Corporate Affairs Commission (NSW) v Yuill

(1991) 172 CLR 319
(1991) 9 ACLC 843

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(Judgment by: Dawson)

CORPORATE AFFAIRS COMMISSION OF NEW SOUTH WALES v BRIAN RICHARD YUILL AND ORS

Court:

Judges: Brennan

DawsonToohey
Gaudron
McHugh JJ.

Other References:
F.C. 91/025

Judgment date: 27 June 1991

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Judgment by:
Dawson

An inspector was appointed under Pt VII of the Companies (New South Wales) Code ("the Code") to investigate the affairs of a group of companies, including their dealings with the two companies which are the second and third respondents. The first respondent, Brian Richard Yuill, was an officer of one or other of those companies being investigated. The inspector issued a notice under s.295(1) of the Code requiring Yuill to produce certain documents which were listed in the notice. The inspector had previously sought the documents from Yuill's solicitors, but a claim of legal professional privilege was successfully made in respect of them under s.308 of the Code. These provisions are set out later.

Yuill produced the documents in sealed envelopes to the inspector, but again a claim was made that they were protected by legal professional privilege. An arrangement was made whereby the sealed envelopes were to remain unopened in the inspector's possession until the claim for privilege could be tested. It was common ground that, apart from the provisions of the Code, the documents, or at least some of them, would attract legal professional privilege, having come into existence in the course of a professional relationship between Yuill and his solicitors.

Proceedings were commenced in the Supreme Court of New South Wales by the appellant, the Corporate Affairs Commission, claiming declaratory relief that legal professional privilege was not available. The matter came before Hodgson J. who made the declaration sought. Upon appeal to the Court of Appeal, a declaration was made upholding the claim of legal professional privilege and it is from that order that the appellant appeals to this Court.

Part VII of the Code contains in s.289(1) a wide definition of "officer" which extends to any person who has, or has at any time had, in his possession any property of the corporation or is capable of giving information concerning affairs of the corporation. Sections 291-293 provide a mechanism for instituting an investigation of the affairs of a corporation and for the appointment of an inspector to carry out the investigation. Section 295, so far as is relevant, is as follows:

"(1) An inspector may, by notice in writing ..., 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 affairs of the corporation as are in the custody or under the control of the officer;

(b)

...

(c)

to appear before the inspector for examination on oath or affirmation and to answer questions put to him, ...

(2) ...

(3) Where an inspector has reasonable grounds for believing that books in the custody or under the control of a person may be relevant to any of the matters relating to affairs of a corporation that are being investigated under this Part, the inspector may, by notice in writing ..., require that person to produce those books to the inspector.

(4) ...

(5) ...

(6) Where books are produced to an inspector under this Part, the inspector may take possession of the books for such period as he considers necessary for the purposes of the investigation, and during that period he shall permit a person who would be entitled to inspect any one or more of those books if they were not in the possession of the inspector to inspect at all reasonable times such of those books as that person would be so entitled to inspect."

Section 296(2) provides:

"A person shall not, without reasonable excuse, refuse or fail to comply with a requirement made under section 295."

Under s.296(7):

"An officer is not excused from answering a question put to him by an inspector on the ground that the answer might tend to incriminate him but, where the officer claims, before answering the question, that the answer might tend to incriminate him, the answer is not admissible in evidence against him in criminal proceedings other than proceedings under sub-section (2), (3) or (4) or other proceedings in respect of the falsity of the answer."

Section 298(1) makes provision for an inspector to cause a record to be made of the statements made at an examination under Pt VII and sub-s.(3) provides that a written record of an examination of a person under that Part that is signed by the person or authenticated in any other prescribed manner is prima facie evidence of the statements made at the examination. Section 299(1) provides that, except as provided by sub-s.(2), any statements made at an examination of a person under Pt VII are admissible in evidence in any criminal or civil proceedings against the person. Sub-section (2), so far as is relevant, provides:

"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 sub-section 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)

...

(c)

...

(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."

It is apparent that s.299(2)(d) is in error in referring to "this Division" and that the reference was intended to be to "this Part". The only other provision to which I should refer at this point is s.308. That section provides:

"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 a 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."

