Saraceni v Australian Securities and Investments Commission

Federal Court of Australia (Full Court)|2013-05-16|Before: Commission J, Gilmour JJ

Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2006) 156 FCR 501 Johns v Australian Securities Commission (1993) 178 CLR 408 Kioa v West (1985) 159 CLR 550 May v Commissioner of Taxation (1999) 92 FCR 152 Minosea Pty Ltd v Australian Securities Commission (1994) 14 ACSR 642 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 290 ALR 616 Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69 Ryan v Australian Securities and Investments Commission (2007) 158 FCR 301 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 Saraceni v Australian Securities and Investments Commission [2012] FCA 899 Saraceni v Jones (2012) 287 ALR 551 Soper v Australian Securities and Investments Commission (2004) 207 ALR 509 Spencer v the Commonwealth (2010) 241 CLR 118 Treasurer of the Commonwealth of Australia v Canwest Global Communications Corp [1997] FCA 578 Tubbo Pty Ltd v Minister Administering the Water Management Act [2008] NSWCA 356 WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 Woolfe v Australian Securities and Investments Commission [2004] FCA 1020

Date of hearing: 26 February 2013

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 165

Counsel for the Applicant: Mr MBJ Lee SC with Mr ML Bennett

Solicitor for the Applicant: Jackson McDonald Lawyers

Counsel for the First Respondent: Ms LB Price

Solicitor for the First Respondent: Australian Securities and Investments Commission

Counsel for the Second, Third and Fourth Respondents: Mr MN Solomon with Mr PA Walker

Solicitor for the Second, Third and Fourth Respondents: Ashurst Australia

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 151 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

MARTIN BRUCE JONES AND JOHN ROSS LINDHOLM AS RECEIVERS AND MANAGERS OF SEAPORT PTY LTD ACN 085 027 176 (RECEIVERS AND MANAGERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF NEWPORT SECURITIES PTY LTD ACN 059 217 439 (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF MAYPORT NOMINEES PTY LTD ACN 070 052 603 (RECEIVERS AND MANAGERS APPOINTED)

JUDGE: NORTH, JACOBSON & GILMOUR JJ DATE OF ORDER: 16 May 2013 WHERE MADE: PERTH

Leave to appeal be granted.
The appeal be dismissed.
The applicant/appellant pay the respondents' costs of the application for leave to appeal and the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 151 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

MARTIN BRUCE JONES AND JOHN ROSS LINDHOLM AS RECEIVERS AND MANAGERS OF SEAPORT PTY LTD ACN 085 027 176 (RECEIVERS AND MANAGERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF NEWPORT SECURITIES PTY LTD ACN 059 217 439 (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF MAYPORT NOMINEES PTY LTD ACN 070 052 603 (RECEIVERS AND MANAGERS APPOINTED)

JUDGE: NORTH, JACOBSON & GILMOUR jj DATE: 16 MAY 2013 PLACE: PERTH

NORTH J 1 This appeal raises the question whether a person who may be the subject of an examination about the examinable affairs of a corporation under s 596A of the Corporations Act 2001 (Cth) (the Act) has a right to be heard in respect of a decision by the Australian Securities and Investments Commission (ASIC) to authorise a person to apply to a Court for a summons to a person for examination about a corporation's examinable affairs. 2 The facts, relevant legislation, and the proper approach to the construction of the legislation are set out in the reasons for judgment of Jacobson J. I agree with those matters and there is no need for me to repeat them. 3 Pursuant to s 596A of the Act, ASIC has power to authorise a person to apply to the Court for a summons for examination of an officer or provisional liquidator of a corporation or a person who was an officer or provisional liquidator of a corporation during a specified past period. If a person is authorised by ASIC and applies to the Court for a summons for examination of the officer or provisional liquidator, the Court is required to order a summons for examination. 4 There are therefore two steps involved in the establishment of such an examination: Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69. The first step is the conferral by ASIC of standing on a person to apply to the Court for the summons for examination. The second step is the determination by the Court to issue a summons for examination. 5 The applicant (Mr Saraceni) argues that he has a right to be heard at the first step. Although there are two steps in the process, the second step has an automatic result. The Court is, effectively, bound to issue the summons for examination. Thus, under s 596A, the decision of ASIC has the practical effect of exposing all of the potential examinees to the possibility of examination. 6 The legal question which arises on this appeal was considered in Ryan v Australian Securities and Investments Commission (2007) 158 FCR 301; [2007] FCA 59 (Ryan). Gyles J decided that a potential examinee was not entitled to notice from ASIC of its intention to authorise a person to apply to the Court for a summons for examination. 7 His Honour reasoned at [60]: The power is unconstrained by any express provision and the only effect of the impugned decision is to put the appointee in a position to apply for a summons pursuant to ss 596A and 596B of the Corporations Act as an eligible applicant. That appointment has no effect upon any other person. The interests of other persons are not affected unless and until a summons is issued. The focus upon the Administrators [the subject of the examination] in this case tends to distort perspective. It does not even follow that the issue of a summons for examination and the conduct of the examination will have an adverse impact upon all potential examinees. An examinee may be asked to give an account of what occurred in the affairs of the company without any reflection upon the examinee or the disclosure of any information personal to the examinee. Examinations may be conducted in order to obtain information without any defined target and, even if there is a defined target, many examinees will not be that target. Given the width of ss 596A and 596B, it is apparent that it would be quite impractical to give notice to all persons who might be conceivably affected by the appointment of a person as an eligible applicant in relation to the affairs of a particular corporation either as a potential examinee or a person potentially affected by evidence to be given by an examinee. 8 Importantly his Honour said at [61]: The decision to authorise the Evans did not itself directly adversely affect the interests of others in the manner required to bring the statutory presumption into play. (Emphasis added). 9 Then at [67] his Honour concluded: In my opinion, the initiation of the exercise of a statutory power of an investigatory nature will not normally "destroy, defeat or prejudice" (to use the words from Annetts v McCann [1990] HCA 57; 170 CLR 596) or "imperil" (to use Meagher J's word) any relevant right or interest such as to require notice to be given to the object prior to exercise of the power. In any event, where, as here, the exercise of a power is anterior to that which has a direct effect upon the party, there is no such requirement. (Emphasis added). 10 This reasoning is compelling and should be accepted. It is important to highlight one aspect of the reasoning. 11 It is established that the principles of natural justice regulate the exercise of power where "a statute confers power to destroy or prejudice a person's rights or interests": Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at [11]; [2010] HCA 23 at [11]. 12 The notion of rights and interests in this context is wide. For instance, in Kioa v West (1985) 159 CLR 550; [1985] HCA 81 (Kioa) Mason J said at 582; [28], that "[t]he reference to 'right or interest' in this formulation must be understood as relating to personal liberty, status, preservation of livelihood and reputation, as well as to proprietary rights and interests". And in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, Mason CJ, Dawson, Toohey and Gaudron JJ said at 578 that "[i]t has long been accepted that reputation is an interest attracting the protection of the rules of natural justice". 13 The decision of ASIC to authorise a person to apply for a summons for examination has a consequence for the potential examinees. It brings closer the chance of an examination of the potential examinee occurring. In ordinary parlance that consequence is properly described as a prejudice to the potential examinee because it is a disadvantage to that person. Further, it is a prejudice to an interest which the potential examinee has in remaining free of the intrusion which an examination entails, and free from the necessity to expend time and effort required to participate in such an examination. However, prejudice is not a concept with a fixed content. There are degrees of prejudice. Not all statutory powers which prejudice a person's interest attract the obligations of procedural fairness. It is necessary for the Court to make an assessment of the degree to which the exercise of power prejudices the interests of Mr Saraceni. 14 One approach used to make that assessment is to ask whether the prejudice is direct or indirect. Mason J explained the position in Kioa at 584; [31] as follows: But the duty [to accord natural justice] does not attach to every decision of an administrative character. Many such decisions do not affect the rights, interests and expectations of the individual citizen in a direct and immediate way. Thus a decision to impose a rate or a decision to impose a general charge for services rendered to ratepayers, each of which indirectly affects the rights, interests or expectations of citizens generally does not attract this duty to act fairly. This is because the act or decision which attracts the duty is an act or decision: " ... which directly affects the person (or corporation) individually and not simply as a member of the public or a class of the public. An executive or administrative decision of the latter kind is truly a 'policy' or 'political' decision and is not subject to judicial review." (Salemi [No. 2], (99), per Jacobs J.) (Emphasis added). 15 In Ryan, Gyles J correctly asked the question whether the statutory power in s 596A directly prejudiced the potential examinees. His reasoning sought to resolve that question. Gyles J answered that question by concluding that s 596A did not directly prejudice the interests of the potential examinee. 16 That conclusion was correct. The reasoning applies equally to the circumstances of the present appeal. The statutory power conferred by s 596A prejudices the interests of potential examinees but does not do so in a sufficiently direct way as to require potential examinees to be heard in relation to the decision of ASIC. As a result, the appeal must be dismissed with costs. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.

