Australian Securities & Investments Commission v P Dawson Nominees Pty Ltd

Federal Court of Australia (Full Court)|2009-12-22|Before: Tracey JJ

A. In VID 572 of 2009:

On the appellant's motion notice of which was filed on 5 August 2009: (a) leave to appeal be refused as to the threshold issue described at [22] of the Court's reasons for judgment; (b) leave to appeal be granted as to the inspection issue described at [21] of those reasons.
The appeal be allowed in part.
Paragraph 1(b) of the orders of the primary judge made 29 July 2009 be varied by amending Confidential Appendix A thereto in the manner appearing in Confidential Annexure A hereto.
The appellant pay the first and second respondents' costs of the application for leave to appeal insofar as it relates to the threshold issue.
There be no order as to the third and fourth respondents' costs of the application for leave to appeal insofar as it relates to the threshold issue.
The first and second respondents pay the appellants' and the third and fourth respondents' costs of the appeal. B. In VID 573 of 2009: 1. On the appellants' motion notice of which was filed on 5 August 2009, leave to appeal be granted. 2. The appeal be dismissed. 3. The appellants pay the respondents' costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website.

VID 573 of 2009 BETWEEN: P DAWSON NOMINEES PTY LTD

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

INTRODUCTION 1 Before the Court are two applications for leave to appeal, both filed on 5 August 2009. One is brought by the Australian Securities and Investments Commission (ASIC) and the other is brought by P. Dawson Nominees Pty Ltd (Dawson) and Frederick Henry Hart (which are together referred to as the applicants). On 6 August 2009, Tracey J ordered that the appeals in each application be heard concurrently with the applications for leave to appeal, and also that both proceedings be heard together. 2 Both proceedings relate to orders made by a judge of the Court (the primary judge) on 29 July 2009, concerning documents which had been produced by ASIC pursuant to a subpoena issued by Dawson. The orders permitted limited inspection of the documents and otherwise upheld ASIC's claim to public interest immunity. 3 In order to understand the issues which arise for determination it is necessary to set out briefly some of the history of the matter.

