ANZ Bank New Zealand Limited v Financial Markets Authority [2018] NZHC 691

ANZ Bank New Zealand Limited v Financial Markets Authority [2018] NZHC 691 [17 April 2018]ORDER PROHIBITING PUBLICATION EXCEPT IN REDACTED FORMIN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-610[2018] NZHC 691UNDER The Judicial Review Procedure Act 2016IN THE MATTER of a decision made pursuant to section 59 ofthe Financial Markets Authority Act 2011BETWEEN ANZ BANK NEW ZEALAND LIMITEDApplicantAND FINANCIAL MARKETS AUTHORITYRespondentHearing: 27 November 2017Counsel: AR Galbraith QC, SM Hunter and VL Heine for applicantHB Rennie QC and TC Stephens for respondentJudgment: 17 April 2018Reissued:(Redacted)11 May 2018JUDGMENT OF FITZGERALD J[As to application for judicial review]This judgment was delivered by me on 17 April 2017 at 4 pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Chapman Tripp, Wellington (J Upson)Simpson Grierson, Wellington (J Shackleton and M Webb)ContentsIntroduction and summary ................................................................................ [1]Factual background ............................................................................................ [8]The FMA's decision to disclose ........................................................................ [20]The first Division meeting — 25 May 2016 .................................................... [21]The second Division meeting — 16 June 2016 ............................................... [27]The third Division meeting — 8 July 2016...................................................... [35]Factual findings in relation to the FMA's decision-making ............................ [45]Events leading to the commencement of this proceeding ................................ [46]ANZ's pleaded claims ....................................................................................... [48]SubmissionsSummary — ANZ's submissions ...................................................................... [50]Summary — FMA's submissions ..................................................................... [61]AnalysisIntroduction ..................................................................................................... [71]The broader context to the statutory scheme regarding confidentiality.......... [73]The statutory scheme regarding confidentiality .............................................. [84]Section 34 — history and purpose .................................................................. [86]Is the Proposed Disclosure permitted by s 59(3)(c)? ...................................... [97]Is the Proposed Disclosure permitted by s 59(3)(f)? .................................... [130]First cause of action ...................................................................................... [151]Third cause of action ..................................................................................... [156]Result and costsResult ............................................................................................................. [160]Costs .............................................................................................................. [163]Schedule: Key Provisions of the ActIntroduction and summary[1] In this proceeding, ANZ Bank New Zealand Limited ("ANZ") challenges theFinancial Markets Authority's ("FMA") decision to disclose to third parties documentsand information the FMA obtained from ANZ through the exercise of its statutorypowers.[2] In summary, the FMA obtained documents and information from ANZpursuant to six notices issued under s 25 of the Financial Markets Authority Act 2011(the "Act").1 The FMA issued the notices in connection with its inquiry and theninvestigation into [Company X], and its subsequent inquiry into [Redacted]. The FMAproposes to disclose some of the information it received from ANZ to a [third party]as a proxy representing the interests of [Company X] investors generally (the"Proposed Disclosure").[3] The FMA says there are three reasons for the Proposed Disclosure:(a) first, to obtain responses and any additional information from the[Company X] investors to the information received from ANZ;(b) secondly, to determine the next steps that should occur to enable the[Company X] investors to evaluate the merits of a claim against ANZand consider their position with respect to any such claim; and(c) thirdly, to enable the FMA to consider and determine whether toexercise its powers under s 34 of the Act, which permits the FMA, incertain circumstances, to exercise the right of action a party has againsta market participant.[4] Pursuant to s 59 of the Act, the FMA is prohibited from disclosing anyinformation or documents obtained by it pursuant to a s 25 notice, other than in thecontext of seven prescribed circumstances. The FMA says the Proposed Disclosure1 The full text of s 25 is set out in the schedule at the end of this judgment.falls within the scope of two of the seven permitted disclosures under s 59, becausethe Proposed Disclosure is:(a) for the purposes of, or in connection with, the performance or exerciseof any function, power, or duty conferred or imposed on the FMA bythe Act (or any other enactment);2 and/or(b) to a person who the FMA is satisfied has a "proper interest" in receivingthe information which is the subject of the Proposed Disclosure.3[5] ANZ, on the other hand, says the FMA's stated purposes of the ProposedDisclosure fall outside the scope of s 59(3)(c) and (f) and thus disclosure would beunlawful. It accordingly seeks a declaration that the Proposed Disclosure is unlawful,and orders quashing the FMA's decision to disclose and prohibiting the ProposedDisclosure. There is also an associated claim based on breach of confidence, in respectof which similar relief is sought.[6] For convenience, the key provisions of the Act referred to in this judgment areset out in the attached schedule.[7] It will be apparent that this proceeding concerns (what is not disputed to be)confidential information and whether there are proper grounds for the FMA to discloseit to third parties. Reference in the hearing and in this judgment to certain facts, andthe nature and substance of the information which the FMA proposes to disclose,would likely render ANZ's claims moot. For that reason, orders currently prohibitthird parties accessing the court file without further order of the Court. And while thehearing took place in open court (at which members of the media were present), I madeorders at the outset of the hearing restricting what could be reported. This judgmentis also being issued to the parties prior to being publicly issued, so that appropriateredactions can be made to protect the confidentiality of the information in issue. Anunredacted copy of the judgment will remain on the court file.2 Financial Markets Authority Act 2011, s 59(3)(c).3 Section 59(3)(f).Factual background[8] [Redacted].[9] [Redacted].[10] [Redacted].[11] [Company X was placed in liquidation. The] liquidators thereafter set aboutcarrying out their investigations, with a view to maximising investors' recoveries. Theliquidators took legal advice. Part of that legal advice considered claims [Redacted]against [Company X] and identified that there may also be potential claims againstANZ for participating in those breaches (for example, [Redacted]). However, theeffect of the advice to the liquidators was that it was not the liquidators' role to bringsuch claims against ANZ; rather those types of claim were properly brought byinvestors or, potentially, by the FMA pursuant to s 34 of the Act.4[12] In parallel to the liquidators' work, the FMA continued its investigation into[Company X]. In this context, it issued four notices to ANZ under s 25 of the Act.The second of these was issued on [date redacted] (the "second notice"). Some of thedocuments the FMA intends to disclose to the [third party] were provided by ANZ inresponse to the second notice. The FMA's internal paper supporting the issue of thenotice highlights that it was issued in the context of the FMA's concerns that[Company X], [Redacted] and related entities had been or were engaging in conductthat constituted a contravention of [financial markets legislation] [Redacted].[13] The paper concluded that the information requested under the notice wasnecessary for the purposes of performing the FMA's functions, powers or duties,namely: inquiring into conduct that may contravene the financial markets legislation;and monitoring a matter relating to the financial markets and financial marketsparticipants.4 Section 34 is reproduced in the schedule at the end of this judgment.[14] [Redacted]. After an initial review of the liquidators' analysis, [Redacted], theFMA opened an inquiry into a potential claim against ANZ [Redacted].[15] In the context of its inquiry into ANZ, the FMA issued two further s 25 noticesto ANZ. The notices were headed [Redacted]. It seems that at the time of receivingthe notices, ANZ did not appreciate that it was itself the focus of the inquiry.[16] The balance of the ANZ information the FMA proposes to disclose to the [thirdparty] was produced by ANZ in response to the first of these two notices, issued on[date redacted] (the "fifth notice" issued by the FMA to ANZ). The FMA's internalpaper supporting the issue of the fifth notice stated that the notice was necessary to:obtain further documentation from ANZ to determine whether there hasbeen a breach of the financial markets legislation, and if so, the extent of thebreach. It will also enable FMA to ascertain whether any claims on behalfof investors might lie against ANZ which the FMA may wish to considerpursuing under s 34 of the FMA Act.(Emphasis added)[17] The FMA subsequently took legal advice in relation to the informationreceived from ANZ. That advice was considered by the Enforcement Division of theFMA board on 24 November 2015. In January 2016, the FMA's inquiry into ANZ[Redacted] became an investigation.[18] In February 2016, the FMA wrote to ANZ, outlining its findings from itsinvestigation and the FMA's position that ANZ may be liable to [Company X]investors [Redacted]. The letter also stated that:The FMA considers it appropriate to share its findings with [Company X]investors as any decision about whether a claim is brought will necessarilyneed to have their input. We would like to meet with you to discuss ourfindings and how we see this process operating.(Emphasis added)[19] ANZ refuted the FMA's allegations, and its conclusion that a claim might lieagainst ANZ. It also challenged the FMA's proposal to share its findings with the[Company X] investors.The FMA's decision to disclose[20] Following these initial communications, the Enforcement Division of the FMAboard met three times to consider the question of disclosure. A "Division Paper" wasprepared by FMA staff in advance of each meeting, which was then tabled anddiscussed at the relevant meeting.5 The Division's formal decision taken at the thirdof these meetings, namely to disclose certain information to the [Company X]investors, is the subject of ANZ's application for judicial review. Given the Division'sdecision was made in the context of and against the backdrop of the prior meetingsand recommendations, it is necessary to consider each paper and meeting.The first Division meeting — 25 May 2016[21] The first meeting took place on 25 May 2016. A Division Paper dated 25 May2016 was tabled at the meeting. The paper:(a) updated the Division on the FMA's recent engagement with ANZregarding the FMA's inquiries into potential claims against ANZ; and(b) sought the Division's view on disclosing information gathered by theFMA during its inquiries to the [Company X] investors.[22] In relation to the latter topic, the paper recommended the Division approve theFMA confirming with ANZ the FMA's intent to share information with the [CompanyX] investors "for the purposes of enabling them to consider their position with respectto a claim against ANZ."[23] The meeting minutes record that the Division members identified four possiblepurposes to the proposed "engagement" with the [Company X] investors, recorded inthe minutes as follows:(a) To assist the FMA's on-going investigation;(b) To allow the investors to decide whether they can take action;5 The three Division papers have been produced in evidence in this proceeding. They are heavilyredacted, primarily on the basis of legal advice privilege.(c) To allow the FMA to make a decision as to whether to take actionpursuant to section 34 FMA Act; and(d) To obtain judicial clarity about the operation of s59 FMA Act (and therelated exercise of the FMA's statutory powers). It was noted that tothe extent the FMA resolves not to disclose the material, the investorswill likely make an application to compel the exercise of the FMA'spowers enabled by s59(f). It was noted that clarifying the law was nota reason to support disclosure in itself, but clarity on the law would bean ancillary benefit of the right to disclose for one or more of the otherreasons being challenged.(Emphasis in original)[24] The minutes record that there was at that point insufficient information toenable a decision to be made as to whether the FMA would take action pursuant tos 34 of the Act. In this context, the meeting minutes record:The decision as to whether the FMA would exercise its powers under s34would be influenced by whether investors decided to take action and nodecision could be made by the FMA until investors decide whether to takeaction. The key question was to establish whether we could share theinformation with the investors (as it is their claim).[25] As can be seen from the above, at least at this stage, the FMA saw the secondand third of the three purposes of the Proposed Disclosure as being linked.[26] The minutes concluded that a further meeting should be called as soon aspractical, so that members could decide whether to disclose the material unders 59(3)(f) of the Act.6The second Division meeting — 16 June 2016[27] The second meeting took place on 16 June 2016. A Division paper dated 10June 2016 was tabled and considered at the meeting.[28] The paper focused on the proposed disclosure to [Company X] investors,including what should be disclosed, the purpose of disclosure and the process fordisclosure. The paper noted that the following information would be disclosed (if adecision to that effect were taken by the Division):6 At that stage, no reference was made to disclosure pursuant to s 59(3)(c).(a) External legal advice obtained by the FMA in relation to ANZ'spotential liability to [Company X] investors;(b) Information obtained by the FMA from ANZ through the issue ofnotices under s 25 of the Act and referred to in the external legal advice;and(c) Internal information held by the FMA, including the FMA's findingsbased on the information obtained and inquiries undertaken.