Centurion Trust Company Limited and Australian Securities and Inv estments Commission [2003] AATA 609 (27 June 2003)

Last Updated: 3 July 2003

DECISION AND REASONS FOR DECISION [2003] AATA 609

ADMINISTRATIVE APPEALS TRIBUNAL )

) No W2002/44

GENERAL DIVISION	)
	Re	CENTURION TRUST COMPANY LIMITED

Applicant

And

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

DECISION

Tribunal

Justice Garry Downes, President Murray Allen, Member

Date 27 June 2003

Place Perth

Order

Being satisfied that it is desirable to do so by reason of the confidential nature of the matter, and pursuant to par 35(2)(c) of the Administrative Appeals Tribunal Act 1975 the Tribunal directs that until further order of the Tribunal the disclosure of: (a) the matters discussed ex parte at the hearing on 22 May 2003, including the transcript of that hearing and the affidavits with attachments filed by the respondent in support of its application for orders under s 35; and (b) those parts of the documents filed by the respondent pursuant to s 37 of the Act that are referred to: - in Part B of the Schedule as being material to be deleted from the paragraphs specified in that Part, and - in Part C of the Schedule as items not to be disclosed be restricted to the respondent, its legal representatives and staff of the Tribunal.

..........(sgd Justice Downes)............

President

CATCHWORDS - interlocutory decision - jurisdiction and confidentiality - tribunal has jurisdiction to review decision not to revoke orders in force under Australian Securities Commission Law Div 8 Pt 3 however the application of jurisdiction to the parties' dispute should not yet be determined - confidentiality orders made under par 35(2)(c) of the Administrative Appeals Tribunal Act 1975 in respect of material filed under s 37 of the Administrative Appeals Tribunal Act 1975 and other material supporting respondent's claim that disclosure to applicant or public might compromise investigation - balancing test applied

Administrative Appeals Tribunal Act 1975 (Cth), ss 35, 37

Australian Securities Commission Law, ss 73, 75,

Spargos Mining NL v Standard Chartered Australia Limited (1989) 1 ACSR 311

REASONS FOR DECISION

Justice Downes, President Murray Allen, Member

Jurisdiction and Associated Issues

1. The Tribunal has already made two interlocutory decisions in this matter. The first was given on 10 February 2003. It determined that the Australian Securities and Investments Commission (ASIC) had power to make orders under s 73 of the Australian Securities Commission Law 1989 (the ASIC Law) restraining Centurion Trust Company Limited from dealing in certain shares held by it. It further determined that ASIC did not have power to vary those orders under s 75 of the ASIC law to require the proceeds of sale of those shares to be held in trust by ASIC pending the outcome of the investigation which underlay the exercise of the powers. The Tribunal left a number of matters unresolved largely because they had not been the subject of submissions.

2. A further interlocutory hearing was scheduled to see whether some or all of these issues could be determined before a final hearing and, in particular, to explore the question whether the Tribunal had jurisdiction to continue hearing the application in the light of its earlier findings.

3. One possible outcome might be that, because there is no power under s 73 or s 75 to make orders relating to proceeds of sale, the moneys must be repaid and ASIC's decision not to repay the moneys should be reversed. Another possibility is that although ASIC had no power to hold the moneys pursuant to s 73 or s 75 orders it could look to other sources of power to continue to hold the moneys. In that event the Tribunal might not have any jurisdiction to continue to conduct this review. The parties would be left to their rights at law. Whether or not either of these two results should obtain could, at least theoretically, be determined without exploring the underlying facts which led to the s 73 orders being made and the events which have since occurred.

4. The parties have now put further oral and written submissions on these issues. Regrettably, we find that we are still not able finally to resolve the matters which might put an end to the dispute without a full hearing. The matters will be dealt with at the final hearing which has been fixed for 28 to 31 July 2003.

5. The submissions that have been put and the time taken up in the further interlocutory hearing has not been wasted because the submissions will be relevant to the issues which will arise at the final hearing.

