[1992] FCA 293; (1992) 108 ALR 305

[1992] FCA 293; (1992) 27 ALD 281

Corporations - investigations - notice to produce documents - documents in custody of solicitors - whether in legal possession of clients recipients of notices - whether claim of legal professional privilege available - whether issue of notice and compliance proceedings abuse of process - related and antecedent Supreme Court proceedings.

Australian Securities Commission Act 1989

The Companies (Acquisition of Shares) (Western Australia) Code

The Companies (Acquisition of Shares) (Queensland) Code

The Companies (Acquisition of Shares) (South Australia) Code

Administrative Decisions (Judicial Review) Act 1977

Corporations Act 1989 (Cwth) ss.5, 6

The Corporations (Western Australia) Act 1990 (WA)

Towers and Co. Ltd v. Gray (1961) 2 QB 351

Sullivan v. Earl of Caithness (1976) 2 WLR 361

SA Brewing Holdings Ltd v. Baxt (1989) 89 ALR 105

Grant v Downs [1976] HCA 63; (1976) 135 CLR 674

Sorby v The Commonwealth [1983] HCA 10; (1983) 152 CLR 281

Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52

Federal Commissioner of Taxation v. Citibank Limited (1989) 85 ALR 588

Corporate Affairs Commission of New South Wales v Yuill [1991] HCA 28; (1991) 172 CLR 319

O'Reilly v The Commissioners of the State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1

Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589

Counsel for the Applicant: Mr C. Zelestis QC and Ms K. Choules

Solicitors for the Applicant: Kulandra Ratneser, Regional General

Counsel for Western Australia,

Australian Securities Commission

Counsel for the Respondent: Mr W. Martin

Solicitors for the Respondent: Jackson McDonald

THE COURT ORDERS THAT:

1. Each of the first, second and third respondents comply with the

applicant's notices requiring the production of books dated 11

November 1991 within seven (7) days of the date of this order

provided that production of the documents into the custody of

the Court until further order shall be sufficient compliance

for the time being.

2. The cross-claim be dismissed.

3. The respondents pay the applicant's costs of the application

and the cross-claim.

4. There be liberty to apply on the disposition of the documents

after their production to the Court.

Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.

Dalleagles Pty Ltd is a company incorporated in the State of Western Australia and is trustee of a trust of which Lawrence Robert Connell and his wife, Elizabeth Joan Connell, are beneficiaries. Jackson McDonald is a firm of solicitors which acts for the company and the Connells and has acted for them since at least March 1989. Prior to that time and through 1988 another legal firm, L. Musca and Co., carried on legal work for them which included the provision of advice and opinions and the drawing up of commercial documents. In carrying out that work the firm brought into existence related letters, notes, memoranda and other papers. Some of these documents were kept in a file which bore the number 16370. In March 1989 L. Musca and Co. delivered that file and other documents to Jackson McDonald who, since that time, have acted for the company and the Connells. They still have the file and other documents on their premises.

2. On 22 February 1991 the Regional Director of the Australian Securities Commission in Perth, Mr M.J. Allen, acting as a delegate of the Commission, made a determination under s.13(3) of the Australian Securities Commission Act 1989 ("the ASC law"). After considering the report of Mr M.J. McCusker QC, an inspector appointed under the former Companies (Western Australia) Code, to investigate the affairs of Rothwells Ltd, he determined that there was reason to suspect that contraventions of various statutes may have been committed in relation to the affairs of Rothwells Ltd between 1 January 1983 and 31 December 1988. He also suspected contraventions in relation to the affairs of various other corporations insofar as they related to or were connected with the affairs of Rothwells in that period. The statutes thought to have been contravened were the Companies (Western Australia) Code, The Companies (Acquisition of Shares) (Western Australia) Code, The Securities Industry (Western Australia) Code, The Companies (Queensland) Code, The Companies (Acquisition of Shares) (Queensland) Code, The Companies (New South Wales) Code, The Securities Industry (New South Wales) Code, The Companies (Victoria) Code and The Companies (Acquisition of Shares) (South Australia) Code. The various corporations referred to were listed in Schedule A to the determination and included Dalleagles Pty Ltd and Katanning Holdings Pty Ltd.

3. On 22 May 1991, Paul Raymond Frankel, an investigator with the Australian Securities Commission, issued a notice under s.30 of the ASC law to Neil Gentilli, a partner in the firm of Jackson McDonald. The notice was served on the same day. It was expressed to relate to:

"... an investigation of the affairs of Katanning

Holdings Limited... in so far as they relate to or are

connected with the affairs of Rothwells Limited

between 1 January 1983 and 31 December 1988."

It required the production of documents described as:

"1. L. Musca and Co. File No's 1644, 16320,

16411 and 16370 with respect to the

funding and purchase by Katanning Holdings

Ltd of shares in Rothwells Ltd from Bond

Brewing Investments Pty Ltd in October

2. All other L. Musca and Co. files with

respect to the funding and purchase by

Katanning Holdings Ltd from Bond Brewing

Investments Pty Ltd in October 1988 and

with respect to the loan of moneys to

Katanning Holdings Ltd in October 1988 by

L.R. Connell and/or associated entities."

Jackson McDonald produced documents in answer to this notice on 30 May 1991, but retained others, including the documents which are the subject of these proceedings.

