Zarro, P. v Australian Securities Commission

No judgment structure available for this case.

Re: PASQUAL ZARRO; MICHELLE GAY ZARRO; DOUGLAS CHALMERS BURGESS; HAROLD
WALLACE WOODS; SPRING COIL PTY LTD; TRENGATE PTY LTD; POINTBLANK PTY LTD and
WESTPAC BANKING CORPORATION
And: AUSTRALIAN SECURITIES COMMISSION
No. Q G3018 of 1991
FED No. 309
Practice and Procedure
(1992) 10 ACLC 831
(1992) 36 FCR 40

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Lockhart(1), Ryan(2) and Gummow(3) JJ.

CATCHWORDS

Practice and Procedure - Application of public interest immunity to documents arising from Australian Securities Commission investigation - width of claim of public interest immunity - documents to which public interest immunity attaches - purpose of inspection of documents by a Judge.

HEARING

SYDNEY

#DATE 25:5:1992

Counsel for the Applicants: R.N. Chesterman QC,

S. Couper and G. O'Grady

Solicitors for the Applicants: McLaughlin Gordon and Lennon

Counsel for the Respondent: J. Griffin QC and G. Egan

Solicitors for the Respondent: R.A. Chapman, Solicitor

ORDER

The Court orders that:

1. Leave to appeal from the judgment of Drummond J. on 13 March 1992 be granted.

2. The draft notice of appeal included in the appeal papers be deemed to be the notice of appeal.

3. The appeal be dismissed.

4. The applicants pay the cost of the respondent of the motion for leave to appeal and of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is a motion by the applicants (the respondents at first instance) for leave to appeal from an interlocutory judgment of a Judge of the Court (Drummond J.), given during the hearing of a proceeding brought by the respondent (the applicant at first instance) Australian Securities Commission ("the ASC") against the applicants seeking relief pursuant to ss. 230, 599, 1323 and 1324 of the Corporations Law.

On Friday, 13 March 1992, the learned primary Judge upheld a claim made by the ASC in the proceeding that certain documents are protected from disclosure to the applicants on the ground of public interest immunity. It is from this judgment that the applicants seek leave to appeal.
On Monday, 16 March 1992 his Honour refused a stay of the trial of the issues to which those documents relate. The applicants seek leave, in a separate motion, to appeal from the order refusing the stay. We heard the second motion upon the conclusion of the first motion. Both motions were argued as if the Court was hearing the appeals themselves.
It is necessary to examine the course of events during the proceeding, both before and after the commencement of the trial, to understand the issues before us. Many allegations are made by the ASC against the respondents. The amended application filed by the ASC seeks orders including the following:
. that the first, second, third and fourth applicants ("the natural

applicants") be prohibited from dealing with funds held in certain bank accounts including accounts in the names of various corporations including the fifth, sixth and seventh applicants;

. the appointment of receivers and managers of the fifth, sixth and

seventh applicants;

. directing the fifth, sixth and seventh applicants to deliver to

the receivers and managers a considerable amount of information and various documents;

. prohibiting the natural applicants from taking or sending money

out of Australia or transfering securities to places outside Australia;

. declaring that, contrary to s. 232(2) of the Corporations Law,

each of the natural applicants failed to act honestly in the exercise of his or her powers and in the discharge of his or her duties of office in relation to the management of some or all of a large number of companies (approximately 35) including the fifth, sixth and seventh applicants;

. declaring that, contrary to s. 232(4) of the Corporations Law,

each of the natural applicants failed to exercise reasonable care and diligence in the exercise of his or her powers and the discharge or his or her duties in relation to those companies of which each natural applicant was and is an officer;

. declaring that contrary to s. 232(5) of the Corporations Law each

of the natural applicants made improper use of information acquired by virtue of his or her position as an officer of one or more of those companies so as to gain directly or indirectly an advantage for himself or herself or for some other person;

. declaring that each of the natural applicants failed to observe

and perform the fiduciary obligations owed by the natural applicants as officers of one or more of those companies; and

. pursuant to s. 230 of the Corporations Law, that each of the

natural applicants be prohibited from managing those companies for such period as the Court sees just.

In November and December last year Judges of the Court made orders requiring the ASC to provide further particulars of its claims. Following two days of submissions from counsel for the parties the primary Judge, on 13 December 1991, ordered the ASC to provide the applicants with a statement of the factual and legal bases upon which the relief claimed against various applicants was said to be based and a list of the witnesses and the documents on which the ASC intended to rely. The hearing was adjourned to consider further directions and the trial was set down for hearing to take one week commencing on 10 February 1992.
The ASC provided particulars following his Honour's order and they comprise 204 pages. In substance the ASC particulars assert that:
. various sums of money were diverted from certain companies to

another company by the natural applicants and others;

. certain companies were deprived of "rent moneys" by cheques being

endorsed to companies that were not entitled to receive them;

. proceeds from the sale of properties were paid to companies or

persons that had no entitlement to them;

. proceeds from the sale of shares were paid to companies which had

no right to receive them;

. tax refunds due to companies were paid to other companies which

had no right to claim or receive them;

. moneys were taken from the accounts of companies and paid into the

personal accounts of certain of the natural applicants;

. debts owed by some companies to other companies were transfered by

false journal entries to other companies;

. sham transactions took place;

. moneys were received by one or more of the natural applicants from

certain companies, causing detriment to companies and gaining improper advantage to the natural applicants.

These matters were all relied upon by the ASC in support of its claims in the amended application to which reference has been made and which provided the foundation for the claims for relief under ss. 230, 599, 1323 and 1324 of the Corporations Law.
In an endeavour to identify the transactions which were alleged by the ASC to constitute shams (to use what Diplock L.J. described in Snook v London and West Riding Investments Limited (1967) 2 QB 786 at 802 as "this popular and pejorative word"), a document was produced on 28 February 1992 which was described as "Particular 30 of the Statement of Legal and Factual Bases".
There was lengthy argument before the primary Judge about deficiencies in Particular 30 which led to amendments being made to it; these were delivered to the applicants' solicitors on 6 March 1992. Further amendments to Particular 30 were directed by the primary Judge on 9 March 1992 to expose the basis upon which reliance was placed on s. 232(4) of the Corporations Law as a ground of relief against the corporate applicants. These amendments were made, and on 13 March 1992 (the day on which his Honour delivered the judgment with which this motion is concerned) Particular 30 was put into its present form.
Particular 30 alleges in essence that the natural applicants fraudulently or negligently represented to a number of financiers (who were then pressing various members of what is described in the evidence as the Witan Group of companies and associated guarantors for repayment of loans) that they had arranged sales of properties or arranged to refinance loans in order to delay actions by the financiers to recover the loan moneys. It is alleged that these representations were false to the knowledge of the natural applicants or were made negligently. It is also alleged that by making these false representations the applicants procured the financiers to forbear from taking action to recover their debts or to exercise rights as secured creditors over the properties the subject of securities. Some, but not all, of the representations made by certain of the natural applicants to financiers are alleged to be to the effect that a company, Pacific Commerce Finance Limited ("PCF"), or an organization associated with it had agreed to take over certain of the loans to members of the Witan Group, to buy properties from a member of that group and that PCF would refinance the borrowing of some of the corporate applicants.
His Honour gave directions for the discovery and inspection of documents by the ASC relating to Particular 30, the details of which are recorded in his reasons for judgment and which it is not necessary to repeat. What emerged from this process was that the ASC objected to producing any of the documents for inspection by the applicants, relying on a claim of public interest immunity. The claim was propounded by Mr Barrie Adams, the Regional Commissioner for Queensland of the ASC and the officer in charge of the ASC in Queensland, in three affidavits, the second being proffered because the first was deficient and the third because the second was deficient. The first affidavit claimed that in Mr Adams' opinion:

"the release of the documents would be contrary to the public interest. The reasons for this opinion are based upon my knowledge and experience of this operation, and the operation of the Australian Securities Commission in particular." (para. 6)

In paragraph 7 Mr Adams gave five reasons in general terms which he said supported the claim for public immunity. In his second affidavit Mr Adams gave a little more detail of the material to support certain of the assertions made by him in paragraph 7 of his first affidavit. In his third affidavit (sworn on 12 March 1992) Mr Adams said amongst other things that exhibit BA2 to his affidavit was a list of the documents in respect of which public interest immunity was claimed but was claimed no longer. He said that exhibit BA3 to his affidavit was a list of the residue of documents in respect of which public immunity privilege continued to be claimed.
It is the residue of those documents that is subject to the ASC's claim for non production based on public interest immunity; and all such documents were held by the primary Judge to be relevant to Particular 30.
His Honour allowed Mr Adams to be cross-examined about certain aspects of his affidavits for the following reasons:

"I said that I took this exceptional course because of concerns at what had emerged with respect to the way the Commission had gone about claiming immunity and because of concerns at the reliability of Mr Adams' final claim to immunity for certain of the documents, in view of the change of ground, and in view of the contents of all three affidavits."

