|
|
[Home]
[Databases]
[WorldLII]
[Search]
[Feedback]
Federal Court of Australia |
Judiciary Act 1903 (Cth), s.38B(1A)
Australian Securities Commission Act 1989 (Cth) Pt 3, ss.19,20,25(1),121(1),125, 127(1),(4)
Companies (Western Australia) Code, ss. 107, 129, 229, 285, 324C, 564, 556
Corporations (Western Australia) Act 1990 (W.A.), s.58
Fencott v. Muller (1983) 152 CLR 570
Avamure Pty Ltd (in liq) v. Fletcher Jones and Staff Pty Ltd (1996) 22 ACSR 256
Enterprise Sheet Metal Pty Ltd (in liq) v. Queensland Steel and Sheet Pty Ltd [1995] 1 Qd R 511
Moorgate Tobacco Co Ltd v. Phillip Morris Ltd [1980] HCA 32; (1980) 145 CLR 457
L.N.C. Industries Ltd v. B.M.W. (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575
Phillip Morris Inc v. Adam P. Brown Male Fashions Pty Ltd [1981] HCA 7; (1982) 148 CLR 457
Thompson v. Randwick Corporation [1950] HCA 33; (1950) 81 CLR 87
Little River Goldfields NL v. Moulds (1991) 32 FCR 456
Cousins v. Corporate Affairs Commission (1977) 3 ACLR 398
Queensland Building Services Authority v. Australian Securities Commission (1997) 23 ACSR 254
Australian Securities Commission v. Deloitte Touche Tohmatsu (1996) 21 ACSR 332
Hong Kong Bank of Australia Ltd v. Murphy (1992) 28 NSWLR 512
Australian Securities Commission v. Lucas [1992] FCA 234; (1992) 36 FCR 165
Re Excel Finance Corporation Ltd; Worthley v. England (1994) 52 FCR 69
Downsview Nominees Ltd v. First City Corporation Ltd [1993] AC 295
Re B. Johnson & Co (Builders) Ltd [1955] Ch 634
Johns v. Australian Securities Commission (1993) 178 CLR 408
Wardley Australia Ltd v. Attorney-General (W.A.) (1991) 5 WAR 453
Westpac Banking Corporation v. Australian Securities Commission (1997) 15 ACLC 445
Bond v. Sulan [1990] FCA 419; (1990) 26 FCR 580
Kioa v. West [1985] HCA 81; (1985) 159 CLR 550
National Companies and Securities Commission v. The News Corporation Ltd [1984] HCA 29; (1984) 156 CLR 296
Whelan v. ASC [1993] FCA 552; (1993) 12 ACSR 239
Grimwade v. Meagher (1995) 1 VR 446
ALAN HAROLD BOYS & ORS v. AUSTRALIAN SECURITIES
COMMISSION & ORS
No. WAG 123 of 1994
CARR J
PERTH
13 JUNE 1997
IN THE FEDERAL COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA ) No. WAG 123 of 1994
DISTRICT REGISTRY )
GENERAL DIVISION )
B E T W E E N : ALAN HAROLD BOYS, RONALD GEORGE HOWARD, DESMOND FRANK CRAWLEY, ANTHONY HAYES DOUGLAS-BROWN, ANTHONY HOWARD LEIBOWITZ
Applicants
- and -
AUSTRALIAN SECURITIES COMMISSION
First Respondent
ERNST & YOUNG (A FIRM)
Second Respondent
PHILLIPS FOX (A FIRM)
Third Respondent
PETER REYMOND QUIGLEY
Fourth Respondent
KEVIN LEE CHRISTENSEN
Fifth Respondent
CORAM: Carr J
DATE: 13 June 1997
PLACE: Perth
1. The application be dismissed.
2. The applicants pay the respondents' costs. Any party shall have liberty to apply by notice in writing within 7 days to vary or amend this paragraph.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
or examinations that were not lawfully conducted?.........................................................................22"The Second Broad Limb"
"The Third Broad Limb"
IN THE FEDERAL COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA ) No. WAG 123 of 1994
DISTRICT REGISTRY )
GENERAL DIVISION )
B E T W E E N : ALAN HAROLD BOYS, RONALD GEORGE HOWARD, DESMOND FRANK CRAWLEY, ANTHONY HAYES DOUGLAS-BROWN, ANTHONY HOWARD LEIBOWITZ
Applicants
- and -
AUSTRALIAN SECURITIES COMMISSION
First Respondent
ERNST & YOUNG (A FIRM)
Second Respondent
PHILLIPS FOX (A FIRM)
Third Respondent
PETER REYMOND QUIGLEY
Fourth Respondent
KEVIN LEE CHRISTENSEN
Fifth Respondent
CORAM: Carr J
DATE: 13 June 1997
PLACE: Perth
Introduction
The following statement of the factual background to this matter is taken largely from a statement of agreed facts. Where this is not the case, and I make specific findings of fact, I shall so identify those findings. On 26 July 1990 Perpetual Trustees W.A. Ltd ("Perpetual") appointed the fourth respondent, Mr Peter Reymond Quigley as Receiver and Manager of Geneva Finance Limited ("Geneva"). The appointment was pursuant to powers contained in a debenture trust deed dated 11 June 1986 and a supplemental trust deed dated 9 May 1989 both made between Geneva and Perpetual ("the Trust Deeds"). The Trust Deeds were executed to secure the interests of debenture holders who loaned monies to Geneva. There were about 2,600 such debenture holders. At the time of Mr Quigley's appointment they were owed a total of about $34.7 million. Mr Quigley embarked immediately upon efforts to realise Geneva's assets. Nine months later he reported to the debenture holders that he estimated that those assets would yield about ten cents in the dollar. In other words, they were facing a total shortfall in excess of $30 million. There is evidence that, at the time of Mr Quigley's appointment, Geneva's ten largest debtors (owing in excess of $31.3 million) were companies associated with its directors. Geneva had issued eight prospectuses for its debenture issues between 30 July 1986 and 15 June 1990. Between April 1986 and 26 July 1990 the applicants (together with a Mr Kevin Ernest Judge) were Geneva's auditors and also prepared investigating accountant's reports for six of those prospectuses. The investigating accountant's report, dated 15 June 1990, for the last of those prospectuses was based on the audited accounts for the six month period ended 31 December 1989. Geneva was still receiving subscriptions for debentures under that prospectus when Perpetual appointed Mr Quigley as Receiver and Manager. Mr Quigley was at all material times a partner in a firm of accountants, Messrs Ernst & Young, (the second respondent) which he retained to assist him in carrying out his duties as Receiver and Manager of Geneva. Shortly after his appointment, Mr Quigley retained the services of a firm of solicitors, Messrs Phillips Fox, the third respondent, and in particular Mr Kevin Lee Christensen, the fifth respondent, who was at all material times a partner in that firm. They were retained to provide legal advice and assistance to Mr Quigley in carrying out his abovementioned duties. The Australian Securities Commission ("the Commission") is the first respondent to these proceedings and the second to fifth respondents comprise Mr Quigley, Mr Christensen and their respective firms.
In or about November 1990 some of the debenture holders joined forces and formed a group known as the "Geneva Finance Limited Investors Group" ("the Debenture Holders' Group"). The Debenture Holders' Group appointed a national committee and engaged a firm of solicitors based in Sydney as its legal advisers. It is an agreed fact that on or about 30 November 1990 Mr Quigley and Mr Christensen became aware that the Debenture Holders' Group had been formed for the purpose of investigating potential actions which could be taken to recover some of Geneva's losses. On or about 12 February 1991 three members of the Debenture Holders' Group, a partner in the firm of solicitors engaged by them and an employee of that firm acquired all of the issued share capital in Geneva by buying those shares from the receiver of its holding company. The purchase price has not been disclosed. Each of those shareholders executed a declaration of trust declaring that he or she held his or her shareholding in Geneva in trust for the Debenture Holders' Group. It is common ground that on or about 1 May 1991 Mr Quigley and Mr Christensen became aware that the Debenture Holders' Group wished to investigate why Geneva went into receivership, whether there had been any mismanagement and whether or not Perpetual had properly carried out its duties as trustee. From the Commission's answers to the applicants' interrogatories, it is apparent that the Commission became aware of this development no later than December 1991. The new shareholders in Geneva became directors of that company. In that capacity, after certain proceedings in the Supreme Court of Western Australia - see Re Geneva Finance Ltd (1992) 7 WAR 496 - they obtained access to the books and records relating to the affairs of Geneva in or about April 1992. From time to time Mr Quigley furnished reports to the debenture holders about his investigations of Geneva's affairs and the progress of the receivership. There were at least seven such reports during the period material to the present case. I mention these matters because I consider that they are relevant, in the particular circumstances of this case, to the likelihood or otherwise of Mr Quigley acting in a manner which would prefer the interests of Geneva, as his appointor, over the interests of the debenture holders.
On 16 January 1991 Mr Quigley submitted a preliminary report to the Commissioner for Corporate Affairs, pursuant to s.324C of the Companies (Western Australia) Code ("the Code"). In that report Mr Quigley expressed his opinion that some of the directors of Geneva had contravened ss.229 and 564 of the Code. Mr Quigley stated that he was also investigating possible contraventions of ss.129 and 556 of the Code. On 11 April 1991 Mr Quigley applied to the Commission for authorisation to make an application to the Court for a public examination to be conducted under s.597 of the Corporations Law. In his letter of application, Mr Quigley referred to the fact that a large number of debenture stockholders had expressed their concern to him about the small dividend which they were likely to receive. Mr Quigley stated that he proposed to examine officers of the company, ex-employees, the auditors (i.e. the applicants) and other persons. He gave his reasons for wishing to do so. In the course of giving those reasons Mr Quigley again referred to an apparent contravention of s.129 of the Code. He also referred to his prima facie view that a cause of action existed against Geneva's auditors in relation to audit and investigating accountant's reports. He expressed the opinion that the proposed examination would provide the most cost-effective method of obtaining information which could be used both to assist the Commission in its inquiries into Geneva's affairs (including the matter of whether prosecutions should be undertaken) and also to assist him in obtaining evidence to take legal recovery action against various parties for losses suffered by Geneva and the debenture stockholders. Mr Quigley suggested that the Commission should be represented at the proposed examination and question the examinees. He also asked that the Commission meet his costs of the proposed examination, then estimated to be in the order of $100,000 to $130,000. During the course of the next eight months Mr Quigley furnished further reports to the Commission in relation to the past and current financial affairs of Geneva. Mr Quigley also attended several meetings with representatives of the Commission and had a series of telephone conversations with those representatives. On 25 November 1991, Mr D.L. Atkinson, an officer of the Commission prepared a document which he headed "DETERMINATION TO COMMENCE INVESTIGATION PURSUANT TO SECTION 13 ASC LAW". In that document Mr Atkinson set out certain statements of fact relating to allotments of shares in Geneva and the financing of the subscription monies payable in respect of those shares. Mr Atkinson's memorandum concluded by stating that he had reason to suspect that Geneva may have contravened s.129(1) of the Code. On 11 December 1991 Mr Quigley wrote to Mr L. Shervington at the Commission. [Between May 1991 and 31 December 1991 Mr Shervington was seconded to the Commission as Regional General Counsel. At all other relevant times Mr Shervington was a partner in a firm of solicitors in Perth.] In his letter to Mr Shervington, Mr Quigley expressed the view that the audit reports in respect of Geneva's financial statements at 31 December 1988, 30 June 1989 and 31 December 1989 contravened s.285 of the Code and that the investigating accountant's reports contained in Geneva's prospectuses numbers 6, 7 and 8 contravened s.107 of the Code. By a further letter, dated 18 December 1991, to Mr Shervington, Mr Quigley gave more information relating to these alleged contraventions. The applicants allege, and the respondents deny, that at about this time the Commission and Mr Quigley reached an agreement or an understanding in relation to an alternative course to Mr Quigley's proposed s.597 examinations. The applicants call this "the ASC Consultancy Strategy". In their re-amended substituted statement of claim, the applicants plead this strategy in the following terms:
. Mr Quigley would assist the Commission to carry out an investigation into matters raised in his reports relating to Geneva either under section 324C of the Code or otherwise;
. the Commission would use its powers under s.19 of the Australian Securities Commission Act 1989 (Cth) ("the ASC Act") to summon for examination persons who might have knowledge of the matters under investigation including those of the applicants and their present and past employees whom Mr Quigley had intended to examine in Court examinations;
. the Commission would formally appoint Mr Quigley and Mr Christensen as consultants to it so as to permit them to ask questions of the proposed s.19 examinees and to permit each of Mr Quigley and Mr Christensen to be present at the examinations from which (so it is pleaded) they would otherwise have been excluded;
. Mr Quigley would at the conclusion of the proposed s.19 examinations either personally or through Mr Christensen, make an application to the Commission under s.25 of the ASC Act 1987 for the release of the transcripts of the examinations which application the Commission intended to grant, alternatively, intended to grant subject only to compliance with formal requirements, alternatively intended to grant subject only to Mr Quigley establishing that the transcripts were needed in good faith and for a proper purpose;
. Mr Quigley and Mr Christensen would not charge the Commission for their services as consultants to it, as Perpetual would authorise the payment from the Trust Funds of their fees and expenses in respect of the services to be provided to the Commission; and
. in order to facilitate the above "strategy" the Commission would expand the scope of the s.13 Determination so as to permit the investigation by the Commission of negligence on the part of the applicants.
