Sekhon v The Director of Quarantine
[2013] FCCA 331
•23 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SEKHON v THE DIRECTOR OF QUARANTINE | [2013] FCCA 331 |
| Catchwords: ADMINISTRATIVE LAW – Objection to subpoena – claim of legal professional privilege – whether there has been an implied waiver of privilege – waiver not found. |
| Legislation: Administrative Decisions (Judicial Review) Act 1977 Evidence Act 1995 (Cth), Part 3.10 Division 1 |
| Mann v Carnell (1999) 201 CLR 1 Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60 at 70 Larratt v Bankers & Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 226 The Commonwealth v Verwayen (1990) 170 CLR 394 at 406, 422, 467, 472 Cross on Evidence, 5th Aust ed (1996), par.25005 Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 497-498 Benecke v National Australia Bank (1993) 35 NSWLR 110 Lillicrap v Nalder & Son (a firm) [1993] 1 WLR 94; [1993] 1 All ER 724 Goldberg v Ng (1995) 185 CLR 83 at 95 Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd (2002) FCA 501 at [11] Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 411 DSE (Holdings) Pty Ltd v Inter TAN Inc. (2003) 127 FCR 499 Commissioner for Taxation v Rio Tinto Pty Ltd (2006) 151 FCR 341 at [66] Idaport v NAB [2012] NSWSC 58 at [67] Colotex Hosiery (Australia) Pty Ltd v Commissioner of Taxation (1975) CLR 525 at 541 Jackson v Commissioner of Taxation (1989) 87 ALR 461 MacCormick v Commissioner of Taxation [1984] HCA 20; (1985) 158 CLR 622 at 639-41 Deputy Commissioner of Taxation v Truhold Benefit Pty Ltd [1985] HCA 36; (1985) 158 CLR 678 at 687-8 Webb v Commissioner of Taxation (1993) 44 FCR 312 |
| Applicant: | TEJINDER SINGH SEKHON |
| Respondent: | THE DIRECTOR OF QUARANTINE |
| File Number: | ADG 266 of 2012 |
| Judgment of: | Judge Simpson |
| Hearing date: | 8 March 2013 |
| Date of Last Submission: | 15 March 2013 |
| Delivered at: | Adelaide |
| Delivered on: | 23 May 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Fuller |
| Solicitors for the Applicant: | Sekhon Lawyers |
| Counsel for the Respondent: | Mr McDonald |
| Solicitors for the Respondent: | Australian Government Solicitor |
ORDERS
The respondent shall within 2 clear business days provide the Court with a minute of orders that are consistent with these reasons.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 266 of 2012
| TEJINDER SINGH SEKHON |
Applicant
And
| THE DIRECTOR OF QUARANTINE |
Respondent
REASONS FOR JUDGMENT
Background
I have before me an objection to a subpoena issued by the Court at the request of the applicant requiring the respondent, the Director of Quarantine (“the Director”) to produce documents. To understand the issues to be dealt with in the objection to subpoena it is necessary to have an understanding of the substantive proceedings and the history of events.
In the initiating document for the substantive proceedings, the applicant is seeking judicial review of a decision of a delegate of the Director (“the Delegate”) that the applicant’s dog, a Dalmatian called Pepper that the applicant imported into Australia from Singapore in July 2012, be exported from Australia by 22 November 2012. The decision was made and communicated to the applicant on 25 October 2012. In August 2012, Pepper had been diagnosed with canine monocytic ehrlichiosis (“CME”) which is said to present “a life-threatening risk to the wider Australian dog population”.
The Delegate gave the applicant his reasons for decision by letter undated but received by a solicitor with the Australian Government Solicitor (“AGS”) on 10 December 2012. The solicitor then annexed the reasons to an affidavit filed by the AGS on 10 December 2012 and served on the applicant at about that time.
