Kennedy v Australian Securities & Investments Commission & Ors [2005] FCAFC 32 (10 March 2005)

FEDERAL COURT OF AUSTRALIA

Kennedy v Australian Securities & Investments Commission & Ors
[2005] FCAFC 32

TREVOR JOHN KENNEDY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, DIRECTOR OF PUBLIC PROSECUTIONS FOR THE COMMONWEALTH OF AUSTRALIA AND ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA
V917 OF 2004

BLACK CJ, MERKEL AND EMMETT JJ
10 MARCH 2005 (CORRIGENDUM 10 MARCH 2005)
MELBOURNE (HEARD IN SYDNEY)

BETWEEN:	TREVOR JOHN KENNEDY APPLICANT
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION FIRST RESPONDENT DIRECTOR OF PUBLIC PROSECUTIONS FOR THE COMMONWEALTH OF AUSTRALIA SECOND RESPONDENT ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA THIRD RESPONDENT
JUDGES:	BLACK CJ, MERKEL & EMMETT JJ
DATE OF ORDER:	10 MARCH 2004
WHERE MADE:	MELBOURNE (HEARD IN SYDNEY)

1 The final sentence of paragraph [29] of the reasons for judgment which states that, "Mr Kennedy was at that time an officer of Offset, in that he was a director of Offset", should be deleted.

"It is asserted that, on the assumption that Mr Kennedy had a relevant interest in, or was entitled to, at least 5% of the shares in Offset in the period 1 September 1994 to 28 February 1995 and on the assumption that Mr Kennedy was an officer of Offset and authorised or permitted statements to be made to ASX on 4 and 11 May 1995 concerning shares in Offset, he committed an offence under s 1309(1) of the Corporations Law."

I certify that the preceding two (2) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment of the Honourable Chief Justice Black and the Honourable Justices Merkel and Emmett.

FEDERAL COURT OF AUSTRALIA

Kennedy v Australian Securities & Investments Commission & Ors
[2005] FCAFC 32

CORPORATIONS – whether the transitional provisions in the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) ("the 2001 Corporations legislation") operate to create a liability to be prosecuted for offences under the 2001 Corporations legislation in respect of conduct that, prior to the enactment of that legislation, constituted offences under the pre-2001 Corporations Legislation – whether requests for assistance under the Mutual Assistance in Criminal Matters Act 1987 (Cth) were valid – whether decisions made by the Australian Securities and Investments Commission under the 2001 Corporations legislation to investigate, and to request a person to appear and answer questions in relation to, conduct engaged in prior to the 2001 Corporations legislation were valid

Corporations Act 2001 (Cth), Part 10.1, ss 1309, 1311, 1370, 1371, 1398, 1399, 1400, 1401, 1403, 1405, 1407
Australian Securities and Investments Commission Act 2001(Cth), Part 16, ss 5, 13, 19, 64, 253, 274, 275, 276, 277, 279, 281, 283
Mutual Assistance in Criminal Matters Act 1987 (Cth)
Mutual Assistance in Criminal Matters (Switzerland) Regulations 1994 (Cth), clause 4
Corporations Act 1989 (Cth), s 82, 709, 710, 1309, 1311
Australian Securities Commission Act 1989 (Cth), s 64
Crimes Act 1914 (Cth), s 35
Corporations (New South Wales) Act 1990 (NSW), ss 7, 74(1)
Corporations (Commonwealth Powers) Act 2001 (NSW), s 4
Corporations (Ancillary Provisions) Act 2001 (NSW), ss 6, 7
Corporations Law of New South Wales, ss 709, 710, 1309, 1311
Australian Securities Commission Law of New South Wales, ss 19, 64

R v Frawley [2005] NSWCCA 66 considered
R v Corbett [2002] QCA 340; [2004] 1 Qd R 146 considered
Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 cited
Trans Pacific Investment Corporation Pty Ltd v Rusty Rees Pty Ltd & Ors (1995) 57 FCR 210 cited
Harris v Attorney-General of the Commonwealth (1994) 52 FCR 386 applied
Little River Goldfields NL v Moulds (1991) 32 FCR 456 applied

Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408 applied
Australian Securities Commission v Graco (1991) 29 FCR 491 cited
Johns v Connor [1992] FCA 193; (1992) 35 FCR 1 cited
Johns v Australian Securities Commission (1992) 35 FCR 146 applied

TREVOR JOHN KENNEDY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, DIRECTOR OF PUBLIC PROSECUTIONS FOR THE COMMONWEALTH OF AUSTRALIA AND ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA
V917 OF 2004

BLACK CJ, MERKEL AND EMMETT JJ
10 MARCH 2005
MELBOURNE (HEARD IN SYDNEY)

BETWEEN:	TREVOR JOHN KENNEDY APPLICANT
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION FIRST RESPONDENT DIRECTOR OF PUBLIC PROSECUTIONS FOR THE COMMONWEALTH OF AUSTRALIA SECOND RESPONDENT ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA THIRD RESPONDENT
JUDGES:	BLACK CJ, MERKEL & EMMETT JJ
DATE OF ORDER:	10 MARCH 2004
WHERE MADE:	MELBOURNE (HEARD IN SYDNEY)

THE COURT ORDERS THAT

1. The application be dismissed with costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN:	TREVOR JOHN KENNEDY APPLICANT
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION FIRST RESPONDENT DIRECTOR OF PUBLIC PROSECUTIONS FOR THE COMMONWEALTH OF AUSTRALIA SECOND RESPONDENT ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA THIRD RESPONDENT

3 Central to this proceeding is the question of whether the Commonwealth Parliament has achieved its clearly stated purpose of ensuring a seamless transition from the earlier corporations regime put in place by cooperative effort of the States and the Commonwealth to the regime enacted by the Corporations Act 2001 (Cth) (‘the 2001 Corporations Act’) and the Australian Securities and Investments Commission Act 2001 (Cth) (‘the 2001 ASIC Act’), following referral of power to the Commonwealth by the States.

4 During 2003, Australian Securities and Investments Commission (‘the Commission’) began investigating whether the applicant, Mr Trevor John Kennedy, had committed offences in connection with investigations that were conducted in 1995 concerning the beneficial ownership of shares in Offset Alpine Printing Group Limited (‘Offset’) held by Swiss entities. The second respondent, the Director of Public Prosecutions for the Commonwealth (‘the DPP’), would be responsible for instituting prosecution proceedings against Mr Kennedy in respect of any alleged offences. The DPP has requested the third respondent, the Attorney-General of the Commonwealth (‘the Attorney General’), to make requests to the relevant authorities in Switzerland for documents that may be relevant to any such prosecution. The Attorney-General has in fact made requests to the competent authority of Switzerland under the Mutual Assistance in Criminal Matters Act 1987 (Cth) (‘the Mutual Assistance Act’).

5 Mr Kennedy has challenged the conduct of the respondents at two levels. At the first level, Mr Kennedy asserts that the transitional provisions contained in the 2001 Corporations Act and the 2001 ASIC Act did not achieve their stated purpose. At the second level, Mr Kennedy draws attention to irregularities to be found in the documentation brought into existence by the respondents in relation to the matters briefly described above.

6 Mr Kennedy seeks injunctions, declarations and other orders under the Judiciary Act 1903 (Cth) (‘the Judiciary Act’). There is no dispute about the facts and, because the proceeding raises important questions of principle, which could have a significant bearing on many other prospective prosecutions, the proceeding was removed into the Full Court (see s 20(1A) Federal Court of Australia Act 1976 (Cth)) with a request that it be heard as quickly as practicable.

