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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Corporations - examination of persons - Corporations Law, s. 597 - Australian Securities Commission Act 1989, s. 11 - delegation by ASC of its function to authorise the making of applications for examination orders - distinction between powers and functions - efficacy of instruments of delegation and authorisation.Administrative Law - circumstances in which validity of an administrative decision may be supported by a head of power other than that expressly relied upon by the decision-maker.
Australian Securities Commission Act 1989
Corporations Law
Administrative Decisions (Judicial Review) Act 1977
Broadcasting and Television Act 1942
Remuneration Tribunal Act 1973
Health Insurance Commission Act 1973
Federal Court of Australia Act 1976
Freedom of Information Act 1982
Corporations (New South Wales) Act
Naval Discipline Act 1866 (Imp)
The Housing Act 1980 (UK)
Federal Administrative Procedure Act, 5 USC
Hongkongbank of Australia Ltd v. Australian Securities Commission (1992) 108 ALR 70, followed.
Australian Broadcasting Tribunal v. Saatchi and Saatchi Compton (Vic) Pty Ltd (1985) 10 FCR 1, considered.
HEARING
SYDNEY, 15, 16 December 1992 Counsel and solicitors Mr J.D. Heydon QC and
for the applicants: Mr C.P. Comans instructed
by Mallesons Stephen Jaques.for the first and Mr G.T. Johnson instructedCounsel and solicitor Mr B.C. Oslington QC and
Australian Securitiesfor the third respondents: Mr L.S. Einstein instructed
Commission.Counsel and solicitors Mr D.F. Jackson QC and
by Baker and McKenzie.
ORDER
The Court orders that(1) The application is dismissed.Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
(2) The applicants pay the costs of the respondents.
DECISION
BLACK C.J. This is an application under the Administrative Decisions (Judicial Review) Act, 1977 and s.39B of the Judiciary Act, 1903 in which the applicants seek judicial review of a decision of the second respondent, the Regional Commissioner for the State of New South Wales of the Australian Securities Commission ("the ASC"). The decision, made on 2 April 1992 purportedly in the exercise of powers delegated by the first respondent, the ASC, authorised the third respondents to apply to the Supreme Court of New South Wales or the Supreme Court of Victoria or to this Court for an order pursuant to s.597 of the Corporations Law in relation to the affairs of BPTC Limited (in liquidation), formerly Burns Philp Trustee Co. Limited ("BPTC").2. This application was heard by a Full Court in the exercise of the Court's original jurisdiction in consequence of a direction given under s.20 (1A) of the Federal Court of Australia Act 1976. The history of the proceeding, and the facts and issues are set out in the reasons for judgment of Lockhart J. and of Gummow J. The relevant statutory provisions, the instrument of authorisation and the instruments of delegation are also set out in those reasons. I turn therefore to the principal questions of law that arise in this case.
Whether the first or second respondents had power to authorise the third
respondents to apply to a court pursuant to s.597 of the
Corporations Law:
3. I agree with Lockhart J. and Gummow J., for the reasons they give, that
s.597 of the Corporations Law confers the function upon
the ASC of authorising
persons to apply to a court for an order under s.597. I agree too, as
Hongkongbank of Australia Ltd v. Australian
Securities Commission (1992) 108
ALR 70 decides, that s.591(1) is not itself the source of the power to
authorise but that the power to do so is conferred upon the ASC by
s.11(4) of
the Australian Securities Commission Act, 1989 ("the ASC Act"). In
Hongkongbank the Court expressly left open the question whether s.591(2)
confers functions upon the ASC to which a power may
attach. It may, in my
view, be readily concluded that s.11(4) of the ASC Act, which provides that
the ASC has "power to do whatever is necessary for or in connection with, or
reasonably incidental to, the performance
of its functions" confers the power.
If the clearly discernible function of authorising persons to make application
to a court under
s.597 of the Corporations Law is to be discharged at all then
it is "necessary" for the ASC to have power to perform that function.
Section
11(4) of the ASC Act applies in such a case according to its terms.
Whether the instrument of authorisation from the second respondent to the
third respondents dated 2 April 1992 can be supported by
s.11 of the ASC Act
if the first and second respondents did not intend to rely on s.11?
4. The instrument of authorisation, executed by the second respondent
purportedly in the exercise of delegated power, is expressed
to be an
authorisation by the ASC "pursuant to" the provisions of s.597(1) of the
Corporations Law authorising the third respondents
to make application to the
courts for an order pursuant to the provisions of s.597. As Lockhart J.
points out, it is clear from
the material before the Court that the second
respondent assumed that the source of his power to authorise the third
respondents
to apply to the court under s.597 was that section itself.
5. I consider that the instrument of authorisation reflects the ASC's mistaken assumption, but this conclusion is not fatal to the valid exercise of the power that the ASC had by reason of the combination of s.11(4) of the ASC Act and s.597 of the Corporations Law: see Brown v. West [1990] HCA 7; (1990) 169 CLR 195 at 203. This case is quite different from Australian Broadcasting Tribunal v. Saatchi (1985) 10 FCR 1.
6. There must of course be limits to the general principle that an act purporting to be done under one statutory power may be supported under another statutory power. The suggested other source of power may, for example, be seen to be unavailable because its exercise depends upon the fulfilment of some condition precedent peculiar to it and that event has not yet occurred: see Saatchi at 23 per Wilcox J. and The King v. Bevan: Ex parte Elias and Gordon [1942] HCA 12; (1942) 66 CLR 452 at 587 per Williams J.. There may also be cases in which the matters to which a decision-maker would be bound to have regard in exercising the other source of power differ materially from the matters relevant to the exercise of the assumed source of power with the result that the other source of power cannot be relied upon to support the decision. Similarly, matters may be taken into account in the purported exercise of a power that would invalidate the attempted exercise of a power derived from another source because, in the context of the other source, they were irrelevant matters. Moreover, for reasons of this nature, where the effect of the exercise of the power upon third parties may differ according to the source of the power, the exercise of the power may not be supportable as a valid exercise of power derived from another source. No difficulties of this sort were present in Brown v. West [1990] HCA 7; (1990) 169 CLR 195, where the court pointed out, at 203-4, that whether the Remuneration Tribunal's power was to be found in one sub-section or in another, the power was to "determine" a postage allowance and that was the power the Tribunal exercised, and where it was conceded that the power was exercised validly.
7. Although the instrument of authorisation reveals, in my view, that the ASC mistook the source of its power, in the sense that s.597 does not of itself confer the power sought to be exercised, it is clear that the ASC intended the discharge, in relation to BPTC, of the function of authorising persons to make an application for an order pursuant to provisions of s.597 of the Corporations Law. It was under no statutory obligation to specify the source of the power under which it was acting and no consequence attached to the specification of a source of power that did not in fact exist. The circumstances relevant to the proper exercise of the power were exactly the same whether the source of the power was s.597(1) of the Corporations Law, as it supposed, or whether the source was s.11(4) of the ASC Act operating in combination with s.597. The function for which s.11(4) provided the necessary power was the precise function to which the instrument of authorisation, which referred to both powers and functions, was directed and for purposes concerning the validity of the exercise of the power it was quite immaterial whether the source was s.597(1) or whether it was s.11(4) of the ASC Act in combination with s.597(2).
8. The instrument of authorisation was not invalidated by the incorrect statement in the recital of the source of the power or by an incorrect assumption about that source.
Whether there was effective delegation by the ASC to the second respondent:
9. The instrument of delegation of 21 March 1991 ("the first instrument of
delegation"), which was the instrument referred to in
the recital to the
instrument of authorisation, delegated not only powers conferred "by" the
Corporations Law but, in addition, powers
conferred "under" the Corporations
Law. Either word would have been appropriate to apply to the common situation
where a section
of an Act specifically confers a power and it is intended to
delegate that power, although to refer to the power as being conferred
"by"
the section may perhaps be more usual than to refer to the power as being
conferred "under" the section.
10. It is clear however that in the context of the instrument of delegation the word "under" is not mere surplusage and that the two words are not intended to cover the same field. The word "by" being plainly apt to apply to the common situation where a section of an Act specifically confers a power, the additional words "or under" should be read as extending the scope of the delegation beyond such a case. Those additional words would be apt to cover a power conferred by regulation made under the Corporations Law but they are probably not essential for that purpose and there is no reason to limit their application to such a case.
11. The express conferral of power by s.11(4) of the ASC Act is incomplete in the sense that it is an indispensable element of the conferral that there should be a function for the performance of which the power is necessary, or reasonably incidental, or with which the power is connected. It is only by the coexistence of the power and the relevant function that the power may be said to be conferred. Thus it may be concluded that the power in question is conferred by s.11(4) of the ASC Act but under the provision of the Corporations Law, in this case s.597, that confers the particular function that is essential for the conferral of the power to be complete.
12. A different conclusion would have been called for had either the word "by" or the word "under" been used alone in the instrument of delegation, but the use of both words compels, to my mind, the conclusion that the delegation should, in this respect, be construed expansively and to extend to the power to authorise persons to make applications, derived from s.11(4) of the ASC Act and s.597 of the Corporations Law working in necessary combination.
13. The circumstance that the first instrument of delegation is expressed to delegate powers and functions conferred or "expressed to be conferred" on the ASC by or under the provisions of the Corporations Law offers further support for this conclusion. Again the language shows an intention to cover a wide field. It shows that the delegation was intended to extend to powers that were not expressed to be conferred by the Corporations Law and were not conferred by that law but nevertheless could be said to be conferred under it.
14. There is in any event the instrument of delegation dated 11 March 1992
("the second instrument of delegation"). It is in the
same terms as the first
instrument of delegation except that it does not contain the words "or
expressed to be conferred" and that,
after the three numbered paragraphs,
there appears the following paragraph:
"AND all the powers and functions to do whatever is incidental toEach instrument of delegation contains a declaration that it does not revoke any previous delegation granted by the ASC except in respects not material to this case.
the exercise and discharge of the powers and functions hereby
delegated, including, without limiting the generality of the
foregoing, affixing the seal of the Commission."
15. For reasons similar to those that lead to the conclusion that the incorrect assumption and statement of the source of the power in relation to the instrument of authorisation do not invalidate the exercise of the power to authorise, the reference to the first instrument of delegation in the recital to the instrument of authorisation does not preclude reliance upon the second instrument of delegation as a source of authority.
16. Whether or not paragraph (1) of either instrument of delegation may be said to delegate powers conferred on the ASC "under" s.597 of the Corporations Law, there is no difficulty in saying that, in terms, the instruments delegate functions conferred on the ASC by or under s.597. There having been a delegation of those functions, the question is whether the additional paragraph in the second instrument of delegation was effective to delegate the power in question as being "incidental" to the discharge of the functions that were delegated.
17. Although the reference to affixing the seal of the ASC might at first sight suggest that the delegation of powers incidental to the exercise of the delegated functions is confined to matters of a formal or subsidiary nature, the instrument specifically makes it clear that the generality of the relevant words is not to be limited in this way.
