Qld Police Credit Union v CJC

[1998] QSC 9

IN THE SUPREME COURT
OF QUEENSLAND

No. 9983 of 1997

Brisbane

Before the Hon. Mr Justice Shepherdson

[Qld Police Credit Union v. CJC]

BETWEEN:

QUEENSLAND POLICE CREDIT UNION LTD
  Plaintiff

AND:

CRIMINAL JUSTICE COMMISSION
  Defendant

JUDGMENT - SHEPHERDSON J.

Judgment delivered 19 February 1998

CATCHWORDS:           ADMINISTRATIVE LAW - Application for declaratory and injunctive relief - claim procedural fairness denied by defendant conducting an inquiry pursuant to statute - procedural fairness denied to plaintiff - declaration accordingly - injunction refused.

Solicitors:Gilshenan & Luton Solicitors for the plaintiff.

R.A. Evans Solicitor for the defendant.

Counsel:  Hanson QC and Perry for the plaintiff.

Gotterson QC and G Newton for the defendant.

Hearing date:          28 January 1998

JUDGMENT - SHEPHERDSON J.

Judgment delivered 19 February 1998

By a resolution dated 29 October 1996 the abovenamed defendant resolved:-

1. to conduct an investigation into cases of alleged or suspected misconduct or official misconduct by members of the Queensland Police Service concerning those members:-

   (a)being in possession of, supplying, producing or trafficking in dangerous drugs;

   (b)associating with, and supplying official information to, persons possessing, supplying, producing or trafficking in dangerous drugs to assist them in avoiding apprehension of prosecution for such activities;

   (c)engaging in acts of official corruption, perversion of justice and like offences in connection with persons mentioned in paragraph (b) or associates of those persons.

during the period 22 April 1990 to the date of the resolution;

1. as part of the investigation referred to in paragraph 1, to consider generally such cases and make such recommendations as may seem appropriate in light of the Commission’s responsibilities under the Criminal Justice Act 1989 with particular reference to sections 23 and 29(3)(e); and

2. to engage the services of an independent qualified person pursuant to sections 25(2)(c) and 66 of the Act, that person being the Honourable William John Carter QC to conduct the investigation, to hold such public or private hearings as may be appropriate and to report thereon to the Commission to enable the Commission, the Commissioners and officers of the Commission to discharge the functions and responsibilities imposed by the Act.

   By an amended resolution dated 24 January 1997 the defendant removed the finite period of time referred to in the earlier resolution.

   By a letter dated 8 October 1997 Mr Carter QC forwarded his report to the Acting Director of the Official Misconduct Division of the defendant.  A report was subsequently furnished to the Minister for Justice and Attorney-General, the Speaker of the Legislative Assembly and the chairman of the Parliamentary Criminal Justice Committee by letter under the hand of the chairman of the defendant Mr F J Clair.

   A full copy of the report is before me.

   On 5 November 1997 the plaintiff issued its writ of summons in this action seeking the declaratory and injunctive relief which was later claimed in the notice of motion filed in this action on 8 January 1998.  The relief sought is:-

   1.a declaration that in reporting adversely on the plaintiff in its report entitled “Police and Drugs: a Report of an Investigation of Cases Involving Queensland Police Officers” the defendant:-

   (i)failed to observe the requirements of procedural fairness towards the plaintiff; and/or

   (ii)in breach of section 22 of the Criminal Justice Act 1989 (as amended) failed to act fairly and/or impartially towards the plaintiff.

2.an injunction restraining the defendant from giving advice, making or pursuing recommendations, or acting pursuant to or in respect of or in reliance upon that part of its report entitled “Police and Drugs: a Report of an Investigation of Cases Involving Queensland Police Officers” of and concerning the plaintiff and referred to on page xvii  (para 3) and pages 23 and 24 of the said report.

The plaintiff was established in 1964 and operates pursuant to rules of the Queensland Police Credit Union Limited.  It appears from these rules that the plaintiff is incorporated under the Financial Institutions (Queensland) Code.

