AWB Limited v Australian Securities & Investments Commission & Anor

[2009] HCATrans 331

[2009] HCATrans 331

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M93 of 2009

B e t w e e n -

AWB LIMITED (ACN 081 890 459)

Applicant

and

AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

First Respondent

ANDREW ALEXANDER LINDBERG

Second Respondent

Application for special leave to appeal

CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 11 DECEMBER 2009, AT 10.07 AM

Copyright in the High Court of Australia

MR R. MERKEL, QC:   If the Court pleases, I appear with my learned friend, MS S.B. McNICOL, for the applicant.  (instructed by Allens Arthur Robinson)

MR P.J. HANKS, QC:   Your Honours, I appear with MS Z.E. MAUD for the first respondent.  (instructed by Australian Securities and Investments Commission)

CRENNAN J:   Thank you.  Mr Merkel, does the recent much publicised litigation between the parties have any impact in relation to this application?

MR MERKEL:   Not as far as I am aware, your Honour.  The litigation is continuing and the discovery order is in effect and the issue is still a live one.  The only other matter I should update your Honours on is that as a result of the Federal Police discontinuing their investigation the appeal from Justice Gordon’s decision has now been dismissed by consent on the basis that the point is moot because there is no longer a possibility of disclosure.  So her Honour’s decision, which is in alignment with the Court of Appeal’s decision, will stand as authority for what her Honour had decided.  So it is a very live point.

CRENNAN J:   Yes, thank you.

MR MERKEL:   I am sorry, it is permanently stayed, your Honour.

CRENNAN J:   Permanently stayed, thank you.

MR MERKEL:   If the Court pleases, the two issues that we say arise and are matters appropriate for consideration by this Court are encapsulated by us at page 74 at the application book in our reply submissions.  Your Honour, can I just introduce the point by saying that this Court and the highest courts in other common law jurisdictions have accepted that the rationale for the common law right attached to privilege to even override other public interest considerations and not to be overridden except by clear words in the statute is the right of a client to apprehend that communications with that client’s solicitor will remain secret forever unless the client consents to disclosure or waives the right to secrecy.

The two decisions of Justice Gordon and the Court of Appeal fundamentally undermine that rationale for the existence of legal professional privilege and the consequence of those decisions, take for example in the present case, is that ASIC is entitled to use and disclose under its statutory regime material that is in its possession and may well be privileged and, in fact, ASIC acknowledges that at application book 71 in paragraph 39 of their submissions at line 8.  What ASIC contends we say is an accurate statement of the effect of the two decisions which are in issue in this case.

CRENNAN J:   I suppose that reflects orthodox principle, putting to one side for a moment Commissioner of Taxation v Citibank?

MR MERKEL:   When you say orthodox principle, your Honour, that assumes that the very principle we are seeking to raise in this Court is orthodox and that is whether the Calcraft v Guest, Ashburton (Lord) v Pape line of authority is correct.

CRENNAN J:   Yes.

MR MERKEL:   That line of authority I think Justice Heydon in his more youthful days in 1974 described in the Modern Law Review as the two cases being fundamentally in conflict.  Baker v Campbell, which has been the authority cited in the South Australian Supreme Court for some kind of recognition of Calcraft v Guest, when properly read probably would be seen to be the contrary.  There was more criticism and suggestion of qualification about Calcraft v Guest than recognition of it and Justice Gummow, when he considered it in Propend, really looked at it more as trying to reconcile the two.  It may be that what Calcraft v Guest is about is maybe a rule of evidence.  But what has happened in the present context is it has been unfolded by decisions in Trevorrow v State of South Australia by the South Australian Full Court and now in this Court of Appeal in Victoria as justifying use and disclosure and really, in effect, distinguishing ‑ ‑ ‑

CRENNAN J:   And the giving of secondary evidence, really.

MR MERKEL:   Giving secondary evidence, that, of course, is right, but secondary evidence, in effect, means disclosure of privileged information.  The real problem is this, your Honour, that Ashburton (Lord) v Pape has cascaded privilege into confidentiality.  I will take your Honours to a more recent decision of the Privy Council which does not accept the distinction that you lose common law privilege and then descend down to confidentiality which is fundamentally different and more restricted right.

CRENNAN J:   That is what Justice Mandie found, essentially, is it not?

MR MERKEL:   Yes, he found that you will cascade out of privilege into confidentiality.

CRENNAN J:   I think that is application book 17 at the bottom of paragraph 51 of Justice Mandie’s decision.