4. On 10 June 1991, Frankel issued a further notice, this time directed to the firm Jackson McDonald, seeking production of the same documents as those specified in the notice issued to Mr Gentilli in person. It relied upon s.33 of the ASC Law rather than s.30. On the same day the Regional Commissioner varied his determination of 22 February 1991 by a further determination extending its scope to "take in the affairs of Rothwells Ltd between 1 January 1989 and 31 July 1989".

5. On 12 June 1991 Dalleagles, the Connells and Jackson McDonald commenced proceedings in the Supreme Court in action number 1950 of 1991 to determine whether the documents which had not been produced in answer to the first notice were privileged and whether they were required to be produced in answer to the second notice.

6. On 4 July 1991, a set of three s.33 notices was issued to Dalleagles and the Connells by Robert Byrne, an employee of the Commission. Each of these required the production of 25 listed documents described in the notice as:

"Taken from L. Musca and Co. file No's 1644, 16411 and

16370 with respect to the funding and purchase by

Katanning Holdings Ltd of shares in Rothwells Ltd from

Bond Brewing Investments Pty Ltd in October 1988, and

L. Musca and Co. files with respect to the funding and

purchase by Katanning Holdings Ltd from Bond Brewing

Investments Pty Ltd in October 1988 and with respect

to the loan of moneys to Katanning Holdings Ltd in

October 1988 by L.R. Connell and/or Associated

entities, being those books as described in items 1 to

25 listed below:..."

These documents included those which were the subject of the notices to Gentilli and Jackson McDonald. On 8 July, Dalleagles and the Connells instituted further proceedings in action number 2111 of 1991 in the Supreme Court of Western Australia to determine the question of privilege in relation to such of the documents referred to in the notice as had been retained by Jackson McDonald in answer to the earlier notice to Mr Gentilli. However on 10 July the Commission advised the company and the Connells that it would take no action to enforce the notices of 8 July. This advice was contained in a letter sent to Jackson McDonald and letters in similar, although not identical terms, to the recipients of the notices. The letter sent to Jackson McDonald on 10 July 1991 was signed by Soraya Mir and was in the following terms:

"I refer to the notices issued to Mr L.R. Connell, Mrs

E.J. Connell and Dalleagles Pty Ltd by Mr Robert Byrne

on 4 July 1991, requiring production of certain files

of L. Musca and Co. relating to the affairs of Katanning

Holdings Limited.

As agreed between Mr Gentilli and Mr Ainslie of

Malleson Stephen Jaques on 9 July 1991, the Commission

will take no further action to enforce these notices

and it may be assumed by Mr L.R. Connell, Mrs E.J.

Connell and Dalleagles Pty Ltd that they are not

required to comply with these Notices.

You will find enclosed copies of letters sent to Mr

L.R. Connell, Mrs E.J. Connell and Dalleagles Pty Ltd

confirming the above."

7. On 11 November 1991, Mr Frankel issued further s.33 notices to Dalleagles and the Connells. The terms of each of the notices were identical. They were expressed to relate to an investigation of:

"1. The affairs of Rothwells Ltd between 1

January 1983 and 31 July 1989; and

2. The affairs of Katanning Holdings Limited

and Dalleagles Pty Ltd in so far as they

relate to or are connected with the

affairs of Rothwells Ltd between 1 January

1983 and 31 December 1988."

The notices were delivered to Mr Gentilli at the offices of Jackson McDonald on 11 November 1991. They required production of the books specified in them at 10 am on Thursday, 14 November 1991. On 12 November 1991, Mr Gentilli informed Mr Frankel by telephone that he had instructions to accept service of the notices on behalf of Dalleagles and Mr Connell and on 13 November 1991 that he had instructions to accept service on behalf of Mrs Connell. A letter dated 13 November 1991 was also sent from Jackson McDonald to Mr Frankel in the following terms:

"We confirm our telephone advice that we have accepted

service of these notices on behalf of all three

parties to whom they are directed.

As foreshadowed, we have instructions to commence

proceedings to determine whether the notices are

effective.

We anticipate being able to institute these

proceedings by Monday 18 November, 1991 at the latest.

We will contact Mr Warnick regarding service as soon

as the writ is ready for service."

However, on 14 November 1991 Mr Leigh Warnick, a solicitor, wrote to Jackson McDonald on behalf of the Australian Securities Commission acknowledging receipt of the letter of 13 November and confirming telephone advice that the Commission proposed to use the procedure prescribed in s.70 of the ASC law to request the Federal Court to:

"... inquire into your clients' failure to comply with

the notices, and to request an order from the Court

that the notices be complied with within a period to

be fixed by the Court."

No documents were produced in answer to the notices of 11 November.

8. On 15 November 1991, Mr Frankel signed certificates pursuant to sub-s.70(2) of the ASC law in respect of the company and the Connells. The certificates were in like terms. That relating to Dalleagles was as follows:

"The Australian Securities Commission, being so

satisfied, hereby certifies that DALLEAGLES PTY LTD

has, without reasonable excuse, failed to comply with

a requirement made under Part 3 of the ASC Law in that

it has, without reasonable excuse, failed to produce

certain books pursuant to and described in a notice

dated 11 November 1991 under s.33 of the ASC Law

requiring the production of the books."