The primary submission of counsel for the applicants was that a Judge ought to look at documents for the purpose of ruling upon their immunity only when the Court is first satisfied that the claim for public interest immunity has been properly made, in the sense that the claim is made out at least in a prima facie sense from which it can be discerned that the production of the documents would be likely to be harmful to the interests of the State. Once the Court is satisfied of this it may then proceed to consider the next question, namely, the interests of the public in general, and litigants in particular, in having access to documents that may relate to issues in litigation. This involves a balancing exercise and the scales may then be tipped by the Court's own inspection. But where the claimant for immunity fails to make out a basis for the claim it was submitted that the Court does not reach the stage of performing that balancing exercise. It was submitted that the primary Judge himself proceeded to propound the claim for public interest immunity because the ASC had failed to do so adequately.
Counsel for the applicants also submitted that Mr Adams had wholly misconceived the basis for the claim for immunity and was ignorant of the documents in respect of which he claimed that immunity. They argued before us that, at the conclusion of the examination, the primary Judge found that he could not accept anything Mr Adams said, except that there was in progress an investigation by the ASC into some undefined and unidentified aspects of PCF. They submitted that after inspecting the documents himself, the primary Judge found that they fell into three categories. The first category is one which identifies "informants". The second comprises documents revealing confidential business information of persons who have supplied information voluntarily to the ASC. The third comprises documents relevant to the investigation into PCF. The applicants conceded before us that the documents in the first category, if properly and specifically identified, should not be produced; they sought to agitate on the appeal the primary Judge's ruling with respect to the other two categories of documents.
The law relating to public interest immunity was considered by the High Court in Sankey v Whitlam (1978) 142 CLR 1, and in Alister v The Queen (1984) 154 CLR 404; by the Federal Court in Young v Quin (1985) 59 ALR 225, Kanthal Australia Pty Limited v Minister for Industry, Technology and Commerce (1987) 14 FCR 90 and Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1; by the Supreme Court of New South Wales, in particular in Spargos Mining NL v Standard Chartered Aust Limited (1989) 1 ACSR 311; by the House of Lords in Burmah Oil Co Limited v Bank of England (1980) AC 1090 and Air Canada v Secretary of State for Trade (1983) 2 AC 394; and by the Court of Appeal of New Zealand in Environmental Defence Society Inc v South Pacific Aluminium Limited (No 2) (1981) 1 NZLR 153. It was decided in Sankey v Whitlam and confirmed in Alister v The Queen that, when one party to a proceeding seeks the production of documents and objection is taken that it would be contrary to the public interest to produce them, the Court must consider two conflicting aspects of the public interest: first, whether harm would be done by the production of the documents and second, whether the administration of justice would be impaired if the documents were withheld; and to decide by a balancing exercise which of these elements predominates. A balancing exercise can only be undertaken when it appears that both aspects of the public interest require consideration:

"i.e. when it appears, on the one hand, that damage would be done to the public interest by producing the documents sought or documents of that class, and, on the other hand, that there are or are likely to be documents which contain material evidence. The Court can then consider the nature of the injury which the nation or the public service would be likely to suffer, and the evidentiary value and importance of the documents in the particular litigation. ..."

Alister v The Queen per Gibbs C.J. at 412.

As was pointed out by a Full Court of this Court in Northern Land Council at 31, when a claim for public interest immunity is raised there may be a threshold question whether the documents in question are or may be of sufficient importance to the case that the Court should undertake the exercise, which may involve their inspection, of balancing the public interest in withholding production against the public interest in the administration of justice. The nature of the balancing process and the factors relevant to deciding a public interest immunity claim were considered in Northern Land Council at 38-39.
An objection to production, even if properly taken, is never conclusive (Sankey v Whitlam, Alister v The Queen and Northern Land Council).
Objection may be taken to the production of documents because it would be against the public interest to disclose their contents or because it belongs to a class of documents which in the public interest ought not to be produced. There are documents which belong to a class which ought not to be disclosed irrespective of the contents of the particular documents because the law acknowledges that in the public interest such a class of documents should be immune from disclosure. The class includes Cabinet minutes and minutes of discussions between heads of government departments, papers brought into existence for the purpose of preparing submissions to Cabinet, and certain other documents which relate to the framing of government policy at a high level: see Sankey v Whitlam especially per Gibbs A.C.J. at 39; Conway v Rimmer (1968) AC 910 at 952, 973, 979, 987, 993; Australian National Airlines Commission v The Commonwealth (1975) 132 CLR 582 at 591; Lanyon Pty Limited v The Commonwealth (1974) 129 CLR 650; Burmah Oil and Air Canada. The extent to which this doctrine would protect from disclosure documents concerned with policy making by junior officials of government or correspondence with outside bodies is a matter on which there is divergence of judicial opinion. Although there are classes of documents which are entitled to protection from disclosure irrespective of their contents "no documents, however exalted their status, are completely immune from production": Northern Land Council at 30. Such documents may be withheld from production only when this is necessary in the public interest: Sankey v Whitlam per Gibbs A.C.J. at 43; Northern Land Council at 296. Although objection may in some cases be taken to production of documents because they belong to a class of documents which in the public interest ought not to be produced and although the class is not closed, it must only be in rare cases of documents at high levels of government involving matters of national importance that the class doctrine can apply. Documents within the possession of the ASC (an investigative and law enforcement agency) of a confidential nature which record information received by it concerning possible offences or irregularities and recording the possible course of investigations or information with respect to evidence concerning proceedings to which the ASC is a party, plainly may fall within the scope of public interest immunity; but as at present advised I cannot conceive of a case where they would fall within the class doctrine and thus be immune from disclosure irrespective of the contents of any particular document.
That the doctrine of public interest immunity can apply to documents in the possession of a law enforcement agency such as the ASC cannot be doubted: see Maloney v New South Wales National Coursing Association Limited (1978) 1 NSWLR 60; Spargos. The ASC has various roles under the Corporations Law; it is investigator, prosecutor and intervener in proceedings, both civil and criminal, and is generally responsible for the enforcement of the Corporations Law. The range of activities which it may investigate and the variety of documents which may come into its possession for the purposes of fulfilling its statutory obligation are numerous and diverse. In some cases the ASC's investigations will be conducted over long periods of time and involve large numbers of documents. Those matters all point to the conclusion that, although the doctrine of public interest immunity may apply to documents of this kind, they cannot be immune from disclosure within the class doctrine; that would be an unwarranted extension of the doctrine which has hitherto been confined to rare cases of documents involving high government policy and decisionmaking.

It is the duty of the Court to prevent the disclosure of a document the production of which would be contrary to the public interest even if no claim is made by a Minister or appropriate government official that its production should be withheld. Indeed, the myth that disclosure could not be prevented unless a claim for immunity from production was made by the Executive has long since been exploded. Equally discredited is the view which previously was commonly held that public interest immunity was in truth Crown privilege; (see Sankey v Whitlam and Alister v The Queen, especially per Gibbs C.J. at 412).
The primary Judge set out the history of the various claims made by the ASC of public interest immunity to shield the relevant documents from the scrutiny of the applicants and I shall not repeat what he said except the following (at 731, 732):

"I have set out at some length the history of this episode in this litigation (i.e. the claim of public interest immunity). Several days have been wasted following the Commission's commitment to take a public interest immunity objection, but before it could finally get its house in order so that the claim could be resolved by the court. The history I have recited, and I include what emerged in cross examination of Mr Adams, left me in a situation in which I was not satisfied that a claim to immunity had been made out in relation to any particular document on the list 'BA3', but I was prepared to accept that there was an investigation on foot by the Commission into the activities of Pacific Commerce Finance Limited, as both Mr Adams, in his oral evidence, and Mr Eriksson in his affidavit filed in December last deposed to. I was also prepared to accept that a range of documents, some of which the Commission by Thursday was prepared to acknowledge should not be made the subject of any claim to immunity from disclosure, had been gathered by the Commission in the course of that investigation.