7 By s 7 of the Corporations (New South Wales) Act 1990 (NSW) (‘the 1990 Corporations Act’), the corporations law set out in s 82 of the Corporations Act 1989 (Cth) (‘the 1989 Corporations Act’), as in force for the time being, was applied as a law of New South Wales, to be referred to as the Corporations Law of New South Wales (‘the Corporations Law’). There were provisions in the same terms in the corporations laws of each of the other States and the territories (except the Australian Capital Territory), but it is not necessary to make further reference to these. Section 58(1) of the 1990 Corporations Act also provided that the Australian Securities and Investments Commission Act 1989 (Cth) (‘the 1989 ASIC Act’) applied as a law of New South Wales, to be referred to as the ASC Law of New South Wales (‘the ASC Law’).

8 Section 74(1) of the 1990 Corporations Act provided that, for the purposes of Part III of the ASC Law, Part III of the Crimes Act 1914 (Cth) (‘the Crimes Act’) applies as a law of New South Wales. Section 74(2) provided that, for the purposes of Part III of the Crimes Act, as so applying, an examination or a hearing is a judicial proceeding. Section 74(3) then provided that, for the purposes of the Corporations Law or the ASC Law, an offence under Part III of the Crimes Act in relation to an examination or hearing is taken to be an offence against Part III of the ASC Law.

9 The Commission is a body corporate incorporated under s 8 of the 1989 ASIC Act. The Commission was originally known as Australian Securities Commission and was continued in existence by s 261 of the 2001 ASIC Act.

The DPP is an officer of the Commonwealth for the purposes of s 39B(1) of the Judiciary Act.

11 The objects of the Mutual Assistance Act include facilitating the obtaining by Australia of international assistance in criminal matters. Under s 7(1), the Mutual Assistance Act applies to all foreign countries. However, s 44 of the Mutual Assistance Act provides that the Governor-General may make regulations prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to the Mutual Assistance Act. Section 7(2) states that the Regulations may provide that the Mutual Assistance Act applies to a foreign country subject to any mutual assistance treaty between that country and Australia that is referred to in the Regulations. In such a case, the Mutual Assistance Act applies subject to the limitations, conditions, exceptions or qualifications that are necessary to give effect to the treaty in relation to that country. Clause 4 of the Mutual Assistance in Criminal Matters (Switzerland) Regulations 1994 (Cth) (‘the Mutual Assistance Regulations’) provides that the Mutual Assistance Act applies to Switzerland subject to such limitations, conditions, exceptions or qualifications as are necessary to give effect to the Treaty between Australia and Switzerland on Mutual Assistance in Criminal Matters done at Berne in Switzerland on 25 November 1991 (‘the Swiss Treaty’).

12 Under s 10 of the Mutual Assistance Act, a request for international assistance in a criminal matter that Australia is authorised to make under the Mutual Assistance Act may be made only by the Attorney-General. The Attorney-General is an officer of the Commonwealth for the purposes of s 39B(1) of the Judiciary Act.

13 On or shortly after 21 April 1995, the Commission received a referral from Australian Stock Exchange Limited (‘ASX’), which drew the attention of the Commission to trading in the shares of Offset between 1 September 1994 and 28 February 1995. ASX suggested that there might have been breaches of certain provisions of the Corporations Law in relation to shares of Offset. On 26 April 1995, the Commission commenced an investigation in relation to that matter.

14 On or about 16 May 1995, the Commission issued a notice to Mr Kennedy requiring him to attend an examination pursuant to s 19 of the ASC Law. On 18 May 1995, Mr Kennedy attended such an examination and was examined by an officer of the Commission. At the commencement of the examination, an oath was administered to Mr Kennedy. During the examination, Mr Kennedy denied having any interest in the Offset shares that were the subject of the Commission’s investigation at that time.

15 On or about 31 May 1995, the Commission issued a notice to Mr Rene Rivkin requiring him to attend an examination pursuant to s 19 of the ASC Law. On 6 June 1995 and 6 September 1995, Mr Rivkin attended such an examination and was examined by an officer of the Commission. During that examination, Mr Rivkin denied having any interest in the shares in Offset that were the subject of the Commission’s investigation.

16 On 30 October 2003, an article was published in the Australian Financial Review newspaper. The article reproduced extracts from transcripts of interviews of Mr Rivkin that had been conducted by the District Attorney of Zurich, Switzerland, in which Mr Rivkin identified himself, Mr Kennedy and Mr Graham Richardson as the ultimate beneficial owners of certain shares in Offset.

17 On 31 October 2003, the Commission, by its delegate, Mr Peter Riordan, made a decision to investigate possible contraventions by Mr Rivkin during the examinations held on 6 June 1995 and 6 September 1995 (‘the First Investigation Decision’). The First Investigation Decision was recorded in a file note made by Mr Riordan and dated 31 October 2003. The file note referred to possible contraventions of s 64(1) ‘of the ASC Law/ASIC Act’ in relation to the information given, and the statements made, by Mr Rivkin during the examinations held on 6 June 1995 and 6 September 1995. A question arises as to what was meant by ‘the ASC Law/ASIC Act’.

18 On 10 November 2003, the Commission, by its delegate Mr Riordan, made a further decision (‘the Second Investigation Decision’). The Second Investigation Decision was to extend the investigation to suspected contraventions of:

The Second Investigation Decision was recorded in a file note made by Mr Riordan on 10 November 2003.

19 Mr Riordan’s note of 10 November 2003 is set out in Schedule 1 to these reasons. It is fair to say that there is a degree of looseness in the language used by Mr Riordan in the file note. Mr Kennedy relies upon that looseness as giving rise to grounds upon which he says that the First Investigation Decision was invalid.

20 On 19 November 2003, Mr Riordan and Mr Robert Ghali, who are authorised by the Commission to conduct examinations under s 19 of the 2001 ASIC Act, signed a notice addressed to Mr Kennedy (‘the Notice’), which was subsequently served on him. The Notice relevantly provided as follows:

The Notice is set out in Schedule 2 to these reasons. There is also some looseness in the language of the Notice.

21 On 24 November 2003, Mr Kennedy attended at the offices of the Commission for an examination. There was no examination at that time and the matter was adjourned to 1 December 2003 at Mr Kennedy’s request. Mr Kennedy was examined on 1 and 2 December 2003, purportedly pursuant to s 19 of the 2001 ASIC Act.

22 On or prior to 22 January 2004, the DPP requested the Attorney-General (‘the First Request’) to make a request to the relevant authorities in Switzerland for certain documents relating to ownership of shares in Offset. Following the First Request, the Attorney-General made a request, dated 22 January 2004, to the competent authority in Switzerland.

23 On or before 2 April 2004, the DPP requested the Attorney-General to make a request to the relevant authorities in Switzerland for further documents (‘the Second Request’). By a further request to the competent authority in Switzerland, dated 2 April 2004, the Attorney-General supplemented the request made on 22 January 2004.

24 Mr Kennedy first challenges the validity of the investigations commenced on 10 November 2003 and 31 October 2003, the validity of the Notice and the validity of the purported examination pursuant to the Notice. Mr Kennedy seeks an order restraining the Commission from taking any further steps in its investigation of him. He also seeks a declaration that the Notice is invalid and that the examination that took place on 1 and 2 December 2003 was not an examination pursuant to the 2001 ASIC Act.