Associate: Date: 16 May 2013 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 151 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

MARTIN BRUCE JONES AND JOHN ROSS LINDHOLM AS RECEIVERS AND MANAGERS OF SEAPORT PTY LTD ACN 085 027 176 (RECEIVERS AND MANAGERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF NEWPORT SECURITIES PTY LTD ACN 059 217 439 (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF MAYPORT NOMINEES PTY LTD ACN 070 052 603 (RECEIVERS AND MANAGERS APPOINTED)

JUDGE: NORTH, JACOBSON & GILMOUR jj DATE: 16 May 2013 PLACE: PERTH

JACOBSON J 17 The Applicant (Mr Saraceni) is, or was at the relevant time, a director of three companies (the Companies) which entered into receivership in the early part of 2011. The second, third and fourth respondents (the Receivers) are receivers and managers of the Companies. 18 Upon the Companies entering into receivership, Mr Saraceni became liable to be examined about the examinable affairs of the Companies if an application was made to the Court by an "eligible applicant" for the issue of a summons to Mr Saraceni under s 596A of the Corporations Act 2001 (Cth). 19 A receiver does not automatically have the status of eligible applicant under the definition of that term in s 9 of the Corporations Act. oweGIHoHoweHowever, the Australian Securities and Investments Commission (ASIC) has power under s 11(4) of the Australian Securities and Investments Commission Act 2001 (Cth) to authorise a receiver to be an eligible applicant to make an application to the Court for the issue of an examination summons under Division 1 of Part 5.9 of the Corporations Act. That Division provides for the mandatory issue by the Court of examination summonses to officers and former officers under s 596A. It also provides for the Court to have a discretion to issue an examination summons to other persons in accordance with s 596B. 20 On 4 July 2011, ASIC authorised the Receivers to be eligible applicants for the purposes of Division 1 of Part 5.9 of the Corporations Act. This conferred the status of eligible applicant upon the Receivers to enable them to apply to the Court for the issue of examination summonses to persons including Mr Saraceni. 21 The authorisation granted to the Receivers, and the steps taken by the Receivers pursuant to it, have resulted in a series of proceedings in this Court, and in the Supreme Court of Western Australia, in which the validity of the examination summonses issued to Mr Saraceni has been challenged. 22 In this proceeding, Mr Saraceni challenged the decision of ASIC to confer the status of eligible applicant upon the Receivers. The challenge was made under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act). The grounds on which Mr Saraceni relied included a denial of procedural fairness. The effect of the ground was that Mr Saraceni was entitled to notice of the application by the Receivers to ASIC and an opportunity to be heard on the question of the grant of the status of eligible applicant. 23 Mr Saraceni also contended that the appointment by ASIC of the Receivers as eligible applicants was an improper exercise of the power because of the failure of ASIC to take into account relevant considerations. These considerations were said to include the existence of pending litigation between Mr Saraceni and the Respondents and the financial institution which had appointed the Receivers under the powers contained in the relevant security documents. 24 The Receivers sought summary dismissal of the proceeding under s 31A(1) of the Federal Court of Australia Act 1976 (Cth). The essential ground of the application was that Mr Saraceni was not entitled to an opportunity to be heard on the question of the grant of the status of eligible applicant. The Receivers also contended that ASIC was not bound to take into account any matters which Mr Saraceni might wish to bring to the attention of ASIC on the question of whether to grant eligible applicant status to the Receivers. 25 The primary judge (Barker J) was satisfied that Mr Saraceni had no reasonable prospects of success on the grounds of review that were raised and ordered summary dismissal of the proceeding. In coming to that view, the primary judge relied upon a number of judgments of the Court which have considered the effect of the statutory scheme contained in Division 1 of Part 5.9 of the Corporations Act and its predecessors. 26 One of those authorities is the decision of a Full Court in Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Worthley v England (1994) 52 FCR 69. That case was decided under the former Corporations Law (Cth) but has been followed in other authorities under the Corporations Act. Re Excel is authority for the proposition that where the applicant for an examination order is not one of the persons specifically granted standing by the legislation, there is a two stage process envisaged by the statutory scheme. The grant of the status of eligible applicant arises at the first stage. 27 More recently, a single judge, Gyles J, held in Ryan v Australian Securities and Investments Commission (2007) 158 FCR 301 that the first stage of the two stage process does not require ASIC to accord natural justice to a potential examinee. 28 The primary judge in the present case followed the decision in Ryan which he considered to be based on sound reasoning: see at [118]. This led his Honour to the conclusion that Mr Saraceni had no reasonable prospects of success on either of the grounds of review. 29 Mr Saraceni seeks leave to appeal from the summary dismissal order. A single judge ordered that the application for leave be heard by a Full Court concurrently with the proposed appeal: Saraceni v Australian Securities and Investments Commission [2012] FCA 899. 30 A critical question which arises for argument is whether there is any doubt about the correctness of the decision in Ryan. 31 Senior Counsel for Mr Saraceni, Mr Lee SC, relies heavily upon the terms of s 596A of the Corporations Act which provides for mandatory examination of officers of a corporation. By contrast, s 597 of the Corporations Law, which was in force when Re Excel was decided, reserved to the Court a discretion to issue an examination summons upon the application of an eligible applicant at the second stage of the process. 32 The gravamen of Mr Lee's submission is that the change in the statutory scheme gives rise to a real possibility that the rights or interests of a director or former director will be adversely affected because he or she may be subject to mandatory examination under s 596A. Accordingly, it is said that the exercise by ASIC of the power to confer eligible applicant status upon a receiver is attended by an obligation to accord procedural fairness to officers of a corporation, such as Mr Saraceni. 33 Mr Lee also relies upon the facts of the present case, including the likelihood that Mr Saraceni would be a "target" for a mandatory examination and the existence of other litigation relating, inter alia, to the appointment of the Receivers.