In submitting that these provisions exclude by necessary implication a claim of legal professional privilege against the production to an inspector of a corporation's books (which are widely defined in s.5(1) to include any document), the Corporate Affairs Commission relied upon the fact that, until the decision of this Court in Baker v. Campbell (1983) 153 CLR 52 in October 1983, the law was, or was thought to be, that a claim of legal professional privilege was not available other than in judicial or quasi-judicial proceedings: see Crowley v. Murphy (1981) 52 FLR 123 ; 34 ALR 496 ; O'Reilly v. State Bank of Victoria Commissioners (1983) 153 CLR 1 . After the legislation in question had come into force, this Court delivered its judgment in Baker v. Campbell, which held that the doctrine of legal professional privilege is not confined to judicial and quasi-judicial proceedings. It should be added that another decision of this Court, Testro Bros. Pty. Ltd. v. Tait (1963) 109 CLR 353 , held that an investigation such as an investigation under Pt VII of the Code was not in the nature of a judicial proceeding.

The argument of the Corporate Affairs Commission was put upon the basis that, if the legislature proceeded upon an assumption that the law was as it was expounded in O'Reilly v. State Bank of Victoria, which would have made legal professional privilege inapplicable in the circumstances of this case, then it must be taken that the intention of the legislature was in accordance with the law as it was thought to be. But even if in enacting the provisions of Pt VII the legislature thought that the doctrine of legal professional privilege was no more than a rule of evidence and thus confined to judicial or quasi-judicial proceedings, that would not carry the argument of the Corporate Affairs Commission far enough. 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 realized that it went as far as Baker v. Campbell held it did. The Corporate Affairs Commission placed reliance upon the decision of the House of Lords in Black-Clawson Ltd. v. Papierwerke AG. [1975] AC 591 where in various ways it was pointed out that it is appropriate in construing legislation to look at it through the eyes of the legislature at the time the legislation was passed and not to make assumptions which were not available to the legislature at the time - contemporanea expositio est optima et fortissima in lege. But in the present circumstances, that approach goes little further than to explain why there is limited reference in Pt VII to the doctrine of legal professional privilege. While the legislature may have acted upon the basis that the doctrine was confined to the law of evidence and had no application in a proceeding which was not of a judicial nature, it is not possible to know from that circumstance alone how the legislature might have provided had it appreciated that the doctrine embodied a fundamental right of more general application.

However, the history of the matter may at least serve to explain why the legislation is cast in the form in which it is. 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) 65 ALJR 167 , at p 168; 97 ALR 177 , at p 180. 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) 171 CLR 1 , at p 23. It should, however, be emphasized 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, at p 123; Sorby v. The Commonwealth (1983) 152 CLR 281 , at pp 289, 309-310, 316; Balog v. Independent Commission Against Corruption (1990) 169 CLR 625 .

In determining the intention of the legislature, that is to say, the intention which is revealed by the words used by the legislature, it is permissible to look to the general purpose or object of the legislation. In speaking of the privilege against self-incrimination in an inquiry under the Trade Practices Act 1974 (Cth), the majority in Pyneboard Pty. Ltd. v. Trade Practices Commission (1983) 152 CLR 328 , at p 341, said:

"In deciding whether a statute impliedly excludes the privilege much depends on the language and character of the provision and the purpose which it is designed to achieve. The privilege will be impliedly excluded if the obligation to answer, provide information or produce documents is expressed in general terms and it appears from the character and purpose of the provision that the obligation was not intended to be subject to any qualification. This is so when the object of imposing the obligation is to ensure the full investigation in the public interest of matters involving the possible commission of offences which lie peculiarly within the knowledge of persons who cannot reasonably be expected to make their knowledge available otherwise than under a statutory obligation. In such cases it will be so, notwithstanding that the answers given may be used in subsequent legal proceedings."