The applicant had his subpoena issued on 10 January 2013. It sought the production of certain documents specified in the schedule attached to the subpoena. The documents sought were as follows:
“All documents including correspondence, memoranda or file notes (electronic and written) kept by the Director of Quarantine in respect of the dog Pepper Sekhon (“Pepper”), Import Permit Number IP2006122, file reference 2012/12533 which refer to or record the following information:
i.The receipt of Pepper at the Byford Quarantine Centre Western Australia on 10 July 2012, details of the manner in which he was housed, observations of his condition and his veterinary treatment whilst at the Centre.
iiThe release from Byford Centre of Pepper on 3 August 2012 to Murdoch University Veterinary Hospital and the reasons for his admission to that hospital and any correspondence to or from the hospital regarding his condition and treatment.
iii.The reasons for the release of Pepper from quarantine at Byford Quarantine Centre Western Australia on 9 August 2012 and any conditions placed upon his release.
iv.Pepper’s condition, and any diagnosis made and treatment administered by Dr David Davies of the Adelaide Veterinary Specialist and Referral Centre.
v.The decision to issue an order into Quarantine dated 24 August 2012 and the reasons for that decision.
vi.The decision to order that Pepper be released under Quarantine Surveillance dated 24 August 2012 and the reasons for that decision.
vii.The letter dated 23 October 2012 from Andrew McDonald to Mr Teijinder Sekhon.
viii.The order into quarantine dated 23 October 2012.
ix.The direction to export dated 23 October 2012.
x.Correspondence from the Adelaide Veterinary Specialist and Referral centre regarding treatment of Pepper.
xi.Allegations of non-compliance by Pepper’s owner, Tejinder Sekhon, with the order into quarantine dated 23 October 2012.
xii.The order into quarantine dated 25 October 2012.
xiii.The direction to export dated 25 October 2012.
xiv.All documents, including file notes, emails and memoranda authored by Andrew McDonald.
xv.Any document recording a request to Andrew McDonald to provide a statement of reasons for the orders into quarantine and directions to export dated 23 and 25 October 2012.”
The Director filed a Notice of Objection to subpoena on 6 February 2013 claiming that all the documents sought were subject to legal professional privilege.
An affidavit of Mr Sanson-Fisher, a lawyer with the Department of Agriculture, Fisheries and Forestry (“DAFF”), filed on 14 February 2013, stated that DAFF engaged AGS to give legal advice on 2 November 2013. The affidavit further stated that DAFF limited its claim to legal professional privilege to the following email chains:
·an email chain within DAFF, commencing on 3 November 2012 and ending on 5 November 2012, including email correspondence from AGS, regarding the proceeding;
·an email chain within DAFF, both commencing and ending on 6 November 2012, including email correspondence from AGS, regarding the proceeding;
·an email chain within DAFF, both commencing and ending on 6 November 2012, including email correspondence from AGS, regarding the proceeding;
·an email chain within DAFF, both commencing and ending on 2 November 2012, including email correspondence from AGS, regarding the proceeding; and
·an email chain within DAFF, commencing on 10 November 2012 and ending on 13 November 2012, including email correspondence from AGS, regarding the proceeding (“the relevant documents”).
The objection to subpoena came before me for the first time on 8 March 2013 at which time I heard submissions from counsel for each of the parties and reserved my decision.
Before I was able to hand down my decision, the matter was brought on again at the request of the applicant. Counsel for the applicant sought permission to put further submissions. I allowed her to do so. The hearing for the further submissions occurred on 15 March 2013 at which time further submissions were also put before me by counsel for the respondent.
The issue to be determined
The question that has to be determined is whether or not, in the circumstances, legal professional privilege continues to exist in relation to the documents specified or whether that privilege has been impliedly or by imputation waived.
Extensive submissions, both written and oral, have been put before me on behalf of each of the parties. Some matters are agreed.
It is an agreed fact that the relevant documents relate to the creation of the undated reasons of the Delegate that were provided to the applicant on 10 December 2012. These reasons were annexed to an affidavit of Mr d’Assumpcao, a solicitor employed by the Australian Government Solicitor (“AGS”) and filed on 10 December 2012.
The parties also agree that the relevant documents were initially covered by legal professional privilege. The only question therefore is whether privilege has been waived.
The provisions of the Evidence Act 1995 (Cth) (“the Evidence Act”) that deal with client legal privilege to be found in Part 3.10 Division 1 have no application in a dispute about documents sought pursuant to a subpoena. The provisions in the Evidence Act only apply to questions concerning the evidence that might be admitted at trial. Authorities make it clear that determinations about production and inspection of documents subject to a subpoena are governed not by the Evidence Act but by the common law.[1]
[1] Mann v Carnell (1999) 201 CLR 1; Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49.
