Federal Court Decision on Document Disclosure in Class Action Lawsuit

FEDERAL COURT OF AUSTRALIA

[NAME] v [COMPANY] (No 7) [2010] FCA 41 Citation: [NAME] v [COMPANY] (No 7) [2010] FCA 41

Parties: [NAME] AND [NAME] IN THEIR OWN RIGHT AND AS REPRESENTATIVES OF THE GROUP MEMBERS v [COMPANY] (ACN [PHONE])

File number: NSD 2020 of 2007

Judges: FOSTER J

Date of judgment: 5 February 2010

Catchwords: PRACTICE AND PROCEDURE – correct approach to the masking of portions of documents produced in answer to a subpoena on the ground that the portions are irrelevant to any issue in the proceedings and on public interest immunity grounds PRIVILEGE – consideration of claims of public interest immunity in respect of parts of documents produced in answer to a subpoena

Cases cited: Alister v The Queen (1984) 154 CLR 404 applied National Employers' Mutual General Association Limited v Waind and Hill (1978) 1 NSWLR 372 applied Sankey v Whitlam (1978) 142 CLR 1 applied [NAME] and [NAME] v [COMPANY] (No 2) (2009) 259 ALR 524 cited

Date of hearing: 2 February 2010

Place: Sydney

Division: GENERAL DIVISION

Category: CATCHWORDS

Number of paragraphs: 40

Counsel for the Applicants: [redacted]

Solicitor for the Applicants: [redacted]

Counsel for the Respondent: [redacted]

Solicitor for the Respondent: [redacted]

Counsel for The Secretary, Department of Foreign Affairs and Trade: [NAME]

Solicitor for The Secretary, Department of Foreign Affairs and Trade: [NAME]

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION NSD 2020 of 2007

BETWEEN: [NAME] AND [NAME] IN THEIR OWN RIGHT AND AS REPRESENTATIVES OF THE GROUP MEMBERS

Applicants

AND: [COMPANY] (ACN [PHONE])

Respondent

JUDGE: FOSTER J

DATE OF ORDER: 5 FEBRUARY 2010

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The Department of Foreign Affairs and Trade produce to the solicitors for the applicants and to the solicitors for the respondents one (1) copy of each of the documents which are annexed to the affidavit of [NAME] sworn on 28 January 2010, and filed herein, and respectively marked "A" and "B", redacted as follows: (a) In the case of Annexure "A" to [NAME]' affidavit, redacted in accordance with Annexure "A" save that the eight (8) lines on p RES.[PHONE] (p 14 of the affidavit) commencing about half way through the text which appears next to the third dot point on the first half of that page and ending with the word legislation at the end of the text which appears next to the fourth dot point on the first half of that page shall be uncovered and disclosed; and (b) In the case of Annexure "B" to [NAME]' affidavit, the whole of the paragraphs numbered 1, 4, 5, 6, 7 and 8 shall be uncovered and disclosed.

2. The solicitors for the parties not disclose the contents of either of the documents referred to in Order 1 above to any person other than to Counsel briefed to appear at the trial of this proceeding and then only on terms that Counsel not disclose the contents of either of the documents to any person.

3. Orders 1 and 2 above be stayed up to 5.00 pm this day, 5 February 2010.

4. There be no orders as to the costs of the application determined by the Reasons for Judgment published this day, 5 February 2010.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION NSD 2020 of 2007

Applicants

AND: [COMPANY] (ACN [PHONE])

