companies legislation which was enacted in the States and Territories of Australia as the Companies Act (Or Ordinance) 1961 or 1962. Although initially substantially uniform throughout Australia, needs were felt in particular States and Territories to introduce local changes to the legislation. A lack of uniformity developed. Ultimately agreement was reached on 22 December 1978 between the Commonwealth and the States for the establishment of a Commonwealth/State scheme for the regulation of companies and the securities industry. The national scheme included the introduction of uniform legislation by the Commonwealth, the States and participating Territories and the establishment of the Commission to administer the national scheme. The Commonwealth Parliament enacted the N.C.S.C. Act which incorporated the agreement of 22 December 1978 between the Commonwealth and the States in the Schedule to the Act. Later, other Commonwealth Acts were passed by the Commonwealth Parliament including the Acquisition of Shares Act, the Securities Industry Act 1980 (Cth.) ("the Securities Industry Act") and the Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980 (Cth.). By 1 July 1982 each State had enacted and brought into operation its own Act to give effect to the national scheme.

The N.C.S.C. Act has force throughout Australia. The Companies Act has force in the Australian Capital Territory. Each State has adopted the Companies Act and incorporated minor variations for each State. Together the Companies Act and the State Acts form the companies codes for the States. The position is the same with respect to the Acquisition of Shares Act and the Securities Industry Act. That is, each State has enacted legislation which adopts the Commonwealth Act subject to minor variations for each particular State. It is common ground that the Companies Act, the Acquisition of Shares Act and the Securities Industry Act apply to the applicants.

Part VI of the N.C.S.C. Act should be read in full to properly understand the issues which arise in this case. As the sections are rather lengthy I shall not recite them here but append them to my judgment.

The First Issue

Counsel for the applicants submitted that, notwithstanding the apparent width of the power to hold hearings conferred upon the Commission by sub-s. 36(1) of the N.C.S.C. Act, it could not be invoked for the purpose of performing the powers of investigation conferred by s.16A of the Companies Act. That section reads:-

"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 expedient for the due administration of this Act."

It was submitted that a hearing under s.36 of the N.C.S.C. Act is a formal proceeding necessarily involving the existence of issues and calling for the Commission's determination. It was submitted that when the Commission holds a hearing it acquires powers and persons who appear before it become subject to obligations which the Commission would not possess or to which those persons would not be subject if all that was involved was an investigation into the possible commission of an offence. A hearing at which the Commission is bound to observe the rules of natural justice is not simply a unilateral investigation, but a proceeding attended by a considerable degree of formality.

Reliance was placed upon the following matters in particular:-

- the proceeding before the Commission is called a hearing (sub-s. 36(1));

- the Commission is bound to observe the rules of natural justice (para. 38(1)(d));

- legal representation is afforded to persons appearing before the Commission (sub-s. 38(2));

- evidence is taken on oath or affirmation (sub-s. 37(2));
- the attendance of witnesses and the giving of evidence
is compellable (sub-ss. 39(1) and (2));

- evidence cannot be false or misleading (sub-s. 39(3));
- a limited privilege against self incrimination is conferred (sub-s. 39(5));

- a contravention of sub-ss. 39(1)(2) or (3) is punishable by a fine or imprisonment (sub-s. 39(6) or as contempt of court (sub-s. 39(8));

- doing anything that would, if the Commission were a court of record, constitute contempt of court is contempt of the Commission and punishable by penalty or imprisonment (s. 40);

- the same protection afforded to Justices of the High Court is given to members of the Commission in the performance of their functions or the exercise of their powers as members of the Commission; the same protection afforded to barristers and solicitors appearing for parties in the High Court is given to barristers and solicitors appearing for persons before the Commission; witnesses before the Commission are given the same protection as witnesses before the High Court (sub-ss. 41(1) (2) and (3));

- offences relating to the administration of justice and judicial proceedings created by Part III of the Crimes Act 1914 (Cth.) (for example corruption of witnesses - s.37, destroying evidence - s.39, conspiracy to defeat justice - s.42) apply to hearings before the Commission (s.42).

