Corporate Affairs Commission (NSW) v Yuill
(1991) 172 CLR 319(1991) 9 ACLC 843
(Judgment by: Brennan)
CORPORATE AFFAIRS COMMISSION OF NEW SOUTH WALES v BRIAN RICHARD YUILL AND ORS
Court:
Judges:
BrennanDawson
Toohey
Gaudron
McHugh JJ.
Other References:
F.C. 91/025
Judgment date: 27 June 1991
Judgment by:
Brennan
In O'Reilly v. State Bank of Victoria Commissioners (1983) 153 CLR 1 , this Court held that legal professional privilege is limited to judicial and quasi-judicial proceedings and therefore did not qualify the obligation to comply with a notice issued under s.264 of the Income Tax Assessment Act 1936 (Cth) by the Commissioner requiring a person to attend and give evidence and to produce books relating to any person's income or assessment. Then, in Baker v. Campbell (1983) 153 CLR 52 , at pp 90,96-97,117-118,123, this Court held that the power of a police officer executing a search warrant issued under s.10 of the Crimes Act 1914 (Cth) is restricted by legal professional privilege. The Court by majority overruled the proposition that legal professional privilege is limited to judicial and quasi-judicial proceedings, holding that a statute should be construed as preserving a right to legal professional privilege unless the privilege is abrogated by express words or necessary intendment. The change in the law of this country which was effected by Baker v. Campbell raises two questions in relation to the construction of ss.295 and 296(2) of the Companies (New South Wales) Code ("the Code").
Section 295 confers on an inspector power to require an officer of a corporation whose affairs are under investigation to produce books relating to its affairs and to appear for examination and to answer questions; s.296(2) prohibits a refusal or failure to comply with such a requirement "without reasonable excuse". Should ss.295 and 296(2) be construed in the light of the law as declared in Baker v. Campbell or in the light of the law as understood when the Code came into force on 1 July 1982 and as expressed in O'Reilly v. State Bank of Victoria Commissioners? And, if ss.295 and 296(2) should be construed in the light of the law as declared in Baker v. Campbell, does the Code necessarily intend to abrogate legal professional privilege? The circumstances in which these questions arise and the relevant statutory context of ss.295 and 296(2) of the Code are set out by Dawson J. and I shall not repeat them.
Statutory construction has often been described as a search for the intention of Parliament but Lord Reid's description in Black-Clawson Ltd. v. Papierwerke AG. [1975] AC 591 , at p 613, is more accurate:
"We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used. We are seeking not what Parliament meant but the true meaning of what they said."
However, as Lord Simon of Glaisdale explained in that case (at pp 645-646):
"if the draftsman uses the tools of his trade correctly, the meaning of his words should actually represent what their promulgator meant to say. And the court of construction, retracing the same path in the opposite direction, should arrive, via the meaning of what was said, at what the promulgator meant to say ... In order to understand the meaning of the words which the draftsman has used to convey what Parliament meant to say, the court must so far retrace the path of the draftsman as actually to put itself in his position and that of Parliament. The expositio must be both contemporanea and eodem loco."
The authority of the courts to change the common law rules of statutory construction must therefore be extremely limited for the courts are duty bound to the legislature to give effect to the words of the legislature according to the rules which the courts themselves have prescribed for the communication of the legislature's intentions: In re Jordison; Raine v. Jordison (1922) 1 Ch 440 ; Sorby v. The Commonwealth (1983) 152 CLR 281 , at p 322. It is only when the operation of an old rule fails to yield the effect that the court conceives the legislature would intend its words to have in contemporary conditions (see, for example, Bropho v. Western Australia (1990) 71 CLR 1 ) that it is legitimate for the courts to propound a new rule better fitted to accord with that conceived intention. Baker v. Campbell should not be regarded as prescribing an alteration in the rules of statutory construction, but rather as declaring legal professional privilege to be a common law right or privilege available (unless excluded) not only in judicial and quasi-judicial proceedings but whenever the exercise of a statutory power would trespass upon the confidentiality of the communications which the privilege protects.
We are therefore not so much concerned with a change in the rules of statutory construction, as with an application of the presumption that the legislature does not intend to abrogate a common law right or privilege unless a contrary intention is clearly expressed or implied in the statute. That presumption is a means by which to discover the true intention of the legislature: see Potter v. Minahan (1908) 7 CLR 277 , per O'Connor J. at p 304. We are thus concerned with an application of that presumption in a legal matrix which has changed since the Code was enacted. The alteration of the law which Baker v. Campbell prescribes evokes an application of the rule contemporanea expositio est optima et fortissima in lege - the best and surest mode of construing an instrument is to read it in the sense which would have been applied when it was drawn up: Broom's Legal Maxims, 10th ed. (1939), p 463. And so, the answer to our first question is that the Code should be construed in the light of the law as it stood when the Code came into force - that is, the law as it stood before Baker v. Campbell was decided - unless there be something in the Code which is inconsistent with the operation that would thus be attributed to the Code.