[29] The paper went on to recommend that:If the Division considers any of the [above] information should be disclosed,[the Division should] discuss and determine what may be disclosed and thepurpose of such disclosure, including whether it is for the purpose of:(i) Obtaining responses and any additional information from the[Company X] investors to the information received fromANZ; and/or(ii) Determining the next steps that should occur to enable the[Company X] investors to evaluate the merits of a claimagainst ANZ and consider their position with respect to anysuch claim; and/or(iii) Enabling FMA to consider and determine whether to exerciseits powers under section 34 of the FMA Act.(Emphasis added)[30] I interpolate to note two points:(a) First, the above seems to envisage that a decision would first be madethat disclosure to the [Company X] investors should be made, beforedetermining the purpose of any such disclosure; and(b) Secondly, the three possible purposes for disclosure are in the sameform as the three purposes on which the FMA now relies for makingthe Proposed Disclosure.[31] The paper then summarised the FMA's engagement with ANZ on the issue ofdisclosure and set out a potential disclosure process. In this context, the paper notedthat in accordance with s 59(4) of the Act,7 confidentiality agreements would need tobe secured with [the third party], and that any such agreements:will also include a clause restricting the [third party] from using any of thedisclosed information for any purpose other than considering a potentialclaim against ANZ and liaising with the FMA.(Emphasis added)[32] The paper concluded that FMA staff remained of the view that there was aproper basis for disclosing the information to [Company X] investors (via the [thirdparty]) under ss 59(3)(c) and (f) of the Act.[33] The minutes of the Division meeting record that the Division members set outthe questions for answering as follows:(a) Should a disclosure be made;(b) What is the purpose of such disclosure;(c) What is the scope of such disclosure; and(d) How disclosure may be made.[34] Most of the balance of the minutes is redacted, but they conclude by notingthat a further paper had been requested on what information should be disclosed, towhom disclosure should be made and the details of the process for that to occur.The third Division meeting — 8 July 2016[35] The third meeting took place on 8 July 2016. A Division paper dated 4 July2016 was tabled and considered at the meeting.[36] The paper noted that at the 16 June 2016 meeting, the Division was "minded"to disclose information to [Company X] investors "for the following purposes":7 Section 59(4) provides that the FMA must not disclose any information under s 59(3)(f) (to aperson the FMA is satisfied has a proper interest in receiving the information or document) unlessthe FMA is satisfied that appropriate protections are or will be in place for maintaining theconfidentiality of the information or document.(a) For the purpose of, or in connection with, the performance or exerciseof any function, power, or duty conferred on the FMA;8 and(b) Disclosure to persons whom the FMA is satisfied have a proper interestin receiving the document or information.9[37] I note that the above are not strictly purposes for which the documents are tobe disclosed, but rather are circumstances in which disclosure is permitted by theAct.10[38] The balance of the paper discussed what information should be disclosed,noting that the minimum amount of material required to meet the purposes ofdisclosure ought to be disclosed. The paper also noted various categories ofdocuments that should not be disclosed, including on the basis that they were notrelevant to a potential claim against ANZ. The paper recommended that the advicereceived by the liquidators and which had been shared with the FMA (see [14] above)not be disclosed, given it contained personal information protected by the Privacy Act1993; information subject to legal professional privilege over which the liquidatorsmaintained privilege; [Redacted].[39] The paper accordingly recommended any disclosure to the [third party] belimited to the following:11(a) The external legal advice obtained by the FMA in respect of potentialclaims against ANZ. The Division paper stated that "this advice issufficient to allow the recipients to make informed decisions relate [sic]to any potential claim"; and(b) Underlying or source documents referred to in the external legal advicewhich had been obtained from ANZ. The paper stated that "in order8 Financial Markets Authority Act 2011, s 59(3)(c).9 Section 59(3)(f).10 Or as Mr Rennie QC, counsel for the FMA, described them in his submissions, "gateways" todisclosure.11 This remains the information subject to the Proposed Disclosure.for the advice to be read in its proper context, we consider it necessaryfor the documents referred to in the advice to be provided."[40] The paper stated that the above two categories of documents represent "theminimum amount of material required to meet the purposes of disclosure".[41] The paper then set out the following process for the Proposed Disclosure:(a) A meeting would be sought with the [third party], the liquidators andtheir legal counsel (if any).(b) Before the meeting, signed confidentiality agreements with [the thirdparty], the liquidators and any legal counsel engaged would beobtained.(c) At the meeting, the FMA would give a verbal report and summary of anumber of matters, including its findings as a result of its inquiries; theexternal legal advice received about potential claims against ANZ; theFMA's view that there may be claims against ANZ; and the FMA wouldinform the [third party] that it was prepared to disclose certaindocuments on the basis appropriate confidentiality protections could beput in place, and then only on a counsel-to-counsel basis with legalrepresentatives engaged by the [Company X] investors and with theliquidators/their legal advisers.(d) Once satisfied that appropriate confidentiality protections were inplace, disclosure to counsel would be made. The paper noted thatdisclosure to counsel only was "at least initially, with discussion tofollow in relation to a wider disclosure of the documents to the [thirdparty]".[42] The paper also recorded the following:We are not in a position to set out the steps that the [third party] would needto take for its decision making process (including the potential scope of anyfurther disclosure that may be required) without engaging with the [thirdparty] and any advisers they engage. For this reason the disclosure processrecommended is an initial process only.[43] The minutes of the third meeting recorded that the Division was satisfied it wasappropriate to disclose information under ss 59(3)(c) and (f) for the three purposes setout at [3] above. The Division also agreed that disclosure would be limited to the twocategories of documents identified in the Division paper of 4 July 2016, for the reasonsset out in that paper. The minutes record that the scope of the Proposed Disclosure"was enough for [Company X] investors to form their own view". In terms of thecontent of the proposed meeting with the [third party], the minutes recorded thefollowing:Members noted that if at the meeting between the FMA and the liquidatorsand the [third party] the FMA is questioned about whether it will take actionunder s 34 FMA Act, the FMA would advise [Company X] investors to maketheir own assessment, and to note that the advice received by the FMA is abouttheir claim. Section 34(5) FMA Act is highly prescriptive and sets out clearlythe high threshold that the FMA must meet before it takes such action.Moreover, it was noted that the Division has not turned its mind to whetheraction under s 34 FMA Act will be considered.[44] Consistent with the last sentence of that extract, the minutes formally noted theDivision paper's recommendation to keep open the option of the FMA bringing a claimagainst ANZ using its powers under s 34.Factual findings in relation to the FMA's decision-making[45] On the basis of the above, I am satisfied of the following matters:(a) First, of the three stated purposes of the Proposed Disclosure, the firstpurpose ("to obtain responses and any additional information from the[Company X] investors to the information received from ANZ") is asecondary or non-operative purpose only. This purpose is not discussedin any detail or substance in the papers or meeting minutes referred toabove, including what information or comments the [Company X]investors (via [the third party]) might be able to provide on thedocuments to be disclosed.(b) Secondly, the scope of the information to be disclosed was determinedby (and limited to) the recipients' ability to make an informed decisionregarding a potential claim against ANZ. This further reinforces thatthe first purpose of the Proposed Disclosure is a secondary or limitedpurpose only.(c) Thirdly, given the above, the second and third purposes are the primarypurposes of the Proposed Disclosure, and are linked to each other, forthe reasons identified by the FMA and set out at [24] above. In otherwords, I am not satisfied that, absent the prospect of the FMA bringinga claim against ANZ pursuant to s 34 of the Act, the FMA would havenevertheless decided to make the Proposed Disclosure solely for thepurpose of enabling the [Company X] investors to evaluate andpotentially bring a claim against ANZ.(d) Fourthly, the FMA has not yet taken a decision on whether to bring aclaim against ANZ pursuant to s 34 of the Act.(e) Finally, there is scope for further disclosure (that is, beyond the presentProposed Disclosure), depending on the steps the [third party] mayneed to take for its own decision-making process.Events leading to the commencement of this proceeding[46] As a consequence of the 8 July 2016 Division meeting, on 13 July 2016, theFMA advised ANZ that it had decided to disclose certain documents received fromANZ to the [Company X] investors, relying on s 59(3)(c) and (f) of the Act. Itconfirmed the two categories of disclosure identified at [39] above. The FMA alsoconfirmed that the Proposed Disclosure was for the three purposes set out at [3] above.ANZ again objected to the disclosure, stating it would be unlawful.[47] The parties continued to engage on this issue over several months, but noresolution was reached. In March 2017, the FMA informed ANZ that it would bemaking the Proposed Disclosure. This prompted ANZ to commence this proceeding.The parties have agreed that the Proposed Disclosure will only occur after a final courtdetermination permitting the disclosure (or discontinuance of the proceeding by ANZ).ANZ's pleaded claims[48] ANZ pleads three causes of action:(a) First, the Proposed Disclosure is outside the FMA's functions asconferred by the Act, and is inconsistent with the purpose for which theFMA's s 25 powers were granted and is thus unlawful.(b) Secondly, the Proposed Disclosure is not permitted by s 59(3) of theAct and is thus unlawful.(c) Thirdly, the Proposed Disclosure is in breach of confidence, given theinformation is confidential and there is no statutory basis for release.[49] As will be appreciated, all three causes of action overlap. If, for example, theProposed Disclosure is permitted by s 59(3) of the Act, then such disclosure could notbe said to be outside the FMA's proper functions for the purposes of the first cause ofaction. Similarly, it could not be said to be in breach of any equitable duty ofconfidence for the purposes of the third cause of action. Accordingly, ANZ's claimsall link to the same fundamental question, namely whether the FMA has a properpurpose or basis upon which to make the Proposed Disclosure.SubmissionsSummary — ANZ's submissions[50] ANZ submits the primary or driving purpose of the Proposed Disclosure is toallow the [Company X] investors to assess and pursue their own claims against ANZ.ANZ says that s 59(3) does not permit the FMA to disclose documents acquired in theexercise of its public functions to private parties for a private purpose.[51] ANZ submits that its approach to the proper interpretation and application of s59(3) of the Act is consistent with leading appellate authorities which have consideredsimilar issues.12 ANZ submits this approach has also been applied in similarcircumstances by the New Zealand High Court in The Stepping Stones Nursery Ltd vAttorney-General ("Stepping Stones").13 Relying in particular on Sir NicholasBrowne-Wilkinson VC's observations in Marcel v Commissioner of Police of theMetropolis, ANZ submits that the power of public bodies such the FMA tocompulsorily acquire documents for public functions necessarily, in the absence ofclear statutory words, exclude disclosure of that same information to private personsfor their private purposes.14[52] As noted, ANZ submits the primary purpose of the Proposed Disclosure is toenable [Company X] investors to consider and potentially bring a claim against ANZ.Given the authorities referred to above, and in light of the broad and general wordsused in s 59(3)(c), ANZ says disclosure for such a private purpose is not permitted.To the extent the FMA relies on s 59(3)(f) of the Act, ANZ submits that the concept ofa "proper interest" is to be construed in accordance with its well understood commonlaw meaning, namely a public interest defence to a claim of breach of confidentiality.ANZ therefore says the [Company X] investors do not have a "proper interest" inreceiving the information, given their only interest is a purely private one.[53] In terms of the disclosure said to be for the purpose of enabling the FMA toconsider whether it will bring a claim against ANZ (pursuant to its powers under s 34),ANZ says, first, that the record of the FMA's decision making shows that the FMA isnot currently exercising or considering whether to exercise its s 34 power; and,secondly, the Proposed Disclosure is not reasonably necessary for that purpose in anyevent. ANZ accepts that when considering its s 34 powers, the FMA must have regardto the likelihood of the proposed plaintiff (referred to in s 34 as "Person A") bringingthe proceeding itself. However, Mr Galbraith QC submits on behalf of ANZ that s59(3) does not envisage the FMA essentially creating that likelihood, by disclosinginformation to Person A which the FMA obtained through the exercise of its statutorypowers.12 Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 (CA); Johns v AustralianSecurities Commission (1993) 178 CLR 408; and R (Ingenious Media Holdings plc) v Revenueand Customs Commissioners [2016] UKSC 54, [2016] 1 WLR 4164.13 The Stepping Stones Nursery Ltd v Attorney-General [2002] 3 NZLR 414 (HC).14 Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 (CA) at 235.