The present proceedings were instituted by the Commission on the same day.

9. By its application filed in this Court on 15 November 1991, the Commission requests that the Court "inquire into this case" and claims an order that Dalleagles and the Connells comply with the notices of 11 November 1991 within 7 days of the date of such order. A claim is also made for costs. Various directions hearings and interlocutory motions followed upon the filing of the application. On 10 February 1992, leave was given to Dalleagles and the Connells to cross-claim against the Commission and Mr Frankel for relief under the Administrative Decisions (Judicial Review) Act 1977 and time was extended for that purpose. On 25 February 1992, a notice was filed in the cross-claim requiring the Commission and Frankel to give discovery of documents within 10 days after service. On 27 February 1992, for reasons then published, it was ordered that neither was required to give discovery pursuant to the notice. The application was listed for hearing on 11 May 1992. The hearing proceeded upon an agreed statement of facts and affidavit evidence from Mr Gentilli, Mr Frankel and Miss Choules, a solicitor acting for the Commission. None of the deponents was cross-examined.

10. Dalleagles and Mr and Mrs Connell contend that they should not be required to act upon the notices of 11 November 1991 because:

1. The documents although in the custody of the respondents'

solicitors are not in the possession of the respondents

for the purposes of the ASC Law.

2. The documents the subject of the notices are protected by

legal professional privilege which constitutes a

reasonable excuse for their non-production.

3. The circumstances surrounding the issue of the notices

including the issue of previous notices and the Supreme

Court proceedings mean that the present application is an

abuse of process and provides the respondents with a

reasonable excuse for non-production of the books.

These contentions reflect the three issues on which the case turns. Before addressing them, it is necessary to sketch out the statutory framework within which they fall to be considered.

11. The principal provisions of relevance to the present case are to be found in the Australian Securities Commission Act 1989, as applied to the State of Western Australia. The Act, which is a law of the Commonwealth, applicable in the Australian Capital Territory, provides in s.1C(2) that:

"Where a law of a jurisdiction other than the Capital

Territory contains provisions corresponding to

sections 5 and 6 of the Corporations Act 1989 and also

provides for provisions of this Act to apply as law of

that jurisdiction, those provisions of this Act, as so

applying, are the ASC Law of that jurisdiction."

Sections 5 and 6 of the Corporations Act 1989 (Cwth) apply the Corporations Law and Regulations made under it to the Australian Capital Territory. The Corporations (Western Australia) Act 1990 (WA) has corresponding provisions in ss.7 and 8. Section 7 provides for the Corporations Law to apply as a law of the State and s.8, for the Regulations to so apply. Section 58(1) of the State Act provides that:

"58(1) The ASC Act, other than the excluded

provisions:

(a) applies as a law of Western Australia; and

(b) as so applying, may be referred to as the

ASC Law of Western Australia."

The excluded provisions are not relevant for present purposes. The ASC Law, save for those elements, therefore applies in Western Australia as a law of the State.

12. Part 3 of the ASC Law contains the bulk of the sections relevant to the present case. Section 13 confers on the Commission the authority to make such investigations as it thinks expedient for the due administration of the national scheme law of Western Australia where it has reason to suspect that there may have been committed:

"(a) a contravention of a national scheme law;

or

(b) a contravention of a law of the

Commonwealth or of a State or Territory,

being a contravention that:

(i) concerns the management

or affairs of a body

corporate; or

(ii) involves fraud or

dishonesty and relates to

a body corporate,

securities or futures

contracts."

13. Division 3 of Part III relates to the inspection of books. Section 28 provides, inter alia:

"28. A power conferred by this Division (other than

sections 29, 35 and 36) may only be exercised:

(a) for the purposes of the performance or

exercise of any of the Commission's

functions and powers under a national

scheme law of this jurisdiction; or

(b) for the purposes of ensuring compliance

with a national scheme law of this

jurisdiction; or

(c) in relation to:

(i) an alleged or suspected

contravention of a

national scheme law of

this jurisdiction; or

(ii) an alleged or suspected

contravention of a law of

this jurisdiction, being

a contravention that

concerns the management

or affairs of a body

corporate, or involves

fraud or dishonesty and

relates to a body

corporate, securities or

futures contracts; or

(d) for the purposes of an investigation under

Division 1."

Section 30 authorises the issue to bodies corporate or "eligible persons" of notices to produce books:

"30. The Commission may give to:

(a) a body corporate that is not an exempt

public authority; or

(b) an eligible person in relation to such a

body corporate;

a written notice requiring the production to a

specified member or staff member, at a specified place

and time, of specified books relating to the affairs

of the body."

Section 33 authorises the issue of a notice to any person to produce a books in that person's possession:

"33. The Commission may give to a person a written

notice requiring the production to a specified member

or staff member, at a specified place and time, of

specified books that are in the first mentioned

person's possession and relate to:

(a) affairs of a body corporate; or

(b) a matter referred to in any of paragraphs

31(1)(g) to (m), inclusive, and 32(1)(j)

to (p), inclusive."