6. A dominant consideration in our decision not now to seek finally to determine the matter is that neither party has put firm submissions to us which would enable us to follow this course. The parties have put submissions as to alternative outcomes and addressed what might be the consequences attendant upon the alternatives. We do not criticise the parties for this. It is really a consequence of the fact that the full circumstances have not yet been exposed. The parties are bound to deal with alternatives. Attractive as it might be to seek to resolve the matter one way or the other without a full hearing it seems that it is not possible to do so.

7. It remains the fact that ASIC made orders under s 73 and varied these orders under s 75. The applicant asked ASIC to revoke the varied orders. ASIC declined. The applicant applied to the Tribunal to review that decision. The Tribunal has jurisdiction to review decisions not to revoke orders under s 73. Accordingly, there can be no doubt that the Tribunal does have basic jurisdiction in this matter. The real jurisdiction question is whether the exercise of that jurisdiction will resolve the dispute between the parties. However, since the parties have not agreed that the Tribunal should determine this issue separately and given that the Tribunal does have jurisdiction to review decisions of the kind challenged in these proceedings it does not seem appropriate for us to attempt finally now to resolve the question.

8. The same seems to us to be true of any argument that the Tribunal, having found that there was no power to make the varying orders under s 75, should, without more ado, reverse the decision not to revoke the varying orders and direct that the moneys be repaid. The real question is not whether the decision should be revoked but whether the Tribunal has jurisdiction to order that the moneys be repaid. Again, the parties have not agreed that this issue should be determined now and have not put full submissions on it.

9. The matter must accordingly go to a final hearing where all outstanding issues will be finally determined.

Orders under section 35

10. The recent interlocutory hearing was not confined to jurisdictional questions. Another outstanding interlocutory question was ASIC's claim that orders should be made under subs 35(2) of the Administrative Appeals Tribunal Act 1975 (the Act) prohibiting the applicant and its representatives from having access to a considerable number of the documents ASIC had produced pursuant to s 37 of the Act. This application was the subject of the second interlocutory decision which has been given in this matter. It was given on 21 May 2003. ASIC had submitted that some of its submissions on this issue should be heard in camera. Our second interlocutory decision determined that we would hear the submissions in camera. Those submissions were heard on 22 May 2003. We now give our decision on the whole application.

11. In our decision of 21 May 2003 we set out the basis upon which we would approach the application under s 35 and the basis upon which we would approach the hearing in camera. We need not repeat that. We will now address, in a way which will not disclose material which we consider should be held confidential, the substance of the evidence and submissions considered by us in the session in camera.

12. The Tribunal heard, in the absence of the legal representatives of the applicant, evidence and submissions relating to, and inspected, the parts of the s 37 documents that had not, to that time, been disclosed to the applicant or its legal representatives. The precise purpose of the in camera hearing was to consider whether the Tribunal should make orders pursuant to subs 35(2) of the Act that would have the effect of preventing the applicants seeing those parts.

13. The respondent had applied for such orders in March 2002 at the time that the s 37 documents were prepared and filed with the Tribunal. When these documents were served on the applicant the parts in respect of which the confidentiality orders were sought were deleted. In the period March to May 2002 several directions hearings were held by the Tribunal and on 22 March 2002 Senior Member Fayle made an order under subs 35(2) that matters discussed ex parte at a directions hearing that day, including affidavits and attachments filed in support of the respondent's application for s 35 orders and written submissions subsequently filed by the respondent at the Tribunal's request, be disclosed only to the respondent and staff of the Tribunal. Because of the way in which the matter proceeded (see the Tribunal's reasons for decision of 10 February 2003) it has not been necessary for the respondent's application to be determined until now.

14. At the hearing on 22 May 2003 we heard oral evidence from Ms Kerrie Lee Papamihail, a senior legal officer of the respondent and the person who has had the care and conduct of the investigation that has given rise to these proceedings. We also had before us an affidavit of Ms Papamihail sworn on 20 May 2003 and other affidavits (including a number of attachments) that had been filed in support of the respondent's application and which were, inter alia, the subject of Senior Member Fayle's order of 22 March 2002.

