CTC Resources v ASX

[2000] HCATrans 467

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P18 of 2000

B e t w e e n -

CTC RESOURCES NL

Applicant

and

AUSTRALIAN STOCK EXCHANGE LTD

Respondent

Application for special leave to appeal

GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON FRIDAY, 27 OCTOBER 2000, AT 11.21 AM

Copyright in the High Court of Australia

MR M.J. McPHEE:  If it please your Honours, I appear on behalf of the applicant.  (instructed by Michell Sillar McPhee)

MR W.S. MARTIN, QC:  If it please your Honours, with my learned friend, DR H.J.T. SHOMBEE, I appear on behalf of the respondent.  (instructed by Mallesons Stephen Jaques)

GUMMOW J:   Yes, Mr McPhee.

MR McPHEE:   Your Honours, the application this morning is for special leave to appeal against a refusal of the Full Court to order an inspection of documents which had been discovered in this action.

CALLINAN J:   Did you want that or did you want the court to look at the documents?  I thought in the end that the relief you wanted was that the court look at the documents and then decide whether there was any obligation to discover them.

MR McPHEE:   I did, yes.  Thank you, your Honour.  When I said “inspect”, that is what I meant, “inspect by the court.”

CALLINAN J:   Yes.

MR McPHEE:   As you will see from the papers, there had been a previous Full Court order allowing an appeal from the Master, the Master having refused an order for production for inspection by the party of the documents and the Full Court order, which appears on page 29 - this case has been before the Full Court twice – this is the original order when the issue first arose and this is in the judgment of the Full Court, I think.

CALLINAN J:   The effect of the order was for further and better affidavit, really, was it not?

MR McPHEE:   Yes, but it was also in subparagraph (e), I think.  Firstly, (a), is the order that they provide a list of documents that “are directly relevant”.  There was an argument about whether documents which were directly or peripherally relevant should be included and that was honed down to documents that “are directly relevant”.

CALLINAN J:   Would you say that there is no issue about relevance ‑ ‑ ‑

MR McPHEE:   No, and we even went so far as to define what we meant by “direct relevance”, and I think I am at one with friends on this, there are documents that are probative, that will prove or disprove the issue.  In
subparagraph (f) on page 30:

In so far as there may be documents in respect of which only part is claimed to be privileged, those parts which are not subject to privilege claims are to be made available for inspection –

and then (g):

If claims for privilege are based on the need not to disclose the identity of informers or investigators, or confidential methods of investigation, those parts of the documents that reveal such material can be concealed from the Plaintiff.

Now, the further affidavit was supplied and when the documents were delivered, apart from a few names and addresses and incidental matters, they were completely blanked out.  They were blanked out in two parts, one, which is described accurately in the judgment as “greyed out”, is that documents were said to be privileged but peripherally relevant and others that were “blacked out” - at my count, there were 24 passages in these documents, including 12 whole pages of blacked out said to be directly relevant documents.

GUMMOW J:   Yes, well, I understand you are malcontented about that.  What is the statement of principle, if any, by the Full Court that you join issue with?  Is it paragraph 29 and 30 of their reasons or ‑ ‑ ‑

MR McPHEE:   Yes, it is on page 39, paragraph 28.

GUMMOW J:   And over to 40.

MR McPHEE:   Page 40, yes.  As I understand the decision in Adelaide -by Justice Debelle, Adelaide Brighton Cement, it was, that once relevance is established, to do the balancing exercise required by Sankey v Whitlam, the Court will inspect.  In Western Australia in this decision - and that is set out at line 15 in paragraph 28 in Adelaide Brighton Cement:

once relevance is established “the court should without more inspect the documents for the purpose of weighing the competing public interests”.

That case is distinguished from the Western Australian position on three grounds which are set out in that paragraph 28.

GUMMOW J:   Then what are they, first?

MR McPHEE:   The first one was that you have to “have some concrete ground for belief” – this is at line 20 – which takes the case beyond a mere fishing expedition.  Now, yes, of course, I agree with that, but that is not the situation in this case.  We have matter that is materially wrong.

CALLINAN J:   Well, it is not really a fishing expedition because relevance is established.  That is your point, is it not?

