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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2003.
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