[54] Finally, Mr Galbraith submits that the FMA's integrity in performing itsfunctions would be seriously compromised if the FMA's position on the ProposedDisclosure were correct. This is because there is a "reciprocity" between the FMA'spower to obtain information compulsorily under s 25 of the Act, and its power to useor disclose that information under s 59 of the Act, and in particular, s 59(3)(c).[55] Mr Galbraith submits on the basis of leading authorities,15 that if disclosure toprivate persons for private purposes were permitted as a part of the FMA's own powersand functions, then it would also be able to collect or acquire information for that sameprivate purpose. Mr Galbraith submits that no-one suggests the FMA ought to be ableto obtain information in such circumstances, but that is the logical consequence of theFMA's present stance that it is entitled to disclose the information to the [Company X]investors to enable them to consider and pursue a claim against ANZ. This in turnrisks undermining cooperation from market participants, who will be conscious of therisk of the FMA voluntarily passing their documents to private parties for privatepurposes. ANZ submits such matters further reinforce that ss 59(3)(c) and (f) oughtto be more narrowly interpreted than suggested by the FMA.[56] For completeness, I note two further aspects of ANZ's claim.[57] First, ANZ's submissions also addressed an alleged deficiency in the FMA'sdecision-making process (in addition to the decision itself being unlawful), on thebasis that the record does not demonstrate that the FMA properly "satisfied" itself thatthe [Company X] investors have a "proper interest" in the Proposed Disclosure for thepurpose of s 59(3)(f). ANZ submits that being "satisfied" is a high threshold, yet therecord does not evidence the FMA ever turned its mind to the statutory test prior tomaking the decision to disclose.[58] However, as I raised at the hearing (and Mr Galbraith acknowledged), any suchalleged deficiency in the FMA's decision-making process is not pleaded as a groundof ANZ's application for judicial review.15 See above n 12.[59] Secondly, ANZ's statement of claim alleges that in making the ProposedDisclosure, the FMA would be acting in breach of s 59 of the Act as it "could not bereasonably satisfied for the purposes of s 59(4) that appropriate protections to maintainconfidentiality are or will be in place, given the potential use of the proposeddisclosure in private proceedings". This point was not however, developed in ANZ'swritten or oral submissions.[60] For these reasons, I do not consider these two aspects of ANZ's submissionsor claim any further.Summary — FMA's submissions[61] Mr Rennie QC for the FMA submits that ANZ's case is premised on three corepropositions which ultimately do not survive scrutiny.[62] First, ANZ's suggestion that the primary purpose of the Proposed Disclosureis to allow [Company X] investors to assess the merits of a claim against ANZmisrepresents the record of the FMA's decision-making. Mr Rennie submits therecord clearly establishes the FMA has not pre-determined whether it will take actionagainst ANZ pursuant to s 34 of the Act, and to assist the FMA's decision-making inthat regard is a clear and fundamental purpose of the Proposed Disclosure.Accordingly, the FMA submits that "the s 34 purpose is clearly an operative purpose"of the Proposed Disclosure.[63] Secondly, the FMA submits ANZ's reliance on the "public/private" divide ismisplaced, as the FMA's objectives, powers and functions are not limited to "public"matters. The FMA submits the Act is replete with measures which assist privateinvestors to recover money where they have wrongfully suffered loss. The FMA saysthat underlying these measures is a precept that the private interests of investors infinancial markets are inherently bound up with the FMA's main objective of promotingand facilitating the development of fair, efficient and transparent financial markets,and the FMA's function of promoting confident participation in those markets.[64] Thirdly, the FMA argues that ANZ's submission that s 59 should be interpretednarrowly does not reflect the proper approach to statutory interpretation in NewZealand. Rather, s 5 of the Interpretation Act 1999 makes a statute's text and purposethe key drivers of interpretation. In that context, the FMA says that the confidentialityregime in s 59 comprehensively balances the confidentiality, privacy and disclosureinterests that are at stake in this case.[65] In terms of the three stated purposes of the Proposed Disclosure, the FMAsubmits that the first purpose (to obtain responses and any additional information fromthe [Company X] investors to the information received from ANZ) is clearlyconnected to a function of the FMA (being the ongoing conduct of an investigation)and a power of the FMA (namely taking action under s 34).[66] The FMA submits that the second purpose (to enable [Company X] investorsto evaluate the merits of a claim against ANZ), is a permitted disclosure unders 59(3)(c) and (f).[67] In terms of s 59(3)(c), the FMA submits the Proposed Disclosure is clearlyconnected with a power of the FMA, namely its consideration of whether to bring aclaim against ANZ using its powers under s 34. The FMA further says that the s 34regime contemplates, authorises and requires the FMA to engage with Person A, in thecontext of the FMA itself coming to a decision as to whether to exercise that power.Mr Rennie submits that disclosure of key information relating to the proposed causeof action must be able to be disclosed to Person A (subject to appropriateconfidentiality arrangement being in place), to enable Person A to make a properlyinformed decision as to whether they will bring the contemplated proceeding. TheFMA submits that the engagement process "wouldn't make sense" unless there is somedisclosure. As such, it says it is rational and lawful for the FMA to try and assess the[Company X] investors' capacity and propensity to being the claim themselves, on thebasis the investors are "adequately informed of the grounds on which their claim mightbe brought." Ultimately Mr Rennie stated that "the level of disclosure would have tobe matched to the ability to get an informed answer from [Person A]".[68] The FMA submits that the second purpose is also permitted by s 59(3)(f), giventhe [Company X] investors' interest in the FMA's ongoing investigation and theprospect that the FMA might exercise their causes of action under s 34. The FMAfurther submits that [Company X] investors also have a "proper interest" inunderstanding what happened to their money. Thus disclosure to enable the [CompanyX] investors to evaluate [Redacted] causes of action is consistent with the policy andobjectives of the Act. The FMA submits that "measures by the FMA that assistinvestors to obtain compensation for loss promotes confidence in participating in thefinancial markets, and contributing to those markets being fair and efficient."[69] The FMA further submits that the third purpose of the Proposed Disclosure,namely to enable the FMA to consider and determine whether to exercise its powersunder s 34, is "palpably" for the purpose of a power of the FMA under the Act andthus permitted by s 59(3)(c). In this context, the FMA refers to s 34(5) and itsobligation to consider the likelihood of Person A commencing proceedings anddiligently continuing them, and Person A's right pursuant to s 35(1)(c) to object to theFMA commencing a proceeding under s 34. For the same reasons as set out at [67]above, the FMA says it is rational and lawful for the FMA to consider these matters,and for Person A to make a decision whether or not to object, on the basis of Person Abeing adequately informed of the basis upon which the claim is to be brought.[70] Finally, in response to the concerns raised on behalf of ANZ by Mr Galbraithconcerning the "reciprocity" point, Mr Rennie submits those issues have already beentaken into account by the FMA in what is described as a "finely adjusted" decision tomake the Proposed Disclosure. Mr Rennie points in particular to the FMA's detailedconsideration of the mechanics and process by which the Proposed Disclosure will bemade. He submits that this is accordingly not a case of converting confidentialdocuments to non-confidential documents.AnalysisIntroduction[71] As noted earlier, ANZ pleads three causes of action, all of which overlap to asignificant degree. Given the matters discussed at [49] above, I have found it helpfulfirst to consider ANZ's second cause of action, namely whether the ProposedDisclosure is permitted by either or both of ss 59(3)(c) and (f) of the Act.[72] My analysis proceeds as follows:(a) First, I examine the broader context to the statutory scheme regardingconfidentiality.(b) Secondly, I examine the statutory scheme itself.(c) Thirdly, I address the proper interpretation of ss 59(3(c) and (f).(d) Fourthly, I address the proposed disclosure against s 59, so interpreted.(e) Finally, I address any residual matters arising under ANZ's first andthird causes of action.The broader context to the statutory scheme regarding confidentiality[73] At its core, this is a case of statutory interpretation, concerning the properinterpretation of s 59(3) of the Act.[74] As the Supreme Court observed in Commerce Commission v Fonterra Co-operative Group Ltd:16[22] It is necessary to bear in mind that s 5 of the Interpretation Act 1999makes text and purpose the key drivers of statutory interpretation. Themeaning of an enactment must be ascertained from its text and in the light ofits purpose. Even if the meaning of the text may appear plain in isolation ofpurpose, that meaning should always be cross-checked against purpose inorder to observe the duel requirements of s 5. In determining purpose theCourt must obviously have regard to both the immediate and the generallegislative context. Of relevance too may be the social, commercial or otherobject of the enactment.(Footnotes omitted)[75] Section 59 of the Act, as its title confirms, concerns confidentiality ofdocuments and information obtained by the FMA through the exercise of its statutory16 Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR767.powers. As Lord Toulson JSC, writing for the United Kingdom Supreme Court inIngenious Media, observed:17The duty of confidentiality owed by HMRC to individual taxpayers is notsomething which sprang fresh from the mind of the legislative drafter. It is awell-established principle of the law of confidentiality that where informationof a personal or confidential nature is obtained or received in the exercise of alegal power or in furtherance of a public duty, the recipient will in general owea duty to the person from whom it was received or to whom it relates not touse it for other purposes. The principle is sometimes referred to as the Marcelprinciple, after Marcel v Comr of Police of the Metropolis [1992] Ch 225.[76] The Marcel principle reflects the courts' longstanding recognition of a citizen'sright of enjoyment of their property and privacy free from intrusion or interference,described as "fundamental human rights".18 Given this, Sir Nicholas Browne-Wilkinson VC stated in Marcel that "search and seizure under statutory powersconstitute fundamental infringements of the individual's immunity from interferenceby the state with his property and privacy".19[77] A similar approach is taken in leading Australian authority. In the AustralianHigh Court's decision in Johns, Brennan J stated the following:20Information is intangible. Once obtained, it can be disseminated or usedwithout being impaired, though dissemination or use may reduce its value orthe desire of those who do not have to obtain it. Once disseminated, it can bedisseminated more widely. A person to whom information is disclosed inresponse to an exercise of statutory power is thus in a position to disseminateor to use it in ways which are alien to the purpose for which the power wasconferred. But when a power to require disclosure of information is conferredfor a particular purpose, the extent of dissemination or use of the informationdisclosed must itself be limited by the purpose for which the power wasconferred. In other word, the purpose for which a power to require disclosureof information is conferred limits the purpose for which the informationdisclosed can lawfully be disseminated or used.17 R (Ingenious Media Holdings plc) v Revenue and Customs Commissioners [2016] UKSC 54,[2016] 1 WLR 4164 at [17].18 See Sir Nicholas Browne-Wilkinson VC's judgment in Marcel v Commissioner of Police of theMetropolis [1992] Ch 225 (CA) at 234. These principles are reflected in s 21 of the New ZealandBill of Rights Act 1990. As the Court of Appeal observed in Tranz Rail Ltd v Wellington DistrictCourt [2002] 3 NZLR 780 (CA) at [28], corporations as well as human beings have legitimateprivacy expectations, citing s 29 of the New Zealand Bill of Rights Act.19 Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 (CA) at 234.20 Johns v Australian Securities Commission (1993) 178 CLR 408 at 423, relying on Marcel andMorris v Director of the Serious Fraud Office [1993] Ch 372 (Ch).[78] Also in Johns, Dawson J referred to the above approach as a "general rule",and that:21Any other approach in relation to information gleaned under compulsionwould encroach further than necessary upon the right of the individual to treatas confidential information in his or her possession.[79] Finally, McHugh J stated in Johns that:22A statute conferring compulsory powers of examination is strictly construed.It is construed as authorising only those actions which are necessary to giveeffect to the purpose for which the power is conferred and whatever isreasonably incidental to that purpose.[80] The approach in New Zealand, however, is not one of a "strict" approach toconstruction of particular statutes or provisions.23 Section 5 of the Interpretation Act1999 makes that clear. McHugh J's observations nevertheless reinforce courts'acceptance that, absent clear wording to the contrary, the purpose for which documentsmay be compulsorily obtained by a public body will ordinarily limit the purpose forwhich they can be used and disclosed.