MR McPHEE:   Yes.

CALLINAN J:   That to refer to it as a fishing exercise is really not accurate.

MR McPHEE:   Or even, yes, in my submission, with respect, and ‑ ‑ ‑

CALLINAN J:   You only fish to look for things to see whether there is something relevant there.  Relevance here is established.

MR McPHEE:   Yes.  I would go further, as I submitted to the Full Court, it is not mere relevance which might lead to information, it is direct relevance.  The second ground at line 30 ‑ ‑ ‑

GUMMOW J:   I am a bit worried about this.  Is there, as you see it, any particular eccentricity in the Western Australian Rules?  Are they….. generally elsewhere?

MR McPHEE:   Yes, they are set out on page 25 in the Master’s judgment.

GUMMOW J:   And, in particular, do they look very different from the South Australian ones that Justice Debelle was dealing with?

MR McPHEE:   Well, I think the difference pointed out by the Full Court was that there is an obligation, an onus, in the – I am sorry, it is in the paginated page 4, which is ‑ ‑ ‑

GUMMOW J:   Yes, I have it.

MR McPHEE:   There is an onus on the person challenging the discovery to show that the claim to privilege is “unfounded or mistaken”.

CALLINAN J:   Do the rules define privilege to include public interest immunity?

MR McPHEE:   Not that I am aware of.  On the face of it, I think this is included – the privilege here is all encompassing including other types ‑ ‑ ‑

CALLINAN J:   Well, people refer to public interest immunity as privilege but I do not know whether that is necessarily correct.

MR McPHEE:   Yes.

CALLINAN J:   Is there a question whether the rule even applies to public interest immunity?

MR McPHEE:   Well, in my respectful submission, there is, because my submission is that the question of whether the public interest immunity applies or not was dealt with by the first Full Court order.  That argument was dealt with there.  So that the defendant was ordered to discover the documents and to make those that are directly relevant available for inspection.  So what we really have here, in my submission, is simply an application for production.  When the defendants seek to comply with the order and block out names and addresses, but do so by taking out whole passages and pages, in my submission, it goes beyond a claim for privilege, it is simply a question of whether or not the court order was complied with.  But the Full Court has founded its decision, as I understand it, on the basis that ‑ ‑ ‑

GUMMOW J:   The actual text they were construing appears at page 4.  What it really turns on is those words “the Court may inspect”, does it not, in Order 26 rule 12(2)?

MR McPHEE:   Yes, and this is where I think, with respect, your Honour, the Full Court’s argument became a bit circular.  If I can take you back to that page 39, which was the third ground of distinction with the Adelaide Brighton Case, which starts on line 39:

Finally, this approach does not give sufficient weight to the pronouncement of Gibbs ACJ in Sankey, at 46, that “once a court has decided, notwithstanding the opposition of a Minister, that on balance the document should probably be produced” private inspection may occur.

CALLINAN J:   But could I just ask you this:  there is no doubt that under the rule there is a discretion, the court has a discretion?

MR McPHEE:   Yes.

CALLINAN J:   Well, would not the court - and there is no question about relevance.  So, would not the court really need some evidence, and I am using that in a broad sense, or some reason to suppose that the claim of public interest immunity has not been properly, or may not have been properly, taken, before the court should exercise its discretion to inspect the documents?  Should there not be something to indicate that more than mere relevance?

MR McPHEE:   I thank you, your Honour.  The point I made in the Full Court was that I think there is a difference between mere relevance and direct relevance.

CALLINAN J:   All right.  Well, let me say direct relevance.

MR McPHEE:   In my submission, no ‑ ‑ ‑

CALLINAN J:   There are a lot of relevant documents which are privileged in the orthodox meaning of the word “privileged”, and the court does not normally inspect those once the claim of privilege has been properly made and everybody accepts that they are relevant.  There needs to be some reason why the court should inspect them, why the court should, as it were, mistrust the validity of the claim.

MR McPHEE:   Well, I think that is the divergence.  The court in Western Australia has decided that there needs to be something which excites its - I think the phrase was, “excites the attention of the court to the view that the process of determining the challenge will be aided by inspection”.