14. The terms "books" and "eligible person" are defined in s.5 of the ASC Law but that is one of the excluded provisions. These definitions are, however, provided in s.60(1) of the Corporations (Western Australia) Act as follows:

"'books' includes:

(a) a register; and

(b) accounts or accounting records, however

compiled, recorded or stored; and

(c) a document; and

(d) banker's books; and

(e) any other record of information."

"'eligible person' in relation to a person, means a

person who:

(a) if the first mentioned person is a body

corporate - is or has been an officer of

the body within the meaning of a national

scheme law or a corresponding previous

law; or

(b) in any case:

(i) is or has been an

employee, agent, banker,

solicitor or auditor of;

or

(ii) is acting, or has acted,

in any other capacity on

behalf of

the first-mentioned person;"

Sub-section 60(2) of the Corporations (Western Australia) Act provides that:

"60(2) Subject to the ASC Law of this jurisdiction, an

expression has the same meaning in that Law and in the

ASC Regulations of this jurisdiction as in the

Corporations Law of this jurisdiction."

That subsection also picks up s. 86 of the Corporations Law applied in Western Australia which provides:

"86. A thing that is in a person's custody or under a

person's control is in the person's possession."

15. Where books are produced under a requirement made under Division 3 of Part III, then sub-s.37(1) applies to authorise the person to whom production of the books is made to take possession of them and to inspect and make copies of or take extracts from them. That person may use or permit the use of any of the books for the purposes of a proceeding. Section 63 creates offences relating to failure to comply with requirements under the Act:

"63(1) A person shall not without reasonable excuse,

fail to comply with a requirement made under s.19,

sub-s.21(3), s.30, 31, 32, 33 or 34, sub-s.37(9) or

s.38 or 39."

Section 68 provides for privilege against self incrimination. It is not a reasonable excuse for a person to refuse or fail to give information or to sign a record or produce a book in accordance with a requirement made of that person, that the information, signing the record or production of the book as the case may be, might tend to incriminate the person or make the person liable to a penalty.

16. Legal professional privilege is dealt with in s.69:

"69(1) This section applies where:

(a) under this Part, Division 3 of Part 10 or

Division 2 of Part 11, a person requires a

lawyer:

(i) to give information; or

(ii) to produce a book; and

(b) giving the information would involve

disclosing, or the book contains, as the

case may be, a privileged communication

made by, on behalf of or to the lawyer in

his or her capacity as a lawyer.

69(2) The lawyer is entitled to refuse to comply with

the requirement unless:

(a) if the person to whom, or by or on behalf

of whom, the communication was made is a

body corporate that is under official

management or being wound up - the

official manager or liquidator of the

body;

(b) otherwise - the person to whom, or by or

on behalf of whom, the communication was

made;

consents to the order complying with the requirement.

69(3) If the lawyer so refuses, he or she shall, as

soon as practicable, give to the person who made the

requirement a written notice setting out:

(a) if the lawyer knows the name and address

of the person to whom, or by or on behalf

of whom, the communication was made - that

name and address;

(b) if sub-paragraph (1)(a)(i) applies and the

communication was made in writing -

sufficient particulars to identify the

document containing the communication; and

(c) if sub-paragraph (1)(a)(ii) applies -

sufficient particulars to identify the

book, or the part of the book, containing

the communication.

Penalty: $1,000 or imprisonment for 3 months, or

both."

Where there is non-compliance with the section, s.70 of the ASC Law provides:

"70(1) This section applies where the Commission is

satisfied that a person has, without reasonable

excuse, failed to comply with a requirement made under

this Part (other than Division 8).

(2) The Commission may be writing certify the

failure to the Court.

(3) If the Commission does so the Court may inquire

into the case and may order the person to comply with

requirements as specified in the order."

The admissibility of statements made at compulsory examinations and the role of legal professional privilege in respect to such statements, is dealt with in s.76(1) of the ASC Law:

"76(1) A statement that a person makes at an

examination of the person is admissible in evidence

against the person in a proceeding unless:

(a) the proceeding is:

(i) a criminal proceeding; or

(ii) a proceeding for the

imposition of a penalty;

(other than a proceeding in respect of the

falsity of the statement) and, before

making the statement, the person claimed

that the statement might tend to

incriminate him or her or make him or her

liable to a penalty;

(b) the statement is not relevant to the

proceeding and the person objects to the

admission of evidence of the statement;

(c) the statement is qualified or explained by

some other statement made at the

examination, evidence of the other

statement is not tendered in the

proceeding and the person objects to the

admission of evidence of the first-mentioned statement;

or

(d) the statement discloses matter in respect

of which the person could claim legal

professional privilege in the proceeding

if this subsection did not apply in

relation to the statement, and the person

objects to the admission of evidence of

the statement."

17. The first question for determination is whether, although located in the offices of the respondents' solicitors, the documents are in their possession for the purposes of s.33. No point was made of any distinction between the position of the individual respondents in that respect. It was accepted that it was open to them to require their solicitors to produce the books. They submitted, however, that if they could be compelled by a notice under s.33 to require such production then the protection of legal professional privilege afforded by s.69 would be futile. A claim of privilege raised under that section by a legal practitioner could be overcome by service of a notice on the client. This, it was said, could not have been the parliamentary intention. In this respect, it was said, the Act manifested an intention contrary to the application of the extended definition of possession in s.86.

