DPP v Arthur Stanley Smith

Introduction 1 This is a preliminary decision in relation to documents summonsed by two applicants, Travel Action Pty Limited (Travel Action) and Suzanne Frugtniet in separate but related proceedings. A single summons was issued and I have decided to deal with these two matters together. The summons, dated 10 February 2003, is addressed to: The Proper Officer, Australian Securities and Investments Commission (ASIC) and, as subsequently amended, requests the following documents: Any statements or affidavit evidence given or sworn by Joseph Stanislav between 1 January 2001 and 29 January 2003 in relation to Travel Action Pty Ltd CAN 001 653 407. All statements or affidavits relating to Suzanne Frugtniet or to Travel Action Pty Ltd, or both, made in the period 1 March 2001 to 14 February 2003 by: a) any officer of the Department of Fair Trading (NSW) including Sebastian Mignacca; b) any officer of the Travel Compensation Fund, including Tony Whittaker; c) any officer of IATA; d) any officer of Orit Pty Ltd, including Dr Andrew Gal' e) any officer of Graham Masselos and Co; f) any officer of Rona Berger accountants; g) any officer of Mallesons Stephen Jacques; h) Brian Frugtniet's parole officer i) Roger Dwyer j) Grant MacDonald k) Barbara Johnson l) Ranuka Ranasinghe m) Joseph Stanislav n) Nick Martin; o) Charlton Wilson. All correspondence and notes of conversations between officers of ASIC of the one part and any of the persons or entities named in sub-paragraph 2 of the other part concerning Suzanne Frugtniet or Travel Action Pty Ltd or both, between 1 March 2001 and 14 February 2003. 2 ASIC appeared and produced numerous documents in compliance with the summons. ASIC did not object to the applicants being granted access to these documents, on the condition: That Travel Action and Suzanne Frugtniet and their advisors are not to directly or indirectly approach any of the following persons without first giving 24 hours notice of their intention to do so to Robert Ghali of ASIC on (phone number provided) namely, Roger O'Dwyer, Susan Javor, Grant Shaun MacDonnell, Nicholas Richard Martin, Andrew Gal, Joseph Stanislav, Gayani Renuka Ranasinghe, Barbara Mary Johnson and Peter Rona. 3 The reasons for seeking this condition were provided in the confidential affidavit. 4 Mr Kirk appeared on behalf of three other third parties (the 2nd third parties) who sought leave to be heard in relation to the summons. Mr Kirk provided the names of those parties to the Tribunal, but sought to have their identities kept confidential. The Tribunal has the power, under s 75(2)(b)(i) of the Administrative Decisions Tribunal Act 1997 (ADT Act), to make an order prohibiting or restricting: The disclosure of the name, address, picture or any other material that identifies or may lead to the identification of, any person (whether or not a party to proceedings before the Tribunal or a witness summonsed by or appearing before the Tribunal) 5 In addition, the Tribunal has the power under s 73(1) of the ADT Act, to "determine its own procedures." I agree with the submission of the 2nd third parties that this power can reasonably be taken to extend to whether particular persons are required to be identified. It has been accepted that the Local Court has a similar implied power. (See DPP v Arthur Stanley Smith (2 May 1996, NSW Court Criminal Appeal); John Fairfax Group v Local Court of NSW (1991) 26 NSWLR 131 at 162.5 per Mahoney JA.) 6 On the basis of these principles and the evidence in the confidential affidavit of Allen Turton, I accept the submissions by counsel for the 2nd third parties that the names of those parties should be kept confidential. Background 7 The substantive proceedings involve a review of four decisions made by the Director General, Department of Fair Trading (Director General) pursuant to s 21 of the Travel Agents Act 1986. The decisions relate to Travel Action as a corporate entity, Sascha Frugtniet as the sole director of Travel Action and to Sascha's parents, Suzanne and Brian Frugtniet, as persons allegedly involved in the direction, management or conduct of the business. 8 The reviewable decision in relation to Travel Action was to cancel its travel agent's licence and disqualify it for a period of 10 years from 27 September 2002 from holding a licence issued under the Travel Agent's Act 1986. 9 The basis for this decision was that pursuant to s 20(1)(c) of the Travel Agent's Act, Travel Action had failed to comply with the Act; that pursuant to s 20(1)(e), Travel Action does not have, or is not likely to continue to have, sufficient financial resources to enable it to continue to carry on business as a travel agent; and s 20(1)(i) that Suzanne Frugtniet and Brian Frugtniet, being persons (other than the corporate licensee) involved in the direction, management or conduct of a business to which the licence relates is not a fit and proper person to be so involved. 10 The reviewable decision in relation to Suzanne Frugtniet was to permanently disqualify her from being involved in the direction, management or the conduct of business as travel agent or holding a licence issued under the Travel Agents Act. The basis for this decision were findings pursuant to s 20(1)(i) of the Travel Agent's Act that Suzanne Frugtniet, being a person (other than the licensee) involved in the direction, management or conduct of a business to which the licence relates, is not a fit and proper person to be so involved. 