CALLINAN J:   What is wrong with that as a test?

MR McPHEE:   Well, it is this.  If I could refer to page 7 of the Adelaide judgment which is unreported, which I have sent you a copy.

GUMMOW J:   Yes, we have that.

MR McPHEE:   Thank you.  Page 7 of the unreported - at the bottom of the second-last paragraph ‑ ‑ ‑

GUMMOW J:   The paragraph beginning “Discovery and production”.

MR McPHEE:   Yes, in the last sentence of that paragraph.

CALLINAN J:   Page?

MR McPHEE:   Page 7, thank you:

A party cannot truly know whether a document supports his case until he has seen it.  If documents had been discovered it is difficult to see why the parties seeking to have the documents produced for inspection should have to discharge any further test before the court will order inspection.

CALLINAN J:   But we know the document may well assist the party because we know it is relevant.  That is not the issue, whether it will assist the party.  The issue is whether the claim for public interest immunity has been properly made or whether there is any reason to mistrust it.  Is that not the real issue?

MR McPHEE:   Yes, thank you, your Honour, but I suggest that the only way that issue or the court could make a decision on that is to look at the documents because without looking at them no balance can be taken by the court and it is the duty of the court, as I understand it, in my submission, to do this balance.

GUMMOW J:   Now, does anything come out of Northern Land Council in this Court on this point, on inspection?

MR McPHEE:   Only on that same page in Adelaide Brighton, again talking about threshold tests, in the paragraph beginning:

The decisions in Burmah Oil…..there may be a further test.  They suggest that in England –

et cetera –

the judge should have some concrete ground for belief of that fact which takes the case beyond a mere fishing expedition, to use the words of Lord Wilberforce…..  There was a division of opinion in the House of Lords whether, before inspection is ordered, the document should appear likely to support the case of the parties seeking discovery, or whether it is enough that they should appear likely to assist any of the parties to the proceedings.  In Air Canada the majority favoured the former view.  The High Court has not had occasion to consider the question…..  Only Toohey J had to consider the issue in Commonwealth v Northern Land Council as the question did not fall for examination on the approach taken by the majority.

GUMMOW J:   Now, is it the thrust of your submissions - I do not know if it is, but is it the thrust of your submissions that the Full Court in this State has introduced Burmah Oil and Air Canada?

MR McPHEE:   In effect, and it is a clear divergence, in my submission, from the Adelaide matter and leads to a difference in view between Adelaide and Perth as to the proper application of these principles established by Sankey v Whitlam.  Could I just take you to the last paragraph on page 7, which I do suggest, with respect, supports my view that ‑ ‑ ‑

CALLINAN J:   In Adelaide Brighton?

MR McPHEE:   Adelaide Brighton, thank you.  Carey v The Queen, which is a Canadian case, where the suggestion was, which I think was the same as the Full Court’s suggestion here, that there has to be something else other than mere relevance, beginning:

What troubles me about this approach is that it puts on a plaintiff the burden of proving how the documents, which are admittedly relevant, can be of assistance.  How can he do that?  He has never seen them; they are confidential and so unavailable.  To some extent, then, what the documents contain must be a matter of speculation.

CALLINAN J:   What does the judge do if the judge looks at them and decides that they will assist the party but that there is a very strong public interest in maintaining their confidentiality?  What does the judge do then?

MR McPHEE:   I think he makes that judgment of balance and decides that ‑ ‑ ‑

CALLINAN J:   But say he makes the judgment.  They might be immensely helpful to the party who wants them, but they would be very damaging to the public interest.

MR McPHEE:   Well, if he makes the judgment, then that is it, but at least the party concerned, in my submission, can be satisfied that such a judgment has been made by a judge.  In the old days of these things, there were certificates from Ministers which were required.  The Minister, of course, was accountable to Parliament.  Then it moved down to heads of department could sign the certificate but such a head also, through the Minister, is accountable to Parliament.  It has only, as I understand the line of authority, been since the court has been prepared to inspect the documents to make such judgments that people other than the Minister or the head of the department can make such certificates.