The High Court decision of Mann provides a helpful explanation of common law waiver and the circumstances that might result in waiver. Their Honours Gleeson CJ, Gordon, Gummow and Callinan had this to say under the heading “Waiver of privilege at common law”:
28.At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that ‘waiver’ is a vague term, used in may senses, and that it often requires further definition according to the context[2]. Legal professional privilege exists to protect the confidentiality of communication between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege[3]. Examples include disclosure by a client of the client’s version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication[4], or the institution of proceedings for professional negligence against a lawyer, in which the lawyer’s evidence as to advice given to the client will be received[5].
29.Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is ‘imputed by operation of law’[6]. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank[7], the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister’s version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and the maintenance of confidentiality; not some over-riding principle of fairness operating at large.” (emphasis added)
[2] Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60 at 70; Larratt v Bankers & Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 226; The Commonwealth v Verwayen (1990) 170 CLR 394 at 406, 422, 467, 472.
[3] Cross on Evidence, 5th Aust ed (1996), par 25005; Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 497-498.
[4] Benecke v National Australia Bank (1993) 35 NSWLR 110.
[5] Lillicrap v Nalder & Son (a firm) [1993] 1 WLR 94; [1993] 1 All ER 724.
[6] eg. Goldberg v Ng (1995) 185 CLR 83 at 95.
[7] (1993) 35 NSWLR 110.
Applicant’s submissions
The applicant submits that when the Court looks at the chronology of events, including the fact that the statement of reasons was produced on 10 December and was annexed to an affidavit of a solicitor with the AGS at a time after the review proceedings had been lodged, that it is plain that it is likely that legal advice or recommendations, or a request resulted in the production of the undated statement of reasons.
It is also submitted by the applicant that it is also likely, when the chronology is looked at, that advice was given about the merits of the judicial review application, which impacted on the statement of reasons.
It was further submitted on behalf of the applicant that if the applicant is not permitted to test the Delegate’s statement of reasons and how they were arrived at by reference to the documents that underpin it, in the same way that documents were used to underpin the Delegate’s letter of 23 October 2012, the applicant will be at a disadvantage in his case.
The applicant submits that where a party makes allegations raising the issue of that party’s state of mind, to which legal advice is likely to have contributed, the party cannot continue to claim privilege for that legal advice. The cases of Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd (2002) FCA 501 at [11], and Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 411 where relied upon.
The applicant also relies on the case of DSE (Holdings) Pty Ltd v Inter TAN Inc. (2003) 127 FCR 499, a decision of Allsop J of the New South Wales District Court, for the test as to when an implied waiver arises in most undue influence cases. The following passage was relied upon:
“(When) the party to the privilege makes an assertion (express or implied) or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny, and by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication.” (emphasis added on applicant’s behalf)
It was further submitted on behalf of the applicant that it is not to the point that a party to an action may have introduced the issue into the proceedings in response to a claim or pleading of the opposing party. Waiver it is said comes about because the privilege holder’s conduct is inconsistent with the continued confidence of the communication because he or she has put in issue the character or contents of the communication in pursuing a right or claim or has created a situation where another party must reasonably do so by way of a defence. The case of Fort Dodge v Nature Vet at [14] was again relied upon.
The applicant’s initial written submissions included the following:
“24.An undated statement of reasons signed by Mr McDonald was exhibited to an affidavit of Mr Paul D’Assumpcao sworn 10 December 2012. The applicant has been advised by the respondent, through the AGS, that this statement of reasons did not exist at the time the decision was made. However, the respondent nevertheless contends that this is the statement of reasons for the decision, the subject of the judicial review.
25.In determining the application for judicial review, the Court is required to consider the decision and the reasons for the decision. The reasons will necessarily inform the Court on the question of jurisdiction and whether there was a proper exercise of power in the decision making process.
26.The respondent did not, until the initiation of the review proceedings, provide the applicant with any further explanation or statement of reasons for its decisions. Accordingly, given the date upon which the further statement of reasons was prepared, it is on the cards that this statement of reasons was prepared upon the recommendation or advice of the AGS.
27.The filing by the respondent of the affidavit of Paul d’Assumpcao dated 10 December 2012 exhibiting the undated statement of reasons of Mr McDonald has put in issue Mr McDonald’s state of mind in these proceedings. That is, the respondent’s contention that the Court should find that these are the reasons for his decision[8] is an issue in dispute between the parties which the Court is required to determine. There is an obvious legitimate forensic purpose in seeking documents which reveal the reasons for and purpose of the provision of this statement of reasons. Such documents are relevant to the question of whether the statement of reasons should be accepted as the reasons for the decision.