18. The word "incidental" may be used in various senses and in one of those
senses. A power may be incidental to the discharge of
a function if it
naturally appertains or attaches to it. The first meaning given to the word
"incident", but not to "incidental",
by the Oxford English Dictionary (1989)
includes "naturally appertaining or attaching " but in ordinary usage that
meaning may also
attach to the word "incidental". The various senses in which
the word "incidental" may be used are discussed by Jacobs J. in State
of
Victoria v. The Commonwealth of Australia and Hayden (1975) 134 CLR 388 at
413-4, and Fowler's Modern English Usage 2nd edn. (1989 reprint) at 274
contains the following observations about the words "incident",
as an
adjective, and "incidental" that bear upon the present question:
"Two tendencies may be discerned. One is for the shorter form19. In the context in which it appears in the second instrument of delegation, the word is not used in conjunction with other words that might point to its use as meaning something subsidiary. The expression is not "necessary or incidental", but "incidental".
with its less familiar termination to be displaced by the longer;
thus we would more usually, though not more correctly, now write
incidental in such contexts as (shortened from OED examples): "All
powers incident to any government; Those in the higher station
have the incident cares and troubles ..."
20. Moreover, it would be strange use of language that produced the result that a function that cannot be discharged without a power had been delegated, but that the power required to make the delegation of that function at all meaningful had not been delegated. For these reasons, I conclude that even if the power is question was not conferred upon the ASC "under" the Corporations Law within the meaning of that word in the instruments of delegation, the power was delegated by the second instrument as being incidental to the discharge of the functions under s.597 that the instrument clearly did delegate.
Whether the second respondent failed to take a relevant matter into account,
namely a submission that the proposed examination would
constitute an abuse of
the process of the court and whether irrelevant matters were taken into
account:
21. I agree with Lockhart J. and Gummow J., for the reasons they give, that
this ground of attack on the second respondent's decision
fails.
22. As the applicants fail on each of the substantive issues it is not necessary to consider the various other issues that were raised. I would dismiss the application and order that the applicants pay the respondents' costs.
LOCKHART J. This is another round in the contest between the applicants and the respondents in which the applicants are resisting attempts by the third respondents, John William Murphy and Peter Bernard Allen, to examine under s. 597 of the Corporations Law various persons, including the second applicant, Roy Moore, in relation to the affairs of BPTC Limited (In Liquidation), formerly Burns Philp Trustee Company Limited ("BPTC"). The third respondents are partners in Arthur Andersen and Co, Chartered Accountants, and "approved trustees" within the meaning of s. 1067(3) of the Corporations Law. They assert that they have been duly authorized by the second respondent, the Regional Commissioner for the State of New South Wales of the first respondent, the Australian Securities Commission ("the ASC"), to apply to a court for an order pursuant to s. 597 of the Corporations Law in relation to BPTC. The applicants assert that the purpose of the third respondents in seeking to invoke s. 597, is, first, to benefit the private commercial interests of parties to current litigation in other courts, being unitholders in what are referred to in this proceeding as the Estate Mortgage Trusts; and, second, that the third respondents are in a position of conflict with the liquidator and creditors of BPTC. These assertions are denied by the third respondents and are not at issue in the present proceeding, but they explain the background to it.
2. The dispute between the parties first came before a Full Court of this Court (constituted as a Full Court pursuant to s. 44(3)(b)(ii) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act")) and judgment was delivered on 10 June 1992 (reported as Hongkongbank of Australia Ltd v. Australian Securities Commission (1992) 108 ALR 70 ("the Hongkongbank Case")). It now comes before this Full Court (constituted as a Full Court pursuant to a direction of the Chief Justice made under s. 20(1A) of the Federal Court of Australia Act 1976), also in exercise of the Court's original jurisdiction. The matter has been before the Administrative Appeals Tribunal (Deputy President McMahon), whose decision on 11 May 1992 was the subject of the application to this Court in which judgment was given by the earlier Full Court on 10 June 1992. The dispute has also been before McLelland J. of the Supreme Court of New South Wales on more than one occasion, most recently on 11 September 1992 (his Honour's reasons for judgment are reported at (1992) 8 ACSR 533) and before the Court of Appeal of New South Wales, which dismissed appeals from McLelland J.'s judgment, on 13 October 1992 (reported at (1992) 10 ACLC 1573). An application for special leave to appeal from the judgment of the Court of Appeal was made by the applicants to the High Court of Australia on 26 October 1992, but it has not yet been heard.
3. The reasons for judgment of the Full Court given on 10 June 1992 in the Hongkongbank Case relate the relevant history of the matter to May 1992, but much has happened since then. It is convenient to summarize the relevant events up to May, though for a fuller narration of them, reference should be made to the judgment of the Full Court (at 71-3).
4. Until 7 November 1990, BPTC was trustee of the Estate Mortgage Trusts. On 7 November 1990, the Supreme Court of New South Wales ordered that BPTC be removed as trustee, and appointed the third respondents as trustees of each of the Estate Mortgage Trusts. They remain in office. On 3 December 1990 the Supreme Court of New South Wales ordered that BPTC be wound up.
5. There are various proceedings presently before the Supreme Court of Victoria instituted by the third respondents against the corporate applicants in the earlier proceeding before this Court, being Hongkongbank of Australia Limited ("Hongkongbank") and the first applicant, Mercantile Mutual Life Insurance Co Limited ("Mercantile Mutual").
6. On 2 April 1992, by instrument under the hand of its Regional Commissioner for the State of New South Wales (the second respondent), the ASC authorized the new trustees to make application to this Court or to the Supreme Courts of New South Wales or Victoria for an order pursuant to s. 597 of the Corporations Law "in relation to" Burns Philp Trustee Co Limited (as mentioned earlier, now BPTC). Pursuant to that authorization the third respondent applied to the Supreme Court of New South Wales and, on 21 April 1992, the Supreme Court, constituted by a Registrar, made four orders. The orders provided for the examination of a Mr Trimboli and Mr Moore (the second applicant in the earlier appeal to this Court, Mr Moore also being the second applicant in the present proceeding) and for the production of records by them and by the corporate applicants Hongkongbank and Mercantile Mutual. The Registrar fixed 11 June 1992 as the date for the examination.
7. On 27 April 1992 Hongkongbank and Mr Trimboli applied to the AAT for review of the decision made on 2 April 1992 to authorize the third respondent to apply to a court under s. 597. The solicitors for Mercantile Mutual and Mr Moore made application to like effect on 1 May 1992. The applications were dealt with as matters of urgency and the AAT delivered its decision on 11 May 1992. Before the AAT it was accepted that the purpose of the orders obtained from the Supreme Court of New South Wales was to assist the third respondent to refine the causes of action in the proceedings before the Supreme Court of Victoria, and to obtain information which might assist them in prosecuting those proceedings.
8. The AAT dismissed both applications on the footing that it had no jurisdiction. Detailed reasons were given which encompassed both applications. The Tribunal concluded that the decision of 2 April 1992 was no more than a step of an administrative nature and not of itself "determinative and final", so that it did not fall within the definition of "decision" in s. 3(3) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act"). The Tribunal concluded that, if there had been a reviewable decision, the applicants before it would have had sufficient standing for the purposes of s. 27 of the AAT Act.
9. On 29 May 1992 McLelland J. delivered judgment upon various applications arising out of the Registrar's orders made on 21 April 1992. His Honour refused the application by Mercantile Mutual and Mr Moore to stay those orders pending the outcome of the proceedings then before this Court.
10. On 1 June 1992, McLelland J. published further reasons for judgment consequent upon the judgment which he gave on 29 May 1992. On 3 June 1992, the Hongkongbank filed a notice of appeal from the judgments of McLelland J. of 29 May and 1 June 1992. On 5 June 1992, the Court of Appeal of New South Wales ordered that, pending the determination of the appeals from the judgment of McLelland J., the orders made on 29 April 1992 for the examination of the second applicant and other persons be stayed.
11. On 10 June 1992, the earlier Full Court of this Court dismissed the appeals to it from the AAT's decision on the ground that the appeals were incompetent. The Full Court found that s. 597 is not a source of power from the Commission to the third respondents authorizing them to make application under that section.
12. On 10 June 1992, McLelland J. dismissed an application by two other
persons challenging orders for their examination under s.
597 in relation to
BPTC.
13. On 11 June 1992, examinations on behalf of the third respondents were commenced before a Deputy Registrar of the Supreme Court of New South Wales which continued for seven days until 25 June 1992. Many persons were examined, two of whom are former officers of BPTC. The third is a former director and officer of Estate Mortgage Financial Services Limited and Estate Mortgage Managers Limited.
14. On 11 June 1992, the present proceeding before this Court was commenced.
15. On 24 June 1992, the Court of Appeal of New South Wales heard the appeals from the judgments of McLelland J. and on 13 October 1992 gave judgment dismissing the appeals.
16. On 6 August 1992, certain parties applied to McLelland J. attacking both the 2 April 1992 authorization and the orders of 21 April 1992. On 11 September 1992, McLelland J. held that the authorization of 2 April 1992 and the orders of 21 April 1992 were valid.
17. This is a sufficient summary of the curial history of this matter. The
amended application for an order of review made by the
applicants in the
present proceeding is the sequel to the earlier matter before the Full Court
of this Court in which judgment was
given on 10 June 1992. The applicants seek
to review the decision of the second respondent, the ASC Regional Commissioner
for the
State of New South Wales made on 2 April 1992. This decision
authorized the third respondents to apply to the Supreme Court of New
South
Wales or the Supreme Court of Victoria or this Court for an order pursuant to
s. 597 in relation to BPTC and for other ancillary
relief. The essential
grounds of attack on the decision of the second respondent are as follows:-
. the first respondent is alleged to have had no power to authorize18. The application now before this Court is brought both under both the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") and s. 39B of the Judiciary Act 1903 ("the Judiciary Act"). The applicants assert: that the decision of the second respondent to authorize the third respondents to apply to the Court pursuant to s. 597 of the Corporations Law is a "decision to which this Act (the ADJR Act) applies" within the meaning of s. 5 of the ADJR Act; and, that the applicants are "persons aggrieved" within the meaning of s. 3(4) of the ADJR Act and therefore entitled to make the application for an order of review. If there is no "decision" within the meaning of the ADJR Act or if the applicants are not persons aggrieved, they argue that s. 39B of the Judiciary Act applies. Section 39B confers original jurisdiction on this Court "with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth". It is not disputed that the second respondent is an officer of the Commonwealth and that the third respondents are not such officers.
the third respondents to apply to the Court pursuant to either s.
597 of the Corporations Law or s. 11 of the Australian Securities
Commission Act 1989 ("the ASC Act");
. the first respondent did not effectively delegate to the second
respondent any power which it had to authorize the making of an
application under s. 597 to an appropriate court;
. the decision of the second respondent authorizing the third
respondents to apply under s. 597 to the appropriate court: (a)
failed to take into consideration a relevant matter, namely, the
submission to the second respondent by the applicants that the
proposed examination under s. 597 constituted an abuse of process
of the court; and (b) took an irrelevant consideration into
account, namely, the second respondent's acceptance of the
correctness of the proposition that the submissions of the
applicants to them should be disregarded.
