P Dawson Nominees Pty Ltd (ACN 004 743 408) v Multiplex Limited

THE ASIC INVESTIGATION 4 On 22 February 2005 ASIC commenced an investigation into events and issues concerning the stadium project. In the course of that investigation ASIC reviewed over 3,000 documents, either examined or took statements from 23 witnesses, and obtained information from the United Kingdom. The investigation was finalised in September 2006. As a result of its investigation ASIC made certain findings in relation to Multiplex's conduct. 5 The examination of the witnesses, whose evidence was transcribed, occurred between 22 March 2005 and 11 August 2006. At the commencement of each examination an ASIC officer gave a direction to the witness to the effect that the witness was not to disclose to any person the questions asked or the information or documents provided to them or by them during the examination except to their legal adviser for the sole purpose of obtaining legal advice. From time to time, ASIC officers wrote to the witnesses extending this period of confidentiality and the last date for the extended period of confidentiality was 5 March 2007. Since that date all the persons examined have been free to disclose the contents of the transcripts of their evidence to anyone. 6 Each person examined was sent a copy of the transcript of their examination under cover of a letter requiring them pursuant to s 24(2) of the Australian Securities and Investments Commission Act 2001 (Cth) to read the transcript, make any changes to ensure it was accurate and to sign each page of it and return it to ASIC by a specified date. Some of the transcripts have been signed and returned to ASIC, but a number of them have not been signed and returned. ASIC has proceeded on the basis that it is obliged by s 127 of the ASIC Act to prevent unauthorised use or disclosure of confidential material obtained by it using its compulsory powers. ASIC also applies common law principles of confidentiality to material provided to it on a voluntary basis. 7 On 20 December 2006, Multiplex entered into an enforceable undertaking, which was accepted by ASIC, pursuant to the provisions of s 93AA of the ASIC Act. The undertaking recorded that Multiplex did not admit that there had been any contravention on its part of either ASX Listing Rule 3.1, the Corporations Act or any law but offered an enforceable undertaking in the terms set out in the undertaking. The undertaking recorded that as a result of its investigation ASIC made findings that Multiplex: "(a) from 3 February 2005 to 23 February 2005 failed to comply with its continuous disclosure obligations pursuant to ASX Listing Rule 3.1 and under s 674 of the Corporations Act … (c) … may not have had appropriate corporate governance and compliance procedures and controls in place to ensure compliance with its continuous disclosure obligations under the Corporations Act and the ASX Listing Rules; (d) … may not have had appropriate policies and procedures in place to foster and encourage the timely upward reporting of concerns or difficulties at an operational level and the mechanisms in place to effectively deal with the reporting of such concerns."