MR MERKEL:   Yes, your Honour.  Can I take your Honours back to the two propositions we wish to put at paragraphs 2 and 3 at page 74?  The first is to the effect, your Honours, that once communications that are privileged come into the possession of a person other than the privilege holder the privilege is lost or cannot be asserted except in a claim separate from the proceeding in which evidence might be tendered to protect confidentiality.  Then acting on that principle, then into the Citibank area, the court then determined that ASIC was entitled to use and disclose the content of privileged communications that came into ASIC’s possession from third parties without affording AWB a practical and realistic opportunity to assert and test the claim.

Your Honours, it is anomalous that the consequences, that is ASIC’s statutory investigative and coercive powers, are able to be exercised against third parties under a statute that does not abrogate privilege – and that has been common ground now as between parties and their litigation – that can lead to the loss of the substantive rights of the privilege holder. They are very substantive rights because the ASIC Act in 127 allows disclosure on an authorised basis to royal commissions, to government agencies, to the police, and that can occur without the privilege holder’s knowledge, consent or waiver and without the privilege holder being afforded an opportunity to assert privilege.

I wanted to take your Honours to two decisions which are in our authorities, which we had not referred to in our submissions, which undermine both legs of the reasoning of the Court of Appeal.  The first is at tab 2 which is B v Auckland District Law Society [2003] 2 AC 736. The relevant passages are at 761 to 762. This case involved an investigation by the law society into a firm of solicitors which had agreed to hand over privileged material on a limited basis to one of the investigators on the basis that it was not to constitute a waiver. A later investigator used the material unaware of that limited basis on which the information had been handed over and it eventually went to the Privy Council when the law society wanted its information back and the law society contended that there had been a disclosure to a third party and they were entitled to use the information and were not prevented from doing so.

The first part of the judgment picks up very much the reasoning in Daniels that the relevant statute does not abrogate privilege, but on the question of limited waiver there were two arguments, both of which were really before the Court of Appeal.  At paragraph 66, starting midway through the paragraph, Lord Millett delivering the judgment for the Privy Council said:

Once disclosure has occurred –

this is the argument –

it is no longer a question of privilege.  Ex hypothesi a right to resist disclosure cannot be invoked against the person to whom disclosure has already been made.  If he is to be restrained from making use of the information, it must be on the ground that the information is confidential.

Then at paragraph 68 his Lordship said:

The society’s argument, put colloquially, is that privilege entitles one to refuse to let the cat out of the bag; once it is out of the bag, however, privilege cannot help to put it back.  Their Lordships observe that this arises from the nature of privilege; it has nothing to do with waiver.  It does not follow that privilege is waived generally because a privileged document has been disclosed for a limited purpose only.

The second argument that the society has put at paragraph 69, which again echoes the reasoning of the Court of Appeal:

The society argued that, once the documents were produced to Mr Ennor, they ceased to be privileged.  Their Lordships consider that this is playing with words.  It confuses the nature of the documents with the rights to which the arrangements with Mr Ennor gave rise.  The documents are privileged because they were created for the purpose of giving or receiving legal advice.  If they are not produced voluntarily, production cannot be compelled.  If they are produced voluntarily, the right to withhold production no longer attaches to them.  In that sense the privilege may be said to be lost.  But they are the same documents, and it is not inappropriate to describe them as privileged. Their inherent characteristics are the same.  The policy which protected them from unauthorised disclosure is the same.  The case is still a cat.  It can be put back in the bag.

Then at paragraph 71 his Lordship said:

The fact that the claim to recover the documents is made on equitable grounds does not mean that it must yield to an overriding countervailing public interest.  The documents are both confidential and privileged.

This is, of course, despite their disclosure –

Whether a claim to the return of such documents is based on a common law right or an equitable one, the policy considerations which give rise to the privilege preclude the court from conducting a balancing exercise.  A lawyer must be able to give his client an unqualified assurance, not only that what passes between them shall never be revealed without his consent in any circumstances, but that should he consent in future to disclosure for a limited purpose those limits will be respected.

That is fundamentally inconsistent with the two main legs of the Court of Appeal’s reasoning here.  The second aspect of the Court of Appeal’s reasoning which I might call the Citibank point was considered by the Supreme Court in Canada in a case at tab 3.  Unfortunately, one of the pages were not included.  Could I hand up to your Honours page 242.

CRENNAN J:   Thank you.

MR MERKEL:   This case concerned a law which gave search powers and protected privilege in a very limited way.  Relevantly for present purposes, it gave the person against whom the power was exercised a limited right under strict time limits to object and the issue, constitutionally, was ‑ ‑ ‑

CRENNAN J:   So, time to consider?

MR MERKEL:   To claim privilege.

CRENNAN J:   Yes, to claim privilege.