BACKGROUND 4 Brookfield Multiplex Limited (previously Multiplex Limited) is a company whose shares are listed on the Australian Securities Exchange (ASX). Each share is stapled to a unit in the Multiplex Group Property Trust. The responsible entity for the Multiplex Group Property Trust is Brookfield Multiplex Funds Management Limited (previously Multiplex Funds Management Limited). Both the Multiplex companies are bound by the ASX Listing Rules. They will be referred to in these reasons as Multiplex. Multiplex Constructions UK Limited (Multiplex UK) is a wholly owned subsidiary within the Multiplex Group. 5 In September 2002 Multiplex UK contracted to design and build the Wembley National Stadium in the United Kingdom. Difficulties arose in the performance of the structural steel contract which resulted in cost increases and delays. 6 In February 2005 ASIC investigated the conduct of Multiplex in relation to the Wembley Stadium project. In the course of the investigation ASIC obtained documents from Multiplex and conducted examinations of persons concerning the events in question. ASIC found that Multiplex Limited had failed to comply with the disclosure obligations contained in the ASX Listing Rules and the Corporations Act 2001 (Cth). On 20 December 2006, Multiplex Limited entered into an enforceable undertaking under s 93AA of the Australian Securities and Investments Commission Act 2001 (Cth)and established a fund of up to $32 million to settle the claims of persons who bought shares without the benefit of the requisite disclosure. 7 On 18 December 2006, Dawson commenced a group proceeding under Part IXA of the Federal Court of Australia Act 1976 (Cth) on its own behalf and on behalf of others who had acquired Multiplex shares between 2 August 2004 and 30 May 2005. On 16 December 2008 Frederick Henry Hart was added as an applicant in this proceeding as the result of the consolidation of this proceeding with another. In the proceeding the applicants contend that they suffered loss as a result of the failure of Multiplex to disclose material which a reasonable person would expect to have a material effect on the price or value of Multiplex shares in breach of the ASX Listing Rules and in breach of s 674 of the Corporations Act. The information which it is alleged Multiplex did not disclose was that by February 2005 Multiplex did not expect that the Wembley Stadium project would produce a profit. 8 On 13 July 2007, Dawson issued a subpoena to ASIC for production of documents produced by Multiplex Limited to ASIC in the course of the investigation, and a copy of the transcripts of the examination of the persons examined by ASIC in the course of the investigation. 9 On 11 September 2007 Dawson's application for inspection of the documents produced by ASIC pursuant to the subpoena came on for hearing. On the ground of public interest immunity ASIC objected to the inspection of 36 of the documents obtained by ASIC from Multiplex Limited and copies of 41 transcripts of examination of witnesses conducted by ASIC. 10 On the application of ASIC, the primary judge closed the Court during the consideration of ASIC's claim to public interest immunity. This meant that the applicants and Multiplex were excluded from that hearing. 11 On 14 November 2007 the primary judge dismissed the application by ASIC that the 36 documents and 41 transcripts were protected from production for inspection on the ground of public interest immunity. In reasons for judgment delivered on 2 November 2007 the primary judge explained that the purpose of public interest immunity privilege in favour of informers was to protect the disclosure of the identity of informers to those about whom information had been provided by the informers. In this case the informer or informers gave information concerning Multiplex, but officers of Multiplex already knew of the identity of the informer or informers. 12 The parties agreed, subject to confidentiality undertakings for the appointment of special counsel on behalf of the applicants and Multiplex. Special counsel was to be provided with the documents for which public interest immunity was claimed and other confidential material so that the applicants and Multiplex could be represented on the application for leave to appeal against the orders of the primary judge. 13 On 4 July 2008 the Full Court (Heerey, Moore and Tracey JJ) allowed an appeal brought by ASIC against the orders made by the primary judge on 14 November 2007, and determined that the 36 documents and the transcripts were protected from inspection: Australian Securities and Investment Commission v P Dawson Nominees Pty Ltd (2008) 169 FCR 236 (the Full Court). The Court held that the partial disclosure of the identity of the informer or informers was not conclusive against the claim for public interest immunity. Immunity from further disclosure had not been lost. 14 Mr Watson, the solicitor for the applicants, said that he learned from the reasons for judgment of the Full Court for the first time that ASIC based its claim to public interest immunity solely on the need to protect the identity of an informer or informers. He said that, had he known this was the sole basis of the claim for immunity, he would have told the primary judge at the original hearing that a Four Corners television program broadcast on 5 September 2005 had identified the Multiplex Accounting Group General Manager as having blown the whistle and contacted ASIC over the Wembley Stadium project, and the subsequent publicity of that information on a number of internet sites. Further, after the original decision of the primary judge and before the determination of the appeal, Mr Watson had ascertained the identity of the Multiplex Accounting Group General Manager at the time and confirmed with him that he was the whistleblower. Had ASIC disclosed the basis of its application for public interest immunity, Mr Watson said he would have brought the fact that the informer had identified himself to the attention of the Full Court as a factor militating against a finding of public interest immunity in favour of ASIC. 15 The applicants then applied to the High Court for special leave to appeal against the orders made by the Full Court. The application for special leave to appeal was refused on 5 December 2008. One reason given by the High Court was that it was open to the primary judge to reopen the interlocutory order if the factual foundation for that order was not sound or if circumstances affecting the existence of the privilege have changed. 16 By a notice of motion dated 16 January 2009, the applicants again sought leave to inspect the documents produced by ASIC pursuant to the subpoena (the motion for inspection). On 13 March 2009 Multiplex filed a notice of motion seeking orders that the applicants' notice of motion be dismissed or permanently stayed as an abuse of process of the Court (the abuse of process motion). 17 The primary judge dealt with these motions in two stages. He first determined whether the applicants were entitled to reopen the application to inspect the subpoenaed documents (the threshold issue). Having decided that they were entitled to do so, he considered whether the Court should permit such inspection (the inspection issue). 18 In reasons for judgment delivered on 28 April 2009 the primary judge ruled that the applicants were entitled to proceed with a second application for inspection, and he indicated that he would dismiss the Multiplex abuse of process motion. For reasons explained below, no orders were made at this time dismissing the abuse of process motion. 19 The primary judge then proceeded to determine the motion for inspection. He allowed inspection of 18 of the 36 documents, and inspection of 14 more of the 36 documents but in a masked and redacted form. He refused to permit inspection of the remaining four of the 36 documents. He also refused to permit inspection of any of the transcripts. The reasons of the primary judge for these conclusions were delivered on 23 July 2009, and the orders which reflected the conclusions reached in those reasons were made on 29 July 2009. 20 The parties had asked the primary judge not to make orders dismissing the Multiplex abuse of process motion until the determination of the motion for inspection. This agreement was made out of concerns about the timing of applications for leave to appeal, about fragmentation, and about whether an appeal might prove futile. The primary judge acceded to this request. Thus, the orders made on 29 July 2009 were intended to reflect the dismissal of the Multiplex abuse of process motion and also to provide for the limited rights of inspection granted to the applicants by the primary judge. The orders entered, however, do not make provision, in terms, for the dismissal of the abuse of process motion. 21 Both ASIC (in VID 572 of 2009) and the applicants (in VID 573 of 2009) seek leave to appeal against the orders made on 29 July 2009. Both applications raise the correctness of the orders made by the primary judge on the substance of the motion for inspection. ASIC argues that the orders for inspection are too wide and that further redactions of 12 documents should be ordered. The applicants argue that the orders are too narrow and should have included the transcripts of the examinations undertaken by ASIC. Multiplex argued that the orders of the primary judge are correct. 22 In VID 572 of 2009 ASIC argues that the primary judge wrongly determined a threshold issue, namely, whether the applicants should have been permitted to reopen the application for inspection when the same application had previously been determined. 23 ASIC also argues that the primary judge erred in not ordering the applicants to pay its costs incurred after 7 April 2009 in answering certain notices to produce (the notice to produce costs issue). These reasons will first address the threshold issue, then the inspection issue, and finally the notice to produce costs issue.