Counsel relied on the following passage from the judgment of Geoffrey Lane L.J. in Norwest Holst Limited v. Secretary of State for Trade (1978) 1 Ch. 201 at p. 228:-

"In every investigation or allegation of fraud or misfeasance there are, it seems to me, by and large three different phases. First of all, the administrative phase; next, the judicial phase; and, finally, the executive phase when the orders of the court or the tribunal are, if necessary, executed or promulgated."

Counsel relied on this passage in support of his argument that a hearing under s.36 necessarily involves the determination of issues, equating first the investigation process pursuant to s.16A of the Companies Act to what Geoffrey Lane L.J. called the "administrative phase", second a hearing under s.36 to the "judicial phase" and third any relevant proceedings before courts to the "executive phase".

Counsel for the applicants referred to particular provisions requiring the Commission to hold a hearing under s.36 and other provisions where it would be appropriate for the Commission to hold such a hearing, in aid of their argument that s.36 hearings were directed to the determination of issues akin to proceedings before courts.

Examples of mandatory provisions were the following:-

- sub-section 18(8) of the Companies Act prohibiting the Commission from refusing to register a person as an auditor unless it has afforded him an opportunity to appear at a hearing before the Commission and to make submissions and give evidence to the Commission in relation to the matter;

- sub-section 20(10) of the Companies Act which is the same as sub-s. 18(8) but in relation to a refusal to register a person as a liquidator;

- sub-section 66(9) of the Companies Act which prohibits the Commission from revoking a licence authorising certain companies to be registered as limited liability companies without the addition of the word "Limited" to their names;

- sub-section 62(1) of the Securities Industry Act which prohibits the Commission from refusing to grant licenses or revoking or suspending licenses or imposing conditions or restrictions in respect of licenses or varying conditions or restrictions applicable to licenses in certain circumstances unless it affords the applicant or the holder of the licence an opportunity to appear at a hearing before the Commission and to make submissions and give evidence to it in relation to the matter.

Examples of cases where the Commission decides to hold a s.36 hearing but is not required to do so by legislation were:-

- sub-section 65(3) of the Companies Act relating to directions by the Commission to a company to change its name;

- section 166 which empowers the Commission to approve deeds for the appointment of a company as trustee for the holders of prescribed interest;

- section 167 which empowers the Commission to approve a company acting as trustee for the purposes of a deed under division 6 of Part IV of the Companies Act;

- section 40 of the Securities Industry Act relating to the formation by the Commission of its opinion that it is necessary to prohibit trading in particular securities of a body corporate on the stock market of a Stock Exchange in order to protect persons buying or selling securities or in the interests of the public.

In support of their submission that a s.36 hearing cannot be held in aid of the investigative power conferred by s.16A of the Companies Act, counsel for the applicants said that an investigation by the Commission pursuant to s.16A was accompanied by the power, vested in the Commission by s.12 of the Companies Act, to require production of books relating to the corporation concerned. Hence there was no necessity for the Commission to look to the s.36 power to hold a hearing to give teeth to the s. 16A investigative power. Reliance was also placed upon ss. 13, 14 and 15 of the Companies Act.

Counsel submitted that whenever the Legislature intended in the national scheme to confer compulsory investigative power upon officers it did so by setting out in self-contained divisions of the relevant legislation complete and exhaustive statements of the powers, rights and obligations involved in the particular investigative process. Examples referred to by counsel in addition to ss. 12, 13, 14 15 and 16A of the Companies Act were the provisions of Part VII of the Companies Act relating to special investigation.

Those are the principal arguments advanced by counsel for the applicants in support of their submission that s.36 cannot be used to enforce the investigative powers conferred by s.16A.

The examination of the Commission's powers to hold hearings under s.36 must commence with the terms of s.36 itself. It confers power upon the Commission in the following wide terms:-

"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."

The section recognises that hearings before the Commission are of two kinds: those which it is required to hold and those which it decides to hold (sub-s. 36(2)). The section thus brings within its scope the numerous examples, some of which I mentioned earlier, of mandatory and discretionary hearings.

The holding of a hearing by the Commission for the purpose of performing its investigative functions or exercising its investigative powers under s.16A falls squarely within the terms of sub-s. 36(1) of the N.C.S.C. Act. Notwithstanding the able arguments in support of the applicants' case, I am not persuaded of their correctness.