19. The relevant prescribed period within which an application for review under the ADJR Act may be filed is the period of 28 days after the day on which the applicants were notified pursuant to s. 13(3) of the ADJR Act that, in the opinion of the decision-maker, they were not entitled to make a request under s. 13(1) of the ADJR Act for the reasons for the decision (see s. 11(1)(c) and 11(3)(b)(ii)). In this case, as that notification was given on 23 April 1992, the 28 day period expired on 21 May 1992. The proceeding commenced on 11 June 1992, the twenty-first day after the prescribed period had expired. The applicants therefore seek an extension of the period within which to bring this application.
20. The first respondent and the second respondent appeared by the same solicitor and counsel. The third respondents were separately represented. The third respondents presented the principal argument in opposition to the case for the applicants; the first and second respondents adopted those submissions and made additional submissions; but the case for all respondents was basically the same.
21. No oral evidence was given at the hearing before us; the evidence consisted of written material which was tendered by consent of all parties. The case was confined to argument on questions of law.
22. The applicants claim relief which includes: an order quashing the decision of the second respondent of 2 April 1992 authorizing the third respondents to apply to the appropriate court for an order pursuant to s. 597; an order directing the third respondent not to take any further action pursuant to that decision; orders for the issue of a writ of certiorari quashing the authorization of 2 April 1992 or a writ of mandamus requiring the first respondent to reconsider any application by the third respondents to be authorized under s. 597(2) of the Corporations Law; and, an order directing the third respondents not to take any further action pursuant to the orders of the Registrar of the Equity Division of the Supreme Court of New South Wales made under s. 597 against the second applicant in consequence of the decision of the second respondent of 2 April 1992.
23. I turn first to the principal questions of law which arise: I will refer later to the questions of standing of the applicants, whether there is a reviewable decision to which the ADJR Act applies and whether s. 39B of the Judiciary Act applies.
Source of the power of the first or second respondents to authorize the third
respondents to apply to the Court pursuant to s. 597
of the Corporations Law
24. Section 597 of the Corporations Law, so far as presently relevant,
provides as follows:
"597(1) In this section, a reference, in25. Section 597 does not confer power on the ASC to authorize "any other person" (see sub-s. (1)) to make application under s. 597. The reasons for this proposition were given by the Full Court in the Hongkongbank Case (1992) 108 ALR 70 per Lockhart, Gummow and O'Connor JJ.
relation to a corporation, to a prescribed
person, is a reference to an official manager,
liquidator or provisional liquidator of the
corporation or to any other person authorised by
the Commission to make applications under this
section or to make an application under this
section in relation to that corporation.
(2) Where it appears to the Commission or to a
prescribed person that:
(a) a person who has taken part or been
concerned in the promotion, formation,
management, administration or winding up
of, or has otherwise taken part or been
concerned in affairs of, a corporation has
been, or may have been, guilty of fraud,
negligence, default, breach of trust,
breach of duty or other misconduct in
relation to that corporation; or
(b) a person may be capable of giving
information in relation to the promotion,
formation, management, administration or
winding up of, or otherwise in relation to
affairs of, a corporation;
the Commission or prescribed person may apply to
the Court for an order under this section in
relation to the person.
(3) Where an application is made under
subsection (2) in relation to a person, the
Court may order that the person attend before
the Court on a day and at a time to be fixed by
the Court to be examined on oath on any matters
relating to the promotion, formation,
management, administration or winding up of, or
otherwise relating to affairs of, the
corporation concerned.
..."
26. In the Hongkongbank Case, the question whether s. 597 was itself a source
of the ASC's power of authorization arose as a threshold
question concerning
the jurisdiction of the Administrative Appeals Tribunal. There were two
appeals before the Court on questions
of law under s. 44 of the Administrative
Appeals Tribunal Act 1975. The threshold question was whether the decision in
question was one in respect of which an enactment provided for an application
for review by the AAT within the meaning of s. 25 of the AAT Act. The
decision of the AAT was that it had no jurisdiction and that the application
for review therefore should be dismissed. The
Full Court held that the
authorization by the ASC of a person to make an application under s. 597 was
not "a decision made under
this law" within the meaning of s. 1317B(1) of the
Corporations Law. The Court said of s. 597(1) at 75:
"... the subsection is not expressed as a27. In this passage, the Full Court rejected the argument that s. 597 is the source of power of the ASC to authorize persons to make application to the Court under s. 597. The Court regarded s. 597(1) as having an explanatory or definitional character. But the Court did not exclude s. 597 as the source of a function of the ASC to authorize persons to make such applications as the passage quoted above demonstrates. The Court there expressly left open the questions of whether s. 11(4) was a source of power of the ASC to perform the function of authorization, and whether s. 597 conferred that function upon it. Whether s. 11(4) is such a source of power arises squarely in the present case.
dispositive provision creating rights or
liabilities or reposing powers or functions.
Legal rights and duties in relation to the
examination of persons concerned with
corporations are created in plain terms in the
balance of s. 597. Section 597(1) specifies the
membership of a class in which, together with
the ASC, is reposed the power or function of
making certain court applications. Membership
of the class includes those 'authorized' to
assert an effect by the ASC. It is consistent
with this explanatory or definitional character
of s. 597(1) to treat the phrase 'authorized by
the Commission' as descriptive of persons who
have attained that state or condition by the
exercise of a function or power of the ASC which
has a legislative source outside the subsection.
Section 11(4) of the ASC Act has been suggested
as such a source, it being reasonably incidental
to the performance of the functions of the
Commission conferred by a combination of s.
11(1) of the ASC Act and s. 597(2) of the
Corporations Law for the Commission to authorize
persons to make applications under s. 597 or to
do so in relation to a particular corporation.
As mentioned earlier, the ASC is established by
the ASC Act not the Corporations Law, and it
would be expected that the ASC Act would provide
at least the primary source of its powers and
functions. It is not necessary for the purpose
of the present appeal to determine whether this
view of s. 11(4) is correct."
28. Counsel for the respondents asked this Court to reconsider the correctness of its decision in the earlier case. I have carefully considered the arguments of counsel, and have come to the conclusion that the earlier decision is correct.
29. The respondents rely on various subsections of s. 11 of the ASC Act as sources of the power of the ASC to authorize persons to apply to the Court under s. 597, in particular sub-ss. (4) and (7).
30. Part II of the ASC Act relates to the ASC and its functions and powers.
The ASC is established as a body corporate (s. 8). Section 11 defines the
functions and powers of the ASC in derivative terms as follows (so far as
relevant):-
"11(1) The Commission has such functions31. Section 12(1) empowers the Minister to give the ASC a written direction about policies it should pursue, or priorities it should follow, in performing or exercising any of its functions or powers under a national scheme law.
and powers as are conferred on it by or under
the following:
(a) the Corporations Act 1989;
(b) the Corporations Law of the Capital Territory;
(c) this Act.
...
(2) The Commission also has the following functions:
(a) to provide such staff and support
facilities to the Panel, the Disciplinary
Board and the Review Board as are
necessary or desirable for the performance
and exercise by the panel, the
Disciplinary Board and the Review Board of
their respective functions and powers;
(b) to advise the Minister about any changes
to a national scheme law that, in the
Commission's opinion, are needed to
overcome, or would assist in overcoming,
any problems that the Commission has
encountered in the course of performing or
exercising any of its functions and powers.
(3) The Commission may, on its own initiative
or when requested by the Minister, advise
the Minister, and make to the Minister
such recommendations as it thinks fit,
about any matter of a kind referred to in
section 148.
(4) The Commission has power to do whatever is
necessary for or in connection with, or
reasonably incidental to, the performance
of its functions.
...
(6) Subject to this Act, the Commission has
the general administration of this Act.
(7) The Commission has any functions and
powers that are expressed to be conferred
on it by a national scheme law of another
jurisdiction."
32. The functions and powers conferred on the ASC by or under the Corporations Act 1989 (Cth) and the Corporations Law are numerous and comprehensive. They include the regulation of corporations, and of the securities and futures industries: see, for example, Division I of Part III of the ASC Act, which deals with investigations by the ASC. Division 2 deals with the examination of persons by the ASC and Division 3 with the inspection of books. Division 4 entitles the ASC to require the disclosure to it of certain information about securities and futures contracts and Division 5 empowers the ASC to commence proceedings following an investigation. The conduct of hearings by the ASC is regulated by Division 6.
33. The ASC Act draws a distinction between the functions and powers of the
ASC, a distinction well recognized in the law with respect to the functions
and powers of administrative bodies. The distinction is between functions or
purposes or activities of an administrative body on
the one hand, and the
powers conferred upon it to perform or execute those functions, purposes and
activities on the other. As Northrop
J. and I observed in Edelsten v. Health
Insurance Commission (1990) 27 FCR 56 at 63:
"The types of statutory contexts in which theSee also Australian Broadcasting Tribunal v. Saatchi (1985) 10 FCR 1 pe r Bowen C.J. at 4 and 8.
expressions 'functions' and 'powers' of such
bodies appear to differ considerably. Sometimes
the two expressions are treated interchangeably
or with blurred dividing lines; whilst some
statutory definitions of 'functions' provide
that 'functions include powers and duties': see
the definition of function in Stroud's Judicial
Dictionary of Words and Phrases, 5th ed., 1986
and Kathleen Investments (Aust) Limited v
Australian Atomic Energy Commission [1977] HCA 55; (1977) 139
CLR 117 at 130; Leon Fink Holdings Pty Limited v
Australian Film Commission (1979) 141 CLR 672 at
677-678; Committee of Direction of Fruit
Marketing v. Australian Postal Commission [1979] FCA 31; (1979)
37 FLR 457."
34. Since the ASC has many diverse functions conferred on it from various statutory sources, obviously there is a need for it to be invested with incidental powers, the logical repository of which is the ASC Act itself. Hence, s. 11(4) is a provision of the kind one would expect to find. Before the incidental power conferred by s. 11(4) can arise, however, it must be attached to a function of the ASC conferred on it by or under some statutory provision other than s. 11(4) itself. It is clear from the language of s. 597(1), (2) and (3) of the Corporations Law that the Parliament envisaged that the functions, purposes or activities of the ASC would include the authorization of persons, other than an official manager, liquidator or provisional liquidator of a corporation, to make application to a court under s. 597 in relation to that corporation.
35. One of the ASC's specific functions is to ascertain if persons who have been concerned in the management or administration or affairs of a corporation have been or may have been guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct, a function recognized by s. 597(2)(a). Another of the ASC's specific functions, recognized by s. 597(2)(b), is to ascertain if persons may give information in relation to the promotion, formation, management, administration or winding up of (or otherwise in relation to) the affairs of a corporation. The performance of those functions is assisted and furthered by the examination of such persons under s. 597. Section 597(2) expressly empowers the ASC or a "prescribed person" to apply to a court for an order under s. 597 in relation to a person.