This brought into sharp focus the question whether it was proper for me to look at the documents listed on exhibit BA3 to assist in deciding whether the claim for immunity was made out or not."

His Honour then referred to the judgment of Gibbs C.J. in Alister v The Queen where the Chief Justice (at 412) referred to Sankey v Whitlam as establishing

"that when one party to litigation seeks the production of documents, and objection is taken that it would be against the public interest to produce them, the Court is required to consider two conflicting aspects of the public interest, namely, whether harm would be done by the production of the documents, and whether the administration of justice would be frustrated or impaired if the documents were withheld, and to decide which of those aspects predominates. The final step in this process - the balancing exercise - can only be taken when it appears that both aspects of the public interest do require consideration - i.e., when it appears, on the one hand, that damage would be done to the public interest by producing the documents sought or documents of that class, and, on the other hand, that there are or are likely to be documents which contain material evidence. The court can then consider the nature of the injury which the nation or the public service would be likely to suffer, and the evidentiary value and importance of the documents in the particular litigation. But the anterior question arises - should the court look at the documents to assist it in answering these questions?"

The primary Judge then stated that in Alister v The Queen Gibbs C.J. ultimately decided that the Court should inspect all documents which related to an investigation by a major Crown witness into the alleged crimes of which the applicants for leave to appeal were convicted and in particular of any reports that that witness may have given to ASIO. His Honour noted that Alister v The Queen was a criminal case, but he applied the approach taken by Gibbs C.J. in the present case. After citing another passage from the judgment of Gibbs C.J. (at 414) the primary Judge said:

"Here, as I have said, there is really no dispute but that the residue of documents in respect of which immunity from disclosure is now claimed are relevant to issues which the Commission itself has raised in the litigation."

His Honour then decided that he should look at the documents himself with this reservation:

"... notwithstanding my concerns at the inadequacy of the evidence to support the proposition that damage will be done to the public interest by producing the documents sought. In making this decision, I also relied on the width of the power of inspection conferred by Order 15 rule 14, as explained in Grant v Downs (1974) 2 NSWLR 401 at 405 and 406."

Later in his reasons his Honour said that he had now read the documents and was satisfied:

"... on the face of the documents, many of them plainly relate to the investigation into Pacific Commerce Finance Ltd. that Mr Eriksson, in his affidavit, and Mr Adams, in his evidence, swore is under way. I am also satisfied from the contents of the balance of the documents in the list 'BA3' and from their relationship to other documents in the list that they, too, relate to this same investigation."

His Honour then proceeded to make more detailed reference to the documents in contention and he summarized this aspect of his judgment by saying this:

"In short, I am satisfied that there is an investigation into the activities of Pacific Commerce Finance Ltd. under way and that all of these documents relate to that investigation for the reasons I have already given. I think that if these documents were disclosed, some of them would reveal the names of confidential informants to the Commission; others would reveal the private affairs of persons and organisations who appear to have co-operated voluntarily with the Australian Securities Commission in providing it with information for the purposes of this investigation. I am prepared to accept that the nature of the information revealed in these two categories of the documents in Exhibit 'BA3' is such that disclosure would be very likely to damage the Commission's capacity to acquire, on a voluntary basis, information of clear relevance to the investigation it now has on foot into Pacific Commerce Finance Ltd and into future investigations it may conduct concerning others. The balance of the documents (and indeed the totality of the documents) shows the extent of the information gathered and the directions the investigation is or may be taking into Pacific Commerce Finance Ltd.. I say 'may be taking' because I have, of course, seen only those documents produced for my perusal and do not know the full range of information available to the Commission in connection with this particular investigation, nor the exact stage to which it has progressed. But, given that this investigation is current, I do not think it proper to order disclosure."

Tracing the course of curial events which led to the judgment of the primary Judge from which this motion for leave to appeal has been brought is not an easy task. It has involved reading, not only his Honour's reasons for judgment, but evidence led at the proceeding before his Honour (including cross examination of Mr Adams) and studying the transcript of certain of the addresses to him and notes of directions hearings; all in a setting where particulars have been found to be deficient and amended more than once, and where affidavits in support of the claim for public interest immunity have also been found to be wanting and attempts made to patch up the problems.
Appellate Courts should exercise particular care in reviewing interlocutory decisions which relate essentially to practice and procedure: see National Mutual Holdings Pty Limited v The Sentry Corporation (1988) 19 FCR 155 at 160-1 and the cases there cited. But having studied all the material I am satisfied, contrary to the applicants' submission, that the primary Judge did not himself seek to propound the claim for public interest immunity. That is the nub of the applicant's submissions. His Honour accepted that the ASC propounded the claim for public interest immunity, but was not persuaded that the documents fell within the scope of the claim merely by acting on the evidence of Mr Adams and other material referred to in his affidavits. His Honour looked at the documents for two purposes: first, to see if the claim had been made good, that is, whether they fell within the category of documents of a confidential nature relating to the investigation conducted by the ASC into the activities of PCF, the disclosure of which would be very likely to damage the ASC's capacity to acquire on a voluntary basis information of relevance to the investigation on foot into the affairs of PCF and into future investigations, if any, it may conduct concerning others. Having thus satisfied himself that there was a legitimate assertion of the claim of public interest immunity, his Honour embarked upon the balancing exercise in which he considered the nature of the harm to the public interest which would be involved in disclosure of the documents as against the need to produce documents in the interests of justice for inspection of the applicants in this litigation. He then reached the conclusion that the balancing exercise resulted in the documents not being made available to the respondents. This primary argument of the applicants therefore fails.
I turn next to the submissions on behalf of the applicants that it is not a proper basis for a claim for immunity if documents reveal business or financial affairs of the parties who have supplied the information voluntarily to public servants or a State instrumentality; and that it is not enough that documents may be relevant to the investigation into the affairs of PCF. The applicants did not contend that documents which would identify informants should be produced. To deal with this submission requires analysis of the categories of documents inspected by his Honour and the conclusions which he drew from that analysis.
The primary Judge said that he was not satisfied before inspecting the documents that the claim for public interest immunity had been made out in relation to any particular document on the list BA3, but he accepted that there was an investigation on foot by the ASC into the activities of PCF. He accepted also that a range of documents had been collected by the ASC in accordance with its investigation, some of which the ASC was prepared to acknowledge could not properly be made the subject of a claim to immunity from disclosure. His Honour accepted also that the residue of documents in respect of which immunity from disclosure was finally claimed were relevant to issues which the ASC itself had raised in the litigation.
His Honour then decided to look at the documents. He concluded that on their face many documents plainly related to the investigation into the affairs of PCF; that from the contents of the balance of them and from their relationship to other documents in the list, BA3, they too related to the same investigation. His Honour drew the following conclusions:
. all documents inspected are relevant to the issues raised by the

ASC in the case sought to be established in Particular 30. (The documents thus stand in contrast to those inspected by McLelland J. in Spargos).

. Some documents (which for convenience I shall call category 1)

would reveal the identity of "informers". The information in most of those documents had been provided voluntarily, and some of it had perhaps been provided through the exercise of compulsory process by the ASC.

. Some documents (category 2) would reveal the private affairs of

persons and organizations who appear to have co-operated voluntarily with the ASC in providing it with information for the purposes of the investigation.

. Some documents (category 3) show the extent of the information

gathered and the direction the investigation is or may be taking into PCF.