[8] Taking into account the letter of 23 October 2012 and the respondent’s concession that the statement of reasons did not exist at the time of the decision.
28.The issue is one relating to Mr McDonald’s state of mind, to which legal advice is likely to have contributed. That is, the respondent, after instructing AGS, now asserts that the reasons for the decision to export are those set out in the undated statement of reasons and are referrable to the direction to export dated 25 October 2012. The only (passing) reference in the statement of reasons to the letter of 23 October 2012 is as follows:
“You were notified of an earlier direction, dated 23 October 2012, under cover of a letter from me of the same date.”
It is then asserted that this direction was superceded by the 25 October 2012 direction. Accordingly, the undated statement of reasons impliedly disavows any adoption of, or ie reliance upon the reasons set out in the letter of 23 October 2012. The undated statement of reasons sets out, inter alia, the opinions formed by Mr McDonald and his belief about the management of the level of risk and quarantine arrangements.
29.The applicant contends that the fact that the undated statement of reasons was filed after the engagement of the AGS and the provision of legal advice, and is now to be relied upon in defending the review proceedings, amounts to an implied or imputed waiver at common law. In light of the date of their creation[9] and a comparison with the letter of 23 October 2012 and the Book of Documents, the applicant contends that the statement of reasons is an ex post facto justification for the decision and represents an attempt to defeat the applicant’s action by, inter alia, disallowing (by omission) any reliance upon “welfare implications” or the fact that an alternative risk management strategy existed or[10] – “relationship considerations” liability of DAFF for “future treatment and reparation of infected dogs”, “reputational damage” “ the burden of regulation under cost recovery” and “procedural fairness and consistency in decision making”.
30.Given the material differences between the undated statement of reasons and the letter of 23 October 2012 (and the contents of the subpoenaed documents that clearly underpin that letter and the decision) it is on the cards that the statement of reasons was provided upon the advice of AGS following the filing of the application for judicial review. It is on the cards that content of those communications will refer to the merits of the judicial review application and the adequacy of the reasons set out in the letter of 23 October 2012. Accordingly, it is on the cards that the document sought will be relevant to:
26.1The credibility of Mr McDonald’s assertion that the direction of 25 October 2012 superseded the direction of 23 October 2012 (thus impliedly rendering nugatory the reasons set out in the 23 October 2012 letter);
26.2The credibility of Mr McDonald’s assertion that the undated statement of reasons operated at the time of his decision to direct the export of the dog;
26.3The judicial determination of the nature and content of the reasons that in fact existed for the decision.”
31.As a consequence of the decision to file the undated statement of reasons without exhibiting them to an affidavit sworn by Mr McDonald, and the respondent’s stated reliance upon them, the applicant was deprived of the ability to require the respondent to produce Mr McDonald for cross-examination.[11] The respondent subsequently refused a formal written request to produce Mr McDonald for cross-examination. Accordingly, the applicant issued a subpoena to compel the attendance of Mr McDonald at the hearing in order to assist the Court in arriving at a conclusion regarding the actual reasons for the decision and by reference to those reasons, determine the application for judicial review. The genesis of, and reasons for, the production of the subsequent statement of reasons are germane to that issue and the documents sought will provide evidentially material of value for use in questioning Mr McDonald at the hearing.
32.In order for the Court to determine whether those reasons were extant and relied upon, as at 23 or 25 October 2012, it is necessary to determine when and why they were produced. It is on the cards that the documents sought are relevant to that issue and there is a forensic unfairness to the applicant in allowing the hearing to proceed without disclosure of those documents.”
[9] Namely after the filing of the judicial review application.
[10] (as has been revealed by the Minute of 23 October 2012)
[11] Affidavit of Parambir Sing Sekhon, sworn 29 January 2013.