[81] These principles were, as noted at [75], recently reinforced by the SupremeCourt's judgment in Ingenious Media. As Lord Toulson noted, however, the Marcelprinciple may be overridden by explicit statutory provisions.24 Thus, in IngeniousMedia itself, the relevant statutory provisions permitted disclosure of informationobtained through the exercise of the statutory powers of Her Majesty's Revenue andCustoms ("HMRC") in circumstances broader than only for the purposes of theHMRC's core functions and powers. Nevertheless, Lord Toulson cautioned againstthe long-established duty of confidentiality owed by public bodies such as HMRCbeing eroded by "words of the utmost vagueness".25 For that reason, Lord Toulsonadopted and applied the principle of construction known as the "principle of legality",21 Johns v Australian Securities Commission (1993) 178 CLR 408 at 436.22 At 467, citing Morris v Director of the Serious Fraud Office [1993] Ch 372 (Ch).23 See for example, Terminals (NZ) Ltd v Comptroller of Customs [2013] NZSC 139, [2014] 1 NZLR121 at [39].24 R (Ingenious Media Holdings plc) v Revenue and Customs Commissioners [2016] UKSC 54,[2016] 1 WLR 4164 at [18].25 At [19].as formulated by Lord Hoffmann in R v Secretary of State for the Home Office, exparte Simms:26Fundamental rights cannot be overridden by general or ambiguous words.This is because there is too great a risk that the full implications of theirunqualified meaning may have passed unnoticed in the democratic process.In the absence of express language or necessary implication to the contrary,the courts therefore presume that even the most general words were intendedto be subject to the basic rights of the individual.[82] Lord Toulson accordingly construed the key provision in issue in IngeniousMedia (namely disclosure being permitted "for the purposes of a function of theRevenue and Customs") as permitting disclosure only to the extent "reasonablynecessary" for HMRC to fulfil its primary function.27[83] The principle of legality discussed by Lord Toulson has been referred to withapproval by the New Zealand Supreme Court. Courts will presume that general wordsin legislation were intended to be subject to the basic rights of the individual.28The statutory scheme regarding confidentiality[84] The principles concerning confidentiality discussed in authorities such asMarcel, Johns and Ingenious Media are clearly embodied in the statutory scheme ofthe Act. In this context:(a) The FMA's power to compel the production of documents andinformation is, under s 25(1) of the Act, constrained to what it considers"necessary or desirable for the purposes of performing or exercising itsfunctions, powers, or duties under this Act".(b) While the FMA is permitted to disclose information it holds in relationto the performance or exercise of its functions, powers, or duties, to alaw enforcement or regulatory agency or an overseas regulator, under s30(2) of the Act, it may only do so if it is satisfied that appropriate26 At [19]; R v Secretary of State for the Home Office, ex parte Simms [2000] 2 AC 115 (HL) at 131.27 R (Ingenious Media Holdings plc) v Revenue and Customs Commissioners [2016] UKSC 54,[2016] 1 WLR 4164 at [23].28 Cropp v Judicial Committee [2008] NZSC 46, [2008] 3 NZLR 774 at [26]–[27].protections are or will be in place for the purpose of maintaining theconfidentiality of anything provided (and in particular, information thatis personal information within the meaning of the Privacy Act 1993).This is despite anything to the contrary in any contract, deed ordocument.29(c) Similarly, while the FMA will assist an overseas regulator by utilisingits powers under s 25 to obtain documents and information, it may onlycomply with a request if the FMA is satisfied that appropriateprotections are or will be in place for the purpose of maintaining theconfidentiality of anything provided (and in particular, information thatis personal information within the meaning of the Privacy Act 1993).30(d) The FMA may also impose conditions in relation to providinginformation, documents or evidence to a law enforcement or regulatoryagency, or to an overseas regulator, but must, when considering whatconditions to impose, have regard to whether conditions are necessaryor desirable to protect the privacy of any individual.31 In addition,conditions may relate to maintaining the confidentiality of anythingprovided (and in particular, information that is personal informationwithin the meaning of the Privacy Act 1993).32(e) The FMA has a specific power to make confidentiality orders (on itsown initiative or on the application of any other person), prohibiting thepublication or communication of any information it obtains inconnection with an inquiry or investigation under the Act.33 Wilfulcontravention of an order is an offence subject to a fine not exceeding$300,000.29 Financial Markets Authority Act 2011, s 30(4).30 Section 32(1)(b).31 Section 33(2).32 Section 33(3)(a).33 Section 44.(f) The FMA may authorise another person to exercise its powers under s25(1)(a) to (c) of the Act.34 If it does so, the person so authorised issubject to strict confidentiality obligations in relation to any documentsor information acquired in the course of exercising those powers.35Wilful contravention of those obligations is also an offence, liable onconviction to a fine not exceeding $200,000.36(g) As already noted, s 59 itself comprises a comprehensive scheme as tothe confidentiality of information disclosed to or obtained by the FMAunder the Act. It prohibits the FMA from publishing or disclosing anysuch information, save for in the prescribed circumstances set out in s59(3). Those circumstances are as follows:(i) Section 59(3)(a) permits disclosure where the information "isavailable to the public under any enactment or is otherwisepublicly available". The FMA is subject to the OfficialInformation Act 1992 and the Privacy Act 1993. Accordinglythis exception will apply if the information is to be disclosedpursuant to either of those Acts. The FMA explains that"typical" good reasons for it to withhold information under theOfficial Information Act are the maintenance of the law; theprivacy of natural persons; trade secrets and unreasonableprejudice to the commercial position of the supplier of theinformation; and that the information is subject to an obligationof confidence, or is information that any person has been orcould be compelled to provide under statutory authority. Asimilar approach applies in relation to information requestedfrom the FMA under the Privacy Act.(ii) Under s 44 of the Act, the FMA is able to effectively "suspend"(in the FMA's words) the operation of the Official Information34 Section 52.35 Section 54(1).36 Section 54(2).Act and Privacy Act during the course of an inquiry orinvestigation, by making a confidentiality order.(iii) Section 59(3)(b) permits disclosure of information in statisticalor summary form.(iv) Section 59(3)(c) is, as noted, of central relevance in this case.It permits disclosure "for the purposes of, or in connection with,the performance or exercise of any function, power or dutyconferred or imposed on the FMA". I address this provision infurther detail below.(v) Section 59(3)(d) and (e) concern disclosure to other regulators,or to an overseas regulator pursuant to sub-pt 2 of pt 3 of theAct. Disclosures in these circumstances are discussed at[84](b), (c) and (d) above. As noted, the sections in sub-pt 2 ofpt 3 contain their own provisions concerning the protection ofconfidentiality.37(vi) Section 59(3)(f) permits disclosure to a person who the FMA issatisfied has a "proper interest" in receiving the informationconcerned. This is the other "gateway" for disclosure on whichthe FMA relies in this case.38 I consider this particular provisionin further detail later in this judgment.(vii) Section 59(3)(g) permits disclosure with the consent of theperson to whom the information relates, or to whom it isconfidential.(h) Section 59(4) is also important to the overall scheme, as it prohibits theFMA from disclosing documents or information pursuant to s 59(3)(f)unless it is satisfied appropriate protections are or will be in place for37 See ss 30–33.38 See above n 10.the purpose of maintaining the confidentiality of anything provided. Asnoted, disclosures pursuant to ss 30 and 32 (which are indirectlyreferred to in s 59(3)(d) and (e)) already contain similar provisions tothis effect.(i) Further, s 60 provides that if disclosure is to be made pursuant tos 59(3)(c), (f) or (g), the FMA may impose conditions on suchdisclosure and, in considering what conditions to impose, it must haveregard to whether conditions are necessary or desirable to protect theprivacy of any individual. It may impose conditions maintaining theconfidentiality of the information to be provided. As s 60 does notapply to disclosures pursuant to s 59(3)(a) and (b), it seems clear thatthe scheme does not envisage confidentiality concerns arising in respectof those permitted disclosures. Through s 60, together with theprovisions of ss 30 and 32, all other permitted disclosures under s 59(3)envisage that conditions maintaining confidentiality may be required,and must be imposed when disclosing information under s 59(3)(f).(j) Finally, s 65 provides that no court or other person can compel the FMA(or persons acting on its behalf) to give evidence in any court or similarproceeding of anything coming to its (or his or her) knowledge inconnection with the operations of the FMA. Nor is the FMA (or personsacting on its behalf) required to make discovery of or produce adocument for inspection if the document was provided or obtained inconnection with the operations of the FMA.39[85] Issues concerning privacy and confidentiality are accordingly a core aspect ofthe Act's provisions regulating the FMA's powers to gather, use and discloseinformation.39 Other than in the context of certain specified offence proceedings, not relevant for presentpurposes (see s 65(2)).Section 34 — history and purpose[86] Given the FMA's reliance on its power to bring proceedings on behalf of[Company X] investors under s 34 of the Act, it is necessary to traverse the history andpurpose of this (relatively new) provision.[87] The power to bring such claims stems from recommendations made by theCapital Market Development Taskforce ("Taskforce"), established in July 2008 to"develop a blueprint" for New Zealand's capital markets.40 Part of the Taskforce'srecommendations was the establishment of a new regulator of capital markets:41with a view to consolidating market functions, building scale and expertiseand reducing regulatory gaps – so that enforcement of the law is swift, fairand visible.[88] In the context of its recommendations on the appropriate regulatoryinstitutions, the Taskforce recommended:42 that, in order to improve investors' access to redress, the regulator be giventhe power to seek civil remedies on behalf of investors in the event that dutiesowed to them are breached (including by fund managers and financialadvisers) and where other forms of redress (such as the forthcoming ApprovedDispute Resolution Schemes) are inadequate. This includes the ability toinitiate and coordinate class actions.[89] In light of the Taskforce's recommendations, the FMA Establishment Boardwas created, to govern the operational establishment of the FMA. In the RegulatoryImpact Statement prepared on what was to become s 34 of the Act, the following wasnoted in relation to the Establishment Board's views on the proposed new power:43A key issue in establishing the FMA is whether it will have the necessarypowers to achieve its objective of promoting fair, efficient and transparentmarkets.The FMA will have the Securities Commission's current powers to enforcethe criminal law. It will also be able to seek civil remedies on behalf ofinvestors under the Securities Act and the Securities Markets Act in certainsituations, for example where a prospectus or an investment statement40 Capital Market Development Taskforce Capital Markets Matter: Report of the Capital MarketDevelopment Taskforce (December 2009) ["Taskforce Report"], at 3.41 At 13.42 At 88.43 Ministry of Economic Development Regulatory Impact Statement: A power for the FMA toexercise an investor's right of action (14 September 2010) ["Regulatory Impact Statement"] at 2.contains an untrue statement or where a person has engaged in misleading ordeceptive conduct in relation to any dealing in securities.There are, however, situations where financial markets participants, auditorsand other people regulated by the FMA may have acted in a manner that givesrise to a civil right of action, but the Commission is unable to act. Theseinclude cases of negligence, breach of trust and breach of statutory duty (e.g.directors' duties).It is rarely in the interests of individual investors to act in these cases becauseof the costs and risks involved or, in the case of debenture holders, becausethey have limited legal standing. Further, in the case of closely heldcompanies, the company and its shareholders may not have the rightincentives to bring action against directors. This is likely to have been thecase with a number of finance companies, for example.A majority of the FMA Establishment Board's members consider that there isa material risk of a mismatch between expectations and powers if the FMAdoes not have a more general power to take cases on behalf of investors. Thishas the potential to undermine the credibility of the FMA, especially ifimportant cases arise during the critical establishment period and the FMA isunable to act.[90] The Regulatory Impact Statement noted that an alternative to the proposed s 34power was to facilitate private enforcement, by reforming the law and proceduresaround class actions, and through greater funding of courts and legal aid.44 TheStatement ultimately recommended, however, that a new power be introduced, namelyfor the FMA, in certain circumstances, to be able to exercise another person's right ofaction.45[91] The benefits of such a power were recorded as the possibility of greatercompliance by financial markets participants involved in public offerings of financialproducts. Under such a power, civil cases would become possible that were notpractical previously.46 The Regulatory Impact Statement also noted that to require theFMA to be satisfied that taking such action would be in the public interest would guardagainst risks such as the FMA being looked upon to take action whenever investorslost money. The Statement stated that there was a risk that the FMA's actions mightblock private settlement and enforcement, which could be mitigated by requiring theFMA to obtain leave of the High Court to bring an action where the relevant investorobjected to the FMA doing so, or was already bringing its own claim.44 At 1.45 At 6.46 At 3.