The statutory framework 34 The relevant statutory framework may be stated briefly. The power conferred on ASIC to authorise a person to apply to the Court for the issue of a summons about the examinable affairs of a corporation is not found in specific terms in the Corporations Act. It has been accepted in this Court that the power is contained in the general terms of s 11(4) of the ASIC Act: see Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2006) 156 FCR 501 at [80] and the authorities cited (French J); see also Ryan at [60]. 35 Section 11(4) provides that ASIC has power to do whatever is necessary for or in connection with, or reasonably incidental to, the performance of its functions. As French J explained in Highstoke at [80], ASIC's function in relation to the authorisation of persons to make an application for a summons under Part 5.9 is identified in the definition of "eligible applicant" in s 9 of the Corporations Act. That is the function which is picked up in the general provisions of s 11(1) of the ASIC Act and is expressed in the broad terms of s 11(4). 36 The definition of "eligible applicant" in s 9 of the Corporations Act specifies ASIC and certain insolvency administrators as eligible applicants. It then goes on in para (e) of the definition to expand the class of persons who may have standing to make an application to persons authorised in writing by ASIC. 37 The terms of the definition are as follows: eligible applicant, in relation to a corporation, means: (a) ASIC; or (b) a liquidator or provisional liquidator of the corporation; or (c) an administrator of the corporation; or (d) an administrator of a deed of company arrangement executed by the corporation; or (e) a person authorised in writing by ASIC to make: (i) applications under the Division of Part 5.9 in which the expression occurs; or (ii) such an application in relation to the corporation. 38 Thus, the operative effect of an authorisation by ASIC is to confer standing on an eligible applicant to make an application to the Court under ss 596A and 596B, both of which are contained in Division 1 of Part 5.9, for the issue of a summons to a person for examination about a corporation's examinable affairs. 39 Under s 596A, the Court has no discretion if the applicant has standing and the proposed examinee is, or was during the specified period, an officer or provisional liquidator of the corporation. 40 Section 596A provides as follows: The Court is to summon a person for examination about a corporation's examinable affairs if: (a) an eligible applicant applies for the summons; and (b) the Court is satisfied that the person is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending: (i) if the corporation is under administration - on the section 513C day in relation to the administration; or (ii) if the corporation has executed a deed of company arrangement that has not yet terminated - on the section 513C day in relation to the administration that ended when the deed was executed; or (iii) if the corporation is being, or has been, wound up - when the winding up began; or (iv) otherwise - when the application is made. 41 Under s 596B, the Court has a discretion whether or not to issue the summons if an eligible applicant applies and it is satisfied that the proposed examinee falls within the categories of persons specified in para (b) of s 596B(1). The specified persons may be said, in general terms, to be persons who have information about the examinable affairs of the corporation and who are likely to be able to assist the applicant in the discharge of his or her statutory duties. 42 Section 596B provides as follows: (1) The Court may summon a person for examination about a corporation's examinable affairs if: (a) an eligible applicant applies for the summons; and (b) the Court is satisfied that the person: (i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or (ii) may be able to give information about examinable affairs of the corporation. (2) This section has effect subject to section 596A.

The background facts 43 The relevant background facts are sufficiently stated in the primary judgment. I will refer to them briefly. 44 Mr Saraceni is the sole director of a company known as Westgem Investments Pty Limited (Westgem) to which receivers and managers have been appointed. Westgem is also in administration. 45 Westgem is responsible for a major commercial property development in the central business district of Perth. Funds for that project were advanced to Westgem by the Bank of Western Australia Limited (BankWest). 46 The obligations of Westgem to BankWest were guaranteed by various related parties including Seaport Pty Limited, Newport Securities Pty Limited and Mayport Nominees Pty Limited which are the companies that I have referred to as "the Companies". 47 The Companies granted a number of securities to BankWest to support the guarantees including fixed and floating charges. 48 During the period from January to March 2011, BankWest exercised its powers under the securities to appoint the Receivers as receivers and managers of the Companies. 49 In some instances the appointments were made in respect of only part of the securities that were granted by the Companies rather than to all of their assets and undertakings. 50 Mr Saraceni contended before the primary judge that the Receivers were not capable of being appointed as eligible applicants in relation to those of the Companies that were not in full receivership. That contention was not pressed as a ground of appeal. 51 The three letters of appointment dated 4 July 2011 under which ASIC conferred the status of eligible applicant upon the Receivers were in evidence. The letters are formal in their terms and contain no details of the information that ASIC took into account in making the appointments other than references to earlier correspondence dated 18 April 2011 and 9 June 2011. That correspondence was not in evidence. 52 The letters of appointment granted authorisation to the Receivers in identical terms in each instance, as follows: ASIC authorises you and… the Receivers and Managers of the Company as eligible applicants for the purposes of Division 1 of Part 5.9 of the Act in relation to the Company. 53 On 15 July 2011 the Receivers applied ex parte to the Supreme Court of Western Australia for the issue of examination summonses to Mr Saraceni under s 596A of the Corporations Act. 54 On 28 July 2011 the Supreme Court made orders under s 596A for the issue of summonses to Mr Saraceni in relation to the examinable affairs of the Companies. The examination summonses were issued on 12 August 2011 and were made returnable on 26 August 2011. 55 Mr Saraceni applied to the Supreme Court to discharge the examination summonses. The grounds raised by Mr Saraceni included a challenge to the constitutional validity of s 596A which was referred to the Court of Appeal of Western Australia as a separate legal issue. That issue was determined adversely to Mr Saraceni on 16 March 2012: see Saraceni v Jones (2012) 287 ALR 551. 56 The other grounds raised by Mr Saraceni in seeking to set aside the examination summonses have yet to be determined by the Supreme Court. 57 The primary judge referred to the existence of other litigation which was described by Mr Saraceni as part of the "commercial disputation" between BankWest and the Companies. The relevant litigation for present purposes was a proceeding brought by the Companies against BankWest in relation to the appointment of the Receivers. Reference was also made to claims brought by BankWest against a number of guarantors including Mr Saraceni.

