Oke v Commissioner of the Australian Federal Police
[2005] FCA 1363
•20 SEPTEMBER 2005
FEDERAL COURT OF AUSTRALIA
Oke v Commissioner of the Australian Federal Police [2005] FCA 1363
PRACTICE AND PROCEDURE – items seized under warrant executed pursuant to s 3E of the Crimes Act - application to determine whether computer records on items seized privileged – parties agreed upon procedure for examination and processing of records with intention that it be made an order of the Court– examination and processing commenced without an order of the Court - examination and processing ceased as procedure prolonged – injunction sought to enforce the agreed procedure – whether agreed procedure amounts to a binding contract – whether parties intended to create legally enforceable mutual obligations which would oust the jurisdiction of the Court to give directions with respect to the resolution of the principal issues in the proceedings – nature of Court’s discretion to vary its earlier orders
SIMON FORBES OKE V COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
SAD 149 of 2004
MANSFIELD J
20 SEPTEMBER 2005
ADELAIDE
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SAD 149 OF 2004
BETWEEN:
SIMON FORBES OKE
APPLICANTAND:
COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
RESPONDENT
JUDGE:
MANSFIELD J
DATE:
20 SEPTEMBER 2005
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
INTRODUCTION
On 24 June 2004 search warrants issued pursuant to section 3E of the Crimes Act 1914 (Cth) (the Crimes Act) were executed at premises of the applicant and of Ozone Manufacturing Pty Ltd (Ozone) in Sydney and Adelaide. The applicant is the sole director of Ozone. At that time the applicant made a blanket claim of legal professional privilege over all documents and computer records seized pursuant to the warrants.
On 1 July 2004 the applicant and his solicitor inspected the items seized by the Australian Federal Police (the AFP) to determine over which documents the applicant would maintain his claim for privilege. While it was possible to properly inspect and make a claim over specific hard copy documents, it was not possible to do so with respect to certain computer records. The applicant thus maintained his blanket claim for legal professional privilege over the computer records.
One of the items seized during the execution of the warrants was a Toshiba Lap Top Computer TE 2100 Serial Number Y2017532V (the laptop computer). An issue arose as to whether its seizure was authorised under the warrants. On 2 July 2004, a further search warrant which authorised the seizure of the laptop computer was ‘executed’, when the laptop computer was returned to the applicant and then immediately re-seized. On 2 July 2004, the AFP also notified the applicant that the AFP were removing the laptop computer from his possession under s 3K of the Crimes Act, and that if agreement were not reached as to a reasonable procedure to resolve the claims for legal professional privilege by later that day, the AFP proposed to examine the laptop computer and its contents.
That prompted the applicant on 2 July 2004 to apply orally for an injunction to restrain the AFP from inspecting the contents of the laptop computer. The application was adjourned to 5 July 2004 to give the parties the opportunity to agree upon an inspection protocol. Their discussions led to an agreement between the applicant and the AFP dated 5 July 2004 (the Agreement) as to the terms upon which the computer records seized in the execution of the warrants would be examined and processed. The Agreement referred to the following computer records: the laptop Computer; Western Digital WD800 Hard Drive Serial No WCA8E697 3032; Computer Driver Model ST34313A P/N: 9P5001 – 030; 4 Syquest Hard Disk Cartridges; Compact discs entitled ‘MAC Conversion to PC’ and ‘Vicky Backup’; and Floppy disc titled ‘3 files from server’.
I will call them collectively ‘the computer records’.
On 5 July 2004, the Agreement was noted by being read into the transcript. The parties had proposed that the Agreement become an Order of the Court. It is headed with the heading of these proceedings and with the word ‘Order’ and is in the form of an Order of the Court. The learned judge hearing the matter was reluctant to make an order in terms of the Agreement having regard to the terms proposed. The applicant of course undertook to institute formal proceedings promptly.