15. The s 37 documents consist of five volumes comprising some 1726 numbered folios and are divided into 15 sections, which may be referred to as T1 to T15. Section T3 makes up the major part of the documents, accounting for 1639 of the total folios. It consists of a memorandum (folios 17 to 43) dated 5 December 2001 from the investigating officers to a delegate of ASIC. The delegate was charged with determining what response should be made to the applicant's request that the varied orders should be revoked. The memorandum had 17 annexures labelled A to Q. For convenience we will refer to the memorandum as T3 and the annexures as T3A to T3Q.

16. A substantial part of the s 37 documents have been provided to the applicant by the respondent, namely:

* the whole of sections T1, T2, T4 to T6, and T8 to T15 ;

* the whole of T3A, T3B, T3C, T3D, T3E, T3J, and T3Q; and

* parts of T3, T3G, T3H, T3L, T3N and T3P.

No claim of confidentiality has been made in respect of the folios that have been so provided.

17. The respondent seeks orders under s 35 in respect of the remaining parts of the s 37 documents. We heard evidence and submissions concerning:

* the nature of the transactions under investigation, the periods of time over which they occurred, and the suspected contraventions of the Corporations Law and the ASIC Law;

* the nature of the investigative activities that have been undertaken thus far in Australia and in other countries - and how the respondent believed that disclosure of the relevant documents at this time would disclose

- the investigation's scope, hypothesis and methodology

- the identity of the persons from whom evidence has been obtained

- the nature and scope of the available evidence

- the commercial transactions under scrutiny

- the reliance placed by the respondent upon certain evidence.

* the reasons why the investigation has been protracted and the steps that have been and are to be taken to bring it to an early conclusion, including the intention to obtain further documentary and oral evidence in Australia and elsewhere - and the proposed timetable for such steps;

* why the respondent is concerned that disclosure of the relevant documents to the applicant at this stage would alert the applicant and others connected with the applicant to the evidence that the respondent hoped to obtain - and that such knowledge would be likely to frustrate the respondent's efforts in the near future to obtain further evidence.

18. In the light of the above, and in order to see whether any of the documents should be disclosed to the applicant at this time, we inspected the relevant documents and undertook the "balancing exercise" that is referred to in our decision of 21 May and in the various decisions that have dealt with issues of this type: see Spargos Mining NL v Standard Chartered Australia Limited (1989) 1 ACSR 311 at 312 per McLelland J. In so doing we were mindful of the respondent's position that disclosure of all the documents could and should be made prior to the hearing of the applicant's substantive application by the Tribunal - but that this disclosure should not be made at the present time because of the prejudicial impact it might have on the conduct of the last phases of the investigation.

19. The documents in contention fall into three broad categories. The first is T3 which sets out the history of the matter and comments on what the investigation has revealed and the significance of that. The second involves the transcripts of the examinations of a person or persons of interest in the investigation under s19 of the ASIC Law and the documents that were shown to the examinee, or examinees, in the course thereof. The third category consists of other documentary evidence that was in the possession of the respondent at various stages of its investigation. Some of the material is in the public domain, but Ms Jones for the respondent submitted that the material should be viewed as a whole - and that disclosure of some or all of the public documents would enable the focus of the investigation to be identified and would result in the prejudice referred to above.

20. We are satisfied that disclosure of any of the outstanding s 37 documents at this time would prejudice the completion of the respondent's investigation to an extent that is greater than the prejudice that the applicant would experience if it is deprived of the ability to see the documents now. In arriving at that conclusion we have considered whether it would be appropriate to permit disclosure only to the legal representatives of the applicant or to the applicant itself but with undertakings to keep the material confidential. We left that issue open in the reasons that we gave on 21 May pending what we heard from the respondent in camera and our own inspection of the documents. On the view we have taken of the documents we do not consider that any form of limited disclosure of the types mentioned would be appropriate.