36. In my opinion these considerations lead to the conclusion that s. 597 itself confers the function upon the ASC of authorizing persons to apply to a court for an order under s. 597.
37. However, the section is not itself the source of the power of
authorization. There is to be gleaned from s. 597 a plainly discernible
function of the Commission to authorize persons to make applications under
that section, a function conferred on the ASC by s. 597
itself. This is
distinct from the power vested in the ASC to grant that authority. The source
of the power is the incidental power
conferred on the ASC by s. 11(4). A
construction of s. 597 which would deny this function of the ASC could lead in
my view to a capricious result, contrary to common
sense. That such a result
is to be avoided is clear from s. 109H of the Corporations Law which provides
as follows:
"109H In the interpretation of a provision of38. Section 11(4) of the ASC Act is therefore the legislative source of the power of the ASC to perform its function of authorizing persons to make application to the Court under s. 597.
this Law, a construction that would promote the
purpose or object underlying the Law (whether
that purpose or object is expressly stated in
the Law or not) is to be preferred to a construction
that would not promote that purpose or object."
39. It is therefore unnecessary to consider whether s. 11(7) of the ASC Act is a source of the power of authorization.
Can the instrument of authorization from the second respondent to the third
respondents dated 2 April 1992 (p 47) be supported by
s. 11 of the ASC Act if
the first and second respondents never intended to rely on s. 11?
40. By instrument of authorization dated 2 April 1992, the second respondent
purported to authorize the third respondents to make application
to the
appropriate court for an order pursuant to s. 597 of the Corporations Law in
relation to BPTC. The instrument of authorization
provides as follows:
"AUSTRALIAN SECURITIES COMMISSION41. It is clear from the material before the Court that the second respondent assumed that the source of his power to authorize the third respondents to apply to the Court under s. 597 was that section itself. That does not, however, determine the question of the validity of the instrument of authorization.
INSTRUMENT OF AUTHORISATION
WHEREAS by instrument of Delegation made under
Common Seal by the Australian Securities
Commission pursuant to section 102 of the ASC
Law made 21 March, 1991 the Australian
Securities Commission has delegated to the
Regional Commissioner for the State of New South
Wales various powers and functions including
those specified in section 597 of the
Corporations Law.
The Australian Securities Commission, pursuant
to the provisions of subsection 1 of section 597
of the Corporations Law, hereby authorises John
William Murphy and Peter Bernard Allen to make
application to the Supreme Court of New South
Wales or the Supreme Court of Victoria or the
Federal Court of Australia for an order pursuant
to the provisions of section 597 of the
Corporations Law in relation to the Burns Philp
Trustee Company Ltd (in liquidation).
Dated 2 April 1992
(Signed)
Regional Commissioner for the
State of New South Wales"
42. The second respondent acted pursuant to an instrument of delegation from the ASC to him pursuant to s. 102 of the ASC Law whereby the ASC delegated to the second respondent various powers and functions which I will assume for the purposes of answering this question (an assumption made by all the parties) includes those specified in s. 597 of the Corporations Law.
43. In my opinion, upon its true construction, the instrument of authorization by use of the words "the Australian Securities Commission, pursuant to the provisions of subsection (1) of s. 597 of the Corporations Law, hereby authorizes ..." is not stating that s. 597 is the relevant source of power to authorize the third respondents to apply to the court; rather, the words "pursuant to" are used in the sense of consequent to or conformable to or in accordance with. These three meanings are accepted meanings of the words "pursuant to" attributed by the Dictionaries, including the Oxford English Dictionary: meanings which accord with ordinary English usage in this country. This is, in my view, an accurate use of the words "pursuant to". Although s. 597(1) is not the source of the ASC's power to authorize persons to apply to the Court under s. 597; it is the section which, for the reasons given earlier, determines the function of the ASC to which the power conferred by s. 11(4) of the ASC Act attaches, and thereby enlivens the function. Without a function of the ASC there is nothing to which the power conferred by s. 11(4) can attach. The two are inevitably intertwined, though it is important to bear in mind that one is the function and the other the power. But without the function, the power has no operation. It is not therefore inaccurate for the second paragraph of the instrument of authorization to use the language which it does.
44. Even if this paragraph is to be read, contrary to my view, as indicating
that the only relevant head of power to authorize the
third respondents was s.
597(1), and that the reference to that sub-section was intended to be a
reference to the source of power
to authorize, in my opinion, the authority
may be supported under the statutory power conferred by s. 11(4). In Brown v.
West [1990] HCA 7; (1988) 169 CLR 195, in the joint judgment of five members of the High
Court, their Honours said at 203:
"However, the validity of the Tribunal's45. In Lockwood v. The Commonwealth [1954] HCA 31; (1954) 90 CLR 177 Fullagar J. referred at 184 to the:
determinations is unaffected by mistaking the
source of the power to make them: Moore v
Attorney-General (Irish Free State) (1935) AC
484; R v. Bevan; Ex parte Elias and Gordon [1942] HCA 12; (1942)
66 CLR 452 at 487."
"settled principle that an act purporting to be46. In Australian Broadcasting Tribunal v. Saatchi (1985) 10 FCR 1, the Full Court of this Court considered the validity of the Television Programme Standards issued by the Australian Broadcasting Control Board. The Board was empowered to make rules of general application relative to the conditions under which advertisements might be televised. Bowen C.J. referred to Lockwood v. The Commonwealth and recognized the principle that "the Executive can rely upon a power other than one expressly specified when its decision was made, provided a proper head of power is available to support its action". But his Honour distinguished it on the following ground:
done under one statutory power may be supported
under another statutory power."
"Nevertheless, the question here is whether aHis Honour referred on the one hand to the desirability of the proper activities of statutory bodies laying down rules affecting citizens not being hampered by an unnecessary introduction of technicalities, but on the other hand:
statutory body with functions and powers
specified in the legislation can purport to act
under one head of power in laying down rules of
general application, and have the validity of
its rules upheld by a court even though the
specified power did not authorize its action, on
the ground that there was another appropriate
power upon which it could have relied."
"the citizen confronted with rules he is requiredHis Honour then said:
to observe is entitled to know with some precision
what binding authority the rules have and what
the consequences of non-observance may be."
"In my opinion, where an administrative body47. Fox J. appears to have agreed with Bowen C.J. (at 17) but with this qualification:
which states it is exercising a particular power
in laying down a general rule lacks power on the
stated ground, but could have laid down the rule
validly under another head of power, it would
generally be wrong for a court to uphold the
rule as if it had been made under the unstated
head of power, particularly where the
consequences for the citizen of each exercise of
power are different."
"There may of course be cases where a change48. Both Bowen C.J. and Fox J. were speaking of rules of general application concerning television programme standards which citizens are required to observe. The present case is quite different. There are no rules in this case of general application of the kind before the Court in Saatchi. The question simply is whether a particular source of power to authorize persons to apply to an appropriate court under s. 597, if wrongly stated, invalidates the authorization. Wilcox J., though in dissent, adopted with approval the passage from Fullagar J.'s judgment in Lockwood mentioned above.
from reliance from one provision, stated by an
administrative body as authority for its acts,
to reliance on another may patently be quite
immaterial but otherwise the change cannot be made."
49. The submission of the applicants that the instrument of authorization of 2 April 1992 is invalid, fails.
Whether the first respondent effectively delegated to the second respondent
any power it had to grant authorities to persons to apply
to courts under s.
597
50. Section 102 of the ASC Law empowers the ASC, by writing under its common
seal, to delegate to a person all or any of its functions and powers.
Two
relevant instruments of delegation were executed under the common seal of the
ASC, the first dated 21 March 1991 and the second
11 March 1992 (78 and 281).
Reliance was placed upon each of these two instruments by the third
respondents. The ASC and the second
respondents relied upon the instrument of
11 March 1992, doubtless because it is the later of the two instruments.
There is some
difference in language between the two instruments to which
reference shall be made later, but each of them states that the ASC declares
for the removal of doubt that the delegation does not revoke any previous
delegation granted by the ASC except in certain immaterial
respects.
51. I propose to approach the case on the footing that either of the two instruments is available to support the delegation of relevant powers by the ASC. In my view each could be relied upon by it as an operative delegation. However, the instrument of authorization by the second respondent to the third respondents dated 2 April 1992, which is made pursuant to an instrument of delegation by the ASC to the second respondent, recites that the relevant instrument of delegation was made on 21 March 1991. Counsel for the ASC and the second respondent argued that the authorization mistakenly referred to the delegation of 21 March 1991 when the "operative" delegation is that dated 11 March 1992. However, it was argued on their behalf that this mistake was of no consequence because of the principle for which Brown v. West was said to be authority, namely, that an exercise of administrative power is generally unaffected by mistake as to the source of the power.
52. Each of the two instruments of delegation purported to delegate to each of the persons from time to time holding, occupying or performing the duties of certain offices (including that of the Regional Commissioner for the State of New South Wales) relevant powers and functions. It is common ground that the second respondent held office as Regional Commissioner for the State of New South Wales at all material times.
53. It is necessary to set out so much of the instrument of delegation of 21
March 1991 as is presently relevant, and it reads as
follows:
"AUSTRALIAN SECURITIES COMMISSION54. The instrument of delegation of 11 March 1992 is in the same terms in all material respects as that of 21 March 1991, except that the former omits reference to the words "or expressed to be conferred" in the last two lines of the first paragraph of the instrument and from the first two lines of the paragraph numbered (1). A second difference between the two instruments is that the instrument of 11 March 1992 includes the following immediately after paragraph (3):
ASC LAW
DELEGATION OF POWERS AND FUNCTIONS
PURSUANT to section 102 of the ASC LAW, the
AUSTRALIAN SECURITIES COMMISSION ('the
Commission') HEREBY DELEGATES to each of the
persons from time to time holding, occupying or
performing the duties of the offices and
positions mentioned in Schedule A and Schedule B
(other than a person who has been suspended from
or is on leave from and is during the course of
such leave absent from the Commission), all of
the powers and functions conferred or expressed
to be conferred on the Commission by or under
the following provisions:
(1) all of the powers and functions conferred
or expressed to be conferred on the
Commission by or under the provisions of the
Corporations Law other than sub-paragraph
409(5)(a)(ii), sub-sections
65(1), 260(1), 313(6), 349(7), 733(1),
1058(9) and section 1113;
(2) ...
(3) ...
AND THE COMMISSION HEREBY DECLARES for the
removal of doubt that this delegation does not
revoke, and is not intended to be construed as
revoking, any previous delegation granted by the
Commission, except insofar as a previous
instrument delegated functions and powers to
persons suspended or on leave from the offices
of positions mentioned in that instrument.
SCHEDULE A
(a) the Regional Commissioner for the State of
New South Wales;
(b) ...
(c) ...
SCHEDULE B
...
DATED this 21st day of March 1991.