The plaintiff’s application relates to a passage in chapter 3 of Mr Carter Q.C.’s  report.  Chapter 3 is headed “THE INVESTIGATION OF CORRUPTION”.  The passage complained of appears at pages 23-24 and it brings chapter 3 to an end.  The passage reads:-

“The analysis of the financial affairs of a corrupt suspect is often a fruitful exercise and section 69 of the Criminal Justice Act is designed to facilitate the investigation.  This section permits the Chairperson of the Commission, in certain circumstances, to issue a notice to a person to furnish information and/or documents.  This facility is frequently used to obtain financial information and/or documents from various financial institutions.  Although there is no statutory obligation imposed on the institution to refrain from informing the suspect of the fact of the issue of the notice, the Commission has over several years enjoyed the confidence of several major financial institutions which have kept secure the fact of the Commission’s interest in the suspect.  It should be mentioned in passing that a statutory obligation to maintain security in similar circumstances is available to the National Crime Authority.

I recommend the introduction of a similar statutory prohibition in the Criminal Justice Act.

The CJC is inhibited in its investigation of corrupt police by the unavailability of a power to prohibit the financial institution from disclosing the interest of the suspect.  Although, as pointed out above, the major financial institutions in the State assist the Commission in maintaining the security of its investigations, it is somewhat paradoxical that the same measure of security is not afforded the Commission by the Queensland Police Credit Union, the financial institution which acts as the banker for most, if not all, serving police.

It is seemingly the stated policy of the Queensland Police Credit Union that any request by the CJC to the Credit Union for financial information which may be relevant to an investigation of a police suspect is immediately relayed to that police officer.  It is the only financial institution that deals with the Commission’s notices to produce in this way.

This creates very serious difficulties in the investigation of suspected corrupt police.  Maintaining security for an investigation in this kind of operation is paramount.  The policy of the Queensland Police Credit Union effectively compromises any such investigation.  The consequence is that the effectiveness of any investigation of corruption which requires access to Police Credit Union information is significantly reduced.  It seems that only a legislative prohibition upon disclosure of the Commission’s interest can effectively meet this idiosyncratic policy of the Queensland Police Credit Union.”

I add that the reference in the Notice of Motion to page xvii (para 3) is to Mr Carter’s Recommendation No 3 which reads:-

“That the Criminal Justice Act be amended to prohibit any person who is served with a Notice under section 69 of the Act from informing any other person of the fact of such service.” [Chapter 3: pages 23-24].

The applicant’s case is:-

1.that the above passage from pages 23 and 24 of the report (which was widely reported in the media) clearly damaged the reputation of the plaintiff.

2.that the plaintiff was not accorded procedural fairness by the defendant, through Mr Carter QC, in that, before finalisation and publication of the report it was not offered any opportunity to make submissions to and/or call evidence before the enquiry being conducted by Mr Carter QC with respect to the matters which Mr Carter canvassed (by findings and comments) in that passage.  It is said that the applicant thereby lost the opportunity to refute those findings and comments.

3.that the relief sought in the notice of motion should be granted.

The respondent opposes the application.  The plaintiff by its solicitors letter dated 24 October 1997 addressed to the Chairman of the defendant, complained of distress and embarrassment caused by the comments and sought a retraction and apology.  In that letter the solicitors said:-

“Commissioner Carter commented further that our client was the only such financial organisation to jeopardise investigations.  The clear imputation is that our client was acting improperly or corruptly or contrary to its duties and obligations in a manner calculated to assist corrupt persons to avoid detection and apprehension.  The suggestion seems to be that this conduct was engaged in because our client is the Queensland Police Credit Union.

Such comments by Commissioner Carter in our view constitute a gross defamation of our client.”

The defendant replied, refusing to accept there had been any inference of corruption on the part of the plaintiff which should be retracted and denied any procedural unfairness necessitating an apology.  The defendant has maintained that attitude.

Before considering the arguments of both sides and what imputations can be drawn from the passage in the report I turn to the law.

The principal authority is Ainsworth v. Criminal Justice Commission (1982) 175 CLR 564. Mr Hanson QC, leading counsel for the applicant submits that it applies to the present case while Mr Gotterson QC, leading counsel for the defendant submits that it is distinguishable. Ainsworth was concerned with the Criminal Justice Act 1989 of the State of Queensland the provisions of which differed from the present provisions. Nevertheless, in Ainsworth and in the present case the defendant had the same statutory obligation - it must at all times act independently, impartially, fairly and in the public interest: See section 22 of the present Act which says:-

“The Commission must at all times act independently, impartially, fairly and in the public interest.”

