Deputy Commissioner of Taxation v Law Institute of Victoria Ltd
[2010] VSCA 73
•8 April 2010
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 3772 of 2009
| DEPUTY COMMISSIONER OF TAXATION | |
| Appellant | |
| v | |
| LAW INSTITUTE OF VICTORIA LTD | Respondent |
---
JUDGES: | MANDIE and BONGIORNO JJA, HANSEN AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 1 March 2010 | |
DATE OF JUDGMENT: | 8 April 2010 | |
MEDIUM NEUTRAL CITATION: | [2010] VSCA 73 | |
JUDGMENT APPEALED FROM: | Law Institute Of Victoria V Deputy Commissioner Of Taxation (No 2) [2009] VSC 179 (Pagone J) | |
---
PRACTICE & PROCEDURE – Privilege – Notice by Deputy Commissioner of Taxation to Law Institute of Victoria to produce documents – Public interest immunity – Documents produced or generated in the course of regulating the legal profession – Whether ‘class’ or ‘contents’ claim – Whether documents protected from disclosure – Income Tax Assessment Act 1936 (Cth) s 264(1)(b) – Legal Profession Act 2004 (Vic) s 6.4.5.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr S Gageler SC with Mr P J Hanks QC and Ms F L McKenzie | Australian Government Solicitor |
| For the Respondent | Mr P J Riordan SC with Mr J R M Tracey | Joseph Barravecchio |
MANDIE JA:
Introduction
On 27 October 2008, the Commonwealth Deputy Commissioner of Taxation (‘the Commissioner’ or ‘the appellant’) gave a notice to the Law Institute of Victoria Ltd (‘LIV’) pursuant to s 264(1)(b) of the Income Tax Assessment Act 1936 (Cth).[1] The notice was addressed to the LIV’s Department of Professional Standards and required the LIV to produce to the Commissioner ‘those documents described in the schedule which are in your custody or under your control concerning the income or assessment of Mr Nicholas Michael Kephala for the period 1 July 1998 to present’.
[1]Section 264(1)(b) relevantly provides that the Commissioner may by notice in writing require any person to attend and give evidence concerning his or any other person’s income or assessment and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.
The schedule to the notice listed the following classes of documents:
1.Records showing the history of Mr Kephala’s practice in Victoria, including dates on which he held a practising certificate and the nature of the certificate such as whether he was the principal or an employee.
2.Records of any audit conducted in respect of Mr Kephala’s trust accounts and the errors/discrepancies revealed.
3.Records in respect of the cessation of Mr Kephala’s registration as a practising lawyer, including documents stating Mr Kephala’s election to not renew his practising certificate; or notification of his ineligibility; or notification of the requirement for investigations to be conducted before it could be renewed.
The LIV was involved as regulator in the issue, refusal, suspension and cancellation of lawyers’ practising certificates in the State of Victoria under the legislative regimes that existed prior to the Legal Profession Act 2004 (Vic). Under that Act, the LIV is a delegate of the Legal Services Board and, as such, has continued its role in relation to practising certificates. Section 6.4.5 of the Legal Profession Act applies to the LIV[2] and s 6.4.5(2) provides that a person to whom the section applies must not disclose or communicate to any person any information relating to the affairs of any person or law practice acquired in the performance of functions under the Act.[3]
[2]Because it is a person to whom the Board has delegated functions within the meaning of s 6.4.5(1)(f) of the Legal Profession Act 2004.
[3]The section goes on to provide for exceptions but these are not presently material.
Concerned with its obligation of confidentiality under the Legal Profession Act, the LIV filed, on 24 December 2008, an Originating Motion seeking a declaration that its compliance with the Commissioner’s notice would not constitute a contravention of s 6.4.5 of the Legal Profession Act. However, by the time the hearing the subject of the judgment under appeal took place, and despite the nature of the relief sought in the Originating Motion, the issue had changed to one relating to whether the documents the subject of the Commissioner’s notice were protected from disclosure by reason of public interest immunity. This was because, by then, it was accepted that, having regard to the application of s 109 of The Constitution (Cth), the provision as to confidentiality in the State Act was inconsistent with the requirements of s 264 of the Income Tax Assessment Act and therefore inoperative to that extent.
The Commissioner appeals from the decision of a judge in the Trial Division which determined that some of the documents sought by the Commissioner were protected from disclosure by public interest immunity. The LIV cross-appeals in relation to certain of the documents that the judge found were not so protected.
The proceeding below
The Originating Motion was supported by an affidavit sworn by a lawyer in the employ of the LIV on 23 December 2008. The affidavit, at that stage, was primarily concerned with the LIV’s obligation of confidentiality but the affidavit also contained the statement that:
The LIV has also informed the ATO that the privilege of public interest immunity may be an additional ground for not complying with the Notice. It is submitted that section 264 of the ITAA cannot be construed as abrogating important common law rights and immunities. Accordingly, it is respectfully submitted that it is arguable that public interest immunity, as it exists at common law, can be claimed by the [LIV] …
The affidavit also stated that the ‘LIV is of the view that there is a risk that a court of competent jurisdiction might rule that public interest immunity applies’ to the documents covered by the notice.
A further affidavit was sworn on behalf of the LIV on 12 February 2009 by Joseph Ambrose Barravecchio, a senior solicitor employed by the LIV in its Professional Standards Section. Mr Barravecchio described the documents covered by the Commissioner’s notice. I note that he said that they included (inter alia) documents and correspondence relating to practising certificates applications, correspondence, file notes and emails relating to trust account and related matters and auditor’s reports and correspondence.