18. The word "possession" has a number of applications well reflected in its definition in the Shorter Oxford English Dictionary which includes:

"the visible possibility of exercising over a thing

such control as attaches to lawful ownership; the

detention or enjoyment of a thing by a person himself

or another in his name; the relation of a person to a

thing over which he may at his pleasure exercise such

control as the character of the thing admits to the

exclusion of other persons..."

The common law or statutory setting in which the word is used will, in the absence of an express definition, determine the way in which it is to be construed - Towers and Co. Ltd v. Gray (1961) 2 QB 351 at 363 (Lord Parker C.J., Winn and Widgery JJ. agreeing). As is recognised in the Oxford English Dictionary definition, the word is capable at law of embracing the relationship between a person and goods which, although not in that person's physical custody are held by another from whom that person can require production - Sullivan v. Earl of Caithness (1976) 2 WLR 361 at 363 (May J., Parke J. and Lord Widgery C.J. agreeing). In this respect a distinction is sometimes drawn between the transitive verb "to possess" and the expression "to have in possession":

"If I say I am "in possession" of a thing, that seems

to indicate that I have it in my custody, control, or

power, while if I say I "possess" a thing, something

more than a mere right of custody or control seems to

be intended."

McCaskill v. Marzo (1944) 46 WALR 64 at 72 (Wolff J.)

19. The sense in which "possession" is used in a statute requires a consideration of statutory policy. By s.33 and its associated provisions in Div.3 of Part III of the ASC Law, wide investigative powers are conferred upon the Commission. They must, like all such investigative powers be limited by its legitimate statutory functions. SA Brewing Holdings Ltd v. Baxt (1989) 89 ALR 105 at 116. It is however a minimum requirement of the statutory policy that the investigative power be effective. A limitation of the word "possession" in s.33 to actual physical custody would leave open to persons connected with the corporation whose affairs are under investigation, the possibility of avoidance of the section by the simple artifice of placing sensitive documents in the hands of some third party. Once it is posited that the policy of the statute is not to leave open that possibility then the application of the definition of possession in s.86 of the Corporations Law follows, it being consistent with a minimum requirement for effective exercise of the power under s.33. And if that be right, there can be no basis for saying that the word "possession" as used in s.33, has some different meaning in relation to documents in the hands of a party's lawyer who is required by the client to raise and maintain a claim of legal professional privilege. Whatever the effect of s.69 of the ASC Law, it does not, in my opinion, support a construction of "possession" that shifts according to whether a person holding documents for the recipient of a notice relating to such documents is or is not a lawyer and is or is not asserting legal professional privilege. This conclusion leaves open the question whether, as a matter of statutory construction, legal professional privilege is a "reasonable excuse", within the meaning of ss.63 and 70 of the ASC Law, for non-compliance with a notice directed to a person whose lawyer holds the relevant documents.

20. For these reasons the respondents' contention that they are not in "possession" of the documents the subject of the notice does not succeed.

21. Legal professional privilege has been characterised by some commentators in recent times as conferring upon legal practitioners an unfair advantage over others such as accountants who are said to be engaged in the provision of services which, in some respects, compete with those offered by lawyers. Whatever the rights and wrongs of that debate, the rationale for the judge made privilege was never the expression of any special tenderness to the legal profession. In 1833 it was explained by Brougham L.C. in Greenough v. Gaskell (1833) 1 My and K. 98 at 103, as follows:

"The foundation of this rule is not difficult to

discover. It is not (as has sometimes been said) on

account of any particular importance which the law

attributes to the business of legal professors, or any

particular disposition to afford them protection,

Though certainly it may not be very easy to discover

why a like privilege has been refused to others, and

especially to medical advisers.

But it is out of regard to the interests of justice,

which cannot be upholden, and to the administration of

justice, which cannot go on, without the aid of men

skilled in juris prudence, in the practice of the

courts, and in those matters affecting rights and

obligations which form the subject of all judicial

proceedings. If the privilege did not exist at all,

everyone would be thrown upon his legal resources;

deprived of all professional assistance, a man would

not bench to consult any skilful person, or would only

dare to tell his counsellor half his case. If the

privilege were confined to communications connected

with suits begun, or intended, or expected, or

apprehended, no-one could safely adopt such

precautions as might eventually render any proceeding

successful, or all proceedings superfluous."

22. From that rationale, which was accepted by the High Court in Grant v. Downs [1976] HCA 63; (1976) 135 CLR 674, it follows that the privilege is that of the client and not the lawyer. Whether in modern times it should be retained, excluded or extended is no longer a matter for judges to determine - Grant v. Downs (supra) at 685. It is a matter for Parliaments. In each case in which a statutory power is conferred on some official or public authority to require the disclosure of information or the production of documents, the language of the statute will decide whether or not the power is limited by legal professional privilege. Where the statute is not explicit upon that question it is for a court to construe it as best it can and to ascertain from its words, its policy and its context what is its true effect.

