Drafting valid compulsory notices: A practical guide for regulators

Key takeaways

• Ensure every notice complies with the enabling legislation.
• Clearly identify the matters under investigation.
• *Demonstrate the connection between the investigation and the information sought.
• Anticipate common legal objections before issuing the notice.
• Careful drafting can reduce challenges and avoid delays to investigations.

Regulators serve an important function of investigating offences and ensuring compliance with the law. To perform this function, regulators often have investigative powers to issue notices to compel the production of documents and the furnishing of information.

Although investigative powers are broadly similar across different regulatory schemes, the particular requirements of a notice will be highly dependent on the particular statute which enables a notice to be issued. As compulsory notices are the main tool that regulators have to gather evidence in relation to an investigation, challenges to the validity of a notice may lead to substantial delays in progressing an investigation.

When drafting and issuing a compulsory notice, it is important to consider the following questions to ensure that the notice is valid:

1. Does the notice satisfy the formal requirements of the statute?
2. Does the notice clearly identify the information and documents required to be produced?
3. Does the notice clearly indicate the basis on which the issuer is entitled to require production? In particular:
   • Is there power to issue the notice?
   • Does the notice sufficiently describe the "matters" being investigated?
   • Are the information and documents sought by the notice "related" to the matters identified in the notice?

Formal requirements of the statute

Regulators should have regard to the particular provisions of the statue to ensure that the notice complies with the formal requirements set out in the enabling statute. Ordinarily, a compulsory notice is required to:

• specify a time and place for compliance with the notice;
• provide a reasonable period of time to comply with the notice;
• specify the manner in which the information or records is required to be produced, for example, whether production can be provided electronically or if hard copy is required;
• be issued by a person who has been appointed or is authorised under the statute to exercise investigatory powers, including the power to issue the notice; and
• in some regulatory schemes, include a warning or notice that failure to comply with the notice is an offence. Even if not required, it is good practice to draw attention to any consequences of non-compliance.

Does the notice clearly identify the information and documents required to be produced?

A notice must clearly convey to the recipient what falls within the scope of the notice and what is required to be produced to comply with the notice. A notice may be invalid if it is "couched in such wide and general terms that a proper exercise of the investigatory power could not support the requirement in question". However, the requirement of clarity is not to be applied in a precious, overly technical or hypercritical way. The use of common expressions like "relating to" or "referring to" will not invalidate a notice.

Notices requiring the provision of information can only require the recipient to provide information which is within their knowledge or control. A notice cannot require the recipient to act as a "detective" by investigating matters beyond their control. However, where the notice is issued to a company, the knowledge and information of a company will ordinarily be the knowledge and information of its officers. It may therefore be necessary for the company to make inquiries of responsible officers, employees and agents to comply with a notice.

Lastly, when drafting the notice be aware that recipients are entitled to interpret the notice narrowly. For example, if the notice calls for "employment records", records relating to a contractor may not be caught.

Does the notice clearly indicate the basis on which the issuer is entitled to require the provision of information and documents?

A notice should be clear on its face so that the issuing party has the power to issue the notice and to require the recipient to provide the requested information or documents. Even where there is no express requirement in the statute for a notice to set out the basis for the regulator's entitlement to require production, this may be implied as a condition in order for the notice to be valid, particularly if the statute creates an offence for non-compliance with the notice.

To satisfy this requirement, the notice must:

• be clear on its face that the issuer of the notice is empowered to investigate the matters relating to the notice;
• provide a sufficient description of the "matter" being investigated;
• show the necessary connection between the "matter" and the information and documents sought.

Is there power to issue the notice?

Investigative powers to issue a compulsory notice are typically broad. Regulators should consider the particular provisions of the statute that set out the circumstances in which a compulsory notice may be issued. Common examples in regulatory schemes include to determining whether there has been a contravention of the Act, for obtaining information or records for purposes connected with the administration of the Act, and generally for administering the Act and promoting its objects.

The notice should clearly identify the power which is relied upon to issue the notice. This power should be connected to the "matters" identified in the notice.

Does the notice sufficiently describe the "matter" being investigated?