25 In addition, Mr Kennedy says that the requests made to Switzerland do not comply with the Mutual Assistance Act or with the Swiss Treaty and, accordingly, are invalid. He seeks an order restraining the DPP from performing any further functions in respect of the matters alleged against him. Finally, Mr Kennedy seeks declarations that the requests to Switzerland of 22 January 2004 and 2 April 2004 are beyond the powers conferred by the Mutual Assistance Act and Article 1 of the Swiss Treaty.

26 There are four possible offences that it is said may have been committed by Mr Kennedy in 1995. They were referred to in Mr Riordan’s file note of 10 November 2003 recording the Second Investigation Decision. It is convenient to deal with each of the suspected offences separately.

27 Section 709(1) of the Corporations Law provided that a person who is a substantial shareholder in a company must give a written notice to the Company in accordance with that section. A substantial shareholder in a company is a person who is entitled to not less than 5% of the shares of the company. Section 710(1) of the Corporations Law provided that, where:

28 Section 1311(1) of the Corporations Law provided that a person who does not do an act or thing that the person is required or directed to do by or under a provision of the Corporations Law, or otherwise contravenes a provision of the Corporations Law, is guilty of an offence.

29 It is asserted that, on the assumption that Mr Kennedy had a relevant interest in, or was entitled to, at least 5% of the shares in Offset in the period between 1 January 1991 and 31 December 1995, he failed to comply with either s 709 or s 710 in relation to the shares in Offset and, accordingly, committed an offence by the operation of s 1311 of the Corporations Law.

30 Section 1309(1) of the Corporations Law provided that an officer of a corporation who makes available or furnishes information or authorises or permits the making available or furnishing of information to a securities exchange, being information that relates to the affairs of the corporation and that, to the knowledge of the officer, is false or misleading in a material particular, is guilty of an offence.

31 On 4 May 1995, Offset stated in a release to ASX that it had no independent knowledge of the beneficial ownership of certain shares in its capital. In a further release to ASX on 11 May 1995 Offset reiterated that neither Offset nor any of its directors had knowledge of the beneficial ownership of those shares. Mr Kennedy was at that time an officer of Offset, in that he was a director of Offset.

32 It is asserted that, on the assumption that Mr Kennedy had a relevant interest in, or was entitled to, at least 5% of the shares in Offset in the period 1 September 1994 to 28 February 1995 and on the assumption that Mr Kennedy authorised or permitted statements to be made to ASX on 4 and 11 May 1995 concerning shares in Offset, he committed an offence under s 1309(1) of the Corporations Law.

33 Section 64(1) of the ASC Law provided that a person must not, in the course of an examination of the person, give information, or make a statement, that is false or misleading in a material particular. It is asserted that, on the assumption that Mr Kennedy had a relevant interest in, or was entitled to, at least 5% of the shares in Offset in the period 1 September 1994 to 28 February 1995, his denial of having any interest in those shares in the course of the examination of 18 May 1995 was a contravention of s 64 of the ASC Law.

34 Section 35 of the Crimes Act, which is contained within Part III of that Act, provides that any person who, in any judicial proceeding, intentionally gives false testimony touching any matter, material in that proceeding, is guilty of an indictable offence. Under s 31 of the Crimes Act, ‘judicial proceeding’ includes a proceeding, before a body or person acting under the law of the Commonwealth, in which evidence may be taken on oath. It is asserted that, on the assumption that Mr Kennedy had a relevant interest in, or was entitled to, at least 5% of the shares in Offset in the period 1 September 1994 to 28 February 1995, Mr Kennedy made false or misleading statements in his examination on 18 May 1995 and committed an offence under s 35 of the Crimes Act, as applied as a law of New South Wales by s 74(1) of the 1990 Corporations Act.

35 Following the decision of the High Court in Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511, in which it was held that the cross-vesting provisions of the Corporations Acts of the States were unconstitutional and of no effect in so far as they purported to invest and confer on the Federal Court jurisdiction in cases arising under the corporations law of a State, and the consequent effects upon the cooperative scheme, the Parliaments of each of the States referred to the Parliament of the Commonwealth, pursuant to s 51(xxxvii) of the Constitution, certain matters relating to corporations. The intention was that the Parliament of the Commonwealth would pass legislation in relation to corporations and in relation to the Commission that would take the place of the cooperative scheme.

36 Each of the States has passed laws for the purposes of s 51(xxxvii) of the Constitution, referring certain matters relating to corporations to the Parliament of the Commonwealth for the purpose of enabling it to pass the 2001 Corporations Act and the 2001 ASIC Act. In particular, New South Wales enacted the Corporations (Commonwealth Powers) Act 2001 (NSW) (‘the NSW Referral Act’).

37 Thus, s 4(1) of the NSW Referral Act provides that the following matters are referred to the Parliament of the Commonwealth:

For the purposes of those provisions, the following terms are defined as indicated:

38 Section 4(4) of the NSW Referral Act states that it is the intention of the Parliament of New South Wales that:

39 Section 4(5) of the NSW Referral Act then provides that, despite any other provision of s 4, a reference of power under s 4(1) has effect for a period beginning at the beginning of the Commencement.

40 Consequent upon the referral, the Parliament of the Commonwealth enacted the 2001 Corporations Act and the 2001 ASIC Act. Each contains transitional provisions, the 2001 Corporations Act in Part 10.1 and the 2001 ASIC Act in Part 16. The stated object of each of those transitional provisions is to provide for a smooth transition from the old cooperative regime, to the new Commonwealth regime, so that all persons are placed, to the greatest extent possible, in the same position they would have been in were the old legislation Commonwealth legislation and the new legislation a continuation of the old (see s 1370 of the 2001 Corporations Act and s 253 of the 2001 ASIC Act). In resolving any ambiguity in the transitional provisions, an interpretation consistent with that object is to be preferred over one that is not (see ss 1370(2) and 253(3) respectively).

41 The general transitional provisions of the two Acts are substantially identical. It is convenient to summarise the provisions of Chapter 10 of the 2001 Corporations Act. Subject to differences in numbering, the summary is equally applicable to Part 16 of the 2001 ASIC Act.

42 Under s 1371 of the 2001 Corporations Act (s 254 of the 2001 ASIC Act) the following terms are given the meanings indicated:

43 Division 1 of Part 10 is a preliminary division. Divisions 2, 3, 4 and 5 deal with registration of companies, the old Corporations Regulations, court proceedings and orders and other specific transitional matters. Division 6 is concerned with general transitional provisions relating to other things done under the old corporations legislation.

44 Section 1398 of the 2001 Corporations Act (s 274 of the 2001 ASIC Act) states that Division 6 deals at a broad level with concepts and matters in a way that is intended to achieve the object of Part 10.1 as set out in s 1370: see [38] above. Section 1398 specifically provides that some of the provisions of Division 6 will have an effect that overlaps or interacts to some extent with the effect of other provisions of Division 6. The section also specifically provides that this is intended and that the provisions of Division 6 are not to be regarded as dealing with mutually exclusive situations.

45 Under s 1399(1) of the 2001 Corporations Act (s 275 of the 2001 ASIC Act), a thing that was done before the Commencement by, under, or for the purposes of, a carried over provision of the old corporations legislation and that had an ongoing significance immediately before the Commencement for the purposes of that legislation, has effect, after the Commencement, for the purposes of the new corporations legislation, as if it were done by, under, or for the purposes of, the corresponding provision of the new corporations legislation. Illustrations given in ss 1399(2)(e) and 1399(4)(e) include the taking of steps in a procedure, other than a proceeding in a court.