The reasons of the primary judge 24 In reasons for judgment delivered on 28 April 2009 the primary judge held that in order for the Court to entertain the second application for inspection of the subpoenaed documents, the applicants had to show that: (a) there was new material or new evidence which was not available, or reasonably available, to them at the time the orders were made by the primary judge on 14 November 2007 and by the Full Court on 4 July 2008; (b) there had been a material change in the circumstances since those orders were made; (c) there were exceptional circumstances which warrant re-consideration of the claim for inspection; (d) as a matter of discretion, the justice of the matter required that the applicants be allowed to revisit the claim for inspection. 25 The only evidence before the Court in support of the application was the oral evidence of Mr Watson, the solicitor for the applicants. The primary judge found him to be a truthful and credible witness. From his evidence the primary judge found that the applicants did not know until the delivery of the reasons for judgment of the Full Court on 4 July 2008 that ASIC's claim to public interest immunity was based solely on the ground of informer privilege. The primary judge found that ASIC had conducted itself in the hearings before him on 11 and 17 September 2007 in the applicants' first application for inspection, in a manner aimed at diverting the applicants' legal advisers from an appreciation that the sole basis of the claim to public interest immunity was informer privilege. Mr Watson was aware at the time of the initial hearing that journalists who worked for the Four Corners television program had investigated the Wembley Stadium project and, on 5 September 2005, a Four Corners program had gone to air which identified the Multiplex Accounting Group General Manager as having blown the whistle and contacted ASIC. After the program had gone to air 11 internet sites reported the story and referred to the Multiplex Accounting Group General Manager. On 2 May 2008, Mr Watson spoke by phone with Mr Stewart Cummins who confirmed that he was the Multiplex Accounting Group General Manager in February 2005 and that he was the whistleblower referred to in the Four Corners program and that he had gone to ASIC with his concerns about the Wembley Stadium project. The primary judge accepted that Mr Watson did not draw these public disclosures to the attention of the primary judge because he had not been aware that ASIC's claim was based on informer privilege, and because the primary judge had, on ASIC's application, closed the Court for the purpose of hearing argument on the claim for public interest immunity. 26 The primary judge also found that ASIC knew at the time of the initial hearing about the Four Corners program and had not drawn it to the attention of the Court in the closed hearing. He held that ASIC had a duty to disclose the facts revealed in the Four Corners program, and had, in breach of that duty, failed to do so. 27 The primary judge said at [151] - [152]: 151 I am satisfied that on the basis of the findings I have made earlier, particularly in relation to Mr Watson's evidence, that: (a) the applicants have demonstrated that there is new material or new evidence which was not available or was not reasonably available to them at the time the orders were made on 2 November 2007 and 4 July 2008; (b) there has been a material change in the circumstances facing the applicants since those orders were made; (c) there are exceptional circumstances which warrant re‑consideration of the applicants' application for leave to inspect and copy documents produced by ASIC pursuant to a Subpoena to Produce issued on 13 July 2007 and ASIC's claim that thirty‑six of those documents and forty‑one transcripts of examinations of witnesses conducted by ASIC are privileged from production and inspection on the ground of PII; (d) I should otherwise exercise the discretion committed to me to permit the re‑litigation of the matter raised in the applicants' Notice of Motion. It is in the interests of justice to do so. 152 I am also satisfied that the applicants were not given the opportunity to bring to the Court's attention the fact of the Four Corners broadcast and the media reports because of the nature of the correspondence between the applicants' legal advisers and ASIC after the service of the subpoena, the submissions made by counsel for ASIC on 7 August 2007 and 11 September 2007, the ex parte in camera hearing on 11 and 17 September 2007 from which the applicants were excluded and the Special Counsel regime imposed for the Full Court hearing. 28 The primary judge also said at [150]: 150 In those circumstances, independently of the ground or reason for allowing a second interlocutory application for relief along the same lines as an earlier interlocutory application on the basis of fresh evidence or materially changed circumstances, I consider that the effect of the non‑disclosure of the Four Corners broadcast to me by ASIC is that exceptional circumstances have arisen and that, in substance, ASIC's application to resist, and its grounds for resisting, the claim for production and inspection of the documents sought in the subpoena should be visited afresh. It would not be in the interests of justice to do otherwise.

ASIC's Submissions 29 Leave to appeal will only be granted if an applicant can demonstrate that the orders in question are attended by sufficient doubt that reconsideration by the appeal court is warranted, and that substantial injustice would result to the applicant if the orders were left uncorrected: Décor Corp Pty Ltd v Dart Industries Inc (1993) 33 FCR 397 (Décor). 30 In relation to the first limb of this test, namely the existence of a sufficient doubt as to the correctness of the orders, ASIC accepted that the primary judge exercised a discretion when he determined to allow the applicants to bring the second application for inspection. In its written submissions ASIC contended that the exercise of the discretion miscarried because the primary judge erred by finding that: (a) ASIC deliberately sought to divert the applicants from concluding that it relied on informer immunity by not stating in open court at the hearing of the first application the basis on which it claimed public interest immunity. (b) ASIC breached its duty to the Court by not disclosing to the Court in the in camera hearings in February 2007 the Four Corners program. (c) ASIC did not explain why it was being "Delphic" in the first application and the primary judge did not until 30 March 2009 understand why it was being "Delphic". (d) A reasonable legal practitioner in Mr Watson's position would not have concluded, either at the time of the hearing of the first application before the primary judge or the appeal, that ASIC was relying on informer immunity. 31 In oral argument, Mr Pearce SC, who appeared with Ms Lo Piccolo for ASIC, said that it was not necessary to persist with the argument in relation to conclusion (d). He said "We think if we can't persuade your Honours on points 1, 2 or 3, then we probably won't persuade your Honours on point 4." 32 In relation to the second limb of the test, namely, the potential for substantial injustice, ASIC submitted in its written outline of argument "if left uncorrected, substantial injustice will result by way of damage to ASIC's reputation, bearing in mind its role as a public regulator, its obligations as a model litigant and its activities as a frequent litigator".