[92] The explanatory note to the Financial Markets (Regulators and KiwiSaver) Bill2010 (which later became the Act) also commented on the proposed new power:47The Bill creates a new power enabling the FMA to exercise a person's civilright of action.The power does not change the duties or liability of any person: its sole effectis to give the FMA standing to take up existing rights of action against certainpersons in certain circumstances. Its primary objective is to promote thepublic interest rather than to obtain redress for investors, althoughredress (for example, damages) would often follow if the FMA's actionwere successful. The power is similar in scope to that available under section50 of the Australian Securities and Investments Commission Act 2001 (Aust).In assessing whether it is in the public interest to take action, the FMA willhave to consider certain matters, including the FMA's objective of promotingfair, efficient and transparent markets, the likely effect of proceedings onfuture conduct, the effective and efficient use of its resources, the significanceof the matter and whether the action would be taken if the FMA did notact. As a result, it is expected that the FMA will exercise the powerinfrequently.(Emphasis added)[93] Commentary to the Bill as reported back from the Commerce Committeerecommended a number of changes to the draft power. These included allowing moretime for investors to object to the FMA proposing to take action; preventing the FMAfrom exercising the power over the objection of an individual whose right of actionwas being exercised; and, after the FMA has commenced or taken over proceedingsunder its new powers, an obligation on the FMA to consult the person on whose behalfthe FMA was taking action.48[94] As is evident from these extracts from the legislative materials, the FMA's s 34power was modelled on s 50 of the Australian Securities and Investments CommissionAct 2001 ("ASIC Act"). Section 50 is more "streamlined" than s 34, and simplyconfers on the Australian Securities and Investment Commission ("ASIC") the powerto bring an action in another's name, subject to being satisfied that to do so is in thepublic interest. Section 50 does not, for example, expressly specify the matters ASICis to take into account when considering whether exercising its power would be in the47 Financial Markets (Regulators and KiwiSaver) Bill 2010 (211-1) (explanatory note) at 4.48 Financial Markets (Regulators and KiwiSaver) Bill 2010 (211-2), cl 40A; see s 40 of the Act asenacted.public interest, in the same way that s 34(5) does. Nevertheless, in AustralianSecurities Commission v Deloitte Touche Tohmatsu, a leading decision on theAustralian provision, a Full Court of the Federal Court of Appeal addressed a numberof factors it considered relevant to ASIC's (then the Australian SecuritiesCommission's) determination of whether exercising its power under s 50, including:49(a) The nature of the alleged breaches of duty and the strength of the claim;(b) The proposed remedy to be sought;(c) The likelihood of the proposed plaintiff bringing the claim;(d) Whether taking such action would support ASIC's primary objectivesas set out in the ASIC Act; and(e) The broader public effect of the proposed action.[95] Echoes of many of these factors can be seen in s 34(5) of the Act.[96] With that background in mind, I now turn to consider whether the ProposedDisclosure is permitted under either or both of ss 59(3)(c) or s 59(3)(f) of the Act.Is the Proposed Disclosure permitted by s 59(3)(c)?[97] The full text of s 59 is set out in the schedule to this judgment. The words "forthe purposes of the performance or exercise of any function, power, or dutyconferred or imposed on the FMA" in s 59(3)(c) are extremely broad and generalterms. On their face, disclosure in any way related to any of the FMA's powers orfunctions, no matter how tenuous the connection might be, would be permitted underthis provision. As Lord Toulson observed in Ingenious Media when consideringsimilar statutory wording, this would lead to the protection afforded to individuals bythe FMA's duty of confidentiality being significantly eroded by "words of the utmost49 Australian Securities Commission v Deloitte Touche Tohmatsu (1996) 70 FCR 93 (FCAFC) at124–127.vagueness".50 As noted at [82] above, it was for this reason Lord Toulson concludedthat similar wording used in the statute in issue in that case was properly interpretedas permitting disclosure "reasonably necessary" for HMRC's primary functions.[98] Similarly, the words "in connection with," under their plain meaning, are alsoof the widest import. As the Court of Appeal confirmed in Sportzone Motorcycles Ltd(in liq) v Commerce Commission, that phrase must take its meaning from the relevantstatutory context, which can drive a broad or restrictive interpretation.51 I have set outabove the relevant statutory context in this case, and the importance of confidentialityto its overall scheme.[99] I therefore consider that s 59(3)(c) permits disclosure:(a) when disclosure is reasonably necessary for the purposes of theperformance or exercise of any function, power or duty conferred orimposed on the FMA by the Act or any other enactment; or(b) where there is a close connection or nexus between the disclosure andthe performance or exercise of the FMA's relevant function, power orduty.[100] I do not consider this approach injects words into the section which do notexist, or otherwise adds an unjustifiable gloss. Rather, given the legislative andbroader context discussed above,52 this approach is, in my view, embodied in the veryconcept of the disclosure being "for" or "in connection with" the particular power,function or duty. I do not consider Parliament intended disclosure to be permitted solong as there was some link or connection to a power, function or duty of the FMA,no matter how tenuous or weak.50 R (Ingenious Media Holdings plc) v Revenue and Customs Commissioners [2016] UKSC 54,[2016] 1 WLR 4164 at [19].51 Sportzone Motorcycles Ltd (in liq) v Commerce Commission [2015] NZCA 78, [2015] 3 NZLR191 at [52]. See also IAG New Zealand Ltd v John F Jackson [2013] NZCA 302 at [24], whereMiller J, writing for the Court, noted that "the phrase 'in connection with' plainly requires a nexusbetween one thing and another, but the nature and closeness of the required connection alwaysdepends on context and purpose." Miller J cited a decision of the Federal Court of Appeal asauthority for that proposition: Hadfield v Health Insurance Commission (1987) 15 FCR 487(FCA) at 491.52 See [73]–[95] above.[101] In this context, therefore, is the Proposed Disclosure reasonably necessary forthe purposes of the FMA's decision-making under s 34, or is there a close connectionor nexus between the Proposed Disclosure and the FMA's decision-making under s34? In my view, the answer is "no".[102] As noted, the FMA submits the Proposed Disclosure is necessary because,under s 34(5), the FMA must have regard to the likelihood of Person A commencingthe proceedings and diligently continuing them. The FMA says that for it properly tohave regard to these matters, and given it is ultimately Person A's claim, it needs to beable to have an informed dialogue with Person A, which in turn necessitates theProposed Disclosure. I disagree.[103] I do not accept it is implicit in having regard to the "likelihood" of Person Acommencing the proceedings that the FMA must consult with that person and, even ifit does, that the FMA is required or permitted to disclose to Person A informationobtained through the exercise of its statutory powers. Section 34 does not expresslyrefer to or require such engagement. Section 35, which provides Person A the right toobject to the FMA's intention to bring proceedings under s 34, only requires the FMAto give written notice of the FMA's intention to commence proceedings. Further, theonly express duty to consult with Person A arises under s 40, after the FMA has madea decision under s 34 and has commenced proceedings. Moreover, the FMA havingregard to the "likelihood" of Person A commencing the proceedings, is different to theFMA knowing whether Person A will (or will not) commence the proceedings (onlythe latter requiring some form of engagement, in the absence of a public statement onthose matters by Person A).[104] I accept that, in practice, the FMA may wish to engage with Person A, in thecontext of assessing the likelihood of Person A commencing the proceedings. MrGalbraith accepted, rightly in my view, that there could be no objection in thosecircumstances of disclosing the fact the FMA was contemplating bringingproceedings, particularly given s 34(5)(e)'s reference to "the" proceedings, rather thansome broader potential claim against the proposed defendant. But it is a significantadditional step, in my view, to make disclosure of the type proposed in this case. Thereis no suggestion, either on the face of s 34, or in any of the commentary on its historyand purpose, that in having regard to the likelihood of Person A commencing theproceedings, disclosure of materials held on a confidential basis is required orenvisaged. Had that been envisaged, it might have been expected to be a matterspecifically considered in the lead up to s 34's enactment, and expressly addressed ins 34 (or s 59), given the Act's focus on confidentiality of information obtained throughthe exercise of the FMA's powers.53[105] Further, by giving disclosure such as that proposed in this case, the likelihoodof Person A commencing proceedings will no doubt be increased from what wouldhave otherwise been the case. In effect, the disclosure itself will drive, enhance or, atthe very least, affect the likelihood of Person A commencing the proceedings. In myview, s 34(5)(e) is aimed at the FMA making an assessment of the likelihood of PersonA commencing the proceedings, independent of the FMA's own investigation and theparticular information it may have learned as a result. As I raised with Mr Rennie atthe hearing, prospective plaintiffs are required every day to form a view on whether tocommence proceedings, based on information they then have at their disposal.Disclosure such as that proposed in this case would place Person A in a quite differentand indeed privileged position to other litigants making the same sorts of decisions.[106] I do not consider that result was intended through the requirement that, whenconsidering whether to exercise its powers under s 34, the FMA have regard to the"likelihood" of Person A commencing the proceedings. In addition, the recorddemonstrates that an operative purpose of the Proposed Disclosure in this case is toenable the [Company X] investors to form their own view, with the benefit of theinformation and documents obtained through the FMA's inquiry, on whether they willbring proceedings against ANZ, rather than the FMA making its own assessment ofthe likelihood of the [Company X] investors doing so. Section 34 explicitly requiresthe FMA to make the second of those assessments, but it is silent as to the first.[107] There are also practical considerations. The FMA has given careful and properattention to maintaining the confidentiality of the documents and informationconcerned. It proposes that a condition of the Proposed Disclosure is that [the third53 See the discussion of the statutory scheme regarding confidentiality at [84]–[85] above.party] will be restricted from using any of the disclosed documents and informationfor any purpose other than considering a potential claim against ANZ and liaising withthe FMA. But once [the third party] are in possession or have knowledge of thedocuments and information, it is unclear how this condition would operate in practice.If, for example, following the Proposed Disclosure, the [Company X] investors diddecide to commence proceedings against ANZ, would they be required to ignore thevery information on which their decision to bring the claim was based whenformulating their statement of claim? Similarly, when formulating requests fordiscovery, would the categories of documents to be discovered by ANZ need to ignorethe information already held by [Company X] investors?[108] Additionally, the Proposed Disclosure is, at least initially, to be made in alimited form and to a limited class of persons.54 However, the FMA recognises that itis not aware of what steps the [third party] may need to take for its own decision-making process, including the potential scope of any further disclosure that may berequired. For these reasons, the Proposed Disclosure is described in the FMA's papersas "an initial process only". Presumably this envisages that the documents andinformation may need to be communicated more widely across the [Company X]investor group. How confidentiality would be appropriately maintained in thosecircumstances is not addressed in the underlying papers. This point, and that addressedin the preceding paragraph, reinforce Brennan J's cautionary observation in Johns thatgiven information is intangible, once it has been disclosed it can be disseminated orused in ways which are alien to the underlying purpose for which it was originallyobtained.55[109] I am conscious that, if the [Company X] investors were to commenceproceedings against ANZ, they may acquire the documents which are the subject ofthe Proposed Disclosure in any event, through the discovery process. Why then shouldthere be any objection to the same information being disclosed to them now by theFMA?54 See [41] above.55 Johns v Australian Securities Commission (1993) 178 CLR 408 at 423.[110] A similar point was considered by the Court of Appeal in Marcel.56 The Courtconcluded that the police in that case were required to disclose the documents inquestion to the plaintiff in civil proceedings in response to a subpoena, partly on thebasis that the person from whom the police had seized the documents would have beenrequired to produce them in response to a subpoena in any event. However:(a) All members of the Court of Appeal in Marcel agreed with Sir NicholasBrowne-Wilkinson VC that it was not within police powers tovoluntarily disclose information acquired during its investigations toassist a plaintiff in private civil litigation.57(b) In addition, and as noted above, the position under the Act is quitedifferent to that considered by the Court of Appeal in Marcel, givens 65 specifically prohibits the FMA from being required to producedocuments by way of discovery or otherwise in civil proceedings.(c) Further, whether the information to be disclosed would be available toPerson A (via discovery) if they were to commence proceedings is notcertain. That would depend on the scope of the pleadings and thus thematters in issue, which may or may not align with the scope andpurpose of the inquiry or investigation in connection with which theinformation was obtained by the FMA.