In Ainsworth the present defendant had, on 1 June 1990, delivered a report entitled “Report on Gaming Machines and Regulations”.  This report included references to Leonard Hastings Ainsworth and the Ainsworth group of companies which included Ainsworth Nominees Pty Ltd.  (“the company”) L.H.  Ainsworth was the managing director of the company which conducted a business of manufacturing and supplying poker machines.  The defendant recommended that the Ainsworth group of companies should not be allowed to participate in the gaming machine industry in Queensland.  Neither L.H. Ainsworth nor the company was aware of the report until it had been tabled and publicised.  They were not given any opportunity to be heard on the matters about them raised in the report.

L.H. Ainsworth and the company alleged breach of procedural fairness and sought mandamus and certiorari directed to the defendant.  The application was made to the Supreme Court of Queensland, and ultimately the Full Court of that Court discharged with costs, orders nisi which the applicants had obtained.

An application for special leave to appeal to the High Court of Australia succeeded. The High Court was concerned with the requirement of the defendant to act fairly. In respect of that requirement Mason CJ, Dawson, Toohey and Gaudron JJ considered s.3.21(2)(a) of the Criminal Justice Act which stated:-

“The Commission shall, at all times -

(a) act independently, impartially, fairly, and in the public interest.”

At pages 574-5 their Honours said:-

“A requirement to act fairly may not be in quite the same category as the requirement to act impartially or in the public interest.  However, a body established for purposes and with powers and functions of the kind conferred on the Commission and its organisational units is one whose powers would ordinarily be construed as subject to an implied general requirement of procedural fairness, save to the extent of clear contrary provision.  That is because it is improbable that, though it did not say so, the legislature would intend that a body of that kind should act unfairly.”

At p.576 their Honours said:-

“The process which led to the report may be described as one of enquiry and investigation.  Obviously, not every enquiry or investigation has to be conducted in a manner that ensures procedural fairness.”

Later, on the same page, their Honours said:-

“It is now clear that a duty of procedural fairness arises, if at all, because the power involved is one which may ‘destroy defeat or prejudice a person’s rights, interests or legitimate expectations” (Annetts v. McCann (1990) 170 CLR 590 at page 598 per Mason CJ Deane and McHugh JJ). Thus, what is decisive is the nature of the power, not the character of the proceeding which attends its exercise. That is not to deny that provision may be made permitting or requiring procedures which are wholly inconsistent with a requirement of procedural fairness.”

Their Honours then stated the question before them and they said (page 577):-

“... the only question which now arises is whether the report adversely affected a legal right or interest, including an interest falling within the category of legitimate expectation, such that the Commission was required to proceed in a manner that was fair to the appellants.”

At pages 577-8 their Honours said:-

“... the law proceeds on the basis that reputation itself is to be protected.  And the Commission’s report, published in the manner required by s.2.18 of the Act, could only ensure that, thereafter, the appellant’s reputation in Queensland would be of the worst kind.”

In Ainsworth the High Court concluded that the appellants’ reputation had been blackened in  circumstances in which the Commission should have given, but did not give them an opportunity to put their side of the matter (page 579).  In the course of their reasons the above 4 members of the Court said that business or commercial reputation has been established as an interest which should not be damaged by an official  finding after a statutory enquiry unless the person whose reputation is likely to be affected has had a full and fair opportunity to show why the findings should not be made.  (see p.578).

Although concluding that the appellants were entitled to procedural fairness their Honours said (page 578):-

“It is not in doubt that, where a decision-making process involves different steps or stages before a final decision is made, the requirements of natural justice are satisfied if ‘the decision-making process, viewed in its entirety entails procedural fairness’.” (see South Australia v. O’Shea (1987) 163 CLR 378 at p.389 per Mason J.)

I propose to follow Ainsworth.  The matter before me requires me to view the decision-making process in its entirety and decide whether or not that process so viewed entailed procedural fairness.  It also requires me to decide whether the passage complained of did damage the plaintiff’s reputation.

Mr Carter QC was appointed to perform one of the functions of the Official Misconduct Division those functions being defined in s.29(3) of the Criminal Justice Act. Section 29(3) appears in Division 4 - Official Misconduct Division. His function was to investigate the matters set out in the resolution which I have earlier recounted (see also s.29(3)(d) for the specific function).

