AB v National Crime Authority [1996] FCA 122

CATCHWORDS

ADMINISTRATIVE LAW - Judicial review - practice and

procedure - whether limited discovery should be ordered

National Crime Authority Act 1984 (Cth) ss 4(1) 11(2) 13(1) 13(2)(a) 16 28(1) 28(2) 28(3) 28(7) 29 29A 29B 30(2) 30(11) 32(2) 32(12)(b)

National Crime Authority (State Provisions) Act 1984 (Vic)

Acts Interpretation Act 1901 ss 15AB 46(1)(a)

W.A. Pines Pty Ltd v Bannerman (1980) 41 FLR 175

Australian Securities Commission v Somerville (1994) 51 FCR 38

AB V NATIONAL CRIME AUTHORITY

No VG 765 of 1995

NORTHROP J

MELBOURNE

7 MARCH 1996

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY No VG 765 of 1995

GENERAL DIVISION

B E T W E E N :

Applicant

A N D :

NATIONAL CRIME AUTHORITY

Respondent

COURT: NORTHROP J

PLACE: MELBOURNE

DATE: 7 MARCH 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

The applicant's motion, notice of which is dated 14 November 1995, be refused with costs.

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

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY No VG 765 of 1995

GENERAL DIVISION

B E T W E E N :

Applicant

A N D :

NATIONAL CRIME AUTHORITY

Respondent

COURT: NORTHROP J

PLACE: MELBOURNE

DATE: 7 MARCH 1996

REASONS FOR JUDGMENT

The matter for decision before the Court has arisen in somewhat unusual circumstances. On 8 September 1995 the applicant, under summons, attended a meeting being held by the National Crime Authority ("the NCA") pursuant to powers conferred by the National Crime Authority Act 1984 (Cth) (the "NCA Act") and its complementary Acts including the National Crime Authority (State Provisions) Act 1984 (Vic) "the Victorian Act". The applicant was represented by counsel. Counsel told the NCA that the applicant proposed to challenge the validity of the summons by way of a challenge to the power of the NCA to issue the summons. The applicant was sworn, was identified and was asked a question by the member of the NCA presiding at the meeting. Counsel for the applicant claimed there were reasonable excuses for the applicant to refuse to answer the question. Following submissions by counsel for the
applicant and by counsel assisting the NCA, the member of the NCA made a decision, giving reasons, that the claim by the applicant to be entitled to refuse to answer the question was not justified and formally required the applicant to answer the question. The meeting was adjourned to enable the applicant to make an application under subsection 32(2) of the NCA Act for an order of review in respect of that decision.

The application under subsection 32(2) of the NCA Act was issued on 14 September 1995 and a number of directions hearings have been held. The substantive grounds relied upon to support the application are not readily apparent from a consideration of the documents filed in Court. At a directions hearing held on 27 October 1995 the Court made an order as follows:

"2. That the applicant file and serve on the respondent by 3 November 1995 a notice of discovery (not being general discovery) in such terms as the applicant may be advised."

The applicant did not comply with this order in that no notice of discovery has been filed. Instead, by letter dated 6 November 1995 addressed to the solicitor for the NCA, the solicitors for the applicant listed "the categories of documents as to which discovery is sought by our client". These categories of documents suggest the applicant is seeking discovery of all documents relating to or connected with the reference of the special investigations to the NCA under the NCA Act, the Victorian Act and other State Acts upon which the NCA relied to support its decision that the applicant was required to comply with the summons and to answer the questions of the NCA. The NCA has not filed any affidavit claiming it is not required to give the discovery sought. At a directions hearing on 17 November 1995, the Court directed that the directions hearing be adjourned to a date to be fixed "for the purpose of receiving submissions on the question of discovery". Further directions were given with respect to the filing and serving of written outlines of argument. On 5 December 1995, the applicant filed an affidavit sworn by the solicitor for the applicant exhibiting a copy of the transcript of the proceedings at the meeting of the NCA on 8 September 1995 and a copy of the letter dated 6 November 1995. No other affidavits were read.

When the matter came on for hearing before the Court as presently constituted, counsel for the applicant said the issue arising was based "on the common understanding of the parties that [the NCA] contends that it ought not to be obliged to discover any documents at all". Of necessity this must refer to the limited discovery of the categories of documents listed in the letter of 6 November.