23. In the process of construction courts resort to principles such as that enunciated in Sorby v. The Commonwealth [1983] HCA 10; (1983) 152 CLR 281 at 309-310 that a statute will not be construed to take away a common law right unless a legislative intent to do so clearly emerges whether by express words or necessary intendment. It was in the application of that principle that Wilson J. in Baker v. Campbell [1983] HCA 39; (1983) 153 CLR 52 at 95 said of legal professional privilege in relation to search warrants issued under the Crimes Act 1914:

"The multiplicity and complexity of the demands which

the modern State makes upon its citizens underlines

the continued relevance of the privilege to the public

interest. The adequate protection according to law of

the privacy and liberty of the individual is an

essential mark of a free society and unless abrogated

or abridged by statute the common law privilege

attaching to the relationship of solicitor and client

is an important element in that protection."

In that regard I adhere to the view I expressed in Federal Commissioner of Taxation v. Citibank Limited (1989) 85 ALR 588 at 614:

"Australia is a liberal democracy with a broad

tradition of at least nominal resistance to

encroachment upon established rights and freedoms.

That view is reinforced by its adherence to the

International Covenant on Civil and Political Rights,

which relevantly provides in Art 17, inter alia, that:

"No-one shall be subject to arbitrary or unlawful

interference with his privacy, family, home or

correspondence...". The nature of this society, and

its tradition of respect for individual freedoms, will

support an approach to construction which requires

close scrutiny and a strict reading of statutes which

would otherwise remove or encroach upon those

freedoms. But where the natural meaning of the words

is clear, the will of the Parliament must be

respected."

I should add that where the High Court has construed a statute closely analogous to that under consideration and concluded that the privilege is excluded, there may be little room for the expression of any different view in relation to the application of that reasoning in cases in which it is plainly applicable. This is so in relation to the decision of the High Court concerning the operation of certain provisions of the Companies (New South Wales) Code in Corporate Affairs Commission of New South Wales v. Yuill [1991] HCA 28; (1991) 172 CLR 319. In Yuill's case the High Court concluded by a majority that the power of an inspector to compel production of documents under s.295(1) of the Companies (New South Wales) Code was not subject to legal professional privilege. That section provided:

"295(1) An inspector may, by notice in writing

containing the prescribed matters given in the

prescribed manner, require an officer of a corporation

affairs of which are being investigated under this

Part-

(a) to produce to the inspector such books of

the corporation and other books relating

to the affairs of the corporation as are

in the custody or under the control of the

officer;

(b) to give to the inspector all reasonable

assistance in connection with the

investigation; and

(c) to appear before the inspector for

examination on oath or affirmation and to

answer questions put to him,

and may administer an oath or affirmation to that

officer."

It was to be read in conjunction with sub-s.296(2) of the Code:

"296(2) A person shall not, without reasonable excuse,

refuse or fail to comply with a requirement made under

s.295. Penalty: $10,000 or imprisonment for 2 years

or both."

Section 308 of the Code related to privileged communications in the following terms:

"308. Where in the exercise of his powers under

section 295 an inspector requires a duly qualified

legal practitioner to disclose a privileged

communication made by or on behalf of or to that legal

practitioner in his capacity as a legal practitioner,

the legal practitioner is entitled to refuse to comply

with the requirement unless the person to whom or by

or on behalf of whom the communication was made or, if

the person is a body corporate that is under official

management or in the course of being wound up, the

official manager or the liquidator, as the case may

be, agrees to the legal practitioner complying with

the requirement but, where the legal practitioner so

refuses to comply with the requirement, he shall if he

knows the name and address of the person to whom or by

or on behalf of whom the communication was made,

forthwith furnish that name and address in writing to

the inspector.

Penalty $1,000 or imprisonment for 3 months, or both."

The parallels between ss.295, 296 and 308 of the Code on the one hand, and ss.33, 63 and 69 of the ASC Law on the other, are apparent.

24. Reference should also be made to s.299 of the Code, the close equivalent of which is found in s.76 of the ASC Law. Section 299 provided:

"299(1) Except as provided by subsection (2), any

statements made at an examination of a person under

this Part are admissible in evidence in any criminal

or civil proceedings against the person.

299(2) Evidence of a statement made by a person at an

examination under this Part shall not be admitted in

evidence in criminal or civil proceedings against the

person if-

(a) where the statement is an answer given by

the person to a question - the proceedings

are criminal proceedings (other than

proceedings for an offence against

subsection 296(2), (3) or (4) or other

proceedings in respect of the falsity of

the answer) and, before answering the

question, the person claimed that the

answer might tend to incriminate him;

(b) the statement is not relevant to the

proceedings and the person objects to the

admission of the evidence;

(c) the statement is qualified or explained by

some other statement made at the

examination, evidence of the other

statement is not tendered in the

proceedings and the person objects to the

admission of the evidence of the first-mentioned

statement; or

(d) the statement disclosed matter in respect

of which a claim of legal professional

privilege could be made by the person in

the proceedings if the provisions of this

Division did not apply in relation to that

evidence, and the person objects to the

admission of the evidence."

25. The majority in Yuill had regard to the fact that the provisions of the Code then under consideration had been enacted prior to the judgment of the Court in Baker v. Campbell (supra) and against the background of the law as stated in O'Reilly v. The Commissioners of the State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1, which confined the operation of legal professional privilege to lawyer/client communications in judicial or quasi judicial proceedings. Baker v. Campbell had held the privilege not to be so confined and not to be overridden by the widely expressed provisions of s.10 of the Crimes Act 1914 which authorises the issue of search warrants in relation to offences against Commonwealth and Territory laws.