11 These proceedings are part-heard. Further hearing dates are scheduled for 6, 7 and 8 May 2003. Investigations by ASIC 12 Suzanne Frugtniet produced a letter dated 24 January 2003, in which ASIC requested that she attend for a formal interview in relation to an investigation of a suspected contravention of 206A of the Corporations Act 2001 during the period of 1 February 2001 to 25 January 2002. That investigation concerned her involvement with Travel Action. Section 206A of the Corporations Act 2001 states that: A person who is disqualified from managing corporations under this Part commits an offence if: (a) they make, or participate in making, decisions that affect the whole, or a substantial part, of the business of the corporation; 13 Allen Turton, the Director, Enforcement of ASIC, gave confidential evidence concerning the investigation of Suzanne Frugtniet and other matters. Proposed condition on access being given to documents produced. 14 The applicants opposed the imposition of any condition on access to the documents produced under the summons. According to the applicants there is no property in a witness and the condition serves no purpose. I am satisfied that pursuant to s 85 of the Administrative Decisions Tribunal Act 1997 (ADT Act), the Tribunal has power to impose conditions of the kind sought by ASIC. However, despite the confidential evidence provided by ASIC, I am not satisfied that there is any need to impose the condition requested by them. Consequently, access is given to the applicants (and to the Director General, Department of Fair Trading) to inspect the documents produced by ASIC and to have photocopy access at the Tribunal's premises. Some of the copies are not clearly legible. If the applicants require originals to be produced, ASIC should produce the originals to the Tribunal within 2 working days. Legitimate forensic purpose. 15 The overriding principle in relation to documents produced under summons is that access may be refused if the Tribunal is not satisfied that access is required for any legitimate forensic purpose. The applicants submitted that the Tribunal should allow documents to be inspected if they are apparently relevant or are on the subject matter of the litigation. According to the applicants, it is not necessary that they be relevant in the sense that a document itself tends to prove or disprove a fact in issue. (See R v Saleam (1989) 16 NSWLR 14). The applicants say that as long as it is "on the cards" that the documents relate to issues in the case, those documents should be produced. (Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667.) I agree with this summary of the legal position. 16 The 2nd third parties submitted that an allegation under s 206A of the Corporations Law which relates to a person disqualified from management of a corporation carrying on management, does not involve questions of whether the person is a "fit and proper person" which appears to be the focus of the current proceedings. The applicants submitted that the investigations by ASIC relate to Suzanne Frugtniet's involvement in the conduct and management of Travel Action. That is a matter in issue in the present proceedings and is relevant to the question of whether Suzanne Frugtniet is a fit and proper person to be involved in the direction, management or conduct of a travel agency. 17 I am satisfied that the issues being investigated by ASIC overlap to some extent with issues relevant in the substantive proceedings before the Tribunal. There is a legitimate forensic purpose in seeking access to the documents. Non-production of documents based on provisions of ASIC Act 18 One submission presented by the third parties was that ASIC was obliged by the terms of the ASIC Act not to produce the documents requested in the summons. Section 127(1)(a) of the ASIC Act states that: ASIC must take all reasonable measures to protect from unauthorised use or disclosure information: (a) given to it in confidence in or in connection with the performance of its functions or the exercise of its powers under the corporations legislation (other than the excluded provisions); or (b) that is protected information 19 Section 127(4)(b) of the ASIC Act states that: Where the Chairperson is satisfied that particular information (b) will enable or assist the government, or an agency, of a State or Territory to perform a function or exercise a power; the disclosure of the information to the agency, government or disciplinary body by a person whom the Chairperson authorises for the purpose is taken to be authorised use and disclosure of the information. 20 According to Mr Kirk, counsel for the 2nd third parties, the bulk of the relevant material held by ASIC was obtained by, or in connection with, the exercise of its compulsive powers in s 19 and s 33 of the ASIC Act. The material is subject to a statutory duty of confidentiality. Release of the material may only take place as authorised by, and for the purposes of, the ASIC Act. (See s 22 and s 127 ASIC Act and ASC v Johns (1993) 178 CLR 408 at 424, 427.) 