46 Section 1400 of the 2001 Corporations Act (s 276 of the 2001 ASIC Act) applies in relation to a right or liability (‘the pre-commencement right or liability’), whether civil or criminal, that was acquired, accrued or incurred under a carried over provision of the old corporations legislation and that was in existence immediately before the Commencement. Under s 1400(2), on the Commencement, the person acquires, accrues or incurs a right or liability (‘the substituted right or liability’) equivalent to the pre-commencement right or liability, under the corresponding provision of the new corporations legislation, as if that provision applied to the conduct or circumstances that gave rise to the pre-commencement right or liability. Under s 1400(3) a procedure, proceeding or remedy in respect of the substituted right or liability may be instituted, after the Commencement, under the new corporations legislation, as if that provision applied to the conduct or circumstances that gave rise to the pre-commencement right or liability.

47 Section 1401 of the 2001 Corporations Act (s 277 of the 2001 ASIC Act) applies in relation to a pre-commencement right or liability that was acquired, accrued or incurred under a provision of the old corporations legislation that was no longer in force immediately before the Commencement and that was in existence immediately before the Commencement. Under s 1401(2), the new corporations legislation is taken to include the provision of the old corporations legislation, with such modifications, if any, as are necessary, under which the pre-commencement right or liability was acquired or accrued or incurred and the other provisions of the old corporations legislation, with such modifications, if any, as are necessary, that applied in relation to the pre-commencement right or liability. Under s 1401(3), on the Commencement, the person acquires, accrues or incurs the substituted right or liability equivalent to the pre-commencement right or liability, under the provision taken to be included in the new corporations legislation by s 1401(2), as if that provision applied to the conduct or circumstances that gave rise to the pre-commencement right or liability. Under s 1401(4), a procedure, proceeding or remedy in respect of the substituted right or liability may be instituted, after the Commencement, under the provisions taken to be included in the new corporations legislation by s 1401(2), as if those provisions applied to the conduct or circumstances that gave rise to the pre-commencement right or liability.

48 Thus, ss 1400 and 1401 of the 2001 Corporations Act (ss 276 and 277 of the 2001 ASIC Act) are essentially equivalent, except that the former deals with the creation of equivalent rights and liabilities to those that existed under carried over provisions of the old corporations legislation and the latter deals with the creation of equivalent rights and liabilities to those that existed under repealed provisions of the old corporations legislation.

49 Section 1403(1) of the 2001 Corporations Act (s 279 of the 2001 ASIC Act) provides that an event, circumstance or other thing that occurred or arose before the Commencement under or as mentioned in the provision of the old corporations legislation and that had a particular significance, status or effect for the purposes of a carried over provision of that legislation has the same significance, status and effect, after Commencement, for the purposes of the provision of the new corporations legislation that corresponds to that carried over provision.

50 Section 1405(1) of the 2001 Corporations Act (s 281 of the 2001 ASIC Act) provides that a reference in the new corporations legislation to an Act or Regulation or another instrument that is part of the new corporations legislation or a provision or group of provisions of such an Act, Regulation or other instrument is taken, in relation to events, circumstances or things that happened or arose at a time before the Commencement when the old corporations legislation was in force, to include a reference to the corresponding part, provision or provisions of the old corporations legislation.

51 Section 1407 of the 2001 Corporations Act (s 283 of the 2001 ASIC Act) provides that a reference in, or taken immediately before the Commencement to be in, an instrument to an Act or to Regulations or some other instrument, that is part of the old corporations legislation or to a provision or group of provisions of such an Act, Regulations or other instrument, is taken after the Commencement, to include a reference to the corresponding part, provision or provisions of the new corporations legislation.

52 The Parliament of New South Wales also enacted transitional legislation in connection with the referral of power to the Commonwealth. Specifically, the Corporations (Ancillary Provisions) Act 2001 (NSW) (‘the Ancillary Provisions Act’) was enacted to come into operation immediately before the 2001 Corporations Act came into operation.

53 Section 6 of the Ancillary Provisions Act provided that the cooperative scheme legislation was to operate of its own force only in relation to matters arising before the Commencement, insofar as those matters are not dealt with by the 2001 Corporations Act or the 2001 ASIC Act. Section 7(1) provides that, to the extent that a law of New South Wales (‘the repealed law’) ceases to operate of its own force because of s 6, the effect is that which would have resulted had the Ancillary Provisions Act and the repealed law been Commonwealth Acts in relation to which the Acts Interpretation Act 1901 (Cth) (‘the Interpretation Act’) applied. Part III of the Interpretation Act contained provisions dealing with the effect of repeal of an Act. The provisions protect accrued rights and liabilities and allow legal proceedings in respect of them to be commenced or continued.

54 Section 7(2) of the Ancillary Provisions Act provides that, despite s 7(1), if, by force of Chapter 10 of the 2001 Corporations Act or Part 16 of the 2001 ASIC Act, a person acquires, accrues or incurs a right or liability in substitution for a pre-commencement right or liability, the pre-commencement right or liability is cancelled at the Commencement and ceases at that time to be a right or liability under a law of New South Wales.

55 On the basis indicated above, namely, on the assumption (which is asserted) that Mr Kennedy had a relevant interest in, or was entitled to, at least 5% of the shares in Offset in the period 1 September 1994 to 28 February 1995 and on the assumption that Mr Kennedy authorised or permitted statements to be made to ASX on 4 and 11 May 1995 concerning shares in Offset, Mr Kennedy was liable, on 14 July 2001, to be prosecuted under:

The first question is whether Mr Kennedy’s position was different after the Commencement.

56 On the assumptions that are asserted and indicated above, Mr Kennedy had incurred a duty or obligation under ss 709 and 710 of the Corporations Law. That duty or obligation constituted a pre-commencement liability within the meaning of s 1401(1) of the 2001 Corporations Act. By the operation of s 1401(2), the 2001 Corporations Act is taken to include ss 709 and 710 of the Corporations Law. By the operation of s 1401(3), Mr Kennedy incurred a liability equivalent to the pre-commencement liability under ss 709 and 710 of the Corporations Law as those provisions were taken to be included in the 2001 Corporations Act. He did so as if ss 709 and 710, as included in the 2001 Corporations Act, applied to his conduct or the circumstances that gave rise to the pre-commencement liability in 1994 and 1995.

57 Section 1311(1) of the 2001 Corporations Act relevantly provides that a person who does not do an act or thing that the person is required or directed to do by or under a provision of the 2001 Corporations Act or otherwise contravenes a provision of that Act is guilty of an offence. A failure by Mr Kennedy to comply with ss 709 and 710 of the Corporations Law would mean that he did not do an act or thing that he was required or directed to do by or under a provision of the 2001 Corporations Act. Accordingly, there would be a contravention of the 2001 Corporations Act.

58 Similar reasoning leads to the conclusion that there would be a contravention of s 1309 of the Corporations Law, as taken to be included in the 2001 Corporations Act, and also a contravention of s 64 of the ASC Law, as that provision is taken to be included in the 2001 ASIC Act.

59 Thus, Mr Kennedy’s potential criminal liability under s 1311 of the Corporations Law became a substituted criminal liability under s 1311 of the 2001 Corporations Act, by the operation of s 1400 of the 2001 Corporations Act. Similarly, criminal liability under s 1309 of the Corporations Law became a substituted criminal liability under s 1309 of the 2001 Corporations Act, by the operation of s 1400. In relation to prospective criminal liability under s 64 of the ASC Law, that criminal liability became a substituted criminal liability under s 64 of the 2001 ASIC Act, by the operation of s 276 of the 2001 ASIC Act.