The applicants plead that this strategy was formulated by Mr Shervington and/or Mr Murray Allen (who was then the Regional Commissioner of the Commission in Western Australia) on behalf of the Commission and by Mr Quigley in telephone conversations made on 20 November 1991 and 5 December 1991, and at meetings on 10, 12 and 20 December 1991. In relation to the understanding, the applicants plead that Mr Quigley and the Commission shared a common belief that each of them would act in accordance with the ASC Consultancy Strategy. The applicants allege that, in furtherance of the ASC Consultancy Strategy, in or about January 1992 the Commission, by its officer Mr Atkinson varied the existing s.13 determination or alternatively made a supplementary determination under s.13 of the ASC Act in relation to an investigation of Geneva.
I have examined the contemporaneous documents and I have considered the evidence given by Mr Allen, Mr Shervington and Mr Quigley. I believe their evidence about what transpired in December 1991 and January 1992. I accept Mr Allen's evidence to the effect that the Commission was the genesis of the co-operative arrangement between it and Mr Quigley. In October 1991 Mr Allen prepared a memorandum entitled "Liquidators and Their Lawyers as "Free" Investigation Consultants" (Agreed Document No. 27). He circulated that document to the Chairman and Deputy Chairman of the Commission and to the Regional Commissioners for their views. That memorandum referred to situations similar to the factual circumstances then existing in this matter. Mr Allen then (in his memorandum) very carefully reviewed the purposes, the advantages and the disadvantages of engaging liquidators or receivers as consultants to assist the Commission in investigations and examinations. Mr Allen specifically raised the possible argument that the Commission's investigatory powers would be used for an improper purpose. He answered this argument by referring to the need for the Commission to satisfy itself that there were reasons to suspect that contraventions may have occurred and to ensure that proper consideration was given to prosecutions as well as civil proceedings. Other issues were raised and considered. A careful reading of Mr Allen's memorandum discloses purposes and concerns entirely consistent with the proper and efficient performance of the Commission's functions and the exercise of its powers. [The applicants did not question the authenticity of this document.] Whether the Commission's purposes were lawfully achieved is, however, a core issue in this matter, which I consider below. But first I return to the facts. I find that in late December 1991 or early January 1992 an understanding was reached between the Commission on the one hand and Messrs Quigley and Christensen on the other hand. A basic part of that understanding was that instead of Mr Quigley proceeding with his plan to conduct a public examination under the supervision of the Court, the Commission would conduct an investigation under Part 3 of the ASC Act. I find further, for reasons which I set out later, that the Commission would have conducted an investigation and examinations into Geneva's affairs whether or not Mr Quigley had proceeded with his proposed application to the Court to conduct public examinations under s.597 of the Corporations Law. I accept the Commission's evidence that it was prepared to authorise Mr Quigley to apply to the Court if he had chosen to persist in that course. I return to my findings in respect of the understanding reached between the Commission and Mr Quigley. I find that a part of that understanding was that the Commission would appoint, under s.121(1) of the ASC Act, Messrs Quigley and Christensen as consultants to assist the Commission in carrying out its investigation. Between 20 December 1991 and 3 January 1992 (there is no evidence of the precise date, but the parties are agreed that it was between these dates) Mr Atkinson signed a further document entitled "SECTION 13 OF THE ASC LAW DETERMINATION - GENEVA FINANCE LTD". In that document Mr Atkinson recited the fact of Mr Quigley's appointment as Receiver and Manager of Geneva, receipt by the Corporate Affairs Department and the Commission of complaints from debenture holders about the affairs of Geneva prior to such appointment, Mr Quigley's report under s.324C of the Code detailing possible contraventions and subsequent reports from Mr Quigley to the Commission. Mr Atkinson stated that from those reports it appeared that Geneva's auditors, Messrs Howarth & Howarth, may have been negligent and in breach of their duty of care in relation to:
. the audits referred to above;
. certain reports submitted to Perpetual;
. the investigating accountant's reports; and
. reports furnished in accordance with the Trust Deeds.
Mr Atkinson's determination then stated that ss.107 and 285 of the Code may have been contravened due to inadequate provision for bad and doubtful debts. Mr Atkinson's determination concluded in these terms:
"7. After review of the reports and correspondence received from the receiver and manager of Geneva, Peter Quigley, I have reason to suspect that there has been committed contraventions of the Companies (Western Australia) Code and that the matters raised in those reports and correspondence referred to above should be investigated."
It would appear that the Commission took the view that such a written determination was necessary before it commenced an investigation under Part 3 of the ASC Act, although (as Mr R.V. Gyles QC, senior counsel for the second to fifth respondents, pointed out) there is nothing expressed in s.13 of that Act which requires such a formal determination. Davies J held that there was no such formal requirement in Little River Goldfields NL v. Moulds (1991) 32 FCR 456 at pp.462, 464, and I respectfully agree with his Honour's view. The parties to these proceedings were at issue over whether there was an agreement or understanding made or reached between the Commission and Mr Quigley at about this time concerning the release of information to be obtained by the proposed Commission investigation of Geneva's affairs. I accept Mr Allen's evidence to the effect that there was at the relevant time an understanding that if Mr Quigley applied for the information obtained in the course of the investigation and if the Commission were at that time (the time of application) of the view that he was legally entitled to have that information then the Commission would release it to him. On 9 January 1992 the Commission and Messrs Christensen and Quigley executed a consultancy agreement ("the Consultancy Agreement"). I do not see recital G (set out below) of the Consultancy Agreement as being inconsistent with Mr Allen's evidence. The recitals to the Consultancy Agreement referred to the fact that Mr Quigley was the Receiver of all the assets and undertakings of Geneva, that he had provided reports to the Commission either pursuant to s.324C of the Code or otherwise, that the Commission intended to conduct an investigation into matters raised in those reports, that the Commission had requested Mr Quigley to assist it with that investigation and that the Commission wished to retain Mr Quigley and Mr Christensen as consultants to assist it with the investigation. There then followed a recital to the effect that Mr Quigley considered that the investigation by the Commission, with the assistance of himself and Mr Christensen as consultants, would be the quickest and most efficient method of obtaining information necessary for the realisation of Geneva's assets. Recitals G and H were in the following terms:
"G. The ASC presently intends to make available copies of the written records of any examinations and any related books to the Receiver upon the Receiver making application to the ASC pursuant to the ASC Law. The ASC may impose any conditions it sees fit upon the release of such information.
H. The Receiver's fees, costs and expenses and those of the Solicitor which are incurred by them as consultants assisting the ASC with the Investigation shall be met from assets of the Company."
By clause 2 of the Consultancy Agreement the consultants bound themselves to perform what were described as the "Consultancy Services". That term was defined by a description in item 1 of the Schedule to the Agreement, which read as follows:
"Item 1
The Consultant will assist the ASC to carry out the Investigation by providing the following services:
(a) reviewing all documents obtained by the ASC and advising the ASC whether further searches and enquiries for documents should be pursued;
(b) preparing for and conducting an examination of relevant persons pursuant to Division 2 of Part 3 of the ASC Law; and
(c) preparing reports to the ASC regarding the conduct of the examination and making recommendations as to the further conduct of the Investigation."
Clause 3 of the Consultancy Agreement contained a statement to the effect that the ASC intended to conduct the investigation diligently and as quickly as reasonably practicable and in accordance with its duties and obligations under ASC Law. That clause also stated that the Commission was at all times to control and direct the investigation. I consider that to have been a most important provision. I make a finding, later in these reasons, that the Commission did in fact control and direct the investigation. Clause 4 provided that the Commission would not be responsible for payment of the consultant's costs and expenses which were to be payable out of Geneva's assets. By clause 11 the consultants bound themselves not to disclose any material relating to the investigation, without the prior written approval of the Commission. The same clause also provided for the giving of written undertakings not to disclose confidential information. Clause 12 of the Consultancy Agreement dealt with the matter of conflict of interest and is set out in full later in these reasons.
On 14 January 1992 and 14 February 1992 the Commission issued notices, under s.30 of the ASC Act, requiring the second-named applicant, Mr Ronald George Howard to deliver up certain specified documents to the Commission for the purposes of what became known as "the Geneva Investigation". Mr Howard duly complied with those notices. Later in February 1992 the Commission issued notices to Mr Howard, his former partner Mr Anthony Howard Leibowitz and several employees and former employees of the applicants ("the Howarth Examinees") requiring them to attend for the purpose of being orally examined pursuant to s.19 of the ASC Act in relation to the affairs of Geneva. During March 1992 the Howarth Examinees attended at the Commission's offices and were orally examined in private. I shall refer to those proceedings as "the Geneva Examinations". The Geneva Examinations can thus be seen as part of the Geneva Investigation. Each of the Howarth Examinees was represented at the Geneva Examinations by Mr K.J. Martin of counsel (since appointed senior counsel). The Geneva Examinations were presided over by a Mr Anthony John Noel O'Connor. Mr O'Connor (a solicitor) was an officer of the Commission. In the notices to the Howarth Examinees, Mr O'Connor was referred to as the person before whom they were required to appear. Mr O'Connor was thus the "inspector" referred to in s.20 and the subsequent sections of Division 2 of Part 3 of the ASC Act. Also present during the oral examination of the Howarth Examinees at the Geneva Examinations were other officers of the Commission (including another solicitor employed by the Commission), Mr Christensen who questioned the Howarth Examinees, Mr Quigley and a senior manager employed by Mr Quigley's firm with expertise in insolvency matters. As contemplated by the Consultancy Agreement, neither Mr Quigley nor Mr Christensen charged the Commission for their services. Their costs and expenses were paid out of the proceeds of some of the realised assets of Geneva. The Commission caused written verbatim records ("the Transcripts") to be made of the oral examinations of the Howarth Examinees. On 3 April 1992 and again on 9 April 1992 Mr Quigley wrote to the Commission requesting it to exercise its powers under s.25(1) and (3) of the ASC Act, to release to him copies of:
. the Transcripts;
. the applicants' working papers in respect of six specified audits between 31 December 1987 and 31 December 1989;
. the auditor's permanent file;
. the investigating accountant's work papers in relation to his reports contained in Geneva Prospectuses 3 to 8; and
. certain other documents brought into existence as part of the performance of the consultants' duties under the Consultancy Agreement.
Later in April 1992, the Commission, without informing the applicants or any of the Howarth Examinees of its intention to do so, released copies of those documents to Mr Christensen [under s.25(1) of the ASC Act] and Mr Quigley [under s.25(3) of that Act]. Those documents have been referred to in the pleadings and in the statement of agreed facts as "the Released Information" and I shall so refer to them in these reasons. Mr Quigley's stated purpose in asking for the Released Information was to obtain legal advice on the matter of suing the auditors and the investigating accountant. He used the Released Information for that purpose. Mr Christensen used the Released Information for the purpose of providing that advice. On 23 July 1993 Messrs Phillips Fox, on instructions from Mr Quigley, caused a writ to be issued out of the Supreme Court of Western Australia. The plaintiff in those proceedings was named as Geneva Finance Ltd (Receiver & Manager appointed). The applicants in these proceedings, together with Mr K.E.Judge, are the defendants to those proceedings. At the hearing of this matter I was told that the writ in the Supreme Court proceedings has not been served on the defendants, but has been renewed from time to time and is still current. The Supreme Court writ carries an endorsement of claim indicating that the plaintiff claims damages against the defendants for:
. breach of duty of care owed in tort;
. breach of statutory duty arising under ss.158, 285-287 and other provisions of the Code by virtue of their appointment as auditors of the plaintiff;
. breach of contract; and
. misleading or deceptive conduct contrary to s.10 of the Fair Trading Act (Western Australia).
All of the above was stated in the writ to be in relation to or arising from audits of the plaintiff's accounts and records by the defendants, advice given or omitted and statements made by the defendants to the plaintiff concerning its internal management and control of its business, and its business procedures and reports and advice given or which ought to have been given under the Trust Deeds. It is common ground that in or about July 1993 (but obviously after 23 July 1993) the applicants became aware that the Supreme Court writ had been issued. I shall refer to the proceedings thus instituted as "the Supreme Court action".