CALLINAN J:   That was not the case with police informants, was it?  A certificate was never required for those and this case is, perhaps, analogous to the case of a police informant.

MR McPHEE:   Well, perhaps, it is, but the difficulty with that, your Honour, in my submission, is that what you have here is a Stock Exchange which has a mixture of responsibilities.  It is a private company entering into contracts through its rules with all of its companies.  It is also a public body exercising duty in the form of a regulatory ‑ ‑ ‑

CALLINAN J:   You can take shares in it now, can you not?

MR McPHEE:   You can buy shares in it, it is floated on the Stock Exchange.  So we have a company like that which is also a policeman.  It is like the umpire kicking goals, you know, like it - it has two hats, and as it changes hats, it has to make these decisions appropriate to what hat it is wearing.

GUMMOW J:   I have been wondering about this.  What is the particular head of public interest immunity that is involved here?

MR McPHEE:   I think it is to do with ‑ ‑ ‑

GUMMOW J:   In other words, what is the Australian Stock Exchange inside the structure of government?

MR McPHEE:   As I understand it ‑ ‑ ‑

GUMMOW J:   It used to be called “Crown privilege”.  One understood that.  Now it is all tricked out with these other phrases.  At the end of the day, we are talking about government.  What is it that brings the claim of privilege here into the operations of government in any of its manifestations, I wonder?

CALLINAN J:   Is it some kind of a delegate of the Executive.

MR McPHEE:   I think it is a delegate.  It is a private contractor, if I can call it that, of the government to carry out its actual hands-on supervisory role of the market.  The government does not have a body of inspectors.  The Stock Exchange does and the Stock Exchange reports to the ASIC and they liaise.

GUMMOW J:   There has to be some statute somewhere.

MR McPHEE:   There is.  In the Corporations Law now appropriate - this matter is dealt with and there is an obligation on the Stock Exchange to report matters that it sees in the administration of its supervisory role to ASIC.

GUMMOW J:   That is right, so that the public interest immunity is said to be protective of that statutory duty, I suppose.

MR McPHEE:   Yes.  But I do not think there is a statute that actually sets out the structure and duties of the Stock Exchange in this respect other than a duty to report.

GUMMOW J:   Yes.

MR McPHEE:   Your Honour, my times up, the red light is on.  That is my submission.

GUMMOW J:   Yes, Mr Martin.

MR MARTIN:   If it please your Honours, this applicant seeks leave to appeal from an interlocutory decision relating to the exercise of discretion under ‑ ‑ ‑

GUMMOW J:   Yes, we know that.

MR MARTIN:   Your Honours, there is no point ‑ ‑ ‑

GUMMOW J:   I meant, really, so is Led v Cardile - we had to deal with Mareva orders.

MR MARTIN:   Indeed, your Honours, but this is a rule of court that is not of general application throughout Australia and no point of general importance arises unless it is said that there is a duty on every court determining a claim for public interest immunity in every circumstance, notwithstanding that the court may be satisfied on the affidavit material that the claim is made out.

CALLINAN J:   But sub-rule (2) only states what the common law is, does it not?  Courts can always inspect the documents.

MR MARTIN:   Indeed, your Honour, but it is pre-conditioned by the test which is posed by sub-rule (1) and, as the Full Court pointed out, the exercise of the power under sub-rule (2) is for the purpose of making the determination referred to under sub-rule (1).

GUMMOW J:   Well, how does that work?  I know they said that, but just as a matter of language, looking at page 25, sub-rule (1), “a party claims” ‑ ‑ ‑

MR MARTIN:   Your Honour, the question posed under sub-rule (1) is whether the claim to privilege is unfounded or mistaken and it is to that end that the power of inspection is conferred under sub-rule (2).

GUMMOW J:   That is right.

MR MARTIN:   That is why the Full Court said, at page 40 – their Honours stipulated the point of principle in the middle of that page:

There should be something in the circumstances of the case which excites the attention of the court to the view that the process ‑ ‑ ‑

GUMMOW J:   Now, what does “the circumstances of the case” mean?

MR MARTIN:   All relevant material before the court.

GUMMOW J:   Evidence, in other words.