26. The circumstance that the Companies Code was drafted after O'Reilly and before Baker v. Campbell led Brennan J. to conclude, at 323, that the absence of any express exclusion of legal professional privilege could not support an argument that it was intended to limit the power conferred by s.295(1). But Dawson J. (with whom Toohey J. agreed) said at 330 that even if the legislature, in enacting the relevant provisions of the Code, had thought the doctrine of legal professional privilege confined to judicial or quasi judicial proceedings, that would not lead to the conclusion that it intended to exclude the doctrine:

"For it is one thing to say that the legislature

accepted the law as it thought it to be; it is quite

another thing to speculate upon whether the

legislature would have sought to change the law had it

realised that it went as far as Baker v. Campbell held

it did."

"The absence of an express provision excluding a claim

for legal professional privilege in an investigation

under Pt. VII may be accounted for by the view of the

law which the legislature took at the time the

legislation was passed: cf Annetts v. McCann ((1990)

[1990] HCA 57; 170 CLR 596 at p 600). And if the legislation

otherwise evinces a sufficiently clear intention to

exclude the doctrine, then effect must be given to

that intention: see Bropho v. Western Australia

((1990) [1990] HCA 24; 171 CLR 1 at p 23). It should, however, be

emphasised that in the absence of an express

exclusion, any implication to that effect must be a

necessary requirement, for legal professional

privilege is a doctrine of a fundamental kind which is

not to be abrogated except in the clearest terms: see

Baker v. Campbell ((1983) 153 CLR at p 123); Sorby v.

The Commonwealth ((1983) [1983] HCA 10; 152 CLR 281 at pp 289, 309-310,

316); Balog v. Independent Commission Against

Corruption ((1990) [1990] HCA 28; 169 CLR 625)."

27. Both of their Honours nevertheless proceeded to consider the provisions of the Code to determine what Brennan J. called "the indicia of legislative intent". He observed that the court does not enter upon an inquiry under s.297 unless an inspector has certified that a person has failed to comply with a requirement under s.295 "without reasonable excuse". It would be unlikely that an inspector contemplating the issue of a certificate should have to form an opinion whether a claim of legal professional privilege had been validly made either by a solicitor or by a client. That logic applies with equal force to the certification process under the ASC Law.

28. Next Brennan J. considered s.308 of the Code noting that it made a specific exemption which entitled solicitors to refuse to comply with a notice issued under s.295 where compliance would involve a breach of legal professional privilege, the exemption being conditioned on the furnishing of the client's name and address. His Honour observed at 324:

"The enactment of s. 308 would be otiose and the

specifying of a condition governing the solicitor's

excuse for non-compliance would be futile if the

observance of legal professional privilege were a

reasonable excuse for non-compliance, for a solicitor

who is bound to observe legal professional privilege

would be entitled to refuse to comply with a notice

issued under s. 295 without satisfying such a

condition (Reg. v. Bell; Ex parte Lees ((1980) 146 CLR

141 at pp 144-145)) otherwise than by identifying the

client whose privilege is asserted: Southern Cross

Commodities v. Crinis ((1984) VR 697). The apparent

purpose of the statutory condition is to ensure that a

client can be located and required to disclose

communications protected by legal professional

privilege although the solicitor may be excused from

disclosing them."

This reasoning applies with like force to s.69 of the ASC Law.

29. His Honour also referred to s.299 of the Code providing for the admission in civil or criminal proceedings of statements made by a person at an examination by an inspector. The general rule in favour of admissibility was subject to the exception contained in s.299(2)(d) protecting matter in respect of which a claim of legal professional privilege could be made and continued (at 324-325):

"As the admission in evidence of a statement pursuant

to sub-s. (1) would destroy any claim of privilege,

sub-s. (2)(d) is enacted to restore, sub modo, the

privilege which would have been available to protect

the matter disclosed under compulsion on examination

by the inspector had ss. 295 and 296(2) not overridden

the privilege. Thus it appears that an assertion of

legal professional privilege is not a "reasonable

excuse" where the requirement is to answer questions.

It would be a curious asymmetry to treat an assertion

of the privilege as a "reasonable excuse" for

non-compliance with a requirement to produce books, for

the contents of the books could be ascertained in any

event by compelling oral disclosure by any person who

has knowledge of them."

At 326 his Honour observed that the protection accorded to oral evidence by s.299(2)(d) was probably to be explained by the legislature's unwillingness to compel a person to furnish out of his own mouth evidence which might be used against him on a criminal trial even though compulsory disclosure of privileged communications might lead to the discovery of other admissible evidence. That consideration did not inhibit the compulsory production of books which might be used in evidence for they are real evidence which speak for themselves, unlike oral evidence which comes into existence only in response to an exercise of investigative power. And again it may be said that those considerations apply with equal force to s.76 of the ASC Law.

30. The other statutory indicium of legislative intention taken into account by his Honour was the purpose of instituting special investigations under Pt.VII of the Code. He noted that it would frequently be impossible in practice for an inspector to discharge the duty laid upon him by s.305 to form an opinion on the affairs of a corporation and to report that opinion and the facts on which it is based if he were unable to compel disclosure of professional communications between legal advisors and those who had played some part in a corporation's affairs.