21 Mr Kirk acknowledged that Maronis Holdings v Nippon Credit Australia [2000] NSWSC 138 stands for the proposition that despite the provisions of the ASIC Act, a court or Tribunal may still summons ASIC documents. At p 612, the Supreme Court said, "Where ASIC produces a document to a Court in compliance with a subpoena or other order of a Court the protection of confidentiality with respect to the documents comes under the control of that court and is not under the control of ASIC." (See also Australian Securities Commission v Zarro & Ors (No 2) (1992) 34 FCR 427 per Drummond J at 432.) 22 Mr Kirk sought to distinguish Maronis, but I am satisfied that it provides binding authority on this Tribunal that the protections in relation to confidentiality in the ASIC Act do not apply to documents summonsed by a court or tribunal. Consequently, the documents are not immune from production on that ground. Public interest immunity 23 The third parties' final submission was that the documents are covered by the doctrine of public interest immunity. ASIC confirmed that it was not making a "class" claim in relation to all documents in possession of a law enforcement agency and relating to an investigation. ASIC relied on the "content" of each document over which public interest immunity is claimed. 24 In accordance with the principles enunciated by Gibbs CJ in Alister v The Queen (1984) 154 CLR 404 at 412, the question of whether public interest immunity applies requires the Tribunal to balance the public interest questions involved. In particular, the Tribunal must weigh up the competing public interests in the harm that might be done by production of the documents, and any frustration of or impairment to the administration of justice if the documents are withheld. (Attorney-General for NSW v Stuart (1994) 34 NSWLR 662 at 675F.) 25 The third parties submitted that documents held by ASIC are prima facie immune from production. That submission is derived from passages in Spargos Mining NL v Standard Chartered Australia Ltd (No 1) (1989) 1 ACSR 311 at 312 and OAMPS Ltd v Porter [1999] NSWSC 1200 at [6]. 26 In Spargos, the Supreme Court was dealing with the equivalent powers under the previous Companies Code scheme. McLelland J said, at 312: In my opinion, documents within the possession of the National Companies and Securities Commission of a confidential nature and recording information received by the Commission relating to possible offences or irregularities, or recording information received in the course of the investigation of possible offences or irregularities, including the identity of informants, and confidential documents recording the actual or possible course of such investigations or particulars of available or potentially available evidence, are in the public interest prima facie immune from compulsory disclosure, on the basis that such disclosure would be likely to seriously impede the ability of the Commissioner to fulfil its function of effectively investigating possible offences under, inter alia, the Companies (New South Wales) Code, and in appropriate cases instituting and prosecuting criminal or civil proceedings in the public interest. 27 This passage was quoted by Bryson J in OAMPS Ltd v Porter at [6]. His Honour went on to say that "The prima facie immunity to which McLelland J referred does not establish the result of the balancing exercising (sic) but it does establish that such documents enter into it." I take this later authority to mean that the fact that documents fall within the description given by McLelland J in Spargos does not mean that the Tribunal does not have to engage in the balancing exercise required in relation to any claim for public interest immunity. 28 In Australian Securities Commission v Zarro & Ors (No 2) (1992) 34 FCR 427 at 432, Drummond J quoted the passage quoted above from Spargos, and noted that "Such comments can, depending upon the circumstances of the particular case, be directly applicable to the activities of the Australian Securities Commission." Balancing competing public interest considerations 29 The general public interest consideration in favour of production is that the withholding of documents should not frustrate the administration of justice. 30 The applicants submitted that withholding the documents would frustrate the administration of justice because it would not enable them to have access to all the relevant material available in relation to the issues in dispute. According to the applicant, they are entitled to all documents that ASIC released to the Department of Fair Trading. The applicants provided a list of the information they believed has been provided by ASIC to the Department of Fair Trading. There is sufficient evidence to conclude that ASIC did provide information to the Department of Fair Trading. One must assume that the information was provided pursuant to s 127(4)(b) of the ASIC Act, quoted above. 31 The Director General of the Department of Fair Trading is required, under s 58(1)(b) of the ADT Act to provide the applicants with "a copy of every document or part of a document that is in the possession, or under the control, of the administrator that the administrator considers to be relevant to the determination of the application by the Tribunal." There is no basis for concluding that the administrator has not provided to the applicants and the Tribunal, all the relevant information that ASIC provided to it. There may be information held by ASIC and not provided to the Department of Fair Trading that is relevant to issues in dispute in the substantive proceedings before the Tribunal. 