Consideration 33 As explained earlier, the threshold issue concerns the step taken by the primary judge to proceed to consider the applicants second application for inspection. No order made on 29 July 2009 expressly reflects the decision to reject the Multiplex abuse of process motion or to proceed with the second application. However, the decision to allow the second application to proceed is implicit in the orders made for inspection. ASIC correctly accepted the need to satisfy the Décor test in relation to both the implicit decision of the primary judge to allow the second application for inspection to proceed, and separately, in relation to the substantive orders allowing limited inspection. 34 The second limb of the Décor test required ASIC to demonstrate that it would suffer injustice if the judgment of the primary judge to allow the second application for inspection to proceed were permitted to stand. 35 The Court is empowered to hear appeals from "judgments" made by a single judge: s 24 Federal Court of Australia Act 1976 (Cth). Judgments are defined as "judgments, orders and decrees": s 4 Federal Court of Australia Act 1976 (Cth). These words refer to operative judicial acts: Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45 at 64 per Barwick CJ. Appeals do not lie against the reasons expressed by a judge for the orders which are made. Thus, the injustice which Décor requires to be demonstrated is injustice which flows from the making of orders or from the operative judicial act. 36 In the present case the operative judicial act was the act of the primary judge allowing the applicants to proceed to argue the substance of the second motion for inspection. ASIC has not relied upon any injustice which flows from that judicial act. Rather, it asserts an injustice which it says results from adverse findings made by the primary judge concerning its conduct in opposing the first motion for inspection and in the conduct of the appeal against the orders made on that motion. In the absence of any claim that ASIC would suffer substantial injustice from the operative judicial act, namely, the primary judge proceeding to hear the second motion for inspection, ASIC is unable to make out a case for leave to appeal against the threshold issue. 37 In these circumstances it is unnecessary for the Court to consider whether ASIC has satisfied the first limb of the Décor test, that is to say, whether it has established sufficient doubt as to the correctness of the decision of the primary judge to proceed to hear the second motion for inspection.