PROCEEDING BEFORE THE COURT 8 This proceeding was commenced on 18 December 2006 as a group proceeding pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) by the applicant on its own behalf and on behalf of other persons who, speaking generally, acquired shares in Multiplex between 2 August 2004 and 30 May 2005. The applicant alleges that during that period the costs of the stadium project exceeded budgeted costs, construction fell behind schedule, the project made a forecast budgeted loss and the project substantially reduced profit earnings for the Multiplex Group. 9 The applicant further alleges that by 2 August 2004 Multiplex was aware, or ought reasonably to have been aware, of these matters. It alleges that information about these matters was material information that a reasonable person would expect to have a material effect on the price or value of Multiplex's shares, that Multiplex was obliged pursuant to the ASX Listing Rules to tell the ASX about these matters and that in contravention of its obligation of continuous disclosure under s 674 of the Corporations Act Multiplex failed to do so. The damage alleged by the applicant is primarily the difference between the price paid during the relevant period for Multiplex shares and what is said to be the true value of those shares. 10 On 21 December 2006 the solicitors for the applicant applied to ASIC pursuant to s 25(1) of the ASIC Act for: "all statements and or transcripts of examination, and any related books of the company, of each person examined by ASIC relevant to the contraventions/allegations as pleaded". ASIC notified third parties who might be affected by the release of the documents and received submissions from them. ASIC communicated with each person whose evidence had been transcribed to ascertain whether they consented to their transcripts being given to Multiplex to enable it to consider whether it objected to the transcript being made available to the solicitors for the applicant. Several examinees objected to the release of their transcripts to Multiplex. On 28 February 2007, ASIC wrote to the solicitors for Multiplex and granted them access to the transcripts of those examinees who had not objected for the purpose of allowing Multiplex to make a written submission as to how ASIC should exercise its discretion in relation to the request from the applicant's solicitors. Access was limited to Multiplex's legal advisers, company secretary and in‑house counsel. ASIC has not made a determination on the applicant's s 25 application. 11 The applicant applied for leave to issue a subpoena duces tecum against ASIC and the respondents were given notice of that application. It came on for hearing before Heerey J on 5 July 2007. ASIC did not object to the granting of leave, but leave was opposed by the respondents. 12 On 12 July 2007 Heerey J ordered that the applicant have leave to issue a subpoena directed to ASIC to produce specified documents. That order was varied by Finkelstein J on 7 August 2007. No claim for restricted access was made by ASIC in relation to the majority of those documents and the production for inspection of those documents is not in issue. They were produced to the Court on 20 August 2007. Multiplex submitted that these documents should only be inspected by the applicant's counsel and solicitors who had signed confidentiality undertakings. The applicant contended that the documents should be available for inspection without the need for confidentiality undertakings being signed by persons undertaking the inspection. In order to expedite the inspection I put in place an interim arrangement on 11 September 2007 whereby I ordered that access be given to those documents to the applicant's counsel and solicitors who had signed confidentiality undertakings on the basis that such order was without prejudice to the applicant's right to contend that no confidentiality regime was appropriate and that execution of confidentiality undertakings did not constitute an admission as to the appropriateness of confidentiality orders. 13 The respondents objected to the production for inspection, on the ground of legal professional privilege, of a number of the documents specified in the subpoena as: "One copy of documents provided by Multiplex Limited to the Australian Securities and Investments Commission (ASIC) in the course of the investigation (the investigation) referred to in the Enforceable Undertaking under s. 93AA of the Australian Securities and Investments Commission Act 2001 entered into by Multiplex Limited on 20 December 2006 (the Enforceable Undertaking), a copy of which is attached to this notice." The determination of the claim for legal professional privilege has been adjourned for hearing at a later date. 14 ASIC's application to restrict inspection of documents produced pursuant to the subpoena was fixed for hearing on 11 September 2007. Prior to that date ASIC informed the parties and the Court that it was objecting to the production for inspection of thirty‑six specified documents and copies of the transcripts of examination of all persons examined by ASIC during the course of its investigation on the ground of public interest immunity privilege. The transcripts of examination and the documents the subject of the applicant's subpoena were obtained by ASIC using its coercive powers under s 19 and Pt 3, Div 3 of the ASIC Act. 15 In the material it filed in the Court and served on the parties ASIC did not elaborate on the matters of public interest it had identified for resisting the production of the documents and transcripts. It contended that to do so would, or could, disclose, or tend to disclose, certain confidential information contained in, or revealed by, the documents and the transcripts. ASIC contended that such disclosure would, or could, tend to defeat the public interest which ASIC sought to protect in relation to those documents and transcripts. Accordingly ASIC sought to have its claim for public interest immunity privilege heard in camera in the absence of all the parties to the proceeding. 