The "matter" which is required to be identified in the notice will depend on the statutory scheme and the particular terms of the statutory provision which enables the notice to be issued. For example, if the statute provides that a notice may be issued in connection with a matter:

• that constitutes, or may constitute, a contravention of the Act, the notice should include a description of the nature of the suspected contraventions. In this case, the "matter" refers to the body of facts which constitutes or may constitute a contravention. Courts have recognised that, at an early stage of the investigation, the full body of facts may not yet be fully known to the regulator. However, if the facts identified in the notice are incapable of forming the basis for a contravention, the notice will be invalid.
• in connection with the functions and powers of the regulator, the validity of the notice will depend on whether the "matters" identified in the notice are relevant to the performance of those functions and the exercise of its investigative powers. This will depend on the particular function or power relied upon to issue the notice.

A notice is not required to provide such a level of detail in order to "plead" all of the facts necessary to constitute a contravention or which relate to the investigation. There is also no requirement to refer to every factual issue that may ultimately be brought in legal proceedings.

As the "matter" required to be disclosed in a notice is dependent on the requirements of the particular enabling legislation, care should be taken to avoid applying authorities which apply to different statutory regimes. In Mosaic Brands Ltd v Australian Communications and Media Authority [2022] FCAFC 79; (2022) 294 FCR 119, the relevant statute provided that a notice could be issued to compel production of information and records "relevant to … the performance of any of the ACMA's telecommunications functions" or "the exercise of any of the ACMA's telecommunications powers". The Full Court of the Federal Court criticised reliance on authorities which focused on the meaning of the word "matter" as applied in statutory schemes relating to a contravention or suspected contravention of a statute. The Full Court found that the ACMA's power to issue a notice was not limited to investigating contraventions of the law or proving an allegation but could be exercised in aid of the ACMA's wider investigative powers which were broad in scope.

Are the information and documents sought by the notice "related" to the matters identified in the notice?

It must be apparent from the notice that the documents and information sought are related to the matters identified in the notice. For example, in D'Anastasi v Environment, Climate Change and Water NSW [2011] NSWCA 374; (2011) 81 NSWLR 82, the NSW Court of Appeal found that a notice was invalid in circumstances where the recitals to the notice identified a set of incidents which occurred between February and March 2010, but many of the questions in the notice related to events which occurred before and after this period. The Court found therefore that the notice failed to indicate to the recipient the matter with which it was concerned.

Whether the notice discloses the necessary relationship is not to be assessed in an over-technical or hypercritical way. Courts have also recognised that, in the context of an investigation, the scope of the investigation may not necessarily be clear. The possibility that the documents sought by the notice may not ultimately be relevant to the investigation is not a basis for setting aside a notice.

Common objections to a compulsory notice

A recipient of a notice may challenge production of some, or all the information and documents sought by the notice. A common trap is where recipients of a notice may seek to apply concepts relevant to subpoenas to compulsory notices, particularly where the recipient is unfamiliar with regulatory schemes. We set out some common observations below:

• Legal professional privilege: Unless the relevant statutory scheme expressly abrogates the right to object to production on the basis of legal professional privilege, a recipient of a notice cannot be compelled to produce privileged documents. However, where legal professional privilege is claimed, regulators may ask the recipient to identify the basis for privilege to ensure that the claim for privilege is properly made.
• Confidentiality or commercially sensitive information: Unless expressly provided by statute, confidentiality is not a proper basis to object to compliance with a statutory notice. However, regulators are typically subject to secrecy provisions which prohibit regulators from sharing information or documents acquired in the exercise of their investigative functions.
• Self-incrimination: Some statutory schemes expressly state that a person is not excused from complying with a notice on the ground that the record or information might incriminate the person, although objections can usually be lodged that limit the use of the information or document in collateral proceedings.
• Concepts applicable to subpoenas/summonses: Statutory powers to issue compulsory notices are generally broader than the circumstances in which a subpoena or summons may be issued in court proceedings. Unlike subpoenas, there is no requirement for a compulsory notice to be issued for a "legitimate forensic purpose". As compulsory notices are issued in the context of an investigation, notices may be issued to ascertain facts which may merely indicate a further line of inquiry.