(The Common Seal of the ASC was duly affixed)"
"AND all the powers and functions to do whatever55. The relevant part of each instrument of delegation is the paragraph numbered (1); it is common ground that paragraphs (2) and (3) are not applicable.
is incidental to the exercise and discharge of
powers and functions hereby delegated,
including, without limiting the generality of
the foregoing, affixing the seal of the Commission."
56. The use of the words "by or under" in each instrument of delegation suggests that different things are meant by those two words. In my opinion it is a permissible use of language to construe the instrument as saying that the function of the ASC of authorizing persons to make applications to a court under s. 597 and the power of the ASC to perform that function derived from s. 11(4) of the ASC Act are "powers and functions conferred on" the ASC "under the provisions of the Corporations Law". The operation of s. 11(4) of the ASC Act upon s. 597 of the Corporations Law is not inaptly described by the language used in the instruments of delegation. Although the source of the power to authorize stems from s. 11(4) of the ASC Act, s. 11(4) is an incidental power that assumes the existence of a function to which it can attach. In this case, the function is one which arises from s. 597. The interaction of the two statutory provisions is sufficiently described by the language of each instrument of delegation.
57. The instrument of delegation of 21 March 1991 confers the powers and functions "conferred or expressed to be conferred" on the ASC by or under the provisions of the Corporations Law. This phrase draws a distinction between a power or function, which is in fact conferred by a provision of the Corporations Law, and one which is referred to by a provision of the Corporations Law on the basis that it has been conferred elsewhere. There are various instances to be found in the ASC Act and the Corporations Act 1989 (Cth) where the expression "expressed to be conferred" is used in this sense. See for example s. 11(1A), (7) and (10) of the ASC Act, s. 46 of the Corporations Act 1989 (Cth).
58. In this sense the power to appoint some person as a "prescribed person" is "expressed to be conferred" "under" (and probably "by") s. 597(1) and (2). For this alternative reason, the instrument of delegation of 21 March 1991 can be supported. However, the presence of the words "or expressed to be conferred" in the instrument of 21 March 1991 does not detract from my primary view that it is a sufficiently apt use of language to say that the relevant functions and powers with which this case is concerned answer the description of "the powers and functions conferred ... under the provisions of the Corporations Law". The addition of the words "or expressed to be conferred" in the instrument of 21 March 1991 gives added emphasis to this view.
59. It is not necessary to consider the effect, if any, of the reference to incidental powers and functions in the instrument of 11 March 1992.
60. This attack of the applicants upon the instrument of delegation fails.
Whether the exercise of the power to authorize the third respondents to make
application to the court is vitiated because the second
respondent, the
delegate of the first respondent: (a) failed to take into consideration a
relevant matter, namely, the submission
to the second respondent by the
applicants that the proposed examination under s. 597 constituted an abuse of
process of the court; and (b) took an irrelevant consideration into account,
namely, the second respondent's
acceptance of the correctness of the
proposition that the submissions of the applicants to them should be
disregarded.
61. The genesis of this submission lies in the contents of a submission dated
2 April 1992 prepared by a legal officer of the ASC
for the delegate of the
ASC relating to the proposed authorization to apply to the court under s.
597(2) of the Corporations Law. The submission (264) is a nine page document
which traverses various matters and at p 4 under the heading
"Submissions
Opposing the Making of an Order" the legal officer summarizes the major
submissions made by three parties to the then
litigation and the liquidator of
BPTC opposing the grant of authorization by the Court. That summary reads as
follows:
"1. The persons authorised by the ASC should62. On the following page (p 5) the submission reads, so far as relevant:
be sui generis with those persons
specifically listed in s 597(1) ie
'official manager, liquidator or
provisional liquidator.' The new
trustees, who are seeking to revive the
trusts as going concerns, do not fall
within these categories.
2. A person who clearly represents sectional
interests should not be authorised by the ASC.
3. The appropriate persons to conduct an
examination are the liquidator of BPTC or
the ASC. The new trustees are in a
position of conflict with the liquidator
and other creditors of BPTC.
4. As proceedings have already commenced it
would not be a proper use of examinations
to benefit the private commercial interest
of unitholders in current litigation. The
new trustees already have an understanding
of the claims they wish to pursue and do
not need to conduct examinations in order
to refine these claims.
5. Although the courts have permitted
liquidators involved in current litigation
to conduct examinations it is not clear
whether the court would exercise its
discretion in favour of third parties.
6. The ASC should not authorise parties who
are unlikely to be allowed by the court to
conduct an examination.
7. The information required could be obtained
in a more expedient and less expensive
manner through discovery, inspection and
interrogatory procedures available from
the courts.
8. The powers of compulsory examinations
should be made available only in
exceptional circumstances and only for
proper purposes."
"However it is submitted that matters such as63. It was submitted that these paragraphs indicate that the legal officer's submission to the delegate was that the delegate should ignore the arguments being advanced on behalf of the applicants (the arguments being that the proposed examinations were an abuse of process) and that this failure to take them into account rendered the instrument of authorization invalid.
whether it is appropriate in all the
circumstances that examinations occur, who
should be examined, the scope of the examination
and the effect of the examination on current or
pending litigation are a matter more properly
for the court to determine. To the extent that
matters related to the question of abuse of
process of the court have been raised in the
submissions of these opposing the application,
these should be disregarded by the ASC."
64. The short answer to the argument of the applicants is that it
misconceives the nature of the submission of the legal officer
to the second
respondent and the role which it played in the latter's decision. The relevant
complaints of the applicants which were
said to have led to the conclusion
that the use of the power of examination under s. 597 was an abuse of process
of the court were clearly stated and summarized in the submission to the
delegate. The delegate did take
them into account by reading and noting them;
but he concluded that it was a matter for the court to take them into account
when
deciding whether or not to authorize the conduct of the examinations.
That claims of abuse of process may be taken into account by
a court before
authorizing examinations under s. 597 (and its statutory predecessors under
the Companies Codes and the Uniform Companies Acts 1961) is well established:
see Hugh J Roberts
Pty Limited (In Liq) and The Companies Act (1970) 91 WN
(NSW) 537; Re Rothwells Limited (No 2) (1989) 7 ACLC 576; Hamilton v. Oades
[1989] HCA 21; (1989) 166 CLR 486; Re BPTC Limited (In Liq) (1992) 10 ACLC 877 (McLelland J.)
upheld on appeal by the Court of Appeal of New South Wales, reported at [1991] HCA 58; (1992)
10 ACLC 1,573.
65. Also, if there was a failure by the second respondent to take a relevant consideration into account, it has not been demonstrated that such failure (which I find does not exist in any case) materially affected the decision: see Minister for Aboriginal Affairs v. Peko Wallsend Limited [1986] HCA 40; (1986) 162 CLR 24 at 40. Hence any such failure, if it had occurred, has not been shown to have vitiated the decision.
66. For the same reasons I reject the submission of the applicants that the second respondent took an irrelevant consideration into account, namely, the statement included by the legal officer of the ASC in her report to the second respondent (that the submissions of the applicants "shall be disregarded" with respect to abuse of process, because they related to matters which could be taken into account by the court). Therefore, this argument for the applicants fails.
Whether there is a "decision" to which the ADJR Act applies, or whether the
applicants are "persons aggrieved" for the purposes of that Act; whether s.
39B of the Judiciary Act applies; whether time should be extended to enable
the applicants to bring the application for review; and discretionary
considerations.
67. As the applicants' case has failed and the application must be dismissed,
these questions do not arise for consideration. However,
I have considered
the submissions of the applicants and the other parties with respect to these
matters and in my opinion the decision
of the second respondent to authorize
the third respondents to apply to the Court pursuant to s. 597 of the
Corporations Law is a
"decision to which (the ADJR Act) applies" within the
meaning of ss. 5 and 3(1) of the ADJR Act. Also, the applicants are in my
view "persons aggrieved" within the meaning of s. 3(4) of the ADJR Act. If it
were necessary to do so I would support the extension of time for the bringing
by the applicants of the application for judicial
review. I do not find it
necessary to consider the submissions made by the parties with respect to s.
39B of the Judiciary Act.
68. I would dismiss the application of the applicants with costs.
GUMMOW J. The first respondent ("the ASC") is established as a body corporate by ss. 7 and 8 by Australian Securities Commission Act 1989 ("the ASC Law"). The second respondent ("the Commissioner") is Regional Commissioner of the ASC for the State of New South Wales. It is accepted that he is an officer of the Commonwealth within the meaning of s. 39B of the Judiciary Act 1903 ("the Judiciary Act"). The proceeding is in the original jurisdiction of the Court. It was heard by a Full Court, after a direction by the Chief Justice under sub-s. 20 (1A) of the Federal Court of Australia Act 1976 ("the Federal Court Act"). There were no evidentiary disputes. Argument was confined to questions of law.
2. It was accepted by all the parties before us that this proceeding is a "special federal matter" within the meaning of the legislation considered in NEC Information Systems Australia Pty Ltd v. Lockhart (1992) 108 ALR 561. As such, ordinarily it should be resolved in this Court. (See also Professor Campbell's article "Cross-vesting of Jurisdiction in Administrative Law Matters" (1990) 16 Monash L Rev 1 at 10-12.)
3. BPTC Limited, formerly Burns Philp Trustee Co Limited, ("BPTC") was a trustee of 6 trusts known as "The Estate Mortgage Investment Trust", "The Estate Mortgage Income Trust No. 1" and "The Estate Mortgage Depositors Trust" Nos. 1, 2, 3 and 4 ("the Trusts"). There were approximately 52,000 investors in the Trusts.
4. On 3 December 1990 the Supreme Court of New South Wales ordered that BPTC be wound up. Messrs. Sherlock and M. Brown were appointed liquidators. In the meantime, on 7 November 1990, pursuant to an order of the Supreme Court of New South Wales the parties comprising the Third Respondents ("the new trustees") had been appointed trustees of the Trusts. With certain exceptions not presently relevant, the assets of the Trusts were vested in the new trustees and they remain in office.
5. The new trustees are not officers of the Commonwealth, but this Court being seized of the matter under s. 39B of the Judiciary Act, this carries with it jurisdiction to grant remedies against other parties to the controversy which comprises that matter: The King v. Drake-Brockman; Ex parte National Oil Pty Ltd [1943] HCA 35; (1943) 68 CLR 51 at 57-8; Kennedy v. Australasian Coal and Shale Employees Federation (1983) 50 ALR 735 at 742-4.
6. On 2 April 1992 the Commissioner executed a document headed "INSTRUMENT OF
AUTHORISATION". It stated:-
"WHEREAS by instrument of Delegation made under Common SealIn this proceeding, the applicants seek judicial review (under the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") and s. 39B of the Judiciary Act of what they describe as the decision to authorise the new trustees in the terms set out above. Issues arise concerning the validity and efficacy of the Instrument of Authorisation dated 2 April 1992 and of Instruments of Delegation dated 21 March 1991 and 11 March 1992.
by the Australian Securities Commission pursuant to section
102 of the ASC Law made 21 March 1991 the Australian
Securities Commission has delegated to the Regional
Commissioner for the State of New South Wales various powers
and functions including those specified in section 597 of
the Corporations Law.
