National Companies & Securities Commission v News Corp Ltd

National Companies & Securities Commission v News Corp Ltd - [1984] HCA 29 - HCA 1983 case summary — Zoe

[74]

Subject to this agreement, the functions of the National Commission to be established by the Commonwealth Acts shall be to have and to exercise, subject only to directions from time to time of the Ministerial Council, responsibility for the entire area of policy and administration with respect to company law and the regulation of the securities industry. For the purpose of performing any of the functions so widely described, the Commission may hold a hearing. In some cases, as s. 36(2) recognizes, the Commission is required to hold a hearing: for example, before refusing to register a person as auditor or liquidator (ss. 18(8) and 20(10) of the Companies Act), before revoking a licence authorizing a company to omit "Limited" from its name (s. 66(9) of the Companies Act), and, with certain exceptions, before refusing to grant, or revoking or suspending, or imposing or varying conditions or restrictions in respect of, a licence under the Securities Industry Act 1980 Cth (s. 62(1) of that Act). Those are cases in which the exercise of power by the Commission may affect rights, but the Commission is not required to hold a hearing in every case when rights may be affected; in some such cases the Commission may, but need not, hold a hearing: see, e.g., ss. 65(3), 166(1) and 167(2) of the Companies Act and s. 40 of the Securities Industry Act. In some cases where the Commission holds a hearing before making a decision that will directly affect rights, one might sensibly speak of an issue to be determined, although not of an issue between contending parties. Where, however, the Commission decides to hold a hearing for the purpose of investigating whether a person has committed an offence against the Companies Act, or for the purpose of deciding whether it should make application to the Supreme Court, there is no issue to be decided; the hearing is designed to discover facts which may or may not lead to further action being taken; no finding of fact or decision of law need be made; and the procedure is not an adversary one but inquisitorial. In the case of such hearings, which include the present, the word "hearing" has no significance other than to indicate that Pt VI applies; the word is not used for the purpose of prescribing, implicitly, the procedure which the Commission must follow at a hearing or of indicating that persons who may be affected by a hearing have rights similar to those of parties at a trial. Its use is a convenient description of a procedure the incidents of which are described in Pt VI of the N.C.S.C. Act.

[75]

It was further submitted on behalf of the respondents that the Commission had equated its proceedings at a hearing with those adopted by an inspector under Pt VII of the Companies Act and was attempting to conduct a hearing as though it were a special investigation, or a series of private examinations, under Pt VII but without the safeguards which that Part provides. An investigation permitted by Pt VII may be into the affairs of a corporation (see ss. 290 and 291 of the Companies Act) - i.e., it may be much wider in scope than an investigation under s. 16A. An application for an investigation under Pt VII may be made, inter alia, by a prescribed number or proportion of members of the corporation, by a trustee for debenture holders, by the holders of debentures of sufficient value or by the corporation itself (s. 290) or it may be instigated by ministerial direction (s. 291). The investigation can be established, and its scope determined, only by the Minister or the Ministerial Council (ss. 290-292), although the investigation will be carried out by the Commission or one of its inspectors (s. 292). An inspector (which term for this purpose includes a member of the Commission: s. 289(4)) may require an officer of a corporation whose affairs are being investigated to produce books and appear for examination and to answer questions (s. 295(1)). An examination under s. 295 is deemed to be a judicial proceeding for the purpose of Pt III of the Crimes Act (s. 295(4)). It is an offence, inter alia, to fail to comply with a requirement made under s. 295 or to make a false or misleading statement when appearing before an inspector for examination under that section (s. 296). An inspector may make a record of the questions asked and answers given at an examination (s. 298(1)) and the examinee is entitled to a copy of the record (s. 298(2)(b)). The Commission may give a copy of a written record of an examination to a legal practitioner who satisfies the Commission that he is acting for a person who is conducting, or is, in good faith, contemplating criminal or civil proceedings in respect of any matters into which the investigation has been or is being made (s. 298(6)), and may, if it thinks fit, give a copy to any other person (s. 298(8)). When a final report is made in respect of an investigation, any record of an examination shall be furnished with the report (s. 298(10)). On completion of an investigation a report shall be made (s. 305). Subject to certain exceptions, copies of the final report of the investigation shall be sent to the corporation, and (on request) to an applicant under s. 290, and to each other person to whom in the opinion of the Commission the report ought to be given by reason that it relates to the affairs of that person to a material extent (s. 306(1)-(4)). The report may be printed and published by the Minister or the Ministerial Council as the case may be (s. 306(6)), but shall not be published where an Attorney-General certifies that its publication would be prejudicial to the administration of justice (s. 306(7)).