MR MERKEL:   It was very limited, very strict, but there was an opportunity afforded but it was to the privilege keeper, the person against whom the power was exercised, not the privilege holder.  The question, relevantly for this purpose, is whether that gave the privilege holder, the person entitled to claim privilege, a right and if it did not, whether that limited right to the keeper was unreasonable.  In a statutory and constitutional context it is different but in terms of principle the distinction that Justice Mandie drew between this case and Citibank was Citibank was limited to giving a person against whom a power is exercised a right to claim privilege and that had been afforded to the numerous witnesses in the present case.

His Honour, on that ground and one other which I will come to, found that the right to give the privilege holder a reasonable opportunity to claim and assert privilege is not one that exists under the statutory regime.  We say that their Honours in a majority plurality judgement of six of the judges dealt with that point.  Can I take your Honours to page 242.  This is Justice Arbour delivering the judgment which the five other judges concurred.  At paragraph 38 it says:

Does s 488.1 more than minimally impair solicitor‑client privilege?  It is my conclusion that it does.

39       While I think it unnecessary to revisit the numerous statements of this Court on the nature and primacy of solicitor‑client privilege in Canadian law, it bears repeating that the privilege belongs to the client and can only be asserted or waived by the client or through his or her informed consent . . . In my view, the failings of s 488.1 identified in numerous judicial decisions and described above all share one principal, fatal feature, namely, the potential breach of solicitor‑client privilege without the client’s knowledge, let alone consent.  The fact that competent counsel will attempt to ascertain the whereabouts of their clients –

and this was, again, a solicitor’s case, like Citibank –

and will likely assert blanket privilege at the outset does not obviate the state’s duty to ensure sufficient protection of the rights of the privilege holder.  Privilege does not come into being by an assertion of a privilege claim; it exists independently.  By the operation of s 488.1, however, this constitutionally protected right can be violated by the mere failure of counsel to act, without instruction from or indeed communication with the client.  Thus, s 488.1 allows the solicitor‑client confidentiality to be destroyed without the client’s express and informed authorization, and even without the client’s having an opportunity to be heard.

Then in the next paragraph about a third of the way down her Honour says:

Therefore, under this statutory scheme, reasonable opportunity has to be provided to the privilege keeper, but not to the privilege holder, to ensure that the privileged information remains so.  This positive obligation on counsel shifts the burden of guaranteeing the respect for Charter rights from the state to the lawyer.

Now, we say common law rights can be substituted for the words “Charter rights” but the same principle very much applies here.  Then at the end of her judgment on this point at 247 at the top of the page her Honour said:

In short, in my opinion, s 488.1 fails to ensure that clients are given a reasonable opportunity to exercise their constitutional prerogative to assert or waive their privilege.  Far from upholding solicitor‑client confidentiality, s 488.1 permits the privilege to fall through the interstices of its inadequate procedure.

Then her Honour quotes Justice Cory in an earlier Canadian Supreme Court case where his Honour said:

“Unfortunately it would seem that whenever the Crown is granted statutory power that can be used abusively then, on occasion, it will indeed be used abusively.  The protection of basic rights should not be dependent upon a reliance on the continuous exemplary conduct of the Crown, something that is impossible to monitor or control.”

Now, we go beyond that in the present case.  ASIC has asserted in that paragraph I referred your Honour to to a right to use privileged information.  So it is not even a matter of exemplary conduct.  The consequence of the decision of the Court of Appeal in this case is that it is entitled to in circumstances where AWB has not only given no consent and there is no waiver but is seeking to uphold its right to claim privilege.

All of that occurs simply because of the fortuitous circumstance that the witnesses are AWB former or present employees or AWB former or present solicitors but not AWB.  So that, in effect, what has happened here is, yes, ASIC has given a privilege keeper, if that is what they are appropriately called, but really in this case it is even one step further down the line, as the privilege keeper in Lavallee and the privilege keeper in Citibank was able to be seen as an agent without authority to assert or waive privilege but at least an agent of the privilege holder.  When these individuals are called up before ASIC, they are not agents of AWB in any sense but they are holders or custodians of secret information.

CRENNAN J:   They were all former employees, were they?

MR MERKEL:   There were numerous of them, your Honour.  Many were former, some may be current, many were former solicitors and some were current.  There were external and internal solicitors.  So the point is not in any sense merely a hypothetical point.

CRENNAN J:   Yes, I see.

