Bills Digest No. 181 2002-03
HIH
Royal Commission (Transfer of Records) Bill 2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
HIH
Royal Commission (Transfer of Records) Bill 2003
Date Introduced:
18 June 2003
House:
House of Representatives
Portfolio:
Treasury
Commencement:
Royal Assent
The purpose of this Bill
is to put in place arrangements to facilitate the transfer of information
across from the HIH Royal Commission to the Australian Securities and
Investments Commission (ASIC).
The major companies in the HIH Insurance Group (HIH)
were placed in provisional liquidation on 15
March 2001. The collapse of HIH is likely to be the largest
corporate failure in Australia
to date. The losses and hardship inflicted on the Australian community
by this corporate failure have been significant and have been a contributing
factor to the current insurance crisis. The liquidation process could
take up to ten years and the financial return to creditors is expected
to be negligible.
The suspicions about a serious level of corporate mismanagement
within HIH saw the appointment of a Royal Commission in August 2001.
The Royal Commission's report (the Report) was publicly released
on 16 April 2003.
The Report recommended that 56 possible breaches of the
Corporations Act 2001 and the New South Wales Crimes Act 1900
be referred to either ASIC or (in a small number of cases) the New
South Wales Director of Public Prosecutions for further investigation.
Since this time, the Government has referred all 56 possible breaches
of the law to the relevant authorities. The 2003 Federal budget allocated
an extra $28.2 million over the next two years to ASIC to fund a taskforce
to investigate and pursue charges.
The
Explanatory Memorandum to the Bill
states that:
The HIH Royal Commission (Transfer of Records) Bill
2003 provides for the transfer of custody of certain records of the HIH
Royal Commission (the Royal Commission) to the Australian Securities and
Investments Commission (ASIC).
Subsection 22 of the Archives Act 1983 states
that the Commonwealth is entitled to the possession of records of a Commonwealth
Royal Commission. The Act deems these records to be Commonwealth records.
Subsection 22(3) gives the Minister the discretionary
power to determine who retains custody of the records. As a result of
the High Court decision in Johns v Australian Securities Commission(1)
if the Minister decides that custody in the records is to be transferred,
the Minister must notify the person who originally provided the records
to the Royal Commission that custody in the records is being transferred.
The Minister must consult with the person to determine whether they object
to the transfer. It is the discretionary nature of the Minister’s power
in subsection 22(3) which leads to the need to consult.
Therefore, as a result of this decision, any documents
of a Royal Commission that vest in the Commonwealth can only be transferred
to a particular agency once the Commonwealth has gone through the process
of giving notice to owners of documents and settling any objections to
the transfer.
To overcome this procedural requirement in relation
to the HIH Royal Commission, the Bill contains
a series of provisions, which state that custody in HIH Royal Commission
documents will automatically vest in ASIC. This removes the discretionary
power of the Minister to determine custody and hence the need to consult
with the original owners of the document.
The Bill puts in place
arrangements for ASIC to make use of the records and states that elements
of confidentiality, any associated legal professional privilege and protection
against self incrimination are maintained.
Clause 4 of
the Bill facilitates the transfer of the HIH Royal Commission records
to ASIC by stating that by force of the section, ASIC gains custody of
records that were produced to the Royal Commission and which subsequently
have become Commonwealth records (by virtue of subsection 22(2) of the
Archives Act 1983).
This proposed amendment does
not cover records that were produced by persons employed or retained by
the Royal Commission (ie internal Royal Commission documents).
The transfer is to take place
as soon as practicable following commencement of the Bill.
Clause 5 of the Bill also facilitates the transfer
of HIH Royal Commission electronic records to ASIC. Clause 5 states
that by force of the section ASIC will gain custody of an electronic version
of documents or things produced to the Royal Commission, and which have
subsequently become Commonwealth records (by virtue of subsection 22(2)
Archives Act 1983).
The Bill in clause 6 also makes provision for
the transfer to ASIC of other HIH Royal Commission records that are not
covered by clauses 4 and 5 of the Bill. Clause 6 is a regulation
making power and it states that regulations can be made to allow for the
further transfer of records that remain in possession of the Commonwealth.
ASIC’s use of the transferred records is limited by the
Bill. Clause 7 states that ASIC will only be able to use the records
transferred under the Bill in the course of performing its functions and
exercising its powers under the ASIC Act.
Confidentiality
Section 127 of the Australian Securities and Investments
Commission Act 2001 deals with confidentiality of information held
by ASIC. Section 127 states that ASIC must take all reasonable measures
to protect from unauthorised use or disclosure, information that is ‘protected
information’.
‘Protected information’ is defined in section 127 and
essentially refers to information and documents, relating to a person
or body regulated by ASIC, which has been given to or obtained by ASIC
in accordance with section 12A.
The Bill in clause 7 deems that the Royal Commission
information transferred to ASIC by this Bill is ‘protected information’
for the purposes of section 127 of the ASIC Act. Accordingly ASIC must
take all reasonable measures to protect the information against unauthorised
use or disclosure.
Retention
of records
Clause 7of the Bill states that ASIC is able to
retain the transferred records for as long as it considers it desirable
for the purpose of exercising its powers and functions.
Self incrimination
Witnesses appearing before the HIH Royal Commission can
be compelled to give evidence even where that evidence is self incriminating.(2)
Witnesses are protected from direct use of that evidence against them
by section 6DD of the Royal Commissions Act 1902 which provides
that no evidence given to a Royal Commission, may be used against the
witness who gave it.
The Bill in clause 8 makes it clear that section
6DD of the Royal Commissions Act 1902 continues to apply to records
of the Royal Commission that are transferred to ASIC.
Legal Professional Privilege
Legal professional privilege
has been described in the following manner:
Legal professional privilege is a substantive general principle
of the common law under which a person is entitled, subject to defined
qualifications and exceptions, to preserve the confidentiality of statements
and other materials which have been made or brought into existence for
the dominant purpose of the person seeking or being furnished with legal
advice or legal services by a practising lawyer or for the dominant purpose
of preparing for existing or anticipated judicial or quasi-judicial proceedings(3)
Clause 9 of the Bill states that any right to
claim legal professional privilege over records that have been transferred
to ASIC will remain if once the records have been transferred to ASIC
and if ASIC seeks to use these records
This Bill puts in place arrangements so that information
collected during the course of the HIH Royal Commission, can be expeditiously
transferred across to ASIC, to assist ASIC in the course of their investigations
into HIH.
- 1993 CLR 408.
- Royal Commissions Act 1902, section 2,3 and
6A.
- Halsburys Laws of Australia, volume 16, Butterworths,
1997, p. 462, 424.
Susan Dudley
23 June 2003
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2003
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