The primary judge's reasons 58 The primary judge recorded at [49]ff the grounds of judicial review raised by Mr Saraceni. 59 His Honour summarised the first ground of review, that is to say the natural justice ground, by saying at [51] that Mr Saraceni contended that in light of the "commercial disputation" between himself, BankWest and the Receivers, ASIC was required, before granting authorisation to the Receivers as eligible applicants, to notify Mr Saraceni of the applications and to hear from him before granting the authorisations. 60 His Honour went on to say that Mr Saraceni submitted that if ASIC had heard his side of the dispute, it might have decided to withhold authorisation. He then said at [53]: That of course is possible, but the question is whether ASIC laboured under any legal obligation to the applicant at material times to afford him natural justice or procedural fairness either at all or in the practical circumstances of each case. 61 The second ground of review was improper exercise of power. His Honour recorded nine matters which were relied upon by Mr Saraceni as being relevant considerations that ASIC had failed to take into account, or irrelevant considerations that were taken into account. 62 The only items which were relied upon in the proposed appeal were the existence of pending litigation and that ASIC confined itself to the material provided by the Receivers. 63 The starting point for the primary judge's consideration of the grounds of review was his acceptance of the two-stage operation of Division 1 of Part 5.9 of the Corporations Act discussed in the various authorities to which he referred in some detail. 64 His Honour then said that in practical terms this raised the question of whether a "potential target" of an examination is entitled as a matter of law to have any input into ASIC's decision-making at the first stage of that process. He observed that this was the issue which was determined in Ryan. 65 The substance of the primary judge's reasons on the natural justice ground may be found at [118] as follows: I consider the decision in Ryan v ASIC is based on sound reasoning with which, with respect, I agree. The proposition that, in effect, ASIC should consult with a range of potential examinees who may possibly be affected by the authorisation of a particular person to apply for an examination summons under the Corporations Act lacks coherence in policy terms. By that I mean the subject matter, scope and purpose of Pt 5.9 of Ch 5 of the Corporations Act does not seem to me to require such an outcome. The finding of a duty to consult would not only delay the sensible administration of that part of the Corporations Act by ASIC but would also conceivably provide a target examinee with two opportunities, at least, to challenge ASIC's decision - both the first stage decision and in the course of resisting the second stage examination. In circumstances where questions of substance relating to any alleged improper purpose or other such grounds can be raised at the second stage examination by a directly affected person, the need for the law to impose a consultation obligation on ASIC to give notice to potential examinees (or other persons) at the first stage of the process identified in Re Excel does not commend itself in terms of practical administration or legal reasoning. 66 His Honour went on to accept the submissions made by ASIC and the Receivers that the natural justice ground had no reasonable prospect of success. His Honour came to that conclusion as a matter of statutory construction, the effect of which was that the first stage of the two-stage process does not affect the interests of a potential examinee in a direct and immediate way. 67 The primary judge's finding that there was no duty to accord natural justice at the first stage of the process led him to reject the submission made by Mr Saraceni that ASIC had failed to take into account matters which Mr Saraceni may have wished to bring to ASIC's attention. His Honour said at [124]: If ASIC did not labour under a duty to consult the applicant it can hardly have acted improperly by not seeking out and regarding his views. 68 His Honour went on to say that in any event, he did not consider that ASIC was bound to have regard to the matters on which Mr Saraceni sought to rely. His reasons are set out at [126] - [127] as follows: 126 The material before the Court does not disclose whether the pending litigation was brought to ASIC's attention and, if it was, whether ASIC took it into account. Putting the applicant's case at its highest, that is to say assuming that the litigation was not brought to ASIC's attention, or if it was and was not taken into account, the applicant nonetheless has no reasonable prospects of success for the following reasons. First, in Re Excel, at 87, the Court noted that in an appropriate case the material before the decision-maker may indicate that a person seeking authorisation is in a difficult conflict situation. The examples given, as noted above, are of the creditor related to officers of the company to the knowledge of the decision-maker. However, the Court in Re Excel then went on to note: If facts such as those were known to the decision-maker, it might be necessary to take them into account. But that is not the present case. Similarly, in the present case, there is no foundation for an assertion of this nature. There is no suggestion, let alone evidence of something personal to these respondents in their relationship with the applicant or the subject corporations which ASIC was required to consider but failed to consider. 127 As to the pending litigation, the litigation was not at material times between the applicant and the respondents, but rather between the applicant and the respondents' appointor. There is nothing to suggest (as in Re Excel at 92) that the respondents were or are seeking to conduct the examination in the interests of a creditor who appointed them, rather than in the interests of other creditors or for the purpose of finding out the circumstances which led the company into financial difficulties. In any event, as Re Excel itself makes clear, even if the receivers were in this position, that would not of itself render them unacceptable candidates for authorisation.

The proper approach to the natural justice question 69 The question of whether a statutory power is conditioned upon an obligation of procedural fairness is determined by a process of statutory construction. 70 That proposition was stated in unqualified terms by French CJ, Gummow, Hayne, Crennan and Kieffel JJ in Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at [12]. Their Honours traced the source of that principle to an earlier decision of the High Court in Annetts v McCann (1990) 170 CLR 596, and to the explanation, which underlies that approach, given by Brennan J in Kioa v West (1985) 159 CLR 550. 71 Brennan J commenced his explanation in Kioa at 609 by pointing out that the jurisdiction of a court to review the exercise of a statutory power depends upon the terms of the statute. Thus, jurisdiction to review a decision on a natural justice ground will depend upon whether the statute provides in express or implied terms that the exercise of the power is conditioned upon the observance of the principles of natural justice. 72 Of course, the question of whether such a term is to be implied may sometimes be difficult but, as Brennan J pointed out at 611, the question demands a universal answer in each case because it is a question of construction. Thus, it may be said in relation to a particular statutory power that: its exercise is never conditioned on the observance of the principles of natural justice. 73 What is important, as Brennan J went on to explain in Kioa at 612, is that a distinction exists between two closely related questions. The first is the threshold question of whether the exercise of the power is conditioned upon the observance of the principles of natural justice. This is to be determined as a matter of statutory construction. The second is the content of any condition of natural justice which is found to exist in the particular statute. 74 The latter question, unlike the threshold question, turns in part upon the statutory context and in part upon the circumstances of the particular case. That is why the courts have so often referred to the flexible nature of the principles of natural justice. But that statement addresses the content of the obligation if it is found to exist as a matter of statutory construction. 75 Where a statute does not expressly condition the exercise of the power on the observance of the principles of natural justice, the process of construction is undertaken on the footing that "the justice of the common law will supply the omission of the legislature": Kioa at 609, citing Cooper v Wandsworth Board of Works (1863) 14 C.B (N.S.) at 194; 143 ER 414 at 420; see also Saeed at [11]. 76 But, the common law duty to accord procedural fairness does not attach to every decision of an administrative character. The question of whether the common law will fill the gap left by the legislature depends upon whether the exercise of the power will affect the rights or interests of the party, subject to the manifestation of any contrary statutory intention: Kioa at 584 per Mason J, at 609 per Brennan J. 77 The principle was reiterated by Mason CJ, Deane and McHugh JJ in Annetts v McCann at 598. Their Honours considered it to be a settled principle that when a statute confers power on a public official to "destroy, defeat or prejudice" a person's rights or interests the rules of natural justice regulate the existence of the power unless the rules are excluded by plain words "of necessary intendment". See also Saeed at [11]. 78 The reference in Annetts v McCann and other authorities to the exercise of a power which affects "legitimate expectations" may now be disregarded: Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 290 ALR 616 at [65] (Gummow, Hayne, Crennan and Bell JJ).

