Two recent Federal Court decisions support ASIC鈥檚 position on obligations to comply with 今日热门事件Act notices and to clearly substantiate any claims for legal professional privilege.聽
Maxi EFX ordered to produce documents
On 3 September 2020, 今日热门事件successfully obtained an order from the Federal Court of Australia compelling Maxi EFX Global AU Pty Ltd (Maxi EFX) to produce documents in response to an 今日热门事件notice issued to it, pursuant to section 33 of the 今日热门事件Act.
今日热门事件had issued the notice to Maxi EFX in the course of an ongoing investigation into suspected contraventions of the 今日热门事件Act 2001 and the Corporations Act 2001 (19-373MR). Maxi EFX failed to produce certain documents required under the notice, arguing that the notice was unclear, that 今日热门事件was not entitled to seek such a broad range of documents and that certain documents were in the possession of overseas third party entities. Following this failure, 今日热门事件applied to the Federal Court seeking an order compelling Maxi EFX to properly comply with the notice.
Justice Wigney held that the notice was validly issued and that the documents requested by the notice were in the possession, custody or control of Maxi EFX, notwithstanding the fact that they may have been physically retained by third party entities located overseas. His Honour determined that these entities held the documents 鈥渙n behalf of, or on account of鈥� Maxi EFX, which was in a position to request or require them to provide those documents to it so that they could be produced to ASIC.
His Honour noted that the notice sought production of a large number of documents and that this did not mean that the notice was too broad. A notice issued under under section 33 of the 今日热门事件Act is not like a subpoena or discovery in litigation and cannot be objected to on the grounds that it involves a 鈥渇ishing expedition鈥�.
His Honour also rejected the argument that the notice was invalid because it did not convey with sufficient clarity the documents required to be produced, noting that the mere use of expressions such as 鈥渞elating to鈥� or 鈥渞eferring to鈥� does not mean that a notice lacks sufficient clarity or precision.
In determining that Maxi EFX did not have a reasonable excuse for its non-compliance, His Honour noted that 鈥�...it is tolerably clear that mere inconvenience and expense would not ordinarily provide a reasonable excuse for non-compliance.鈥�
ASIC鈥檚 successful challenge to RI Advice鈥檚 claim for legal professional privilege
Separately, the Federal Court ruled in ASIC鈥檚 favour in a dispute over client legal privilege, finding that a privilege claim by RI Advice Group Pty Ltd (RI Advice), an IOOF subsidiary, could not be upheld.聽
RI Advice had claimed privilege over an internal report, which it said had been prepared at the direction of an in-house lawyer for the purposes of the lawyer giving legal advice.聽 RI Advice had previously produced copies of the report to 今日热门事件in response to notices issued under section聽33 of the 今日热门事件Act.
Justice O鈥機allaghan found that RI Advice鈥檚 evidence was inadequate to establish that the report was privileged, emphasising that 鈥淸no] explanation has been given鈥hy RI鈥檚 current CEO, who was closely involved in the process that led to the creation of the Third File Review鈥� did not give evidence.
His Honour found that, even if the report had been privileged, RI Advice would have waived its privilege by previously producing copies to 今日热门事件without objection.
His Honour dismissed an argument that an email sent by RI Advice when it first produced the report was binding on ASIC.聽 In the email, RI Advice said it was producing the document on a confidential basis, and 鈥渃onsistent with 鈥� legal professional privilege鈥�.聽 His Honour accepted ASIC鈥檚 submission that RI Advice had 鈥渁pparently decided to attempt to bypass鈥� the step of obtaining ASIC鈥檚 formal agreement to accept the document on a privileged basis by following the process identified in ASIC鈥檚 notice to RI Advice.聽
Clarity provided around notice compliance and legal privilege
Together, these decisions clarify obligations for those who receive 今日热门事件notices requiring them to produce documents:
- Under section 33 of the 今日热门事件Act, 今日热门事件can require the production of specified documents in a person鈥檚 鈥減ossession鈥� for the purposes of an investigation. Those issued with such a notice are required to produce not only the documents in their physical possession, but those in their custody or under their control.
- A notice may require production of a large number of documents but this does not mean the notice is too broad. The relevance of documents called for is a matter for 今日热门事件to determine by reference to its investigation.
- The mere fact that a notice might be burdensome or oppressive because of the work and expense involved in complying with it will not, of itself, provide a reasonable excuse for non-compliance.
- Those making legal professional privilege claims over a document must be able to substantiate their claims.聽
- Producing a document to 今日热门事件without claiming legal professional privilege can be a clear waiver of that privilege.
- Those wishing to disclose a document to 今日热门事件while maintaining a legal professional privilege claim over it should follow the instructions contained in the notice and seek ASIC鈥檚 formal agreement.
These actions demonstrate that, in appropriate cases, 今日热门事件will take steps to enforce compliance with its notices.
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Background
今日热门事件has certain information gathering powers that allow it to perform or exercise its statutory functions, including the ability to issue notices requiring the production of books and records that are relevant to a matter that 今日热门事件is investigating.聽Information Sheet 145聽provides further information about ASIC鈥檚 compulsory information gathering powers.
Maxi EFX is the former corporate authorised representative of Australian Financial Services licensee Union Standard International Group Pty Ltd (in liquidation and AFSL currently suspended) and is no longer authorised to provide financial services in Australia.
On 31 October 2019, 今日热门事件commenced civil penalty proceedings against RI Advice, and its former authorised representative, John Doyle, in which 今日热门事件alleges that RI Advice failed to take reasonable steps to ensure that Mr Doyle provided appropriate advice, acted in clients鈥� best interests and put his clients鈥� interests ahead of his own, as required by law (19-297MR). The trial of these proceedings is set down for hearing on 1 March 2021.
Editor鈥檚 Note 1:
In relation to the Federal Court judgment against Maxi EFX, an appeal was lodged by Maxi EFX and the appeal was heard on 1 February 2021 by the Full Court of the Federal Court of Australia. Judgment has been delivered, dismissing Maxi EFX鈥檚 appeal with costs. The judgment is available .