The foregoing material having been filed, the proceeding came on for hearing before the judge on 12 February 2009 and reasons for judgment were handed down on 26 February 2009.[4] These reasons are not the subject of appeal but need to be mentioned. In these reasons, the judge said that it was ‘trite law’ that s 6.4.5 of the Legal Profession Act was invalid to the extent of any inconsistency with the operation of the notice issued under s 264 of the Income Tax Assessment Act. His Honour referred to the question whether the Commissioner could require production of documents if they attracted public interest immunity and noted that the Commissioner accepted and conceded that the doctrine of public interest immunity applied to the operation of s 264 but contended that the LIV had not established that those principles applied to the documents sought by the notice.
[4]Law Institute of Victoria Ltd v Deputy Commissioner of Taxation [2009] VSC 55.
After referring to the relevant principles, the judge said that the description in Mr Barravecchio’s affidavit did not provide a secure foundation upon which to uphold a claim of public interest immunity in respect of any particular document or category and that the evidence was insufficient for him to determine that any one document, or class of documents, attracted immunity. His Honour decided that he would re-list the proceeding for the parties to make submissions about what further directions should be made for the Court to determine the issue by reference to the documents (which at that stage had not been produced to the Court) and any further materials which the parties might wish to adduce in evidence.
On 27 February 2009 the Court made directions as to the filing of further affidavits in support of or in opposition to the claim for public interest immunity, and for lodging with the Court by the LIV of copies of the documents in respect of the claim for immunity.
The LIV filed a further affidavit sworn by Mr Barravecchio on 13 March 2009. Exhibited to that affidavit was a confidential exhibit describing the documents to be provided to the judge and a non-confidential exhibit describing the same documents for provision to the Commissioner’s legal representatives. The affidavit did not otherwise advance any evidence bearing upon the question whether the documents were protected by public interest immunity, or, more particularly, what harm to the public interest might be caused by their disclosure.
Two affidavits were filed on behalf of the Commissioner going to the possible value and importance of the documents sought by the notice for the purpose of the proper exercise of the Commissioner’s statutory functions under the income tax legislation and stating that the ATO was conducting an audit of the taxation affairs of Mr Kephala as part of a particular operation concerning tax havens, known as ‘Project Wickenby’.
In that state, the proceeding came on again for hearing before the judge on 28 April 2009 and his Honour handed down reasons for judgment on 12 May 2009.[5]
[5]Law Institute of Victoria Ltd v Deputy Commissioner of Taxation (No 2) [2009] VSC 179.
In those reasons, now the subject of appeal, his Honour dealt with the three categories of documents sought by the Commissioner after having inspected the contents of the LIV documents.
The first category of documents related to the history of Mr Kephala’s practice in Victoria including the dates and nature of his practising certificates. His Honour said that no attempt was made by the LIV to maintain public interest immunity over any one document in that category by reference to the particular information it contained and that the LIV’s submission was the same as that which had been put and rejected at the previous hearing, namely, that all documents in its possession which were acquired pursuant to its statutory function necessarily attracted the immunity. His Honour said that the documents in the first category were largely of a mundane kind and he could not see any basis to attract public interest immunity.
His Honour said that the second category of documents, being records of any audit conducted in respect of Mr Kephala’s trust accounts, were in a different position. His Honour said that the LIV had identified 35 documents falling within this category that were produced as part of the LIV discharging its statutory function of regulating the legal profession. His Honour said:[6]
All of these documents came into existence in the expectation that they would be kept confidential. None of the documents were prepared in contemplation that they might be made available to the Commissioner or might in some way bear upon or affect Mr Kephala’s taxable income. Many of the documents contain conclusions and opinions from source documents which may readily be available to the Commissioner directly from others. The opinions and conclusions in the documents in Schedule 2 were expressed and drawn for the statutory function exercised by the LIV and not for the quite different function to be exercised by the Commissioner.
[6][2009] VSC 179, [9].
I interpolate here that, in my opinion, with respect, the judge’s statements that the documents were not prepared in contemplation that they might be made available to the Commissioner or might in some way bear upon Mr Kephala’s taxable income or that many of the documents contained opinions and conclusions from source documents that might readily be available to the Commissioner from others or that the opinions and conclusions in the documents were expressed and drawn for the purpose of the LIV’s statutory function and not for the purpose of the Commissioner’s function, are all irrelevant to the task of determining whether the disclosure of such documents might cause harm to the public interest in relation to the proper regulation of the legal profession by the LIV.
His Honour went on to say:[7]
The disclosure of the information and content of these documents does interfere with, and potentially damages, the discharge of the duties and functions by the LIV in the regulation of the legal profession. The considerations arising in the preparation of an audit for the LIV in the context of its statutory duty and function to regulate the legal profession are different from those arising in an audit to determine the taxable income of a solicitor from his or her practise. The disclosure to the Commissioner of documents prepared in the discharge of the LIV’s duties and functions carry with it the risk that the discharge of the LIV’s function needs to take into consideration the potential impact on matters otherwise, and properly, wholly extraneous to the LIV’s statutory task.
[7][2009] VSC 179, [10].