The applicant provided the Court with further oral and written submissions when the matter was called back on for them to do so on 15 March 2013. The further written submissions stated:
“1.The respondent contends that the legal advice given by the AGS could not have contributed to the decision to export as the legal advice post-dated the date of decision. Although superficially attractive, the premise of the submission is flawed and unduly limits the ambit of the general principle of issue waiver. The respondent’s contention presupposes the correctness of Mr McDonald’s assertion that the reasons for decision articulated on or about 10 December 2012 existed on 25 October 2012. That assertion is disputed by the applicant and therefore the legal advice remains relevant to the court’s determination of his actual state of mind as at 25 October 2012. The threshold question to be asked before the merits of the review can be considered is “What were the reasons for the decision of 25 October 2012?” The respondent has, by filing a subsequent statement of reasons (inconsistent in part with the earlier statement of reasons), raised this issue for the court’s determination. But for this, the review would have proceeded upon a consideration of the reasons articulated in the letter of 23 October 2012, the applicable legislation and the ADJR Act.
2.The applicant contends that the legal advice is likely to have contributed to Mr McDonald’s state of mind when he produced the reasons of 10 December 2012 and accordingly it is relevant to determining the credibility of his assertion that those reasons were extant and operative on 25 October 2012. The fact that reasons were produced on or about 10 December 2012, after the initiation of proceedings and after advice from AGS, provides a compelling basis for an inference that this advice contributed or directly resulted in the production of this statement of reasons. Or, to put another way, the legal advice is likely to have contributed to a state of mind different from that which in fact existed on 23 and 25 October 2012. It is only upon an examination of the circumstances under which those reasons were provided that the court can determine the veracity of Mr McDonald’s assertion. The nature and content of that legal advice is inextricably linked to the production of that statement of reasons.
3.Although it may be common for a decision maker to provide a statement of reasons for the purposes of litigation (and there may be a statutory requirement to do so in some cases)[12] and that such a statement of reasons may be provided following legal advice, that will usually occur where no (or no adequate) reasons accompanied the original decision. However, that is a different situation from the case at bar where there is a letter accompanying the decision which purported to ‘articulate the basis of the decision’ and contemporaneous documents which reveal the manner in which the decision was arrived at, including the detailed balancing of a number of factors and considerations. None of the authorities cited by the respondent, in particular Commissioner of Taxation v Rio Tinto, refer to a factual situation analogous to the case at bar. That is, in each case where a decision had been made there were not two separate and (in part) inconsistent accounts of the reasons for that decision.
[12] See Commissioner for Taxation v Rio Tinto Pty Ltd (2006) 151 FCR 341 at [66].
4.In any event, the principle of issue waiver is not confined to a situation where legal advice is provided at the time of the decision. It is a waiver that arises by reason of the inconsistency ‘which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and the maintenance of confidentiality, not some overriding principle of fairness operating at large”[13]. The authorities that have specifically considered ‘issue waiver’ are of limited utility, principally because each turns on its own particular facts. Whether or not privilege is waived will depend upon the particular character of the case and how it is conducted.[14] The relevant inconsistency between the conduct of the respondent and the maintenance of the confidentiality is the assertion that the 10 December 2012 reasons existed on 25 October 2012 but that the applicant should not be permitted to test that assertion by reference to the advice that contributed to it. The considerations of fairness are those that dictate that the applicant’s ability properly to test this assertion should not be defeated by the claim of legal professional privilege.
5.Mr McDonald will give evidence at the review hearing. He will no doubt assert that his reasons for decision were those set out in the statement of reasons. Without the documents revealing the process by which that statement of reasons was produced the applicant will be unfairly deprived of a proper opportunity to test his evidence. He has made an assertion as part of his case that necessarily lays open the contents of the privileged documents to scrutiny.
6.In Rio Tinto the Court observed:
“Even though communications may contribute to the decision-making, the mere reference to this fact by a decision-maker in the course of defending a judicial review application or on a taxation appeal is not inconsistent with the maintenance of the privilege...This is because the decision-maker...would not put such legal advice in issue merely by saying that the advice was relevant or contributed to his decision. There would be no issue waiver because the decision-maker would not have done anything inconsistent with the maintenance of the privilege. The situation might be otherwise if the decision-maker puts the contents of the legal advice in issue by specifically relying on the contents of the advice (and not merely the fact of the advice) to vindicate his claimed state of satisfaction or exercise of discretion.
In this case, everything turns on the particular given by the Commissioner in response to Rio’s request. The question is whether, by his particulars, the Commission made an assertion as part of his case that puts the contents of the privileged scheduled documents in issue, or necessarily lays them open to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege. To answer this the relevant assertions must be considered in their proper context”.[15] (emphasis added).