16 ASIC filed with the Court and served on the parties written submissions as to the procedure which should be adopted by the Court on the hearing of its public interest immunity privilege claim. In support of its submissions ASIC relied upon confidential affidavits, to which were exhibited a number of documents, and confidential submissions filed in the Court but which were not served on the applicant or the respondents. These confidential affidavits and submissions were relied on by ASIC in support of its public interest immunity privilege claim. 17 ASIC sought orders: (a) pursuant to s 50 of the Federal Court of Australia Act forbidding the publication of the confidential affidavits filed by it, including publication to the legal representatives of the applicant and the respondents; (b) pursuant to s 17(4) of the Federal Court of Australia Act, excluding the public from the hearing of its public interest immunity privilege claim on the ground that the presence of the public would be contrary to the interests of justice. The effect of the orders sought by ASIC was that the hearing of its objection to the production of the transcripts and the documents on the ground of public interest immunity privilege would be made ex parte, in camera and with no other party or person present to put opposing submissions. 18 I was extremely unhappy about adopting the procedure proposed by ASIC but, after giving the applicant and the respondents the opportunity to make submissions in relation to ASIC's proposal for the procedure for the hearing of its public interest immunity privilege claim, I reluctantly acceded to ASIC's submissions. My reasons for making orders pursuant to ss 17(4) and 50 of the Federal Court of Australia Act follow. 19 The power given to the Court under s 50 of the Federal Court of Australia Act to forbid or restrict the publication of evidence should only be exercised in exceptional circumstances. Section 50 makes it clear that the power should only be exercised in order to prevent "prejudice to the administration of justice or the security of the Commonwealth". In the present case ASIC's concerns relate to prejudice to the administration of justice. It is a fundamental principle of the administration of justice in Australia that the administration of justice be open justice. When considering whether to exercise the power given by s 50 a Court must bear in mind the need to do justice between all relevant parties, taking as its initial position the principle of open justice. The manner in which a Court should approach an application under s 50 of the Federal Court of Australia Act to restrict the publication of evidence was considered by a Full Court of the Federal Court in Applicant Y v Australian Prudential Regulation Authority [2005] FCAFC 222. The Full Court said at pars [14] and [15]: "The public interest, that the Court should effectively endeavour to achieve in considering the exercise of power under s 50, is the object of doing justice between the parties. That is the function that the Court is appointed to discharge. Where refusal to make an order might well undermine or defeat the purpose of achieving justice between the parties, and disappoint the public interest in having the Court deal responsibly with the affairs of citizens, it may be appropriate to make an order pursuant to s 50 … The Court must, however, take into account what s 50 does not explicitly state, but is the underlying assumption upon which it is based, namely, the principle of open justice. The importance of the principle of open justice is not in doubt. On the other hand, the possibility of prejudice to the administration of justice must be weighed against the public interest in maintaining open justice. Although the principle of open justice is of great importance in exercising the discretion under s 50, it is not necessarily the whole weight of that principle that must be placed on the scales. The derogation from the principle that might be involved in making an order under s 50 may be very great, or it might be very small. The degree of derogation from the principle involved in the proposed order is an important matter to be considered in balancing the principle against possible prejudice to the administration of justice …" (citation omitted) 20 The basis upon which the Court should approach an application under s 17(4) of the Federal Court of Australia Act is similar to the approach it should take in relation to an application under s 50. The power to order the exclusion of persons from a hearing should only be exercised in exceptional cases. It is clear from s 17(4) that that power should only be exercised in circumstances where not to exercise it would be "contrary to the interests of justice". The primary principle is that the principle of open justice is to be observed in that Court hearings should be open to the public and only closed where the interests of justice require that closure. As Earl Loreburn said in Scott v Scott [1913] AC 417 at 445: "The inveterate rule is that justice shall be administered in open Court." His Lordship accepted that it was appropriate in the interests of justice that the doors of the Court be closed when the subject‑matter of the action would be destroyed by a hearing in open court. 