[80]

In my opinion the Commission has misconceived the extent of its functions in thinking that the powers conferred by s. 16A of the Companies Act and Pt VI of the N.C.S.C. Act entitle it to publish a report of the result of its investigations under s. 16A, or to make a finding or assertion that a person has contravened a provision of the Companies Act. The purpose of a hearing of the kind in question in the present case is simply to find out the facts and to enable the Commission to decide whether it should make application to the Supreme Court under s. 45(1) of the Acquisition of Shares Act or s. 146(1) of the Companies Act. For these purposes no report is necessary and none is contemplated by Pt VI - here the contrast with Pt VII of the Companies Act is important. Of course the Commission has the freedom of speech which any member of the community enjoys, but to say that it may exercise its right to speak is not to say that it is necessarily performing its functions under the Act in doing so, or that its words will necessarily be protected by s. 41 of the N.C.S.C. Act if an action for defamation is brought in respect of them. It would be unnecessary and unwise to attempt to discuss, in the abstract, the sort of cases in which the Commission would or would not obtain the protection given by s. 41. However, it would seem that where the Commission has held a hearing such as that in the present case, three typical situations may arise. First, the Commission may conclude that a contravention has occurred and it may decide to take action in the Supreme Court. In that case, speaking generally, the publication of a report by the Commission that in its opinion a contravention had occurred would not only be no part of its function, but might well be a contempt of the Supreme Court. Secondly, the Commission may conclude that no contravention had occurred. In that case ordinary fairness might require it to say so, and its statement might be regarded as made in the performance of its functions, although it probably would not in any case need the protection of s. 41 for what was said. The third case is where the Commission reaches the conclusion that a contravention has occurred but is prepared to accept an undertaking that some remedial action will be taken by those who have committed the contravention. In such a case the Commission is in effect compromising the proceedings or proposed proceedings in the Supreme Court and it may be possible that as part of the compromise the alleged offender may agree to the publication of a report. The fact that it is normally no part of the Commission's function to publish a report on a hearing of the present kind does not mean that it is unable to perform an educative role, for example, by the publication of general guidelines or by private admonition.

[81]

The Full Court of the Federal Court accepted that the Commission might, as a result of its hearing, make a report adverse to the respondents and placed considerable weight on that circumstance in reaching its conclusion that the course proposed by the Commission did not satisfy the demands of natural justice. Although, as I have indicated, I do not agree that the publication of adverse findings, conclusions or evidence after a hearing such as the present is normally, and without more, one of the functions of the Commission, that does not in my opinion make a critical difference to the result. Let it be assumed that as a result of the hearing the reputation of the respondents may in some way be affected. The question would then be what natural justice requires when a hearing, publicly announced but held in private, is held only for the purpose of investigation, the hearing being one in the course of which no issue can be determined, and as a result of which no right, interest or legitimate expectation can be affected, although the reputation of the respondents may be damaged. That question has to be answered in the light of a statutory framework which expressly recognizes the need for expedition and gives the Commission power to decide who may attend and who may intervene at the hearing. If the Commission were to accord to all the persons whose reputation might possibly be affected by the hearing a right to cross-examine the witnesses and call evidence as though they were in a court of law, the hearing might become so protracted as to render it practically futile. In these circumstances, with all respect, I find it quite impossible to say that the rules of natural justice require the Commission to proceed as though it were conducting a trial. It seems to me in no way unfair that, at a hearing of the kind which I have described, the respondents should not be entitled to cross-examine such witnesses as the Commission may call, or to call evidence of their own. If proceedings are subsequently brought in the Supreme Court against the respondents, they will of course be able to test by cross-examination the evidence adduced, and to call evidence themselves.