Curiously, the application which was formally instituted on 6 July 2004 seeks a declaration that certain specified documents are subject to legal professional privilege and an injunction restraining the AFP from examining them, and interlocutory relief restraining their inspection by the AFP pending the determination of their status as privileged documents. It does not expressly refer to the computer records. I assume that was by oversight. I do not think anything presently turns on that, as the application can (and should) be amended to reflect that which is really in dispute between the parties. I have required it to be amended before giving my decision on the present issue. That having been done, it seems to me to be appropriate for the Court to give directions so that the contents of the computer records are identified, and then so that the particular contents can be addressed individually to determine if they or any of them attract the claim of legal professional privilege.
THE INSPECTION PROCESS
The inspection process has been prolonged. It appears from the affidavit of the solicitor for the applicant not to have been facilitated by the applicant. I do not say that critically. The description of the process undertaken indicates to me that the AFP has been permitted to search the computer records by AFP selecting the key word searches used. It has not lead to a list of the documents in respect of which privilege is claimed. Those about which there is no dispute that they are relevant (i.e. covered by a warrant) and are not privileged have been made available to the AFP. Those about which there is a claim for privilege have been separately stored, but not yet described. Those about which there is a dispute about whether they are ‘relevant’ have also been separately stored. The majority of searched files have apparently been of no interest to the AFP, and have simply remained on the particular computer records. There has been no satisfactory agreed process to have a physical list of the documents or files as separately stored on computer. Disputes have occurred as to the period of time that the AFP should be permitted to look at a particular record or file from a computer record, once the applicant nominated it as an ‘irrelevant’ document or file or a privileged document or file. Disputes have arisen as to the nature and extent of the notes taken by officers of the AFP as to the description (and, the applicant conjectures, the contents) of those documents or files. That process of inspection appears to have been abandoned by the AFP about 13 October 2004.
Examination of the computer records ceased on 13 October 2004 after a dispute arose concerning the note taking practices employed by the AFP. The AFP made an urgent application to the Court on 15 October 2004 seeking the dismissal of the principal application for relief (made on 6 July 2004) on the basis that the applicant had frustrated the proper implementation of the agreement; and that the Agreement did not prevent the AFP from taking notes of the documents and files on the computer records. On 15 October 2004 the learned judge then conducting the matter dismissed that application with costs.
THE ISSUE
On 22 April 2005 the solicitors for the AFP informed the applicant that the AFP considered that the Agreement had proved to unworkable. It proposed an alternative processing and examination procedure. Its proposal was that the applicant have until 10 May 2005 (or such later date as the respondent may agree) to identify the individual items over which the applicant makes the claim of legal professional privilege and the specific basis upon which the claim was made. The AFP indicated that after 17 May 2005 it would proceed to examine the computer records excluding those records over which a proper claim of privilege had already been made. That action prompted the present motion.
THE MOTION
The applicant by motion dated 13 May 2005 seeks an injunction restraining the AFP from examining or otherwise dealing with the computer records other than in accordance with the Agreement. The respondent opposes the motion and seeks directions that:
(1)the applicant file and serve within 28 days an affidavit setting out the grounds of the claim to privilege and exhibiting in a sealed envelope those documents of which privilege are claimed;
(2)the AFP within 14 days of receipt of the applicant’s affidavit file and serve such affidavit material in response as it may be advised.
The applicant submits that the Agreement is enforceable against the AFP and, on the basis that legal professional privilege is a substantive right which should be protected, the Court should uphold the agreement as one entered into between the parties at arms length with legal advice and which is part-performed. The applicant also submits that the AFP is estopped from searching the computer records without complying with the Agreement, and that it would be unconscionable for the AFP to unilaterally determine not to perform its obligations pursuant to the Agreement.
CONSIDERATION
The Agreement reached in the context referred to above (see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337) was intended to become a consent interlocutory order of the Court. It is drawn in that way. It is understandable that the learned judge in whose docket the matter then lay was concerned about making the proposed order in its terms, as it started with the proposition that it was ‘without prejudice to either party’.
Apart from that feature, the Agreement provided that in relation to the computer records, ‘leave be granted’ to examine and process the computer records, through experts but with the participation of the applicant and an officer of the AFP and legal representatives. The processing involved sorting the documents or files on the computer records into three categories, which were then to be transferred to separate computer discs. The categories were:
(a)documents or files over which a claim for legal professional privilege is made;
(b)documents or files over which no claim for legal professional privilege is made; and
(c)documents or files which were not entitled to be seized under the warrants.