I would again interpolate here that it seems to me that his Honour gave no clear reason for his conclusion that the disclosure of the contents of these documents would interfere with and potentially damage the discharge of the duties and functions of the LIV in its regulation of the legal profession. There was no evidence before him to that effect and there is no indication as to why the nature of the contents of these documents was such that their disclosure would interfere with or potentially damage the discharge of the LIV’s statutory functions. Again, it seems to me to be irrelevant to state the obvious fact that the preparation of an audit for the LIV involved different considerations to those arising from an audit to determine the taxable income of a solicitor. Finally, on this aspect, the somewhat delphic statement that the disclosure to the Commissioner of these documents carried with it ‘the risk that the discharge of the LIV’s function needs to take into consideration the potential impact on matters otherwise, and properly, wholly extraneous to the LIV’s statutory task’ is really unexplained.
His Honour went on to say:[8]
There may be circumstances when it would nonetheless be proper for disclosure to the Commissioner of documents created by or for the LIV in the exercise of its statutory duty and function. However, I do not consider this to be one such case. The reports themselves are all based upon other material. The conclusions drawn by the auditors are conclusions and opinions by the auditors for the LIV’s statutory task and do not establish anything independently of the source documents beyond opinions or conclusions wholly drawn for the LIV’s statutory function. These documents contain no more information than the Commissioner could create himself by undertaking the task of having someone analyse source documents. The Commissioner has not sought to rely upon any material in support of disclosure of these documents beyond a power to require the documents, the existence of an audit and the possibility that these documents might be of assistance. He has not sought to assist the Court by indicating (either in an open affidavit or by some confidential affidavit or exhibit) what source information is currently available to the Commissioner, what steps have been taken by the Commissioner to obtain the source information, or whether the need to secure the conclusions drawn from these documents are more likely to assist the Commissioner than for the Commissioner to draw his own conclusions and himself undertake the work which the LIV’s auditors have done. In short, no material has been put before me on behalf of the Commissioner beyond an assertion of power, the existence of an audit, and the possibility that disclosure of the documents might be of assistance, from which I should conclude that the balance of competing interests favours disclosure of these documents to the Commissioner. In my opinion the balance I must strike in this case favours the preservation of them from disclosure. To disclose these documents, in the absence of anything tipping the balance in favour of the Commissioner, adversely interferes and affects the public policy evident in the acquisition of the documents by the LIV with an obligation to keep them confidentially.
[8][2009] VSC 179, [10].
It seems clear that, in the above quoted passage, his Honour was undertaking the ‘balancing exercise’ required by the cases but the question arises whether an occasion for doing so had been established. The conclusion that the disclosure of the documents ‘adversely interferes and affects the public policy evident in the acquisition of the documents by the LIV with an obligation to keep them confidentially’ suggests that his Honour’s reasons were based on the nature of the documents in this category rather than the contents of any one of them.
After referring to the failure of the Commissioner to put forward any material showing a need to rely on documentation from the LIV to perform its functions, his Honour said that it might be that the Commissioner was ‘entitled to undertake fishing inquiries but when such fishing expeditions are undertaken in waters attracting public interest immunity’ it was insufficient for the Commissioner to rely upon the existence of his power to do so, without more.
His Honour then turned to the third category of documents, namely all records in respect of the cessation of Mr Kephala’s registration as a practising lawyer. His Honour said that many of the same remarks he had made in relation to the first category of documents were applicable to this category as well. His Honour noted that the LIV sought only to rely upon the information in two of the documents as justifying a claim of public interest immunity beyond the general contention that all of the documents in its possession attracted such immunity by reason of their nature. These two documents, labelled 1C and 2C, recorded complaints against Mr Kephala and identified the name of the complainants. It was submitted on behalf of LIV that the names of complainants attracted the privilege in the same way as the courts in other places have sometimes protected from disclosure the identity of ‘whistleblowers’. His Honour rejected that submission, saying that there was nothing in the material to show that a complainant was a whistleblower in the sense that the complaint was made on the basis of their identity being kept confidential nor had the LIV attempted to ascertain whether the complainants had any objection to their identity being revealed to the Commissioner. His Honour concluded that none of the documents in the third category contained information of a kind that attracted the doctrine of public interest immunity.
For those reasons, the Court below ordered that the documents in the first and third category did not attract the doctrine of public interest immunity for the purpose of any disclosure by the LIV to the Commissioner but that the documents in the second category were immune from disclosure by reason of public interest immunity.
Grounds of appeal
The Commissioner appealed against the order made by the Court in relation to the second category of documents on the primary ground that his Honour erred in finding that the disclosure to the Commissioner, in response to a notice under s 264 of the Income Tax Assessment Act, of documents in the second category would interfere with, and potentially damage, the discharge of the duties and functions of the LIV in the regulation of the legal profession under the Legal Profession Act. This was ground 1 – there were numerous other grounds but the Commissioner submitted that ground 1 effectively covered them all.
The submissions
It was clear to me, having heard the submissions of the parties, that it was common ground (and rightly so) that documents in the second category of documents, namely, documents created or received by LIV in the course of its regulation of the legal profession pursuant to its statutory function, were capable of being the subject of public interest immunity depending on the contents of those documents. However the Commissioner submitted that the LIV’s case did not get off the ground because it had not been demonstrated to the Court below that any harm would be caused by disclosure of the particular documents either by reference to the specific contents of any of the documents or on the basis of any evidence.
The Commissioner submitted that it had been inappropriate of the court below to conduct the ‘balancing exercise’ when it had not been established by LIV even on a prima facie basis that the contents of the documents in the second category were such that public interest immunity was or might be attracted. The balancing exercise had been carried out in the absence of sufficient evidence establishing that the disclosure of the documents would cause or was likely to cause any real harm (as opposed to merely speculative harm) to the public interest in the LIV’s exercising its statutory function of regulating the legal profession.