Respondent

JUDGE: FOSTER J

DATE: 5 FEBRUARY 2010

PLACE: SYDNEY

REASONS FOR

JUDGMENT 1 In [NAME] and [NAME] v [COMPANY] (No 2) (2009) 259 ALR 524 at [1], I described the core claims made in the present proceeding as follows: The present action is a class action brought by and on behalf of certain shareholders in the respondent ([NAME]). Those shareholders allege (amongst other things) that [NAME] contravened the Corporations Act 2001 (Cth) and other Commonwealth legislation by concealing from the Australian stock market and from relevant authorities the fact that it had paid inland transportation fees and other payments in respect of wheat shipments to Iraq which were inflated and which exceeded the real costs to [NAME] of transporting its wheat in Iraq in order to make funds available to entities and persons associated with the [NAME] in breach of UN sanctions which were then in force. 2 In July 2009, I gave leave to the respondent ([NAME]) to issue and serve upon the Secretary, Department of Foreign Affairs and Trade ([NAME]) a subpoena for production. By arrangement between the parties, an amended subpoena for production was issued on 2 September 2009 and served upon [NAME] in substitution for the subpoena which had been issued and served in July 2009. 3 A dispute has recently arisen between [NAME] and [NAME] concerning [NAME]'s compliance with the amended subpoena. These Reasons for Judgment determine that dispute. 4 [NAME] has produced many documents in answer to the amended subpoena. However, it has masked portions of two of those documents. [NAME] contends that [NAME] is not entitled to mask any part of either of the documents in question and seeks an order from the Court requiring [NAME] to produce to the Court unredacted versions of both documents. It also seeks access to unredacted versions of both documents. It is prepared to consent to a confidentiality regime which confines access, in the first instance, to the legal representatives of [NAME]. 5 [NAME] argues that it is entitled to decline to produce a complete copy of both of the documents in question and to maintain the current redactions on relevance and on public interest immunity grounds. 6 At the hearing of the present application, Counsel for [NAME] produced to the Court an unredacted version of each of the documents in question and informed me that the Department had no objection to my inspecting the unredacted versions for the purpose of deciding the present application. The unredacted versions are now in the control of the Court. 7 I have inspected a complete copy of each document. 8 The first document is an undated eleven page document headed: Iraq: Oil for Food Program: Compliance Issues. Although that document is undated, there are indications within the document that it was brought into existence some time after late October 2003. The second document is a Departmental Minute dated 7 May 2003 prepared by an officer of [NAME]. It was sent to other identified [NAME] officers, to certain named Ministerial staff and to the Australian Ambassador to the US.

The evidence relied upon by [NAME] 9 In support of the position which it has adopted, [NAME] read the affidavit of [NAME] sworn on 28 January 2010. In that affidavit, [NAME] said that he is a Senior Advisor heading the Department's Oil for Food Unit that was established in August 2009 to respond to the subpoena served on the Department by [NAME] on 24 July 2009. He said that he had retired from full time work in 2005 and that, prior to that time, he had occupied a number of senior positions within [NAME]. 10 In his affidavit [NAME] did not say that he had read the documents in question. Further, nothing in the employment history of [NAME] suggested that he has any personal knowledge of the circumstances in which either of the documents in dispute had been created. He did not assert that he had any such knowledge. The language deployed in [NAME]' affidavit suggests to me that he was doing no more than putting before the [NAME]'s corporate view. 11 In his affidavit, in respect of the undated eleven page document, [NAME] said that: (a) Certain of the masked portions related to the business affairs of companies unconnected to [NAME]; (b) Certain of the masked portions were, strictly speaking, not covered by the terms of the subpoena; (c) Certain of the masked portions would disclose private and personal information of persons unconnected with [NAME] in circumstances where such disclosure was not justified; and (d) Certain of the masked portions, if released, could potentially cause prejudice to the international relations of Australia or prejudice or limit Australian trade opportunities and dealings with potential exporters in the future. 12 In respect of the Departmental Minute, [NAME] said that the redacted portions were all irrelevant to the issues raised in the current proceeding. He also asserted that the masked portions related to matters of State and that disclosure might prejudice relations with the [NAME] of other countries. In particular, [NAME] asserted that [NAME]'s claim for public interest immunity in respect of the masked portions of this document was based upon the content of the document rather than upon the proposition that the document was in a class of documents which were protected by public interest immunity as a matter of course. 13 [NAME] went on to explain, in a general way, why it was that Australia's relations with the [NAME] of certain other countries might be damaged by the revelation of communications within [NAME]. He said that there was a risk that the accounts of communications between officials of the [NAME] of other countries and Australian officials found in the [NAME] documents might be inaccurate; he said that such accounts might be uncomplimentary; and he said that the views expressed may not represent the official position of the Australian Government in respect of the subject matter of those views. He also said that it was important that decision-makers within the Australian Government be given the benefit of frank expressions of opinion on the part of Australian bureaucrats in relation to matters within their areas of responsibility. [NAME] also said:

14. There is an established diplomatic practice and convention that certain communications between [NAME], particularly where such communications concern matters of continuing sensitivity, remain confidential and not be disclosed unless the parties to those discussions agree to the contrary. That practice and convention are of long standing and are generally accepted by [NAME] and the international community. That practice and convention is firmly entrenched, and it is not usual or necessary that there be an express agreement that such communications are made on a confidential basis and shall remain confidential. In my career with the Department, I have always operated on the basis of this practice and convention. 14 [NAME] went on to outline reasons why, in his experience, the practice to which he referred in that part of his affidavit which I have extracted at [13] above has been consistently adhered to.