21. However, we consider that some additional parts of T3, as identified in Parts A and B of the Schedule to these reasons for decision, should be disclosed at this time. The other parts of the s 37 documents identified in Part C of the Schedule should not be disclosed at this time.

22. A final matter remains. On 21 May we indicated to Mr Bennett for the applicant that a transcript of the in camera proceedings on 22 May 2003 would be kept and that a decision would be made as to whether to permit the applicant to have access to all or part of it. In the event, and although we have determined that the applicant should have access to some of the outstanding parts of the T documents, we have concluded that it would not be possible to separate meaningfully the transcript into that part which relates to confidential material and that part which does not. Nor do we think that any such exercise, if it were possible, would provide the applicant with any more useful information. We do not consider, therefore, that any part of that transcript should be disclosed to the applicant.

23. The order that we will make, therefore, is:

Being satisfied that it is desirable to do so by reason of the confidential nature of the matter, and pursuant to par 35(2)(c) of the Act the Tribunal directs that until further order of the Tribunal the disclosure of:

(c) the matters discussed ex parte at the hearing on 22 May 2003, including the transcript of that hearing and the affidavits with attachments filed by the respondent in support of its application for orders under s 35; and

(d) those parts of the documents filed by the respondent pursuant to s 37 of the Act that are referred to:

- in Part B of the Schedule as being material to be deleted from the paragraphs specified in that Part, and

- in Part C of the Schedule as items not to be disclosed

be restricted to the respondent, its legal representatives and staff of the Tribunal.

I certify that the twenty-three (23) preceding paragraphs are a true copy of the reasons for the decision herein of:

Justice Garry Downes, President

Murray Allen, Member

Signed: ........(sgd A Edington)....................................

Associate

Dates of Hearing 21 and 22 June 2003

Date of Decision 27 June 2003

Counsel for Applicant M Bennett and J Hill

Solicitor for Applicant Bennett & Co.

Counsel for Respondent L Jones

Solicitor for Respondent Australian Securities and Investments Commission

SCHEDULE TO REASONS FOR DECISION DATED 27 JUNE 2003

Part A

The following numbered paragraphs of T3 should be disclosed in full: 2.5, 2.8, 2.13, 2.14, 2.15, 2.19, 4.8, 4.38, 4.63 and 5.8.

Part B

The following numbered paragraphs of T3 should be disclosed with the following material deleted.

No. of paragraph	Material to be deleted
2.4	All words after "("Smith")" on line 2 and before "in" (where first appearing) on line 3
2.9	The number and symbol on line 5
2.12	All words after "1998" and before "lodged" on line 1
4.62	The final sentence on lines 3,4 and 5

Part C

The following parts of the s 37 documents should not be disclosed:

T3 paragraphs 2.22 to 2.24, 2.27, 2.28, 4.15 to 4.35.10, 4.40 to 4.54, 5.9 and 5.10 (all inclusive)

The headings appearing immediately before paragraphs 4.18, 4.21, 4.23, 4.25, 4.32 4.33.1, 4.35.1, 4.42 and 4.47

T3F all

T3G folios numbered 0354 to 0358, 0360 to 0370, 0379 to 0390, 0417 to 0499, 0502 to 0524, 0527 to 0528, 0530 to 0532, 0534, 0538 to 0540 (all inclusive)

T3H folios numbered 0546 to 0548, 0551 to 0553, 0562 to 0570 (all inclusive)

T3I all

T3K all

T3L folios numbered 1051 to 1057, 1160 to 1174, 1181 to 1200, 1282 to 1284 (all inclusive)

T3M all

T3N folios numbered 1386 to 1399, 1402 to 1410, 1417 to 1418, 1420, 1426 to 1427, 1434 to 1443 (all inclusive)

T3O all

T3P folios numbered 1518 to 1550, 1561 to 1582, 1587, 1636 to 1637 (all inclusive)

T7 all