His Honour found that the documents in all three categories fall within the general description by his Honour of documents that show the extent of the information gathered and the direction the investigation is or may be taking into PCF.
Some of the documents on the list BA3 from their description on the list could not on their face be the subject of a claim for immunity (for example document 5 "Blank Offer of Loan Agreement from agent of Lender Y", document 15 "Open letter W to potential borrowers 22/4/91", document 94 "Open letter - no addressee - from RI - 27/4/90"). But his Honour presumably concluded that they were either part of a chain of documents otherwise linked with documents properly the subject of such a claim or perhaps even bearing notes of officers of the ASC (one simply does not know) which together may be fairly said to be documents of a confidential nature which record information received by the ASC relating to the investigation into PCF and possibly disclosing offences under the law. This submission of the applicant also fails.
Counsel for the applicants and counsel for the ASC did not dissent from this Court inspecting the documents itself if it found it necessary to do so, but this has not been a course which I find it necessary to adopt to determine this matter.
In these days with large government instrumentalities and agencies involved in time consuming and extensive investigations into possible irregularities and offences, great care is required by the bodies themselves in ensuring both that the correct person within the structure of the organization (that is a person who knows the facts, has seen the documents and who is preferably at a high level within the organization) swears the appropriate affidavit claiming public interest immunity and that the claim is not made too widely so as to sweep within its net documents that are not legitimately an essential integer in the investigative process. This also calls for vigilance by the Courts lest documents are shielded from public scrutiny or inspection by parties to litigation under an unduly broad umbrella of public interest immunity.
It is apparent from my reasons that the questions raised in this matter are of sufficient importance to warrant the grant of leave to appeal. I would therefore grant the applicants leave to appeal from the interlocutory judgment of Drummond J. given on 13 March 1992, deem the draft notice of appeal included in the appeal papers to be the notice of appeal and dismiss the appeal with costs.

JUDGE2

This is an application by the respondents to the substantive application (whom I shall call in these reasons "the respondents") for leave to appeal from an interlocutory order of a Judge of the Court upholding a claim of privilege by the Australian Securities Commission ("the ASC") against the production of certain documents on the ground of public interest immunity. It is not disputed that the documents should be produced if that claim to immunity cannot be made out. The claim of public interest immunity was not clearly or consistently articulated before the learned primary judge. The documents in respect of which it was made were successively reduced in number until they were confined to a list of 115 comprised in Exhibit BA3 to an affidavit sworn on 12 March 1992 by a Mr Adams, the Regional Commissioner for Queensland.

By an earlier affidavit sworn 10 March 1992 Mr Adams had deposed as follows in respect of a larger collection of documents which included those listed in Exhibit BA3 to his later affidavit:

"6. In my opinion, the release of the documents would be contrary to the public interest. The reasons for this opinion are based upon my knowledge and experience of this operation, and the operation of the Australian Securities Commission in particular.

7. Given my knowledge and experience of this operation and the operation of the Australian Securities Commission I say that:

(i) the disclosure of the documents would affect current, on-going and future operations being conducted by the Australian Securities Commission. Furthermore the investigation of suspects and offenders would be greatly prejudiced by the release of this information.

(ii) the disclosure of the documents would be in breach of the statutory obligation of confidentiality in section 127 of the Australian Securities Commission Law.

(iii) the disclosure of the documents would reveal the methods of investigation utilized by the Australian Securities Commission and the Australian Federal Police.

(iv) the disclosure of the documents would reveal the identity of informants who supply the information to the Australian Securities Commission on a confidential basis.

(v) the disclosure of the names of the informants would frustrate assistance by members of the public in future investigations conducted by the Australian Securities Commission."

By a second affidavit also sworn 10 March 1992, Mr Adams deposed:

"4. Further to paragraph 7 of my previous affidavit filed herein I say that future operations of the applicant concerning the investigation of suspects and offenders to whom and in relation to which the documents the subject of the claim for privilege relate, would in my opinion be substantially prejudiced in that by experience I have found that potential informers are reticent to co-operate and assist the Commission or further assist the Commission if their identity is revealed. In that latter event, not only would the course of the operation be adversely affected but also the chance of successfully recovering moneys or other securities on behalf of aggrieved persons within the meaning of that term as used in s.1323 or obtaining injunctive relief on behalf of other persons whose interests have been or might be affected within the meaning of s.1324. Further, the prospects of success in any future prosecution resulting from the collation of the documents the subject of the claim for privilege may be prejudiced should the names of the authors of the documents become a matter of public knowledge."

By his third affidavit of 12 March 1992, Mr Adams invoked assertions in his earlier affidavits in support of the claim to public interest immunity made in respect of the smaller collection of documents listed in Exhibit BA3. Mr Adams was cross-examined on his affidavits and the relevant effect of that cross-examination was summarised as follows by the learned primary judge in his reasons:

"In the course of his cross-examination, Mr Adams indicated that the claim to immunity from disclosure of the documents in Exhibit "BA3" to his third affidavit was made on the basis that disclosure would prejudice the Commission's current investigation into Pacific Commerce Finance Ltd. and would have a damaging impact on people giving the Commission information now and in the future. He said this particular investigation was at an early stage. He said, that at least prior to swearing his third affidavit, he read all the documents in the original list produced in part on Monday afternoon and that he could not say whether any particular document in the list, which is "BA3", was given to the Commission on a confidential basis. He went on to say that some of the documents could have been obtained by the Commission's coercive powers, some could have been obtained by search warrant, and some could have been given to the Commission voluntarily on a confidential basis, but that he himself did not know with respect to any given document which means was used to obtain the particular document."

The perceptions which his Honour had after Mr Adams' cross-examination had been concluded are then indicated thus:

"The history I have recited, and I include what emerged in cross-examination of Mr Adams, left me in a situation in which I was not satisfied that a claim to immunity had been made out in relation to any particular document on the list "BA3", but I was prepared to accept that there was an investigation on foot by the Commission into the activities of Pacific Commerce Finance Ltd., as both Mr Adams, in his oral evidence, and Mr Eriksson, in his affidavit filed in December last deposed to. I was also prepared to accept that a range of documents, some of which the Commission by Thursday was prepared to acknowledge should not be made the subject of any claim to immunity from disclosure, had been gathered by the Commission in the course of that investigation. This brought into sharp focus the question whether it was proper for me to look at the documents listed on Exhibit "BA3" to assist in deciding whether the claim for immunity was made out or not."

Mr Eriksson was an officer of the Australian Federal Police seconded to the ASC who deposed that the ASC had commenced an inquiry into the affairs of the Witan group of companies and subsequently into the affairs of Pacific Commerce Finance Ltd ("PCF"). His affidavit contained a number of hearsay allegations to the effect that the firstnamed respondent, Pasqual Zarro had paid to one Richardson of PCF $10,000 for each of a series of letters to the effect that PCF had arranged finance for the Witan Group and that the proceeds of various loans would be made available to the Witan Group on specified dates. It is then alleged that those letters were used to delay certain creditors of the Witan Group so as to put group assets beyond their reach. Mr Eriksson then deposed to various payments made by companies in the Witan Group including payments of substantial amounts to Mr Richardson, PCF and an alleged associate of theirs, John Howard. Paragraph 6 of Mr Eriksson's affidavit (the second so numbered) was in these terms:

"6. I have conducted extensive enquiries into the activities of Pacific Commerce Finance Ltd and have established that numerous companies and business people have entered into agreements with the company Pacific Commerce Finance Ltd to obtain off-shore funds to support their business. In respect to these applications for moneys large loan establishment fees had been paid. My enquiries have established that some 18 months have passed since the first application for an overseas loan was made with Pacific Commerce Finance. My enquiries have not established any loan moneys being forthcoming from Pacific Commerce Finance Ltd."

After referring to the principles enunciated by Gibbs C.J. in Alister v The Queen (1984) 154 CLR 404, the learned primary judge concluded that he should himself examine the documents collected in Exhibit BA3, saying:

"I therefore decided I should look at the documents myself, notwithstanding my concerns at the inadequacy of the evidence to support the proposition that damage will be done to the public interest by producing the documents sought. In making this decision, I also relied on the width of the power of inspection conferred by Order 15 rule 14, as explained in Grant v Downs

(1974) 2 NSW LR 401 at 405 and 406. In the course of the past week, when confronted with difficulties raised by the actions of the Commission relating to this issue of immunity, I have a number of times expressed concerns at the possibility that the overruling of objection to production of documents on the ground of public interest immunity on the ground that there was an inadequate foundation laid for the claim might lead to the disclosure of documents which are, in truth, legitimately entitled to be kept confidential by the Commission in reliance upon the immunity question. Having now read the documents, I am satisfied that on the face of the documents, many of them plainly relate to the investigation into Pacific Commerce Finance Ltd. that Mr Eriksson, in his affidavit, and Mr Adams, in his evidence swore is under way. I am also satisfied from the contents of the balance of the documents in the list "BA3" and from their relationship to other documents in the list that they, too, relate to this same investigation."