60 The position is not quite so clear in relation to s 35 of the Crimes Act. However, we accept the submission of ASIC, the DPP and the Attorney General that s 35 of Crimes Act, applied as a law of New South Wales by s 74(1) of the 1990 Corporations Act, has a corresponding provision in the "new ASIC legislation", that is, s 35 of the Crimes Act (which applies to an ASIC examination or hearing by reason of s 88(1) of the 2001 ASIC Act and, prior to that Act, by reason of s 88(1) of the 1989 ASIC Act). The reason for that conclusion is that s 35 of the Crimes Act, applied by s 74(1) of the 1990 Corporations Act, is part of the "old ASIC legislation" as defined in para (b)(iii) of the definition of that term in s 254(1) of the 2001 ASIC Act and s 35 of the Crimes Act is part of the "new ASIC legislation" as defined in para (c) of the definition of that term in s 254(1) of the 2001 ASIC Act, which incorporates the definition in para (b)(iii). By reason of ss 276 and 279 of the 2001 ASIC Act any contravention of s 35 is dealt with in the same way as a contravention of s 64 of the 1989 ASIC Act.

61 Division 1 of Part 3 of the 2001 ASIC Act is concerned with investigations. Section 13, which is in Division 1, relevantly provides that the Commission may make such investigation as it thinks expedient for the due administration of the Corporations Legislation, where it has reason to suspect that there may have been committed a contravention of the Corporations Legislation. Under s 5 of the 2001 ASIC Act, Corporations Legislation means the 2001 Corporations Act and the 2001 ASIC Act.

62 Division 2 of Part 3 of the 2001 ASIC Act deals with the examination of persons. Section 19 applies where the Commission, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1. Under s 19(2), the Commission may, by written notice to a person, require the person to give to the Commission all reasonable assistance in connection with the investigation and to appear before a specified member or staff member for examination on oath and to answer questions. Under s 19(3) the notice must state the general nature of the matter that the Commission is investigating or is to investigate.

63 Thus, the Commission’s power to investigate is predicated on suspicion of contravention of the Corporations Legislation. The question is whether the Commission was authorised, as at 31 October 2003 and 10 November 2003, to investigate conduct by Mr Kennedy in 1995. The Corporations Legislation, of course, is Commonwealth legislation enacted in 2001, several years after the time when the conduct of Mr Kennedy that is in question occurred. Mr Kennedy contends that any potential liability that he might have had prior to the Commencement has been cancelled and that there is no longer anything that the Commission can investigate. He says that the transitional provisions are not effective to create something to which s 13(1) of the 2001 ASIC Act can respond.

64 Section s 276 of the 2001 ASIC Act (s 1400 of the 2001 Corporations Act) and s 7 of the Ancillary Provisions Act operate so that, if a criminal liability under s 276 (or s 1400) is activated, then the corresponding criminal liability under the equivalent ASC Law or Corporations Law provisions is cancelled. Mr Kennedy says that that has happened and that, if he had a pre-existing criminal liability, that liability arose, for example, under s 64(1) of the ASC Law (s 1309 of the Corporations Law).

65 On the Commencement, s 276(1) gave him an equivalent liability under s 64(1) of the 2001 ASIC Act as if that provision had applied to the conduct in question. Because he acquired such a liability by virtue of s 276(1), any liability under s 64(1) of the ASC Law was cancelled by s 7 of the Ancillary Provisions Act. The same contentions would be applied to the operation of s 1400 of the 2001 Corporations Act.

66 Mr Kennedy says that the federal liability generated by s 276 of the 2001 ASIC Act (s 1400 of the 2001 Corporations Act) can be described, within the meaning of s 13(1) of the 2001 ASIC Act, as a contravention of the 2001 ASIC Act (the 2001 Corporations Act) only if s 276 or s 277 of the 2001 ASIC Act (s 1400 or s 1401) has the effect of making, for example, s 64 of the 2001 ASIC Act (s 1309 of the 2001 Corporations Act) apply retrospectively to a time in 1995. He says that, if s 276 and s 277 (s 1400 and s 1401) do not have that effect, then it would be impossible to describe what has happened as a contravention of s 64 of the 2001 ASIC Act (s 1309 of the 2001 Corporations Act) because, ex hypothesi, s 64 of the 2001 ASIC Act (s 1309 of the 2001 Corporations Act) was not in force in 1995: something that is not in force at the time when conduct occurs cannot be contravened by that conduct.

67 Mr Kennedy contends that the question depends upon the meaning of the words ‘as if’ as used in s 276 and s 277 of the 2001 ASIC Act (ss 1400 and 1401 of the 2001 Corporations Act). Sometimes the words as if connote that the reader is to proceed on an hypothesis that is different from the actual fact. In other cases the reader is to proceed on the basis that a real state of affairs is connoted. Mr Kennedy contends that, if the words are given the former meaning, the effect of s 276 and s 277 (ss 1400 and 1401) would be retrospective. He says that there are several factors that indicate that those sections were not intended to have any retrospective effect.

69 On their proper construction, the transitional provisions do not have the retrospective effect for which Mr Kennedy contends. On 14 July 2001, Mr Kennedy was liable to be prosecuted for a contravention of s 64 of the ASC Law (s 1309 of the Corporations Law) in the manner described above. Section 64 (s 1309) is a carried over provision under Part 16 of the 2001 ASIC Act (Part 10.1 of the 2001 Corporations Act). Accordingly, on 15 July 2001, Mr Kennedy’s liability to be prosecuted under s 64 of the ASC Law (s 1309 of the Corporations Law) was transformed by s 276 of the 2001 ASIC Act (s 1400 of the 2001 Corporations Act) into a liability to be prosecuted under s 64 of the 2001 ASIC Act (s 1309 of the 2001 Corporations Act).

70 Putting it another way, on the assumption that Mr Kennedy gave false evidence, that would have had the legal consequence, as at 14 July 2001, that he was liable to be prosecuted under s 64 of the ASC Law. On the same assumption, by virtue of the operation of s 279 of the 2001 ASIC Act, on 15 July 2001 Mr Kennedy became liable to be prosecuted under s 64 of the 2001 ASIC Act because s 64 of the 2001 ASIC Act corresponds with s 64 of the ASC Law, which was a "carried over provision" for the purposes of s 279 of the 2001 ASIC Act.

71 That does not involve giving s 64 of the 2001 ASIC Act retrospective operation. The transitional provisions do not make the legislation operate retrospectively: rather, they create present liabilities by reference to historical facts, namely, the existing liability under the ASC Law.

72 It is true that the transitional provisions do not state explicitly that, where a liability to prosecution under the new legislation is created (as, for example, through s 1400 of the 2001 Corporations Act), there is, or there is taken to be, a contravention of that legislation. However, there could not be a liability to prosecution without a contravention. If Mr Kennedy became liable, after 14 July 2001, to be prosecuted under s 64 of the 2001 ASIC Act (s 1309 of the 2001 Corporations Act), it can only be because he committed, or is taken to have committed, an offence under that section. Since the offences under the old legislation have been abolished, and it is plainly intended that a person incurs an equivalent liability under the new legislation, it must follow that there are new offences under the new legislation. Such a construction is consistent with – and indeed may be seen to be compelled by – the admonition contained in the 2001 Corporations Act and the 2001 ASIC Act, that the transitional provisions are to be construed as giving an interpretation consistent with the object of providing for a smooth transition from the regime provided for in the old legislation to the regime provided for in the new legislation.