The Australian Securities Commission, pursuant to the
provisions subsection 1 of section 597 of the Corporations
Law, hereby authorises (the new trustees) to make
application to the Supreme Court of New South Wales or the
Supreme Court of Victoria or the Federal Court of Australia
for an order pursuant to the provisions of section 597 of
the Corporations Law in relation to (BPTC)."
7. Section 102 of the ASC Law, so far as material, provides as follows:-
"102 (1) The Commission may, by writing under its Common Seal,I should note that whilst s. 102 requires a delegation to be by writing under the Common Seal of the ASC, it was accepted that whatever its statutory source (if there be one at all) an authorisation need not be in writing and it may operate from time to time in the sense of enabling more than one application to the Court.
delegate to a person all or any of its functions and
powers.
(2) The Commission shall not, without the Minister's
approval, delegate a function or power to a person
other than:
(a) a member;
(b) a staff member; or
(c) a person who, by virtue of
the regulations, is a prescribed person in
relation to the delegation.
(3) . . .
(4) . . .
(5) In the performance of a function, or the exercise of a
power, delegated under this section, the delegate is
subject to the Commission's directions.
(6) Where a function or power conferred on the Commission
by or under a law (including this Law) and delegated
under this section is performed or exercised by the
delegate, it shall, for the purposes of that law and
this Law, be deemed to have been performed or
exercised by the Commission.
(7) . . ."
8. By a combination of sub-s. 5 (3) of the ASC Law and s. 109ZD of the Corporations Law, the power of delegation extends to persons from time to time occupying or performing the duties of a specified office or position.
9. So far as is material, s. 597 of the Corporations Law is set out in the judgment of Lockhart J. I will not reproduce s. 597 again here.
10. The instrument of delegation dated 21 March 1991 ("the first delegation")
was executed under the Common Seal of the ASC. It
is headed:
"AUSTRALIAN SECURITIES COMMISSIONIt reads so far as material, as follows:-
ASC LAW
DELEGATION OF POWERS AND FUNCTIONS"
"PURSUANT to section 102 of the ASC LAW, the AUSTRALIAN SECURITIESThe Commissioner, the Regional Commissioner for the State of New South Wales, is identified in Schedule A. Part 3 of the ASC Law is headed "Investigations and Information-Gathering" and comprises ss. 13-93. In the present litigation much turns upon s. 11. This is found in Part 2.
COMMISSION ('the Commission') HEREBY DELEGATES to each of the
persons from time to time holding, occupying or performing the
duties of the offices and positions mentioned in Schedule A and
Schedule B . . . all of the powers and functions conferred or
expressed to be conferred on the Commission by or under the
following provisions:
(1) all of the powers and functions conferred or expressed
to be conferred on the Commission by or under the
provisions of the Corporations Law other than
(provisions not including s. 597);
(2) all of the powers and functions conferred or expressed
to be conferred on the Commission by or under
sub-section 11 (1A) of the ASC Act and sub-section 66 (2)
of the Corporations (New South Wales) Act and the
corresponding laws of the States of Victoria,
Queensland, South Australia, Western Australia and
Tasmania and the Northern Territory . . .;
(3) all of the powers and functions conferred or expressed
to be conferred on the Commission by or under Part 3
of the ASC Law.
AND THE COMMISSION HEREBY DECLARES for the removal of doubt that
this delegation does not revoke, and is not intended to be
construed as revoking, any previous delegation granted by the
Commission, except insofar as a previous instrument delegated
functions and powers to persons suspended or on leave from the
offices or positions mentioned in that instrument."
11. Reliance also is placed by the respondents upon a later instrument of
delegation ("the second delegation") expressed to be made
pursuant to s. 102
of the ASC Law. No point is made that the recital to the instrument of
authorisation refers to the first but
not to the second of the Instruments of
Delegation. The second delegation was executed under the Common Seal of the
ASC on 11 March
1992. Again the Commissioner is within the class of delegates
specified in Schedule A. Paragraphs (1) (2) and (3) correspond to
those in
the instrument dated 21 March 1991 save that the phrase "expressed to be
conferred" does not appear in those paragraphs.
What is of some significance
for the present case is that the second delegation includes the following
immediately under paragraph
(3):
"AND all the powers and functions to do whatever is12. The new trustees have commenced or are parties to proceedings in the Supreme Court of Victoria and the Supreme Court of Queensland. One set of proceedings in the Victorian Supreme Court concerns purported assignments, allegedly at considerably less than their face value, of interests in mortgages which BPTC held; issues arise as to the respective priorities of the new trustees and those assignees. The amount in issue is said to be about $195m. The second applicant (Mr Moore) is General Manager, Finance, of MML.
incidental to the exercise and discharge of powers and
functions hereby delegated, including, without limiting the
generality of the foregoing, affixing the seal of the
Commission.
AND THE COMMISSION HEREBY DECLARES for the removal of doubt
that this delegation does not revoke any previous delegation
granted by the Commission except in so far as a previous
instrument delegated functions and powers to persons
suspended or on leave from the offices or positions
mentioned in that instrument."
13. The new trustees contend that critical to the conduct of the various proceedings which have been commenced, including those against MML, will be the knowledge of officers and employees of the corporate parties.
14. On 21 April 1992, upon an ex parte application by the new trustees, the Supreme Court of New South Wales, constituted by a Registrar ordered, under sub-s. 597 (3) of the Corporations Law, 9 persons to attend before the Supreme Court to be examined on oath and to produce documents, in relation to the affairs of BPTC. Mr Moore was one of those persons.
15. The order against Mr Moore required him to attend before the Supreme Court at a time and place appointed by the Registrar to be examined in public on oath or affirmation on any matters relating to the management or administration or otherwise in relation to the affairs of BPTC "as Trustee of the Estate Mortgage Trusts set out in the Schedule hereto" and to produce any books in his possession or under his control relevant to those matters. 11 June 1992 was fixed as the date for the examination.
16. On that day, examinations were commenced before a Deputy Registrar of the Supreme Court of New South Wales. They continued over some 7 days until 25 June 1992. During that period three persons were examined. They were Mr R.J. Young, former General Manager and Director of BPTC, Mr H.R. Harrison, a former Director of the Manager of the Estate Mortgage Trusts, and Mr E.J. Forth, former State Manager for Victoria of BPTC. Otherwise, it appears that examinations of the other persons in respect of whom examination orders had been made by the Registrar have not proceeded. This is because the examinations have been held over pending the passing of a storm of litigation in the Supreme Court of New South Wales, this Court and the Administrative Appeals Tribunal in which, in various ways, attacks have been made upon the steps taken by the ASC and the new trustees.
17. The litigation is further described in the judgment of this Court in Hongkongbank of Australia Ltd v. Australian Securities Commission (1992) 108 ALR 70 and those of McLelland J. in Re BPTC (1992) 7 ACSR 539 at 541-545, and Re BPTC LTD (in liq) (1992) 8 ACSR 533 at 535. The second of these judgments of McLelland J. was delivered on 11 September 1992. The first was delivered on 29 May 1992; an appeal was dismissed by the New South Wales Court of Appeal on 13 October 1992 and is reported[1991] HCA 58; , (1992) 10 ACLC 1,573.
18. The present proceeding was instituted in this Court on 11 June 1992, the day after the delivery of the Full Court judgment to which I have referred.
19. The decision in respect of which judicial review is sought is described as that made by the Commissioner on 2 April 1992 "purportedly on behalf of the first respondent" to authorise the new trustees to make application for an order under s. 597 of the Corporations Law in relation to BPTC and for other relief relating thereto. It will be apparent that the application under the ADJR Act is thus out of time, unless there be an order in favour of the applicants under para 11 (1) (c) of the ADJR Act. In support of their case for such an order, the applicants submit that it was only during the course of argument in this Court on 1 June 1992 that it became apparent that there were the alleged deficiencies in the legal structure of authorisation and delegation on which the new trustees had based their status to obtain the ex parte orders from the Registrar in the New South Wales Supreme Court on 21 April 1992.
20. On their part, the respondents say that the decision of the second respondent on behalf of the ASC to authorise the new trustees to make the applications for the s. 597 orders was not a decision to which the ADJR Act applies, nor was it conduct for the purpose of making such a decision. It is also contended that the applicants are not persons "aggrieved" within the meaning of sub-s. 5 (1) of the ADJR Act. The first two of these procedural objections do not apply to the application under s. 39B of the Judiciary Act. The third, going to standing, is alleged to apply also to the s. 39B branch of the case.
21. The so-called "substantive issues" raised by the applicants may briefly be described as follows. It is contended (i) that the ASC had no power to authorise the new trustees to apply to the Supreme Court, pursuant to either s. 597 of the Corporations Law or s. 11 of the ASC Law, (ii) that the ASC did not effectively delegate to the Commissioner any power that it did have in that regard, and (iii) that in reaching the decision of 2 April 1992 to authorise the new trustees to make the application the Commissioner, acting purportedly of behalf of the ASC, excluded from consideration a matter to which he was bound to have regard, namely the extent to which questions of abuse of process might arise by the application for a grant of orders under s. 597 by the Registrar of the Supreme Court.
22. It is appropriate to turn first to these substantive issues.
I commence with the third of the substantive issues. The Commissioner made
his decision to authorise the new trustees solely for
the purposes and reasons
outlined in the submission prepared by a legal officer of the ASC, Miss
Rosemary Webb, and dated 2 April
1992. The submission is a document of nine
pages. The applicants fix upon a passage on page 5 as follows:
"(I)t is submitted that matters such as whether it is23. I accept the submissions for the new trustees (a) that the effect of this passage is that the issues there referred to are more appropriate for determination by a court than the ASC and (b) that the taking of that position is consistent with the decision-maker nevertheless having taken into account, in the sense understood in administrative law, the detailed written submissions which had been received in opposition to the grant of authorisation.
appropriate in all the circumstances that examinations
occur, who should be examined, the scope of the examination
and the effect of the examination on current or pending
litigation are a matter more properly for the court to
determine. To the extent that matters related to the
question of abuse of process of the court have been raised
in the submissions of (those) opposing the application,
these should be disregarded by the ASC."
24. On page 4 of the Webb submission, there is set out a summary of the major submissions which had been received from parties opposing the grant of authorisation. In particular, she noted the submission that as proceedings had already commenced it would not be a proper use of s. 597 examinations to benefit the private commercial interests of the unit holders in that litigation, and that persons such as the new trustees who represented "sectional interests" should not receive any authorisation by the ASC.
25. In my view, the applicants do not succeed on the third of the three substantive issues. I turn then to the question of authorisation, the first issue.
26. Here, it is necessary to note a submission in the nature of a preliminary point.
27. In the Instrument of Authorisation, dated 2 April 1992, the ASC is expressed to be acting pursuant to sub-s. 597 (1) of the Corporations Law. It would follow from the decision of this Court in Hongkongbank of Australia Ltd v. Australian Securities Commission (1992) 108 ALR 70 at 75, that sub-s. 597 (1) could not have been the source of that authorisation, and that the legislative authority for it must lie elsewhere. There was debate before us as to whether the correctness of that decision should be reconsidered. The Court permitted argument which canvassed the correctness of that decision.