In support of that submission, the Commissioner referred to State of Victoria v Brazel.[9] In that case, the members of the Court of Appeal having inspected the documents for themselves, said that the public interest immunity claim ‘failed at the threshold’ and that no case for secrecy was made out.[10] The Court of Appeal then said:[11]
[9](2008) 19 VR 553.
[10](2008) 19 VR 553, [46] (Maxwell P, Buchanan and Vincent JJA).
[11](2008) 19 VR 553, [47]-[49].
Axiomatically, the decision on any PII claim depends upon the circumstances in which the claim is made. Everything turns on the character of the particular information in issue and the nature of the particular litigation (or administrative investigation) in which the occasion for disclosure of the information arises. Before embarking on the balancing exercise, the court must assess the strength of the arguments for non-disclosure and disclosure respectively. The court must scrutinise carefully what is said to be the potential damage to the public interest if the information is disclosed and, equally, what is said to be the significance of the information in the litigation.
Gibbs CJ elucidated the process in Alister v R,[12] as follows:
‘[T]he court is required to consider two conflicting aspects of the public interest, namely whether harm would be done by the production of the documents, and whether the administration of justice would be frustrated or impaired if the documents were withheld, and to decide which of those aspects predominates. The final step in this process — the balancing exercise — can only be taken when it appears that both aspects of the public interest do require consideration — ie, when it appears, on the one hand, that damage would be done to the public interest by producing the documents sought or documents of that class, and, on the other hand, that there are or are likely to be documents which contain material evidence. The court can then consider the nature of the injury which the nation or the public service would be likely to suffer, and the evidentiary value and importance of the documents in the particular litigation.’[13]
As to the damage which may result from disclosure, it is necessary to consider whether the content of the document is ‘current and controversial’.[14] Obviously, if the information is out-of-date, the risk of injury to the public interest is likely to be much reduced, if not non-existent. The need for secrecy may be short-lived or long-lasting. Everything depends on the subject-matter and content of the information in question.[15]
[12](1984) 154 CLR 404, 412.
[13]Emphasis added by me.
[14]Sankey v Whitlam (1978) 142 CLR 1, 97, 98 and 99–100 (Mason J); Commonwealth v Northern Land Council (1993) 176 CLR 604, 617 (Mason CJ, Brennan, Deane, Dawson, Gaudron and McHugh JJ).
[15]Sankey v Whitlam (1978) 142 CLR 1, 41–2 (Gibbs ACJ).
In State of Victoria v Brazel, after further consideration of the documents, the Court concluded as follows:[16]
For these reasons, we consider that the State has failed to satisfy the threshold test — of potential damage to the public interest — in respect of any of the disputed portions of the report. No occasion arises therefore to undertake the balancing exercise.
This conclusion — and the analysis on which it is based — should provide a salutary lesson for any government official or agency contemplating a claim for public interest immunity. Since immunity will not be lightly conferred, it should not be lightly claimed. Contrary to the assumption on which the State appears to have acted in this interlocutory litigation, it is never enough merely to assert — as if it were self-evident — that disclosure of the information in question will harm some particular aspect of the public interest. The claim for immunity must be articulated with rigour and precision, and supported by evidence demonstrating the currency and sensitivity of the information, so as to constitute a compelling case for secrecy. Anything less will be unlikely to suffice.
[16](2008) 19 VR 553, [67]-[68].
The Commissioner submitted that likewise, in the present case, the public interest immunity claim failed at the threshold. The submission, in effect, was that the potential damage to the public interest by disclosure of the documents had not been identified, let alone articulated with rigour and precision.
In response, the LIV referred to a number of authorities but most of those only established, as was not in dispute, that the documents in the second category were capable of being the subject of public interest immunity. The LIV submitted that once it was established that the documents were capable of being the subject of public interest immunity, the balancing exercise had to be carried out. The LIV sought to distinguish State of Victoria v Brazel on the basis that the documents in that case were not within a recognised category for public interest immunity whereas the documents in this case were within an established category. The LIV supported this distinction by referring to what Warren CJ called the ‘initial hurdle’[17] in Royal Women’s Hospital v Medical Practitioners Board of Victoria and to what was said by Maxwell P in the same case:[18]
Like the Chief Justice, I consider that the hospital’s claim for public interest immunity (‘PII’) fails at the threshold. That is, the class of documents the subject of the claim is not capable, as a matter of law, of attracting PII. No occasion therefore arises to engage in a ‘balancing exercise’.
[17](2006) 15 VR 22, [35].
[18](2006) 15 VR 22, [39].
The LIV submitted that both State of Victoria v Brazel and Royal Women’s Hospital v Medical Practitioners Board of Victoria were cases where the documents were not within a recognised category for public interest immunity. Accordingly, the ‘threshold question’ was whether a new category should be recognised i.e. a category in respect of which it was open to claim public interest immunity. On the other hand, some categories were already established by earlier decisions and these were regarded as a precedent for later situations of the same kind as was recognised by Lord Denning MR in Neilsen v Laugharne.[19]
[19][1981] 1 QB 736, 748.
The LIV submitted, as I have said, that the documents in this case fell within an established category or class. The LIV first referred to Borg v Barnes.[20] In that case the plaintiff sued her former lawyers for negligence in relation to a damages claim against her employer and subpoenas were served on the Bar Association and the Law Society of New South Wales. The plaintiff had made a complaint to these bodies and sought to subpoena the relevant documents dealing with her complaint. Carruthers J said:[21]
[20](1987) 10 NSWLR 734.