7.Further, permitting inspection of the documents over which the claim is made will not give rise to a ‘floodgates’ argument or set a precedent for the disclosure of legal advice where a decision maker subsequently provides a statement of reasons.[16]
8.In the ordinary case of judicial review of an administrative decision, the review is determined by an examination of the decision and the asserted reasons against the established facts and the applicable legislation. In those cases, state of mind is not in issue because there is no dispute that a decision was made for the reasons stated. What is in dispute is whether that decision, for those reasons, should be set aside.”
[13] Mann v Carnell (1999) 201 CLR 1 of [29].
[14] Commissioner for Taxation v Rio Tinto at [60].
[15] [66] – [68].
[16] See Idaport v NAB [2012] NSWSC 58 at [67] for discussion of the principles distilled from the authorities, including “the fact that the documents over which privilege is claimed are materially relevant to a pleading of state of mind is not alone sufficient to compromise the assertion of privilege”.
Conclusions
For the reasons that follow, I have come to the conclusion that there has been no waiver of legal professional privilege and that the respondent should not be required to produce the relevant documents.
The case of Commissioner of Taxation v Rio Tinto Ltd[17] makes it clear that when a decision-maker, such as the Commissioner of Taxation, in giving particulars merely refers to privileged documents, and not their contents, or asserts that privileged advice was relevant to, or contributed to some decision, that this would not be inconsistent with the maintenance of privilege.
[17] (2006) 151 FCR 341; 229 ALR 304; [2006] FCAFC 86.
In the Rio Tinto case the facts were that the Commissioner issued a notice of income tax assessment, a notice of franking account assessment and made certain other determinations. Rio Tinto objected to these assessments. The Commissioner then made decisions rejecting the objections and Rio Tinto filed applications appealing against the Commissioner’s objecting decisions. When the appeal applications were filed, the Commissioner was required by the rules to file and serve a statement outlining succinctly the Commissioner’s contentions and the facts and issues in the appeal as the Commissioner perceived them. This statement is referred to in the Full Court’s decision as the ‘SFIC’. The matter came before the Court and was initially dealt with by the docket judge who decided that for a number of reasons, the Commissioner had waived privilege. The Commissioner appealed to the Full Court.
The Full Court comprised their Honours Kenny, Stone and Edmunds JJ. In their joint judgment their Honours stated as follows:
“62.The critical question is whether or not the docket judge relevantly erred when he held that the Commissioner had, in the circumstances of the case, acted inconsistently with the maintenance of privilege in respect of the eight privileged scheduled documents. In reaching this ultimate conclusion, his Honour held, first, that the Commissioner, by his SFIC, raised an issue in the substantive proceedings as to his state of mind. This characterisation of what has happened may be open to doubt; and, in any event, whether or not the Commissioner did so is largely immaterial. His Honour was in error in having regard to this consideration, although, for the reasons given below, there was no error in his Honour’s ultimate disposition of the application before him.”
A little later, their Honours stated:
“65.In any event, even if his Honour was correct in holding that, by the SFIC, the Commissioner raised an issue in the substantive proceeding as to his states of mind, this alone would not provide a proper basis for “issue waiver”. As the previous examination of the authorities shows, the question is not whether the Commissioner has put his state of mind in issue but whether he has directly or indirectly put the contents of the otherwise privileged communications in issue in the litigation either in making a claim or by way of defence. Put another way, to adapt Allsop J’s language in DSE, has the Commissioner (being the privilege holder) made an assertion as part of his or her case in the litigation that lays open the privileged documents to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege?
66.In the ordinary case, the Commissioner’s compliance with his procedural obligations in a taxation appeal, including the provision of a SFIC, would not result in a waiver of privilege. In taxation appeals, the requirement to provide a SFIC, which is proper particularised, means that the Commissioner “must expose to the tax payer … both his state of mind at the relevant time and its basis”; Colotex Hosiery (Australia) Pty Ltd v Commissioner of Taxation (1975) CLR 525 at 541 per Barwick CJ; also Jackson v Commissioner of Taxation (1989) 87 ALR 461 (“Jackson”) at 470-1 per Gummow J; also Rio Tinto (1) at 329-330 [16] per Sunberg J. In considering what is required of the Commissioner in providing a SFIC, it should be bourne in mind that, to be constitutionally valid, that imposition of a tax must be challengeable: MacCormick v Commissioner of Taxation [1984] HCA 20; (1985) 158 CLR 622 at 639-41 per Gibbs CJ, Wilson, Dean and Dawson JJ; and Deputy Commissioner of Taxation v Truhold Benefit Pty Ltd [1985] HCA 36; (1985) 158 CLR 678 at 687-8 per Gibbs CJ, Mason, Wilson, Deane and Dawson JJ. In case of this kind, the Commissioner must disclose the factual basis on which he formed his satisfaction that was the condition of the operation of section 46A of the RTAA 36 or exercised his discretion with respect to penalties; see Jackson at 471. By his letter of 27 October 2004, the Commissioner apparently undertook to discharge his obligation in this regard.