Both Mortimer v. Brown (1970) 122 CLR 493 and Hamilton v. Oades (1989) 166 CLR 486 were concerned with the investigation of an officer of a company under the relevant companies legislation. In both cases it was held that the character and purpose of the legislation, which was the investigation of the conduct of persons who might be concerned, fraudulently or otherwise, to conceal information which ought to be revealed in the public interest, pointed inevitably to the exclusion of the privilege against self-incrimination. In speaking of the section imposing an obligation to provide answers in Mortimer v. Brown, Kitto J. observed, at p 496, that "(t)o read down the wide terms of the section so as to allow a danger of self-incrimination as a valid ground for refusing to answer a question would render the provision relatively valueless in the very cases which call most loudly for investigation". And as Mason C.J. pointed out in Hamilton v. Oades, at p 495, Mortimer v. Brown is a striking illustration of the statutory abrogation of the privilege where the intention to abrogate was ascertained by necessary implication. In Hamilton v. Oades the character and purpose of the legislation remained the same as in Mortimer v. Brown, but in the former case there was an express provision excluding the privilege and providing a limited measure of protection which was previously unavailable to a person being examined.

Privilege against self-incrimination and legal professional privilege rest upon different, although not wholly unrelated, foundations. But with both it can be said that legislation, based upon a public concern for the honest conduct of the affairs of companies, may disclose a sufficiently clear purpose as to indicate the withdrawal, in the public interest, of those protections which are otherwise afforded to individuals. Obviously, the more specific the legislation the less difficult it will be to determine whether such an implication is justified, but the character or purpose of the legislation may of itself be a sufficient indication of legislative intent.

Some idea of the purpose of Pt VII is to be found in s.306. Sub-section (8) provides:

"If from a report under this Part or from the record of an examination under this Part, it appears to the Commission that an offence may have been committed by a person and that a prosecution ought to be instituted, the Commission shall cause a prosecution to be instituted and prosecuted."

And sub-s.(11) of the same section provides:

"If, from a report under this Part, or from the record of an examination under this Part, the Commission is of the opinion that proceedings ought in the public interest to be brought by a corporation for the recovery of damages in respect of fraud, negligence, default, breach of trust, breach of duty or other misconduct in connection with affairs of, or for the recovery of property of, the corporation to which the report or record relates, the Commission may cause proceedings to be brought accordingly in the name of the corporation."

Under sub-s.(13)(b) of s.306, a certified copy of a report under Pt VII is admissible in civil proceedings as evidence of any facts or matters stated in the report to have been found to exist by the Commission.

An investigation may be instigated under Pt VII by a minister only where it appears to him that it is in the public interest in respect of the State or, in the case of the Commonwealth minister, that it is in the national interest: s.291(1) and (2). An investigation may also be directed by the Ministerial Council: s.291(3). Plainly, any investigation is likely to be hampered by a claim of legal professional privilege on the part of an officer of the company being investigated. This is the more so when the aims of the investigation include the prosecution of offences and the institution of civil proceedings. In particular, establishing such matters as fraud, negligence or breach of duty may depend upon proof of the nature of any legal advice given. Legal professional privilege may not, of course, be claimed even at common law for communications which amount to participation in a crime or a fraud, but a claim of legal professional privilege may nevertheless seriously impede the investigation of those matters.

It is against that background that the specific provisions of Pt VII which throw light upon the intention of the legislature should be considered. It is convenient to turn first to s.308.

That section is derived from s.367 of the uniform Companies Act for the States and Territories which was first introduced in 1961. Section 367 originally provided:

"No inspector appointed under this Act shall require disclosure by a duly qualified legal practitioner of any privileged communication made to him in that capacity, except as respects the name and address of his client."

Inspection under the uniform companies legislation was a procedure comparable to a special investigation under Pt VII of the Code. There was, as might be expected, no indication that the draftsman of the legislation in 1961 understood that a claim for legal professional privilege might be made in the course of an inspection, which, upon the basis of Testro Bros. Pty. Ltd. v. Tait, was not a judicial or quasi-judicial proceeding. Nevertheless, it was evidently felt necessary to protect legal practitioners against the compulsory disclosure of privileged communications to an inspector. No such concern was shown where the client himself was required to provide information and the legal practitioner was required to disclose the name and address of his client, obviously to enable the necessary information to be obtained compulsorily from the latter. In Re Stanhill Consolidated Ltd. (1967) VR 749 an inspector obtained from the liquidator of a company the waiver of any privilege on the part of the company, but Menhennitt J. held that certain privileged communications remained privileged within the meaning of s.367, notwithstanding the purported waiver by the liquidator, with the consequence that the company's solicitor was entitled to refuse to reveal them. 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.