On 1 December 1993 the applicants' solicitors wrote to the Commission. The purpose of that letter can be seen to have been twofold. First, it repeated an earlier request for copies of certain of the Transcripts. Secondly, it expressed concerns that Mr Quigley's solicitors might have access to the Transcripts. The letter concluded with a request for advice as to what steps had been taken to ensure that Mr Quigley's solicitors were not using the Transcripts. The Commission's letter dated 24 December 1993 to the applicant's solicitors dealt with this latter aspect in the following terms:
"... I advise that the ASC provided copies of written records of examination of a number of persons to the solicitors for Geneva's receiver and manager in April 1992 pursuant to s.25 ASC Law. That release was made for the purpose of contemplated proceedings by the receiver manager of Geneva Finance Ltd against your client. At this stage the ASC has no intention of taking any steps in relation to that release of information."
There ensued further correspondence between the applicants' solicitors and the Commission which included a demand, on 18 February 1994, that the Released Information be returned to the Commission. The applicants' solicitors sent similar correspondence to Messrs Phillips Fox. In or about March 1994, at the Commission's request, Messrs Quigley and Christensen returned the Released Information to the Commission. On 12 May 1994 Messrs Quigley and Phillips Fox made a further application to the Commission for the release to them of the Released Information ("the Second Application"). On or about 13 July 1994 the Commission gave notice to the Howarth Examinees (which include the applicants) of the Second Application and invited submissions on the question whether the Released Information should be released to Messrs Quigley and Phillips Fox. The decision whether or not to do so has not yet been made but, according to the undisputed evidence, will be made by a Ms A. Speirs. Ms Speirs is Regional General Counsel for the Commission at Darwin. On 31 October 1994 the applicants filed their application and statement of claim.
The respondents contended that this Court does not have jurisdiction to hear this application. The applicants initially put forward four alternative bases upon which they maintained that the Court has jurisdiction to hear the application, namely:
1. Under s.6(1) of the ADJR Act 1990 . The applicants identify the relevant decision as being the decision, about to be made by Ms Speirs, whether to re-release the Released Information;
2. Under its accrued jurisdiction;
3. Under s.42(3) of the Corporations (Western Australia) Act ("the State Act"); and
4. Under s.4(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (W.A.) ("the Cross-Vesting Act").
During the course of the hearing, I raised with counsel the question whether the Court might have jurisdiction under s.38B(1A) of the Judiciary Act 1903 (Cth). That subsection, which came into effect on 17 April 1997, (five days before the start of the hearing of this matter) provides that the original jurisdiction of this Court includes jurisdiction in any matter arising under any laws made by the Parliament. Counsel for the applicants subsequently added that provision as a basis for the Court having jurisdiction to hear this application. The respondents disputed all of the bases put forward as founding the Court's jurisdiction to hear this application. This included a challenge to the constitutional validity of the Cross-Vesting Act 1903 . This challenge was raised during closing addresses. Notices were subsequently served, under s.78B of the Judiciary Act (Cth), on the Attorneys-General for the Commonwealth and the States and Territories, but none intervened. So far as the recent amendment to s.38B of the Judiciary Act 1958 was concerned, the respondents contended that this application did not constitute a matter arising under any laws made by the Parliament and, in particular, was not a matter arising under the ASC Act. It was common ground that the ASC Act is a law made by the Parliament. Section 58 of the State Act provides that the ASC Act, other than "the excluded provisions", applies as a law of Western Australia. I will return below to the significance of the excluded provisions. However, the provisions of Part 3 of the ASC Act, which deals with investigations and information-gathering, are not excluded provisions. In other words, the State Act applies Part 3 of the ASC Act as a law of Western Australia. It was under Part 3 of the ASC Act that the Commission conducted the Geneva Investigation and the Geneva Examinations, obtained production of the applicants' specified books and proposes again to consider releasing the Released Information. By their application, the applicants have brought the Commission (and the other respondents referred to above) before this Court to restrain that release and the further use of the Released Information and to obtain declarations that, as a matter of law, the Released Information may not again be released. In essence, the applicants contend that the Commission has not lawfully exercised its power under the ASC Act in conducting the Geneva Investigation and the Geneva Examinations and that the proposed re-release of the Released Information to the other respondents is unlawful. The applicants say that the Commission exceeded its power in various ways including unlawful appointment of Messrs Quigley and Christensen as consultants and for those, and other reasons (detailed below) the respondents should be restrained in the manner sought.
In my view, the matter or controversy before the Court is whether the Commission has lawfully exercised its powers and is proposing lawfully to exercise its powers under the ASC Act. The very subject matter of that controversy owes its existence to the ASC Act. The whole case revolves around and depends upon the proper construction of the ASC Act and whether, on the construction advanced by the applicants, the respondents are to be restrained from engaging in further unlawful conduct. They contend that the Released Information found its way unlawfully into the hands of Messrs Quigley and Christensen and that this will happen again unless the Court grants relief.
In some ways this case could be regarded as a classic example of citizens seeking to restrain an organ of the Commonwealth from acting in a manner which they allege to be unlawful and to their detriment. Whether the Commission has the right to act in the manner contemplated and whether the applicants have the right to restrain the Commission from doing so are crucial parts of the matter to be determined in these proceedings - see Felton v. Mulligan [1971] HCA 39; (1971) 124 CLR 367 at pp.375, 382-383. That is the "justiciable controversy" [a term used in Fencott v. Muller (1983) 152 CLR 570 at p.603] brought before this Court. It is not simply a matter of interpreting some statutory provisions. Disputed issues of fact have to be resolved in order to determine the legality of the proposed course of conduct which the applicants challenge.
The present matter is to be distinguished from Avamure Pty Ltd (in liq) v. Fletcher Jones and Staff Pty Ltd (1996) 22 ACSR 256 and is more akin to Enterprise Sheet Metal Pty Ltd (in liq) v. Queensland Steel and Sheet Pty Ltd [1995] 1 Qd R 511. In Avamure the Court of Appeal of the Supreme Court of Victoria held that merely because a liquidator used a power conferred by s.506(1)(b) of the Corporations Law to sue for a debt on behalf of the company in liquidation, that did not mean that the claim arose under the Corporations Law within the meaning of ss.40 and 42 of that law. The cause of action arose out of a breach of contract or (as Tadgell JA observed at p.257) a claim for work done and materials provided. Those claims did not owe their genesis to the Corporations Law, but arose at common law. By contrast, Enterprise Sheet Metal involved recovery of preferences under s.565(1) of the Corporations Law. As McPherson JA and Derrington J observed at p.515:
"In the absence of s.565(1) of the Corporations Law, there would be no title in the liquidator to recover the payments."
Similarly at p.512 Fitzgerald P noted that the claim for determination in the action was based upon the right to avoid the payment which owed its existence to the Corporations Law of Queensland. All three members of the Court of Appeal agreed that the matter arose under the Corporations Law of Queensland. In the present matter the claims raised by the applicants for judicial determination bring into question the Commission's rights to obtain and re-release the Released Information. Those rights owe their existence to the ASC Act, are qualified by the terms of that Act, and can only be enforced by virtue of that Act. In making that observation I am adapting the language of Gibbs J in Moorgate Tobacco Co Ltd v. Phillip Morris Ltd [1980] HCA 32; (1980) 145 CLR 457 at pp.468-469. Similarly, to track the language of the principal judgment in L.N.C. Industries Ltd v. B.M.W. (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575 at p.582, the subject matter of the dispute in the present application arises under and exists only by reason of provisions contained in the ASC Act. The matter involved in this application thus arose under that Act, being a law made by the Parliament. In my view, it is quite clear that s.39B(1A) of the Judiciary Act invests this Court with jurisdiction to decide the matter. For very similar reasons, I consider that this Court also has jurisdiction under s.42(3) of the State Act (although, given my conclusion on the application of s.39B(1A) of the Judiciary Act, it is not necessary to decide the point) which provides:
"Jurisdiction is conferred on the Federal Court of Australia with respect to civil matters arising under the Corporations Law of Western Australia."
Section 41(2) of the State Act defines "the Corporations Law of Western Australia" as including "the ASC Law of Western Australia". By s.58 of the State Act, the ASC Act, other than the excluded provisions, applies as a law of Western Australia and may be referred to as "the ASC Law of Western Australia". Some of the sections of the ASC Act, upon which the applicants rely, for example ss.121 and 127, are excluded provisions. However, to the extent that the legality or otherwise of what the respondents have done or propose to do depends upon a consideration of any excluded provisions (assuming, without deciding, that there can be such dependence) and to the extent that any of the applicants' claims (such as the injunctive relief sought to restrain Messrs Quigley and Christensen from taking part in the Supreme Court action) may not be so vested, then in my opinion they fall within the Court's accrued jurisdiction. They clearly arise out of "a common substratum of facts" - see Phillip Morris Inc v. Adam P. Brown Male Fashions Pty Ltd [1981] HCA 7; (1982) 148 CLR 457 at p.512 (per Mason J). In those circumstances I do not need to consider the other bases put forward by the applicants for their contention that this Court has jurisdiction to hear their claims. I turn now to the issues which have to be decided.
Whether the Transcripts cannot be released because (on the applicants' case) they are the product either of an investigation that was not lawfully constituted or examinations that were not lawfully conducted?
The applicants put their case on what they described as "three broad limbs". The first such limb was a submission that the Released Information may not be again released because it was the product of an investigation which was unlawfully constituted or (in the alternative) the product of examinations which were unlawfully conducted. The applicants advance six contentions in support of that submission. They say that any one of those contentions is sufficient to make out their "First Broad Limb". I propose to deal with the first two contentions simultaneously and then proceed in sequence to the remaining four such contentions.
1.1 Whether a substantial purpose of the Commission's decision to conduct the Geneva Investigation was to facilitate the understanding made between the Commission and Mr Quigley?
1.2 Whether, in making that decision, the Commission took into account an irrelevant consideration, namely the substantial purpose referred to above?
In the statement of claim, the Commission's decision is described in terms of a decision to vary Mr Atkinson's first determination under s.13 of the ASC Act or to make a supplementary determination under that section in relation to the Geneva Investigation. I have already, earlier in these reasons, referred to the fact that s.13 of the ASC Act does not require any formal written determination. Accordingly, in my view, a fair reading of the issue raised by the relevant paragraphs in the statement of claim is whether the decision (made under s.13 of the ASC Act) to make the Geneva Investigation was invalid for the reasons set out above. At the core of this contention, as Mr M.J.Buss QC (senior counsel for the applicants) explained in his opening address, was the alleged understanding that Messrs Quigley and Christensen would obtain information to be used in connection with the contemplated Supreme Court proceedings against the applicants for negligence. The applicants say that in return Messrs Quigley and Christensen would provide the abovementioned consultancy services at no cost to the Commission, but at the expense of those interested in the monies held by Mr Quigley as Receiver and Manager of Geneva. The applicants submitted that a substantial purpose of the decision to make the Geneva Investigation was to facilitate that understanding. That decision, so it was put, would not have been made, or would not have been made in the terms in which it was made, but for the existence of that understanding. The consequence, so it was submitted, was that the decision was beyond power, and that the Geneva Investigation and the Geneva Examinations were unlawful.
The applicants, in their written submissions, appear to have assumed that the relevant provision is s.13(1) of the ASC Act. The statement of claim does not specify any particular subsection of that section. However, it is common ground that the relevant events in the affairs of Geneva were those which took place before Mr Quigley's appointment as Receiver and Manager of Geneva on 26 July 1990. The National Corporations Law Scheme came into force on 1 January 1991. Accordingly, the authority for the Geneva Investigation must be found in s.13(3) which provides:
"13(3) Where the Commission has reason to suspect that a contravention of a relevant previous law of this jurisdiction may have been committed, the Commission may make such investigation as it thinks appropriate."