The N.C.S.C. Act is applicable throughtout Australia. The Commission was established to formulate policy for and to administer the national scheme. The role of the Commission in the administration of the Acquisition of Shares Act and the substantial shareholding requirements of the Companies Act which are concerned with the integrity and efficiency of organised securities market throughout Australia are of particular relevance.

In its reasons for decision in the present case the Commission said:-

"3. In the performance of its functions, the Commission must ensure that the market in securities operates on the basis of availability of material information, equal opportunity and fairness to participants, so as to maintain and increase investor confidence in a fair and informed market. These aims follow from the basic policy of the legislation which is designed to bring about the following consequences:

(1) disclosure of the identity of acquirers of shares at defined points of time;

(2) the furnishing to shareholders of a company with essential material information, the source of which may come from a bidder, a substantial shareholder or the directors of the company;

(3) provision of safeguards designed to ensure that a takeover bid will not be frustrated by actions of the directors;

(4) the sharing of the premium for control amongst all shareholders;

(5) the slowing down of the dynamics of the auction type system of transactions conducted on the stock exchange by requiring takeover offers to remain open for longer periods, by giving directors of the target company an opportunity of evaluating any offer, and furnishing shareholders with sufficient information to enable them to make a judgment on the merits of the bid; and

(6) a denial that control of a publicly listed company may be acquired by stealth or by discriminating purchases.

4. These are some of the objectives which the Commission seeks to achieve within the framework of the legislation. In the process of so doing, the Commission is required to maintain continuous surveillance over the operations of the market place to the bounds of the legislation or in breach of it. . . ."

I agree generally with those statements.

The argument of counsel for the applicants that the investigative power conferred by s.16A, as supported by ss. 12 to 14 inclusive of the Companies Act, are discrete powers which do not require enlargement or support from a s.36 hearing does not, in my opinion, aid the applicants' case. Nor does the argument that the compulsory investigative powers conferred upon the Commission in the national scheme are self contained divisions of the relevant legislation so that s.36 would not readily be regarded as a source of power to support the s.16 power.

The power conferred upon the Commission by s.16A to make such investigation as it thinks expedient for the due administration of the Companies Act when it has reason to suspect that a person has committed an offence under that Act could not conceivably empower the Commission to secure the compulsory attendance of witnesses, to compulsorily examine them and to exercise and enforce the other powers that customarily attend the compulsory examination of witnesses. It is true that s.12 of the Companies Act empowers the Commission to require the production of books relating to the affairs of the relevant corporation and that ss. 13 and 14 give teeth to this power; but no power is conferred by those sections akin to the power to summon persons to appear before the Commission to produce documents such as is conferred by sub-s. 37(1) of the N.C.S.C. Act exercisable at a hearing.

Special investigations have traditionally been dealt with by companies legislation in self-contained divisions. The national companies codes follow the same pattern.

Nor do the remarks of Geoffrey Lane L.J. in the Norwest Holst Case support the applicants' arguments. His Lordship's reference to every investigation or allegation of fraud or misfeasance being "by and large three different phases" - the administrative phase, the judicial phase and finally the executive phase "when the orders of the court or the tribunal are, if necessary, executed or promulgated "must be read in the context of the facts, legislation and issues there under consideration. They are plainly distinguishable from the present case.

The N.C.S.C. Act operates throughout Australia, establishes the Commission, defines its functions and powers and provides for the constitution and meetings of the Commission, its staff, finance and other matters. If the Legislature intended to invest the Commission with powers to conduct hearings concerning matters arising under the other legislation comprising the national companies and securities scheme, the very place one would expect to find them is the N.C.S.C. Act and not spread at random through other legislation, including legislation of the States. The numerous examples of hearings which the Commission is required or decides to hold arising from the Companies Act, the Acquisition of Shares Act and the Securities Industry Act support this conclusion.

