MR RIORDAN'S FILE NOTES
100 Mr Kennedy contends that there are several difficulties with the First Investigation Decision and the Second Investigation Decision that arise on the face of the file notes that recorded those decisions.
101 The investigation contemplated by the file note of 31 October 2003 was narrower than that contemplated by the file note of 10 November 2003. The file note of 31 October 2003 refers only to s 64(1)'of the ASC Law/ASIC Act' and records that Mr Riordan had reason to suspect that there may have been contraventions of that provision in relation to the information given, and the statements made, by Mr Rivkin during his examination of 6 June 1995 and 6 September 1995. Mr Kennedy's complaints in relation to the First Investigation Decision therefore stand or fall with his complaints in relation to the Second Investigation Decision.
102 Mr Riordan's file note in relation to the Second Investigation decision recorded that Mr Riordan had reason to suspect that there may have been contraventions of 'section 64(1) of the ASC Law/ASIC Act' as well as the three other provisions to which reference has been made. It is common ground that, despite the language of the 10 November 2003 file note, the examination of Mr Kennedy on 18 May 1995 was pursuant to s 19 of the ASC Law. The ASC Law was relevantly the 1989 ASIC Act, as applied in New South Wales by the 1990 Corporations Act. Thus, it is clear that the examination was conducted pursuant to a law of New South Wales.
103 Mr Kennedy contends that Mr Riordan failed to identify properly, in his file note of 31 October 2003, the relevant statutory provisions. He says that the file note exhibits a misapprehension, namely, that the Commission was exercising power under the 1989 ASIC Act rather than power under the ASC Law. That is to say, the references to the provisions contravened are to provisions of laws of New South Wales, which do not satisfy the description 'the corporations legislation' as that term is used in s 13(1) of the 2001 ASIC Act: in s 13, corporations legislation means the 2001 ASIC Act and the 2001 Corporations Act.
104 A decision to investigate under s 13 of the 2001 ASIC Act does not need to be recorded in writing. If a written record of the decision to investigate is made, it ought not necessarily be treated as a formal statement of reasons (see Little River Goldfields NL v Moulds (1991) 32 FCR 456 at 462 and 464). Even if an officer were under a misapprehension as to the source of his statutory power, that misapprehension would not of itself invalidate the exercise of the power: misdescription of the statutory provision by reference to which a power is exercised would not of itself invalidate the exercise of the power: see Johns v Australian Securities Commission (1993) 178 CLR 408 at 426.
105 Thus, if Mr Riordan bona fide believed that the conduct of Mr Kennedy that he wished to investigate was capable of constituting a contravention of the Corporations Legislation, as defined, and that conduct was in law capable of constituting a contravention of the Corporations Legislation, it would be immaterial that he may, at some time, have misapprehended or misdescribed the provision of the Corporations Legislation that was contravened. Mr Riordan's errors in the file note do not indicate that he did not have a bona fide belief that there may have been contraventions of provisions of the Corporations Legislation, as that term is defined.
106 Certainly, it is apparent that Mr Riordan did not spell out how it was that he suspected that there were contraventions of the corporations legislation, in the way that has been summarised above. It may be that Mr Riordan had an imperfect understanding of the somewhat arcane way in which the transitional provisions operate to transform a liability under the former State law into a liability under the new federal corporations legislation. His file note clearly does not state fully the way in which Mr Kennedy is liable to prosecution under the corporations legislation by reason of conduct in contravention of State legislation that occurred in 1995. It should be noted, however, that both file notes conclude with the statement:
'I am also of the view that it is expedient for the due administration of the corporations Act 2001 and the ASIC Act [2001] that ASIC investigate the matters set out above'
The statements disclose, implicitly if not explicitly, that Mr Riordan was of the view, which we have found to be correct, that the due administration of the 2001 Corporations Act and the 2001 ASIC Act enabled the investigation and prosecution of the contraventions referred to in the file notes.
107 Accepting that Mr Riordan may have had an imperfect understanding of the operation of the transitional provisions, it does not follow that Mr Kennedy has established that s 13 of the 2001 ASIC has not been activated such that a notice pursuant to s 19 of the 2001 ASIC Act in relation to such an investigation could not validly be given. Plainly, an incomplete record of a decision cannot invalidate a decision that was validly made. Mr Kennedy has not established that there was no power to investigate or that the decision to investigate was not validly made.