In each of Mr Atkinson's determinations he stated that he had reason to suspect that there had been contraventions of the Code. Mr C.G. Colvin, counsel for the Commission, submitted that so far as the applicants were concerned, the relevant provisions were ss.107, 108 and 285 of the Code. Section 107 of the Code imposed a civil liability upon certain persons (including auditors) to pay compensation to persons subscribing for, among other things, debentures and who sustained loss or damage by reason of any untrue statement in a prospectus. In my view, s.107 of the Code is not a section which lays down a norm of behaviour whereby failure to act in a particular manner constitutes a contravention of that section. It is to be contrasted in that regard with, for example, ss.106 and 108 of the Code. However, I accept Mr Gyles' submission that a reference to liability under s.107 would include contravention of s.108. Section 285 of the Code did impose duties upon an auditor of a company. The particulars of the possible contravention expressed in Mr Atkinson's determination were that "... the provision for bad and doubtful debts as disclosed in the financial statements of Geneva was inadequate". I was not taken to any specific provision of s.285 which might thereby have been contravened by the applicants. But the case was not conducted by the parties on the basis that a failure to provide for bad and doubtful debts in Geneva's financial statements could not form part of a contravention of s.285. There was no submission on the applicants' part that the material before the Commission precluded it from having reason to suspect that there had been a contravention of s.285. Nor did the applicants submit that Mr Atkinson's suspicion that there had been a contravention of s.285 was entirely without foundation. Rather the applicants contended (see paragraphs 5.9 and 5.10 of their closing submissions) that a substantial purpose in deciding to make the Geneva Investigation was to facilitate the understanding reached with Mr Quigley and in particular to assist him with his proposed proceedings in negligence against the applicants. The applicants contended that this was a substantial purpose of the Commission in the sense that the decision to make the Geneva Investigation would not have been made if the understanding had not been reached. In that regard, the applicants relied on the decision of the High Court of Australia in Thompson v. Randwick Corporation [1950] HCA 33; (1950) 81 CLR 87 at p.106. In that case it was found that the Council would not have attempted compulsorily to acquire certain land except to make "as big a profit as possible". The High Court observed (at p.106):
"In Municipal Council of Sydney v. Campbell [1925] AC 338, this was the sole purpose. But in our opinion it is still an abuse of the Council's powers if such a purpose is a substantial purpose in the sense that no attempt would have been made to resume this land if it had not been desired to reduce the cost of the new road by the profit arising from its re-sale."
At this stage I should interpolate that insofar as the applicants' submissions depend upon the assertion that Mr Atkinson's second determination would not have been worded as it was, but for the allegedly wrongful substantial purpose, I do not think there is any merit in that submission. I say that because the exercise of the power conferred by s.13(3) of the ASC Act does not depend upon the contents of the formal determination. I return to the application of the principle discussed in Thompson v. Randwick Corporation. I am not satisfied on the evidence in this matter that in the absence of the alleged understanding with Mr Quigley, there would not have been a Geneva Investigation and more particularly that the applicants would not have been required to produce the documents under s.30 and attend the Geneva Examinations. In fact I am satisfied that even if the understanding had not been reached, the Commission would have made the Geneva Investigation and that, on the balance of probabilities, the applicants would have been required to produce those documents and attend the Geneva Examinations. I have reviewed both the documentary and the sworn evidence given on this aspect of the matter. I have taken note of the fact that the collapse of Geneva and in particular the very large deficiency of its assets compared to its liabilities were matters which received extensive reporting in the financial press in Western Australia and nationally. I refer to the press cuttings which are in evidence. I refer also to the evidence concerning the formation of the Debenture Holders Group and the activities of that group, which I have outlined earlier in these reasons. On 2 January 1991 (see Agreed Document 8) Mr Atkinson forwarded his interim report in respect of Geneva to a person within the Commission described as "Director of Investigations". The report contains the following paragraphs:
"A further area of inquiry is the role of the Auditor Howarth & Howarth in firstly the year end audit duties and more particularly the certification he gave in each 6 monthly prospectus in respect of Geneva's ability to borrow pursuant to the borrowing limitations in the Debenture Deed.
I understand from the Receiver and the Trustee that they both have concerns in this area."
It will be noted that this report was furnished some three months before Mr Quigley applied to be a prescribed person so that he could apply in turn to the Supreme Court to conduct public examinations. Mr Allen's evidence was that the Commission would have conducted an investigation into the affairs of Geneva even if there had been no civil recovery prospects and even if Quigley had no real interest in participating in any further investigation. Mr Allen was not cross-examined upon that evidence. Mr Allen gave his evidence most carefully and I believe him. In fact there was no suggestion that Mr Allen was a witness who should not be believed. I have also had regard to the evidence of a series of meetings at which Mr Shervington was present in June and July 1991 and a second series in November and December 1991. There were also relevant telephone conversations during each of those periods. Some of the meetings involved Messrs Quigley and Christensen, but others were meetings within the Commission. At the end of the second series of meetings and telephone conversations the Consultancy Agreement was executed. From this evidence I formed the view, and I so find, that at the relevant times Mr Quigley wished to conduct public examinations of the auditors and others in relation to matters which included the question whether the auditors had been negligent. He invited the Commission to take part in those public examinations (see page 3 of his letter dated 11 April 1991 to the Commission - Agreed Document 13). He was prepared to consider, in the alternative, taking a role (with Mr Christensen) in the conduct of examinations under the ASC Act. Had Mr Quigley not agreed to take that role, my assessment is that the Commission would have conducted the Geneva Investigation in any event. I gave consideration to what might have happened if Mr Quigley had obtained leave from the Court and proceeded with public examinations under s.597 of the Corporations Law. My assessment is that, in that eventuality, the Commission would still have proceeded with an investigation into Geneva's affairs. I say this because the evidence discloses a wider interest on the Commission's part in the affairs of Geneva than those which Mr Quigley wished to pursue for the benefit of the debenture holders. For example there were the matters of possible criminal liability on the part of some of the Geneva directors. Two of those directors were subsequently prosecuted. See also Mr Atkinson's two determinations and Mr Shervington's handwritten notes. I accept Mr Allen's evidence, in cross-examination, that it was a normal part of many investigations to examine auditors and to obtain their working papers; that it was entirely normal for auditors to be involved in an investigation even though the Commission's determination might not say anything about the auditors at all. My assessment is that, as part of its investigation of Geneva's affairs, the Commission would have called the Howarth Examinees to give evidence and would have served notices to produce their working papers. The relevance of an auditor's conduct to the affairs of a company was outlined by Helsham CJ in Cousins v. Corporate Affairs Commission (1977) 3 ACLR 398. See also Australian Securities Commission v. Lucas [1992] FCA 234; (1992) 36 FCR 165 at pp.184-185. I accept that Mr Quigley had also shown some interest in pursuing Geneva's former directors but my assessment is that he would have concentrated on the auditors to the exclusion of the directors, other than any director who may have been of financial substance. The evidence suggests that there were not many indications of good recovery prospects from the former directors. For all these reasons I conclude that the purpose alleged by the applicants (as set out in heading 1.1 above) was not a substantial purpose of the Commission, in the Thompson v. Randwick Corporation sense, when it decided to conduct the Geneva Investigation. The situation was one in which the Commission and Mr Quigley were planning two separate investigations of Geneva's affairs, each of which would include examinations of the auditors. There was likely to be a substantial overlap in those investigations. This would be wasteful of resources. There were significant advantages both to the Commission on the one hand and to Mr Quigley and those he represented on the other hand, in their joining forces and co-operating in the one investigation. Nevertheless, I am firmly of the view that if Mr Quigley had not decided to co-operate, the Commission would have proceeded with an investigation in any event.
However, it seems to me that a purpose may be substantial without satisfying the "but for" test applied by the High Court in Thompson v. Randwick Corporation in the passage set out above. In the present context, i.e. the applicants' first two contentions, I would regard a substantial purpose as one which, although not the sole purpose, played a material part in the making of the relevant decision. In that sense, I think it was one of the Commission's substantial purposes, not in deciding to make the Geneva Investigation, but when it decided to conduct the Geneva Investigation and the Geneva Examinations in the manner in which it did so - i.e. by appointing Messrs Quigley and Christensen as consultants, to accommodate their desire to examine the applicants in relation to Geneva's affairs. In my assessment, that purpose extended to the release of the Released Information to Mr Quigley and Mr Christensen if that could be done lawfully. I think it is sufficient to refer, for example, to Mr Allen's memorandum of October 1991 (no more precise date could be put on this document, which is Agreed Document 27). That was the memorandum (referred to earlier in these reasons) from Mr Allen to Commission members outlining the issues involved, the pros and cons and the policy considerations in entering into consultancy agreements of a type reflected in the Consultancy Agreement and the arrangements contemplated by such a document. Then there were Mr Shervington's discussions with Mr Quigley which resulted in Mr Quigley forwarding his letters dated 11 December 1991 and 18 December 1991 (Agreed Documents 30 and 32) to Mr Shervington. Does the existence of such a substantial purpose, in the secondary sense to which I have just referred, cause the relevant decision to be beyond power? I deal here with that question simultaneously with the question whether (as the applicants allege) taking such a purpose into account amounts to taking into account an irrelevant consideration and thus amounts to an alternative basis upon which the Commission's decision is invalid. It seems to me that a logical starting point is s.13 of the ASC Act.
There was no significant challenge to the proposition that the Commission, at the relevant time, had reason to suspect that a contravention of the Code may have been committed. In any event, the factual circumstances relating to the loans and their irrecoverability, which I have summarised above, in themselves constitute prima facie grounds for inquiry into possible contraventions. In those circumstances, the onus lies upon the applicants to establish lack of bona fide belief of the type required by s.13(3) of the ASC Act: Little River Goldfields NL at p.466. In my view, they have not discharged that onus. In my opinion, the Commission was fully justified in deciding to make an investigation into the affairs of Geneva. Those affairs would quite properly include the matters of how the audit was carried on, how the accounting investigation was carried on for the purposes of preparing the investigation reports included in the relevant prospectuses, what advice was given or withheld and generally what steps Mr Howard took in his capacity as auditor and investigating accountant: Cousins at pp.401-402. In Lucas (at p.180) Drummond J expressed the following views:
"Under s.13(3), provided the Commission has reason to suspect that a contravention of the relevant previous law may have been committed, there is no express limit on the investigation the Commission may make, other than it must be "such investigation as it thinks appropriate". The subsection does not, in terms, confine the permitted investigation to an investigation into the suspected contraventions. [His Honour then referred to a portion of Davies J's reasons for judgment in Little River Goldfields NL.] ... There is no justification for reading s.13(3) down to limit the scope of the investigation to an investigation into the particular contraventions of a relevant previous law which the Commission has reason to suspect may have been committed."
With respect, I agree with the views of Davies J and Drummond J in Little River Goldfields NL and Lucas respectively. At pp.180-181 in Lucas Drummond J set out three separate reasons for reaching that conclusion. I respectfully adopt those reasons. The second and third reasons were matters of construction based on the immediate context of s.13(3) and took into account the provisions of s.13(1) and s.13(5) as indicating a very wide power of investigation once the precondition relating to suspicion is satisfied. The first of Drummond J's reasons was based on the provisions of s.1(2) of the ASC Act which requires the Commission to strive, in performing its functions and exercising its powers (which, as Drummond J pointed out, would include its powers of investigation under s.13):
"(a) to maintain, facilitate, and improve, the performance of companies, and of the securities market and futures markets, in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy; and
(b) to maintain the confidence of investors in the securities markets and futures markets by ensuring adequate protection for such investors."
Section 1(2) falls within the "excluded provisions" of the ASC Act - see s.58(2) of the State Act and does not have automatic application under s.58(1) of that Act. However, when one refers to the provisions of ss.65 and 68 of the State Act it can be seen that the Commission is charged to perform its functions and exercise its powers in Western Australia in the manner referred to in s.1(2) of the ASC Act. Furthermore, in my view, the conduct of the auditors was properly the subject of the Geneva Investigation and the Geneva Examinations for two more reasons. First, depending upon what emerged, the Commission may have chosen to prosecute under s.49 of the ASC Act or institute civil proceedings against the auditors under s.50 of that Act. Secondly, grounds may have emerged which would justify the Commission in referring the manner in which the Geneva audits had been carried out to the Companies Auditors and Liquidators Disciplinary Board constituted under Part 11 of the ASC Act. In accommodating Mr Quigley's desire to examine the applicants with a view to proceeding against them in the proposed Supreme Court action, thereby, as I have found, making that purpose a substantial purpose (in the secondary sense referred to above) of its decision, I do not consider the Commission exceeded its power. Nor did it take into account an irrelevant consideration. On the contrary, the Commission was advancing its statutory purposes to which I have referred above. The key factor in the collapse of Geneva was the irrecoverability of the loans, supposedly secured, which were made to entities associated with its directors. Ten such associated companies accounted for $31.4 million of those loans. In any investigation of Geneva's affairs the most obvious line of inquiry would be what steps, if any, the auditors took to check the ten largest loans in Geneva's loan portfolio, whether they had been made to related entities and, most importantly, what security had been taken. Mr Quigley had possession of Geneva's financial records and for nearly eighteen months had been investigating its affairs. In deciding to take advantage of Mr Quigley's knowledge and experience and at the same time co-operate with him in the conduct of the Geneva Investigation and the Geneva Examinations, for a purpose which included as a substantial purpose assisting him in carrying on the proposed Supreme Court action, the Commission did not, in my view, either act beyond power or take into account an irrelevant consideration. My assessment of the facts is that the object of the Commission on the one hand (to make such investigation as it thought appropriate, having reason to suspect contraventions of a previous law) and Mr Quigley's object on the other hand (to obtain evidence in relation to the possible recovery by Geneva, and thus by the debenture holders, of its losses) were coincident objects. Section 25(1) of the ASC Act is clear statutory recognition that such common purposes may be served by an investigation and that information obtained in such an investigation may be used otherwise than exclusively for the Commission's purposes. Parliament in enacting s.25(1) thereby enabled information obtained in the course of an investigation by the Commission to be made available to a lawyer for a person who is carrying on a proceeding or is contemplating in good faith a proceeding in respect of a matter to which the examination related. I consider that the policy reflected by s.25(1) is a very important factor in dealing with the issues here (i.e. under the above headings) raised by the applicants.