MR MERKEL:   We say that his Honour’s approach to distinguishing Citibank – that is Justice Mandie – is fundamentally in conflict with the decisions to which we have referred but also to two other appellate court decisions in Australia, Question of Law Reserved – I will not take your Honours to them – that is in tab 4, and JMA Accounting, tab 5, were decisions of the Full Court of the Supreme Court in South Australia and also the Full Court of the Federal Court.  They qualified Citibank, although in fairness to the Citibank, four Citibank judges took it to the authority for something wider than it really is.  In Citibank the real question was whether the statutory power was qualified by not being empowered to override privilege without giving a reasonable opportunity to be heard.  The point never was raised as an issue that Citibank was a privilege keeper versus a privilege holder and it was not in issue that there would be privileged documents there. 

The South Australian Supreme Court had this odd case where it was common ground there were no privileged documents, but a search warrant was sought to be said to be invalid because the person, the subject of the warrant, was not given a reasonable opportunity to claim privilege.  So, understandably, his Honour Chief Justice Doyle was not prepared to say that there was a universal obligation, irrespective of the circumstances, to afford a reasonable opportunity to claim privilege, but the point we make, and we need go no further than this, is that the statutory investigative and coercive power of ASIC are restricted in this one narrow way.  We need to go no higher than that. 

This is consistent with all three Full Court decisions, apart from the Court of Appeal decision, and that is that the statutory authority has no power to override privilege or to assert or treat privilege as lost or any of the rights of the common law privilege holder as lost unless and until the privilege holder has been afforded a practical and reasonable opportunity to assert privilege.  That does not mean the search power or investigative power is invalid, therefore we override the criticism of Citibank, which we would say is a little unfair but does not matter, in JMA and in Question of Law Reserved, but it is in full line with all three court decisions that there is a statutory restriction whether it is in the ability to issue the warrant or in the ability to execute it.  In this case it does not matter.  It is the execution of the power by which privileged information may have been obtained which is qualified by that principle.

CRENNAN J:   You are contending for a practical and reasonable opportunity to consider the documents so as to make the claim if it is available.

MR MERKEL:   Yes, and in a manner which in no way can undermine all of the investigative rights and confidentiality which ASIC assert, independent counsel, and the whole procedure can be agreed to which ensures that there is no unfair advantage gained, confidentiality regimes which are becoming more commonplace, but there is no realistic reason why that opportunity should not be afforded.

BELL J:   All of this goes to your third proposition, that is, your third special leave question, application book 54.  I am wondering whether the first two special leave questions are really raised in the circumstances of this case.  It remains very much at issue, as I understand it, whether there is a single privileged communication in the transcripts or the voluntary statements.

MR MERKEL:   When you say raised, your Honour, it can only be raised in this case, because if there is a privileged document, then no one challenges the right of AWB to assert confidentiality and claim injunctive relief, unless I have missed your Honour’s point.

BELL J:   I understand your point in terms of your special leave question number 3, but the broader issue of Calcraft v Guest might be better raised in a case where there was a privileged communication, one would think.  That is the point I am raising with you.

MR MERKEL:   Except for this, your Honour, that the Calcraft v Guest point was fundamentally a stepping stone in the reasoning of Justice Mandie to get him to the conclusion he arrived at because his Honour distinguished Citibank but his reasoning started with privilege being lost.  If your Honour goes to paragraph 43 at page 40.

CRENNAN J:   Paragraphs 43 and 44, really, is the nub of his reasoning.

MR MERKEL:   Yes, 43 and 44, then Trevorrow, which was a privilege lost on Calcraft v Guest grounds of disclosure to a third party.  That is mentioned in the last line of the citation at paragraph 46 at page 42 of the application book.  Then his Honour reverts back to privilege being lost in the middle of paragraph 49 and it is central to his Honour’s reasoning.

BELL J:   I am not sure about that.  At 50 he starts by saying, “With that background” in mind “it is necessary to refer to the prime” contention.

MR MERKEL:   Your Honour, the way we put it is Calcraft v Guest was the stepping stone to say that disclosure to a third party means you have lost the right of the privilege holder and that was very much the reasoning of Justice Gordon to say that ASIC does not even have to determine whether it is holding privileged documents.  Then in respect of the stepping stone in paragraph 51, the reasoning then deals with Citibank, but the principle his Honour contends for at the finish of paragraph 51 at page 44:

The principle cannot extend that far, in my view, because the legal position is, as I have said, that once such documents come into the possession of another party –

and that is the Calcraft v Guest point –

the privilege is lost or cannot be asserted –

Your Honour, there may be an argument as to whether the two points intersect or they are stepping stones, one to the other, but we say they are both raised. It is important to accept in the present case it is not disputed by ASIC that the material may well contain privileged communications. The point raised in the case before Justice Gordon was whether, under that statutory regime of disclosure under 127 of the ASIC Act, the decision‑maker was required to determine whether there was privileged material and her Honour said no, basically, on the Calcraft v Guest line of authority. 