73 Section 281 of the 2001 ASIC Act (s 1405 of the 2001 Corporations Act) gives further support to that conclusion. Section 281 (s 1405) enables the reference to ‘contravention of the ASIC Legislation’ in s 13(1) of the 2001 ASIC Act to include a reference to contraventions of the previous legislation. It follows that the Commission is authorised to investigate the contraventions, even if any prosecution would now be in respect of the substituted liabilities under the new legislation, whether it be the 2001 Corporations Act or the 2001 ASIC Act.

74 Mr Kennedy contends that if the provisions operate to apply the 2001 legislation retrospectively to a time prior to the Commencement they are invalid as being beyond the head of power conferred by the operation of s 51(xxxvii) of the Constitution. Mr Kennedy contends that the NSW Referral Act did not refer to the Parliament of the Commonwealth a matter of such a character as to confer the legislative power to enact the 2001 Corporations Act and the 2001 ASIC Act so as to have effect at a time prior to the Commencement.

75 Mr Kennedy contends that s 4(4)(a) of the NSW Referral Act, together with the terms of s 4(1), make it clear that the 2001 Corporations Act can have its operation altered only after the Commencement. He says that, if the 2001 Corporations Act were retrospective to a time prior to the Commencement, the effect of those provisions would be that that retrospective operation could never be amended. He says that that result was clearly not intended. Therefore, he says, the NSW Referral Act did not refer to the Commonwealth Parliament the power to make the 2001 ASIC Act and the 2001 Corporations Act have effect at a time prior to the Commencement.

76 Formulation of the propositions in that way serves to demonstrate the fallacy in Mr Kennedy’s contention that the operation of the 2001 Corporations Act or the 2001 ASIC Act is retrospective. Neither has the effect of making an offence conduct that, when it occurred, was not an offence. There is nothing in s 4 of the NSW Referral Act that restricts the power of the Commonwealth to enact the transitional provisions of Part 10.1 of the 2001 Corporations Act and Part 16 of the 2001 ASIC Act. Section 4(5) of the NSW Referral Act deals with the period in which the Commonwealth Parliament may legislate. It does not deal with the period for which it may legislate.

77 Similarly, s 4(4) of the NSW Referral Act imposes no limit on the ability of the Commonwealth Parliament to legislate retrospectively pursuant to the reference. That provision makes clear that the Commonwealth Parliament can amend the new legislation, within its own sphere of legislative competence, without reliance on the express reference of power to amend that is conferred by s 4(1)(b) of the NSW Referral Act. In any event, even if the new legislation does operate retrospectively in some relevant respect, it would not be outside the scope of the matter referred, because the tabled text, which is part of that matter, included the very transitional provisions that are challenged by Mr Kennedy.

78 The parties made only passing reference to two decisions in other jurisdictions to which it is important that we now turn. The two decisions were the decision of the Court of Appeal of Queensland in R v Corbett [2002] QCA 340; [2004] 1 Qd R 146 ("Corbett") and the interlocutory decision of Grove J in R v Frawley (70070/03 on 9 September 2004) in a prosecution for insider trading allegedly committed in 1998 and prosecuted under the new 2001 Corporations legislation. Since the hearing before us the New South Wales Court of Criminal Appeal refused leave to appeal from the interlocutory decision of Grove J: see R v Frawley [2005] NSWCCA 66 ("Frawley"). In Frawley, which is directly in point on some of the issues raised by Mr Kennedy in the present case, Spigelman CJ, with whom Mason P and Santow JA agreed, rejected the contention that the use of the words "as if" in s 1400(2) of the 2001 Corporations Act created ambiguity. The Chief Justice observed at [16]:

80 Subject to a qualification not presently material, Spigelman CJ agreed with the analysis of the operation of s 1401 by the Court of Appeal in Corbett. He considered the analysis equally applicable to s 1400. In Corbett Davies JA, with whom Williams JA and Jerrard JA agreed, observed that neither the referral nor s 1401 operated upon past conduct by making past conduct unlawful; rather, they operated upon existing liabilities for that conduct: see at [24]-[26].

81 Spigelman CJ rejected the contention that s 1400 was outside the scope of the matter referred to the Commonwealth Parliament on the ground that it operated upon events that occurred prior to the commencement. He drew the same distinction that we have drawn between the period in which the Commonwealth Parliament may legislate in respect of the referred matter and the period for which it may legislate.

82 As will be apparent, the analysis in the Courts of Appeal in New South Wales and Queensland is consistent with our own.

83 The way in which the case was conducted before us, the different circumstances under which Corbett arose, and the fact that at the time of the hearing before us Frawley had not been considered on appeal, made it desirable that we consider for ourselves the issues raised by Mr Kennedy rather than consider simply applying, to the extent applicable, the principles emerging from Frawley and Corbett. We should, however, note that the importance of uniformity in the interpretation of national legislation, such as the Corporations Act, was emphasised by the High Court in Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485, a case arising under the old legislation. In that case Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ said (at 492):

See also Trans Pacific Investment Corporation Pty Ltd v Rusty Rees Pty Ltd & Ors (1995) 57 FCR 210 at 214 per Black CJ, Davies and Beaumont JJ.

84 Mr Kennedy also raises questions as to the manner and form of the decision making process in the present case. His complaints relate to the file notes made by Mr Riordan, to the Notice and to the requests made to Switzerland.

85 As indicated above, the Mutual Assistance Regulations provide that the Mutual Assistance Act applies to Switzerland subject to such limitations, conditions, exceptions or qualifications as are necessary to give effect to the Swiss Treaty. The Swiss Treaty relevantly imposes two conditions.

86 First, under Article 1 of the Swiss Treaty, the Contracting Parties are to grant to each other assistance in investigations or proceedings in respect of ‘offences the punishment of which falls or would fall within the jurisdiction of the judicial authorities of the requesting state’. Thus, it must be shown that there is an investigation or proceeding in respect of offences by Mr Kennedy, the punishment of which falls or would fall within the jurisdiction of the judicial authorities of Australia. Secondly, Article 7(1)(b) of the Swiss Treaty relevantly provides that requests for assistance must include ‘a description of the essential acts or omissions alleged or sought to be ascertained, including the text, or a statement, of the law applicable at the place where the offence was committed’.

87 The Second Request is expressed to be a supplementary request and Mr Kennedy advanced no separate contentions in relation to the Second Request. It is therefore unnecessary to say anything about the Second Request specifically.

Mr Kennedy’s complaints relate to the material under the heading ‘SUSPECTED OFFENCES’.

90 The material under the heading ‘ALLEGED FACTS’ refers to the Commission’s investigation commenced in April 1995 into the ownership of shares in Offset and the examinations of Messrs Rivkin and Kennedy on 6 June 1995 and 6 September 1995 and on 18 May 1995 respectively. The effect of evidence given by Messrs Rivkin and Kennedy at those examinations is summarised under that heading.

It was not suggested that the extracts from the legislation in Attachment C are inaccurate or incorrect.

Mr Kennedy asserts that the First Request fails to state any offence the punishment of which falls, or would fall, within the jurisdiction of the judicial authorities of Australia. Accordingly, he says, the condition imposed by Article 1 of the Swiss Treaty was not satisfied. The complaint concerning non-compliance with Article 1 is based on the contention that the transitional provisions are defective. That complaint is answered by the conclusions reached above.

93 Mr Kennedy’s complaint concerning Article 7(1)(b) is that paragraphs 40 to 49 of the First Request do not contain an adequate description of the text, or a statement, of the law applicable in New South Wales where the suspected offences were committed. The references to statutes in those paragraphs are references to Commonwealth statutes and the paragraphs do not set out the way in which Commonwealth laws were made applicable in New South Wales by the 1990 Corporations Act.