Section 299(2)(d) of the Code provides that evidence of a statement made by a person at an examination under Pt VII shall not be admitted in criminal or civil proceedings against the person if the statement discloses matter in respect of which a claim of legal professional privilege could be made in the proceedings if the provisions of Pt VII did not apply in relation to that evidence and the person objects to the admission of that evidence. Part VII does not of itself preclude legal professional privilege from being claimed in civil or criminal proceedings, but if a person were required to disclose information in the course of an investigation under Pt VII, the privilege would or may be lost and, in the absence of a provision such as s.299(2)(d), be unavailable in subsequent proceedings even if they were of a judicial kind: Baker v. Campbell, at p 129. What s.299(2)(d) does indicate is 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. It is, of course, possible that s.299(2)(d) envisages 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 it is hardly likely that the legislature would seek to restore the privilege if it were not claimed initially and the history of the legislation suggests a different explanation for the provision.

It is of significance that s.296(7) expressly denies the privilege against self-incrimination to an officer in answering questions put to him by an inspector. That provision does not extend to the production of books, but the questions that may be put by an inspector under s.295(1) clearly may include those relating to the compilation of books or to matters to which the books relate. That fact, together with the requirement that books be produced to an inspector when requested, point to the conclusion that the privilege against self-incrimination in relation to the production of books is excluded by necessary implication: see Controlled Consultants Pty. Ltd. v. Commissioner for Corporate Affairs (1985) 156 CLR 385 . Controlled Consultants was concerned with comparable provisions under the Securities Industry (Victoria) Code and it was recognized in that case that the legislation drew a distinction between real evidence in the form of books and evidence of a testimonial character. It may be noted in passing that s.308, in dealing with a claim of legal professional privilege by a legal practitioner, draws no such distinction. Be that as it may, privilege against self-incrimination must, upon the reasoning adopted in Controlled Consultants, be held to have been abrogated by Pt VII. That privilege is the other leading exception to the rule of compulsion in relation to evidence and it is unlikely that the legislature thought it necessary to deny its protection for the purposes of an investigation under Pt VII, intending at the same time to preserve legal professional privilege, when a claim of legal professional privilege might well hamper an investigation as much as, or more than, a claim of privilege against self-incrimination.

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.

Section 296(2) itself modifies the generality of the obligation which it imposes by providing, in effect, that a person may refuse or fail to discharge the obligation if he has a reasonable excuse. However, as was pointed out in Controlled Consultants in a passage (at p 392) dealing with a similar provision in relation to the privilege against self-incrimination, but with equal application to legal professional privilege, "what may constitute a reasonable excuse obviously extends beyond matters which give rise to the privilege and there are the strongest indications in other provisions of the Code that the privilege was not intended to constitute a reasonable excuse for failing to produce books pursuant to a requirement to do so". "Reasonable excuse" more aptly refers to any physical or practical difficulties in complying with a requirement under s.295. To construe it as embracing legal professional privilege would be to render ss.299(2)(d) and 308 superfluous and to produce an incongruity with the denial of self-incrimination as a reasonable excuse.

Apart from the character and purpose of the legislation, s.308 positively indicates, in respect of both books and statements, an intention not to extend the full protection of legal professional privilege beyond a legal practitioner. The unavailability of the privilege against self-incrimination strongly suggests that Pt VII was not intended to preserve legal professional privilege save to the limited extent provided in ss.299(2)(d) and 308. And the very limits imposed by those provisions render inescapable, in my view, the conclusion that it was intended that, save as provided, legal professional privilege should play no part in an investigation under Pt VII.

For these reasons I have reached the conclusion that there was no claim of legal professional privilege in relation to the documents which the first respondent was required to produce. I would allow the appeal.