As noted above, the partial inspection of the computer records has resulted in a fourth category, namely documents or files in which the AFP have no interest. That fourth category is not contentious. It was then contemplated that the documents or files in categories (a) and (c) would be addressed and, in the event of disagreement as to their status, referred to the Court for determination.
The first step in considering whether to make the order sought on the motion is to determine whether the parties are bound by the Agreement, so that the Court should simply enforce it. There are two matters to address in that regard. The first is to determine whether the Agreement purports to oust the jurisdiction of the Court to give directions inconsistent with the terms of the Agreement. If not, the second is to determine whether the Court should enforce the Agreement irrespective of the present circumstances, where the AFP contends that it is practically unworkable. (In addressing that issue, it is not presently necessary to form any view as to the accuracy of the AFP’s contention. That question may arise if the Court has power to do other than enforce the Agreement). The AFP’s position is not that it is seeking to avoid a contract by saying that the Agreement has been technically frustrated. Rather, the AFP submits that the Agreement was not intended to create enforceable legal relations between the parties, but rather was to provide a practical means of dealing with the applicant’s claim for legal professional privilege and was simply an interim agreement between the parties as to how they would proceed.
Before referring further to the Agreement, it is convenient to make some observations about the nature of interlocutory orders.
There is no necessary permanence in any order made by the Court on a directions hearing. To the contrary, the Federal Court Rules envisage that any orders made by the Court itself can be varied.
O 10 r 1(1) provides that on a directions hearing the Court shall give such directions with respect to he conduct of the proceeding as it thinks proper. O 10 r 1 (3) provides that ‘the Court may revoke or vary any order made under subrules (1), (1A) or (2).’
0 35 r 7(2) is also relevant. It provides:
‘7(2) The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part III of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where –
. . .
(c) the order is interlocutory. . .’
An interlocutory order may be set aside even where made by consent and entered: Mullins v Howell (1879) 11 Ch D 763 (Mullins); Ainsworth v Wilding [1896] 1 Ch 673.
In Mullins, Jessel M.R said at 766:
‘I have no doubt that the Court has jurisdiction to discharge an order made on motion by consent when it is proved to have been made under a mistake, though that mistake was on one side only, the Court having a sort of general control over orders made on interlocutory applications.’
His Lordship then referred to the general control which a court has over its own orders and in particular interlocutory orders, and continued at 766:
‘I do not think that the rules which have been laid down as the rules under which the Court will enforce agreements apply to enforcing orders of the Court, because the Court has jurisdiction over its own orders, and there is a larger discretion as to orders made on interlocutory applications than as to those which are final judgments.’
The variation of interlocutory orders entered by consent was also considered in R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389. In that case, the parties had agreed to an order that the appellant pay into court $20,000 as security for costs within 45 days and that in default the appeal would be dismissed. The appellant failed to comply with that order. After the time limited for compliance had elapsed, the appellant applied to vary the order to enable the appellant belatedly to comply with it, by providing the agreed security. The Full Court permitted that to be done. Woodward and Foster JJ held that, although the order had given effect to a contract between the parties, the Court had an overriding power to control its own proceedings, and so could vary interlocutory orders, even when made as the result of a binding contract. Jenkinson J reached the same result by a slightly different path. His Honour held that the agreement leading to the consent order did not contain an implied term that the appellant would not invoke the Court’s power to vary it, so the appellant could apply to the Court to vary its earlier order. In the circumstances, , the appellant’s attempts to vary the consent interlocutory order did not involve any breach of its agreement.
Woodward and Foster JJ said at 390-391:
‘It is convenient to begin by considering whether there was in fact a binding contract between the parties expressed by the consent order, or whether this was one of the frequent cases in which an interlocutory order is made on the application of one party with the other party or parties consenting – in the sense of not objecting – but without there being any intention of entering into a formal and binding contract; see Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185 at 189; 1 All ER 377 at 380.