Construing the Code in that way, the phrase "without reasonable excuse" in s.296(2) would not embrace the excuse of legal professional privilege, for an exercise by an inspector of the powers conferred by s.295 does not give rise to a judicial or quasi-judicial proceeding. (Cf. s.295(4) which has no present relevance.) If, at the time when the Code was enacted, the legislature had directed its attention to the question whether to exclude the privilege expressly, no such exclusion would have been enacted for it was not then understood that the obligation to comply with a requirement under s.295 would be restricted by the privilege. Imputing to the legislature at the time when the Code was enacted an understanding of the law as expressed in O'Reilly v. State Bank of Victoria Commissioners, the legislature must be taken to have intended that, without having to say so expressly, legal professional privilege should not restrict that obligation. The argument that, because the legislature has not enacted an express exclusion, the privilege must now be taken to restrict the obligation imposed by s.296(2) must be rejected.
The Code contains no provision that is inconsistent with the operation thus attributed to the Code. To the contrary, even if ss.295 and 296(2) were construed in the light of Baker v. Campbell so that the privilege would be available unless abrogated by express words or necessary intendment, the Code evinces an intention that legal professional privilege should not be a reasonable excuse for failure to comply with a requirement under s.295. In the absence of language which expressly excludes the privilege, indicia of legislative intention can be found in the nature of the statutory power, the prescribed manner of its exercise and the purpose which its exercise is designed to achieve: Controlled Consultants Pty. Ltd. v. Commissioner for Corporate Affairs (1985) 156 CLR 385 , at p 396. That case considered the question of reasonable excuse for non-production of a company's documents on the grounds that the production might tend to incriminate the person from whom the production was sought.
The indicia of legislative intent are found in the text of the statute. The powers conferred by s.295 are exercised by the giving of a notice in writing to an "officer of a corporation". Solicitors for a corporation are included as a class within the definition of "officer" for the purposes of Pt VII of the Code: s.289(1). Compliance with a requirement under s.295 is enforced by a court which, after inquiry, may order compliance or may impose a penalty: s.297(2). The court does not enter upon an inquiry unless the inspector has certified that a person has failed to comply with a requirement under s.295 "without reasonable excuse". It is unlikely that the legislature intended that an inspector, contemplating the issue of a certificate, should have to form an opinion as to whether a claim of legal professional privilege has been validly made either by a solicitor or by a client. Next, s.308 creates a specific exemption which entitles solicitors to refuse to comply with a notice issued under s.295 where compliance would involve a breach of legal professional privilege, the exemption being conditioned on the furnishing of the client's name and address.
The enactment of s.308 would be otiose and the specifying of a condition governing the solicitor's excuse for non-compliance would be futile if the observance of legal professional privilege were a reasonable excuse for non-compliance, for a solicitor who is bound to observe legal professional privilege would be entitled to refuse to comply with a notice issued under s.295 without satisfying such a condition (Reg. v. Bell; Ex parte Lees (1980) 146 CLR 141 , at pp 144-145) otherwise than by identifying the client whose privilege is asserted: Southern Cross Commodities v. Crinis (1984) VR 697. The apparent purpose of the statutory condition is to ensure that a client can be located and required to disclose communications protected by legal professional privilege although the solicitor may be excused from disclosing them.
A further textual indication of legislative intent appears in s.299. As a general rule, statements made by a person at an examination by an inspector are admissible in evidence against that person in any criminal or civil proceedings: s.299(1). That general rule is subject to the exception, inter alia, contained in s.299(2)(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."
As the admission in evidence of a statement pursuant to sub-s.(1) would destroy any claim of privilege, sub-s.(2)(d) is enacted to restore, sub modo, the privilege which would have been available to protect the matter disclosed under compulsion on examination by the inspector had ss.295 and 296(2) not overridden the privilege. Thus it appears that an assertion of legal professional privilege is not a "reasonable excuse" where the requirement is to answer questions. It would be a curious asymmetry to treat an assertion of the privilege as a "reasonable excuse" for non-compliance with a requirement to produce books, for the contents of the books could be ascertained in any event by compelling oral disclosure by any person who has knowledge of them.