It is true that Part VI of the N.C.S.C. Act confers large powers upon the Commission and subjects persons who appear before it to obligations, breach of which may constitute an offence. I referred earlier to some illustrations of these powers and obligations and need not repeat them. But it does not follow that a hearing before the Commission necessarily involves issues which the Commission must determine or that the hearing is adversative in nature or that the Commission's procedures must be attended by a considerable degree of formality. Some hearings will involve the Commission determining issues, for example, hearings required by sub-ss. 18(8) or 20(10) of the Companies Act, although it does not follow that they will be adversative in nature. Nor will hearings necessarily be formal. Paragraph 38(1)(a) of the N.C.S.C. Act provides that hearings will 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 proper consideration of the matters before the Commission permit."

The Commission is an administrative body with large and far reaching powers. If it holds hearings under Part VI it must observe the rules of natural justice. It is not bound by the rules of evidence. It may summons persons to appear before it to give evidence and produce documents; it may require witnesses to answer questions. Failure to observe its directions is punishable by fine or imprisonment as contempt of court. The proceeding is called a "hearing" and legal representation is permissible. Parliament has conferred upon the Commission wide powers to give real force and effect to its role as the body charged with the function of exercising responsibility for the administration of companies and the regulation of the securities industry. Parliament has invested the Commission under Part VI with substantial powers and, because their exercise may encroach on the freedom of the individual, safeguards are provided to protect him, such as the requirement that the Commission observe the rules of natural justice and the grant of the right of legal representation.

The numerousness of matters which shall or may cause the Commission to hold a hearing under Part VI and their diversity in source, kind and substance finds legislative expression in provisions contained in that part, including sub-s. 36(2) which empowers the Commission to direct that the hearing take place in public or private and sub-s. 36(5) which empowers the Commission to give directions as to the persons who may be present at a hearing to take place in private. A hearing in aid of investigative powers is a clear example of the desirability of a hearing taking place in private when it is coupled with the right of the person being examined to be represented by counsel or solicitors.

In my view the Commission may invoke s.36 to hold a hearing for the purpose of performing its functions of exercising its powers of investigation conferred by s.16A of the Companies Act.

The Second Issue. Counsel for the applicants submitted that the Commission is not empowered to hold hearings for the purpose of enabling it to decide whether to apply to the Supreme Court of the Australian Capital Territory -

(a) pursuant to sub-s. 45(1) of the Acquisition of Shares Act for any of the orders therein mentioned where a person has acquired shares in contravention of s.11 of the Acquisition of Shares Act, or

(b) pursuant to sub-s. 146(1) of the Companies Act for any of the orders therein mentioned where a person has been a substantial shareholder and failed to comply with ss. 137 and 138 of the Companies Act.

It was submitted that sub-ss. 45(1) and 146(1) merely give locus standi to the Commission to apply to the Supreme Court of the Australian Capital Territory for appropriate orders where a relevant breach of the legislation has occurred. It was said that the "notice of hearing" asserts the existence of the power in the Commission to hold hearings for the purpose of enabling it to decide whether to apply to the Supreme Court and, as there is no such power, the Commission's decision to hold such a hearing is bad in law.

This submission was based on the form of the "notice of hearing" set out earlier and issued by the Commission before the hearing on 19 April 1983 which was read at the commencement of the hearing by the Executive Director of the Commission on 19 April on the instruction of the Commission's chairman. I agree that sub-s. 45(1) of the Acquisition of Shares Act and sub-s. 146(1) of the Companies Act do no more than give locus standi to the Commission as the moving party before the Court for orders under those sections and that they cannot, by themselves, be relied on as enlivening the Commission's power to hold hearings under sub-s. 36(1). But I do not construe the "notice of hearing" as bearing the meaning asserted by the applicants. Section 16A is the source of the Commission's power to make such investigation as it thinks expedient for the due administration of the Companies Act and the Acquisition of Shares Act (see sub-s. 5(1) of the latter Act which provides that the Companies Act "is incorporated, and shall be read as one, with this Act as if this Act were part of the Companies Act 1981. . . ."). This power arises where the Commission has reason to suspect that a person has committed an offence under a provision of the Companies Act or the Acquisition of Shares Act (s.16A). The object of such an investigation, relevantly to this case, is so that the Commission may decide whether proceedings shall be commenced by it pursuant to sub-s. 45(1) of the Acquisition of Shares Act or sub-s. 146(1) of the Companies Act. The rights to apply to the Court which those sections confer arise once the Commission decides to commence those proceedings. In coming to its decision the Commission may be assisted by its investigations under s.16A, including related s.36 hearings. The "notice of hearing" should be read this way, rather than as asserting that sub-s. 45(1) and 146(1) are sources of power independent of s.16A and sufficient in themselves to invoke the s.36 power to hold a hearing.