[21](1987) 10 NSWLR 734, 737-8.
The full fabric of the disciplinary procedures and powers of the Association and the Society were laid before me. It is sufficient, however, if I observe that in each case the complaint was dealt with by the professional body in the exercise of its general disciplinary functions.
The threshold question is whether it is open to the Bar Association and the Law Society to take objection to the production of the relevant documents on the grounds of public immunity.
It is now well-established that the categories of public interest are not closed and must alter from time to time, whether by restriction or extension, as social conditions and social legislation develop: D v National Society for the Prevention of Cruelty to Children [1978] AC 171 at 230 per Lord Hailsham.
The problem should be approached with caution, but at the same time a willingness to extend established principles by analogy and legitimate extrapolation. Flexibility is required: Aboriginal Sacred Sites Protection Authority v Maurice (1986) 65 ALR 247 at 251 per Bowen CJ.
The maintenance of a body of competent barristers and solicitors
compliant with high ethical standards of conduct is fundamental to the proper administration of justice; the proper administration of justice itself being fundamental to the maintenance of our democratic system of government. There is thus a public interest in the Association and the Law Society continuing to exercise an efficient disciplinary role over their members.I have no hesitation in holding in the light of the principles enunciated in various cases since McGuiness v Attorney-General (Victoria) (1940) 63 CLR 73, that public interest immunity attaches to confidential material obtained by the Bar Association and the Law Society pursuant to the exercise by them of their disciplinary functions and that they are accordingly entitled to object to the production of such material.
The question then is whether they are entitled to have their objections upheld. The resolution of this question involves what is referred to as the ‘balancing exercise’. It involves having the detriment to the public interest involved in disclosure weighed in the balance against the detriment to the public interest in non-disclosure. (His Honour went on to refer to the statement by Gibbs CJ in Alister v The Queen.)[22]
[22]See [29] above.
It is convenient to note here that Carruthers J, in Borg v Barnes, then conducted a balancing exercise (in what his Honour described as a contents claim rather than a class claim), taking into account the regulatory bodies’ contentions that a breach of confidentiality would endanger the public interest, that immunity from production fostered candour and frankness and that disclosure would destroy harmony of cooperation between the lawyers and their professional associations exercising a disciplinary role. Ultimately, it was held that these considerations should not prevail.
The LIV next referred to Law Institute of Victoria v Irving.[23] In that case the LIV had resisted discovery of material generated or obtained by it during an inquiry into the affairs of a solicitor and an audit of his trust account on the grounds inter alia of public interest immunity. The documents included annual audit reports in respect of a solicitor’s trust account, correspondence between the LIV and the solicitor and between the LIV and the solicitor’s auditor, internal reports and memoranda and the like and a computer print-out of complaints against the solicitor. The Full Court[24] considered that it was open to the LIV to take objection to the production of the documents on the ground of public interest immunity[25] but then asked the question ‘can it be said that production of the documents in question will be injurious to that public interest?’[26] and dealt with that question as follows:[27]
The substantive argument advanced on behalf of the institute in this regard was that there is a real risk that if material gathered by the institute in the course of its inquiry into Skinner's affairs and its audit of his trust account is disclosed, it will inhibit the institute's conduct of inquiries hereafter in that persons (including accountants and inspectors) who might otherwise be prepared to give information to the institute in confidence will no longer do so for fear that their identity will be disclosed. Expressed another way, it is said that the public interest immunity which protects the identity of informants in public prosecutions should be extended to protect from disclosure information given to the institute relating to the affairs of solicitors. Whilst we agree that there is much force in the proposition that as a general rule the names of informants who have given information to the institute in confidence should not be disclosed, we consider there is no warrant for the much wider proposition that information provided by such informants should not be disclosed during the course of litigation in respect of which it is of relevance, let alone documentation bearing upon the very issues the court will be required to determine in that litigation. It is to be remembered that disclosure pursuant to the process of discovery is not disclosure to the world at large, because the party obtaining information through discovery is not able to make use of the information and documents thus acquired otherwise than for the purposes of the litigation: see Home Office v Hannan [1983] 1 AC 280. There is no evidence to suggest that any informant in the present case gave information to the institute on any undertaking or understanding that his or her name would not be revealed.
In our opinion, the only document which poses any problem in the present case is the computer print-out of complaints against [the solicitor]. There is no suggestion that any of the remaining categories of documents contain the names of informants. The computer print-out may well contain such information …
[23][1990] VR 429.
[24](Murphy, Gray and Beach JJ).
[25][1990] VR 429, 437.
[26][1990] VR 429, 437.
[27][1990] VR 429, 437.