So that AWB was shut out from having a decision made on whether there was privileged material that would then take it to the Citibank point.  It would then be able to say, “We must have an opportunity to claim privilege in respect of it and argue about it”.  So that, in effect, the statutory circle set up by ASIC – and this applies to all investigative bodies, there is nothing unique about ASIC’s investigative powers – is that once they obtained privileged information from some person other than the privilege holder they are free to use and disclose that material without affording the privilege holder an opportunity to be heard.  We say that is the combination of the two principles but for our purposes it matters not.  Both really need to be considered because they raise a question that we say calls for consideration in this Court. 

The irony, ultimately, of course, as was both said before the primary judge and the Court of Appeal, the outcome of these decisions, the decision in the Court of Appeal and Justice Gordon, not only is tensioned with other Full Court decisions and courts of the highest authority overseas, but it puts AWB and other persons in its position in the classic catch‑22, yes, you may claim privilege or confidentiality in a breach of confidence action but you cannot find out whether the information contains any of your privileged communications.  We say that is a most unsatisfactory state of the law and Chief Justice Doyle even in Question of Law Reserved said it is far from satisfactory.  The courts have struggled to deal with how you reconcile these principles.  This Court has never really considered either and we say it is matter of enormous implication across the judicial system both on common law privilege and on statutory investigative powers.

CRENNAN J:   Thank you, Mr Merkel.  Yes, Mr Hanks.

MR HANKS:   Your Honours, when the forensic setting in which this question was presented is understood we say it can be seen that the fundamental points that our friends wish to agitate are not raised.  The critical question raised by the application for special leave is whether the primary judge fell into error when he found an injunctive relief against ASIC in effect to interpose the present applicant between ASIC and the other party in the litigation pursuant to a discovery or order and did so on the basis that the Citibank Case established some cause of action that would found injunctive relief or was the Court of Appeal correct when it said that such relief as the present applicant might be entitled to comes from the law relating to the protection of confidentiality.

CRENNAN J:   This is all in the setting that the applicant is a stranger to the litigation?

MR HANKS:   That is right, they are a stranger to the litigation.  Of course, they were not a stranger to the litigation before Justice Gordon.  They were the moving party in that litigation.  Perhaps I could just draw your Honour’s attention to one point that Justice Gordon made in that case.  It is an obvious point of history.  Your Honours, it is at tab 1 in our book of authorities.  Your Honours will see that at paragraph 33 Justice Gordon referred to the obvious fact that at the time of what our friends now say are the possible disclosures to ASIC of privileged material, the putative disclosures, the present applicant took no step to review the decision of the investigator to refuse to permit it to be represented at the examinations and it would be our position that if the Citibank principle is to have any operation, that would have been the appropriate occasion to test it.

CRENNAN J:   Do you say this amounts to waiver?

MR HANKS:   No, your Honour, we do not say that, but we say that the Citibank principle does not found the injunctive relief that the primary judge, the trial judge ordered in this case.  What it might do, and that, of course, might be a matter of some controversy because it is by no means a universal view amongst the intermediate appellate courts that had looked at Citibank, but what it might do is ‑ ‑ ‑

CRENNAN J:   That has also been subject to some criticism, has it not?

MR HANKS:   Yes, it has, indeed, but it might found some constraint on the investigative agency at the point of reception of the putative privileged information, but not the relief that the primary judge, Justice Robson, ordered in this case.

BELL J:   Why, as a matter of principle, should that be so?  Why should not the privilege owner have an opportunity to consider the position?

CRENNAN J:  Later.

MR HANKS:   Your Honour is asking me, I perceive, a hypothetical question.  We say that the time at which that is to be exercised is at the time when, to the knowledge of the privilege owner, the agency proposes to collect the information.

CRENNAN J:   I think Justice Bell is asking you why should time be so critical?  Why is there a once only opportunity as a matter of principle?

MR HANKS:   As a matter of principle, we would obviously derive considerable support from the propositions that we have referred to in our summary that privilege, although a fundamental principle of the common law, is not the foundation for any cause of action and we derive that from, for example, Justice Gummow’s observations in Propend, from the Victorian Court of Appeal’s observations in Cowell and from the Full Court of the South Australian Supreme Court in Trevorrow.

KIEFEL J:   Is this to see privilege as an immunity and not a right?

MR HANKS:   That is right, your Honour.  That is our position.

KIEFEL J:   But then you have a right to receive the immunity.  It is question of how you cast it.

MR HANKS:   That is right.