MR MARTIN:   Evidence.   Something in the evidence before the court that:

excites the attention of the court to the view that the process of determining the challenge to the immunity –

that is the process of determining the question posed under Order 26 rule 1 will be assisted by inspection.

GUMMOW J:   But why, why should they be such - - -

MR MARTIN:   Because, your Honour, otherwise the purpose of inspection ‑ ‑ ‑

GUMMOW J:   What is the harm of the public interest in the court looking at documents?

MR MARTIN:   There is no harm, your Honour, but there is no purpose either to be served if the court is already satisfied on the material before it that the ground is made out and in this case, both at first instance and on appeal, the court was so satisfied because of the nature of the affidavits.

CALLINAN J:   You rely upon the word “shall” in 1(b), do you?

MR MARTIN:   We do.  There is a discretion to aid a process of adjudication.

CALLINAN J:   But you say the privilege “shall” be sustained unless there is evidence.

MR MARTIN:   Indeed, unless there is evidence.  Now, in this case ‑ ‑ ‑

CALLINAN J:   As a matter of construction of the rule.

MR MARTIN:   Indeed.  What the court said, both at first - your Honours, could I just direct the attention to page 13 where the affidavits are described and, perhaps, at the beginning of the preceding page is the description of the ground of immunity that was claimed, and with respect to my friend, the ASX is expressly recognised the Corporations Law and its rules are given course and effect under that law and has a specific role to play in conjunction with ASIC in relation to the enforcement of the provisions of that law.  So the affidavit ‑ ‑ ‑

GUMMOW J:   Yes, I know, but is there any case that cloaks them with public interest immunity?

MR MARTIN:   I have not researched that, your Honour.  It was not said before today, I do not think, that this was not a proper ground for immunity.  The only question that arose, both at first instance and on appeal, was whether there ought to be an inspection to determine whether or not this ground was made out.

CALLINAN J:   You could well understand though that there might be a different test for, say, legal professional privilege, from the test for public interest immunity.

MR MARTIN:   Indeed.  One could well appreciate that because, of course, if the adjudicator is the trier, the mind may be poisoned.  One also, of course, where one is dealing with a statutory discretion, must say, “Well, what are the circumstances in which the discretion falls for exercise?”.  The answer must be, surely, that it is legitimate for the exerciser of a discretion to take into account the question of whether or not its exercise will assist him or her in the process of adjudication.  And that is all the Full Court said.  All the Full Court said was there has to be something in the exercise of the discretion that would assist in the process of adjudication.  In this case, like the Master, we are satisfied that the affidavits make clear, because they condescended to significant detail ‑ ‑ ‑

GUMMOW J:   Where do they say that?

MR MARTIN:   Your Honour, the Master says, at page 13:

It is clear that great care has been taken by the defendant to comply precisely with the orders of the Supreme Court.

The deponent refers to the deponents being fully conversant with the issues.  They then made an assessment of relevance and then they have gone through and he has been – it then goes on.

GUMMOW J:   What is the rank of these deponents?

MR MARTIN:   They were, effectively, the officers involved in the – supervising the relevant surveillance sections and, therefore, the officers who were personally conversant with the role which these documents played in the operation of their particular investigative arms.

GUMMOW J:   They were officers of the Stock Exchange, were they?

MR MARTIN:   Yes, your Honour, and Zarro - Justice Lockhart makes the point that it is preferable in cases of this kind to ensure the affidavits are from persons who do have a first-hand experience.

GUMMOW J:   Yes, I remember that.

MR MARTIN:   Your Honour, there may well be one –Boys v Australian Securities Commission, cited by my learned friends at page 66, applied public interest immunity to the Securities Commission and to the Australian Stock Exchange, so there is authority for the proposition that the immunity does apply.  Your Honours, this was a case in which the affidavits condescended to considerable detail.  The grounds were set out.  The nature of the documents was clear to the court, therefore, the question that both the Master and the Full Court addressed was what purpose would be served by us proceeding to inspect.

Contrary to my learned friend’s submission, it was not common ground that the documents would be probative.  All that was common ground was that the “Peruvian Guano” test of adjectival relevance was not to apply to these documents.  The question of whether or not they were admissible in evidence was entirely speculative and, as the Full Court pointed out, the question of whether or not they would affect the outcome of the case or even assist the present applicant, was entirely speculative.