There were manifest advantages to the Commission in having the assistance of Mr Quigley and Mr Christensen, both of whom had acquired considerable knowledge of Geneva's affairs. Although it is not necessary for me to decide the point, it might well be that the inclusion of Mr Quigley and Mr Christensen as part of the ASC investigating team comes within the statutory authority to make such investigation as the Commission thinks "appropriate". Section 121 of the ASC Act confers a very wide discretion on the Commission to engage, as consultants, persons having suitable qualifications and experience. The Commission was entitled to form the view that Messrs Quigley and Christensen's respective professional qualifications and experience and the familiarity which they had gained with Geneva's affairs made them most suitable for such engagement. The course which the applicants maintain should have been followed would have resulted in two sets of examinations of their client [a matter referred to by Spender J in a different but related context in Queensland Building Services Authority v. Australian Securities Commission (1997) 23 ACSR 254 at p.265] and a waste of resources. Instead, the Commission obtained the benefit of Mr Quigley's and Mr Christensen's services without paying their fees. Those services extended to far more than the investigation of the auditors' conduct and the examination of the Howarth Examinees. Exhibit R12 shows that Mr Quigley and Mr Christensen were present at the examinations of several of Geneva's directors (including the two directors who were prosecuted) and other persons in February, March, April, May, August and September 1992. On the other hand Mr Quigley and Mr Christensen, so I infer, were assisted in rendering their services by the ASC investigating staff and lawyers made available by the Commission for the purposes of the Geneva Investigation and all of the examinations. In that light, no sinister connotation can be put on the fact that Mr Quigley's and Mr Christensen's fees were, effectively, paid for out of the debenture holders' funds. The debenture holders stood to benefit from the rendering of those services to the Commission. There was no suggestion that the decision to make the Geneva Investigation was a sham. The width of the discretion conferred upon the Commission when deciding to exercise its powers is demonstrated by the decision of a Full Court of this Court in Australian Securities Commission v. Deloitte Touche Tohmatsu (1996) 21 ACSR 332. Despite the difference in the language used in ss.13 and 50, I accept Mr Gyles' submission that, the latter is "a cognate area".
2. Whether the Commission's engagement of Messrs Quigley and Christensen as consultants was beyond power and therefore unlawful?
The applicants contended that the engagement of Messrs Quigley and Christensen was inconsistent with ss.90, 125 and 127 of the ASC Act by reason of direct or indirect or actual or potential conflict of interest their part.
The applicants submitted that Messrs Quigley and Christensen had the following private interests which were said to conflict or had the potential to conflict with the proper performance by them of their services under the Consultancy Agreement:
. the duty to act in the interests of Perpetual and Geneva, which was said to arise out of the fact that Perpetual had appointed Mr Quigley as Receiver and Mr Quigley had retained Mr Christensen as his solicitor;
. the fees and disbursements which Messrs Quigley and Christensen had earned and would earn in connection with the work which they had performed in relation to the affairs of Geneva before, during and after the Geneva Investigation which fees were to be paid out of the trust funds held by Mr Quigley, subject to authorisation by Perpetual; and
. the fees which Messrs Quigley and Christensen and their respective firms would earn for services to be performed in connection with carrying on the proposed Supreme Court proceedings.
The applicants contended that Perpetual's appointment of Mr Quigley as Receiver and Manager, Perpetual's authorisation of his fees and disbursements and his appointment of Mr Christensen as solicitor could preclude them from exercising their powers and performing their functions as ASC staff members in a manner which might reveal facts adverse to Perpetual.
All of these matters, so it was put, had the potential to conflict with Messrs Quigley and Christensen's duties as Commission staff members fairly and independently to investigate possible contraventions of a national scheme law (which I have taken to be a reference to "a relevant previous law") with a view to findings of fact being made and acted upon in the public interest as contemplated by ss.16, 17, 18, 49 and 50 of the ASC Act. Furthermore, it was submitted that the above matters had the potential to conflict with Mr Quigley's duty to be alert to any possible contraventions by Perpetual of its duties under the Trust Deeds and to inform the Commission of any such contraventions.
It is common ground that the Commission, when it appointed Messrs Quigley and Christensen as consultants, did so under the power conferred by s.121 of the ASC Act. Section 121(1) provides that the Commission may, on the Commonwealth's behalf, engage, under written agreements, persons having suitable qualifications and experience as consultants to, or to perform services for the Commission in connection with the performance or exercise of any of its functions or powers. The applicants submitted that although s.121(2) provides that the terms and conditions of engagement of persons engaged under s.121(1) are such as the Commission determines from time to time, those terms and conditions must be consistent with the objects and provisions of the ASC Act. The applicants identified, in particular, three sections of that Act with which it is said that the engagement of Messrs Quigley and Christensen was inconsistent. The first was s.90 which provides that subject to s.91 (which contains no provisions relevant to the present matter), the Commission shall pay the expenses of an investigation. The applicants contended that it was inconsistent with s.90 to appoint consultants who were not to be paid by the Commission. This matter is also raised as a separate, apparently free-standing contention. In my view, the short answer to such alleged inconsistency is that where consultants do not raise any charges then there are no relevant "expenses of an investigation" which the Commission is required to pay. I develop the reasons for this conclusion slightly more fully below.
Then the applicants point to the provisions of s.125(1) of the ASC Act. Relevantly, that subsection states that s.125 has effect where a person, in the course of performing functions or services as a staff member (it is common ground that each of Messrs Quigley and Christensen was a "staff member" within the meaning of that definition in s.5 of the ASC Act) is required to consider a matter in which the person has a direct or indirect pecuniary or other interest that could involve a conflict with the proper performance or exercise by the person of those functions, services or powers. Section 125(2) provides that such a person shall forthwith give to the Commission a written notice: (a) stating that he or she is required to consider the matter and has an interest in it; and (b) setting out particulars of the interest. Section 125(3) provides that such a person shall do whatever is necessary to avoid the conflict referred to in subsection (1) and a penalty of fifty penalty units or imprisonment for twelve months, or both may be imposed for a contravention of that subsection. The applicants submitted that to comply with s.125(3) Messrs Quigley and Christensen should either have declined to accept appointments as consultants to the ASC or Mr Quigley should have ceased to be Receiver and Manager and Mr Christensen should have ceased to act for Mr Quigley. The essence of the applicants' contention was that when the Commission engaged Messrs Quigley and Christensen as consultants:
(a) to the knowledge of the Commission, Messrs Quigley and Christensen had a direct or indirect interest that could involve a conflict with the proper performance or exercise by them of their functions; and
(b) to the knowledge of the Commission, neither Mr Quigley nor Mr Christensen intended to do whatever was necessary to avoid that conflict.
In those circumstances, the applicants contended that the Commission's engagement of Messrs Quigley and Christensen was beyond power and therefore unlawful.
As a preliminary matter, I think it is pertinent to point out that clause 12 of the Consultancy Agreement was in these terms:
"12. Conflict of Interest
12.1 The Consultant warrants that, at the date of signing this Contract, no conflict of interest exists or is likely to arise in the performance of its obligations under this Contract. If, during the term of this Contract a conflict or risk of conflict of interest arises, the Consultant undertakes to notify the ASC immediately in writing of that conflict or risk."
Mr Buss submitted that Messrs Quigley and Christensen had a direct or indirect interest that could involve a conflict with the proper performance of their functions which was clearly known to the Commission and about which "nothing or nothing adequate or sufficient was done". There are other grounds for rejecting this contention but, as a preliminary observation, I would have thought that clause 12 of the Consultancy Agreement was at least a good step in the right direction of meeting any potential direct or indirect conflict of interest. By way of a further preliminary remark, I accept a submission put by Mr Colvin on behalf of the Commission. That submission was that the interests of Mr Quigley were to identify who was responsible for Geneva's collapse and thus to identify causes of action that might produce a return for debenture holders. The Commission's interest was in investigating who was responsible for Geneva's collapse so as to fulfill its statutory charter under s.1(2)(b) of the ASC Act, to protect investors. Rather than conflict, there was a very substantial coincidence and correspondence of interest between the Commission on the one hand and Mr Quigley (and his solicitor, Mr Christensen) on the other hand. There are two broad areas which the applicants identify as potential sources of conflict of interest with Messrs Quigley and Christensen's duties as Commission staff members, which I have summarised above (as part of a summary of the applicants' submissions). The first was said to be an interest in protecting Perpetual from adverse findings or consequences. The second related to Messrs Quigley and Christensen's financial interests in earning the fees referred to above.
As to the first area, in my view the applicants' contentions are misconceived. Mr Quigley (and this includes Mr Christensen as his solicitor) was obliged to investigate any breach of trust on the part of Perpetual, because to do so would be in the interests of the debenture holders. Such a breach of trust might give rise to a right on the debenture holders' part to damages or equitable compensation. As a Full Court of this Court pointed out in Re Excel Finance Corporation Ltd; Worthley v. England (1994) 52 FCR 69 at pp.86-87, a receiver owes a primary duty to the debenture holders through the trustee by whom he or she has been appointed. In so holding, the Full Court was following the advice of the Privy Council in Downsview Nominees Ltd v. First City Corporation Ltd [1993] AC 295 at pp.313-314. The Privy Council in turn was approving the reasoning of Jenkins L.J. in Re B. Johnson & Co (Builders) Ltd [1955] Ch 634 at pp.661-663. See also Beaumont J in Whelan v. ASC [1993] FCA 552; (1993) 12 ACSR 239 (admittedly another s.597 case) at p.252, and at p.253 where his Honour observed:
"In my opinion, there is nothing in the text of s.597, explicit or implicit, or in its underlying policy, to warrant its reading down so as to exclude from the class of "prescribed persons" a receiver for debenture holders, notwithstanding that the receiver may owe duties to the debenture holders and that the trustee is empowered to give the receiver directions.
In this connection, it should be borne in mind that cases can arise where the number of debenture holders is larger and may be seen as representing a substantial section of the public."
In Whelan v. ASC (No. 2) (1994) 58 FCR 352 at pp.362-363 Burchett J considered a conflict of interest argument similar to that advanced in the present case. His Honour said:
"The applicant's argument involves the proposition that the receiver is not likely to investigate a possible liability of the trustee who appointed him. But notwith- standing the difficulties asserted by the argument, a receiver is placed in a special position by the Corporations Law itself. See, for example, ss.82A, 420, 420C, 422, 424, 429, 430 and 431. Generally, Pt 5.2 of the Corporations Law does not discriminate between receivers appointed by the Court and privately appointed receivers. Where, in s.420(2), it does do so, the terms of the provision made by Parliament serve only to emphasise the point. And decisions of high authority make it plain that the special powers contained in s.597 may be conferred by the authorisation of the Australian Securities Commission upon a receiver. The fact that the receiver has a dual role, with responsibilities both under the Corporations Law and towards his appointor, has not been regarded as a bar.
. . .
In my opinion it cannot be said to be unfair to the applicant to allow his liability to be investigated in those circumstances. He was responsible, as auditor, to the company in question, as well as to the debenture holders. The trustee had a different responsibility, and the question whether it failed in its duty may be differently investigated, or not investigated, as those with an interest to investigate it may choose. In fact, the most likely way of ensuring its investigation would be the pursuit of the claim against the auditor, which the receiver desires to pursue, thus providing the auditor with a motive to examine any possible breach by the trustee. If the examination proposed by the receiver discloses default by an officer of the company, such as its auditor (see Re Equiticorp Finance Ltd; Ex parte Brock (1992) 10 ACLC 382 at 387), the fact that it was directed at him, and not at someone truly outside the company to whom he might wish to shift the blame, involves no unfairness. After all, the language of s.597(2) squarely applies to the auditor; the trustee's role is peripheral by comparison."
I do not consider that the above observations are made any less relevant to the present matter by the fact that, under the then Companies Code, Mr Whelan (as an auditor) was an officer of the company. The Corporations Law is different - see s.82A. I note also that in Re Compass Airlines Pty Ltd (1992) 35 FCR 447, Lockhart J (at p.453) contrasted the provisions of Chapter 5 of the Corporations Law (in which s.597 is to be found) with provisions of the type now found in Part 3 of the ASC Act. That was for the purpose of deciding whether s.597 of the Corporations Law, by necessary implication, abrogated the application of legal professional privilege to an examination conducted under the authority of that section. While I acknowledge the distinction drawn by Lockhart J in Compass Airlines, it seems to me that the purposes lying behind s.597 and its associated provisions on the one hand, and those of Part 3 of the ASC Act are broadly similar. The purposes of the former provisions were described by Gleeson CJ in Hong Kong Bank of Australia Ltd v. Murphy (1992) 28 NSWLR 512 (at p.521) as "... includ(ing) the protection of shareholders and creditors and of interested members of the public." For that reason, I consider that I am justified, in the absence of any direct authority on the question of conflict of interest in the context of Part 3 of the ASC Act, in deriving some guidance from decisions made in respect of s.597 of the Corporations Law. In doing so, I should not be taken as having overlooked the requirements of s.125 of the ASC Act and in particular s.125(3), a subject to which I return below.