28. The respondents submitted that if some other legislative source did exist, for example in s. 11 of the ASC Law, that was sufficient to support the efficacy of the instrument of authorisation of 2 April 1992. They referred, in particular, to what was said by Williams J. in The King v. Bevan; Ex parte Elias and Gordon [1942] HCA 12; (1942) 66 CLR 452 at 487, and by five members of the High Court in their joint judgment in Brown v. West [1990] HCA 7; (1990) 169 CLR 195 at 203-4.
29. In the latter case, it was accepted, by concession, that the validity of
determinations by the Remuneration Tribunal established
by the Remuneration
Tribunal Act 1973, was unaffected by the Tribunal having mistaken the source
of its power to make those determinations. In the earlier case, it was
held
that a seaman of the Commonwealth Naval Forces who had been unconditionally
transferred to the Royal Navy, and who had been
found guilty of murder by a
court martial, might be sentenced to death in accordance with certain Imperial
legislation, notwithstanding
the provisions of s. 98 of the Defence Act 1903.
This provided that no member of the Commonwealth Defence Force might be
sentenced to death by any court martial except for offences,
of which murder
was not one. The Imperial legislation was the Naval Discipline Act 1866
(Imp). Williams J. said (at 487):
"Rear-Admiral Crace could have convened the30. On the other hand, the applicants placed particular reliance upon remarks of Bowen C.J. and Fox J. in Australian Broadcasting Tribunal v. Saatchi and Saatchi Compton (Vic) Pty Ltd (1985) 10 FCR 1 at 9-10. Bowen C.J. said:
court under the authority conferred upon him by
his commission from the Admiralty, but there was
nothing inconsistent with the Naval Discipline
Act in the Governor-General also commissioning
him to convene courts-martial for the trial of
officers and ratings of His Majesty's Australian
ships or in his exercising this authority, so
long as in doing so he complied with the
requirements of the Naval Discipline Act, as the
Australian law, for the reasons already given,
is the same as and operates concurrently with
the Imperial law. Even if he did err as to the
source of an authority which he undoubtedly
possessed his mistake in no way affected the
personnel of the court or its proceedings, so
that all the conditions on which the right of
the court-martial to exercise jurisdiction
depended were in fact fulfilled. His mistake under
such circumstances would be in a non-essential
matter which would not amount to want
of jurisdiction . . ."
"Where a statutory authority has purported toThese remarks must be understood in the context of the case. The litigation concerned the validity of television programme standards and the proper construction of the Broadcasting and Television Act 1942 in relation to programme standards by licensees. The observance of those standards attracted significant sanctions under the legislation. In that setting, Fox J. (at 17) said:
exercise one of its powers but has in fact acted
outside that power, it would only be in
exceptional circumstances that the act could be
upheld as a valid exercise of another head of
power . . . The proliferation of statutory
bodies authorised to lay down rules affecting
citizens in one way or another makes the
question an important one. On the one hand it
is desirable that the proper activities of such
bodies should not be hampered by any unnecessary
introduction of technicalities. On the other
hand, the citizen confronted with rules he is
required to observe is entitled to know with
some precision what binding authority the rules
have and what the consequences of non-observance
may be.
In my opinion, where an administrative body
which states it is exercising a particular power
in laying down a general rule lacks power on the
stated ground, but could have laid down the rule
validly under another head of power, it would
generally be wrong for a court to uphold the
rule as if it had been made under the unstated
head of power, particularly where the
consequences for the citizen of each exercise of
power are different."
"What is critical, is the way a recipient of theBoth the Chief Justice and Fox J. referred to United States authority as supportive of the conclusions they reached.
documents (taking them together) would have seen
the matter. There can be little doubt that it
would have been thought they were intended to
provide standards, in the ordinary sense of the
word, which is the statutory sense, and would
have related them, so far as concerned
advertisements, to its duty under s 100 (4).
In these circumstances, it is not open to the
Tribunal to seek to justify its "standards" by
reference to the function and power respecting
"conditions". To do so would be not only be
unfair and unreasonable, but would tend to
undermine the efficacy of the prescription
itself. . . . There may of course be cases
where a change for reliance on one provision,
stated by an administrative body as authority
for its act, to reliance on another may patently
be quite immaterial but otherwise the change
cannot be made."
31. There are general statements in the United States texts that it is a
fundamental rule of administrative law that a reviewing
court, in dealing with
a determination which an administrative agency alone is authorised to make,
must judge the propriety of such
action solely by the grounds invoked by the
agency as disclosed by the record. But such statements must be understood in
the very
specific context in which they are made. Section 557 (c) of the
Federal Administrative Procedure Act, 5 USC, requires each authority
of the
Government of the United States (defined as an "agency") to adopt in any
formal adjudication or formal rulemaking a complete
statement of its findings
with respect to all material issues of fact and its conclusions concerning all
legal issues presented.
There must be included as part of the record a
statement of:
"(A) findings and conclusions, and the reasons or basis therefor,See the discussion by Pierce, Shapiro and Verkuil in "Administrative Law and Process", 1985, para. 7.2.
on all the material issues of fact, law, or discretion
presented on the record; and
(B) the appropriate rule, order, sanction, relief or denial
thereof."
32. This provision may be contrasted with the requirements for a statement under s. 13 of the ADJR Act. These requirements are more narrowly expressed than in the United States legislation. A s. 13 statement is to set out in writing "the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision".
33. In my view, the truth of the matter can only be found by analysis of the particular statute or other written law said to authorise or empower the making of the decision in question. Having regard to any specification of manner and form and, on a more general level, to the subject matter, scope and purpose of the law, is it a requirement that the decision-maker specify in writing the source of the authority relied upon?
34. Is such a requirement made directory or mandatory by the law in question? That distinction, as now understood, is discussed in Tasker v. Fullwood (1978) 1 NSWLR 20 at 23-4; TVW Enterprises Ltd v. Duffy [1985] FCA 382; (1985) 8 FCR 93 at 102, 113-4; Broadbridge v. Stammers (1987) 16 FCR 296 at 300 and Formosa v. Secretary, Department of Social Security [1988] FCA 291; (1988) 81 ALR 687 at 691-3. If there be no such requirement, or if the requirement be directory in character, it must be very difficult to sustain a case that the propriety of the decision in question is to be judged by that head of power expressly relied upon (if any) to the exclusion of any other enabling authority.
35. Here, none of the heads of power suggested to support the authorisation specify any particular form, nor, indeed, that it be embodied in any written instrument. Nor does reliance upon one rather than another head of power lead to any difference in the consequences for third parties, such as the present applicants. The position was rather different with the legislation considered in Saatchi and Saatchi.
36. In disputes of this character, there may be a question whether any of the suggested further heads of power are in truth available; the point is further discussed, with examples, by the Chief Justice in his reasons.
37. In my view, the Court should accept the submission for the respondents that the expressed reliance in the Instrument of Authorisation of 2 April 1992 upon sub-s. 597 (1) is not fatal to the existence of the necessary authority in the Commissioner if it may be supported by another head of power. (For similar reasons, the recital in that instrument of the first delegation does not foreclose reliance upon the second delegation.)
38. It is then necessary to consider the submission for the applicants that no head of power other than sub-s. 597 (1) exists in the legislation. I would reject that submission. The necessary authority is to be found in s. 11 of the ASC Law.
39. Section 11, so far as relevant, provides:
"11 (1) The Commission has such functions and powers as areFurther, s. 12 obliges the Commission to comply with a written direction by the Minister "about policies it should pursue, or priorities it should follow, in performing or exercising any of its functions or powers under a national scheme law of this jurisdiction", provided that the Minister shall not give a direction "about a particular case".
conferred on it by or under the following:
(a) the Corporations Act 1989;
(b) the Corporations Law of the Capital Territory;
(c) this Act.
(1A) The Commission also has the functions and powers
expressed to be conferred upon the NCSC by or under:
(a) any Act that is a relevant Act for the purposes
of the Companies and Securities (Interpretation
and Miscellaneous Provisions) Act 1980; or
(b) any law of a State that corresponds to such an
Act.
(1B) In the performance of a function, or the exercise of a
power, referred to in paragraph (1A) (a), the
Commission is not subject to any directions other than
directions given section 12.
(2) The Commission also has the following functions:
(a) to provide such staff and support facilities to
the Panel, the Disciplinary Board and the Review
Board as are necessary or desirable for the
performance and exercise by the Panel, the
Disciplinary Board and the Review Board of their
respective functions and powers;
(b) to advise the Minister about any changes to a
national scheme law that, in the Commission's
opinion, are needed to overcome or would assist
in overcoming, any problems that the Commission
has encountered in the course of performing or
exercising any of its functions and powers.
(3) The Commission may, on its own initiative or when
requested by the Minister, advise the Minister, and
make to the Minister such recommendations as it thinks
fit, about any matter of a kind referred to in s. 148.
(4) The Commission has power to do whatever is necessary
for or in connection with, or reasonably incidental
to, the performance of its functions.
(5) . . .
(6) Subject to this Act, the Commission has the general
administration of this Act.
(7) The Commission has any functions and powers that are
expressed to be conferred on it by a national scheme
law of another jurisdiction.
(8) The Commission may, with the consent of the Minister,
enter into an agreement or arrangement with a State or
Territory for the performance of functions or the
exercise of powers by the Commission as agent of the
State or Territory.
(9) The Commission has such functions and powers as are
referred to in such an agreement or arrangement.
(10) The Commission has power to do acts in the Capital
Territory in the performance or exercise of any
function or power:
(a) expressed to be conferred on the Commission by a
national scheme law of another jurisdiction; or
(b) referred to in an agreement or arrangement of
the kind referred to in subsection (8)."
40. In s. 3 of the Corporations (New South Wales) Act - New South Wales being treated in argument as the only relevant State - the term "Commission" is defined as meaning the Australian Securities Commission established by the Australian Securities Commission Act 1989 of the Commonwealth. Sub-section 66 (1) states that the Commission has the functions and powers conferred or expressed to be conferred on it under a national scheme law of New South Wales. Any function and power conferred or expressed to be conferred by s. 597 of the Corporations Law would fall within this description.
41. In Re BPTC LTD (in liq) (1992) 8 ACSR 533 at 536, McLelland J. said:
"It is necessary to be bear in mind that forCounsel for the applicants criticised the accuracy of that statement and referred to The Queen v. Duncan; Ex parte Australian Iron and Steel Pty Ltd [1983] HCA 29; (1983) 158 CLR 535 and Re Cram; Ex parte NSW Colliery Proprietors' Association Ltd [1987] HCA 28; (1987) 163 CLR 117, and Precision Data Holdings Ltd v. Wills [1991] HCA 58; (1991) 173 CLR 167. This criticism, in my opinion, should not be accepted.
constitutional reasons a State law (the
Corporations Law of New South Wales) cannot
itself validly confer a power of (the kind found
in 597) on a Commonwealth statutory authority
(the commission). However a Commonwealth law
(the ASC Act) can validly confer such a power on
the commission, and may do so by reference to a State
law by which the power is 'expressed to be conferred'."