Courts are very familiar with the circumstance in which parties reach an agreement, either after a good deal of negotiation or perhaps quite readily about the orders that should be made for the future conduct of an action. We would be most reluctant to reach any conclusion which tended to inhibit the ready consent of practitioners to the making of sensible arrangements in such cases. It would normally be understood by them that, if circumstances arose which made it necessary, they would be entitled to apply to the court for a variation of the orders to which they had consented. No doubt the fact of their consent would be a relevant consideration for the court in deciding whether to order a variation, but it would be understood by all that the ultimate decision was in the court’s hands.’
Their Honours concluded that the consent order did give effect to a contract between the parties. However, they pointed out at 392 that the Court has an overriding power to control its own proceedings and that the existence of that inherent power has long been recognised and acted upon. Their Honours considered a number of English Court of Appeal decisions and concluded at 393:
‘… we think it is clear that the Court of Appeal has at least taken the view that interlocutory orders can be varied by the Court, even where they have been made as the reuslt of a binding contract between the parties, and, also that any ouster of the Court’s jurisidction to make such a variation cannot be effected except by clear words.’
Their Honours at 393 left open whether the court’s control could properly be ousted. It was not necessary to decide that question as the agreement resulting in the consent order did not purport to do so.
In Wilkshire and Coffey v Commonwealth of Australia (1976) 9 ALR 325 at 330 Muiread J held that the Court has inherent power to review and set aside orders, including consent orders, made upon a summons for directions provided the orders are procedural only and have not determined in whole or in part the rights or status of parties on the essential issues involved in the case.
I have also reached the view that the Agreement was not intended by the parties to create legally enforceable mutual obligations which would inhibit the parties from applying to the Court to give directions with respect to resolution of the principal issues in the proceedings. The context in which the Agreement came into existence was that the applicant was seeking urgent interlocutory relief from the Court. He wanted to prevent the computer records from being inspected generally by the AFP. The AFP, whilst accepting that the applicant may have a claim to legal professional privilege over some of the documents or files on the computer records, wanted to proceed to access that material to which it was entitled under the warrants. The Agreement was, in effect, an agreed resolution of the immediate issue as to whether some form of interlocutory injunction should be granted. It was a practical solution on an interim basis to the issue as to how the applicant’s rights could be protected. The ultimate determination about which documents or files held on the computer records are the subject of legal professional privilege was not the subject of the Agreement. It related to a procedure by which that ultimate determination might come to be made. The Agreement was intended to become an order of the Court. There is no indication in the Agreement that the normal power of the Court to vary procedural orders made from time to time was intended to be inhibited. The contrary is the case, by the inclusion of the provision for liberty to apply.
The introductory words to the Agreement are that it is ‘Without prejudice to either party …’. Those words also, especially in conjunction with the expressly reserved liberty to apply, might also point to the Agreement being no more than an agreed process to progress identification of the documents or files on the computer records about which there is a dispute as to their privileged status. In the course of submissions, senior counsel for the applicant indicated a different reason for that expression, namely to have recognised that the applicant does not accept the legality of the execution of all the warrants. As the transcript on 5 July 2004 contains a similar observation, and as senior counsel for AFP did not dispute the assertion as to the reason for that expression, I have not placed the weight on it which otherwise I may have done.
Nevertheless, for the reasons I have given, I do not consider an Agreement was intended to impose upon the parties mutual obligations which were not vulnerable to either party seeking from the Court some other directions as to how the proceedings should be conducted with a view to identifying the real issues in dispute. Nor do I think it was intended to create some obstacle to the Court giving such directions in the exercise of its usual discretion and having regard to the usual consideration. The Agreement, nonetheless, does reflect the working model for refining the issues for trial adopted by the parties at that time. In determining whether any directions different from the Agreement should be given, I will place weight upon it by reason of that fact. However, I do not consider that it constitutes an anticipatory fetter on the exercise of the Court’s power and discretion as to what interlocutory directions should now be made, or any fetter upon the rights of the parties to seek directions from the Court (cf per Mason J in Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 at 77).
Before addressing the question whether directions should be given different from the process specified in the Agreement, there is one further contention of the applicant which it is necessary to address.