[85]

These statements will not be applicable to a hearing before the Commission if, as I have held, it is normally no part of its function to make any findings or any report and if none are to be made in the present case. However, assuming their applicability, the requirement to which they refer is satisfied by the procedure which the Commission has suggested, namely, that if, at the conclusion of the hearing, the Commission proposes to publish any matter adverse to or critical of any person it will afford him or it an opportunity to be heard and call evidence on such matter before proceeding further. The learned judges who constituted the Full Court said that the right to call rebutting evidence and to make submissions after the Commission had formed its views in the absence of the accused fell well short of the rights ordinarily afforded to a person accused of a breach of the law. That is true but it is of no present significance; in the first place, there is in the true sense no accused, and secondly, the rules of natural justice do not require the Commission to treat the hearing as though it were a trial in a court of law. Their Honours went on to say that the procedure proposed by the Commission placed the respondents in the position of having to call evidence and make submissions in an endeavour to persuade the Commission to change its mind and reverse the conclusion arrived at on evidence which only the Commission had heard. They said: "Human experience teaches that such a course imposes a heavy burden. Minds which have reached conclusions, however tentative, may not be closed totally, but the task of prising them open will not be a light one." Whether the course proposed would place a heavy burden on the respondents depends of course on the circumstances. However, as common judicial experience shows, minds may remain open and impartial although they have given consideration to a matter and reached tentative conclusions upon it (cf. Reg. v. Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group [11] ); and it will be enough in the present case if the respondents are given a fair opportunity to correct or contradict any relevant material prejudicial to them: cf. Board of Education v. Rice [12] and In re Pergamon Press Ltd. [13] . It is hardly likely that at the hearing the Commission will fail to call witnesses from the respondent companies, and since the Commission has indicated that such witnesses may be represented by counsel, who may re-examine them, the respondents' case will in all probability be made known to the Commission during the course of the hearing. Further, when the Commission said that it would give the respondents an opportunity to be heard, it must have meant a proper opportunity, and there is no reason to think that the Commission will not give to the respondents adequate notice of any adverse conclusion which it has tentatively reached, or of any criticism which it tentatively proposes to make, or that it will not listen with an open mind to whatever material is then put before it by the respondents and give full weight to such material. Having regard to the nature of the hearing, it seems to me that what the Commission has proposed is all that fairness requires. 1. [1984] A.C. 808. 2. [1984] A.C., at p. 820. 3. [1965] 1 Q.B. 456, at pp. 488, 490. 4. [1965] 1 Q.B., at p. 488. 5. [1984] A.C., at pp. 820-821. 6. (1969) 122 C.L.R., at p. 554. 7. [1911] A.C. 179, at p. 182. 8. [1971] Ch. 388, at pp. 399-400, 407.

[134]

The developing practice of the Commission in relation to the publication of its views following an investigation is in our opinion open to question. As has been seen, s. 36(1) of the N.C.S.C. Act authorizes the Commission to hold a hearing "for the purpose of the performance of any of its functions or the exercise of any of its powers". Those functions include, subject to directions from time to time of the Ministerial Council, "responsibility for the entire area of policy and administration with respect to company law and the regulation of the securities industry" (the Agreement, cl. 32(1)). One can understand, in the light of such a responsibility, that it is an important task of the Commission to make known nationally matters of policy and administration. Particularly in these early years of the co-operative scheme there is a daunting educative role confronting the Commission. So much may be readily conceded. But where the purpose of undertaking an investigation by way of a hearing is to determine whether the Commission should make certain applications to the Supreme Court, and that hearing is conducted in private, the subsequent publication by the Commission of the evidence given in that hearing and of the Commission's views upon it may not be appropriate. Part VI of the Act, although dealing in detail with the subject of hearings, does not expressly authorize the Commission to publish a report of a hearing. Certainly, if the hearing is to be followed by an application to the Court then any prior publication would seem to be distinctly unwise if not positively unlawful. If the result of the hearing, whether or not followed by successful negotiations for a settlement of the matter, does not issue in any further proceedings, the desirable course of action is not so clear. Bearing in mind the fact that the Commission has published in conjunction with the notice of hearing a statement to the effect that it has reason to suspect that a number of companies may have contravened certain of the provisions of the legislation but that thereafter the hearing has proceeded in private, it would seem that fairness required some further statement either to the effect that the suspicion has not been substantiated or that the matter had been resolved to the satisfaction of the Commission as the case may be. In the latter case, the form and content of the publication would be likely to form part of the settlement.

At a glance

Court

Decision date

Before

Source

Judgment (140 paragraphs)

Parties