KIEFEL J:   There is a right underlying the ability to assert an immunity.

MR HANKS:   Yes, and what the primary judge has done here is go beyond that, we say.  He has gone beyond the right to assert the immunity which, given the history of this issue as between the present applicant and the first respondent which goes back some years, that immunity should have been asserted at an earlier stage and it was not.  No attempt was made to vindicate the immunity or vindicate what is said to be the principle derived from Citibank and consistent with what we say is very clear authority, it recognises this distinction, the authorities I have just referred to, but we could perhaps focus only on what Justice Gummow said in Propend, it cannot be used as the basis for, as it was here, the grant of relief in injunctive terms to allow the present applicant to stand between the first respondent and the second respondent.

What we say is, and this is what Justice Mandie concluded, for ASIC to regain control of any privileged communications which might have been included in the information provided to ASIC it has to rely on the equitable claim to protect confidentiality.

CRENNAN J:   That would be a right to bring a cause of action, in that context.

MR HANKS:   It is, your Honour, and it is, we would say, with respect, quite clearly established by the authorities that that is the basis on which it should be done.  Your Honours will see that Justice Mandie nodded in that direction at the end of paragraph 51 on page 44 in the application book.  Then, if your Honours go down to paragraph 53, his Honour noted that there was some resemblance in this application to an application for pre‑trial discovery, which would be of the kind that would then, perhaps, provide sufficient information to found an application for breach of confidence, but that was not the form in which it was brought.  It was brought in an entirely different form.  It was not the way in which the primary judge dealt with it.

So, in our submission, this is nothing more than an entirely orthodox application of those principles where we might say Justice Gummow identified them quite clearly in the Propend Case, but they have been acknowledged regularly since then, the distinction between the privilege operating as immunity, on the one hand, and operating as the basis for some cause of action on the other.  Could we say something about the points that our friends have raised in their reply.  I will go to the reply.  I believe it starts at page 73 in the application book.  Our friends refer to the paramountcy in paragraph 1 of the privilege and we do not, of course, quibble with that.  The public interest that does support this doctrine of legal professional privilege is paramount.  It overrides competing public interests.

CRENNAN J:   You accept, do you, also, as Mr Merkel indicated, that it is certainly possible that some of these documents were subject to privilege?

MR HANKS:   I think the parties have a – there is a wonderful symmetry about what they accept.  My client accepts that they may or, to put it another way, I think as it was put below, my client cannot assert that it does not contain privileged information and on the other hand, the applicant cannot assert that it does. 

CRENNAN J:   That is the reason for wanting, as the trial judge said, the practical and reasonable opportunity to expect.

MR HANKS:   That may be their motivation, your Honour, yes, but they cannot assert that it does and we cannot assert that it does not.  That is what I mean by symmetry.  Your Honour would have noted that Justice Robson referred in some detail to the findings made by Justice Gordon about the steps that were made at the time of the collection of the information to at least minimise the risk of disclosure, but I think it is accepted that a witness might inadvertently, innocently, disclose information it had about some privileged character not knowing that it was privileged.

The privilege holder would be in a better position to do that and that is why we say that if there is a right of the kind identified in Citibank, the right to a reasonable and practicable opportunity to assert the privilege, then it has to be asserted at that time.  It could have been tested but it was not tested.  Coming back to the point about paramountcy, it does not mean, of course, that the privilege cannot be lost.  Although it is a paramount principle, it is not absolute and we have in mind there some observations made, for example, by Justice Dawson in Baker v Campbell.  Your Honours would, I think, be generally familiar with those observations.

Could I go to paragraph 2 of the reply.  Our friends have here set out in summary form what the Court of Appeal concluded or determined and, in our submission, that does not accurately reflect the Court of Appeal’s determination.  There was no determination that – and this is, as we understand it, a reference to paragraph 51 of the Court of Appeal’s reasons for judgment, or Justice Mandie’s reasons for judgment – ASIC was entitled to use and disclose the content of any of AWB’s privileged communications that had been provided to it by third parties.  What his Honour said was that the right to claim immunity from compulsory production arises at the time of the production it sought. 

Secondly, and it is a corollary, perhaps, or an alternative way of putting that point, as an incident of the doctrine of legal professional privilege the right to a practical and realistic opportunity to claim the privilege arises at the time that production is sought.  Because legal professional privilege – and this we think is the third proposition – is a right to refuse compulsory disclosure of information, it has no role to lay once the information has been disclosed except in the context of a claim in equity to the preservation of confidentiality.