The nature of the power 79 What is decisive in the process of statutory construction is the nature of the power in question, not the character of the proceeding which attends its exercise: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 576 (Mason CJ, Dawson, Toohey and Gaudron JJ). 80 As Gyles J observed in Ryan at [63], there is a "plethora" of statutory provisions which do not involve a hearing but which result in the compulsory acquisition of information and documents that can be used in subsequent proceedings by a regulatory authority. Examples include notices under s 155 of the Trade Practices Act 1974 and similar provisions in the Income Tax Assessment Act 1936 (Cth) as well as search warrants issued under Part 1AA, Div 2 of the Crimes Act 1914 (Cth). 81 Counsel for the Receivers provided the Court with a helpful aide memoire of the large number of decisions which have considered the question of whether an obligation of procedural fairness is to be implied in an investigative context. It is not necessary to refer to all of the cases but a brief review of them emphasises the importance of the need to have regard to the nature of the power and the way in which it may be thought to affect a person's rights or interests. 82 In Hare v Gladwin (1988) 82 ALR 307, a question arose as to whether a provision of the Commonwealth Electoral Act 1918 (Cth), which empowered an officer of the Electoral Commission to issue a notice requiring production of documents where the officers had reason to believe that a person was capable of producing documents relating to a possible contravention of the Act, was subject to an obligation of natural justice. 83 In that case Sheppard J found that the officer was not required to give the person an opportunity to make submissions about whether the notice should be issued, or the form of it. His Honour observed at 330 that the officer was acting in an investigatory capacity only and that: (n)othing that she could do could affect any right or interest which he has or expose him, except by the operation of the Act itself, to conviction… 84 In Ainsworth, the High Court characterised the power in question as investigatory but held that it was subject to an obligation of procedural fairness. The power in that case was conferred on the Criminal Justice Commission under the Criminal Justice Act 1989 (Qld) to prepare a report to be tabled in Parliament containing recommendations about persons involved in the poker machine industry. The Commission exercised the power and tabled a report which contained adverse recommendations about certain persons. 85 The plurality in Ainsworth (Mason CJ, Dawson, Toohey and Gaudron JJ) described the process which led to the reports as one of inquiry and investigation. They observed at 576 that not every inquiry or investigation has to be conducted in a manner that ensures procedural fairness. Their Honours went on at 576-579 to explain why the power was conditioned upon such principles in that case. 86 Their Honours referred at 576 to the principle stated in Annetts v McCann that a duty of procedural fairness ordinarily arises where the power is one which may destroy, defeat or prejudice a person's rights or interests. They emphasised, as the decisive consideration, the nature of the power. 87 The nature of the power in Ainsworth was characterised by the plurality at 578-579 as the final step of the Commission in the discharge of its functions which were brought into play because of its decision to investigate and report on the industry. What was decisive was that the nature of the power adversely affected the reputation of the persons who were the subject of the report. 88 Their Honours distinguished the stages in the investigative process and considered the nature of the functions reposed in the Commission and in Parliament. They observed that there may be an opportunity for Parliament to redress any unfairness: But, if so, that cannot alter the fact that their [the persons'] reputation was blackened in circumstances in which the Commission should have given, but did not give, them an opportunity to put their side of the matter. 89 In May v Commissioner of Taxation (1999) 92 FCR 152, a Full Court of the Federal Court dealt with the question of whether the power conferred on the Court under s 264(1) of the Income Tax Assessment Act to require production of information, and to attend to give evidence concerning the person's income, was subject to an obligation of procedural fairness. 90 Their Honours (Branson, Finn and Kenny JJ) held that the power was not so conditioned. They said at [36] that if an obligation of procedural fairness was to be imposed, notwithstanding the obvious practical difficulties, it was one for Parliament, not the courts. They also endorsed at [37] the decisions of a number of single judges of the Court who held that the obligation of procedural fairness does not apply to a decision to issue a notice under s 264(1) or equivalent statutory provisions. 91 One of the single judge decisions which was endorsed by the Full Court was Minosea Pty Ltd v Australian Securities Commission (1994) 14 ACSR 642. There, the power was conferred on the Australian Securities Commission to issue a notice to a person under s 33 of the Australian Securities Commission Act 1989 (Cth), to produce books and records in relation to an investigation by the Commission of a suspected contravention of the Corporations Law. 92 In refusing relief in that case, Lindgren J observed at 651 that: … notices of the kind in issue in this case are given at a fact gathering stage, which is conceptually remote from the taking of any decision by the ASC on the commencement of proceedings… 93 In Johns v Australian Securities Commission (1993) 178 CLR 408 the High Court considered the question of whether a power conferred on a delegate to disclose the transcripts of an examination conducted by the Commission under s 19 of the Australian Securities Commission Act 1989 was subject to an obligation of procedural fairness. The delegate exercised a power to authorise disclosure of transcripts conducted in private examinations to a Royal Commission enquiring into the collapse of a large group of corporations. 94 The majority of the Court (Brennan, Dawson, Gaudron and McHugh JJ) held that before authorising the Royal Commission to use the transcripts, the delegate was required to give the examinee an opportunity to be heard in opposition to that course. In coming to that view, each of the Justices referred to the interests of the examinee in preserving the confidentiality of the transcript: see at 430 per Brennan J; at 437 per Dawson J; at 462 per Gaudron J; at 472 per Mc Hugh J. 95 The nature of the power was expressed quite clearly by McHugh J at 473 as follows:- …the decisions to release the information to the Royal Commission were in themselves decisions that affected the appellant's interests in a manner that attracts the protection of procedural fairness. 96 His Honour also drew attention at 473 to the statement made in Ainsworth at 578 that where a decision-making process involves different stages before a final decision is made, the requirements of natural justice are satisfied if the process, viewed in its entirety, accords procedural fairness. However, he went on to observe that, as in Ainsworth, the two stages did not form part of the same decision-making process. 97 The decision in Johns was distinguished by a Full Court of the Supreme Court of Victoria in Cornall v AB (A Solicitor) [1995] 1 VR 372. The case was concerned with the power of the Law Institute to investigate alleged misconduct by solicitors and to refer the matter to the Solicitors' Board if "of opinion that there appears to have been misconduct". 98 The Full Court (Ormiston, Coldrey and O'Bryan JJ) was of the view, at 396-397 that the decision-maker's investigative function was not to reach conclusions as to guilt or innocence but to determine whether there was an arguable case of sufficient strength to justify the imposition of sanctions by the disciplinary body. Their Honours recognised the possible reputational consequences of the decision to refer the matter to the Board but considered that, by contrast with the statutory regimes in Ainsworth and Johns, the decision-making stages formed part of an entire process which entailed procedural fairness as the second stage. 99 More recently, in Byrne v Marles (2008) 19 VR 612, the Court of Appeal of Victoria cast doubt upon the reasoning in Cornall, before ultimately distinguishing it on the ground that the statutory regime had been altered in 2004. 100 Nettle JA (with whom Dodds-Streeton JA and Coghlan AJA agreed) said at [81] that Annetts, Ainsworth and Johns are not "special cases". Rather, they stand as authority expressed in terms of general application. He continued by stating that its not clear why the solicitor in Cornall was any less affected by the actions of the Secretary of the Law Institute than was Mr Johns affected by the decision of the delegate in ASIC. 101 Three propositions may be drawn from a review of these authorities. First, not every power of investigation attracts a duty of procedural fairness. Second, whilst it may be true that no bright lines can be drawn, a statutory power that is purely investigative, such as the power of the Commissioner of Taxation to require production of documents or to attend to give evidence about the person's income, are less likely to be attended by an obligation to accord procedural fairness. This is particularly so where the investigative function does not include a power to make findings or recommendations. 102 The third, and most fundamental proposition, is that the overriding question will always be whether the exercise of the investigative power carries with it the capacity to destroy or prejudice the rights or interests of the person affected by the exercise of the power. That was why the exercise of the power by the Commission in Ainsworth and by the delegate in Johns were each attended by an obligation of procedural fairness. In those cases there was inevitable public attention drawn to matters that were otherwise protected by statutory obligations of confidence.