31. Dawson J. said that a necessary statutory implication was required before legal professional privilege could be abrogated. In determining whether such an implication could be drawn from the Companies Code, he began with a consideration of its character or purpose and with reasoning similar to that applied by Brennan J. observed that any investigation was likely to be hampered by a claim of legal professional privilege on the part of an officer of a company being investigated. This was more so when the aims of the investigation included the prosecution of offences and the institution of civil proceedings. Accepting that legal professional privilege may not be claimed even at common law for communications which amount to participation in a crime or fraud, his Honour was of the view that it may nevertheless seriously impede the investigation of those matters.

32. Turning to particular sections, his Honour's conclusion with respect to s.308 of the Code was similar to that reached by Brennan J. Noting that s.308 reflected s.367 of the former Uniform Companies Acts in an amended form, he said at p 334:

"Section 308 of the Code represents s.367 in an amended

form. It allows the privilege to be waived, but

otherwise entitles a legal practitioner to claim

privilege against an inspector. Thus s.308 represents

(as did s.367 before it) what was thought to be a

limited extension of the doctrine of legal

professional privilege into the area of company

investigation in order to protect the professional

confidence of a legal practitioner. At the same time

it manifests an intention to extend the protection of

legal professional privilege no further; in

particular, not to extend it to the client."

33. With respect to s.299(2)(d), his Honour held that it indicated that the legislature assumed that legal professional privilege would be unavailable in the course of an investigation, yet sought to ensure its availability in judicial proceedings but not otherwise. He accepted that it was possible that the provision envisaged a situation in which a claim of legal professional privilege was available during the course of an investigation, but was not made or, having been made, was rejected, but considered it hardly likely that the legislature would seek to restore the privilege if it were not claimed initially. After referring to the provisions of s.296(7) in relation to the privilege against self incrimination, his Honour said at 335-336:

"The reason why, in relation to answers to questions,

privilege against self-incrimination is expressly

denied by s.296(7) would appear to be in order to

restore the privilege in relation to a limited class

of criminal proceedings. Similarly, when express

mention is made of legal professional privilege in

relation to statements in s.299(2)(d), it is in order

to restore the privilege in relation to criminal or

civil proceedings. It is not possible to read into

these provisions any intention to cut down the

generality of the obligation otherwise imposed by

s.296(2) to comply with a requirement under s.295."

34. A number of textual differences between the Code and the ASC Law were relied upon by counsel for the respondents to support the proposition that the Court should look afresh at the question whether under the ASC Law legal professional privilege was abrogated in relation to books required to be produced pursuant to a notice under s.33. In my opinion, however, the generality of the reasoning adopted by the majority of the High Court in Yuill's case is not affected by those textual differences and although I am not strictly bound by the decision, its approach to the question of statutory construction is of the highest persuasive authority. I do not consider that in the present case there is any reason which would justify departing from it in its application to the ASC Law. Applying the reasoning adopted by the High Court, I am led to the conclusion that the provisions of the ASC Law were intended to exclude the operation of legal professional privilege in relation to the production of books under a notice issued pursuant to s.33.

35. This aspect of the respondent's submissions relied upon the conduct of the proceedings in action number 1950 of 1991 in the Supreme Court of Western Australia. That action was brought by the respondents and Jackson McDonald as plaintiffs in relation to the notice issued to Jackson McDonald on 10 June 1991. It proceeded on a basis outlined by counsel for the respondents appearing on their behalf and on behalf of Jackson McDonald before Anderson J. in the Supreme Court on 20 August 1991. Transcript of some of the opening remarks was in evidence in these proceedings. Counsel explained to his Honour that the sole question that arose for determination was whether documents covered by the notice were in fact the subject of a proper claim of legal professional privilege. The question, it was said, arose in the context of s.69 of the ASC Law. Section 69, it was said, effectively maintained the entitlement to legal professional privilege at common law. Counsel went on:

"So for all practical purposes, then, the question

before you will simply be whether at common law the

documents forming part of the bundle are the subject

of a valid claim for privilege. We say in our

submission in consequence of that the recent decision

of the High Court in Yuill's case, which concerned the

construction of provisions of the Companies Code in

order to ascertain whether they did in fact preserve

the entitlement to claim privilege, is irrelevant

because we are here dealing with a statutory provision

which expressly maintains the entitlement to claim

privilege in these circumstances. The only question

before you is essentially whether the documents fall

within the ambit of that privilege."

That is the basis upon which the action was fought and it is reflected in his Honour's judgment in which he held that the documents were protected by legal professional privilege. But the question whether the provisions of the ASC Law exclude legal professional privilege in relation to a notice issued to the clients of a lawyer as distinct from the lawyer himself could not have arisen in that case. There is no room in these circumstances for the application of the extended principle of res judicata in Port of Melbourne Authority v. Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 relied upon by counsel for the respondents. Nor does the abandonment of the notices of 4 July 1991 and the consequential abandonment of the respondents' action 2111 of 1991 give grounds in my opinion for any contention that the present proceedings are an abuse of process. They are properly brought on a genuine issue which was not and could not have been decided in respect of the Supreme Court proceedings in action 1950 of 1991 which proceeded to a hearing on the merits.

36. For the preceding reasons, I propose to find for the applicant in this case and will make orders accordingly.