Consideration and decision 15 [NAME] does not contend that the two documents in question are in a class of documents whose members are entitled to protection from disclosure irrespective of their contents. The arguments advanced on behalf of [NAME] recognise and accept that both the relevance and public interest immunity bases for resisting production must be sustained by reference to the contents of the documents. 16 As far as the objection based upon relevance is concerned, [NAME] accepts that each of the documents was required to be produced under the terms of the amended subpoena. However, it was submitted on behalf of [NAME] that, were I to be satisfied that the material which has been masked is irrelevant to any of the issues raised in the proceeding, the most convenient way of properly protecting [NAME]'s interests and the interests of others who might be affected if the contents of the documents were disclosed, was to continue to permit the irrelevant portions to be masked. It seems to me that, in principle, this approach is perfectly acceptable as one way of giving effect to the control which the Court is required to exercise at the second stage of the process involved in compulsorily requiring the production of documents to the Court (as to which see National Employers' Mutual General Association Limited v Waind and Hill (1978) 1 NSWLR 372 at 382–384). 17 At [51] in [NAME] v [COMPANY] (No 2) 259 ALR 524, I said: Where an objection to the production of documents in answer to a subpoena is based upon a claim of public interest immunity, the usual practice—established many years ago—has been for the grounds of the claim to be set out and explained in an affidavit made by either the Minister who is the political head of the particular department concerned or the Secretary of that department (Sankey v Whitlam (1978) 142 CLR 1 at 43). The weight to be afforded to that affidavit is governed to some degree by the extent of the knowledge which the deponent possesses concerning the documents which are the subject of the claim ([NAME] v [NAME] 142 CLR at 44). The knowledge of those documents which must be considered comprises not only knowledge of the contents of the documents but also knowledge of the circumstances in which they came into existence. When the claim is based partly or wholly on national security grounds, very considerable weight must be given to the views of the responsible Minister or the permanent head. In the present case, because we live in dangerous times and matters of national security are at the forefront of the ONA's responsibilities, very considerable weight must be given to the views of the Director-General expressed, as they were, on his oath (Alister v The Queen (1984) 154 CLR 404 at 435). 18 In the present case, [NAME] is content that I move straight to the second stage contemplated by the authorities (as to which, see Sankey v Whitlam (1978) 142 CLR 1 at 46 (per Gibbs ACJ); at 65 (per Stephen J) and at 96 (per Mason J); and Alister v The Queen (1984) 154 CLR 404 at 412 and at 414–415 (per Gibbs CJ); and at 453–457 (per Brennan J)) and determine the application after having inspected the two documents in question. As I have already mentioned at [7] above, I have inspected the documents. 19 [NAME] did not testify that he had read the documents. He did not provide evidence to the Court of the circumstances in which the documents were created and was, in any event, not qualified to do so. Nor, it seems to me, was [NAME] really qualified to provide evidence to the Court as to the prejudice and danger to Australia's international relations that might be caused by disclosure of those portions of the two documents in question which have been masked. 20 For the reasons stated in [19] above, I propose to give the evidence of [NAME] little or no weight. In truth, that evidence did not rise much higher than a submission made on behalf of [NAME]. 21 Further, I think that it is significant that neither the Minister nor the permanent head of [NAME] nor a senior official within [NAME] who has knowledge of the relevant circumstances provided any evidence to the Court as to the likely damage that would be caused to Australia's international relations should the documents be disclosed. 22 The appropriate course, nonetheless, is for me to undertake the balancing exercise of which I spoke at [54] and [55] in [NAME] v [COMPANY] (No 2) 259 ALR 524. The competition is between the public interest in withholding production in order to avoid harm to the nation or the Public Service, on the one hand, and the public interest in requiring production in aid of the administration of justice, on the other hand. 23 At [39]–[44] in [NAME] v [COMPANY] (No 2) 259 ALR 524 I described the forensic purpose stated by [NAME] as being served by the production of documents of the kind then under consideration. It is not necessary for me to set out in full what I said in those paragraphs. It is sufficient for present purposes for me to note that [NAME] wishes to contend that [NAME] had knowledge of the nature and extent of the payments made by [NAME] which the applicants assert were concealed. [NAME] relied upon the stated forensic purpose which I described at [39]–[44] in [NAME] v [COMPANY] (No 2) 259 ALR 524 as supporting its claim for disclosure of the two documents which are under consideration in the present application. 24 I propose to deal with each of the documents separately.