94 The term ‘ASC Law’ was defined in paragraph 10 of the First Request as the 1989 ASIC Act. In fact, the examination of Messrs Rivkin and Kennedy in 1995 was pursuant to the ASC Law and not the 1989 ASIC Act. The 1989 ASIC Act simply had no application to an examination in New South Wales. Of course, the terms of s 64 of the 1989 ASIC Act were identical to the terms of s 64 of the ASC Law. That is because the 1989 ASIC Act was applied as a law of New South Wales by the operation of the 1990 Corporations Act.

95 A similar complaint is made in respect to the reference to s 1311 of the 2001 Corporations Act. That is to say, s 1311 of the 2001 Corporations Act did not make a breach of ss 709 or 710 of the Corporations Law an offence. Rather, it was s 1311 of the Corporations Law that made such non-compliance an offence.

96 When considering compliance with a treaty, the Court should look to substance rather than form: Harris v Attorney-General of the Commonwealth (1994) 52 FCR 386 at 401. Under the Vienna Convention on the Law of Treaties, to which Australia is a signatory ([1974] ATS 2), the terms of a treaty are to be interpreted in their context and in the light of the object and purpose of the treaty. Such an approach requires an analysis of the Swiss Treaty in order to determine its object and purpose and then consideration of the context in which Article 7 is found.

97 Article 1 of the Swiss Treaty states that the Contracting Parties are to grant each other assistance in investigations or proceedings in respect of offences. Clause 2 of Article 1 specifies the kind of assistance that may be granted. Under clause 3, assistance is not to include extradition enforcement or execution of final criminal judgments.

98 Article 2 provides that assistance may be refused in certain circumstances as follows:

99 Article 3 provides that assistance may also be refused if it involves compulsory measures. Article 4 imposes limitations on the use of information and material provided pursuant to the Treaty. For example, the Requesting State must not use information or material for a purpose in respect of which assistance would not be granted under the Treaty. Article 6 provides for the appointment of a central office for the purpose of the Treaty: requests for assistance are to be made through the central offices.

100 Article 7 must be construed in the context of those provisions. The purpose for including, in a request for assistance, a description of the essential acts or omissions alleged or sought to be ascertained, including the text, or a statement, of the law applicable at the place where the offence was committed, is to enable the Requested State to make a judgment as to whether assistance should be granted or refused. The relevant requirement of Article 7(1)(b) in the circumstances of the present case was that sufficient information be provided to enable the Requested State to make an assessment under Article 2. That being so, it would be immaterial that there may be some technical misdescription of the legislative provisions that created the suspected offences. So long as the description is sufficient to enable the Requested State to make an assessment of the nature of the suspected offences, and thus whether Article 2 would be applicable, Article 7(1)(b) will be satisfied.

101 For the reasons outlined above, each of the suspected offences that form the basis of the First Request were described in substance in paragraphs 40 to 49 of the First Request. The substance of the suspected offences is made sufficiently clear in the relevant paragraphs to enable the relevant authorities in Switzerland to make an assessment as to whether Clause 2 of Article 1 or Articles 2 or 3 of the Swiss Treaty were satisfied or applicable. There was no failure to comply with the conditions of the Swiss Treaty by reason of the inaccuracies of the descriptions in paragraphs 40 to 49. We would add that, in any event, the misdescription relied upon is not such as would invalidate the Request.

102 Mr Kennedy contends that there are several difficulties with the First Investigation Decision and the Second Investigation Decision that arise on the face of the file notes that recorded those decisions.

103 The investigation contemplated by the file note of 31 October 2003 was narrower than that contemplated by the file note of 10 November 2003. The file note of 31 October 2003 refers only to s 64(1) ‘of the ASC Law/ASIC Act’ and records that Mr Riordan had reason to suspect that there may have been contraventions of that provision in relation to the information given, and the statements made, by Mr Rivkin during his examination of 6 June 1995 and 6 September 1995. Mr Kennedy’s complaints in relation to the First Investigation Decision therefore stand or fall with his complaints in relation to the Second Investigation Decision.

104 Mr Riordan’s file note in relation to the Second Investigation decision recorded that Mr Riordan had reason to suspect that there may have been contraventions of ‘section 64(1) of the ASC Law/ASIC Act’ as well as the three other provisions to which reference has been made. It is common ground that, despite the language of the 10 November 2003 file note, the examination of Mr Kennedy on 18 May 1995 was pursuant to s 19 of the ASC Law. The ASC Law was relevantly the 1989 ASIC Act, as applied in New South Wales by the 1990 Corporations Act. Thus, it is clear that the examination was conducted pursuant to a law of New South Wales.

105 Mr Kennedy contends that Mr Riordan failed to identify properly, in his file note of 31 October 2003, the relevant statutory provisions. He says that the file note exhibits a misapprehension, namely, that the Commission was exercising power under the 1989 ASIC Act rather than power under the ASC Law. That is to say, the references to the provisions contravened are to provisions of laws of New South Wales, which do not satisfy the description ‘the corporations legislation’ as that term is used in s 13(1) of the 2001 ASIC Act: in s 13, corporations legislation means the 2001 ASIC Act and the 2001 Corporations Act.

106 A decision to investigate under s 13 of the 2001 ASIC Act does not need to be recorded in writing. If a written record of the decision to investigate is made, it ought not necessarily be treated as a formal statement of reasons (see Little River Goldfields NL v Moulds (1991) 32 FCR 456 at 462 and 464). Even if an officer were under a misapprehension as to the source of his statutory power, that misapprehension would not of itself invalidate the exercise of the power: misdescription of the statutory provision by reference to which a power is exercised would not of itself invalidate the exercise of the power: see Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408 at 426.

107 Thus, if Mr Riordan bona fide believed that the conduct of Mr Kennedy that he wished to investigate was capable of constituting a contravention of the Corporations Legislation, as defined, and that conduct was in law capable of constituting a contravention of the Corporations Legislation, it would be immaterial that he may, at some time, have misapprehended or misdescribed the provision of the Corporations Legislation that was contravened. Mr Riordan’s errors in the file note do not indicate that he did not have a bona fide belief that there may have been contraventions of provisions of the Corporations Legislation, as that term is defined.

108 Certainly, it is apparent that Mr Riordan did not spell out how it was that he suspected that there were contraventions of the corporations legislation, in the way that has been summarised above. It may be that Mr Riordan had an imperfect understanding of the somewhat arcane way in which the transitional provisions operate to transform a liability under the former State law into a liability under the new federal corporations legislation. His file note clearly does not state fully the way in which Mr Kennedy is liable to prosecution under the corporations legislation by reason of conduct in contravention of State legislation that occurred in 1995. It should be noted, however, that both file notes conclude with the statement:

The statements disclose, implicitly if not explicitly, that Mr Riordan was of the view, which we have found to be correct, that the due administration of the 2001 Corporations Act and the 2001 ASIC Act enabled the investigation and prosecution of the contraventions referred to in the file notes.

109 Accepting that Mr Riordan may have had an imperfect understanding of the operation of the transitional provisions, it does not follow that Mr Kennedy has established that s 13 of the 2001 ASIC has not been activated such that a notice pursuant to s 19 of the 2001 ASIC Act in relation to such an investigation could not validly be given. Plainly, an incomplete record of a decision cannot invalidate a decision that was validly made. Mr Kennedy has not established that there was no power to investigate or that the decision to investigate was not validly made.

