Dynamic Supplies Pty Ltd and Australian Securities and Investments Commission [2010] AATA 86 (5 February 2010)

Last Updated: 31 March 2010

Administrative Appeals Tribunal

DIRECTION AND REASONS FOR DIRECTION [2010] AATA 86

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/5606

GENERAL ADMINISTRATIVE DIVISION		)
	Re		DYNAMIC SUPPLIES PTY LTD

Applicant

And

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

DIRECTION

Tribunal

Senior Member Bernard J McCabe

Date 5 February 2010

Place Brisbane

Direction

The Tribunal sets aside paragraph 2 of its order dated 20 January 2010. The Tribunal now directs that, pursuant to s 35(2) of the Administrative Appeals Tribunal 1975, and subject to any order of the Federal Court: The Tribunal’s reasons for decision in Re Dynamic Supplies Pty Ltd and Australian Securities and Investments Commission [2009] AATA 983 be printed in the form marked “A” annexed to these reasons for direction; The Tribunal’s reasons for decision in the form marked “A” annexed to these reasons for direction shall not be published to any person except the parties and the staff of the Tribunal and Federal Court until 30 days from the date of this direction. An unexpurgated copy of the Tribunal’s reasons for decision shall be placed in a sealed envelope in the Tribunal’s file. That document may be accessed and copied by the parties and by staff of the Tribunal and the Federal Court, but subject to any order of the Federal Court, must not be published to any other person until further order of the Tribunal. Either party is at liberty to apply.

.....................[SGD].........................
Senior Member

CATCHWORDS

PRACTICE AND PROCEDURE – Confidentiality – application to redact references to evidence given before the Tribunal in its written reasons for decision – evidence subject to confidentiality order – whether Tribunal can publish written reasons with references to that redacted – whether the Tribunal would comply with obligation to give reasons for its decision – disclosure of evidence might damage the applicant and third parties – disclosure would undercut applicant’s appeal to Federal Court – application granted

Administrative Appeals Tribunal Act 1975 (Cth) ss 35(1), 35(2), 43(2), 43(2B)

Corporations Act 2001 (Cth) ss 319, 340, 342(1)(c)

Australian Securities and Investments Commission v Administrative Appeals Tribunal [2009] FCAFC 185

REASONS FOR DECISION

5 February 2010

Senior Member Bernard J McCabe

1. Dynamic Supplies Pty Ltd, the applicant in these proceedings, sought an exemption from the requirement in s 319 of the Corporations Act 2001 (“the Act”) that it file financial statements with the Australian Securities and Investments Commission. The applicant is concerned that the information in the statements might be used against it by its competitors. The respondent (and the Tribunal on review) can exempt a company from the requirement under s 340 of the Act. The criteria governing the exercise of the power are set out in s 342 of the Act. The applicant argued that disclosure in its case would “impose unreasonable burdens” within the meaning of s 342(1)(c). I disagreed. The Tribunal’s decision and my reasons in this matter were handed to the parties on 22 December 2009. I directed that (a) the decision not take effect for 30 days and (b) the reasons not be published to any person other than the parties until the decision took effect. The evidence given in the course of the hearing remains subject to a confidentiality order made under s 35(2) of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”) I invited the parties to make submissions as to the form in which the reasons would be published in due course.
2. A directions hearing was convened on 20 January 2010 to discuss the form in which my reasons would ultimately be published (subject, of course, to any order of the Federal Court) and the continued operation of any confidentiality orders. As anticipated, the applicant asked me to redact or refashion a number of references to evidence given in confidence. Mr Bickford, counsel for the applicant, took me through my reasons and identified the passages which were of particular concern to his client. I was told an appeal had been lodged and the applicant was understandably concerned that it might be deprived of the benefit of a successful decision in its favour if the confidential information it was seeking to protect were to be disclosed to the public in my reasons. Mr Bickford added that even if the appeal were unsuccessful, the applicant had disclosed (and the reasons to some extent recorded) confidential evidence in the course of proceedings. That evidence was supplied to the Tribunal in connection with the proceedings. It would not otherwise be available to the public even if the applicant was required to comply with s 319 of the Act.
3. Mr Golledge, counsel for the Australian Securities and Investments Commission (“ASIC”), argued that most of the reasons should be released. He noted the expectation that the Tribunal would ordinarily conduct its hearings in public created a presumption that evidence as well as the decision and the reasons for decision should be publicly available unless an order was made under s 35(2) of the AAT Act. He argued against making such an order.
4. After hearing the parties, I ordered that the confidentiality orders remain in place in relation to the evidence presented at the hearing. I also directed that the decision and reasons would remain confidential while I considered the submissions. I did not see any reason for delaying the operation of the decision any further: the decision to do that is now a matter for the Federal Court.

THE OBLIGATION TO GIVE REASONS IN CASES DEALING WITH CONFIDENTIAL INFORMATION

5. Section 43(2) of the AAT Act obliges the Tribunal to give reasons for its decision. Section 43(2B) provides that written reasons:

shall include [the Tribunal’s] findings on material questions of fact and a reference to the evidence or other material on which those findings were based.