The LIV next referred to Legal Services Commission v Trotter.[28] In that case the factual situation was relevantly similar to that in Law Institute of Victoria v Irving. Cox J (with whom King CJ agreed) said that the first thing that was necessary to consider was whether it was open to the Legal Services Commission to take a public interest objection. After considering the statutory role and objects of the Commission, his Honour considered that a plausible argument could be made out that the Commission could put forward a claim for public interest immunity and continued to consider the appeal on that assumption.[29] Cox J then went on to say that, on the authorities, there was no class of documents that was absolutely immune from discovery on the ground of public interest. After referring to what Gibbs CJ said in Alister v The Queen and to a number of other authorities, Cox J said:[30]
Most of the decisions I have been discussing on this subject related to class claims. If court inspection is justifiable in such cases, it must be even more obviously so with a contents claim. A claim that the actual contents of a document will establish a substantial public interest immunity and tip the scales in favour of the claimant could not be resolved, I should think, except in the clearest of cases, without first reading the document and forming a judgment upon it. For instance, often an important balancing factor will be the extent to which the document is likely to assist the party in the prosecution of his case, and it would be impossible to make any estimate of that on general principles, much less mere surmise. …
I should say that I see no reason to think that the plaintiff's application under r 60 is a mere fishing expedition: cf Alister v The Queen at 439, 455-456. No doubt he hopes to find in the documents something that will assist him in his action against the defendants, but that is not an improper motive for seeking discovery.
I do not think that this is one of those cases that can be decided without a court inspection. I have therefore looked at the documents. They consist for the most part of the formal assignment papers and reports by the defendants about the plaintiff's bail requests. They are plainly relevant to the proceedings. I have taken into account the two conflicting aspects of the public interest that arise in this case and I am firmly of the opinion that the documents should be produced by the Commission for inspection by the parties.
[28](1990) 54 SASR 74.
[29]Cox J approached the matter in that way because the plaintiff was not represented by counsel on the appeal and the Court had been denied a ‘thorough discussion of the principles and authorities by both sides’.
[30](1990) 54 SASR 74, 85-6.
The LIV next referred to Finch v Grieve.[31]In that case a barrister challenged the validity of a referral of alleged misconduct on his part to the Legal Profession Disciplinary Tribunal by the Bar Council and the barrister sought from officers of the New South Wales Bar Association production of the material giving rise to the allegation of misconduct. The Bar Council claimed public interest immunity for the documents and, in relation to that claim, Wood J said:[32]
The present is a case where the claim to public interest immunity, or
privilege, was taken as a class, and was unsupported by any affidavit or any evidence to the effect that any person supplied information on an undertaking or promise of confidentiality, or otherwise detailing the public interest considerations. That it was dealt with as a ‘class claim’ rather than as a ‘contents claim’, that is, one to withhold particular documents, raises no difficulty. …It was also a claim made without the support of any affidavit. Again that is not unusual, nor is it a circumstance disentitling the claimant to an immunity from production …, although it is usually more satisfactory for the Court to have an evidentiary basis upon which it might consider the claim.
It is clear from the authorities previously cited that claims to public interest immunity are not to be narrowly confined to departments or organs of central government. In appropriate cases, I am of the view that the Bar Council is entitled to make such a claim. However, where it does take that course, then it requires the balancing exercise referred to in the authorities and in the passage I have quoted from Alister v The Queen, to be undertaken. That involves weighing the detriment to the public interest involved in disclosure, against the detriment to the public interest in non- disclosure. …
In the weighing exercise, I am satisfied that there is a substantial public interest in the Bar Council receiving complaints about misconduct of barristers, in being able to speak freely with such complainants, in being able to fully investigate those complaints and in appropriate cases being able to gather additional evidence. This is part and parcel of a public interest that it effectively carry out the statutory functions assigned to it, and that the legislation as a whole be implemented. The public interest is obvious and hardly needs stating. The public are to be protected from barristers who are guilty of professional misconduct, or unsatisfactory professional conduct, and are entitled to have effective orders made not only for the disciplining of those barristers who offend, but to have their losses made good. These are the ends the Act serves, and it provides an effective means for discipline and compensation.
On the other side, there is the public interest in the eliciting of truth in a disciplinary proceeding, and in making all relevant material available to both parties. An interference with a practitioner's right to practice is important, and disciplinary proceedings against a barrister are akin to criminal proceedings, particularly in that the orders which may be made include a fine, and/or reprimand, quite apart from orders for cancellation or suspension of the right to practice and for remedying loss.[33]
[31](1991) 22 NSWLR 578.
[32](1991) 22 NSWLR 578, 595-6.
[33]The Court decided that, apart from the name of one complainant, there was a balance in favour of the public interest being served by the disclosure of the documents.
The LIV next referred to Middendorp Electric Co Pty Ltd v Law Institute of Victoria & anor.[34] In that case the LIV claimed public interest immunity in respect of documents, sought by the Commissioner, relating to an enquiry into a complaint by the plaintiff against its solicitor. Nathan J said that the doctrine of public interest immunity attached to documents supplied to and generated by the LIV pursuant to its investigation of a solicitor. He then moved on to consideration of the balancing exercise which he ultimately adjourned for further hearing at a later date.
[34][1994] 2 VR 313.
Finally the LIV referred to R v Young[35] in which Spigelman CJ said that professional disciplinary bodies had been found to fall within the scope of public interest immunity because these private bodies, in the relevant respect, performed a governmental – indeed statutory – function.[36]
[35](1999) 46 NSWLR 681.
[36](1999) 46 NSWLR 681, [62].
As I have said, it was on the basis of the foregoing authorities that the LIV submitted that the documents held by the LIV in this case, containing information obtained pursuant to its statutory powers and functions and relating to trust account records and the audits and analysis thereof, fell into a category in respect of which it was open to the LIV to claim public interest immunity and, therefore, the court had to undertake the balancing exercise to determine whether that public interest was outweighed by the public interest in the unfettered investigation of the affairs of taxpayers by the Commissioner.