108 An additional issue arose in respect of s 35 of the Crimes Act. As explained in [58] above a pre-2001 contravention of s 35 of the Crimes Act was transformed into a contravention of the new federal corporations legislation by reason of the definitions in s 254(1) of the 2001 ASIC Act of "old ASIC legislation" and "new ASIC legislation" and s 276 of that Act. However, the definition of "old ASIC legislation" was amended by the Financial Sector Legislation Amendment Act No 1 of 2001 (Cth), which was assented to on from 27 November 2003 but operated retrospectively from immediately after the commencement of the 2001 ASIC Act on 15 July 2001, to ensure that both definitions included the Crimes Act. The Second Investigation Decision, (which relied, inter alia, on a suspected contravention of s 35 of the Crimes Act) was made on 19 November 2003. The s 19 notice, which also pre-dated the amendment, did not refer to s 35 of the Crimes Act. We have concluded, however, that nothing turns on the point, as, by the time Mr Kennedy was examined (1 and 2 December 2003) and the First and Second Requests were made (22 January 2004 and 2 April 2004), a pre-2001 contravention of s 35 of the Crimes Act applied as a law of New South Wales, was an offence under the new federal corporations legislation and ASIC's suspicion in relation to it remained operative. Thus, as from the date of the amending Act, ASIC's investigation under the 2001 ASIC Act in relation to a suspected contravention of s 35 of the Crimes Act satisfied the requirements of s 13(1) of the 2001 ASIC Act and was valid and lawful.
109 As we have concluded that ASIC's investigation into the matter set out in the notice given to Mr Kennedy pursuant to s 19 of the 2001 ASIC Act was a valid and lawful investigation, the only remaining issue is whether the notice complied with s 19(3) of the 2001 ASIC Act which requires the notice to state "the general nature of the matter" ASIC is investigating. The "matter" referred to in s 19(3) is the matter the subject of the s 13 investigation, which is whether the contravention of the kind to which the section is directed may have been committed: see Australian Securities Commission v Graco (1991) 29 FCR 491 ("Graco") at 497-8 per Jenkinson J; Johns v Connor (1992) 35 FCR 1 ("Johns v Connor") at 11-13 per Lockhart J; Johns v Australian Securities Commission (1992) 35 FCR 146 ("Johns v ASC") at 166-8 per Black CJ and von Doussa J.
110 The requirement that a s 19 notice describe the "general nature" of the matter ASIC is investigating "invites both comprehensiveness and brevity in description of the matter, and gives no encouragement to definitional particularity": see Graco at 495 and Johns v Connor at 13. In Johns v ASC at 167-168 Black CJ and von Doussa J, drawing upon the analogous situation of a notice under s 155(1) of the Trade Practices Act 1974 (Cth), suggested that in identifying the matter that is being investigated the notice must identify the matter in such a way that the recipient can "perceive the general ambit of the subject matter of the investigation that is being undertaken". Black CJ and von Doussa J also observed (at 168) that a proper description of "the matter" will usually include a reference to the specific law suspected of being contravened.
111 The s 19 notice given to Mr Kennedy plainly enables the recipient to perceive the general ambit of the subject matter of the investigation that is being undertaken. However, Mr Kennedy relies on the failure of the notice to describe the transitional provisions that operate to transform the liability under the previous laws described in the notice into a liability under the new federal corporations legislation. In fact, the notice purported to do so in respect of the possible contraventions of s 709 of the Corporations Law, but mistakenly referred to s 1400 instead of s 1401 of the 2001 Corporations Act as the transforming provision.
112 In our view the omissions complained of do not have the consequence that the notice fails to state the general nature of the matter being investigated. The notice accurately describes the general nature of that matter being investigated, including the specific pre-2001 provisions that were suspected of having been contravened. It's failure to state the legal basis upon which those pre-2001 contraventions were transformed into contraventions under the new federal corporations legislation is an omission relating to the legal nature of the matter being investigated, and is not such as to result in the general nature of that matter not being sufficiently described. Accordingly, Mr Kennedy's challenge to the s 19 notice also fails.