42. The first of the above cases is authority for the proposition that whilst a State cannot unilaterally vest State functions in a Commonwealth instrumentality, the Parliament of the Commonwealth may establish a body such as the ASC and declare that it may exercise functions arising under State laws; see 158 CLR at 552-3, 563, 579, 588-9. The remarks of Brennan J. at 579 as to the necessity for authorisation under a law of the Commonwealth for the exercise of powers conferred by State legislation was affirmed in the joint judgment of all members of the High Court in Cram supra at 127. Otherwise, the basic proposition remains that a State cannot unilaterally vest functions under State laws in Commonwealth instrumentalities: The Commonwealth v. Bogle [1953] HCA 10; (1953) 89 CLR 229 at 259-60; The Commonwealth v. Cigamatic Pty Ltd [1962] HCA 40; (1962) 108 CLR 372 at 377; Australian Postal Commission v. Dao (1985) 3 NSWLR 565 at 595-6, per McHugh J.A. Nothing which was said, in relation to the provisions establishing the Corporations and Securities Panel established by s. 171 of the ASC Act, in Precision Data Holdings Ltd v. Wills, detracts from the above propositions.
43. The Corporations Law, as enacted by the Parliament of New South Wales, is a law which corresponds to the Corporations Law of the Australian Capital Territory, within the meaning of the definition of "national scheme law" in sub-s. 5 (1) of the ASC Law. Therefore, a function or power expressed by s. 597 of the Corporations Law to be conferred upon the ASC is a function or power conferred upon the ASC by a national scheme law of another jurisdiction, within the meaning of sub-s. 11 (7) of the ASC Law. The ASC has the power, by reason of sub-s. 11 (4) of the ASC Act, to do whatever is "necessary for or in connection with, or reasonably incidental to, the performance of its functions".
44. The distinction between a power and a function was drawn as follows by
Northrop and Lockhart JJ. (with reference to the Health Insurance Commission
Act 1973) in Edelsten v. Health Insurance Commission (1990) 27 FCR 56 at
62-3:
"The distinction between the functions and45. Sub-section 597 (2) makes provision for the specific function of making applications for court orders, in aid of a more broadly outlined function of concern with misconduct or possible misconduct of the affairs of corporations, whether or not the corporation in question has been wound up. The ASC may exercise its specific function directly by itself applying to the Court. Sub-section 597 (2) also provides for this to be undertaken by a "prescribed person". That class is defined in sub-s. 597 (1) so as to include persons authorised by the ASC, whether to make an application in relation to a particular corporation or, more generally, "to make applications under this section".
powers of an administrative body is between
functions or purposes or activities of an
administrative body on the one hand and the
powers conferred upon it to perform or execute
those functions, purposes or activities on the
other. This is the primary sense in which the
words are understood. The types of statutory
contexts in which the expressions 'functions'
and 'powers' of such bodies appear differ
considerably. Sometimes the two expressions are
treated inter-changeably or with the blurred
dividing lines; whilst some statutory
definitions of 'functions' provide that
'functions includes powers and duties' . . . In
the Health Commission Act the two expressions
are used in their primary sense mentioned above."
46. The power to give such authorisations might have been conferred upon the
ASC by implication. An example is provided by s. 33
of The Housing Act 1980
(UK), which was considered by the English Court of Appeal in Wansbeck District
Council v. Charlton (1981)
79 LGR 523. Sub-section 33 (2) stated:
"33 (2) A notice under this section must be in a formIt was held that this contained a clear implication that the Secretary of State had power to make regulations thereunder. As will have become apparent, s. 33 was cast in a different form to sub-s. 597 (1). The latter provision is drawn in terms to explain the sense in which the expression "a prescribed person" is used in the balance of s. 597. It assumes the grant of authorisation by the ASC of those constituting one species of the genus "prescribed person".
prescribed by regulations made by the Secretary of
State and must specify the ground on which the court
will be asked to make an order for possession of the
dwelling house."
47. As I have indicated, the ASC is established as a body corporate by ss. 7 and 8 of the ASC Law. It consists of members appointed by the Governor-General upon the nomination of the Minister (s. 9). These provisions are included in Part 2 of the ASC Act which is headed "The Commission And Its Functions And Powers". The provisions of s. 11 detailing the functions and powers of the ASC follow upon those earlier provisions providing for the constitution of the ASC. It is not surprising that the legislative source of the authority of the ASC to authorise persons so that they fall within the class of prescribed persons identified in sub-s. 597 (1), is to be found in Part 2 of the ASC Act.
48. It is reasonably incidental to the discharge of the functions of the ASC under sub-s. 597 (2) of the Corporations Law, that it not act directly itself or not act alone, and instead or, in addition, that it authorise, as in this case, the new trustees to make applications in terms of the instrument of 2 April 1992. Official managers, liquidators and provisional liquidators have their own status, as prescribed persons, from the terms of sub-s. 597 (1), without the necessary intervention of the ASC so to constitute them. Other persons require authorisation of the ASC to bring them within that class of prescribed persons. The taking of that step by the ASC is reasonably incidental, within the meaning of sub-s. 11 (4) of the ASC Act, to the discharge by the ASC of its functions under s. 597 (2). As I have indicated, sub-s. 597 (2), given the constitutional scheme which now governs corporate law in this country, is to be read with sub-ss. 11 (1), (7) of the ASC Act.
49. I conclude that there is no "gap" in the legislative scheme, such as contended for by the applicants.
50. It follows that the attack upon the validity and efficacy of the instrument of authorisation of 2 April 1992 fails, subject to consideration of the further point that the Commissioner himself lacked the necessary delegation of authority by the ASC to execute that instrument.
51. The instrument of authorisation in terms relies upon the first delegation. I have set out the text of that delegation, and of s. 102 of the ASC Law, referred to therein. It will be apparent from its terms that the powers and functions which were expressed in that instrument as delegated did not include those of the ASC under any of the provisions of s. 11 of the ASC Law, save sub-s. 11 (1A). This deals with the powers of the National Companies and Securities Commission and is not relevant.
52. I have concluded that (a) the ASC has, by reason of sub-s. 11 (4) of the ASC Law, the power to do whatever is necessary for or in connection with, or reasonably incidental to the performance of its functions under sub-s. 597 (2) of the Corporations Law, and (b) it is reasonably incidental to the discharge of the functions of the ASC thereunder to authorise persons so as to bring them within the class of prescribed persons who may make applications for Court orders.
53. The source of the power to authorise thus is found in sub-s. 11 (4), being a power incidental to functions identified in s. 597. Section 102 of the ASC Law undoubtedly permits the ASC to delegate that power. The present issue is whether it has succeeded in doing so.
54. The principal submissions for the parties supporting the efficacy of the
first delegation fixed upon the first paragraph, reading:
"all of the powers and functions conferred or55. The case for the applicants is that on a fair reading of the first delegation, there was no delegation of any power with which the ASC is endowed by sub-s. 11 (4). However, is it the case that the phrase "the powers . . . conferred or expressed to be conferred . . . by or under the provisions of the Corporations Law" is sufficient to that end?
expressed to be conferred on the Commission by
or under the provisions of the Corporations Law
other than (provisions not including s. 597)."
56. No doubt, instruments of this character are not necessarily drafted with the precision which should attend the preparation of delegated legislation. Nevertheless, the steps taken under or pursuant to such instruments may affect in a significant manner the rights and liabilities of a wide range of third parties. Accordingly, the terms of these instruments should be fairly but not over-generously construed.
57. As a matter of first impression, of the two phrases to which reference was made by those supporting the efficacy of the first delegation, the first, "expressed or expressed to be conferred", may be seen to reflect concerns arising from the interaction of State and federal legislation in this field, something to which reference has already been made in this judgment. Further, the phrase "by or under" used in relation to provisions of the Corporations Law, is apt to deal with the situation where the power or function in question is conferred on the Commission "by" the provisions of the Corporations Law themselves or "under" those provisions in the sense that the immediate source of conferral is delegated legislation. In this way, "under" serves a purpose distinct from that which "by" serves.
58. Certainly, sub-s. 11 (4) assumes the existence of functions of the ASC, and those functions include the functions found in sub-s. 597 (2). But, in my view, it does not follow from the interaction of these statutory provisions that the power under sub-s. 11 (4) is sufficiently identified in the first delegation to be delegated under s. 102. of the ASC Law.
59. The power itself is not conferred by s. 597, although its objects include functions conferred by s. 597.
60. Is the power conferred under s. 597? It is true that the power appertains and attaches to, and is exercisable in respect of, functions conferred by s. 597. In a sense, the power may be said to arise "under", meaning "by reason of the existence of", the function conferred by s. 597; cf. as to the Constitutional phrase "matter arising under any law made by the Parliament", LNC Industries Ltd v. BMW (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575 at 581. But that does not mean that the power in s. 11 (4) is "conferred" on the ASC under s. 597. Put another way, notwithstanding the interrelation between the provisions, the source of the relevant power conferred upon the ASC is s. 11, not s. 597; cf. Glasson v. Parkes Rural Distributions Pty Ltd [1984] HCA 49; (1983) 155 CLR 234 at 241, where the High Court was construing the phrase "under (a Commonwealth) enactment" in sub-s. 3 (1) of the ADJR Act.
61. However, there remains the second delegation. This includes the
following:
"AND all the powers and functions to do whatever isAlthough the reference to the affixing of the seal may suggest that the delegation of powers incidental to the exercise of the delegated functions is confined to matters of a formal nature, the instrument, on a fair reading, makes it clear that the generality of the relevant words is not so limited.
incidental to the exercise and discharge of powers and
functions hereby delegated, including, without limiting the
generality of the foregoing, affixing the seal of the Commission."
62. The relevant function under sub-s. 597 (2) is among those delegated in para. (1) of the instrument. The power under sub-s. 11 (4) of the ASC Law is (in the terms of that provision) to do whatever is necessary for or in connection with or reasonably incidental to the performance of that function. Accordingly, in my view, this power is incidental to the exercise and discharge of the function, within the meaning of the second delegation.
63. In that regard, as a fair use of language, a power may be incidental to a function if it naturally appertains and attaches to it; see the discussion of the various senses in which the term "incidental" may be used, by Jacobs J. in The State of Victoria v. The Commonwealth of Australia [1975] HCA 52; (1975) 134 CLR 338 at 413-4. I agree with what the Chief Justice has said upon this point in his reasons for judgment.
64. For these reasons I would also decide adversely to the applicants what I have earlier identified as the second of the substantive issues.
65. It follows from this that if the applicants were to succeed on what I have described as the procedural issues the litigation nevertheless would be decided adversely to them.
66. I should indicate that had it been necessary to do so I would have decided the issues of standing both under the ADJR Act and under s. 39B, favourably to the applicants.
67. The application should be dismissed with costs.
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