Your Honours, the Full Court did not seek to impose Burmah Oil and Air Canada into the law of Western Australia.  That is clear from the passages at pages 37 through to 39 where, having set out at the top of 37 the English cases, Burmah Oil and Air Canada, they then went on to refer to Sankey and refer to the difference in the Australian position, and then at 38 developed that point by reference to Northern Land Council, and then at the top of page 39 referred to a previous authority in this State, Middleton’s Case, to the effect that there was:

no threshold test over and above the question of relevance necessary to enliven the jurisdiction to inspect.

So, their Honours did not impose any threshold test.  The test which they imposed was that to which I have taken the Court earlier and, in our submission, that is an entirely proper test and not a test that one would expect to receive a serious divergence of opinion, with respect, and it is not a test that is inconsistent with Justice Debelle.  My learned friend has picked on one passage from his Honour’s judgment but if your Honours go to other portions of Justice Debelle’s decision, if your Honours have that to

hand, if I could go to the commencement of paragraph (9) which is on page 6 of the unreported decision.  In the middle of that page, his Honour refers to the balancing exercise and makes the point that:

In some cases, the court might be able to determine that the public interest requires that the documents be withheld from production without inspection of the documents: see Commonwealth v Northern Land Council.

So the passage that has been seized upon at the bottom of that page and over the next page has to be read in its context and also a context that includes, at page 8, just before we get to the next paragraph on page 10, his Honour observes:

The court should not inspect the documents as a matter of course for the documents or one of them may fall into a class disclosure which would be injurious to the public interest regardless of the contents –

again, Northern Land Council.  So his Honour Justice Debelle was not saying that inspection is an inevitable course to be followed in every case.  Rather, his Honour was also adopting the approach that it falls for the exercise of discretion.  Now, if, as this Full Court has done, poses a test in terms of whether inspection would aid, it and the Master have formed the conclusion that inspection would not aid the process of adjudication, where we would ask, rhetorically, is the point of general importance that ought occupy the attention of this Court?

Your Honours, this was, in our submission, a quite clear case, falling within the scope of the immunity claimed.  Both the Master and the Full Court considered it fully and properly and made no error of principle.  It is interlocutory, no conflict in authority arises and, in our respectful submission, the decisions below are not attended with sufficient doubt to justify the grant of leave.  If it please your Honours, those are our submissions.

GUMMOW J:   Thank you.

MR McPHEE:   Just one matter, on, I think, with respect to my learned friend, in relation to Justice Debelle’s comments on page 6, and the fact that it is possible, in certain circumstances, for a decision to be made without inspection, may I take your Honours to the middle of that paragraph, which is a long one, but dealing with Northern Land Council:

It was unnecessary in that case to inspect the documents to determine the claim for privilege.

But the court went on, “Only” – it is about halfway down on the right-hand side of the paragraph:

Only in cases where the ministerial affidavit demonstrates with sufficient particularity the nature and the significance of the documents both in terms of any need to preserve their confidentiality on the one hand –

that is the public interest –

and for the actual litigation on the other is it likely that it will be possible to reach such a conclusion.

So where the ministerial affidavit itself does the balancing exercise and it is clear to the court where the balance lies, then such a decision might be made without inspection.  But not in a case, as here, where we have assertions, on the one hand, about public interest from the Stock Exchange but nothing about the documents so that it is not possible to do a balance without inspection.  If the Court pleases.

GUMMOW J:   We will take a short adjournment.

AT 11.53 AM SHORT ADJOURNMENT

UPON RESUMING AT 12.02 PM:

GUMMOW J:   Without affirming that there is any general principle with respect to the entitlement of regulatory bodies to claim public interest immunity or that a rule of court of the kind in question here necessarily extends to that immunity, we are not satisfied that in the circumstances of this case there are sufficient prospects of success on the grounds put forward by the applicant to warrant a grant of special leave.  Accordingly, special leave is refused with costs.

AT 12.03 PM THE MATTER WAS CONCLUDED