Any duty owed by Mr Quigley to Perpetual was to that company in its capacity as trustee for the debenture holders. If the interests of Perpetual at any time conflicted with the interests of the debenture holders, Mr Quigley was required to act in the interests of the debenture holders. In those circumstances I do not think it could be said that there was any interest which could involve a conflict with the proper performance or exercise by Mr Quigley (or Mr Christensen) of his functions as a staff member of the Commission. The Commission had an interest relevantly equivalent to Mr Quigley's interest in ascertaining whether there was the potential to recover damages or equitable compensation for the debenture holders by reason of any default on the part of Perpetual in discharging its duties under the Corporations Law and otherwise. Insofar as the Trust Deeds contained provisions requiring Mr Quigley to conform to Perpetual's directions [see, for example clause 24(d)], those directions would be construed as being lawful directions. A direction which in any manner fettered Mr Quigley (whether as Receiver and Manager or as consultant to the Commission) from investigating or pursuing Perpetual would squarely conflict with Mr Quigley's equitable duties to the debenture holders and thus be unlawful in the sense of being inconsistent with a basic purpose of the Trust Deeds. Similarly, Perpetual's discretion to fix and approve Mr Quigley's remuneration could only be a discretion to fix such remuneration as was reasonable. If Mr Quigley had properly rendered services then he was entitled to reasonable remuneration for those services and Perpetual's role in that matter was thus extremely limited. The applicants did not contend or suggest that Mr Quigley had a potential conflict of interest in that if he pursued Perpetual over the Geneva matter he might not expect any further appointments as a receiver from that source. Furthermore, there was no evidence that would found such an inference. The proposition (if it had been made) would not have been self-evident. A responsible Board of a trustee company might well have a policy of not discriminating in relation to (or even a policy of favouring) the appointment of persons who fearlessly carry out their legal duties, even if this causes occasional discomfort or financial loss. If trustee company executives are not fulfilling their duties it might be thought that an appropriate policy consideration was that the earlier this came to light, the better for the trustee company in the long run. The situation is analogous to auditors who qualify their reports or even report a company's breaches of the law. There is evidence that Mr Quigley was in fact interested in pursuing Perpetual. At a meeting with Mr Shervington on 15 July 1991 (according to Mr Shervington's evidence) Mr Quigley said that his then proposed examination under s.597 of the Corporations Law would include Perpetual, the auditors, directors and former employees of Geneva (see p.3 of Agreed Document No. 22 and transcript p.333). Mr Quigley in cross-examination denied having said that he intended to examine Perpetual at a s.597 examination and claimed that he had said he was "looking at" the auditors, directors and former directors of Geneva but had not included Perpetual in that list. Mr Quigley's recollection of the detail of what transpired was (not surprisingly, given the time since elapsed and the numerous issues discussed) in my view not particularly strong. I prefer to rely on Mr Shervington's contemporaneous note of that meeting and I find that at that time Mr Quigley was looking at Perpetual, the auditors, the directors and the former directors of Geneva in the context of his proposed s.597 examination. Given the circumstances of the formation of the Debenture Holders' Group and the actions taken by that group (described earlier in these reasons), I think it would be inherently probable that he would do so. Both Mr Quigley and the Commission were aware of those circumstances at the time the Consultancy Agreement was made.
The fact that Messrs Quigley and Christensen might earn fees if the proposed Supreme Court proceedings were issued would not, in my opinion, amount to a relevant conflict of interest. If anything, they would provide a spur to Messrs Quigley and Christensen to bring to light the relevant information which might form the evidence to support the recovery proceedings on behalf of Geneva and, through it, on behalf of the debenture holders. [There was very little (comparatively) owed to unsecured creditors.] All of that coincided with the Commission's interests in making the Geneva Investigation and conducting the Geneva Examinations. In my view, the applicants have not made out their contention that there was any relevant conflict of interest within s.125 of the ASC Act.
In case I am wrong in my conclusions on the existence of the alleged conflicts of interest, I should consider whether, as the applicants allege, s.125 of the ASC Act caused the appointment of Mr Quigley and Mr Christensen as consultants to be beyond power and therefore unlawful. A key link in the chain of the applicants' reasoning on this issue was that, to the knowledge of the Commission, neither Mr Quigley nor Mr Christensen intended to do whatever was necessary to avoid the conflict. Another key link in that argument was that the relevant potential conflict of interest could be avoided only by Mr Quigley and Mr Christensen declining to accept appointment as consultants to the Commission or by Mr Quigley ceasing to be Receiver and Manager of Geneva and Mr Christensen ceasing to act for him. I do not think that the applicants have made out their case on either of those two points. First, I accept Mr Allen's evidence that either at his meeting with Mr Quigley on 10 December 1991 or at an earlier meeting, he asked Mr Quigley whether he was aware of any facts which suggested that Geneva had a potential claim against Perpetual. Mr Allen's evidence was that Mr Quigley replied in substance that he was not aware of any facts of that kind but that he was aware of the "need to be alive to the possibility of facts pointing in that direction". On that occasion Mr Allen sought from Mr Quigley and obtained an assurance that Mr Quigley would raise with the Commission any potential deficiencies in the conduct of Perpetual if he found them. Then I refer to the warranty and undertaking contained in clause 12 of the Consultancy Agreement the text of which I have set out in full above. In the circumstances that the Commission was fully aware of all of the material facts, was in charge of the Geneva Investigation and the Geneva Examinations and had no reason to expect that Mr Quigley and Mr Christensen would not honour their undertaking, I consider that the applicants have not made out their case that the Commission knew that neither Mr Quigley nor Mr Christensen intended to do whatever was necessary to avoid any potential conflict of interest. On the contrary, the Commission was well aware of the potential liability of Perpetual for the very substantial losses sustained by the debenture holders. The evidence satisfies me that the Commission expected Perpetual's conduct to be kept under review. As early as 12 September 1990 (see Agreed Document No. 5) the Commission recorded its concerns about Perpetual. It may even be inferred (and I do so) from that document and Agreed Document No. 6 that Mr Quigley assisted the Commission's investigators in re-phrasing certain questions which they wanted answered by Perpetual and by the Geneva directors. The investigators discussed those questions with the Assistant Manager of Perpetual on 21 September 1990. The Commission served two notices on Perpetual requiring production of a wide range of documents under s.30 of the ASC Act on 19 and 25 June 1992 respectively [see Exhibit AIII documents Nos. 14 and 15]. This was followed by a Commission review document dated 16 July 1992 [Agreed Document No. 80] which discussed the possible criminal and civil liability of Perpetual in relation to statements in Geneva prospectuses 4 to 8. I am satisfied from the evidence, both in witness statements and in other documentary form, that the Commission made its own assessment of Perpetual's responsibility (if any) in the matter of Geneva's financial collapse. It was not a matter of Mr Quigley or Mr Christensen being in a position to shield that company. For example, in his "Midway Assessment Report" dated 3 February 1993 to the Commission's Enforcement Management Committee (Agreed Document No. 76), Mr Atkinson after referring to proceedings in relation to certain alleged defences, stated:
"In addition to the civil actions by the Receiver and Manager a brief for opinion is with Legal Division [of the Commission] to consider whether an action for negligence can be mounted against Perpetual Trustees (WA) Ltd and if so by whom."
The applicants relied fairly heavily on Mr Bruno Romeo's evidence (Mr Romeo was a manager of Perpetual who had responsibilities, between 1985 and 1991, relating to the Trust Deeds) and in particular his file note of a telephone conversation with Mr Quigley on 17 January 1991 (Exhibit AVII). This was said to bear upon Mr Quigley's potential conflict of interest and was to be weighed up with his conversation with Mr Allen in December 1991. I have examined that diary note. First, it must be remembered that it is a summary prepared by Mr Romeo as an officer of Perpetual. When read as a whole, and in that context, I do not consider that Mr Romeo's statement in paragraph 2 of his file note that:
"Mr Quigley considered that the Trustee may be vulnerable in its treatment of related company loans in December 1989. He noted that he had not revealed this observation to any other parties"
should be regarded as in any way sinister or suggestive of pro-Perpetual bias on Mr Quigley's part. In the very next paragraph Mr Quigley is recorded as having told Mr Romeo that he had sought legal advice from Mr Christensen on various issues including the duties and obligations of "the Trustee" (which must be a reference to Perpetual) and whether either a receiver or liquidator could sue "the Trustee or the Auditor on behalf of the Debenture Holders". Mr Quigley is noted as having said that he expected Mr Christensen's opinion on approximately 23 January (1991).
Secondly, in the particular circumstances of this matter, I do not think it was necessary, in order to avoid such an alleged conflict, for Mr Quigley and Mr Christensen either to decline the appointment as consultants or to cease acting as Receiver and Manager and solicitor to the Receiver and Manager respectively. In my view, by ensuring that the Commission was fully aware of the circumstances (which it was) Mr Quigley and Mr Christensen had done what was necessary to avoid any conflict. When assessing what was "necessary", I have borne in mind that the Geneva Investigation and the Geneva Examinations always remained under the control of Commission officers other than Messrs Quigley and Christensen. All of the foregoing is on the assumption (contrary to my earlier findings) that there was such a direct or indirect pecuniary or other interest that could involve a conflict with the proper performance or exercise by Mr Quigley and Mr Christensen of their functions, services or powers.
The proposition that the engagement of Messrs Quigley and Christensen as consultants (as distinct from the terms and conditions of the Consultancy Agreement) was inconsistent with s.127 of the ASC Act was not developed by the applicants at this stage of their argument. In any event, I think it is appropriate to deal with any alleged inconsistency between the Consultancy Agreement itself and its terms on the one hand, and s.127 on the other hand, separately when considering whether the terms of the appointment contravened s.127. I now turn to that contention.
3. Whether the terms upon which Messrs Quigley and Christensen were appointed as consultants contravened s.127 of the ASC Act and, if so, whether that contravention rendered their appointment beyond power and unlawful?
Section 127(1) of the ASC Act provides as follows:
"127(1) The Commission shall take all reasonable measures to protect from unauthorised use or disclosure information given to it in confidence in or in connection with the performance of its functions or the exercise of its powers under a national scheme law of this jurisdiction."
The ASC Act is "a national scheme law of this jurisdiction" - see the definitions in s.60(1) of the State Act when read with s.58 of that Act. Information given to the Commission in the course of the Geneva Investigation or the Geneva Examinations would, in my opinion, as a matter of law have been given to it in confidence: Johns v. Australian Securities Commission (1993) 178 CLR 408 at p.424 (Brennan J), 435 (Dawson J), 458-459 (Gaudron J) and 467 (McHugh J).
The applicants contended that the terms upon which Messrs Quigley and Christensen were appointed as consultants to the Commission contravened s.127(1) and that in consequence their appointment was beyond power and therefore unlawful. The first leg of the applicants' argument depends upon a submission concerning the alleged agreement or understanding that after the Geneva Inquiry and the Geneva Investigations, Messrs Quigley and Christensen would make an application to the Commission under s.25 of the ASC Act for the release of the Transcripts and that the Commission intended to grant that application, or grant it subject only to compliance with formal requirements, or grant it subject only to Mr Quigley establishing that the Transcripts were needed in good faith and for a proper purpose.
I have already found that, on the evidence adduced, there was an understanding between the Commission and Mr Quigley a part of which was that if the latter applied for the information obtained in the course of the Geneva Investigation and if the Commission were then of the view that he was legally entitled to have that information, then the Commission would release it to him. The applicants' complaint extended to information in a form other than the Transcripts and the documents produced during the course of the Geneva Investigation and the Geneva Examinations. This was said to be the information which Messrs Quigley and Christensen "would inevitably acquire merely by virtue of reading documents produced to the Investigation, formulating questions to be asked of the examinees, in the case of Mr Christensen asking those questions, and in the case of both of them, hearing the answers". This was described as a store of knowledge "which they carry around in their heads".
The applicants referred to clause 11.1 of the Consultancy Agreement, which is in the following terms:
"11. Disclosure of Information
11.1 The Consultant shall not, without the prior written approval of the ASC, disclose to any person other than the ASC, any ASC Material or Contract Material or any other material which relates to the Investigtion (sic). In giving written approval, the ASC may impose such terms and conditions which it sees fit."