If I had accepted the construction contended for by the applicants and if the consequence was that the applicants were prima facie entitled to an order of review I would have been disposed to declare that the Commission could not, when resuming its hearing, rely on sub-s. 45(1) and 146(1) as enlivening the power to hold a hearing under s.36 of the N.C.S.C. Act. As I do not accept the correctness of that construction of the notice of hearing this question does not arise.

The Third Issue. Counsel for the applicants submitted that the Commission erred in holding that the rules of natural justice did not require it to take the steps mentioned in sub-paras 1(a) to (g) of the amended application. The submission may be summarised as follows:-

1. The national scheme provides three methods by which persons may be compelled to provide information in particular circumstances:-

(a) a special investigation under Part VII of the Companies Act and Division 2 of the Securities Industry Act: sub-ss. 296(6), (12) and (13) of the Companies Act and sub-ss. 19(8), 12A and 12B of the Securities Industry Act;

(b) by specific obligation; the Companies Act sub-s. 12(7) and the Securities Industry Act sub-s. 8(6) and 12(3A)(g) and

(c) Part VI of the N.C.S.C. Act.

Circumstance (c) differs markedly from (a) and (b). (a) and (b) are purely investigatory. No hearing is involved, and in the case of (a) there is specific and limited entitlement to participation and to legal representation.
2. If a hearing is held pursuant to s.36 of the N.C.S.C. Act the Commission acquires powers and those who appear before it are subject to obligations which the Commission would not possess or to which they would not be subject if all that was involved was an investigation or the making of an administrative decision to institute proceedings in a court. Reference was made by counsel to matters to which I have already referred including the power to summon witnesses to give evidence and produce document. Reliance was also placed upon the submission to which I have already referred that proceedings under s.36 are analogous to those before courts, that the N.C.S.C. is bound to observe the rules of natural justice and that the procedure is attended by what was described in the submission as a considerable degree of formality.

3. Part VI of the N.C.S.C. Act expressly negatives or reverses the principles which have been established by a number of decisions of the court negativing the application of the rules of natural justice to a mere investigation or a mere decision to institute proceedings. I was referred to Testro Bros. Pty. Limited v. Tait [1963] HCA 29; (1963) 109 C.L.R. 353; re Pergamon Press Limited (1971) 1 Ch. 388; Maxwell v. Department of Trade and Industry (1974) 1 Q.B. 523; Norwest Holst v. Secretary of Trade (supra) and Wiseman v. Borneman (1971) A.C. 297.
4. At common law the extent to which a Tribunal is bound to observe the rules of natural justice depends upon the legislative framework and the circumstances of the case: Salemi v. MacKellar No. 2 [1977] HCA 26; 137 C.L.R. 396 at p.401. In some cases only a measure of natural justice is required and some only of the rules apply: Keller v. Drainage Tribunal and Montague (1980) V.R. 449 at p.456.

Paragraph 38(1)(d) requires the rules of natural justice to be observed at all hearings of the Commission.

5. The Commission's decision not to permit the applicants to be present before it and not to permit it to participate in the proceedings in the manner sought by them produces the result that the proceedings so conducted are not a hearing within the meaning of Part VI or, if they are then not one where the rules of natural justice are observed.

Much of what I said earlier with reference to the first issue applies to this issue. I will avoid repetition so far as possible.

It is important to keep in mind that Parliament has expressly provided that the Commission shall observe the rules of natural justice at hearings before it (para. 38(1)(d) of the N.C.S.C. Act). As so often happens in cases involving questions as to the application of the rules of natural justice, the difficulty is not so much in concluding that they, or such of them as are relevant, operate in the particular case but to give content to them and to apply them to the facts of the case: Salemi's Case (supra) at p. 419 per Gibbs J. (as the Chief Justice then was). This is the very difficulty that arises here.