110 An additional issue arose in respect of s 35 of the Crimes Act. As explained in [58] above a pre-2001 contravention of s 35 of the Crimes Act was transformed into a contravention of the new federal corporations legislation by reason of the definitions in s 254(1) of the 2001 ASIC Act of "old ASIC legislation" and "new ASIC legislation" and s 276 of that Act. However, the definition of "old ASIC legislation" was amended by the Financial Sector Legislation Amendment Act No 1 of 2001 (Cth), which was assented to on from 27 November 2003 but operated retrospectively from immediately after the commencement of the 2001 ASIC Act on 15 July 2001, to ensure that both definitions included the Crimes Act. The Second Investigation Decision, (which relied, inter alia, on a suspected contravention of s 35 of the Crimes Act) was made on 19 November 2003. The s 19 notice, which also pre-dated the amendment, did not refer to s 35 of the Crimes Act. We have concluded, however, that nothing turns on the point, as, by the time Mr Kennedy was examined (1 and 2 December 2003) and the First and Second Requests were made (22 January 2004 and 2 April 2004), a pre-2001 contravention of s 35 of the Crimes Act applied as a law of New South Wales, was an offence under the new federal corporations legislation and ASIC’s suspicion in relation to it remained operative. Thus, as from the date of the amending Act, ASIC’s investigation under the 2001 ASIC Act in relation to a suspected contravention of s 35 of the Crimes Act satisfied the requirements of s 13(1) of the 2001 ASIC Act and was valid and lawful.

111 As we have concluded that ASIC’s investigation into the matter set out in the notice given to Mr Kennedy pursuant to s 19 of the 2001 ASIC Act was a valid and lawful investigation, the only remaining issue is whether the notice complied with s 19(3) of the 2001 ASIC Act which requires the notice to state "the general nature of the matter" ASIC is investigating. The "matter" referred to in s 19(3) is the matter the subject of the s 13 investigation, which is whether the contravention of the kind to which the section is directed may have been committed: see Australian Securities Commission v Graco (1991) 29 FCR 491 ("Graco") at 497-8 per Jenkinson J; Johns v Connor [1992] FCA 193; (1992) 35 FCR 1 ("Johns v Connor") at 11-13 per Lockhart J; Johns v Australian Securities Commission (1992) 35 FCR 146 ("Johns v ASC") at 166-8 per Black CJ and von Doussa J.

112 The requirement that a s 19 notice describe the "general nature" of the matter ASIC is investigating "invites both comprehensiveness and brevity in description of the matter, and gives no encouragement to definitional particularity": see Graco at 495 and Johns v Connor at 13. In Johns v ASC at 167-168 Black CJ and von Doussa J, drawing upon the analogous situation of a notice under s 155(1) of the Trade Practices Act 1974 (Cth), suggested that in identifying the matter that is being investigated the notice must identify the matter in such a way that the recipient can "perceive the general ambit of the subject matter of the investigation that is being undertaken". Black CJ and von Doussa J also observed (at 168) that a proper description of "the matter" will usually include a reference to the specific law suspected of being contravened.

113 The s 19 notice given to Mr Kennedy plainly enables the recipient to perceive the general ambit of the subject matter of the investigation that is being undertaken. However, Mr Kennedy relies on the failure of the notice to describe the transitional provisions that operate to transform the liability under the previous laws described in the notice into a liability under the new federal corporations legislation. In fact, the notice purported to do so in respect of the possible contraventions of s 709 of the Corporations Law, but mistakenly referred to s 1400 instead of s 1401 of the 2001 Corporations Act as the transforming provision.

114 In our view the omissions complained of do not have the consequence that the notice fails to state the general nature of the matter being investigated. The notice accurately describes the general nature of that matter being investigated, including the specific pre-2001 provisions that were suspected of having been contravened. It’s failure to state the legal basis upon which those pre-2001 contraventions were transformed into contraventions under the new federal corporations legislation is an omission relating to the legal nature of the matter being investigated, and is not such as to result in the general nature of that matter not being sufficiently described. Accordingly, Mr Kennedy’s challenge to the s 19 notice also fails.

115 Mr Kennedy has failed to establish any invalidity in relation to the First Investigation Decision or the Second Investigation Decision. Nor has he established that the Notice is invalid or that the First Request or the Second Request was beyond power. There is no reason why the Commission and the DPP should not continue to investigate the matters that are currently being investigated. The application should be dismissed with costs.

I certify that the preceding one hundred and thirteen (113) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black and the Honourable Justices Merkel and Emmett.

Counsel for the Applicant:	Mr P M Wood and Mr N Perram

Solicitor for the Applicant:	Arnold Bloch Leibler

Counsel for the First Respondent:	Mr S Gageler SC and Mr M Pearce

Solicitor for the First Respondent:	Australian Securities and Investments Commission

Counsel for the Second and Third Respondents:	Mr D M J Bennett QC (Solicitor-General), Mr G H Livermore and Mr G A Hill

Solicitor for the Second Respondent:	Director of Public Prosecutions for the Commonwealth of Australia

Solicitor for the Third Respondent:	Australian Government Solicitor

Date of Hearing:	8 and 20 December 2004

Date of Judgment:	10 March 2005

Subject: Decision to extend section 13(1) ASIC Act investigation commenced on 31 October 2003.

(i) transcripts of the examinations, pursuant to s19(2) of the ASC Law, of Trevor Kennedy ("Kennedy") (18 May 1995) and Rene Rivkin ("Rivkin") (6 September 1995) relating to the investigation being conducted by the Australian Securities Commission into trading in the shares of Offset Alpine Printing Group Limited ("Offset") and into the beneficial ownership of certain of those shares held by Bank Leumi Le-Israel and EBC Zurich AG:

(iv) the telephone interview on 4 November 2003 with Peter Hunig, an examining magistrate in the Chief Examining Magistrate’s Office in Zurich;

As a result of my review, I have reason to suspect that there may have been contraventions of:

(i) sections 709 and 710 of the Corporations Law, in relation to the suspected failure of Rivkin, Kennedy and Graham Richardson to comply with the disclosure requirements of the substantial shareholder provisions of the Corporations Law between 1 January 1991 and 31 December 1995;

(ii) section 64(1) of the ASC Law / ASIC Act ("false information"), in relation to the information given, and the statements made, by Rivkin and Kennedy during their respective examinations.

(iii) section 35 of the Crimes Act 1914 ("false testimony") in relation to the testimony of Rivkin and Kennedy during their respective examinations; and

(iv) section 1309 of the Corporations Law ("false information"), in relation to statements made by the Board of Offset on 4 May 1995 (and clarified on 11 May 1995).

I am also of the view that it is expedient for the due administration of the Corporations Act 2001 and the ASIC Act that ASIC investigate the matters set out above.

Date: 10 November 2003.

................................................................
Peter Riordan,
a delegate of the Australian Securities and Investments Commission

FORM 1
Regulation 4
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
REGULATIONS 2001
Australian Securities and Investments Commission

NOTICE REQUIRING APPEARANCE AT AN EXAMINATION
OR REASONABLE ASSISTANCE IN CONNECTION
WITH AN INVESTIGATION

Please note the provisions of subsection 23(1) of the ASIC Act (relating to legal representation) and section 68 of the ASIC Act (relating to self-incrimination). The effect of those provisions is set out at the end of this form.

Peter Riordan Robert Ghali

Signatures of persons authorised by the Commission to conduct the examination.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	V917 OF 2004

JUDGES:	BLACK CJ, MERKEL & EMMETT JJ
DATE:	10 MARCH 2005
PLACE:	MELBOURNE (HEARD IN SYDNEY)

Federal Court of Australia - Full Court Decisions

Kennedy v Australian Securities & Investments Commission & Ors [2005] FCAFC 32 (10 March 2005)