The reasons of the primary judge 38 In dealing with the applicants' motion for inspection, the primary judge noted the parties' agreement as to the steps involved in determining a challenge to an application for production of documents on the ground that they might tend to disclose the identity of an informer or informers. They were: (a) to determine whether the documents disclose the existence of an informer or informers to ASIC; (b) to determine whether the documents tend to identify an informer or informers, and if so whether the documents can be redacted so that it will not be possible, even by conveying "a shrewd idea", to identify the informer or informers; (c) to undertake a balancing exercise to determine whether, to the extent to which the documents are not redacted, they are of sufficient importance for the applicant's conduct of the proceedings to outweigh the importance of not disclosing the identity of the informer or informers. 39 His Honour then noted that three relevant events had occurred since his orders of 14 November 2007. The first was that it had been made public that the basis for ASIC's claim to public interest immunity was that inspection of the documents would disclose the identity of an informer or informers. The second was that the identity of Mr Stuart Cummins as an informer had been disclosed, so that there was no longer any confidentiality attached to his identity. The third was that the Full Court's decision had been handed down. 40 The primary judge then set out the propositions in the Full Court's judgment by which he was bound or thought he should follow. They were: (a) in determining a claim for protection of documents from disclosure on the ground of public interest immunity, the Court must undertake a balancing exercise to determine whether the public interest in protecting the disclosure of the identity of an informer outweighs the public interest that in a civil proceeding a party should not be denied access to relevant evidence; (b) immunity from further disclosure is not necessarily lost where there has been a partial limited disclosure of the identity of an informer; (c) the transcripts of the examination of the informer or informers would, both directly and circumstantially, identify the informer or informers; (d) the test to apply in determining whether inspection of the relevant documents and transcripts might disclose the identity of an informer or informers is to ask whether there is in the documents any material by which "a shrewd idea" might be conveyed as to the identity of the informer or informers, noting that documents taken together may convey information which each, by itself, could not convey; (e) the benefit of the doubt should be in favour of non‑disclosure. 41 The primary judge then directed himself to the steps set out at [38]. As to pars (a) and (b) he was satisfied that the confidential material relied upon by ASIC disclosed the existence and identity of an informer or informers other than Mr Cummins. As to par (c), his Honour was of the view that ASICs masking of some of the partially redacted documents had gone beyond what was necessary in order to protect the identity of an informer or informers. He set out what he considered to be the appropriate redactions in a confidential appendix. In connection with the balance of the documents in issue (numbered 2, 3, 17, 33 and 34), his Honour was satisfied that 2, 3, 33 and 34 should be protected, and that there should only be a partial redaction of 17. He set out the extent of the redaction in another confidential appendix. The primary judge was aided in reaching his determination as to redactions by confidential affidavits filed by ASIC. 42 Turning to the transcripts, the primary judge referred to two confidential affidavits of Grant Moodie filed by ASIC. The first (10 September 2007) was affirmed at a time when Mr Cummins' identity as an informer had not been disclosed. At that time Mr Moodie was a lawyer of some fourteen years experience, the last three with ASIC. He said that for the purposes of the then current application, he had read each page of the 41 transcripts of examination. He listed in separate annexures: (a) the pages of transcript in which examinees or investigators identified an informer or informers as the source of information to ASIC or as whistleblowers; (b) the pages of transcript of each examinee in which reference was made by examinees or investigators to documents the subject of ASIC's claim to public interest immunity; (c) the pages of transcript of persons other than an informer or informers in which reference was otherwise made, or could be inferred, to an informer or informers. 43 The primary judge said he had considered the pages of transcript identified by Mr Moodie and was satisfied that his description of them was substantially correct. 44 Mr Moodie's second affidavit (12 June 2009) was affirmed after Mr Cummins' identity as an informer had become known. Mr Moodie said he had reconsidered each of the transcripts with a view to determining whether any of them could now be disclosed in their entirety or in a redacted form "providing that there is no risk of identification of" an informer or informers other than Mr Cummins. He concluded that there was such a risk having regard to titles, responsibilities and reporting lines to and from examinees, and a simple process of deduction. Mr Moodie's explanation of the reasons behind the risk are more detailed than can be recorded here without making inopportune disclosure of confidential material. The primary judge agreed with Mr Moodie's assessment of the unacceptable risk of identification. 45 His Honour then dealt with the applicants' submission that where portions of documents were "innocuous", in that they did not identify or tend to identify an informer or informers other than Mr Cummins, they should be made available for inspection with the nocuous parts redacted. The applicants had called in aid and adapted the observation of Stephen J in Sankey v Whitlam (1978) 142 CLR 1 at 66‑67 (Sankey), that it "seemed … scarcely credible" that an inspection of the transcripts would not reveal the practicability of extracting innocuous material without revealing or tending to reveal the identity of an informer. 46 His Honour decided he could not undertake that task. He said at [31]: The transcripts record the evidence of twenty‑three witnesses. The identity, occupation, role, employment title and employer of each of them is disclosed in the transcripts. If I were to redact or mask the transcripts so as to leave the "innocuous" parts so that the names, occupations, roles, employment titles and employers of the various witnesses and the organisation or company which employs them or with which they were involved were still disclosed, the applicants' legal advisers would still be left with material by which a shrewd idea would be conveyed as to the identity of an informer or informers other than Mr Cummins. 47 His Honour then explained why that was so. There would have been available publicly, for example from Multiplex's Annual Report, information and documents relating to its many officers and employees and the reporting lines between them. The applicants were also likely to have this information available to them from other sources. It would therefore be possible, his Honour said, by a process of elimination, for the applicants' legal advisers to deduce the identity of the informer or informers other than Mr Cummins. 48 The primary judge then considered whether he should "go one step further" and redact the names, occupations, roles, employment titles and employers of each of the witnesses. He determined not to take that course, saying at [33]: I am satisfied that even if I were to go this far, it would still be possible for the applicants' legal advisers, by a process of deduction and inference, to reach a conclusion as to the identity of an informer or informers to ASIC. The only way this situation could be avoided would be if I were to go through each of the forty‑one transcripts with a fine toothcomb and eliminate by redaction or masking any reference to a name, occupation, role, employment title and line of communication or reporting to or from each of the witnesses or any reference from which an inference could be drawn in relation to these matters. In this connection his Honour referred to the Full Court's observation that "Consistently with the underlying public policy of public interest immunity, the benefit of the doubt should be in favour of non‑disclosure": 169 FCR at [41]. 49 His Honour then noted that his knowledge about the subject matter of the proceedings and its background was extremely limited compared with that of the applicants' and Multiplex's legal advisers. This comment was directed to the greater facility with which those more familiar with the litigation and its background could piece together a mosaic from disparate documents and events, draw inferences and make deductions. 50 The primary judge then referred back to the applicants' "scarcely credible" submission, and said at [35]: Although it might seem to the outside observer that it is "scarcely credible" that an inspection of the forty‑one transcripts would not reveal the practicability of extracting material in itself quite innocuous, I have reached the conclusion that that task is impracticable for me for the reasons to which I have referred. It might be possible for that task to be undertaken by special counsel for the applicants in conjunction with ASIC and special counsel for Multiplex, but that route has not been chosen by the parties. 51 The primary judge considered an affidavit of Mr Watson explaining the importance of the 36 documents and 41 transcripts to the principal proceeding. Although Mr Watson had not had access to these documents and transcripts, he said that having regard to the overlap between the issues in the principal proceeding and the matters the subject of ASIC's investigation, the documents and transcripts were "likely to cast significant light on the central issues in the proceeding". He identified those issues as the allegations that the Multiplex Group failed to keep ASX and investors properly informed in relation to: (a) cost overruns and delays on its Wembley Stadium project and the impact of those cost overruns and delays on the profitability of the project, the Group, its Construction Division and its UK subsidiary; (b) deterioration in its estimated profit on its West India Quay project and Qantas Hangar project and the impact of that deterioration on the profitability of the Group and its Construction Division; (c) a significant change in the composition of Group and Construction Division Revenue, such that a substantial portion of that revenue was to be derived from "non‑core earnings"; (d) whether the Group had reasonable grounds for representations regarding its profit forecasts and whether it had reporting systems which ensured adequate and timely reports regarding the Wembley Stadium, West India Quay and the Qantas Hangar projects. 52 Having summarised this information, the primary judge said that in the light of the Full Court's decision, it was "not open on the hearing of the current motion for the applicants to rely upon this evidence". The Full Court had specifically addressed the significance and importance of the documents and transcripts to the principal proceeding, and his Honour did not think it was open to him to revisit the following finding of the Full Court at [61]: We do not see the documents in question as having sufficient importance for [Dawson's] conduct of this litigation to outweigh the importance of not disclosing the identity of informers. The documents may be discoverable, and relevant, but beyond that they are not shown to have any greater significance for [Dawson]. 53 The primary judge went on to refer to Mr Watson's evidence that since the issue of the subpoena and the Full Court's decision, the range of contraventions alleged had been expanded to include failure to keep ASX and investors properly informed in relation to the matters in pars (b) and (c) at [51] above. His Honour did not consider that the addition of these matters "requires or enables a reconsideration" of the Full Court's opinion that the documents do not have sufficient importance to the applicants' conduct of the litigation to outweigh the importance of not disclosing the identity of informers.