(d) Finally, if the documents were to be obtained by Person A through thediscovery process, that process would be subject to the Court's controland oversight, including the obligation not to use or disclose thedocuments for any purpose other than the relevant proceeding.58 Andwhile in this particular case the FMA proposes to impose conditions onthe use to which the information and documents can be put, and to56 Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 (CA).57 At 235 per Sir Nicholas Browne-Wilkinson VC; 256 per Dillon LJ; 260 per Nolan LJ; and 263 perSir Christopher Slade.58 High Court Rules 2016, r 8.30(4).maintain confidentiality, there is no requirement under s 59(3)(c) for itto do so.59[111] As will be evident from the above discussion, there are no authorities directlyaddressing the issue arising on this aspect of ANZ's claim. However, I note that a(somewhat) similar point arose, at least at first instance, in Australian SecuritiesCommission v Deloitte Touche Tohmatsu.60 That case came about following thecollapse in 1990 of a group of companies known as "Adsteam". The AustralianSecurities Commission ("ASC") (now ASIC), conducted an investigation into thecollapse. Accounting irregularities were discovered. As a result of its investigation,ASC resolved to commence proceedings in the name of Adsteam under s 50 of theASIC Act, against Adsteam's former directors and Adsteam's auditors, DeloitteTouche Tohmatsu ("Deloitte"). Those proceedings were commenced, but were stayedpending resolution of Deloitte's application for judicial review of ASC's decision tocommence the proceedings.[112] ASC had engaged with the (new) directors of Adsteam before making itsdecision to commence the proceedings. Adsteam, through its new directors, opposedASC commencing the proceedings. The primary ground of Deloitte's application forjudicial review was that when considering whether commencing the proceedings wasin the public interest, ASC failed to consider the policy of general law that it is a matterfor the directors of a wronged company to determine whether proceedings ought to becommenced in its name (referred to in the judgment as "the Foss v Harbottleconsideration").61[113] At first instance, Lindgren J granted Deloitte's application for judicial review,finding that ASC was bound to take into account the Foss v Harbottle considerationwhen making a decision under s 50.62 This conclusion was overturned on appeal. TheCourt of Appeal (unanimously) held there was no justification for importing such aconsideration into s 50, given its remedial nature. As noted above, the Court of Appeal59 That is because s 59(3)(c) is not subject to s 59(4). Rather, the FMA has the discretionary powerto impose conditions on disclosure pursuant to s 59(3)(c); see s 60.60 Australian Securities Commission v Deloitte Touche Tohmatsu (1996) 70 FCR 93 (FCAFC).61 See Foss v Harbottle (1843) 2 Hare 461, 67 ER 189 (Ch).62 Deloitte Touche Tohmatsu v Australian Securities Commission (1996) 136 ALR 453 (FCA).also set out a range of matters which it considered to be relevant considerations to betaken into account when making a decision under s 50.63[114] For present purposes, relevant aspects of the decision are Lindgren J'sobservations at first instance of the consultation between ASC and Adsteam's directorsbefore ASC made its decision under s 50. Adsteam had been asked by ASC for itsviews on ASC commencing the proceedings in Adsteam's name. Meetings andcorrespondence had taken place and passed between the parties in this regard. Thelast two paragraphs of Adsteam's letter to ASC dated 10 March 1994 are of particularrelevance. In response to ASC's request for Adsteam's views on ASC commencingthe proceedings, Adsteam wrote:64Up to a point these are preliminary reactions because ASC officers were notprepared at last Thursday's meeting to disclose to Adsteam the factswhich the ASC investigation has apparently established. Adsteam istherefor unable to form its own view as to whether it is in the company'sinterest to bring civil proceedings. It is possible that the case against theformer directors is strong enough to warrant civil proceedings by Adsteamitself – although this seems highly unlikely, given Adsteam's present positionand the company's present interests, and given also that the ASC hasapparently concluded that the evidence is not strong enough to initiatecriminal proceedings.Adsteam's view is that the decision whether or not civil action should beginin the company's name is a decision for Adsteam in the first instance, and adecision to be taken in the light of the company's interests (not the widerpublic interest, as you seem to suggest; on our advice it is in the public interestthat proceedings should be commenced once it has been determined that it isin the company's interest to commence them).(Emphasis added)[115] No substantive response was provided by ASC to the matters raised in thepenultimate paragraph of the 10 March 1994 letter. Lindgren J described thecorrespondence by that point as having "led to an an impasse."65 The Court of Appealagreed.66 In its subsequent internal submission paper on whether or not to commencethe proceedings, ASC officials noted that "it is apparently unlikely that the current63 See [94] above.64 Deloitte Touche Tohmatsu v Australian Securities Commission (1996) 136 ALR 453 (FCA) at 471.65 At 474.66 Australian Securities Commission v Deloitte Touche Tohmatsu (1996) 70 FCR 93 (FCAFC) at125.board of Adsteam will bring any proceedings itself in respect of the improperconduct", referring, inter alia, to the correspondence of 10 March 1994.67[116] In his decision at first instance, Lindgren J commented on the matters raised inAdsteam's letter of 10 March 1994 in the following terms:68Neither the officers nor the members [of the ASC] ever grappled with the issueraised by [Adsteam] in the last two paragraphs of its letter dated 10 March. Itwill be recalled that that letter did two things. First it gave "preliminaryreactions" to the ASC officers' request for [Adsteam's] observations on thequestion whether the proceedings being proposed by ASC officers wouldcause [Adsteam] commercial problems. Secondly, and in my view moresignificantly, in the last two paragraphs [Adsteam] volunteered a statement ofits own position which was that ASC should provide it with "the facts whichthe ASC investigation ha[d] apparently established" so the directors couldform their own view as to whether it was in the company's interest to bringcivil proceedings. The paragraphs made it clear that [Adsteam] desired tohave that information in order to enable its directors to assess, no doubt withlegal and accounting advice, the strength of [Adsteam's] case. It would hardlybe in [Adsteam's] interest to pursue lengthy proceedings against its formerdirectors and auditors, albeit at the cost of ASC, only to fail.[117] Lindgren J further stated:69It is clear that the view taken by ASC was that the view expressed by[Adsteam] in the last two paragraphs of its letter dated 10 March were at oddswith the terms of s 50 and that the significance of [Adsteam's] letter dated 10March was to be found only in its submission as to "commercialinconvenience".[118] His Honour concluded:70This approach pays too little regard to the fact that the causes of action referredto in s 50(a), like the property referred to in s 50(b), belong to the company orother person referred to in s 50, not to ASC. I infer that ASC at no time gave to [Adsteam] an account of the evidencewhich it had concluded was available from its inspection of the documentsand examination of the individuals, enabling [Adsteam] to decide whether ornot to commence, or consent to the commencement of proceedings. Nor didASC ever reveal to [Adsteam] the nature of the accounting or legal advicewhich it had obtained. ASC could have waived, subject to appropriateconstraints, the legal professional privilege attached to the legal advice whichit had obtained, in order to enable the directors to be acquainted with the effectof that advice, particularly as to the strength of [Adsteam's] causes of action.67 At 109.68 Deloitte Touche Tohmatsu v Australian Securities Commission (1996) 136 ALR 453 (FCA) at 477.69 At 478.70 At 478.In relation to the accounting advice, [Deloitte] called for production of it onthe hearing but it was not produced for the reason that privilege was claimedin respect of it.[119] The Judge did not consider the evidence satisfactorily explained why ASC didnot provide Adsteam the information it requested. His Honour did not specificallyaddress confidentiality, but noted that ASC would have been permitted to discloseASC's internal report about Adsteam to Adsteam under s 18(3) of the Act. And interms of documents obtained through its investigation, and a copy of the record ofexaminations it had conducted, Lindgren J noted that ASC would have been permittedto disclose those to Adsteam under s 25(1) and s 37(7) of the ASIC Act.71[120] In relation to those provisions:(a) Under s 18(3) of the ASIC Act, if a report or part of a report relates toa person's affairs (in that case, Adsteam), ASC/ASIC may, at thatperson's request, or of its own motion, give that person a copy of thereport.(b) Section 25(1) provides that ASC/ASIC may give a copy of a writtenrecord of an examination of a person conducted in connection withASC/ASIC's investigation to "a person's lawyer if the lawyer satisfiesASC/ASIC that the person is carrying on, or is contemplating in goodfaith, a proceeding in respect of a matter to which the examinationrelated." Further, s 25(2) provides that if such a written record isdisclosed under s 25(1), the record must not be used or disclosed otherthan in connection with preparing, beginning or carrying on aproceeding (breach of which is a strict liability offence subject topenalties including imprisonment for three months).(c) Section 37(7) is again a specific permitted disclosure in definedcircumstances, to the effect that where books have been produced toASC/ASIC, it must permit another person to inspect those books in71 At 478. The wording of the relevant provisions of the Act at the time of the Federal Court ofAppeal's judgment continues to apply.cases where they would have been entitled to inspect them and maypermit another person to inspect the books in other circumstances.[121] Lindgren J accordingly concluded that:72By not meeting [Adsteam's] request referred to in the penultimate paragraphof [its] letter dated 10 March, ASC deprived itself of the opportunity of givinggenuine consideration to the question of whether [Adsteam] was failing toenforce its causes of action for such a reason that ASC was justified doing soin its name without consent. Expressed differently, ASC deprived itself of theopportunity of genuinely considering whether the circumstances wereexceptional ones in which, consistently with the policy underlying s 50, it wasappropriate for ASC to assume the role of enforcing [Adsteam's] cause ofaction.[122] As noted however, Lindgren J's conclusions were overturned on appeal.73 TheCourt of Appeal rejected the conclusion that ASC was bound to take into account theFoss v Harbottle consideration when making a decision under s 50. It found that thelikelihood of Adsteam commencing the proceedings was a relevant consideration inASC exercising its discretion under s 50. Indeed, the Court stated:74it is extremely significant that although, as we have seen, lengthycorrespondence was exchanged [between Adsteam and ASC], the directors atno stage suggested that they might resolve to take action against the auditors.[123] However, neither in this context, nor in any other aspect of the judgment, didthe Court of Appeal suggest that ASC's assessment of the likelihood of Adsteamcommencing proceedings was deficient because it had not acceded to Adsteam'srequest to provide the information sought in Adstream's 10 March 1994 letter.[124] I appreciate the matters I am required to determine on this aspect of ANZ'sclaim were not directly in issue in Australian Securities Commission v Deloitte ToucheTohmatsu. Nevertheless, the matters discussed above reinforce my conclusion thatthere is nothing implicit in s 34 itself which requires or permits the FMA to discloseto Person A information obtained by the FMA through the exercise of its statutorypowers. I therefore conclude the Proposed Disclosure is neither reasonably necessaryfor the purpose of the FMA's decision-making under s 34, nor is there a sufficiently72 Deloitte Touche Tohmatsu v Australian Securities Commission (1996) 136 ALR 453 (FCA) at 479.73 Australian Securities Commission v Deloitte Touche Tohmatsu (1996) 70 FCR 93 (FCAFC).74 At 125.close connection between the Proposed Disclosure and the FMA's decision-makingunder s 34.[125] The FMA further submits the Proposed Disclosure is permitted by s 59(3)(c),given a purpose of the Proposed Disclosure is to obtain responses and any additionalinformation from the [Company X] investors to the information received from ANZ(the first purpose). However, I have already found that that purpose was a secondary(non-operative) purpose only.75 Accordingly, I accept ANZ's submission that if I findthe FMA may not release the documents and information for the operative purposesof disclosure (namely the second and third purposes), the decision to disclose cannotbe "saved" by a non-operative purpose.76[126] For the reasons set out above, I am satisfied that the material reasons for theFMA's decision to make the Proposed Disclosure were the second and third purposes.In other words, but for the second and third purposes, the decision to make theProposed Disclosure would not have been made. It is accordingly not necessary toconsider the first purpose in any detail.[127] For completeness, however, I observe that the first purpose appears, withrespect, to be somewhat of a makeweight argument. The record of the FMA'sdecision-making outlined above does not touch on, in any substantive way at least,why the Proposed Disclosure is reasonably necessary for, or even linked to, the firstpurpose. As stated above (at [45]), the scope of material to be disclosed was notdetermined by any reference to the first purpose, but only by reference to the second(and consequently) the third purposes.77 Disclosure of confidential material which hasbeen compulsorily acquired through the exercise of the FMA's statutory powers for apurpose unconnected with that material, would thwart the policy and objectives of theAct.75 See [45](a) above.76 In accordance with Poananga v State Services Commission [1985] 2 NZLR 385 (CA) at 393-394per Cooke J; and Unison Networks Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR42 at [50]–[55]. The FMA did not dispute this approach as a matter of principle.77 The documents to be disclosed being the FMA's external advice on a potential claim against ANZand, to enable that advice to read in its proper context, the documents referred to in it. As notedat [40] above, the FMA considers this the minimum material required "allow the recipients tomake informed decisions relate (sic) to any potential claim."