21 In Raybos Australia Pty Ltd v Jones [1985] 2 NSWLR 47, Kirby P (as he then was) said at 55: "Many cases report the scrutiny by courts of statutory provisions designed to derogate from the open administration of justice. Running through these decisions is a common theme. It is that, by our tradition, the open administration of justice is the rule. Statutory derogation from openness is the exception. In the defence of the rule, such statutes will usually be strictly and narrowly construed. Unless the derogation is specifically provided for, courts are loathe to expand the field of secret justice …" Samuels JA, in the course of analysing whether the publication of the names in suit would defeat the ends of justice, said at 61: "The inquiry must start with the proposition, central to our notions of forensic procedure, that the courts customarily conduct their business in public in order that the integrity, fairness and efficiency of the system, and its administrators, may be maintained by its exposure to public scrutiny." 22 The applicant submitted that ASIC should disclose in open hearing what was the reasoning process to support the protection of the information sought by ASIC without disclosing what that information was. It submitted that it should, to the extent possible, identify the reasons why the information was being withheld without disclosing the information. The difficulty with acceding to that submission is that exposing the reasoning process would inevitably disclose the information sought to be protected. There were also a number of matters in respect of the claim for public interest immunity privilege raised in the confidential material which I wanted to discuss with counsel for ASIC but it was not possible to do this in open session without exposing the information that ASIC sought to protect. 23 The difficulty with which I was faced in this application by ASIC was that in order to determine whether orders should be made under ss 17(4) and 50 of the Federal Court of Australia Act I must have regard to the confidential affidavits (not served on the parties) filed by ASIC and its confidential submissions (not served on the parties) in order to understand the basis for the application. I reached the conclusion that in order to preserve the subject‑matter of ASIC's claim for public interest immunity privilege I was compelled to make orders under ss 17(4) and 50 of the Federal Court Act in order to avoid prejudice to the administration of justice. If I had not made such orders I would have destroyed the basis for ASIC's claim. The hearing of ASIC's claim in the presence of the parties to the proceeding would have disclosed the very subject‑matter and issues which ASIC claimed were protected from disclosure by the public interest immunity privilege. I therefore heard ASIC's application in camera in the absence of the parties to the proceeding. 24 ASIC raised two threshold submissions which I can resolve in published reasons. The first submission was that the subpoena was being used for an inappropriate purpose. It submitted that the forensic objective which was sought to be achieved by the applicant through the subpoena was one of helping the applicant in a discovery process so as to confine the quantum of any security for costs which might be ordered which would cover the costs of obtaining discovery. It was submitted that that was a different purpose from the usual purpose of issuing the subpoena which was to obtain documents for use as evidence. I consider that the use of the subpoena in this case serves both purposes and that the purpose of seeking to confine the quantum of any security for costs which might be ordered which would cover the costs of obtaining discovery is legitimate. That purpose has as its ultimate objective the obtaining of discovery of relevant documents. If the scope and costs of discovery in a proceeding as complex as this proceeding can be limited and minimised by the use of Court processes such as the issue of a subpoena duces tecum to a third party, then such use is for a legitimate purpose and for a proper forensic objective. 25 In any event this submission made by ASIC is foreclosed by the reasons for judgment and orders of Heerey J on 12 July 2007. What was before his Honour on that occasion was an application by the applicant for leave to issue a subpoena duces tecum to be served on ASIC. Such an application is normally made ex parte but ASIC was given notice of the application and, as Heerey J observed, the application was argued on the implicit basis that considerations which might warrant the setting aside of the subpoena were appropriate to the anterior question of whether leave to issue the subpoena should be granted (at par [1]). Heerey J also noted that ASIC did not object to the issue of the subpoena. 26 Heerey J concluded that the production of the documents sought under the subpoena: "… is likely to assist in resolving discovery questions, both for the purpose of the security for costs question and generally for the more efficient conduct of the proceeding." (par [28]) Heerey J concluded further (at par [34]) that the applicant's purposes seemed to him to be forensic purposes and that on their face they were related to the litigation in this proceeding. He did not see the applicant's purposes in seeking to issue the subpoena as illegitimate. If ASIC wished to challenge the forensic objective which was sought to be achieved by the applicant in issuing and serving the subpoena, that challenge should have been made by way of seeking leave to appeal from the decision of Heerey J. 27 ASIC's second threshold submission was that until the applicant inspected those documents produced under the subpoena, in respect of which there was no challenge to their inspection, the applicant did not know whether the forensic objective that it sought to