The LIV submitted that harm might be caused to the public interest because knowledge that the Commissioner might have access to the documents would potentially damage the capacity of the LIV to properly fulfil its statutory functions. In that regard, the LIV referred to the possible inhibition that might be placed on persons providing trust account information to the LIV, and to the LIV itself, if they had to have regard to ‘extraneous considerations’. By ‘extraneous considerations’ I understood the submission to refer to possible taxation implications and consequences for the solicitor involved (or maybe others). Another description of the way it was suggested that such harm might be caused was put as ‘whether if persons who are compulsorily to provide information and audit information to [the LIV] were mindful of the fact that that may then become available to the Australian Taxation Office, whether that would impact on their preparedness and the manner in which they complied with the statutory obligation’.
Turning to the balancing exercise, the LIV said that this (ie the exercise) was ‘more difficult and there’s not much to be said on our side’ but that ‘there’s even less to be said on their side’ and, therefore, ‘the trial judge was right’. The LIV submitted that the trial judge, having looked at the documents, had undertaken the balancing exercise and concluded that the documents in category 2 were protected by public interest immunity but that the documents in categories 1 and 3 were not. However the LIV made clear that the strength of the claim for immunity was based on general grounds and not on any particular harm arising from the contents of the actual documents in this case. However the LIV qualified that statement by contending that the judge was right to conclude that the Commissioner had no need for the documents based on the inspection thereof and had not otherwise produced evidence as to their significance or supporting his need to see them.
Finally, the LIV referred to authorities supporting its submission that the court had a duty to undertake the balancing exercise in order to determine whether the documents were protected by public interest immunity.[37]
[37]Citing Sankey v Whitlam (1978) 142 CLR 1, 38 (Gibbs ACJ); Middendorp Electric Co Pty Ltd v Law Institute of Victoria [1994] 2 VR 312, 326 (Nathan J); State of Victoria v Seal Rocks Victoria (Australia) Pty Ltd (2001) 3 VR 1, 6-7 (Ormiston JA).
Analysis
I think that the first question that needs to be asked is whether the claim by the LIV in this case was a ‘class’ or ‘contents’ claim. As the High Court said in The Commonwealth v Northern Land Council[38] in the joint judgment:[39]
The classification of claims for public interest immunity in relation to documents into ‘class’ claims and ‘contents’ claims has been described as ‘rough but accepted’. It serves to differentiate those documents the disclosure of which would be injurious to the public interest, whatever the contents, from those documents which ought not to be disclosed because of the particular contents. Both upon principle and authority, it is hardly contestable that documents recording the deliberations of Cabinet fall within a class of documents in respect of which there are strong considerations of public policy militating against disclosure regardless of their contents. But, whatever the position may have been in the past, the immunity from disclosure of documents falling within such a class is not absolute. The claim of public interest immunity must nonetheless be weighed against the competing public interest of the proper administration of justice, which may be impaired by the denial to a court of access to relevant and otherwise admissible evidence. As Gibbs ACJ said in Sankey v Whitlam:
‘I consider that although there is a class of documents whose members are entitled to protection from disclosure irrespective of their contents, the protection is not absolute, and it does not endure for ever. The fundamental and governing principle is that documents in the class may be withheld from production only when this is necessary in the public interest. In a particular case the court must balance the general desirability that documents of that kind should not be disclosed against the need to produce them in the interests of justice. The court will of course examine the question with especial care, giving full weight to the reasons for preserving the secrecy of documents of this class, but it will not treat all such documents as entitled to the same measure of protection -- the extent of protection required will depend to some extent on the general subject matter with which the documents are concerned. If a strong case has been made out for the production of the documents, and the court concludes that their disclosure would not really be detrimental to the public interest, an order for production will be made.’
In the last sentence in the passage which we have just quoted, Gibbs ACJ was referring no doubt to the outcome of a balancing process in a case where the detriment to the public interest involved in disclosure was outweighed by the public interest in the advancement of justice. In a case where a document fell into a class of document the disclosure of which would be injurious to the public interest regardless of the contents, a court could conclude that ‘disclosure would not really be detrimental to the public interest’ only in circumstances where there was a competing public interest, such as the public interest in the advancement of justice, which outweighed the public interest in the preservation of confidentiality. To inspect the contents of documents as a matter of course would be to disregard the basis of the immunity for a document falling within the class described. The apparent dilemma is, we think, to be resolved by recognizing that the classification of claims for immunity into ‘class’ claims and ‘contents’ claims is indeed often rough and imprecise. In many so-called ‘class’ cases a court may find it necessary to consider a document, inspecting it if necessary, in order to determine whether it does in truth fall into a class which attracts immunity. The contents of the document may have a bearing on that question as may the topic with which it deals, particularly if it is no longer current or controversial.[40]
[38](1993) 176 CLR 604.
[39](1993) 176 CLR 604, 616-7 ( Mason CJ, Brennan, Deane, Dawson, Gaudron, McHugh JJ).
[40]Citations omitted.
In the present case, as I understood it, the LIV was contending, both at trial and on appeal, at least primarily, that the documents were protected from disclosure by reason of their nature, that is by reason of the class into which they fell, and not by reason of their particular contents. If that is right, then it appears from the above statement of the High Court that, generally speaking, the only basis for inspecting the documents is to ensure that they fell into the relevant class.[41] However in this case there did not seem to be a dispute that the documents fell into the relevant class so that the reason for the judge inspecting the documents is not readily apparent.
[41]Namely, documents obtained or generated pursuant to the statutory functions and object of regulating the legal profession.