Mr Hanson QC has submitted that the following imputations can all be drawn from the above quoted passage from the report:-

1.that there was something wrong with the plaintiff’s policy.

2that the plaintiff was obstructing justice by tipping off suspects who were its customers or clients.

3.that one consequence of the plaintiffs conduct was to compromise police investigations.

4.the use of the word ‘idiosyncratic’ in relation to the plaintiff’s policy meant that the plaintiff’s policy was out of step with policies of other financial institutions and that the plaintiff was being ‘recalcitrant’.

5.that the only way to bring the plaintiff into line was to introduce legislation forcing it to adopt a policy which would assist the Commission’s investigation and this was something which needed to be done and should be done.

He further submitted that these imputations had damaged the reputation of the plaintiff and that before publishing the report Mr Carter QC should have given but did not give the plaintiff an opportunity to put its side of the matters which are mentioned in the passage at pages 23-24 and which I have earlier set out at length.  I mention one matter relied on by Mr Hanson.  In the penultimate paragraph of the above quoted passage from the Report the following finding is made:-

“It is the only financial institution that deals with the Commission’s notices in this way.”

The affidavit evidence before me and relied on by the plaintiff discloses the plaintiff believed it owed a higher duty to its members than to the defendant.

The above finding that the plaintiff was the “only” financial institution is one which the plaintiff may have wished to challenge but it was not given any opportunity to do so.

Mr Gotterson conceded that the obligation to give an opportunity to be heard arises only if what a person in Mr Carter’s position would say, is likely to be damaging to reputation.  He recognised that in Ainsworth it was held that the duty of procedural fairness arises where a business or commercial reputation is likely to be damaged by express finding or adverse recommendation.  His central submission was that no imputation likely to damage or harm the plaintiff’s business or commercial reputation is to be found in the relevant passage from pages 23-24 of the report.

He has further submitted that a fair reading of the relevant passage reveals that this is so.

Mr Gotterson analysed the relevant passage sentence by sentence and in so doing pointed out that in the 3rd paragraph on page 24 (the penultimate paragraph in the quotation earlier in these reasons) two uncontroversial facts were stated namely:-

(a)what the plaintiff’s policy is with respect to disclosure of any request by the defendant for financial information being immediately relayed to the police officer customer;

(b)that the plaintiff was the only financial institution which dealt with the defendant’s notices in that way.

As to whether the second of these facts was uncontroversial is not clear.

In my view, a fair reading must be made of the whole of the relevant passage in order to decide whether or not the passage conveys the imputations for which Mr Hanson contends.  I pause to say that Mr Gotterson seemed to rely on the use by the majority of the High Court in Ainsworth of the word “finding” as opposed to “imputations”.  In my respectful view absence of an express finding or absence of an express recommendation which is adverse to the plaintiff’s business or commercial reputation does not mean the plaintiff’s claim must fail.  In my view a fact or facts may reasonably and rationally be inferred from the words chosen in the report and may amount to a finding although not an express finding but nevertheless sufficient in certain cases to require the doctrine of procedural fairness to be applied.  As to drawing inferences see Holloway v. McFeeters (1956) 94 CLR at p.475 and 480-1.

As I have said, a fair reading must be made of the whole of the relevant passage in order to decide whether or not the passage conveys the imputations for which Mr Hanson contends.  I do not consider a sentence by sentence analysis is the correct method of deciding what imputations, if any, are conveyed.

There are three points that should be borne firmly in mind when reading the whole of the passage.  First, the plaintiff is a legal entity separate from its members (Salomon v.  A. Salomon & Co Ltd (1897) A.C.22). The second is that under the plaintiff’s rules, membership is not limited to members of the police force although it was true to say, as Mr Carter did say, that the plaintiff is “the financial institution which acts as the banker for most, if not all, serving police”. The third point is that the plaintiff is engaged in business with a view to making profits.

Doubtless the continued financial viability of the plaintiff depends largely on the number of its members and those members benefiting from the plaintiff’s pursuit of its objects stated in rule 4.1 of the plaintiff’s rules.