6. The subsection does not require that the Tribunal set out every piece of evidence in its reasons in exhaustive detail. It will usually be enough if the Tribunal refers to the evidence and submissions that are important to its decision. The object is to expose the Tribunal’s reasoning process so that it may be clearly understood by the parties – but also so that any flaws in the reasoning may be detected and corrected on appeal.
7. A Tribunal member may be circumspect about the way in which he or she deals with evidence in the course of giving reasons. The text of a decision and the reasons for decision are ordinarily published on the internet. The reasons for a decision can be accessed by anyone with a computer and an internet connection. Some of the evidence might be embarrassing or damaging to the parties, or to third parties. It might be of interest to nosey neighbours and identity thieves. The public interest in open and transparent justice can usually be served without gratuitously disclosing every last salacious, embarrassing, damaging or sensitive detail that has come to the Tribunal’s attention if that information is not necessary in order to explain the decision in accordance with s 43(2B).
8. The Tribunal has the power to go further and prohibit the public disclosure of evidence in appropriate cases. The power is contained in 35(2) of the AAT Act. The section says the Tribunal may prohibit the publication of evidence where “it is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason”. The power to make confidentiality orders in s 35(2) is an exception to the general presumption in s 35(1) that hearings will be conducted in public. The Full Federal Court had recently confirmed that the power under s 35(2) should only be used when the Tribunal had cogent reasons for doing so: Australian Securities and Investments Commission v Administrative Appeals Tribunal [2009] FCAFC 185 at [76] per Downes and Jagot JJ. Confidentiality orders are the exception, not the rule.
9. I made orders under s 35(2) in relation to the evidence in this case. It is a different situation to the one under review in the Full Court in ASIC v AAT. In that case, ASIC made a banning order against a person providing financial services. The public has an obvious interest in learning of allegations about a financial services provider. That may be a hard result for the provider in question if he or she ultimately prevails upon review, but the commitment to open justice and the need to protect the public would ordinarily take precedence. In the present case, the public is in no danger. The applicant has asked for the Tribunal to consider whether it is required to file financial statements. It is not seeking to suppress allegations about itself. In order to explain and prove its case, the applicant has disclosed confidential material about its operations that it would not otherwise be required to disclose. The evidence disclosed at the hearing is not merely embarrassing; I accept its disclosure may be damaging to the applicant and perhaps to one or more third parties. At a minimum, disclosure of the evidence would effectively undercut the applicant’s appeal to the Federal Court. There might not be a point in persisting with its attempts to obtain a waiver of the obligation to file financial statements if predatory rivals could access the evidence from the Tribunal’s hearing. I am satisfied the orders under s 35(2) in relation to the evidence should remain in place until further order. Naturally, the parties are free to use the material in connection with a Federal Court appeal.
10. There is an inherent tension between the obligation to give reasons in
    s 43(2B) and the obligation to protect evidence given in confidence that is subject to an order under s 35(2) or any another provision that imposes an obligation of confidentiality or secrecy. In my reasons in this case, I have not referred to some evidence, and I have been circumspect about the way in which I referred to other evidence in an attempt to balance the competing demands. But some of the material had to be disclosed in the course of the reasons to ensure that the decision made sense to the parties and, if necessary, the Federal Court. The question now arises whether it is possible to provide an edited version of those reasons that can be published to the general public.
11. I am satisfied that can be done. A version of the decision and reasons for the decision with appropriate redactions is annexed to these reasons. Subject to any order of the Federal Court, the annexed document may be made available to the public 30 days after the date of this direction. The original decision and reasons for decision remain in effect, and will remain in a sealed envelope on the Tribunal’s file.
12. I am satisfied the whole of paragraph 5 of the reasons for decision after the first word on the fifth line should be redacted. The evidence describes confidential business practices and strategies. Disclosure of those things might seriously damage the applicant’s business. If the Federal Court concludes I am wrong in my finding that the applicant does not face a clear risk of anti-competitive conduct, disclosure of this information would only compound the damage.
13. I accept ASIC’s submission that it is possible to protect a third party if the name of the individual and the company which employs him is deleted from the second and third line of paragraph 3. The name appears again in the first line of paragraph 8. The applicant has asked for the whole of that paragraph to be redacted; I am not persuaded that is necessary or appropriate. The name of that individual and company should also be deleted from paragraphs 14, 15, 18 and 23. The additional material deleted from the fifth through tenth lines in paragraph 14 and the second to the fifth lines of paragraph 15 must be suppressed because it might otherwise permit a reader to identify the company in question. I do not accept it is necessary to delete the balance of the material in paragraph 15 as the applicant requests.
14. I am satisfied the figures on the sixth line of paragraph six and the seventh line of paragraph 10 should be deleted. The precise numbers are of no interest to members of the public, but may – if I am wrong about the anti-competitive effect of the information – be of considerable interest to a predatory rival. The respondent pointed out that the figure in line six might already be a matter of public speculation, but it is unclear whether that figure has been confirmed by the applicant. I would give the applicant the benefit of the doubt in the circumstances, at least until the appeal is resolved.
15. The applicant was particularly concerned about the evidence referred to in the final three sentences of paragraph 12 and the words redacted from the eighth line of paragraph 13. Mr Bickford said the information would be useful to a predator. If I am wrong in my view about the potential for anti-competitive conduct, that might be so. The material should be redacted accordingly.

CONCLUSION

16. For the reasons given above, I would redact confidential material from the reasons for decision so that they can be published after an appropriate delay in the form marked “A” annexed to these reasons. In the circumstances, the redacted copy of the reasons should be made available for general publication 30 days from the date of this direction. The unedited version of the original reasons for decision should not be published to any person apart from the Tribunal, the parties and, of course, the Federal Court. The confidentiality orders that I made in relation to the evidence given at the hearing should otherwise remain in place.

I certify that the 16 preceding paragraphs are a true copy of the reasons for the direction herein of Senior Member Bernard J McCabe.

Signed: .............................[SGD].......................................................

Patrick MacDonald, Associate

Date of Hearing 20 January 2010

Date of Direction 5 February 2010

Counsel for the Applicant Mr P Bickford

Solicitor for the Applicant Clayton Utz Lawyers

Counsel for the Respondent Mr S Golledge

Solicitor for the Respondent Australian Securities and Investments Commission