Transcripts 54 The applicants submitted that the primary judge had fallen into error in failing to undertake the task of redacting the transcripts so as to leave those parts which did not identify or tend to identify any informer to ASIC other than Mr Cummins. We do not agree. As is common in security‑related contexts, his Honour had the benefit of evidence from a person acquainted with the litigation. Mr Moodie had read the transcripts twice (once in 2007 and again in 2009). He is an experienced solicitor, whose evidence his Honour accepted. Consistent with the need to preserve confidentiality, it is not possible for us to go beyond the description of his evidence given by his Honour and recorded by us at [46]. His Honour's ultimate conclusions (recorded at [48] and [50] above) were influenced by Mr Moodie's evidence. 55 His Honour was aware of the "mosaic analysis" to which many of the decisions in security‑related contexts make reference. In the earlier Full Court decision in the present case it was said at [39]‑[40]: There could be little doubt that the transcripts of the examination of the informer(s) themselves would, both directly and circumstantially, identify the informer(s). As to the other documents, we think an appropriate test is whether there is, in the words of Hunt J in Attorney-General v Stewart (1994) 34 NSWLR 667 at 674: any material by which a shrewd idea might be conveyed as to the identity of the informer. Documents taken together may convey information which each by itself could not: Zarro v Australian Securities Commission (1992) 36 FCR at 60. … Consistently with the underlying public policy of public interest immunity, the benefit of the doubt should be in favour of non-disclosure. There is always the risk that seemingly innocuous information in a particular document, when combined with information in another document or the reader's background knowledge, may reveal the identity of an informer, or at least give rise to strong suspicion. 56 In Watson v AWB Ltd (No 2) (2009) 259 ALR 524 at [32] Foster J adopted the Director‑General of Security's description of "mosaic analysis": Mosaic analysis involves combining pieces of information to enable a 'picture' to emerge from which inferences can be drawn by targets, or other persons of interest, about matters not otherwise known to them. Some of the pieces of information may appear to be disparate and/or benign; and specific (but important) items of information may only be known by the target(s) or other persons of interest (making it difficult to precisely assess the risk posed by mosaic analysis in any particular scenario). 57 It was with these matters in mind that the primary judge compared his extremely limited knowledge of Multiplex's activities and the circumstances and background leading up to the proceedings with that of the applicants' and Multiplex's legal advisers. 58 No exception can, in our view, be taken to the primary judge's treatment of the applicants' "scarcely credible" submission. See [45] and [50]. Sankey was quite unlike the present case. The public interest immunity asserted concerned Cabinet privilege and the related privilege protecting the deliberations of senior government officials. Mr Sankey had made allegations of criminal conspiracy against former Commonwealth ministers in connection with a proposal to raise a foreign loan outside Loan Council procedures. The documents sought by Mr Sankey were Loan Council documents. What he wanted to establish via the documents was that the loan in question had not been considered by the Loan Council. 59 After noting that in none of the Cabinet privilege cases from 1816 to 1978 had a court been concerned with criminal charges against Ministers of the Crown, that they conspired together in their role as Ministers to effect unlawful purposes, Stephen J continued at 57: Judicial descriptions of the general doctrine of Crown privilege must necessarily be affected by the facts of the case in hand; they cannot be applied to wholly unforeseen and quite different circumstances and used as rules of law governing those circumstances. Instead the principles upon which Crown privilege is founded and by reference to which it has operated must be applied to the very special circumstances of the present case. Emphasis added. 60 Those special circumstances included that upholding the immunity would "come close to conferring immunity from conviction upon those who may occupy or may have occupied high offices of State if proceeded against in relation to their conduct in those offices": at 56. 61 It was in the above context that at 66‑67 Stephen J said: the informant's case is in no way concerned with the contents of any of these Loan Council documents except in one specific, and what might be described as negative, respect. The informant has sought their production only for the purpose of establishing, if the need arises, that the alleged proposed borrowing of four billion dollars was not the subject of Loan Council consent. … At the conclusion of argument it seemed to me scarcely credible that an inspection of the papers would not reveal the practicability of extracting material in itself quite innocuous, consisting perhaps of no more than the figure of approved Commonwealth borrowings not in fact availed of, which would provide evidence of this negative character. 62 Judicial observations are always to be read secundum subjectam materiam. Sankey involved criminal proceedings. The extracted material, to prove the negative, was quite innocuous. No mosaic analysis was involved. None of those features is present in this case. It is a claim for damages. The information sought by the applicants is, on the evidence, far from innocuous. And it involves mosaic analysis. What was "scarcely credible" in Sankey is not so here. 63 We were taken in closed court to a sample transcript of examination. It consisted of 199 pages. Our assessment of this document accords with the primary judge's conclusion in relation to the transcripts generally. It would be impracticable to separate out innocuous from nocuous material. In addition, we would have no confidence that what we might think innocuous would not, when combined with other material not known to us, lead those better informed to a train of enquiry pointing to an informer or informers other than Mr Cummins. In those circumstances it is proper to apply the earlier Full Court's caution that consistently with the underlying public policy of public interest immunity, the benefit of the doubt should be in favour of non‑disclosure.