The applicants submitted that clause 11.1 is inconsistent with s.127 of the ASC Act because, so it was put, that section does not relevantly confer on the Commission a dispensing power in relation to the use or disclosure of information given to it in confidence. The applicants contended that there is further inconsistency because clause 11.1 refers merely to "disclosure" and not "use" of information, whereas s.127(1) refers both to use and disclosure.
In my opinion, the resolution of this issue turns on the word "unauthorised" in s.127(1) and the proper construction of the inter-relationship between that subsection and s.25 of the ASC Act. The issue in Johns was not whether transcripts of examinations could be released under s.25(1) for the purposes of carrying on a proceeding. The issue was whether the Commission's approval for use of such transcripts by a Royal Commission in public hearings was valid. As Brennan J (at p.428) observed:
"The question whether approval for use of the transcripts in public hearings was validly given depends on the scope and effect of s.127(1) and (4)(b). Section 127(1) protects information from "unauthorized use or disclosure". It does not purport to protect information from publication when the publication occurs in the course of an authorised use or disclosure. For example, the Act contemplates that information contained in the transcript of a s.19 examination may be published in the course of court proceedings: see ss.25(1) and (2), 68 and 76 and generally Pt 3 Div. 9. When information is disclosed under s.127(4)(b) to an agency of a State to enable or assist it to perform its functions, the use or disclosure of that information by that agency is not governed by s.127(1)."
It can be seen that in Johns the High Court was reconciling s.25(3) and s.127 and explaining their operation. I have obtained considerable guidance, in particular, from Brennan J's observations in Johns at p.425. Clearly in the present matter s.127(1) must be read together with s.25(1) and s.25(3). The High Court in that case found that the Commission was authorised to disclose the information under s.127(4)(b). That was the context and the extent of the search for authorisation in that case. It was in that context that Brennan J said (at p.425):
"Information obtained in exercise of the powers conferred by s.19 may therefore be used or disclosed for the purpose of the performance of any of the functions of the A.S.C. and for any of the purposes mentioned in sub-ss.(2) and (4) of s.127. But for no other purpose.
. . .
The power conferred by s.25(3) must be exercised consistently with the provisions of s.127 so that the giving to a person of "a copy of a written record of the examination ... together with a copy of any related book" under s.25(3) is authorized only if it be for a purpose consistent with s.127."
I am also particularly conscious of Brennan J's footnote (36) on p.425 in Johns. In that footnote his Honour stated that he was unable to accept a view of s.25(3) as broad as that embraced by the Full Court of the Supreme Court of Western Australia in interpreting the equivalent of s.25(3) of the ASC Act in the Code in Wardley Australia Ltd v. Attorney-General (W.A.) (1991) 5 WAR 453 at p.468. The Wardley case was principally concerned with the equivalent of s.25(1) in the Code. It is now settled (by Johns) that s.25(3) of the ASC Act does not of itself provide authority for release of the information referred to in that section. The question is whether s.25(1) might fall into a different category to s.25(3) and amount to sufficient authority itself for the release of the information and indeed then under s.25(3) in much the same way as s.127(4)(b) was found to provide authority in Johns? In my view, the answer to that question is - yes. It seems to me to be quite clear that Parliament's intention in enacting s.25(1) was to authorise the Commission to provide the information referred to in that subsection to a person's lawyer if the lawyer satisfies the Commission that the person is carrying on, or is contemplating in good faith, a proceeding in respect of a matter to which the examination related. Parliament's evident intention is that the fruits of an examination should be made available in those circumstances to assist a litigant in civil proceedings. In my opinion, that intention is very similar to the intention expressed in, for example, s.127(4) that the information may be released to assist the various governmental and public bodies described in that subsection. When the Commission exercises its power under s.25(1) to release information in accordance with the terms of that subsection then it has been authorised to do so by Parliament and there is no "unauthorised use or disclosure" within the meaning of s.127(1). McHugh J in Johns (at p.468) reached a similar conclusion, although in doing so his Honour referred to s.127(3). That there may be sources of authority for the use or disclosure of information given to the Commission, other than those found in s.127, is confirmed by s.127(6). Section 127(6) relevantly provides that nothing in s.127(2),(3),(4) and (4B) limits what may otherwise constitute, for the purposes of s.127(1), authorised use or disclosure of information. As to the information "carried around" in Messrs Quigley and Christensen's heads, I would make two points. First, the restriction in s.127(1) is confined to "information given to [the Commission] in confidence". That information when given orally is reduced to the written record of examination referred to in s.25(1). Secondly, the information may have been provided in documentary form under s.30 and that too would fall within the expression "any related book" used in s.25(1). The term "books" is very widely defined in s.5 of the ASC Act. "Related books" would, in my opinion, include all the documents produced by the applicants to the Commission in relation to the Geneva Investigation. It would also include notes made by Messrs Quigley and Christensen and any other person for the purposes of the Geneva Investigation or the Geneva Examinations. There was no evidence that Messrs Quigley and Christensen obtained any relevant information going beyond the books and documents produced, the oral evidence given by the Howarth Examinees and what was otherwise lawfully available to them in any event. Mr Buss submitted that it was obvious that they did. I disagree. I think that it is a matter which was required to be proved, particularly when it is borne in mind that Messrs Quigley and Christensen had considerable information about the affairs of Geneva and the applicants' involvement in those affairs before the Commission engaged them as consultants. That leaves only the advantage of seeing the Howarth Examinees in the witness box - an advantage which Mr Buss described as a "dry run" for cross-examination in the Supreme Court action. The demeanour of the Howarth Examinees and how they conducted themselves in the witness box do not, in my view, fall within the description of "information given to [the Commission] in confidence." If Mr Christensen is authorised by s.25(1) to obtain the information on behalf of Mr Quigley, as I think he is, then in my view, the Commission may also (subject to such conditions as it may see fit to impose) release that information to Mr Quigley for the purposes of the contemplated proceedings. In those circumstances it would be artificial to regard the information which they obtain from the transcripts and documents as being something which falls short of what they may have observed during the Geneva Investigation and the Geneva Examinations. I do not think that Parliament intended s.25 to be so narrowly construed. Its intention was, as I have mentioned above, to facilitate civil proceedings subject to the requirements of s.25(1) and subject to such conditions as the Commission might impose where s.25(1) authorised the release and a further application was made by the client/person, under s.25(3). Clause 11.1 of the Consultancy Agreement does not confer any licence. I read it as a restriction. Part of the understanding between the Commission and Messrs Quigley and Christensen at the time when the Consultancy Agreement was executed, was that any release of the information would have to be in accordance with the law. In those circumstances I reject the contention that the terms upon which Messrs Quigley and Christensen were appointed contravened s.127 of the ASC Act thereby rendering their appointment beyond power and unlawful.
4. Whether the terms upon which Messrs Quigley and Christensen were appointed as consultants contravened s.90 of the ASC Act and in consequence the ASC acted unlawfully and beyond power in making the appointment?
The applicants contended that the provisions of clause 4.1 of the Consultancy Agreement whereby the Commission was not to be responsible for payment of Messrs Quigley and Christensen's costs and expenses "contravened" s.90 of the ASC Act. Section 90 of the ASC Act provides that, subject to s.91, the Commission shall pay the expenses of an investigation. I have already referred, briefly, to that submission above. I incorporate those observations here by so referring to them. Section 90 was recently considered by Cooper J in Westpac Banking Corporation v. Australian Securities Commission (1997) 15 ACLC 445. The context of that matter was different to the present in that the applicant was challenging the Commission's refusal to pay about $3,000 costs incurred in complying with notices served on it by the Commission requiring the applicant to produce documents. The question was whether those costs were "expenses of an investigation". Cooper J held that they were not and that s.90 dealt with expenses incurred by the Commission or which the Commission was liable to pay under the ASC Act. At p.454 his Honour observed:
"The word `expenses' in the context of s.90 and s.91 bears its ordinary and natural meaning as being confined to monies expended by a person or an obligation incurred by the person. It does not include sums which the person claims a right to charge against others for his own services [authorities cited]. The expenses of an investigation which the ASC are obliged to pay by operation of s.90 of the Act are the entitlements to prescribed allowances and expenses under s.89(1), any discretionary payments the ASC determines to make under s.89(3), the costs and expenses of any civil proceedings for the recovery initiated by the ASC in the name of a company or a person with that person's consent under s.50 of the Act and such further outgoings as the ASC may in the discharge of its functions and powers reasonably and necessarily incur for the purposes of an investigation."
I agree, respectfully, with those observations. In the present matter, Messrs Quigley and Christensen agreed to provide their services free of charge. The Commission did not incur any relevant expenses. In any event, I agree with the submissions made on behalf of the respondents that s.90 is principally the equivalent of an appropriation provision, making lawful such a payment. It may also be seen as confirming that, unless a curial order of the types described in s.91(1)(a) or (b) is subsequently made, the Commission has no power to order anyone else to pay the costs of an investigation. The applicants contended that the section was concerned to preserve the independence of the Commission. In my view s.90 does not have that purpose. For those reasons I reject this contention.
5. If the Geneva Examination was unlawfully constituted or unlawfully conducted, whether this precludes the Released Information being re-released pursuant to s.25 of the ASC Act?
The essence of the applicants' submissions in relation to this contention was that the power conferred on the Commission by s.25 does not extend to copies of transcripts and related documents generated or obtained in the course of an unlawful investigation or examination. In view of the conclusions which I have expressed above in respect of the constitution and conduct of the Geneva Investigation and the Geneva Examinations, it is not necessary further to consider this contention.
6. Whether the ASC denied procedural fairness to the applicants in the establishment and carrying on of the Geneva Examination?
The applicants contended, and the second to fifth respondents denied that the Commission was obliged to accord procedural fairness to them in relation to the establishing and carrying on of the Geneva Investigation. The Commission (in paragraph 21A of its defence) also denied such an obligation, though it made no substantive submissions on that issue. I shall return to that question immediately below. The respect in which the applicants say that they were denied procedural fairness is that there was a reasonable apprehension of bias in relation to the Geneva Investigation in consequence of -
(a) the existence of what was said to be the potential conflict of interest;
(b) the failure of the Commission to take any action in relation to the potential conflict of interest; and
(c) what were said to be contraventions of ss.90 and 127 of the ASC Act.
The applicants contended that a fair-minded person with knowledge of the relevant facts would entertain a reasonable apprehension of bias on the part of the Commission in relation to the establishment and carrying on of the Geneva Investigation. Further, so it was put, the Commission compromised its independence in order to facilitate the proposed civil proceedings against the applicants, and in order to fund a significant part of the investigation from the trust funds held under the Trust Deeds. I turn first to the question whether the applicants were entitled to procedural fairness. Mr Gyles submitted that in the conduct of the Geneva Examinations there was "simply no place for natural justice or procedural fairness" where the investigations came to an end without any report being furnished under either ss.16 or 17 or distributed under s.18 of the ASC Act. Mr Gyles further submitted that if all the Commission was doing was to investigate then there was no obligation to extend procedural fairness. He contended that Division 2 of Part 3 of the Act, which deals with examination of persons, provided a code relating to the power to be exercised and the protections granted which did not give rise to any requirement of natural justice or procedural fairness.
I was not referred to any case in which the question of any entitlement to procedural fairness has been considered in the context of an investigation where it was not inevitable that a report of some sort would be prepared and furnished to some authority. In Bond v. Sulan [1990] FCA 419; (1990) 26 FCR 580, a case which involved an investigation under Part 7 of the Code (which contained provisions broadly comparable, and in some cases precisely comparable, to Division 2 of Part 3 of the ASC Act), it was assumed that the applicants were entitled to procedural fairness. But in that case the Ministerial Council had directed Mr Sulan to produce reports. The cases on procedural fairness in the conduct of investigations all seem to involve the preparation of a report after such investigations.
It seems to me that, in the apparent absence of any authority directly in point, the proper approach to the question of whether there is an entitlement to procedural fairness is first to examine the nature of the statutory power here being exercised: see for example Kioa v. West [1985] HCA 81; (1985) 159 CLR 550 at p.619 where Brennan J referred to:
"The presumption that the principles of natural justice condition the exercise of a statutory power may apply to any statutory power which is apt to affect any interest possessed by an individual whether or not the interest amounts to a legal right or is a proprietary or financial interest or relates to reputation. It is not the kind of individual interest but the manner in which it is apt to be affected that is important in determining whether the presumption is attracted.
...
Therefore the presumption applies to any statutory power the exercise of which is apt to affect the interests of an individual alone or apt to affect his interests in a manner which is substantially different from the manner in which its exercise is apt to affect the interests of the public. Of course, the presumption may be displaced by the text of the statute, the nature of the power and the administrative framework created by the statute within which the power is to be exercised."
