Case: Australian Securities Commission v Bell (1991) 32 FCR 517
Outcome: followed
There were three issues between the parties. (a) The identity and authority of the decision-maker. ASIC contended that it had given the direction. The Applicants denied that the power to exclude Atanaskovic Hartnell from the examinations was a power which was vested in ASIC. They submitted that the power was vested in the inspectors. The inspectors were joined to the proceedings against this possibility. (b) The reasonable grounds issue. The Applicants submitted that the Full Court's decision in Australian Securities Commission v Bell (1991) 32 FCR 517 meant that the inspectors' direction was liable to be set aside unless they the inspectors demonstrated during the present proceeding that there were reasonable grounds for a bona fide belief on their part that to allow Atanaskovic Hartnell to represent all three of the Applicants would be likely to prejudice the investigation. ASIC, on the other hand, argued that Bell was concerned with the evidential consequences of the regulator failing to provide any reasons for the making of such a direction. Since ASIC furnished reasons for its direction it followed that the principle was inapplicable. Even if that were not so, ASIC argued that the materials before the Court showed that there were reasonable grounds for a bona fide belief on its or the inspectors' part that to allow the Atanaskovic Hartnell to represent all three Applicants would be likely to prejudice the investigation. (c) The procedural fairness issue. As an alternative, the Applicants argued that the power to exclude their lawyers from the examinations was a power the exercise of which attracted an obligation of procedural fairness. Since the inspectors did not give the Applicants any opportunity to argue that the direction should not be made, it followed, so the argument ran, that they had denied the Applicants procedural fairness. ASIC, on the other hand, denied that the power to exclude the Applicants' legal advisers from an examination was a power the exercise of which was conditioned upon adherence to requirements of procedural fairness. It pointed to the fact that the decision to summon the Applicants for examination in the first place was not subject to those requirements and asked, rhetorically, how in the midst of a process in which procedural fairness did not figure largely such an obligation might be found to exist. Against the possibility that it might be found to exist, ASIC submitted that, in the circumstances, the content of the obligation would be diminished to such a low level that it should be found that the obligation had been discharged. 21 ASIC contended that it was it, as a corporate entity, that had given the direction to exclude Mr Hartnell and Atanaskovic Hartnell from being present at all the examinations. The Applicants made no express submission about that question but did submit that if ASIC was the decision-maker (as it submitted) then it had no power to give the direction. This was because the power to exclude a person from an examination was conferred by s 22(1) of the ASIC Act and that provision conferred power not on ASIC but on the inspector conducting the examination. 22 It is necessary in the first instance to identify with clarity who gave the direction. There are three matters bearing on this issue. First, there is the letter of Friday 10 October 2008 written by Ms Dodds and Mr Astar which is on the letterhead of ASIC and is signed by both Ms Dodds and Mr Astar in their stated capacity as "Lawyer, Deterrence". It contains the critical passage: ... we have now considered the matter and formed the view ... 34 This argument should be rejected. Section 19(2) authorises ASIC to summon a person for examination before an inspector. Section 22(1) authorises the inspector to give directions as to who may be present during the examination. There is no warrant for reading s 19(1) as the source of the authority to give such a direction. In any event, the authority of this Court establishes that the source of the power is s 22(1) itself: Australian Securities Commission v Bell (1991) 32 FCR 517 at 521 per Lockhart J, 528-529 per Sheppard J. 39 In Bell v Australian Securities Commission (1991) 31 FCR 184 at 189 Pincus J held that s 22 did not permit an inspector to exclude an examinee's lawyer. This conclusion was reversed by the Full Court: Australian Securities Commission v Bell (1991) 32 FCR 517 at 521 per Lockhart J, 528-529 per Sheppard J, 532-533 per Burchett J. The binding nature of that conclusion is not open to doubt. 42 The authorities do not establish this proposition clearly. However, at least two members of the Full Court thought that the right was conferred on the lawyer: Australian Securities Commission v Bell (1991) 32 FCR 517 at 528 per Sheppard J, 532 per Burchett J. The matter is complicated because Burchett J also thought (at 532) that the client had a right to have his lawyer's right observed. Lockhart J adverted to the question (at 519) but did not answer it.