67.Further, in exposing his states of mind and the basis for it, the Commissioner would not ordinarily act in a manner inconsistent with the maintenance of privilege over legal advice relevant to his attaining a state of satisfaction or exercising his discretion in a particular way. Since the decision of the majority of the High Court in Waterford, it is plain enough, that legal professional privilege may attach to communications brought into existence by government offices seeking or giving legal advice as to the nature and extent of governmental powers, whether statutory or otherwise:; see Waterford at 63-4 per Mason and Wilson JJ and 74-5 per Brennan J. Even though such communications may contribute to the decision making, the mere reference to this fact by a decision-maker in the course of defending a judicial review application or on a taxation appeal is not inconsistent with the maintenance of the privilege: compare Webb v Commissioner of Taxation (1993) 44 FCR 312 at 317 per Cooper J and Lovegrove at [24] per Pullin J. This is because the decision maker (here the Commissioner) would not put such legal advice in issue merely by saying that the advice was relevant or contributed to his decision. There would be no issue waiver because the decision-maker would not have done anything inconsistent with the maintenance of privilege. The situation might be otherwise if the decision-maker puts the contents of the legal advice in issue by specifically relying on the contents of the advice (and not merely the facts of the advice) to vindicate his claimed state of satisfaction or exercise of discretion.” (emphasis added)
I note that notwithstanding these comments in the Rio Tinto case, that in the circumstances, the Full Court decided that the docket judge had correctly decided that there was an issue waiver and as a result the documents were no longer covered by legal professional privilege. This occurred as a result of the Commissioner stating in answer to a request for particulars that the matters taken into account in making his decision, were those evidenced by documents including documents from legal advisors. In so saying, the Commissioner effectively incorporated the contents of those documents as part of his reasons for making the decision. This is not the case in the present proceedings. There has been no suggestion by the decision-maker that the legal advice that he received formed any part of his reasons for his decision.
There is no suggestion in any of the material that is before me that the Delegate was influenced in his decision making by the legal advice obtained. In addition, the reasons do not incorporate or reference the content of the legal advice.
In her submissions for the applicant, counsel often referred to the legal advice being “likely” to have contributed to the decision-maker’s state of mind. But the only state of mind that is relevant, is the decision maker’s state of mind on 23 October 2012 and legal advice was first sought by the respondent on 2 November 2012. Legal advice cannot therefore be an issue about the decision maker’s state of mind at the time of the decision. I conclude therefore that what the applicant is really concerned about is the possibility that, between the time that the decision was made (ie 23 October 2012) and the giving of reasons (ie 10 December 2012), the decision maker may have come up with an additional reason or reasons (with or without the assistance of the AGS) for making his decision and has included these additional reasons in his written reasons without disclosing that these were an afterthought.
The possibility of the decision-maker, ex post facto, coming up with additional reasons for the decision is not something that would cause the respondent to lose their privilege over the otherwise privileged communications between the respondent and the AGS.
I do not accept the proposition put on behalf of the applicant that “… the fact that the undated statement of reasons was filed after the engagement of the AGS and the provision of legal advice, and is now to be relied upon in defending the review proceedings, amounts to an implied or imputed waiver at common law.” More is required for such a waiver.
In the circumstances, I find that there is no implied assertion that the reasons necessarily incorporate or rely on the content of the relevant documents. Were implied waiver to exist in such circumstances parties such as the respondent would be significantly hampered in their ability to obtain legal advice that is kept confidential. I find that the relevant documents are subject to legal professional privilege.
I propose to make an order requiring the respondent to prepare a minute of order consistent with these reasons.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Simpson
Associate:
Date: 23 May 2013
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