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BFCSA: Implications for ASIC after Daniels

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Hiding behind the law.......
Implications for ASIC after Daniels
by Tim Bednall
7 November 2002 Ruling
Since the High Court decision in Yuill in 1991, ASIC has required parties that are the subject of its investigations to provide privileged information.  However, the recent High Court decision in Daniels held that the Australian Competition and Consumer Commission (ACCC) cannot compel the production of confidential lawyer-client communications when exercising its investigative powers under the Trade Practices Act 1974 (Cth).  This judgment is likely to have significant implications for ASIC investigations.
The ASIC Act

Under the Australian Securities and Investments Commission Act 2001 (Cth), ASIC is given three broad investigative powers, namely:

the power to conduct an examination of a person if ASIC has reasonable grounds to believe the person can give information relevant to a matter that ASIC is investigating (Part 3, Division 2);
the power to give a direction requiring the production of books relating to the affairs of a company (Part 3, Division 3); and
the power to conduct a hearing (Part 3, Division 6).
ASIC's view is that the ASIC Act contains a legislative scheme under which ASIC may compel disclosure of privileged information relying on the decision in Yuill (see, for example, ASIC Policy Statement 103).  Yuill was decided on the basis of the Companies Code, and some, but not all, of the features of the Code that Justice Brennan relied on in his judgment are also present in the ASIC Act:

section 30 of the ASIC Act requires production of documents in similar terms to the former s295(1); and
section 69 of the ASIC Act provides that a lawyer may refuse to comply with a request for information on the grounds of legal professional privilege, in similar terms to the former s308.

However, the public policy issues are different because ASIC investigations are no longer carried out by Ministerial authority.


On 7 November 2002, the High Court handed down its decision in Daniels. The High Court held that the ACCC cannot compel the production of confidential lawyer-client communications when exercising its investigative powers under the Trade Practices Act .  In Daniels, the High Court considered s155 of the Trade Practices Act , which gives the ACCC the power to obtain information, documents and evidence where the ACCC has reason to believe that the documents or information relate to a suspected contravention of the Act.

All seven members of the High Court emphasised that legal professional privilege confers a right or immunity so fundamental that it can only be taken away by the clearest of statutory terms. 
Since s155 of the Trade Practices Act is only expressed in general terms, it was found to provide no basis for the abrogation of the privilege.

In the course of the judgment, the judges made comments that make it appear unlikely that Yuill will endure:

Chief Justice Gleeson and Justices Gaudron, Gummow and Hayne stated 'it may be that Yuill would now be decided differently'.
Justice Kirby stated that 'Yuill may have been wrongly decided'.

The High Court decision in Yuill is the only decision on legal professional privilege in the past 20 years that did not require express terms or necessary intendment to abrogate the privilege. The Yuill decision was made on various public policy grounds that may not apply today.

It will be interesting to see how ASIC and the legislature respond to this decision. It is unlikely that ASIC will cease to require production of privileged material in the course of exercising its information-gathering powers and in the absence of a High Court decision expressly overturning Yuill.   If ASIC's practice of requiring such information continues, recipients of an ASIC notice should obtain advice on the appropriateness of resisting the production of documents or provision of oral information, which is properly the subject of legal professional privilege. more
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