The operation and effect of Division 1 of Part 5.9 103 The operation and effect of Division 1 of Part 5.9 of the Corporations Act have been considered in some detail by two Full Courts of the Federal Court. The first was Re Excel. The second was Evans v Wainter Pty Ltd (2005) 145 FCR 176 (often referred to as New Tel). 104 In Re Excel at 79ff, the Full Court (Gummow, Hill and Cooper JJ) addressed the historical background to the examination regime which was then contained in s 597 of the Corporations Law as it stood prior to the enactment of the Corporate Law Reform Act 1992 (Cth). 105 Their Honours observed at 81 that the power conferred on the Commission as an administrative matter to authorise a person to make application for the issue of an examination summons reflected a legislative decision to move to the Commission power to grant standing, but without derogating from the discretion which was retained by the Court to grant or refuse an order. 106 The two-stage process, to which I referred above, was explained by their Honours at 81-82. In so describing the process, they observed that the issues that arise for decision at the first stage, that is to say, authorisation, are different from those that arise at the second stage which is concerned with the application to the Court by an "authorised person". 107 At the first stage, the question at issue is whether the applicant for authorisation is an appropriate person for the Commission to authorise to make an application to the Court. That question requires consideration of the relationship which the person has to the corporation but it may also encompass matters personal to the applicant, such as his or her relationship to the persons who may be examined. 108 Their Honours went on to say at 82 that at the second stage, the Court in deciding whether to grant the order may take into account different matters, specifically matters concerning the relationship between the proposed examinee and the corporation and the proposed examinee and the applicant. Also the Court may take into account the purpose of the applicant in seeking the examination order. 109 Significantly, their Honours said, at 83, that ordinarily a challenge to the issue of an examination order on the ground of an improper purpose on the part of the applicant will not arise at the first stage. Rather, the challenge on the ground of purpose will take place at the second stage in relation to the order of the Court. 110 In New Tel, Lander J (with whom Ryan and Crennan JJ agreed) examined in detail the scope and effect of the provisions of ss 596A and 596B, which were then in similar terms to those that now appear in the Corporations Act. 111 Lander J explained the differences between ss 596A and 596B at [83]ff. He said at [89] that the reason why s 596B is discretionary, rather than mandatory as in s 596A, is that s 596B is much wider in its terms. Section 596A is concerned with persons who have been concerned in the management of a corporation such as officers (or provisional liquidators). 112 Section 596B is not so limited. It empowers an eligible applicant to seek an order for examination of a person who has taken part in or been concerned in the examinable affairs of the corporation, and who may have been guilty of misconduct, or may be able to give information about the examinable affairs of the corporation. It includes as potential examinees persons such as employees and persons who have had dealings with the corporation: see New Tel at [86]. 113 Lander J also considered at [101]ff the differences between the regime contained in ss 596A and 596B and those which applied under earlier statutory regimes. 114 He said that in his opinion there is no relevant difference between a "prescribed person" who previously had standing, and an "eligible applicant" under the current regime. The explanation for the expanded and altered list of persons who now have standing, without the need for authorisation, is that the present regime recognises two types of insolvent administration which did not exist before 1992: see New Tel at [105]. 115 His Honour expressed the view that Parliament enacted s 596A to make it easier for an eligible applicant to examine persons who then fell within the definition of "examinable officers" because it wished to simplify the procedure to bring it into line with the bankruptcy procedure. He said that, in doing so, Parliament recognised that a corporation's examinable officers (which included directors, secretaries and executive officers) should always be available to eligible applicants for examination: see New Tel at [192]. 116 He went on to say at [206] that he did not agree with observations made in other authorities, in particular the remarks of Ormiston J in Flanders v Beatty (1995) 16 ACSR 324, that the purposes of the power to issue an examination summons have altered by reason of the enactment of s 596A in mandatory terms. 117 That statement was plainly limited to the purposes for which an examination order may be obtained, and did not extend to any observation about the power to authorise a person to be an eligible applicant to obtain an examination order. 118 Under an earlier form of the present statutory regime, Mason CJ identified two important public purposes which are served by the examination power. The first is to enable a liquidator to gather information which will assist in the winding up of an insolvent company. That purpose involves protection of the interests of creditors. The other purpose is to enable evidence and information to be obtained to support the bringing of charges in connection with the company's affairs: Hamilton v Oades (1989) 166 CLR 486 at 496-497. 119 In New Tel at [118] Lander J identified two further purposes which are to be gleaned from the provisions of s 597(14A). That sub-section permits various persons including creditors and members of the public to inspect a transcript of the examination. The purposes which Lander J therefore identified are to enable the public to know how corporations are being managed and to achieve the deterrent effect of a public examination.