[128] If the first purpose had been a material reason for the FMA's decision to makethe Proposed Disclosure, then a court would ordinarily be hesitant to intervene, givenit would be intervening in the exercise of a broadly-expressed power conferred on theFMA in the context of equally broadly-expressed objectives to which that power isdirected. So, for example, whether it was reasonably necessary for the purpose of anongoing FMA investigation to disclose certain confidential information to a thirdparty, would ordinarily be a matter for the FMA, being the body with expertise in theunderlying investigation and surrounding subject matter. A court's hesitancy tointervene is of course not without its limits.78 However, given my finding on the natureof the first purpose as it concerns the FMA's decision to make the Proposed Disclosure,it is not necessary to comment any further on this issue.[129] I accordingly turn to consider whether the Proposed Disclosure is permitted bys 59(3)(f) of the Act.Is the Proposed Disclosure permitted by s 59(3)(f)?[130] This aspect of ANZ's claim turns on the concept of disclosure to a person witha "proper interest". For the reasons outlined above, the interpretation of a broadconcept such as a "proper interest" will turn on purpose and context.[131] The starting point when considering when an interest will be a "proper" interestunder s 59(3)(f) of the Act are the purposes of the section and the Act. The relevantpurposes are to establish the FMA, state the FMA's main objectives and functions, andprovide for the FMA's information gathering powers.79[132] Also relevant are the FMA's objectives and functions. The FMA's "mainobjective" is to "promote and facilitate the development of fair, efficient, andtransparent financial markets".8078 As explained by the Supreme Court in Unison Networks Ltd v Commerce Commission [2007]NZSC 74, [2008] 1 NZLR 42 at [53], a statutory power is subject to limits even if it is conferredin unqualified or broadly framed terms.79 Financial Markets Authority Act 2011, s 3.80 Section 8.[133] The FMA's functions are listed in s 9 of the Act. Relevant for present purposesare the FMA's functions to:(a) Promote the confident and informed participation of businesses,investors and consumers in the financial markets;81(b) Perform and exercise the functions, powers and duties conferred on itunder the financial markets legislation;82(c) Monitor compliance with, investigate conduct that constitutes or mayconstitute a contravention of certain Acts;83 and(d) Monitor, and conduct inquiries and investigations into any mattersrelating to, financial markets or the activities of financial marketsparticipants or of other persons engaged in conduct relating to thosemarkets.84[134] I have already addressed earlier in this judgment the FMA's key informationgathering powers under s 25, and its powers and duties in relation to s 34.85[135] There is no doubt the FMA is a public body and that its core objectives andfunctions are public in nature. Ultimately, its functions, powers and duties are aimedat driving its main public objective, namely promoting and facilitating thedevelopment of fair, efficient, and transparent financial markets. It is not a primaryobjective or function of the FMA to drive or promote purely private interests.[136] A useful example of this public/private divide is found in s 34 itself. As notedabove, when consideration was given to including s 34 in the Act, a key issue waswhether the FMA, once established, would have the "necessary powers to achieve itsobjective of promoting fair, efficient and transparent markets".86 For this reason,81 Section 9(1)(a).82 Section 9(1)(b).83 Section 9(1)(c).84 Section 9(1)(d).85 See [84]–[96] above.86 Regulatory Impact Statement at 2.introducing a new power such as that contained in s 34 was seen as a means of"benefit[ing] investor confidence in the regulator and financial markets".87 It was notseen as serving the (private) purpose of securing redress for investors.[137] This tension between the FMA's public interests and investors' privateinterests was highlighted in commentary to the Bill as it passed through the House.Again, as noted earlier, in the Explanatory Note to the Bill, the "primary objective" ofthe proposed new power was said to be to promote the public interest, rather than toobtain redress for investors (though redress might be a secondary consequence of thepromotion of the public interest).88 It was because of this tension that furtheramendments were made to the Bill by the Commerce Committee, to "strengthen therights of individuals".89[138] Ultimately, whether a person has a "proper interest" in receiving informationfor the purposes of s 59(3)(f) will be fact specific, and will turn on the nature of thatperson's interest in any given case. It is therefore not helpful to seek to formulate ageneric and broad approach to what will and will not amount to a "proper interest"under s 59(3)(f). But given the purposes of the Act, and the FMA's core objectivesand functions, coupled with the strict limits on the circumstances in which the FMA ispermitted to disclose confidential information obtained through the exercise of itsstatutory powers, I do not consider disclosure to a person who has a purely privateinterest in receipt of the materials, divorced from any of the public purposes of theAct, or the public objectives and functions of the FMA, would be disclosure to a personwith a "proper interest".[139] Such an approach is consistent with the approach taken in Marcel.90 At firstinstance and on appeal, the Courts held that disclosure of documents obtained by apublic body (in that case the police) for public purposes could not be voluntarilydisclosed to private individuals for private purposes. A similar conclusion was87 At 2.88 Financial Markets (Regulators and KiwiSaver) Bill 2010 (211-1), Explanatory Notes at 4.89 Financial Markets (Regulators and KiwiSaver) Bill 2010 (211-2), Explanatory Notes at 4,including the right of Person A to object to the FMA taking a proceeding on their behalf, andincluding a duty on the FMA to consult with Person A after the FMA had commenced proceedingsin Person A's name.90 Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 (CA).reached by Harrison J in Stepping Stones, where his Honour concluded that disclosureof documents obtained by the police was not permitted for the purpose of assisting aprivate party in civil proceedings against the person from whom the documents hadbeen obtained.91[140] Mr Rennie submits that unlike the entities being considered in Marcel andStepping Stones (the police), the FMA's functions extend to facilitating purely privateinterests, and that the Act is "replete with measures enabling the FMA to assistinvestors recover money where they have wrongfully suffered loss". Measuresreferred to by the FMA include:(a) Acceptance and enforcement of compensation undertakings unders 46A of the Act;(b) Intervening in civil proceedings in s 48 of the Act;(c) Obtaining declarations of contravention in ss 486 to 488 of theFinancial Markets Conduct Act 2013 ("FMC Act") designed tofacilitate claims for compensation by investors;(d) Obtaining compensatory orders under ss 494 and 495 of the FMC Actfor investors who have suffered loss because of a contravention of acivil liability provision;(e) Obtaining "other civil liability orders" under ss 497 and 498 of the FMCAct for investors who have suffered loss because of a contravention ofa civil liability provision;(f) Obtaining asset preservation orders under ss 522 to 524 of the FMCAct;(g) Obtaining compensatory orders under s 42 of the Financial MarketsSupervisors Act 2011; and91 The Stepping Stones Nursery Ltd v Attorney-General [2002] 3 NZLR 414 (HC).(h) The acceptance and enforcement of compensation undertakings unders 82(1) and (2)(c) of the Anti-Money Laundering and Countering ofFinancing of Terrorism Act 2009.[141] I accept the functions of the FMA are different to and broader in some respectsthan the functions of the police. Nevertheless, the above functions and powers of theFMA are ancillary to and for the purpose of achieving the FMA's primary publicobjective set out in s 8 of the Act. Moreover, these examples of the FMA assisting orbeing involved in securing civil redress are expressly and carefully addressed in therelevant statutes, rather than enabled through general and ultimately vague words.They also involve the FMA itself taking steps or actions to obtain or facilitate thatredress.[142] Turning to the specific bases upon which the FMA says the [Company X]investors have a proper interest in this case, the FMA first says that the investors'interest in receiving the information is "referable to their interest in the FMA's ongoinginvestigation". I disagree that interest amounts to a "proper interest" for the purposesof s 59(3)(f). In the context of any investigation or inquiry conducted by the FMA,there will be a multitude of parties with an interest in the ongoing investigation orinquiry. If this were a sufficient foundation for disclosure under s 59(3)(f), that wouldamount to a very significant exception to the FMA's primary obligation not to discloseinformation obtained as a result of the exercise of its statutory powers. I do notconsider Parliament intended such a broad exception through the use of the generalwords in s 59(3)(f).[143] The FMA further submits the [Company X] investors have a proper interest inreceiving the documents given the prospect the FMA might exercise their cause ofaction under s 34. However, I have already held that disclosure for the purposes ofenabling the FMA to carry out its own decision-making under s 34 of the Act is not apermitted disclosure under s 59(3)(c). Accordingly, I do not consider the [CompanyX] investors have a "proper interest" in receipt of the information and documents whensuch disclosure is not reasonably necessary or sufficiently connected with the FMA'sown decision-making functions under s 34.[144] Finally, the FMA says disclosure to enable the [Company X] investors toevaluate [Redacted] causes of action is consistent with the policies and objectives ofthe Act and accordingly gives the investors a "proper interest" in receipt of the materialconcerned. It is in this context the FMA relies on what it says is the absence of thesharp public/private divide, as discussed above.[145] Such disclosure, however, does not involve the FMA itself taking action tosecure or assist in securing redress for investors, which would be consistent with itsprimary public objective and functions. A regulator taking steps in appropriatecircumstances to seek redress signals the regulator has strength, and in turn drivesconfidence in the financial markets. That was the very purpose of enacting s 34, whichprovides the appropriate mechanism for securing investors' access to compensationwhen to do so would be in the public interest.92 Conversely, investors' private interestsin independently pursuing their own claims are not sufficiently connected or linked tothe FMA's public functions and objectives to mean they have a "proper interest" indisclosure for the purposes of s 59(3)(f).[146] The conclusions reached in the preceding paragraphs are reinforced by therequirement in s 59(4) of the Act that the FMA must not make disclosure unders 59(3)(f) unless it is satisfied appropriate protections are or will be in place for thepurpose of maintaining the confidentiality of the information or documents concerned.As a mechanism to assist investors to obtain compensation, the information disclosedwould ultimately need to be deployed in the proceedings seeking such compensation.In those circumstances, it is difficult to see how the FMA could be satisfied at thepreliminary disclosure stage that the information would remain confidential. Thepractical issues relating to confidentiality discussed at [107] to [110] above would alsobe relevant.[147] I am reinforced in reaching my conclusion by the terms of s 65. It would beunusual for Parliament to prohibit a party who is seeking redress from a marketparticipant in private proceedings from obtaining the information from the FMAthrough discovery (or the issue of a subpoena), but nonetheless intend the FMA to be92 See the history and purpose of s 34 at [86]–[96] above.able to voluntarily provide the same information to that party for the purpose ofassisting it obtain such redress.[148] There is also a concern that if disclosure to assist a person obtain compensation(in circumstances where the FMA does not itself take steps to obtain suchcompensation) gave that person a proper interest under s 59(3)(f), this would have anegative effect on market participants' cooperation with the FMA in the conduct of itsinquiries and investigations. Section 59 is not limited to information obtainedcompulsorily by the FMA, but extends to any information obtained by the FMA underthe Act. This would include information voluntarily provided to the FMA in the courseof an inquiry or investigation. A market participant would no doubt be hesitant tovoluntarily provide documents and information to the FMA if it understood that, if theFMA considered the information supported a claim by a third party against the marketparticipant, the FMA would be permitted to disclose that information to the third party.Such concerns would also likely drive a strict and "black letter" approach tocompliance with statutory notices seeking documents and information. I do notconsider Parliament intended such negative outcomes through the permission grantedin s 59(3)(f).[149] For these reasons, I conclude the Proposed Disclosure is not to a person with aproper interest for the purposes of s 59(3)(f).[150] I now turn to make some brief concluding observations on ANZ's first andthird causes of action.First cause of action[151] ANZ's first cause of action pleads that the Proposed Disclosure is outside thefunctions of the FMA as conferred by s 9 of the Act (and supplemented by s 14 CrownEntities Act 2004) and inconsistent with the purpose for which the s 25 powers areconferred.[152] Section 59 of the Act is a carefully calibrated regime in relation to theconfidentiality of information obtained by the FMA, and prescribed circumstances inwhich that information may be disclosed. Given this, it is difficult to see, and the FMAdid not seek to suggest, that if the Proposed Disclosure was not permitted under s59(3), it was nevertheless permitted through some broader approach to the FMA'spowers and functions.[153] As I have found the Proposed Disclosure is not permitted by s 59(3), it followsthat the Proposed Disclosure is not otherwise permitted by the broader functions ofthe FMA as conferred by s 9 of the Act.