Volunteering is generally a laudable exercise to be encouraged. But when it comes to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Royal Commission), volunteering could be risky.
In part two of the Royal Commission article series, Virginia Ginnane interviews Thomson Reuters author Dr Tom Middleton about the thorny path ahead for clients who will give evidence to the Royal Commission.
Royal Commission form guide
- Members of the public can voluntarily upload their submissions to the Royal Commission website
- Three Practice Guidelines have been issued by the Royal Commission regarding “Procedures establishing the conduct of the Royal Commission”, “Procedures for leave to appear and witnesses” and “Procedure for making a claim of legal professional privilege”
- “Document Management Protocol for the production of electronic documents”, outlining the technical requirements for uploading submissions is available here
- And it’s all governed by the Royal Commissions Act 1902 (Cth).
The Royal Commission: Go forth and submit
The focus of the Royal Commission is to get to the truth about whether there have been breaches of the financial services laws and other relevant regulatory laws. Voluntary submissions enable the Royal Commission to gather evidence quickly in contrast to the lengthier process of compelling witnesses to appear and produce documents. Such evidence may trigger further lines of inquiry by the Royal Commission and /or the regulators.
There can be no deliberations without evidence to consider, no show without Punch, so the Royal Commission’s current push is to gather voluntary submissions from individuals or entities across all the banking, superannuation and financial services sectors. Quickly and cost-effectively.
So far the Royal Commission has received almost 400 voluntary public submissions, and will continue to accept them over the coming months. No deadline has yet been set.
The Commissioner, the Honourable Kenneth Madison Hayne AC QC, has wasted no time criticising the banks, and other financial institutions in the superannuation and financial services sectors, for their delay in meeting the two-month deadline set for them to make their submissions.
By taking his gloves off in his treatment of these institutions, the Commissioner appears to be implicitly reassuring aggrieved persons to keep those voluntary submissions coming.
And he’s taken the lock off the confidential cabinet, to ensure that employees can spill the beans on their employers in the financial sector without being sacked for shattering any confidentiality agreements. In doing so, the Commissioner has applied s 6N of the Royal Commissions Act 1902 (Cth) (the Act) which provides that any employer who dismisses any employees from their employment, or prejudices them in their employment, for giving evidence (pursuant to a summons) to the Royal Commission, commits an indictable offence.
So the scene is set, the tone is one of urgency and the floodgates are officially open.
Volunteering: It can be fraught with risk
For practitioners whose clients are members of these financial institutions or individuals planning to make voluntary submissions, there are a number of issues to be considered.
Members of the public can voluntarily upload their submissions to the Royal Commission website.
But before doing so, be warned.
“There’s no evidential immunity for a voluntary informant,” explains Dr Tom Middleton, author of Thomson Reuters’ ASIC Corporate Investigations and Hearings and Associate Professor in the School of Law, James Cook University.
“That information that your client has submitted voluntarily to the Royal Commission can be used against them in future civil, civil penalty and/or criminal proceedings. They won’t be given evidential immunity under the Act in those proceedings.
“It can be dangerous to volunteer information, particularly if in hindsight your client realises it may have been self-incriminating. It could also trigger a further line of inquiry that may be injurious to your client.”
Dr Middleton further explains that if the information that your client submits is confidential or protected by legal professional privilege, by submitting it voluntarily, your client may impliedly waive that confidentiality or privilege.
“The voluntary disclosure of confidential or privileged information to the Royal Commission may mean that there’s an implied waiver of confidentiality or legal professional privilege in relation to that information in subsequent litigation.”
“If your client volunteered information that was considered confidential by another person, that person could sue your client for breach of confidence.”
By contrast, there are protections afforded under the Act to those who are compelled to provide information to the Royal Commission, including protections for employees and “evidential immunity” as outlined below.
Evidence from summoned witnesses attracts evidential immunity
As the Royal Commission sifts through the information submitted voluntarily, key “persons of interest” may begin to emerge and those persons may be summoned to appear before, and give evidence to, the Royal Commission.
Section 3 of the Act provides that there’s a penalty of $1,000 or six months in prison for failure to comply with the summons, unless a reasonable excuse can be shown.
This “reasonable excuse” can be due to practical or physical reasons, such as ill health or the fact that too many documents are required to be produced in too short a time. It can also be due to a claim that the information is subject to legal professional privilege, explains Dr Middleton. Section 6AA of the Act outlines the circumstances in which legal professional privilege can be claimed as a “reasonable excuse” for non-compliance.
But there’s an upside to being summoned. In contrast to the lack of evidential immunity for voluntary informants, s 6DD of the Act provides that where a witness is compelled by a summons to give evidence to the Royal Commission, that evidence isn’t admissible against a natural person in any civil or criminal proceedings in any court of the Commonwealth, of a State or of a Territory. It’s however, admissible against a corporation.
“If your clients wait until they’re compelled to give evidence and produce documents by summons, then those clients will get evidential immunity in terms of s 6DD,” says Dr Middleton.
“Although that evidence can be used against other people who your clients have identified and implicated, your clients (who are natural persons, rather than corporations) will be protected (by the Act) from their own direct evidence being used against them in subsequent civil or criminal proceedings.”
Evidential immunity not a gold pass
Section 6DD of the Act must be read carefully. It only gives evidential immunity in relation to the clients’ statements or documents that they were compelled to provide (by summons) to the Royal Commission. There’s nothing to stop secondary evidence being derived from your client’s statement or documents and that secondary or derivative evidence isn’t protected by any evidential immunity and could be admissible in subsequent proceedings as evidence against your client.
“Evidential immunity under s 6DD doesn’t protect your client from a regulator, such as ASIC (the Australian Securities and Investments Commission), using your client’s evidence as a springboard to gather secondary or derivative evidence – and using that derivative evidence against your client,” concludes Dr Middleton.
About Dr Tom Middleton
Dr Tom Middleton is an Associate Professor in the School of Law, James Cook University, Townsville. He is admitted as a Solicitor of the Supreme Court of Queensland.
He earned a Bachelor of Commerce and a PhD from James Cook University, and a Bachelor of Laws (Hons) and a Masters Degree in Legal Practice at Queensland University of Technology.
In 1999, he wrote a two-volume book (looseleaf and online service) entitled ASIC Corporate Investigations and Hearings, published by Thomson Reuters. He currently updates this book five times per year and it has been in continuous publication for the past 18 years. It is the leading publication for legal practitioners in relation to the Australian Securities and Investments Commission’s investigative and enforcement powers.
He has published numerous refereed articles and a number of these have been cited by the Courts, Academics and Law Reform Commissions in Australia and New Zealand. Those articles have also been utilised by government agencies including the Commonwealth Treasury in the context of proposals for law reform.
He is a foundation staff member in the School of Law and he currently teaches third and fourth year law subjects in both Townsville and Cairns.