In my view, although the relevant passage contains a number of statements of fact, comments and opinion the imputations for which Mr Hanson contends all reasonably and rationally arise from what has been said in the relevant passage.  Singly and collectively these imputations tend to lower the plaintiff in the estimation of right-thinking members of society generally (see Gatley on Libel and Slander (7th ed) para.41).

Of those imputations, I am especially concerned with the imputation that the defendant, by implementation of its policy of relaying to the relevant police officer member any request by the defendant, is obstructing the defendant’s investigation of corrupt police by in effect “tipping off” that officer.

In my view that particular imputation is very likely to lead to damage to the plaintiff’s business or commercial reputation and at least prejudice the plaintiff’s legitimate expectations of conducting a successful and profitable business as a credit union.  It does not take much imagination to realise that because of that imputation persons eligible to apply for membership of the plaintiff may well be deterred from so applying.

As I said earlier the plaintiff is a legal entity separate from its members and its commercial viability and reputation will be harmed by the imputation that it is obstructing the investigation of corrupt police who happen to be among its members.

I have concluded that the relevant passages quoted at length above are very likely to have adversely affected the plaintiff’s business and commercial reputation.

In my view the enquiry before Mr Carter QC, insofar as any finding or comment made or to be made in Mr Carter’s report might adversely affect the plaintiff’s reputation including its business and commercial reputation, was one which had to be conducted in a manner that ensured procedural fairness.

As Brennan J (as he then was) said in Ainsworth (at page 592):-

“natural justice is required to be observed whenever a statutory authority contemplates a publication which would affect reputation by diminishing the estimation in which the bearer of the reputation stands in the opinion of others.  The bearer of the reputation has an interest which is subject to adverse affection if the statutory authority publishes the contemplated report and that is sufficient both to attract the requirement of natural justice and to give locus standi to seek judicial review if natural justice is denied.”

I should say now that Mr Gotterson submitted that there is no evidence as to what the plaintiff would have said had it appeared to address Mr Carter QC on the matters which have brought it to this court.  He relied on what was said in Stead v. The State Government Insurance Commission (1986) 161 CLR 141 at 145 and 147. The passage at p.145 refers to appellate Courts and in my respectful view does not apply to me. As to the passage at p.147 Mr Hanson in reply has submitted that I am not concerned with the merits of the report - only with the failure to provide procedural fairness.

In Ainsworth Brennan J said (at page 597) in a passage which I respectfully adopt:-

“Where an official entity, purportedly exercising a statutory power or performing a statutory function which, requires it to observe the rules of natural justice, publishes a report damaging to a person’s reputation without having given that person an opportunity to be heard on the matter, prima facie that person is entitled to a declaration that the report, so far as it damages his or her reputation has been produced in breach of the entity’s duty to observe the rules of natural justice.  The declaration cannot assert that the report was in fact erroneous for the court is not concerned with merits of the report.”

His Honour then went on to quote with approval the following statement by Lord Hailsham of St Marylebone  in Chief Constable of North Wales Police v. Evans (1982) 1 WLR at 1161:-

“The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority after according fair treatment, reaches on a matter which it is authorised to decide for itself a conclusion which is correct in the eyes of the  court.”

The plaintiff has made out its case for the declaratory relief it seeks.  I declare that in reporting adversely on the plaintiff in its report entitled “Police and Drugs: a Report of an Investigation of cases involving Queensland Police Officers” the defendant failed to observe the requirements of procedural fairness.

I turn now to the claim for injunctive relief.

The recommendation by Mr Carter QC which I have earlier set out is not specifically directed against the plaintiff. It is directed to any person to whom s.69 of the Criminal Justice Act 1989 may apply. “Any person” can include any financial institution. In my view the proposed injunction is drafted too widely and does not inform the respondent exactly what it is obliged to do or not do (see “Equity: Doctrines & Remedies” (3rd ed) Meagher, Gummow and Lehane at para. 21 100).

In addition the injunction sought appears contrary to the intention of the Legislature as evinced in s.2(a)(i) of the Criminal Justice Act which provides:-

“2.     The objects of this Act are -

(a) to provide for the establishment and maintenance of a permanent body -

(i)      to advise on the administration of the criminal justice system in Queensland

. . . .”

I refuse the injunction sought.

I shall hear from the parties on costs.