[154] I do not consider, however, that if the Proposed Disclosure is inconsistent withs 25 of the Act, it is therefore ultra vires and unlawful. This is because the Act goesfurther than simply specifying that material obtained through the exercise of theFMA's powers under s 25 can only be used or disclosed for the purposes for which itis obtained. Instead, it lists, in s 59(3), seven scenarios in which disclosure ispermitted, only one of which could be argued to be the "flip side" of s 25 (namely, s59(3)(c)). Thus, the mere fact that disclosure of information might be "inconsistent"with the purpose for which the information was obtained would not render thatdisclosure ultra vires or unlawful, if nevertheless permitted by s 59(3).[155] In light of these observations, and given my conclusion that the ProposedDisclosure is not permitted by s 59(3), I need not say anything further on this cause ofaction.Third cause of action[156] The third cause of action, breach of confidence, adds little, if anything, to thefirst two causes of action. Scant attention was given to it in either party's submissions,written or oral.[157] There is no dispute that the documents and information in question areconfidential. ANZ submits that under common law and the Act, the FMA is requiredto treat ANZ's information as confidential unless it has a statutory basis for release.The FMA does not dispute that. To the extent authority is required as to the positionat common law, Lord Toulson stated in Ingenious Media:9393 R (Ingenious Media Holdings plc) v Revenue and Customs Commissioners [2016] UKSC 54,[2016] 1 WLR 4164 at [28].It is important to emphasise that public bodies are not immune from theordinary application of the common law, including in this case the law ofconfidentiality.[158] I have found that the Proposed Disclosure is not permitted by the terms of theAct. Accordingly, the Proposed Disclosure would be in breach of the FMA's duty ofconfidence to ANZ.[159] The relief sought on this (equitable) cause of action is a declaration that theProposed Disclosure is in breach of confidence and a permanent injunction restrainingthe FMA from making the Proposed Disclosure. Given the orders I propose to makeon the second cause of action (see [161] below), I do not consider it necessary to makethese additional orders.Result and costsResult[160] The Proposed Disclosure is not permitted by ss 59(3)(c) or 59(3)(f) of the Act.[161] There are accordingly orders:(a) quashing the FMA's decision to make the Proposed Disclosure; and(b) prohibiting the FMA from making the Proposed Disclosure.[162] I should emphasise that the above orders are obviously aimed at the FMA'sdecision to make the Proposed Disclosure only. They do not extend to any futurepotential disclosure of some or all of the material which is the subject of the ProposedDisclosure for other purposes (for example, disclosure in the context of anyconsultation under s 40, or in the context of the FMA prosecuting any proceedingsagainst ANZ, were the FMA to exercise its powers under s 34). That is not to signalthat disclosure for those or other purposes would necessarily be lawful; whetherdisclosure for any other purpose is a permitted disclosure under s 59(3) of the Act (orat law) would need to be considered on its own merits.Costs[163] Given the result of this proceedings, costs ought to follow the event in theordinary way, in favour of ANZ.[164] If the parties are unable to agree on costs, memoranda (no longer than fivepages) may be filed; ANZ's memorandum within 15 working days of the date of thisjudgment, the FMA's within a further five working days. The parties had suggestedin an earlier case management memorandum that the proceeding be categorised as acategory 3 proceeding for costs purposes. I agree that is appropriate. I flag that I amminded to certify for second counsel, but not third.____________________Fitzgerald JSchedule: Key Provisions of the Act8 FMA's main objectiveThe FMA's main objective is to promote and facilitate the development of fair,efficient, and transparent financial markets.9 FMA's functions(1) The FMA's functions are as follows:(a) to promote the confident and informed participation of businesses,investors, and consumers in the financial markets, including (withoutlimitation) by—(i) collecting and disseminating information or research aboutany matter relating to those markets:(ii) issuing warnings, reports, or guidelines, or making comments,about any matter relating to those markets, financial marketsparticipants, or other persons engaged in conduct relating tothose markets (including in relation to 1 or more particularpersons):(iii) providing information about its functions, powers, and dutiesunder this Act and other enactments (including promotingawareness by investors that all investments involve risks andthat it is not the role of the FMA to remove those risks):(iv) providing, or facilitating the provision of, public informationand education about any matter relating to those markets:(v) stating whether or not, or in what circumstances, the FMAintends to take or not take action over a particular state ofaffairs or particular conduct (for example, to give a personsome level of certainty that the FMA will take no furtheraction in relation to a matter):(b) to perform and exercise the functions, powers, and duties conferred orimposed on it by or under the financial markets legislation and anyother enactments:(c) to monitor compliance with, investigate conduct that constitutes ormay constitute a contravention or an involvement in a contraventionof, and enforce [the Acts referred to in Schedule 1] (d) to monitor, and conduct inquiries and investigations into any matterrelating to, financial markets or the activities of financial marketsparticipants or of other persons engaged in conduct relating to thosemarkets:(e) to keep under review the law and practices relating to financialmarkets, financial markets participants, and other persons engaged inconduct relating to those markets:25 FMA may require person to supply information, produce documents, orgive evidence(1) If the FMA considers it necessary or desirable for the purposes of performingor exercising its functions, powers, or duties under this Act or any provisionof the financial markets legislation, the FMA may, by written notice servedon any person, require the person—(a) to supply to the FMA, within the time and in the manner specified inthe notice, any information or class of information specified in thenotice; or(b) to produce to the FMA, or to a person specified in the notice acting onits behalf in accordance with the notice, any document or class ofdocuments specified in the notice (within the time and in the mannerspecified in the notice); or(c) if necessary, to reproduce, or assist in reproducing, in usable form,information recorded or stored in any document or class of documentsspecified in the notice (within the time and in the manner specified inthe notice); or(d) to appear before the FMA, or a specified person, at a time and placespecified in the notice to give evidence, either orally or in writing,and produce any document or class of documents specified in thenotice.(2) The FMA may also exercise its powers under subsection (1) for the purposesof complying with the request of an overseas regulator under section 31 orotherwise co-operating with an overseas regulator.(3) Information supplied in response to a notice under subsection (1)(a) mustbe—(a) given in writing; and(b) signed in the manner specified in the notice.(4) If a document is produced in response to a notice under subsection (1), theFMA, or the person to whom the document is produced, may—(a) inspect and make records of that document; and(b) take copies of the document or extracts from the document.(5) In this section and sections 26 and 27, specified person means—(a) a member or an employee of the FMA; or(b) another person to whom the board of the FMA has delegated thepower to receive the relevant evidence (being a person that the FMAis satisfied is suitably qualified or trained, or is a member of a class ofpersons who are suitably qualified or trained, to exercise the power).(6) Subpart 5 contains miscellaneous provisions relating to the powers in thissubpart.34 FMA may exercise person's right of action(1) If, as a result of an inquiry or investigation carried out by the FMA, the FMAconsiders that it is in the public interest for it to do so, the FMA may, inaccordance with this subpart,—(a) exercise the right of action that a person (person A) has against aperson who is or has been a financial markets participant bycommencing and controlling specified proceedings against the personwho is or has been a financial markets participant; or(b) take over specified proceedings that have been commenced by aperson (person A) against a person who is or has been a financialmarkets participant for the purpose of continuing the proceedings.(2) In this subpart, specified proceedings means any of the following kinds ofproceedings:(a) proceedings under, or in respect of, any financial markets legislation(other than criminal proceedings):(b) proceedings seeking damages or other relief for a contravention, aninvolvement in a contravention, fraud, negligence, breach of duty, orother misconduct, committed in connection with a matter to which theinquiry or investigation referred to in subsection (1) related.(3) In exercising a power under this section, the FMA must act in the publicinterest, but (subject to that duty) may take into account the interests of—(a) person A; and(b) the shareholders, members, and creditors of person A; and(c) if person A is an issuer, any product holders of financial productsissued by person A.(4) [Repealed](5) The FMA must, when considering whether exercising a power under thissection is in the public interest, have regard to—(a) its main objective under section 8; and(b) the likely effect of the proceedings on the future conduct of financialmarkets participants in connection with the financial markets; and(c) whether exercising the powers is an efficient and effective use of theFMA's resources; and(d) the extent to which the proceedings involve matters of generalcommercial significance or importance to the financial markets; and(e) the likelihood of person A commencing the proceedings (if thoseproceedings have not yet been commenced) and diligently continuingthe proceedings; and(f) any other matters it considers relevant.59 Confidentiality of information and documents(1) This section applies to the following information and documents:(a) information and documents supplied or disclosed to, or obtained by,the FMA under this Act or any financial markets legislation:(b) information and documents supplied or disclosed to, or obtained by, aperson authorised under section 52 (an authorised person) undersubpart 1:(c) information derived from information and documents referred to inparagraph (a) or (b).(3) The FMA must not publish or disclose, or direct an authorised person topublish or disclose, any information or document to which this sectionapplies unless—(a) the information or document is available to the public under anyenactment or is otherwise publicly available; or(b) the information is in a statistical or summary form; or(c) the publication or disclosure of the information or document is for thepurposes of, or in connection with, the performance or exercise of anyfunction, power, or duty conferred or imposed on the FMA by thisAct or any other enactment; or(d) the publication or disclosure of the information or document is to alaw enforcement or regulatory agency under subpart 2; or(e) the publication or disclosure of the information or document is to anoverseas regulator under subpart 2 or otherwise for the purpose ofassisting the FMA to co-operate with an overseas regulator; or(f) the publication or disclosure of the information or document is to aperson who the FMA is satisfied has a proper interest in receiving theinformation or document; or(g) the publication or disclosure of the information or document is withthe consent of the person to whom the information or documentrelates or of the person to whom the information or document isconfidential.(4) The FMA must not publish or disclose, or direct an authorised person topublish or disclose, any information or document under subsection (3)(f)unless the FMA is satisfied that appropriate protections are or will be in placefor the purpose of maintaining the confidentiality of the information ordocument (in particular, information that is personal information within themeaning of the Privacy Act 1993).60 Conditions relating to publication or disclosure of information ordocuments(1) The FMA may, by written notice to a person to whom any information ordocument is published or disclosed under section 59(3)(c), (f), or (g), imposeany conditions in relation to the publication, disclosure, or use of theinformation or document by the person.(2) The FMA must, in considering what conditions to impose, have regard towhether conditions are necessary or desirable in order to protect the privacyof any individual.(3) Conditions imposed under subsection (1) may include, without limitation,conditions relating to—(a) maintaining the confidentiality of anything provided (in particular,information that is personal information within the meaning of thePrivacy Act 1993):(b) the storing of, the use of, or access to anything provided:(c) the copying, returning, or disposing of copies of documents provided.(4) A person who refuses or fails, without reasonable excuse, to comply with anyconditions commits an offence and is liable on conviction to a fine notexceeding $200,000.65 Limitation on disclosure of information obtained in FMA's operations(1) No court or other person may require a member or an employee of the FMA,any delegate of the FMA, any expert appointed by the FMA, any personauthorised under section 52, or any other person present at a meeting of theFMA to—(a) give evidence in court or in any proceedings of a judicial nature ofanything coming to his or her knowledge in connection with theoperations of the FMA; or(b) make discovery of a document or produce a document for inspectionin court or in any proceedings of a judicial nature if the document wasprovided or obtained in connection with the operations of the FMA.(2) Subsection (1) does not apply to—(a) proceedings in respect of the falsity of any testimony; or(b) proceedings to which the FMA is a party (including where the FMAis acting under subpart 3); or(c) proceedings in respect of—(i) an offence under section 51 or 61; or(ii) an offence against section 78, 78A(1), 105, 105A, or 105B ofthe Crimes Act 1961; or(iii) the offence of conspiring to commit an offence against any ofthose sections of the Crimes Act 1961; or(iv) the offence of attempting to commit an offence against any ofthose sections of the Crimes Act 1961.(3) This section does not limit the application of the Official Information Act1982.