achieve from the production of the documents under the subpoena was satisfied by inspecting those documents. ASIC contended that the applicant would not be able to say whether in order to advance its claims against Multiplex it was necessary to inspect the documents in respect of which the claim for public interest immunity privilege was made until it had inspected the unchallenged documents. Put another way, ASIC submitted that in order for the applicant to overcome a claim for public interest immunity privilege it had to show that the documents, produced under the subpoena, which it had not inspected were necessary for the administration of justice and then have the Court weigh the impact on the administration of justice of those documents being withheld against the interest sought to be protected by the claim for public interest immunity privilege. ASIC contended that it was premature for the Court to undertake this weighing process until the applicant had inspected the non‑contentious documents. ASIC also contended that the volume of material to be disclosed to the applicant pursuant to the subpoena would be more than adequate for the administration of justice. 28 I reject this submission. The documents produced under the subpoena which the applicant is presently able to inspect may well be supportive of the claims made by the applicant against the respondents. But it does not follow that there is no need for it to obtain access to further documents which are the subject for the claim for public interest immunity privilege, which might equally, or more so, support its claims against Multiplex. Nor does it follow that I can, or can attempt to, be satisfied that the documents presently available for inspection by the applicant, enable it to establish its claims against Multiplex. If I were to accept this submission I would need to form, at the least, a preliminary view as to whether the documents presently able to be inspected enable the applicant to prove the case it wishes to make against Multiplex. That is not an appropriate task for me to undertake. It is not for ASIC to say in substance to the applicant, either before or after inspection of the documents which are not in issue, that it has enough documents to prove its case or that it should limit the extent of the documents to be produced under the subpoena or that it does not need the documents which are the subject of the claim for public interest immunity privilege. 29 I have reached the conclusion that I should reject ASIC's claim that the relevant documents and transcripts are protected from production for inspection on the ground of public interest immunity privilege. My reasons for rejection of that claim are contained in a confidential appendix to these reasons published for the moment only to ASIC. I will hear from the parties and ASIC as to if, when and how those reasons should be published to the parties and made available publicly. 30 Separate applications have been made by counsel on behalf of a number of persons who were examined by ASIC, whose transcripts of their examination fall within the applicant's subpoena. A confidential affidavit and confidential submissions have been filed on behalf of one of those persons, for whom Mr Climpson appears, and that affidavit and submissions have not been made available to the applicant's solicitors and counsel or to the respondents. Mr Climpson said in open hearing that his client was seeking to have access refused to anyone to two or three pages of the transcript of his examination. Mr Climpson said that the matters contained in those pages were essentially of a private nature, had no apparent relevance to the proceeding and were essentially potentially embarrassing if other parties were allowed access to those pages. His application was that his client's solicitors be allowed to redact about two or three pages of the transcript. 31 Having regard to my conclusion that the transcripts are not protected from production for inspection on the ground of public interest immunity privilege, those persons should be given the opportunity to make submissions as to whether there are any other grounds on which production of their transcripts for inspection by the applicant and its solicitors should be refused. 32 I am not disposed to consider Mr Climpson's client's application without the applicant's solicitors and counsel being given access, on a confidential basis, to Mr Climpson's client's confidential affidavit and submissions. I will hear Mr Climpson further on his client's application. 33 I now commence the reasons which consider and determine ASIC's claim for public interest immunity privilege. These reasons are contained in the confidential appendix to these reasons. 34 I will hear the parties as to what further or consequential orders and directions should be made and given as a result of my reasons. I certify that the preceding thirty‑four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.

Counsel for the Applicant: N C Hutley S.C. and B J Lee

Solicitor for the Applicant: Maurice Blackburn Cashman

Counsel for the First Respondent: A S Bell S.C.

Solicitor for the First Respondent: Mallesons Stephen Jaques

Counsel for the Second Respondent: Ms K E Day

Solicitor for the Second Respondent: Freehills

Counsel for Australian Securities and Investments Commission: Dr G A Flick S.C. and Ms D Hogan‑Doran

Solicitor for Australian Securities and Investments Commission: Australian Securities and Investments Commission

Counsel for certain examinees: P M Wood

Solicitor for certain examinees Sparke Helmore

Counsel for an examinee: S Climpson

Solicitor for an examinee: Sparke Helmore

Date of Hearing: 11 & 17 September 2007

Date of Judgment: 2 November 2007