Fourth, we think his Honour concluded that as an incident of the immunity afforded by legal professional privilege, the right to a practical and realistic opportunity to claim privilege has no role to play when there has already been disclosure.  That, we think, is what the Court of Appeal concluded.  Could I go to paragraph 3 of the reply.

BELL J:   Can I just understand one thing about the statutory scheme and the documents that are said to contain the communications.  They are in two categories.

MR HANKS:   Yes.

BELL J:   One category involved documents that were the subject of compulsory production, is that so?

MR HANKS: One category, and I think I am right in this, your Honour, are compulsory examinations under section 19 of the ASIC Act.

BELL J:   The statutory scheme is such as to recognise legal professional privilege?

MR HANKS:   Well, that is not something that we need to consider at this stage, your Honour.  Your Honour will recall that there has been a decision to the effect that so far as a parallel power given to the ACCC is concerned, that parallel power does not override legal professional privilege.  My client has never conducted itself in a way that is inconsistent with that proposition but it has not formally accepted that that is the case.

BELL J:   But that is not in issue?

MR HANKS:   No.  That is our position, your Honour.  It is not in issue.

BELL J:   Yes.  When we are looking at the equitable position in relation to some of these communications, we are not looking at the communication having been made in circumstances of confidence but rather pursuant to a statutory compulsive regime?

MR HANKS:   No, not entirely, your Honour, because some of the communications were made voluntarily.

BELL J:   Yes, I understand that.  That is the second set of – there may be some significance.

MR HANKS:   There may indeed.  We would say that those persons who made those communications would have an expectation that the communications would only be used for a particular purpose and there might be some degree of confidentiality associated with the communications.  As part of the general investigative powers that ASIC has, and the general powers are dealt with in section 13 of the Act, it did collect witness statements from particular individuals.

CRENNAN J:   There would have been statutory notices in relation to requiring witnesses to appear and requiring production of documents, I assume?

MR HANKS: Indeed. Yes, your Honour. That is under section 19(2). It is essentially the authority that is given to ASIC, by written notice to require a person to give reasonable assistance or to appear on oath and answer questions. That is all dealt with in section 19.

BELL J:   And there is a statutory obligation on ASIC to protect the confidentiality of material that it assembles in the course of its investigation?

MR HANKS:   That is so, your Honour, section 127, as we understand it, yes.

BELL J:   Yes.

CRENNAN J:   And then all the compulsory processes are done in the context that there is no statutory abrogation of privilege?

MR HANKS:   As I say, your Honour, there is nothing in the statute that declares that privilege is set aside.  Now, whether it is implicit or whether it ought to be construed in the way that our friends put it, namely, that it does not set aside the privilege, is not a matter that was really debated either before Justice Gordon or before Justice Robson, as we understand it.

BELL J:   At the point where the statutory authority, pursuant to the powers that it has governing its use of information that it has obtained compulsorily, determines to make that available to some third party, why at that point does not an issue arise on the part of a privilege owner in relation to a right, if you want to characterise it that way, to determine whether or not that disclosure will involve disclosure of privilege material?  It may be perfectly happy to abide by the statutory scheme taking effect and ASIC obtaining access to material pursuant to its powers, but at the point when it is on notice that there will be a disclosure under – I think it is section 127 – it may take a different view.  What is wrong with that?

MR HANKS:   It may take a different view, your Honour, and, indeed, just to track back to what occurred in this in the present – the background to the present case, indeed, the litigation before Justice Gordon was an attempt by AWB in a judicial review setting to challenge the validity of the decision said to have been made by ASIC to make a disclosure under subsection (4) to the Australian Federal Police of information collected in the course of the examinations and the taking of the witness statements. 

One of the grounds on which the challenge was brought was a failure to take into account a relevant consideration, namely, whether the material included material that was subject to AWB’s LPP and, as I read her Honour’s judgment, her Honour said that that was considered, albeit at a relatively uninformed level – necessarily uninformed level by the delegate – but, as your Honours could, I think, readily grasp, it was a forensic debate that was conducted in the judicial review context and therefore somewhat constrained as to whether (a) it was a relevant consideration, that is, one demanded by the statute in the conventional Peko‑Wallsend sense and,

secondly, whether it had been taken into account by the decision‑maker.  But her Honour did not go so far, did not assert that there was a right at that point in AWB to demand that it be given access to the documents. 

One of the difficulties with asserting such a right is, of course, that there is an element of statutory secrecy about the inquiry that is undertaken and that comes out of section 22 which says that examinations are to take place in private and there is authority to the effect that interposing a third party in the investigation process would be inconsistent with the efficacy of the investigation process.  Those are the matters I wanted to raise – or at least to answer Justice Bell’s questions – about the statutory context.  I can see the red light.  There is perhaps one other point that I need to make, if I could. 