It must be remembered that the Commission said at the hearing on 19 April that it proposed to hold the hearing in private and would give directions as to persons who may be present at the hearing after it determined the questions raised by the applicants.

In the reasons for its decision given on 20 April, the Commission said:-

"8. . . . except to the extent necessary to illustrate the reasons for its conclusions, the evidence led during the course of the hearing will not be published.

. . . .

15. The Commission reiterates its statements made on 19 April 1983 that if, at the conclusion of the hearing, it proposes to publish any matter adverse to or critical of any person, it will afford him or it an opportunity to be heard and call evidence on such matter before proceeding further.

16. The Commission will also provide to each witness a copy of the transcript of his evidence."

When conducting a hearing pursuant to Division VI the Commission is armed with the compulsory powers of attendance and examination of witnesses conferred by that division in aid of its investigative functions and powers conferred by s.16A of the Companies Act. There are "no issues" in the sense in which that term is understood in proceedings before courts. The Commission does not adjudicate upon the rights of persons and it does not relevantly affect or determine their rights. Nothing may happen after the end of the hearing because the Commission may decide not to commence any proceedings. If proceedings are commenced by the Commission it is for the courts before whom they are brought to determine the rights of the parties.

Each of the matters relied on by the applicants in 1(a) to (g) of the amended application assume that the applicants have the right therein mentioned. This assumption is based on what is, in my view, the fallacy that the hearing is in the nature of a proceeding between adversaries and that the applicants are in truth parties to that proceeding.

In some cases the hearing will be akin to a formal proceeding in a court, but not in this case where it is purely inquisitorial. I find it difficult to conceive of any occasion where the applicants, being corporations, would be entitled to be present or represented at the forthcoming hearing except perhaps where a summons is directed to one of the applicants by its proper officer and the presence of the corporation is required at least notionally for this purpose.

These considerations, in the light of what I have said earlier in these reasons, are sufficient to dispose of the application against the applicants, but some particular considerations arise with respect to certain of the matters 1(a) to (g) so I shall now turn to them but they must be read in the light of all that I have said hitherto.

Amended Application 1(a)

It is a condition precedent to the exercise of the investigative power under s.16A, and therefore to the holding of a hearing under s.36 of the N.C.S.C. Act, that the Commission has reason to suspect that a person has committed a relevant offence. But it does not follow that the applicants should be informed of the bases for its view before the hearing commences or indeed during the hearing. I cannot conceive of any reason why they should be so informed. There are not and never may be any proceedings brought against the applicants alleging contraventions of s.11 of the Acquisition of Shares Act or ss. 137 and 138 of the Companies Act or any other proceedings. The revelation of the matters sought by the applicants may be destructive of the very inquisitorial process which Parliament has sanctioned and entrusted to the Commission. There are no parties to the hearing before the Commission. There will be witnesses whose rights are safeguarded by the express provisions of Part VI especially those relating to legal representation and the general requirement of the law that the Commission observe the rules of fair play.

Amended Application 1(b)

As there is no case which the applicants may be required to meet at the hearing this submission fails.

Amended Application 1(c)(d)(e) and (g).

The hearing is to be conducted in private. Each witness being examined may appear with his legal representative if he wishes. It would abort the hearing and again be destructive of it if the applicants were entitled to be present throughout the whole of the hearing with their legal representatives. Again the submissions are based on the erroneous assumption that the hearing is inter-parties, that issues fall to be determined by the Commission and that the Commission is vested with powers of determining rights of the applicants.
Amended Application 1(f)

The only relevant finding which the Commission may make concerning the applicants is that it may institute proceedings under sub-ss. 45(1) of the Acquisition of Shares Act and sub-s. 146(1) of the Companies Act. Yet it may not decide to do so. If it does institute those proceedings then, like all litigation, the parties will be entitled to the usual protection afforded by the law. If any fears are held by the applicants as to whether the Commission will make public any of its views, they are sufficiently protected by the Commission's assurances to which I have referred.

I would dismiss this application with costs.