Other documents 64 The issue here is whether some of the documents ordered to be produced in redacted form should be further redacted. The additional redactions the primary judge declined to make are identified in a confidential affidavit affirmed by Louise Macauley, a lawyer of over 20 years standing, who is currently Commission Counsel to ASIC. Ms Macauley expresses largely unparticularized opinions as to why further parts of the documents should be redacted. ASIC contends that in not further redacting the documents, the primary judge failed to apply the test mandated by the Full Court, namely that the benefit of the doubt should be resolved in favour of non‑disclosure. 65 We have examined each document in the light of the information provided by Ms Macauley, ASIC's confidential submissions and the requirement that the "benefit of the doubt" be resolved in favour of non‑disclosure. In our view five of the documents should be further redacted in the manner appearing in confidential annexure "A" to these reasons.

Balancing process 66 In order to consider the applicants' ground of appeal that the primary judge failed to consider whether the public interest in protecting the identity of informers was outweighed by the public interest in allowing the applicants' legal advisers to inspect the documents, it is important to be aware of the Full Court's reasoning on the earlier appeal. 67 Under the heading "Striking the balance" at [48] the Full Court made the following findings: · the public interest in protecting informers, and encouraging future informers, is as important to a regulatory agency such as ASIC as it is to police in their traditional role; · ASIC's regulatory role is vital to the proper functioning of the Australian financial and investment system: fraud and incompetence can cause catastrophic damage to thousands of individuals; · confidential disclosure to ASIC has particular benefits, including discovering misconduct that might not otherwise be brought to its attention, timely investigation enabling ASIC to move quickly to obtain curial relief, and the ability to interview witnesses while events are still fresh in their minds and business records still available; · the effect of disclosure of the identity of informers and the intimidating effect on potential future informers carries great weight: persons contemplating whistleblowing will realise that disclosure of their identity may cause them harm in ways they may never find out, such as employment or promotions not offered and friendships undermined; · that such adverse consequences may ensue is not to be dismissed as speculative; fears may well be held by potential future informers who may, if disclosure is permitted (in the instant case) decide that informing ASIC is just not worth it. 68 The Full Court then asked - "what should be weighed on the other side of the balancing exercise? What disadvantage would [Dawson] suffer in its litigation against Multiplex by not getting access to the documents in question?" The Court noted that the primary judge held that the documents were "directly relevant" to the issues raised in the statement of claim. They "arguably adversely affect Multiplex's case and arguably support [Dawson's] case". They would be discoverable by Multiplex if an order were made under O 15 of the Federal Court Rules. 69 Their Honours recorded the central aspects of Dawson's statement of claim, and continued at [60]: The public announcements Multiplex made, or failed to make, to the ASX and others over the relevant period will be a matter of public record, the proof of which should present no difficulty to [Dawson]. The construction problems in the UK, particularly those concerning the Cleveland Bridge sub-contract, should be the subject of the usual massive documentation that accompanies major construction projects. The internal reporting and recording documents of Multiplex should be discoverable in the ordinary course of this litigation. In any case, it is alleged that the company constructing Wembley Stadium, Multiplex Constructions (UK) Ltd, was a wholly owned subsidiary of the Multiplex Group, which group included the first respondent to the main proceeding, the ASX listed Multiplex Ltd. It seems inconceivable that Multiplex Ltd would not be fixed with the knowledge of its subsidiary contractor. So the case really boils down to an objective assessment of what in fact was happening at Wembley and whether or not that assessment should have been disclosed by Multiplex, so as to properly inform the market. 70 Their Honours concluded with the passage quoted at [52] above: the documents may be discoverable and relevant, but did not have any greater significance for Dawson's conduct of the litigation so as to outweigh the importance of not disclosing the identity of informers. 71 The primary judge's refusal to reopen the balancing process so far as concerned the facts weighed by the Full Court involved no error. He was bound by its decision. The Court had not only disagreed with his Honour's holding that immunity had been lost by the partial disclosure of the informers' identity. It had also disagreed with his view that relevance and discoverability were sufficient to outweigh the public interest in protecting informers. Accordingly we find no error in his Honour's statement that it was not open to him to rely on Mr Watson's evidence in so far as it related to facts considered by the Full Court in its balancing exercise. 72 Annexed to the applicants' written submissions was a three page document headed "Developments and issues arising in Multiplex class action since Full Court decision on 4 July 2008 relevant to balancing exercise". It has three columns - Date, Development and Relevance to balancing exercise. ASIC attached to its submissions a copy of this document with an additional column containing its comments on each development. We will not rehearse the parties' competing stances. Stephen J in Sankey said at 61 that it is "the nature of the case" which influences the balancing exercise. There the nature of the case dictated disclosure, as his Honour pointed out at 62. In the present case, the nature of the applicants' case in the principal proceeding is not altered by the post‑Full Court events. What the applicants' "Developments" document discloses is the making of additional allegations of the same kind as those originally made. 73 The applicants took issue with the primary judge's reasons recorded above at [51] to [53]. It was said that in treating himself as bound by what the Full Court had decided, his Honour failed to appreciate that he was dealing with a fresh application, to be determined on the basis of the facts then before him, and not limited to those before him in 2007 or before the Full Court in 2008. A superficial reading of what he said at [36] to [39] lends some support to this complaint. However, a fair reading of those paragraphs indicates that his Honour proceeded in two steps. The first was to say that he was not at liberty to second guess the Full Court in relation to the matters before it. No exception can be taken to that. Had there been no new developments, his Honour was bound by the Full Court's decision on the balancing exercise, and could not have come to his own conclusion, even on a fresh application. Then at [38] his Honour dealt with events that had occurred since the Full Court's decision, and announced his conclusion at [39]. That paragraph shows that he treated himself as at liberty to come to a different conclusion from that of the Full Court, but declined to do so on the ground that the new facts did not require or enable him to do so. 74 It is true that [36] to [39] of his Honour's reasons are not as clear as they might have been. That is because the material recorded at [36], preceding his Honour's statement at [37] that the Full Court's decision disabled him from considering it, was a mixture of "old" and "new" facts. However, at [38] and [39] he specifically dealt with Mr Watson's post‑Full Court facts and, rather than saying that he could not have regard to them, said that they did not "require" or "enable" him to reconsider the Full Court's conclusion. 75 We have differed from the primary judge as to five of the documents that ASIC sought to have further redacted. As to the other documents, we find no error in his Honour's resolution of the balancing process. 76 If we have put too favourable a complexion to his Honour's reasoning, we add that we have considered the material in the applicants' "Developments" document, to the extent that it is verified by Mr Watson's affidavit or supported by material filed in Court, and have come to our own conclusion that the documents and transcripts do not have sufficient importance for the applicants' conduct of the litigation to outweigh the importance of not disclosing the identity of an informer or informers. Cf Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [28]‑[29].