If I could go to paragraph 6 of our friend’s reply, which is on page 76, where our friends identify an alternative approach. In our submission, this is not the basis on which the case was conducted either before the primary judge or before the Court of Appeal, remembering that our client, the first respondent, was subject to an order by Justice Robson that it make discovery of the section 19 transcripts and the witness statements. Now, the present applicant did not argue in the Court of Appeal that the order made by his Honour that AWB have access to those documents before they were produced on discovery could be supported by some requirement that there was a requirement to give procedural fairness of the kind involved in Johns before the discovery order was obeyed, and neither the primary judge nor the Court of Appeal considered the extension of Johns to the situation where a statutory body is the subject of a discovery order.  So that alternative approach, in our submission, is not one that is properly raised in this matter.  If your Honours please.

CRENNAN J:   Thank you, Mr Hanks.  Yes, Mr Merkel, anything in reply?

MR MERKEL: Yes, your Honours. With respect to my learned friend, it is not correct to say that the abrogation of privilege issue under the ASIC Act has not been determined. In paragraph 23 of Justice Gordon’s judgment, her Honour found that there was no abrogation of privilege and it was one of the central issues in the case because if there was an abrogation of privilege, we had no right to say privilege had to be considered and her Honour found there was no such abrogation. So that, as between the parties, is not an issue and has never been an issue.

On the last point my learned friend put about the natural justice point, of course, on the reasoning of the Court of Appeal there is no need to accord natural justice because no right is interfered with because privilege is lost.  Our second special question was, we were not given an opportunity to deal with the privilege lost point.  That came up subsequently.

CRENNAN J:   What about Mr Hanks’ point that there was a right time and moment?

MR MERKEL:   Your Honour, a right time and moment to review the decision to refuse counsel to attend the examinations, that is what he puts on some discretionary basis.  Neither Justice Robson nor the Court of Appeal or Justice Gordon has suggested there is any discretionary reason that could disqualify the claims that have been put forward in the present case.  We say in the passage where her Honour referred to a right of review she made it pretty clear that it did not stand much prospect of success and we do not assert a right to attend all examinations, irrespective of whether privileged material is or is not disclosed.

Our right is simply, and the one that we really assert at the bottom line here, is that ASIC’s powers are qualified by not having a power to disclose or use privileged information at least until we have had an opportunity to be heard.  We say my learned friend has no answer to that.  It is the issue upon which this case turned before Justice Robson and his decision could be supported on Citibank ground or on a Johns ground.  It never need to arise before the Court of Appeal because their Honours found that privilege was lost and there was only a residual right, therefore there was no right, privilege or legitimate expectation overridden.

CRENNAN J: I suppose you would always say that under section 19 the disclosures made thereunder are for limited purposes?

MR MERKEL:   Yes, although under 127 those purposes mushroom out to virtually the whole State and Federal Government apparatus and that was why Justice Gordon’s decision has enormous implications because, as my learned friend frankly admitted, privileged or unprivileged communications can be used and disclosed under that statutory regime without the privilege holder knowing, consenting or having waived, and that is exactly what the Canadian Supreme Court said is a fatal flaw in the Canadian regime.  We say that this Court ought to consider that issue before this expansive power is granted, not just to ASIC but basically to the whole statutory investigative regime where privilege is not abrogated.  We say that my learned friend’s discretionary reasons have not found favour anywhere and have not really been put as a disqualifying factor. 

Can I make this last point, that the issue before Justice Robson is one of the only times this issue can arise as it was when it arose before Justice Gordon.  It is only when AWB become aware there is going to be any disclosure outside the secrecy regime that it can become aware that its

privileged information may be disclosed.  It is the only time at which it can act.  It did act before ASIC and Justice Gordon’s decision was the subject of appeal.  It did act before Justice Robson.  His Honour found, as he was entitled to do, on the authorities that it was appropriate not to allow discovery except by affording the privilege holder the very right that we say authority would countenance, but also on the basis that ASIC lacks the power to have that information and therefore to disclose it which would be a basis for us to contend that the injunctive relief, whatever it might be, in support of our privilege can be asserted and we say that that is what is being denied in the present case.  If your Honour pleases.

CRENNAN J:   Thank you, Mr Merkel.  There will be a grant of special leave in this matter.  Do counsel agree this would be a one day case?

MR MERKEL:   Yes, your Honour.

MR HANKS:   Yes, your Honour.

CRENNAN J:   Thank you.  We will adjourn for a moment to reconstitute.

AT 11.02 AM THE MATTER WAS CONCLUDED