His Honour then made these, more detailed, observations of the categories into which the documents appeared, on his examination of them, to fall:

"Many of the documents in Exhibit "BA3" record information given to the Commission by a person in the category referred to in paragraph 6 of Mr Eriksson's affidavit, i.e., "numerous companies and business people ...", in connection with the Commission's investigation into Pacific Commerce Finance Ltd.. Some of the documents in this particular category of the material were, on their face, provided by persons who could fairly be described as informants.

A substantial number of the documents appear in this category from their contents to have been voluntarily offered to the Commission in connection with this investigation. A smaller number of such documents expressly record that the material was provided on a confidential basis.

It is not possible, from a perusal of the balance of the documents, to identify whether they were obtained by the Commission by compulsory process, although the nature of some of the documents suggest that may have been the case. It is apparent, however, that this last group of documents is also relevant to the investigation into Pacific Commerce Finance Ltd., that I have accepted is under way. I am satisfied from my inspection that the documents are all relevant to the issues the Commission has raised by new particular 30, being issues to which particularly paragraphs 6 (second so numbered) to 9 of Mr Eriksson's affidavit are also relevant. In short, I am satisfied that there is an investigation into the activities of Pacific Commerce Finance Ltd. under way and that all of these documents relate to that investigation for the reasons I have already given. I think that if these documents were disclosed, some of them would reveal the names of confidential informants to the Commission; others would reveal the private affairs of persons and organisations who appear to have co-operated voluntarily with the Australian Securities Commission in providing it with information for the purposes of this investigation.

I am prepared to accept that the nature of the information revealed in these two categories of the documents in Exhibit "BA3" is such that disclosure would be very likely to damage the Commission's capacity to acquire, on a voluntary basis, information of clear relevance to the investigation it now has on foot into Pacific Commerce Finance Ltd. and into future investigations it may conduct concerning others. The balance of the documents (and indeed the totality of the documents) shows the extent of the information gathered and the directions the investigation is or may be taking into Pacific Commerce Finance Ltd.. I say "may be taking" because I have, of course, seen only those documents produced for my perusal and do not know the full range of information available to the Commission in connection with this particular investigation, nor the exact stage to which it has progressed. But, given that this investigation is current, I do not think it proper to order disclosure."

It was submitted on behalf of the respondents in support of the application that, before examining for himself the documents comprised in Exhibit BA3, his Honour should have satisfied himself that the ASC had established a prima facie claim of public interest immunity for those documents. Put another way, that argument fixed on the proposition that inspection by the Court of documents which are claimed to attract public interest immunity may be undertaken only for the purpose described as follows by Lord Upjohn in Conway v Rimmer (1968) AC 910 at 992:

"On the one side there is the public interest to be protected; on the other side of the scales is the interest of the subject who legitimately wants production of some documents which he believes will support his own or defeat his adversary's case. Both are matters of public interest, for it is also in the public interest that justice should be done between litigating parties by production of all documents which are relevant and for which privilege cannot be claimed under the ordinary rules. They must be weighed in the balance one against the other."

His Lordship then dealt with the way in which judicial inspection of documents may be undertaken in evaluation of a claim that in the public interest they are privileged from production, saying at 996:

"So it seems to me to be quite clear that there is no erosion upon our normal ideas of justice inter partes if a judge, not satisfied about the Crown's claim to privilege, himself privately inspects the allegedly privileged documents. But before reaching that stage he may, of course, require further and better affidavits by the Minister and may direct the Minister to attend for cross-examination by any party to the litigation before he inspects the document."

However, I do not understand that passage to entail the conclusion that a judge can only undertake an inspection of documents after being satisfied by affidavit, and, if necessary, cross-examination thereon, that a prima facie claim of privilege has been made out. His Lordship's formulation is, I consider, carefully framed to preserve to the judge a wide discretion as to whether, and if so, when, he should inspect allegedly privileged documents. If that discretion were circumscribed in the way contented for by Counsel for the respondents there would be no scope for the Court of its own motion to protect the public interest by declaring a particular document immune from production. For the existence of that power, see Sankey v Whitlam (1978) 142 CLR 1 where Gibbs A.C.J. observed, at 44:

"It is however clear that the court should prevent the disclosure of a document whose production would be contrary to the public interest even if no claim is made by a Minister or other high official that its production should be withheld .... It is necessary that the court should have the power and the duty to prevent the production or use of a document when it would be injurious to the public interest to produce or use it even if the proper procedure for objection by or on behalf of the Minister has not been followed. In some cases a document may be called for and produced in circumstances in which there has been no opportunity to consider at an appropriate level of government whether objection ought to be taken to its disclosure. The court must then intervene if it appears that the public interest requires the document to be protected from disclosure."

See also per Stephen J at 58 and per Mason J (as he then was) at 100. Further support for the view that deficiencies in an affidavit asserting a claim that in the public interest documents should be immune from production, do not preclude a judge in his discretion from inspecting the documents is provided by this passage from the judgment of Mason J in Sankey v Whitlam (supra) at 96:

"To evaluate this submission it is necessary to identify, first, the various elements which sustain the public interest against production of documents of the kind referred to. In identifying these elements I have gained little assistance from the affidavits sworn by Ministers and heads of departments in support of the objection to production. They have sought refuge in the amorphous statement that non-disclosure is necessary for the proper functioning of the Executive Government and of the public service, without saying why disclosure would be detrimental to their functions, except for the reference to want of candour. Perhaps affidavits in this form were acceptable in the days when it was thought that the court should uphold an objection once made by the Crown through its appropriate representative. But they are plainly unacceptable now that the court is to resolve the issue for itself, after an inspection of the documents when that is thought to be appropriate. An affidavit claiming Crown privilege should state with precision the grounds on which it is contended that documents or information should not be disclosed so as to enable the court to evaluate the competing interests. The affidavits in this case fall far short of this standard and I must therefore look beyond them for the considerations which tend to support non-production."

In Robinson v State of South Australia (No 2) (1931) AC 704, Lord Blanesburgh delivered the opinion of the Judicial Committee of the Privy Council, and after rejecting as "entirely inadequate" the formulation of a claim to privilege advanced in an affidavit filed on behalf of the respondent State, continued, at 722:

"But the privilege has not, in their Lordships' judgment, been lost merely by the insufficiency of the form in which it has been claimed. It is quite possible that there may be amongst the scheduled documents some, at least, to which the privilege genuinely attaches, and to throw open these documents to the inspection of the plaintiff, without more, would destroy the protection of the privilege. Therefore it would or might be contrary to the public interest to deprive the respondent State of a further opportunity of regularizing its claim to protection, by producing as its next step an affidavit of the description already indicated.

And that the respondent State should now be given that opportunity would, on proper terms as to costs, have been their Lordships' advice had it not been that such a course would necessarily involve further serious delay, without, it may be, advancing any further the final solution of the question at issue. There is, moreover, another course open which, in the circumstances, seems to their Lordships to be in every way preferable - namely, to remit the case to the Supreme Court of South Australia with a direction that it is a proper one for the exercise by that Court of its power of itself inspecting the documents for which privilege is set up in order to see whether the claim is justified."

That passage makes clear that the court has a discretion which may be enlivened, for example, by a need to save time or costs, to inspect documents to see whether they support a claim for immunity at all, before balancing that claim against the public interest in the full and effective conduct of litigation. That is not to say that a government or agency which relies on an affidavit which articulates a claim of privilege with insufficient precision or particularity can assume that the court will invariably inspect the documents to see whether they can support a claim which could have been, but was not, properly formulated. Such a government runs the risk that the claim will be rejected without inspection of the documents, as apparently happened in Adsteam Building Industries Pty Ltd v The Queensland Cement and Lime Co Ltd (1984) 9 ACLR 62, or after an inspection unaided by an adequate indication of the considerations which prompted the claim as related to particular documents.
I do not understand the passages from the speeches of Lord Keith of Kinkel (at 1134) and Lord Scarman (at 1145) in Burmah Oil Co Ltd v Bank of England (1980) AC 1090 to which we were referred by Counsel for the respondents, to deny the existence of the discretion to which I have just referred. In those passages their Lordships indicated that a court may always inspect the documents when left in some doubt as to the outcome of the balancing exercise after considering a presumptively adequate certificate or affidavit asserting the privilege. However, that is not to say that the court may never inspect the documents at some stage before reaching a real doubt as to where the balance lies. No different understanding, in my view informs the reference to Burmah Oil by Gibbs C.J. in Alister v The Queen (supra) at 414, or the recent discussion of those and other authorities by a Full Court of this Court in Commonwealth v Northern Land Council (1991) 30 FCR 1.
In my view, the learned primary Judge exercised the discretion, which I consider he clearly had, to inspect the documents comprised in Exhibit BA3 to see whether they supported the claim to public interest immunity which he distilled, not without difficulty, from the affidavits and oral evidence of Mr Adams on behalf of the ASC. His Honour then undertook the different intellectual exercise of balancing the claim which he perceived to be supported by the documents against the public interest in the respondents' having access to those documents for the purposes of the litigation.
From his Honour's description of the categories of the documents which he had inspected, it was open to him on balance to hold that the ASC's claim to immunity should prevail. Viewed as a whole the documents described by his Honour were capable of attracting immunity on the ground indicated as follows by McLelland J in Spargos Mining N.L. v Standard Chartered Aust. Ltd (No 1) (1989) 1 ACSR 311 at 313:

"Some of the material considered in isolation is obviously not confidential and some of the documents are matters of public record or documents which would in any event be within the possession or knowledge of the plaintiffs. Considered in isolation, material or documents of that kind would not attract public interest immunity. Such immunity as they may have would derive from such inferences as to the course and progress of the investigation as may be available from their presence or position in various files and perhaps in relation to their conjunction with other documents."

Nothing has been indicated to cast doubt on the result of the balancing process which has been undertaken at first instance so as to warrant this Court's inspecting the documents and undertaking the same process for itself.
Accordingly, I would grant the application for leave to appeal, but dismiss the appeal with costs.

JUDGE3

I agree that the questions raised in this matter are of sufficient importance to warrant the grant of leave to appeal. The circumstances giving rise to the application for leave to appeal are detailed in the Reasons for Judgment of Lockhart J. As his Honour explains, the interlocutory judgment from which leave to appeal is sought was given by a Judge of this Court (Drummond J.) during the hearing of a proceeding in which the Australian Securities Commission (the "ASC") sought relief against the appellants pursuant to ss. 230, 599, 1323 and 1324 of the Corporations Law.

In ss. 1323 and 1324, standing is conferred upon the ASC to seek orders of an injunctive character where there are or there may have been contraventions or threatened contraventions of provisions of the Corporations Law. The standing of the ASC is in addition to that, under s. 1323, of persons who are "aggrieved" and, in the case of s. 1324, of persons whose interests have been, are, or would be affected by the conduct in question. Sections 230 and 599 provide for the making of orders prohibiting persons from "managing" a corporation, within the meaning of s. 91A. Standing under s. 230 is given to the ASC and "prescribed persons", a term defined in sub-s. 230 (6). Section 599 applies where a corporation has been under a form of external administration; the ASC (and no other party) has standing to seek orders forbidding certain persons from managing a corporation.
The ASC is established as a body corporate by ss. 7 and 8 of the Australian Securities Commission Act 1989 ("the ASC Act"). Among the functions of the ASC specified in s. 11 of the ASC Act are those conferred on it by or under the Corporations Law. Part 3 of the ASC Act (ss. 13-93) confers extensive powers to conduct investigations and gather information. Further, where as a result of an investigation it appears to the ASC that a person may have committed an offence and ought to be prosecuted, the ASC may cause a prosecution to be begun and continued (s. 49). Where as a result of an investigation it appears to the ASC to be in the public interest for a person to begin and carry on a proceeding for the recovery of damages for misconduct committed in connection with a matter to which the investigation related or for the recovery of property of that person, the ASC may cause such a proceeding to be begun and carried on in the name of that person, if the person is a company, or, otherwise, do so with the written consent of that person (s. 50). Sections 49 and 50 of the ASC Act thus illustrate the dual and concurrent role of the ASC in pursuit of criminal and civil remedies for contravention of corporate law.
The present appeal arises from the successful invocation by the ASC of the law as to public interest immunity against what otherwise would be its obligation to produce certain documents for inspection upon discovery, in proceedings brought by the ASC for the civil remedies I have described, namely those provided for in ss. 230, 599, 1323 and 1324 of the Corporations Law.
It is necessary first to refer to the applicable principles as the law on this subject stands in Australia, before considering whether there is substance in the appellants' complaint that the primary Judge erred in law.
Quite apart from the question of whether the law for Australia was ever authoritatively expressed in Duncan v Cammell, Laird and Company Limited (1942) AC 624, its authority in England was eclipsed by Conway v Rimmer (1968) AC 910. Nevertheless, there is a passage in the speech of Viscount Simon L.C., supra at 636-7, which provides a suitable introduction to the issues that arose in the present case. The Lord Chancellor said:

"The principle to be applied in every case is that documents otherwise relevant and liable to production must not be produced if the public interest requires that they should be withheld. This test may be found to be satisfied either

(a) by having regard to the contents of the particular document, or (b) by the fact that the document belongs to a class which, on grounds of public interest, must as a class be withheld from production.

Two further matters remain to be considered. First, what is the proper form in which objection should be taken that the production of a document would be contrary to the public interest? And, secondly, when this objection is taken in proper form, should it be treated by the court as conclusive, or are there circumstances in which the judge should himself look at the documents before ruling as to their production?"

It was, of course, the decision of the House upon what is above described as the second of the further matters which gave rise to the acute controversy which was the subject of particular discussion in Conway v Rimmer supra, and Sankey v Whitlam (1978) 142 CLR 1.
On the present appeal, no particular issue arises as to this second matter. The primary Judge inspected the documents in question before delivering his ruling on the claim for public interest immunity asserted by the ASC. Indeed, he was invited to do so by the ASC, something contrary to the usual course of events in such cases where the resistance to inspection by the Court has come from the body seeking to uphold the claim to immunity. The complaints as to the inspection conducted by the Court come from the appellants. They do not challenge his Honour's inspection insofar as it was necessary for him to perform his task of balancing the interests involved in order to determine whether the public interest claimed by the ASC was the predominant interest. But the appellants do complain of what they say was the primary Judge's inspection of the documents for the anterior purpose of dealing with what was the first matter referred to by Viscount Simon L.C., namely the framing of the claim for privilege. (I should add that we have not inspected the documents.)
The appellants submit that it was not for the primary Judge to overcome the deficiencies of the case for the existence of the immunity put forward by the ASC lest there be a disclosure of documents for which, had the ASC better presented its case, it would have been able to establish a claim of immunity.
As Viscount Simon L.C. explained, a claim to public interest immunity may be based on the nature of the contents of a particular document, or on the characteristic of a document as member of a class. As to class claims, the view now accepted is that there is what Lord Reid described as a heavy burden of proof on any authority which makes such a claim: Rogers v Home Secretary (1973) AC 388 at 400, repeated by Stephen J. in Sankey v Whitlam supra at 62. The present appeal, as I have indicated, does not concern the immediate significance of Sankey v Whitlam, namely that membership of any class of official documents is no longer a basis for otherwise unqualified immunity from production, without inspection by the Court so that it may then balance the public interest against production with that in favour of the administration of justice upon consideration by the fact finding tribunal of all the admissible evidence; see Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 at 28-30.
The appellants did not challenge what have been described as the police informer cases, which propound a rule described as follows by McHugh J.A. in Cain v Glass (No. 2) (1985) 3 NSW LR 230 at 248:

"I think that the courts in this State should continue to apply the rule that no question of weighing competing public interests arises when a claim is made that the name of a police informer should be disclosed. The rule is absolute and is relaxed only 'where upon the trial of a defendant for a criminal offence disclosure of the identity of the informer could help to show that the defendant was innocent of the offence. I have stated the exception in the language of Lord Diplock in D. v National Society for the Prevention of Cruelty to Children (1978) AC 171 at 218."