Whether ASIC was required to accord natural justice 120 The essence of the argument urged upon us by Senior Counsel for Mr Saraceni was that the primary judge was in error in concluding that the applicant had no reasonable prospects of success on the procedural fairness issue, in particular because of the circumstances in which the power was exercised, and in light of the current state of authority on the threshold question of the existence of a duty. 121 The circumstances to which our attention was drawn included the fact that the Companies were not in liquidation or administration, the allegedly "bona fide" challenge to the appointment of the Receivers and the history of "broader disputation" with the Receivers and BankWest. It was also suggested that there were only two potential mandatory examinees under s 596A and no wider class of persons who might be the subject of a discretionary order under s 596B. The two mandatory examinees to whom the s 596A orders would be limited were said to be Mr Saraceni and his wife. 122 In my opinion, the approach taken on behalf of Mr Saraceni on this question is at odds with the well established principle stated in the authorities to which I referred above. Those authorities make it plain that the question of whether a duty exists is one of statutory construction whereas the content of the duty turns upon the statutory context and the circumstances of the case. This distinction is drawn most clearly in the observations made by Brennan J in Kioa to which I have referred and in the more recent authorities discussed above. 123 Thus, with due respect to the argument of Senior Counsel, the proposition that a duty is to be implied from the circumstances in which the power was exercised is to conflate the existence of a duty with the content of any duty which might be found to exist. It is the content which may be chameleon-like, depending upon the circumstances, but as Brennan J said in Kioa at 611, the question of whether a duty exists demands a universal answer because it is a question of construction. 124 It is therefore possible in the present case to say that the power of authorisation conferred on ASIC is never conditioned on the observance of the principles of natural justice. This may be determined by reference to the statutory power itself, and in particular in light of the nature of the power. The answer to the question does not turn on the circumstances. 125 The nature of the power of ASIC to authorise a person to be an eligible applicant is merely an antecedent step to the commencement of the exercise of the power to obtain an examination order. It is, to adopt the phrase used by Lindgren J in Minosea, "conceptually remote" from the investigative process which is enlivened at the second stage of the process explained in Re Excel. See also Ryan at [67]. 126 It seems to me to be clear that the grant of authorisation does not affect the rights of any potential examinee. The grant of authorisation to a person as an eligible applicant is merely the conferral of standing to make an application to the Court for the issue of an examination summons under either or both of s 596A and s 596B. Conferral of standing cannot, by its very nature, affect the interests of potential examinees unless and until a summons is issued. 127 That proposition was recognised, in my view correctly, in Ryan at [60]. It is plainly correct because an eligible applicant may decide not to seek the issue of an examination summons at all. Alternatively, he or she may seek to issue a summons against only some or all of the potential examinees. 128 Moreover, as Gyles J went on to say in Ryan at [60], it does not even follow that the issue of an examination summons will have an adverse impact upon all potential examinees. This follows from what Mason CJ said in Hamilton v Oades at 496-497 about the purposes that the examination is designed to serve, in particular, to enable the liquidator to gather information about the affairs of the company. 129 But even if there is an obvious "defined target" of an examination who can be identified at the time of an application for the status of eligible applicant, some potential examinees may not fall within that category. This point was also recognised by Gyles J in Ryan at [60]. 130 His Honour pointed to the width of ss 596A and 596B and the impracticality of giving notice to all persons who might be conceivably affected by the appointment of a person as an eligible applicant. This was not simply an appeal to administrative inconvenience. Rather, it was to emphasise the issue of statutory construction which was at the heart of the question of whether a potential examinee is to be accorded natural justice at the first stage of the process. 131 The regime for which Mr Saraceni contended would require ASIC to identify, in every case, those directors or other persons who would be the subject of mandatory examination and give notice to them of the application for authorisation under s 11(4) of the ASIC Act. Not only is such a regime totally impractical, it is far removed from the terms in which the power is expressed in the ASIC Act and effected in Div 1 of Part 5.9 of the Corporations Act. 132 It is also inconsistent with the nature of the power as explained in Re Excel. The question which is in issue at the first stage of the process is whether the person seeking authorisation is an appropriate person for ASIC to authorise; it requires consideration of the relationship between the applicant and the company and it may encompass matters personal to the applicant: Re Excel at 82. These are not matters which might ordinarily be expected to affect a potential examinee. Nor would a potential examinee be expected, as a general rule, to be able to provide any information about that question to ASIC. 133 The position in Ryan was almost identical to that which arises in the present case. The potential examinee had been identified as a "target". In a practical sense, the grant of the status of eligible applicant was a step towards an examination that was inevitable, or at least highly likely. But as Gyles J said in Ryan at [61], the practical consequence cannot elide the two-stage process explained in Re Excel. 134 The circumstances of the case cannot affect the question of whether the power is subject to an implied obligation of procedural fairness. The decision in Ryan to authorise the applicants did not itself adversely affect the interests of potential examines so as to bring the statutory presumption into play. Nor can it, for the same reasons, bring the presumption into effect in the present case. 135 Unlike the statutory regime which existed in Ainsworth and Johns, the decision to authorise a person as an eligible applicant for the purposes of Div 1 of Part 5.9 does not have the inevitable consequence of drawing public attention to a potential examinee's private affairs. To the extent that a director's actions may be drawn to public attention if an eligible applicant obtains and pursues an examination order, that is merely a foreseeable consequence of the acceptance of the office of director. 136 The principle was, in my respectful opinion, correctly stated by Gyles J in the following passage in Ryan at [67]: In my opinion, the initiation of the exercise of a statutory power of an investigatory nature will not normally "destroy, defeat or prejudice" (to use the words from Annetts v McCann 170 CLR 596) or "imperil" (to use Meagher J's word) any relevant right or interest such as to require notice to be given to the object prior to exercise of the power. In any event, where, as here, the exercise of a power is anterior to that which has a direct effect upon the party, there is no such requirement. 137 The only authority to which Counsel for Mr Saraceni referred which might be thought to cast any doubt on the approach which I have adopted does not, when properly considered, leave open the possibility that Mr Saraceni has reasonable prospects of success on the natural justice question. The authority is the decision of the NSW Court of Appeal in Tubbo Pty Ltd v Minister Administering the Water Management Act [2008] NSWCA 356. 138 In Tubbo, Spigelman CJ described the issue which arose as whether the legislation manifested a clear statement of Parliamentary intention that procedural fairness was not required with respect to the exercise of the particular statutory power. He referred to the view frequently expressed by Brennan J that the question is one that is solely of statutory construction but stated that it was not necessary to resolve the case on that basis: see [54]-[58]. 139 In Tubbo, Allsop P agreed with Spigelman CJ, at [125]. Sackville AJA said at [150] that it was not necessary to determine whether the primary judge was correct to reject the proposition that a process of statutory construction could take into account the manner of exercise of a power in determining whether a duty of procedural fairness might exist. 140 In my respectful opinion, the mere fact that the Court in Tubbo did not decide the question is not a sufficient basis upon which to contend that there are reasonable prospects of success in the present case.

