THE FEDERAL Government’s corporate watchdog will have the power to investigate James Hardie Industries under a NSW law passed by Parliament last week.
But there are inherent problems with the new legislation, according to members of the legal profession — mainly because it shatters the principle of legal professional privilege.
The Special Commission of Inquiry (James Hardie Records) Bill will assist victims of James Hardie to pursue adequate compensation, according to NSW Premier Bob Carr.
“It will ensure that Hardie cannot avoid its moral responsibilities by using legal technicalities to frustrate litigation that may be instituted against it,” Carr told the NSW Legislative Assembly last week.
The law will allow the Australian Securities and Investments Commission (ASIC) unrestricted access to all material gathered by the Jackson commission of inquiry.
But, according to the NSW Bar Association, the legislation “obviously gives considerable cause for concern”.
President Ian Harrison SC told Lawyers Weekly that people compelled to provide information to Jackson’s inquiry did so on condition of an existing immunity. This was “designed to encourage the frank supply of that information”, he said.
“To take away that protection after the event is an extraordinary move. No circumstances, however remarkable they may seem, could ever justify retrospectively eliminating an existing legal protection.”
Premier Carr acknowledged that the Bill required the overriding of any legal professional privilege and confidentiality protecting the inquiry’s records so that ASIC could access the information.
“The Bill ensures that NSW law will not limit the use of these records through protecting legal professional privilege or confidentiality,” Carr said.
However, he said the Government did consider legal professional privilege an important common law right. “But when abhorrent corporate conduct on this scale is uncovered, the offenders should not be able to avoid prosecution or other proceedings by hiding behind spurious claims for legal professional privilege,” he said.
“The special commissioner’s report found that James Hardie’s records were littered with claims for legal professional privilege that would be very difficult to justify.”
The NSW Bar Association, however, maintains that the Bill raises serious issues going to the heart of the lawyer/client relationship and communication between them.
“The undeniable entitlement of mesothelioma and asbestosis sufferers to fair compensation should not signal an abandonment of sound legal principle,” Harrison said.
Law Council of Australia (LCA) president Stephen Southwood QC said last month that “further consideration should be given to any procedural reform which would make the processing of claims quicker and more efficient and which would minimise the legal costs of such proceedings”.
However, Southwood said proposals for reform of corporations law to enable the “piercing of the corporate veil” suggested by the Jackson report needed further investigation before any amendments were made.
ASIC specifically requested that the NSW Parliament enact legislation to transfer the Jackson inquiry’s records to the corporate regulator.
It wanted access to all information gathered by the commission of inquiry. This included “great crates” of information, Carr said. With access to these documents it has been estimated it will take six to 12 months less time for ASIC to carry out its prosecutions.
“ASIC can roll up its sleeves and get right down to work,” said Carr. “It does not have to go through the process of identifying documentation and setting up the procedures involved in such a search. It gets the documents right out of our commission of inquiry and it can take the matter into court.”
The legislation passed last week is similar to that enacted by the Commonwealth Government following the HIH Royal Commission, but goes further by giving ASIC access to the special commissioner’s own internal records.