The undated eleven page document 25 The masked portions of this document may be grouped and described as follows: (a) References by name to corporations and organisations which have no apparent connection to [NAME] or its business; and (b) Departmental commentary and observations in respect of corporations and organisations which have no apparent connection to [NAME] or to its business. For the most part, this material relates to investigations into and potential prosecution of those entities for allegedly failing to obtain the necessary Australian export permit in order to ship their goods to Iraq. In one case, the material relates to an alleged breach of UN sanctions by establishing and pursuing commercial links with Iraq. 26 With one exception, I am of the view that the masked portions of this document do not contain material that has any conceivable relevance to the issues in the present proceeding. The identity of corporations and organisations referred to in this document should be kept confidential unless there is good reason to order disclosure of their identity. I see no reason for allowing the identity of those entities to be revealed. Further, the subject matter of the departmental commentary also has no conceivable relevance to the issues in the present proceeding. There is no justifiable basis for making this material available. 27 The one exception is the eight lines on p RES.[PHONE] of the document (p 14 of [NAME]' affidavit) commencing about half way through the text which appears next to the third dot point on the first half of that page and ending with the word legislation at the end of the text which appears next to the fourth dot point on that page. This material relates to events in September 1997. It concerns the way in which [NAME] and [NAME] were performing their duties in Amman, Jordan. In particular, it makes reference to the fact that [NAME] had placed a [NAME] officer in Amman to assist Australian companies to comply with UN sanctions and Australian domestic legislation. Although it relates to a period somewhat earlier than the period with which the present proceeding is concerned, this particular text seems to me to be relevant to the issues raised in the present proceeding. Further, the material does not contain sensitive intelligence information or details of communications with [NAME]. It is confined to the activities of [NAME] and, more generally, Australian companies dealing with Iraq. I cannot see any harm being caused to the nation or the Public Service if this material is disclosed. I propose to order disclosure of this material but to do so on appropriate terms as to confidentiality.

The Departmental Minute 28 In broad terms, this Minute records what happened on a trip to Kuwait and Baghdad in about April 2003. The author of the document is [NAME], a [NAME] officer, who then held the position of First Assistant Secretary, South Pacific Middle East and Africa Division. [NAME] accompanied [NAME], an executive of [NAME], on that trip. They met with senior officials of [NAME] on that trip. 29 The Minute records [NAME]' observations of various events and things in Iraq as well as his account of various discussions which took place on the trip. 30 Most of the Minute has been masked. The separate paragraphs within the Minute are numbered (except par 1). I propose to deal with the Minute, paragraph by paragraph.

Paragraph 1 (balance) 31 The material which has been masked is arguably relevant to issues raised in the proceeding. It is connected to that part of par 1 which has been disclosed. Balancing the public interest in protecting the nation and the Public Service with the interests of justice, I think that this material should be disclosed. I propose to order disclosure on appropriate terms as to confidentiality.

Paragraph 2 32 The material in this paragraph has no conceivable relevance to the issues raised in the proceeding. I will not order disclosure of this material.

Paragraph 3 33 The material in this paragraph has no conceivable relevance to the issues raised in the proceeding. I will not order disclosure of this material.

Paragraph 4 34 The material contained in this paragraph is arguably relevant to the issues raised in the proceeding. Although, to some extent, it may be thought that some of the observations contained in this paragraph relate to the affairs of a foreign government, the observations are now almost seven years old and are not, of their nature, sensitive. Balancing the public interest in protecting the nation, the nation and the Public Service against the public interest in the administration of justice, I think that this material should be disclosed. I propose to order disclosure of par 4 on appropriate terms as to confidentiality.

Paragraph 5 35 I propose to order disclosure of the material set out in this paragraph for the same reasons as I have done so in respect of par 4.

Paragraph 6 36 The second part of this paragraph has already been disclosed to [NAME]. Indeed, the portion which has been disclosed is the second part of the second sentence of the paragraph. The subject matter of the paragraph is arguably relevant to the issues raised in the proceeding. In my view, fairness requires disclosure of the whole of par 6. Again, although, to some extent, it may be thought that the material in the paragraph records communications between Australian Government officials and those of [NAME], the nature of that material, its age and the importance of it for the present proceeding lead me to conclude that the balancing exercise which I am required to perform justifies disclosure.

Accordingly, I propose to order disclosure of the whole of the balance of par 6 on appropriate terms as to confidentiality.

Paragraph 7 37 The contents of par 7 are arguably relevant to the issues in the proceeding. In my view, there is no particular sensitivity that would justify refusing disclosure on public interest immunity grounds. Accordingly, I propose to order disclosure of the whole of par 7 on appropriate terms as to confidentiality.

Paragraph 8 38 I propose to order disclosure of the whole of par 8 on appropriate terms as to confidentiality for essentially the same reasons that I have ordered disclosure of par 7.

Conclusions 39 I have ordered disclosure of some of the masked portions in the two documents presently under consideration. I have declined to order disclosure of several other masked portions. Each of [NAME] and [NAME] has had some success in the present Application but has also suffered defeat in respect of other aspects. In the circumstances, I propose to make no order as to the costs of the present Application. 40 I do think, however, that I should give [NAME] a fair opportunity to consider the orders which I have made in order to see whether the Department wishes to seek leave to appeal from those orders. For this reason, I propose to order that the orders which I have made be stayed up to and including 5.00 pm this day. In the event that that stay is not continued past 5.00 pm today, I expect [NAME] to provide revised redacted versions of the two documents in question to [NAME] and to the solicitors for the applicants immediately after 5.00 pm today. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Associate: Dated: 5 February 2010