NOTICE TO PRODUCE COSTS ISSUE 77 ASIC's 17th ground of appeal is that the primary judge erred in not ordering the applicants to pay its costs incurred after 7 April 2009 in answering notices to produce given by the applicants. The basis for this ground is that on 4 April 2009 the applicants' solicitors wrote to ASIC inviting it to save costs and expenses by conceding that at relevant times it was aware of the Four Corners program. ASIC says that on 7 April it took up the invitation in the expectation that the notices to produce would be withdrawn. They were not. Instead ASIC says it was put to further trouble and expense in answering the notices and was forced to return to court to do so on 21 April. Only at that stage did the applicants withdraw the notices. 78 The primary judge rejected the submission that ASIC's costs of answering the notices after 7 April should be paid by the applicants. Instead his Honour ordered that ASIC bear its own costs in that regard. 79 The primary judge's exercise of discretion in relation to the costs of an interlocutory motion is eminently within the realm of matters with which an appellate court is reluctant to interfere in the absence of exceptional circumstances. See Décor at 400. We are not satisfied that sufficient doubt attends the propriety of the costs order to justify this Court's intervention. Leave to appeal on this issue is refused.

CONCLUSION 80 We would grant ASIC and the applicants leave to appeal on the inspection issue. The orders in question are attended by sufficient doubt that reconsideration by the Full Court is warranted. In our view, if the orders remain in their present form, assuming them to be wrong, substantial injustice would result to ASIC because material capable of identifying informers would be released to the applicants. As the recipient of information under s 1317AA(1)(b)(i) of the Corporations Act and otherwise, ASIC rightly considers itself obliged to protect the identity of those who provide the information. In this connection we refer to what we have said at [67]. As there appears, ASIC's inability to ensure confidentiality of disclosures is likely to have a detrimental effect on its regulatory and enforcement work in the future. Unless it can provide the maximum confidentiality to disclosers, its role as corporate regulator is likely to be compromised. If the orders remain in their present form, assuming them to be wrong, substantial injustice would result to the applicants, because they would have been denied access to information material to their case. 81 We would allow ASIC's appeal so far as documents 6, 11, 14, 27 and 32 are concerned. We would dismiss the applicants' appeal. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Sundberg, North & Tracey.

Counsel for the Appellant in VID 572 of 2009 and the First Respondent in VID 573 of 2009: M Pearce SC and LM Lo Piccolo

Solicitor for the Appellant in VID 572 of 2009 and the First Respondent in VID 573 of 2009: Australian Securities and Investment Commission

Counsel for the First and Second Respondents in VID 572 of 2009 and the Appellants in VID 573 of 2009: DF Jackson QC and W Harris

Solicitors for the First and Second Respondents in VID 572 of 2009 and the Appellants in VID 573 of 2009: Maurice Blackburn

Counsel for the Third and Fourth Respondents in VID 572 of 2009 and the Second and Third Respondents in VID 573 of 2009: P Jopling QC and D Thomas

Solicitors for the Third and Fourth Respondents in VID 572 of 2009 and the Second and Third Respondents in VID 573 of 2009: Mallesons Stephen Jaques

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