The powers conferred by the relevant provisions of the ASC Act in respect of an investigation are very considerable. They can be demonstrated by the manner in which they were used in the present case. The applicants were first compelled to produce to the Commission their records i.e. their audit papers and files and the records of the work which resulted in the preparation of various investigating accountant's reports for the purposes of Geneva's prospectuses. Two of them were compelled to give oral evidence on oath which, either separately or in conjunction with the documents which they were compelled to produce, might well have damned them out of their own mouths as being negligent. Superimposed upon that situation was the possibility that the Commission might prepare a report and would be obliged to do so if the Minister so directed. Mr Gyles suggested that any entitlement to procedural fairness would only arise at that later stage if such a report were to be prepared. I disagree. In my view, the exercise of the statutory powers in Part 3 of the ASC Act in the present matter so directly and materially adversely (or otherwise) affected or could have affected the applicants' interests that they were entitled to procedural fairness. The disclosures which they might have been compelled to give might well have substantially increased the chances of their being found to be negligent in the foreshadowed Supreme Court proceedings. In my opinion, there was an obligation in such circumstances on the Commission's part to extend procedural fairness. I do not consider that any of the provisions of the ASC Act amount to a "clear manifestation of a contrary statutory intention": Kioa v. West at p.584. I note the specific statutory provisions in Division 2 of Part 3 of the ASC Act relating to the right of legal representation and the right to obtain the written record of statements made at an examination. Mr Gyles submitted that these provisions amounted to a code, thus exclusively defining the protection of examinees. I do not accept that submission. Parliament may well have intended to provide a certain minimum level of statutory protection, allowing the common law to determine, according to the particular circumstances of the case, whether procedural fairness required anything more. The draftsperson would have been well aware of the requirement of a clear manifestation of contrary statutory intention had his or her instructions been to the contrary. An example of such a clear manifestation, in a different statutory context, can be found in s.476(2)(a) of the Migration Act (Cth). The content of the obligation to extend procedural fairness is, of course, a separate matter.
The essence of the applicants' complaints was that of perceived bias on the part of the Commission in the manner in which the Geneva Investigation was established and carried on. So far as Messrs Quigley and Christensen are concerned, I have earlier in these reasons rejected the existence of potential conflict of interest. I have also rejected the submissions that ss.90 and 127 of the ASC Act 1979 were contravened in relation to the establishment and carrying on of the Geneva Investigation. In my view, that removes any basis for a suggestion of perceived bias on the part of the Commission and in particular Mr O'Connor as the inspector. That leaves the role of Messrs Quigley and Christensen as consultants to and staff members of the Commission. I think it is reasonable to have an apprehension that Messrs Quigley and Christensen would bring a degree of bias into the framing of the questions which, based on their examination of the documents in their possession and those produced under compulsion, were considered to be appropriate to put to the applicants. A substantial part of their interest in examining the applicants was to ascertain whether a factual basis existed for the proposed Supreme Court action. However, they were not in charge of the Geneva Investigation or the Geneva Examinations. Nor did they make any relevant decisions which, in my opinion, were required to be free from bias or any appearance of bias. The applicants did not lead any evidence by way of cross-examination or otherwise to suggest that there was any bias or skewing of the investigation or any bias in the form of the questions which the Howarth Examinees were asked. The evidence (see p.371 of the transcript) suggests that Mr K.J. Martin did not object to any of the questions which were put to his clients. In particular, there was no evidence to suggest that the Howarth Examinees were asked questions relevant only to civil liability but not to the suspected contraventions. My assessment is that the applicants' conduct of the audits and preparation of the investigating accountant's reports would be of common relevance to both civil liability and the suspected contraventions.
Moreover, in assessing whether sufficient procedural fairness was extended to the applicants, I consider that all matters relevant to that point should be considered, not merely whether Messrs Quigley and Christensen would bring a bias to their questioning. In this case, each of the applicants was represented at the Geneva Examinations by Mr K.J. Martin of counsel. The inspector told Mr Martin that he was permitted to remain at the hearing at all times, that at the conclusion of the examination or at such other times as the inspector might permit, Mr Martin would be allowed to address the inspector on any matter which he (Mr Martin) considered relevant. The inspector also told Mr Martin that he could examine each examinee about any matter about which he or she had been questioned. Shortly after the hearings, Mr Martin applied on behalf of his clients for transcripts of their respective evidence. They were provided with those transcripts. That, of course, was a statutory entitlement - see s.24(2)(b). In my opinion, assuming a perception of bias of the type referred to above on the part of Messrs Quigley and Christensen, when one takes into account the directions given by the inspector for the applicants' counsel to participate in the examinations, procedural fairness was extended. In colloquial terms - they were given a fair shake. I accept the evidence led by the Commission to the effect that the investigation was at all times under its control and direction. I also find that the examinations themselves were under the control of Mr O'Connor as inspector. The degree of procedural fairness extended by the Commission in this matter does not, in my view, differ substantially from the procedural fairness requirements identified by the High Court of Australia in National Companies and Securities Commission v. The News Corporation Ltd [1984] HCA 29; (1984) 156 CLR 296. The News Corporation case involved a hearing by the Commission's predecessor ("the NCSC"). Hearings conducted by the Commission are also provided for in Division 6 of Part 3 of the ASC Act. In News Corporation the High Court categorised the hearing as being inquisitorial rather than adversarial. The Court held that the NCSC complied with its statutory mandate when it stated that it would allow each person called at the hearing to have legal representation during his examination, the right to be re-examined by his representative if he so wished, that it would provide each witness with a copy of the transcript of his evidence and that if at the conclusion of the hearing the NCSC proposed to publish any matter adverse to or critical of any such person, it would afford him or it an opportunity to be heard and call evidence on such matter before proceeding further. For the foregoing reasons I reject the applicants' contention that they were denied procedural fairness in the manner alleged.
"The Second Broad Limb"
7. On the assumption that the Geneva Examination was lawfully constituted and carried out, whether Messrs Quigley and Christensen have the right to apply for the Released Information and whether the Commission has the right to grant that application?
The applicants described as "the second broad limb" to their case the contention that even if the Geneva Investigation were lawfully constituted and the Geneva Examinations were lawfully conducted, Messrs Quigley and Christensen have no right to apply and the Commission has no right to grant an application under s.25 of the ASC Act for the re-release of the Released Information. This submission builds upon earlier submissions referred to above. First, and this I have already accepted, the Released Information is subject to a statutory obligation of confidence. Then the applicants referred to the requirements of s.127 of the ASC Act, also considered above. The essence of the applicants "second broad limb" is their contention that ss.120, 121, 125, 127 and 127A evince an intention that a person who is or has been a "staff member" of the Commission may not apply under s.25 of the ASC Act. A present or former staff member, so it was put, is not a "person" or a "person's lawyer" for the purposes of s.25. Accordingly, the applicants submitted that a consultant or other staff member of the Australian Securities Commission who has participated in an investigation cannot make an application under s.25. It was common ground that both Mr Quigley and Mr Christensen fell within the definition of "staff member". Mr Buss submitted that when s.25 was properly construed, the reference to a "person" excluded a person who was a present or former Commission staff member. The applicants contended that such a construction was to be "gleaned" in part from the process of reasoning exposed in Johns and secondly by the presence of s.127A in the ASC Act. I have already expressed my conclusions on the manner in which s.25(1) should be reconciled with s.127, consistent with the principles explained in Johns. I shall not revisit that topic. Section 127A imposes obligations of secrecy upon, broadly speaking, former members of the staff of the NCSC. The section was introduced in 1991 when the NCSC was disbanded. Mr Buss submitted that the fact that the legislature included s.127A but did not include a provision in identical terms in relation to the Commission, is to be explained on the basis that no such provision was necessary in respect of the Commission. It could never have been contemplated, so it was put, that information would be released to former staff members of the Commission for the purposes of advancing civil litigation. That would be inconsistent, so it was submitted, with the independence of the Commission. I disagree. I accept the submission put forward on behalf of the second to fifth respondents that to read down s.25(1) by excluding a staff member or former staff member from its operation would be to amend the section rather than to construe it. In Johns, Ms Megay authorised the disclosure of the information to the Royal Commission (including herself). As Mr Colvin pointed out in his submissions, that was not the subject of any criticism in that case. The applicants' argument would mean that (in the circumstances in Johns) disclosure could have been authorised to the Royal Commission, but a former or current Commission staff member who knew that information would not be able to assist the Royal Commission. I can see no clear policy reason why that result should follow or be applicable to Messrs Quigley and Christensen. I accept the Commission's submission that it is just as proper to allow a former staff member who is a receiver to use the information [assuming the requirements of s.25(1) were satisfied] as it would be to allow a staff member who is on secondment to a Royal Commission to use information released under s.127(4) of the ASC Act. In both cases the use is entirely consistent with the purposes of the ASC Act. As Mr Colvin explained, s.47 of the National Companies and Securities Commission Act (Cth) ("the NCSC Act") contained provisions very similar to s.127A of the ASC Act. Section 47 of the former Act was repealed by the Corporations Legislation Amendment Act No. 110 of 1991 which by s.14 repealed the whole of the NCSC Act and, by s.15, required certain final reports then to be completed. It can be seen that s.127A was enacted as simply a convenient means whereby former NCSC officers continued to be subject to statutory restraints. In my view, and for the above reasons, the fact that Messrs Quigley and Christensen are former "staff members" of the Commission does not preclude them from having the right to apply and (if they satisfy the express statutory requirements) to obtain the release of the Released Information under s.25(1) when applied in tandem with s.25(3).
"The Third Broad Limb"
8. Whether Messrs Quigley and Christensen should be restrained from having any further role in relation to the Supreme Court action?
The applicants contended that, even if all their other submissions fail, Messrs Quigley and Christensen are under an implied statutory obligation of confidence in relation to the information which they obtained as Commission staff members in the course of the Geneva Investigation. Part of the information to which this submission was directed is that which is stored in the memories of Messrs Quigley and Christensen. This was described as being "intangible ... but very real". I have already dealt with this argument in the context of describing the interaction of ss.127 and 25 of the ASC Act. For the reasons which I gave above, I reject the applicants' contention that Messrs Quigley and Christensen's implied statutory obligation of confidence precludes them from using either the Released Information or any information which they may retain in their memories, for the purposes of the Supreme Court action. The applicants expressly abandoned any reliance upon the principles discussed in Grimwade v. Meagher (1995) 1 V.R.446. Furthermore, there was no evidence that Messrs Quigley and Christensen would be unable to conduct the Supreme Court action without using any confidential information obtained from the Commission.
Standing
The respondents contended that the applicants lacked standing to raise several of the matters upon which they relied in support of their application. It can be seen that I have taken what might be thought of as rather a broad view or approach to the matter. By that I mean that I considered that the applicants' interests were special enough to justify their challenge to the legality of what the Commission has done and proposes to do. The fact that I considered and dealt with any particular contention, should not be taken as indicating an opinion on my part that the applicants had standing to raise that particular point in isolation. I considered each point as being part of an overall contention that the Commission had acted beyond power and was proposing illegally to release the Transcripts and associated documents.
Discretion
In view of the conclusions which I have reached, it is not necessary to consider the respondents' submissions that the applicants should be denied relief on discretionary grounds such as public policy, futility or delay.
For the above reasons I have concluded, in summary, that the respondents have acted and propose to act in accordance with the law. Parliament has made clear its intention that information obtained in the course of a Commission investigation may be given to a person who is contemplating in good faith a proceeding of the type referred to in s.25(1) of the ASC Act. The Supreme Court action is such a proceeding. Parliament has conferred a wide discretion on the Commission to engage consultants. There was no relevant direct or indirect pecuniary interest that could involve a conflict with the proper performance or exercise by Messrs Quigley and Christensen (as such consultants) of their functions services or powers. The Commission took all the necessary steps to prevent any misuse of its powers, including measures to retain control of the Geneva Investigation and the Geneva Examinations. The statutory and common law requirements of procedural fairness were observed. If the result is that the truth of what the applicants did or did not do emerges, it will, in my opinion, emerge lawfully and fairly in accordance with the express and implied intentions of the Parliament. Accordingly, the application will be dismissed with costs.
I certify that this and the preceding sixty-eight (68)
pages are a true copy of the Reasons for Judgment
of Justice Carr.
Associate:
Date: June 1997
Counsel for the Applicants: Mr M.J.Buss QC (with him Mr A.N. Siopis)
Solicitors for the Applicants: Parker & Parker
Counsel for the First Respondent: Mr C.G.Colvin
Solicitors for the First Respondent: Regional General Counsel (W.A.)
Counsel for the Second-Fifth Mr R Gyles QC (with him Mr J.R.B. Ley)
Respondents: Freehill Hollingdale & Page
Date of Hearing: April 22-24, 28-30, May 1, 1997
Date of Judgment: 13 June 1997
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/cases/cth/FCA/1997/519.html