The result is that a document or collection of documents which, taken together, may disclose the identity of an informant, are in a special position. The claim in respect of them is a contents claim rather than a class claim. The appellants accepted that this was true in the present case of documents held by the ASC for the purpose of an investigation pursuant to its powers under the ASC Act. Their complaint is directed to the upholding of the privilege for the balance of the documents in question. Here the privilege was upheld upon what essentially were "class" claims, within the description of that term by Lord Wilberforce in Burmah Oil Co. Ltd v Governor and Company of the Bank of England (1980) AC 1090 at 1111.
The appellants accept, as they must, that cases of defence secrets, matters of diplomacy or affairs of government at the highest level are in a special position. It may so readily appear that the balance of public interest is against disclosure, that even in the absence before the Court of any claim to Crown privilege (perhaps because the Crown is not a party and is unaware of what is afoot) the Court of its own motion should enjoin disclosure: Sankey v Whitlam supra at 44, 58-59. But it is quite clear, and there has never been any question, that the documents with which this appeal is concerned are not of that special character.
Nevertheless, the principle that the Court itself in some instances may be obliged to prevent disclosure of a document, or the reading of an affidavit or the taking of oral evidence, even though no claim for public interest immunity has been made before this Court, supports the proposition that such a claim, when it is made to the Court, whether by a party or a third party, does not arise as an element in the lis between the parties. When made in a proceeding in this Court, no doubt the claim is an element in the "matter" with respect to which this Court is invested with federal jurisdiction. It is one of the claims giving rise to the controversy between the parties, although it arises in the course of adjudication of that controversy.
The consequence of this, as Bowen C.J. explained in Young v Quin (1985) 4 FCR 483 at 485-6, is that a certificate or affidavit making a claim to public interest immunity is not tendered as evidence in the lis, but for the purpose of enabling the Court to rule on that claim. Hence, his Honour's view (supra) that any cross-examination going beyond the issue of the claim to immunity would be impermissible.
Where a claim has not been propounded in proper form, the Court has various avenues open to it before taking its final decision in the matter. It may order that unless within a specified time a further affidavit be sworn within a specified time which shows the claim to privilege with greater particularity, the documents in question should be produced for inspection. This was the course taken by Eveleigh J. in Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (1971) 2 All ER 843 at 853-4, and it drew no adverse comment in the later stages of that litigation (see (1972) 2 QB 102 at 128, (1974) AC 405 at 425-6). The Court may call for a further affidavit from the same deponent to clarify some point or amplify the claim; or it may require the tender of an affidavit sworn by a more senior officer or the relevant Minister: Young v Quin, supra at 486. Or, in my view, the Court may inspect the documents in question itself to ascertain if any deficiencies in the manner in which the claim has been supported are made good by a consideration of the documents. Certainly, the Court may take this course if it has the consent of the party asserting the immunity.
Within broad parameters of this kind, the course the Court takes is for it to decide in the circumstances of the particular case. It is not improper for the Court to take into account as a relevant factor when deciding what course to pursue, that if the claim is left in its currently unsatisfactory state, the result may be the disclosure of documents which may otherwise have attracted public interest immunity. When the foregoing is appreciated, the fate of the present appeal will become apparent. I turn further to consider the circumstances of this case.
The appellants point to the unsuccessful attempts made in the course of the proceeding by the ASC to frame a viable claim. No fewer than three affidavits by Mr Barrie Adams, the Regional Commissioner for Queensland of the ASC, were relied upon as providing a foundation for the claim of immunity. It is apparent that at least initially a view had been taken by the ASC which overstated the extent of the immunity it might properly claim. Given the wide scope of its powers, and its roles as investigator, prosecutor and civil litigant, it is to be expected that the ASC may come into possession of a wide range of discoverable documents. This case emphasises the importance for the ASC to frame any claim to immunity with care and after due consideration. The result of failure to act in this way will be delay, cost and the impeding of the trial of cases. An example of a carefully drawn claim is provided in Burmah Oil Co. Ltd v Governor and Company of the Bank of England supra at 1108-1111, where the text of the certificate is set out and discussed by Lord Wilberforce.
The appellants emphasise that it is not a sufficient basis for claim for immunity that documents "relate to" a continuing investigation. They say that is for the ASC to show that production of the documents would be harmful to the investigation, something which must depend upon the nature of the documents, their relevance to the matters being investigated and the stage which the investigation has reached. The appellants submit that where the claimant for immunity fails to tell the Court anything of those matters, the claim should fail; with that I would agree but here the material before the Court went further.
The first two affidavits of Mr Adams were sworn on 10 March 1992 and the third on 12 March. Each was made necessary because of defects pointed out in what had gone before, and the number of documents for which immunity was claimed decreased as this process continued. It even transpired that some of them had already been produced to the other side in the ordinary course of discovery. The ASC took its final stand upon the documents comprised in 114 items listed in Exhibit "BA3". The primary Judge acceded to an application by counsel for the appellants for leave to cross-examine Mr Adams on aspects of his affidavits. The cross-examination covers some 10 pages of the Transcript. His Honour said in his judgment:

"I took this exceptional course because of concerns at what had emerged with respect to the way the (ASC) had gone about claiming immunity and because of concerns at the reliability of Mr Adams' final claim to immunity for certain of the documents, in view of the change of ground, and in view of the contents of all three affidavits."

In his cross-examination, Mr Adams propounded the claim to immunity from disclosure of the "BA3" documents on the basis that disclosure (a) would prejudice the ASC's current investigation into Pacific Commerce Finance Ltd (with which it is alleged the first appellant had had financial dealings) and (b) would have a damaging impact on the receipt of information by the ASC now and in the future. His Honour's conclusion from the history of the matter, including what had emerged in cross-examination of Mr Adams, was that he was left:

"in a situation in which I was not satisfied that a claim to immunity had been made out in relation to any particular document on the list 'BA3', but I was prepared to accept that there was an investigation on foot by the (ASC) into the activities of Pacific Commerce Finance Limited . . . I was also prepared to accept that a range of documents, some of which the Commission by Thursday was prepared to acknowledge should not be made the subject of any claim to immunity from disclosure, had been gathered by the Commission in the course of that investigation."

In his cross-examination, Mr Adams had said that he had read all the "BA3" documents and that he propounded the claim for immunity from his own review of the documents and after discussion with his officers and with counsel. But he was unable to match each individual document in "BA3" with a particular head of the claim for immunity and he was unable to identify which documents had been seized by the ASC by use of its coercive powers and which had been supplied voluntarily. It was in this state of affairs that the primary Judge decided to inspect the "BA3" documents himself. Drummond J. said that he had decided to do so:

"notwithstanding my concerns at the inadequacy of the evidence to support the proposition that damage will be done to the public interest by producing the documents sought . . . In the course of the past week, when confronted with difficulties raised by actions of the (ASC) relating to this issue of immunity, I have a number of times expressed concerns at the possibility that the overruling of an objection to production of documents on the ground of public interest immunity on the ground that there was an inadequate foundation laid for the claim might lead to the disclosure of documents which are, in truth, legitimately entitled to be kept confidential by the (ASC) in reliance upon the immunity question."

The result of the inspection was that his Honour found the claim as propounded by Mr Adams did in fact bear upon the "BA3" documents. He said:

"Having now read the documents, I am satisfied that, on the face of the documents, many of them plainly relate to the investigation into Pacific Commerce Finance Ltd that . . . is under way. I am also satisfied from the contents of the balance of the documents in the list 'BA3' and from their relationship to other documents in the list that they, too, relate to this same investigation."

The primary Judge then made further reference to the documents he had inspected and set out his conclusions. As will be apparent, in the passage which follows, his Honour both accepted the claims of prejudice flowing from inspection which Mr Adams had propounded in cross-examination and carried out, favourably to the ASC, the balancing exercise called for by the authorities.
The primary Judge based his ruling upon a tripartite classification of the documents in question. The first concerned the informer immunity, and, as I have said, no objection is taken to that. The objection is taken to the balance of the terms in which the claim to immunity was upheld. The crucial passage in his Honour's conclusions is as follows:

"In short, I am satisfied that there is an investigation into the activities of Pacific Commerce Finance Ltd under way and that all of these documents relate to that investigation for the reasons I have already given. I think that if these documents were disclosed, some of them would reveal the names of confidential informants to the (ASC); others would reveal the private affairs of persons and organisations who appear to have co-operated voluntarily with the

(ASC) in providing it with information for the purposes of this investigation. I am prepared to accept that the nature of the information revealed in these two categories of the documents in Exhibit 'BA3' is such that disclosure would be very likely to damage the Commission's capacity to acquire, on a voluntary basis, information of clear relevance to the investigation it now has on foot into Pacific Commerce Finance Ltd and into future investigations it may conduct concerning others. The balance of the documents (and indeed the totality of the documents) shows the extent of the information gathered and the directions the investigation is or may be taken into Pacific Commerce Finance Ltd. I say 'may be taking' because I have, of course, seen only those documents produced for my perusal and do not know the full range of information available to the (ASC) in connection with this particular investigation, nor the exact stage to which it has progressed. But, given that this investigation is current, I do not think it proper to order disclosure.