The applicant raised an alternative argument that, if there was no contract, then estoppel operated to prevent the AFP from departing from the procedure in the Agreement. The applicant contended that, on the faith of the AFP’s representations (which he says were comprised in ‘the Agreement’), he acted to his detriment by allowing the AFP to retain possession of the laptop computer without having to return to the agreed custodian (the Adelaide Magistrates Court) at the expiration of every 72 hour period to obtain orders pursuant to s 3K of the Crimes Act to enable it to continually and lawfully retain possession of the computer and its contents. Section 3K deals with the examination or processing of things pursuant to the warrants. Section 3K(3A) provides:
‘The thing found at the premises may be moved to another place for examination or processing for no longer than 72 hours.’
Section 3K(3B) then provides:
‘The executing officer may apply to an issuing officer for one or more extensions of time if the executing officer believes on reasonable grounds that the thing cannot be examined or processed within 72 hours or that time as previously extended.’
Section 3K(3C) sets out the rights of the occupier of the premises with respect to the movement of things seized. It provides that the executing officer must give notice of the application under s 3K(3B) to the occupier of the premises, and the occupier is entitled to be heard in relation to the application.
Given the only rights conferred by s 3K on the applicant, as occupier, were to be notified of and heard on a possible extension of time, it is difficult to see how he has acted to his detriment. The applicant submitted that the Agreement meant that it was no longer necessary for the AFP to apply to re-extend the orders allowing them to retain possession. I do not consider that this amounts to a real detriment to the applicant. Moreover, it is difficult to see how the applicant has even altered his position or acted on faith of the representations comprised in ‘the Agreement’ in that his only rights were to be notified and heard in relation to an extension of time application. There is no other legal right which he has forfeited. In any event, there is no real detriment. The access to the laptop computer has been pursuant to the Agreement, but as I have found the Agreement does not on its proper construction prevent the AFP from applying to the Court to vary the procedural process to which the Agreement relates.
It is apparent that the implementation of the process provided for in the Agreement has not been without difficulty. It is now some 12 months since the process started. The evidence before me indicates that the identification of the specific documents and files over which legal professional privilege is claimed is only partially done, and there is a long way to go. The AFP in effect has done no work to advance the process since 13 October 2004. There is some dispute as to the reasons for the process under the Agreement proving frustrating to the AFP. I do not need to resolve that. The task of identifying those documents and files on the computer records in respect of which there is a disputed claim to legal professional privilege, so that the disputes may be determined by the Court, is a very large one. There are apparently some hundreds of thousands of documents and files on the computer records, although the majority of them are apparently not contentious in the present context. I am satisfied on the evidence that the process prescribed by the Agreement is one which the Court should re-visit. It is not in the interests of any party that the resolution of the disputed claims to privilege should be delayed for a further lengthy period. The AFP evidence suggests a period in excess of two years will be involved to the point of identifying the disputed documents or files if the regime under the Agreement is followed. The solicitor for the applicant has deposed to the fact that the applicant remains willing to consider ‘a meaningful variation of the Agreement’.
I do not therefore propose to make the order sought by the applicant on the motion. The AFP’s proposal for directions is a simple one. It reflects the usual order made in similar circumstances, but where the material which may contain the privileged documents is in hard copy. It may be that ultimately such an order is appropriate. However, I am not disposed to make such an order at present. The applicant has not yet presently made any alternative suggestions as to the appropriate directions the Court should give, nor addressed the practicality of the directions proposed by the AFP. That is simply because the applicant’s motion is to insist upon the process prescribed by the Agreement being adhered to.
I will therefore give the parties an opportunity to make further submissions as to what directions should now be given to identify the documents or files on the computer records which the applicant claims attract legal professional privilege, and to have them described to the AFP in a form which enables the AFP to indicate whether it accepts or disputes those claims. It will then be necessary for a further directions hearing to determine how the disputed claims to privilege may be resolved.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate:
Dated: 19 September 2005
Counsel for the Applicant: Mr M Abbott QC with Mr S J White Solicitor for the Applicant: Thomson Playford Counsel for the Respondent: Mr P A Cuthbertson with Mr R Prince Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 24 June 2005 Date of Judgment: 20 September 2005
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