In Zarro v Australian Securities Commission[42] Lockhart J said,[43] citing a number of decisions in the High Court, the House of Lords and the Full Federal Court:
Objection may be taken to the production of documents because it would be against the public interest to disclose their contents or because it belongs to a class of documents which in the public interest ought not to be produced. There are documents which belong to a class which ought not to be disclosed irrespective of the contents of the particular documents because the law acknowledges that in the public interest such a class of documents should be immune from disclosure. The class includes Cabinet minutes and minutes of discussions between heads of government departments, papers brought into existence for the purpose of preparing submissions to Cabinet, and certain other documents which relate to the framing of government policy at a high level: … The extent to which this doctrine would protect from disclosure documents concerned with policy making by junior officials of government or correspondence with outside bodies is a matter on which there is divergence of judicial opinion. Although there are classes of documents which are entitled to protection from disclosure irrespective of their contents ‘no documents, however exalted their status, are completely immune from production’: ... Such documents may be withheld from production only when this is necessary in the public interest: … Although objection may in some cases be taken to production of documents because they belong to a class of documents which in the public interest ought not to be produced and although the class is not closed, it must only be in rare cases of documents at high levels of government involving matters of national importance that the class doctrine can apply. Documents within the possession of the ASC (an investigative and law enforcement agency) of a confidential nature, which record information received by it concerning possible offences or irregularities and recording the possible course of investigations or information with respect to evidence concerning proceedings to which the ASC is a party, plainly may fall within the scope of public interest immunity; but as at present advised I cannot conceive of a case where they would fall within the class doctrine and thus be immune from disclosure irrespective of the contents of any particular document.[44]
[42](1992) 36 FCR 40 (Full Court of the Federal Court) (Lockhart, Ryan and Gummow JJ).
[43](1992) 36 FCR 40, 45-6.
[44]Citations omitted.
In the same case, Gummow J said:[45]
… a claim to public interest immunity may be based on the nature of the contents of a particular document, or on the characteristic of a document as member of a class. As to class claims, the view now accepted is that there is what Lord Reid described as a heavy burden of proof on any authority which makes such a claim: see Rogers v Home Secretary [1973] AC 388 at 400, repeated by Stephen J in Sankey v Whitlam …
[45](1992) 36 FCR 40, 60.
Applying the above statements of principle by Lockhart and Gummow JJ, it will be a rare case in which documents are entitled to protection from disclosure by reason of their class and irrespective of their contents – there is a heavy burden of proof on any authority making a claim based only on the class of the documents.
As indicated earlier, it was common ground that it was open to the LIV to claim the protection of public interest immunity having regard to the class of documents involved but, in my opinion, insofar as the LIV was advancing a ‘class’ claim, it had to fail. Documents received or generated in the course of the statutory task of regulating the legal profession may be protected by public interest immunity but this class of documents is not of such high significance or importance[46] that it will ever be protected from disclosure by public interest immunity irrespective of the contents.
[46]Compare the class constituted by cabinet documents involved in The Commonwealth v Northern Land Council.
It seems to me, therefore, that insofar as the LIV was advancing a ‘class’ claim, then it failed at the threshold as was submitted by the Commissioner but perhaps for slightly different reasons.
As I have already said, I do not think that the LIV was, in general, claiming protection for the documents based on their particular contents but, in case that is wrong, I note that the LIV said on appeal, when it came to the question of the balancing exercise, that ‘there’s not much to be said on our side’. I took this to be a concession that there was nothing much about the contents of the particular documents[47] that demonstrated that there was likely to be any harm to the public interest occasioned by their disclosure. I have inspected the documents myself and can only agree with that concession. It seems to me that the documents are innocuous. There are a number of auditor’s reports but I hardly think that the prospect that such reports might be disclosed to the Commissioner would be likely to affect an auditor’s due performance of his duties and it does not appear to me and it was not suggested either below or on appeal that there was anything about their contents that should give rise to relevant concern. The other documents comprise mainly routine correspondence and memoranda and, again, it does not appear to me and it was not suggested that there was anything about their contents that should cause concern.
[47]Subject to a matter raised on the cross-appeal with which I deal later below.
It seems to me therefore that, insofar as the claim was a ‘contents’ claim, it did not get off the ground. Accordingly, in my opinion, the occasion to undertake a balancing exercise did not arise. However, even if the occasion for undertaking a balancing exercise had arisen, I do not think that it would assist the position of the LIV. As I understood it, the learned trial judge considered, having inspected the documents, that the public interest involved in the Commissioner having access to them was not established or was slight. I respectfully disagree because I do not think it can be concluded from an uninformed inspection of the documents that their contents would necessarily be of little or no use to the Commissioner. There is material in the documents that may or may not be of use to the Commissioner and I do not think it is valid to characterise the Commissioner’s exercise of power as a ‘fishing expedition’ when that is the nature of the power involved.
Cross-appeal
The LIV submitted that the judge was wrong when he permitted the disclosure of the documents labelled 1C and 2C containing complaints against the solicitor and identifying the names of the complainants. It is unnecessary to determine that question because the Commissioner stated that he would accept production of copies of the documents with the names of the complainants blanked out.
Conclusion
For the foregoing reasons, in my opinion the appeal should be allowed. In accordance with the position announced by the Commissioner, the taxed costs of the LIV of the appeal (on a party/party basis), will be paid by the Commissioner. The cross-appeal should be dismissed without adjudication on the merits.
BONGIORNO JA:
I agree with Mandie JA.
HANSEN AJA:
I also agree with Mandie JA.
---
4