. . .

It is regrettable, given the time that has been lost on this issue, that an affidavit was not filed at an early stage of the week past by the

(ASC) which could and should have set out in sufficient detail the existence of the grounds which I have concluded exist to justify the claim of immunity."

(Emphasis supplied)

The primary Judge then concluded his reasons by referring further to the conduct of the proceedings, expressing a dissatisfaction which gave rise to a costs order adverse to the ASC, even though the ruling on immunity was in its favour.
His Honour said:

"As I think has been demonstrated by the course of argument and by my ruling, it is perfectly possible for this to be done in this case without revealing any information that I have held to be properly immune from disclosure and without having to go to the extremes urged on me by the Commission on Tuesday. I was then asked to hear argument on the matter in camera and to make that argument subject to non-publication orders and to require undertakings from the lawyers for the (appellants) not to discuss with anyone else the contents of the original list of documents, 'BA1': yet it is now clear that some of the documents listed in 'BA1' had in fact been given by the (ASC) to the (appellants') solicitors some time ago in the course of discovery, that others of the documents on this list were never properly entitled to immunity and clear that the (ASC), in the course of the week, accepted that others of these documents should not be immune from disclosure."

The appellants point out that even on the list in its final form as Exhibit "BA3", there appear to be various items which could be protected only by a class claim benevolently construed in favour of the ASC. For example, the description of items 5, 10, 25, 94 and 105 refers to documents such as blank offers of loan agreements and open letters to potential borrowers.
The appellants refer to the passages which I have set out from the primary Judge's reasons, including the final paragraphs, as indicating that, in respect of the immunity based on grounds other than the protection of the sources of information to the ASC for its continuing inquiry, the primary Judge set about and completed the task which was to be undertaken, if at all, by the ASC.
They point to what was said by McPherson J. in Adsteam Building Industries Pty Ltd v The Queensland Cement and Lime Co. Ltd (No. 4) (1984) 9 ACLR 62 at 64. His Honour there was dealing with a list of documents for which privilege was claimed by the National Companies and Securities Commission ("NCSC") with a claim formulated in the following terms:

"Such documents should by reason of the class of documents to which they belong be withheld from production on the ground that the production of the same would be injurious to the public interest. Further, in my opinion, the non-disclosure of documents of that class is necessary for the proper functioning of the (NCSC)."

The documents were described as having come into possession of the NCSC in the course of investigations into possible breaches of corporate law, and in the course of investigating complaints of breaches of that legislation, or in the course of confidential communication with the Foreign Investment Review Board.
McPherson J. said:

"However, in order to arrive at a proper balance, or proper assessment of where the balance lies, it is necessary to know with precision what it is that is said to be the interest that requires that the document, or class of documents, be preserved from production. What Mason J. in Sankey v Whitlam described as 'the amorphous statement', that non-disclosure is necessary for the proper functioning of the public service, is no longer an acceptable form of the objection to produce unless the affidavit also says why disclosure would be detrimental to that function: see 142 CLR 1 at 43, where his Honour added: 'An affidavit claiming Crown privilege should state with precision the grounds on which it so contended that documents or information should not be disclosed so as to enable the court to evaluate the competing interests'. . . .

But it was submitted by the NCSC that the form of objection . . . showed that the explanation for the objection was that the documents in question had been acquired or brought into existence in the course of investigating possible breaches of the Companies Code or the Acquisition of Shares Code, and in the course of investigating complaints of breaches of that legislation, or in the course of confidential communication with the Foreign Investment Review Board. As regards the latter, there is nothing specific to demonstrate that any prejudice will result to anyone or anything if the allegedly confidential communication is disclosed pursuant to the compulsory processes of this court. Without evidence of at least the possibility of some such prejudicial consequence, the mere circumstance that the communication was confidential is not a ground for refusing production.

. . .

What is required, even in relation to investigations of crime and sources of information on that subject, is, as O'Leary J. recently remarked in R. v Robertson (1983) 21 NTR 11 at 22, some 'condescension to particularity'. Nothing here suggests that the NCSC has sources of information or techniques of investigation that will be prejudiced by their disclosure in consequence of production of the documents in question, or even that this or future investigations in similar cases will be rendered more difficult by such production."

Counsel for the ASC does not cavil at what McPherson J. said, as a matter of general principle. He accepts, as indicated in Sankey v Whitlam supra at 44 (Gibbs C.J.), 95-6 (Mason J.), 108 (Aickin J.), that an affidavit in support of the claim to immunity will be defective if the deponent does not state that he himself has read the documents in question. But the evidence before Drummond J. showed that Mr Adams had done so. Mr Adams also gave oral evidence as to the foundation of his belief that disclosure would be injurious to the particular public interests upon which the claims by the ASC rested. It was open for the primary Judge to accept this material, as he did, subject to his dissatisfaction with the deficiencies which I have described.
The ASC submits that it was proper for the primary Judge, even without the assent of the appellants, to inspect the documents to see whether by inspection he might satisfy himself as to the remaining short-comings in the evidence of Mr Adams. The ASC further submits that it was appropriate for his Honour, if, informed by the inspection, he was of the view that the ASC had crossed the "threshold", to proceed forthwith to balance the competing interests involved. It will be apparent from what I have said earlier in these reasons that these submissions should be accepted.
In an opening passage of his reasons for decision, the primary Judge had set out a passage from the judgment of McLelland J. in Spargos Mining NL v Standard Chartered Aust. Ltd (No. 1) (1989) 1 ACSR 311 at 312 and said that the comments made therein could, depending upon the circumstances of the particular case, be directly applicable to the activities of the ASC. McLelland J. said that certain documents within the possession of the NCSC were "in the public interest prima facie immune from compulsory disclosure". This was said to be:

"on the basis that such disclosure would be likely to seriously impede the ability of the

(NCSC) to fulfil its function of effectively investigating possible offences under, inter alia, the Companies (N.S.W.) Code, and in appropriate cases instituting and prosecuting criminal or civil proceedings in the public interest."

The documents to which McLelland J. attributed this character were identified by him in the following terms:

"documents . . . of a confidential nature recording information received by the (NCSC) relating to possible offences or irregularities, or recording information received in the course of the investigation of possible offences or irregularities, including the identity of informants, and confidential documents recording the actual or possible course of such investigations or particulars of available or potentially available evidence . . ."

However, it should be noted that Drummond J., having set out those passages, immediately went on to state that one of the critical issues for resolution before a conclusion could be reached by him as to whether the claim to immunity was made out was whether the ASC "has made out a sufficient evidentiary foundation to support the claim to immunity".
The central issue on this appeal is whether in reaching his decision upon that point it was open to his Honour to supplement what had been put to him by the ASC, by an inspection of the documents with the assent of the ASC but against the wishes of the appellants. In my view, it was open to the primary Judge to do so. This is so even though, as the appellants emphasised, the result of allowing the claim is to restrict the range of discoverable documents which might assist their case, either directly or by impugning the case made against them.
The primary Judge was dissatisfied (as well he might have been) with the conduct by the ASC of its claim to immunity. The appellants submit that it was the task of the ASC to enable the Court to evaluate the competing interests involved by stating with precision the grounds on which it was contended that the documents or information in question should not be disclosed; it was not for the primary Judge to remedy the deficiencies put forward by the ASC by himself formulating the existence of the grounds which then led him to decide justified the claim of immunity. As I have already indicated, I do not consider this is what took place. Some of the documents on the list "BA3" from their description on the list could not on their face possibly be the subject of a contents claim. But, in all the circumstances, it was open for the primary Judge to conclude that they were part of a chain of documents otherwise linked with documents properly the subject of a class claim or bearing some notation of a special character.
I agree with the orders proposed by Lockhart J.

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Citations

Zarro, P. & ors v Australian Securities Commission [1992] FCA 309 ((1992) 10 ACLC 831; (1992) 36 FCR 40)

Cases Citing This Decision

0

Cases Cited

16

Statutory Material Cited

0

Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3

Mallesons Stephen Jaques v Mistral Mines Nl [1993] FCA 493

Hinch v Attorney-General (Vic) [1987] HCA 56

[1992] FCA 309

25 MAY 1992