32 The second reason given by the applicants for granting access to the documents was that the public interest in the administration of justice requires that the applicants be able to test the evidence by having access to prior statements made by witnesses in the Tribunal proceedings. The third parties submitted that their understanding is that this point is not relevant to the material over which they claim immunity. While the disputed documents do not contain prior statements given by people who are witnesses in the proceedings before the Tribunal, it is possible that the documents could contain material relevant to cross-examination of those witnesses. 33 According to the third parties, there are four kinds of public interest against requiring production in this case. These are: that to do so may impede the particular investigation that to do so may impede investigations in general that it is against the public interest to release the names of, and information from, persons who have provided information to regulatory investigators, particularly when that information has been required to be provided by compulsory process; and that it is against the public interest to release such information when it may harm the interest of those who provided it, taking account of the fact that the information was provided in connection with a compulsory process. 34 Impede particular investigations or investigations in general. In OAMPS Ltd v Porter [1999] NSWSC 1200 at [8], Bryson J noted that: "The claims of the public interest in favour of not requiring law enforcement agencies to reveal the information they have before their investigations are complete are strong and obvious." His Honour added at [12] that: "It could well have some limiting effect on the availability of information if persons furnishing information thought that their information was unquestionably or readily available for use in civil litigation, or for any use other than investigation of law enforcement." 35 Information provided by informants under compulsory process. The identity of confidential police informers is protected by the doctrine of public interest immunity. (Marks v Beyfus (1890) 25 QBD 494 at 498 at 500. See also Sankey v Whitlam (1978) 142 CLR 1 at 61.) The applicant submitted that there is a distinction between police informers, especially if they are "regular" and/or paid informers and "ordinary citizens who act in various capacities who just happen quite by chance . . to possess some relevant information which they pass on to the police in the spirit of public duty." No authority is quoted for this proposition and I agree with the third party that there is no justification for such a distinction. It is inconsistent with the provisions of s 130(4)(e) of the Evidence Act 1995 and although the Tribunal is not bound by the rules of evidence (s 73(2) of the ADT Act) those rules provide useful guidance for the Tribunal. 36 The applicants submitted that because the information was obtained pursuant to the exercise of compulsory powers, there is not the same interest in protecting confidentiality. According to counsel for the 2nd third parties, that submission is not consistent with the importance of protecting confidentiality recognised in OAMPS and Spargos Mining. I agree with that submission. 37 I have not mentioned all the submissions made by the applicant and the third parties because they are either not relevant, or do not alter my conclusions. Conclusions 38 In Mr Turton's confidential affidavit, he identified four bundles of documents over which public interest immunity was claimed. The first bundle of documents, AJT 7, consisted of 43 pages of emails originating from or sent to an officer of ASIC. ASIC has not objected to the applicant's having access to these documents with the email addresses, phone numbers and other contact details of the parties deleted. Those documents were produced. The effect of this is that ASIC is claiming public interest immunity over the email addresses, phone numbers and other contact details of the people with whom ASIC communicated in these emails. 39 I am satisfied that the contact details should not be disclosed on the basis of public interest immunity. The public interest in maintaining the confidentiality of personal information about various people who have spoken to ASIC, outweighs any public interest in the administration of justice that disclosure would bring. 40 The second bundle, AJT 8, contains two documents. The third bundle, AJT 9, contains documents and cassette tapes. The fourth bundle, AJT 10, contains cassette tapes. Having taken into account the evidence in the confidential affidavit and the submissions by both parties, I am satisfied that the public interest considerations against disclosure of these documents and tapes outweighs those favouring disclosure. Consequently, the third parties' claim for public interest immunity over the documents attached to the confidential affidavit, is upheld.

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