"No reasonable prospect" 141 The question of whether the primary judge was correct in finding no reasonable prospect of success is to be considered in light of the fact that the question to be determined raised an issue of construction of the ASIC Act and the Corporations Act: see Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 and 492. 142 The decision in Ryan was directly on point and was adverse to the fundamental proposition for which Mr Saraceni contented. Ryan is of course not an authority of an intermediate court of appeal but the approach taken by Gyles J in that case was based upon his Honour's application of the principles stated by a full Court in Re Excel and by the High Court in Annetts, Ainsworth and Johns. 143 It is true that summary processes should not be used to stultify the development of the law: Spencer v the Commonwealth (2010) 241 CLR 118 at [25] per French CJ and Gummow J; see also at [58] - [60] per Hayne, Crennan, Kiefel, Bell JJ. But here Mr Saraceni's contention turns upon a proposition of law that is contrary to what appears to be an orthodox application of binding principles. In my opinion the matters urged upon us by Senior Counsel for Mr Saraceni are not sufficient to demonstrate that there are any reasonable prospects of success on the central issue in the case. 144 Mr Lee's submissions must be considered, not only in light of his challenge to orthodox principles, but also in light of the nature of the examination power as fully explained by McLure P (with whom Martin CJ and Newnes JA agreed) in Saraceni v Jones. 145 As McLure P observed at [141], after tracing the history of the power in England and Australia, the power of a court to conduct compulsory examination of bankrupts and persons associated with companies in liquidation is of long standing and pre-dates federation. 146 Although a privately appointed receiver is not an officer of the court, there is a strong correlation between receivership and insolvency: Saraceni v Jones at [145], [151] and [152]. 147 What is fundamental to the nature and scope of the examination power in s 596A is that the court facilitates and supervises the examination conducted by an eligible applicant, including a receiver and manager who is authorised to conduct the examination. The court does so in order to ensure that the examination is not made an instrument of oppression or needless enquiry: Saraceni v Jones at [107]; [109] and [228]. 148 The status and identity of the particular eligible applicant is not the central issue from a constitutional perspective. The purpose of the exercise of the court's power to make an order is to secure full and complete disclosure to enable the administrator to perform his or her powers and duties: Saraceni v Jones at [111] and [233]. 149 As McLure P pointed out at [229], incorporation with limited liability is a privilege, the quid pro quo for which is the provision of legislative powers which are intended to serve transparency and accountability. These powers are now reflected in s 596A which, as Lander J explained in New Tel is intended to ensure that directors and officers of a company under external administration are available for public examination. 150 That is why the enactment of the power of examination in mandatory terms in s 596A does not alter the nature of the power of authorisation which constitutes the first stage of the process as explained in Re Excel. 151 The anterior nature of the authorisation power, as accepted by Gyles J in Ryan is consistent with the analysis undertaken by McLure P in Saraceni v Jones. It is also consistent with, and follows from, the explanation of the two stage process in Re Excel. Authorisation as an eligible applicant focuses upon the relationship of the applicant to the corporation. It is not concerned with the purpose for which the examination summons is to be obtained. 152 Thus as the Full Court said in Re Excel at 83, a review of the decision to issue the summons does not ordinarily arise in relation to the validity of the authorisation. It arises at the second stage where the issue of the purpose of the order may be raised. A similar approach is to be found in the judgment of Hely J in Soper v Australian Securities and Investments Commission (2004) 207 ALR 509 at [31]-[34] and in the decision of RD Nicholson J in Woolfe v Australian Securities and Investments Commission [2004] FCA 1020 at [51]. 153 The overwhelming weight of judicial authority is therefore against the implication of an obligation of procedural fairness at the authorisation stage. As I said earlier, I do not consider that Mr Saraceni may call in aid the silence of the NSW Court of Appeal in Tubbo to support his contention that he has reasonable prospects of success on this issue.

The improper exercise of power 154 The substance of the ground of improper exercise of power, as ultimately advanced on behalf of Mr Saraceni, was that ASIC failed to take into account relevant considerations going to the status of the Receivers as eligible applicants. 155 The relevant considerations were said to include matters personal to the Respondents including the existence of pending litigation and the broader "commercial disputation" between Mr Saraceni or the Companies and the Receivers. 156 In particular, Mr Lee submitted that the exercise of the power of summary dismissal deprived Mr Saraceni of the opportunity to obtain discovery to obtain material to support his case. Mr Lee also submitted that the position taken by ASIC in the appeal was to treat the Receivers as "ex officio" eligible applicants and that Mr Saraceni was entitled to discovery to ascertain whether, in truth, ASIC confined itself to enquiries about the relationship between the Receivers and the Companies. 157 The short answer to these submissions may be found in the reasons of the primary judge at [126] - [127] which I have reproduced above. There was no suggestion of anything to impugn the decision made by ASIC to confer eligible applicant status on the Receivers. Indeed, ASIC's decision, on its face, was in accordance with the approach explained in Re Excel. 158 Thus, Mr Saraceni's contentions amounted to nothing more than an assertion that irrelevant considerations may have been taken into account coupled with a claim to make good those assertions by invoking the Court's discretionary power to order discovery. 159 In my opinion, that submission is misplaced. It may be accepted that the question of whether discovery should be ordered in judicial review proceedings is to be determined in accordance with the principles which ordinarily apply to applications for discovery. But this is subject to the qualification that, often, there will be no need for discovery in judicial review proceedings, particularly where reasons have been given for the decision under challenge: Australian Securities Commission v Somerville (1994) 51 FCR 38 at 52-53 (Black CJ, Ryan and Olney JJ); Treasurer of the Commonwealth of Australia v Canwest Global Communications Corp [1997] FCA 578. 160 It is true that in the present case ASIC did not give reasons and, indeed, was not required to do so. However, the analysis of the authorities by the Full Court in Somerville, including the earlier decision of a Full Court in WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 (Bowen CJ, Brennan and Lockhart JJ) makes it clear that discovery is not to be ordered to assist a party to make good a bare assertion which amounts to nothing more than speculation. Yet that was the basis on which Mr Saraceni sought to resist summary dismissal of his claim.

Whether leave to appeal should be granted 161 In my opinion, the application for leave fails to satisfy either of the tests stated by Sheppard, Burchett and Heerey JJ in Decor Corp Pty Limited v Dart Industries Inc (1991) 33 FCR 397. There is insufficient doubt about the correctness of the decision at first instance. Nor is there "substantial injustice" occasioned by the refusal of leave. 162 Nevertheless, the tests stated by their Honours do not constitute rigid rules: see Decor at 399. 163 In my opinion, having regard to the importance of the first question raised by Mr Saraceni, that is to say, the natural justice ground, the preferable course is to grant leave but to dismiss the appeal.

Orders 164 The orders I would make are that leave to appeal be granted, the appeal be dismissed and the applicant/appellant is to pay the costs of the application for leave to appeal and of the appeal. I certify that the preceding one hundred and forty-eight (148) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate: Date: 16 May 2013 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 151 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

MARTIN BRUCE JONES AND JOHN ROSS LINDHOLM AS RECEIVERS AND MANAGERS OF SEAPORT PTY LTD ACN 085 027 176 (RECEIVERS AND MANAGERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF NEWPORT SECURITIES PTY LTD ACN 059 217 439 (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED)

MARTIN BRUCE JONES, DARREN GORDON WEAVER AND ANDREW JOHN SAKER AS RECEIVERS AND MANAGERS OF MAYPORT NOMINEES PTY LTD ACN 070 052 603 (RECEIVERS AND MANAGERS APPOINTED)

JUDGE: NORTH, JACOBSON & GILMOUR jj DATE: 16 May 2013 PLACE: PERTH

GILMOUR J 165 I agree with the reasons of Jacobson J and the orders proposed by his Honour. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.

Electoral Act 1918(Cth)

Criminal Justice Act 1989(Qld)

Australian Securities Commission Act 1989(Cth)

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