However, there is no provision of the Code which precludes the admission in evidence of books produced in compliance with a requirement under s.295, even though any obligation to produce those books under the general law would be subject to unwaived legal professional privilege. Indeed, the Code provides for the taking of possession by the inspector and the retention by the National Companies and Securities Commission of possession of books so produced (ss.295(6), 307) and for the Commission to permit their use for the purposes of legal proceedings instituted as a result of the investigation: s.307(1)(d). Although the circumstances in which privileged documents are obtained by an adversary may preclude the adversary's tendering of those documents or secondary evidence of them (see, in addition to Baker v. Campbell, at pp 109-110, and the cases there cited, Goddard v. Nationwide Building Society (1987) QB 670; Guinness Peat Ltd. v. Fitzroy Robinson [1987] 1 WLR 1027 ; [1987] 2 All ER 716 ; and Hooker Corporation Ltd v. Darling Harbour Authority (1987) 9 NSWLR 538 , at p 544), it is clear that the Code intends that books which the Commission permits to be used in proceedings should not be inadmissible in evidence by reason of the manner in which their production and retention have been obtained. The absence of some provision protective of the privilege in relation to books when they are tendered in evidence, comparable with the provision of s.299(2)(d) in relation to oral evidence, arguably suggests that the Code intends legal professional privilege to qualify the obligation to produce books. But legal professional privilege in the event of civil proceedings is not protected by the Code even in respect of oral evidence.
If oral evidence given before an inspector goes to establish a fact or matter and the inspector reports that he finds that that fact or matter exists, a certified copy of the report itself is admissible as evidence of that fact or matter in civil proceedings: s.306(12). The protection accorded to oral evidence by s.299(2)(d) is probably to be explained by the legislature's unwillingness to compel a person to furnish out of his own mouth evidence which might be used against him on a criminal trial (cf. Hammond v. The Commonwealth (1982) 152 CLR 188 ) even though the compulsory disclosure of privileged communications might lead to the discovery of other admissible evidence: Hamilton v. Oades (1989) 166 CLR 486 . That consideration does not inhibit the compulsory production of books which might be used in evidence, for books are real evidence which speak for themselves unlike oral evidence which comes into existence only in response to an exercise of investigative power: Controlled Consultants Pty. Ltd. v. Commissioner for Corporate Affairs, at p 392.
Yet another and important indication of legislative intention to exclude the privilege emerges from consideration of the purpose of instituting a special investigation under Pt VII of the Code - "Special Investigations". Part VII provides for investigation into the affairs of corporations when investigation is, in the opinion of the relevant Minister, warranted in the public or national interest (s.291(1) and (2)) or when the Ministerial Council decides that an investigation should take place: s.291(3). It would frequently be impossible in practice for an inspector to discharge the duty laid upon him by s.305 to form an opinion on the affairs of a corporation and to report that opinion and the facts on which it is based if he were unable to compel disclosure of professional communications between legal advisers and those who have played some part in a corporation's affairs. An investigation into the affairs of a corporation may extend to the possible commission of offences, the possible occurrence of fraud, negligence, default, breach of trust, breach of duty or other misconduct occasioning damage to the corporation and the possible taking or non-return of the corporation's property: see s.306(8) and (11). An inspector's ability to satisfy the public or national interest or to meet the concerns of the Ministerial Council on these topics would be significantly diminished if the inspector were not empowered effectively to compel full disclosure of the contents of privileged communications passing between legal advisers and persons whose conduct is material to the investigation. In Rees v. Kratzmann (1965) 114 CLR 63 , at p 80, Windeyer J. said:
" The honest conduct of the affairs of companies is a matter of great public concern today. If the legislature thinks that in this field the public interest overcomes some of the common law's traditional consideration for the individual, then effect must be given to the statute which embodies this policy."
This observation related to a public examination under s.250 of The Companies Act 1961-1964 (Q.). Walsh J. cited this observation in Mortimer v. Brown (1970) 122 CLR 493 , where it was held that a witness in such a public examination may not decline to answer a question on the ground that the answer to it may tend to incriminate him. His Honour said, at p 499:
"This view, with which I am in respectful agreement, means that, having regard to the purpose of s.250 and to the public interest which it is intended to serve, the contention should not be accepted that there should be applied to its construction the principle that a statute should not be construed as being intended to take away common law rights unless that intention is specifically stated."
Equally, I do not think that s.296(2) of the Code should be construed so as to admit legal professional privilege as an excuse for failing or refusing to comply with a legitimate requirement under s.295 to produce books. To admit such an excuse would be to impair and, in some cases, to destroy the effectiveness of the mechanism which Pt VII has created in order to enforce the laws governing corporations.
I would allow the appeal.