Before turning to the facts before the Court, brief reference should be made to some of the provisions of the NCA Act. The complementary State Acts contain corresponding provisions but, for the sake of convenience, reference will be made to the NCA Act only. Sections 29, 29A and 29B of the NCA Act contain provisions relating to the non-disclosure of names of persons and information relating to special investigations being conducted by the NCA. Those provisions have application to the facts of the matter giving rise to this application. In cases similar to this, a practice has developed of using pseudonyms to conceal the identify of the persons, including corporations, concerning the subject of the investigations. Without deciding whether this course is necessary, the Court will follow that practice in this case. Thus, the applicant is named "AB".

In conformity with the provisions of the NCA Act, and State equivalent Acts, the Minister is empowered to refer a matter to the NCA for investigation. For present purposes, subsections 13(1) and (2)(a) are of importance and are set out:

"13 (1) The Minister may, after consulting the Inter-Governmental Committee, by notice in writing to the Authority, refer a matter relating to a relevant criminal activity to the Authority for investigation in so far as the relevant offence is, or the relevant offences are or include, an offence or offences against a law of the Commonwealth or of a Territory.

(2) A notice under subsection (1) referring a matter to the Authority for investigation:

(a) shall describe the general nature of the circumstances or allegations constituting the relevant criminal activity;

(b) ... "

Section 16 imposes limitations on legal challenges to the validity of references but no submissions were made on whether this section has application to the issue presently before the Court.

In the present case, the NCA is performing a special function and thus is conducting a special investigation as defined in subsection 4(1) of the NCA Act. Special functions are described in subsection 11(2) which provides:

"(2)The special functions of the Authority are:

(a) where a reference to the Authority made under section 13 is in force in respect of a matter relating to a relevant criminal activity - to investigate the matter in so far as the relevant offence is, or the relevant offences are or include, an offence or offences against a law of the Commonwealth or of a Territory; and

(b) where a reference to the Authority made in accordance with section 14 by a Minister of the Crown of a State is in force in respect of a matter relating to a relevant criminal activity - subject to subsection 14(1), to investigate the matter in so far as the relevant offence is, or the relevant offences are or include, an offence or offences against a law of the State."

Under subsection 28(1) of the NCA Act, a member of the NCA may, for the purposes of a special investigation (see subsection 28(7), summon a person to appear before the Authority at a hearing to give evidence. Under subsection 28(2) the summons, unless action is taken under subsection 28(3) shall be accompanied by a copy of the notice or notices by which the matters to which the hearing relates were referred to the Authority under section 13. Under subsection 30(2) a person appearing as a witness at a hearing " shall not, without reasonable cause, ... refuse or fail to answer a question that he is required to answer by the member presiding at the hearing." Subsection 30(11) imposes a penalty upon a person contravening subsection 32(2). Under subsection 32(2) a person who is dissatisfied with the decision that a question must be answered, is empowered to apply to the Federal Court for an order of review in respect of the decision. Under subsection 32(12) any such application is to be made in conformity with the requirements of Order 57 of the Federal Court Rules and must set out the grounds of the application and be accompanied by an affidavit or statement of claim showing the nature of the applicant's claim and the material facts on which it is based. The provisions of Order 54 also apply to applications for review of matters arising under the NCA Act.

In the present case, the decision of the NCA was given on 8 September 1995, a Friday. The application for an order of review was filed on 14 September 1995 within the time required by the NCA Act and the Federal Court Rules. The application did not comply with the requirements of paragraph 32(12)(b) of the NCA Act and Form 60 of the Federal Court Rules. Neither an affidavit nor a statement of claim was served with the application, see Order 57 rule 1(3). Confusion arises from these defects. The application does not set out the grounds of the application. As a result there is no clear statement of the grounds relied upon.

In the application there is set out, under the heading "The grounds of the application are" what appears to be a statement of claim. It has been treated by the parties as a statement of claim. In the "statement of claim", the applicant is seeking:

"(1)An order quashing or setting aside the decision by the NCA that the claim by the applicant, that the applicant is entitled to refuse to attend at a hearing before the NCA to answer the Question, is not justified.

(2) An order quashing or setting aside the Summons.

(3) A declaration that sub-section 28(1) of the National Crime Authority Act 1984 (Cth) and sub-section 17(1) of the National Crime Authority (State Provisions) Act 1984 (Vic) do not authorise the NCA to issue a summons to the applicant requiring the applicant to appear before the NCA to give evidence in relation to the nature of and circumstances surrounding an alleged investment of $52,000,000 by MNO Ltd (a subsidiary of PQR Ltd) in securities in STU in or about July 1988."

The NCA has filed and served an amended statement of defence to that document and the applicant has filed and served a reply.

From a perusal of these documents it appears that a number of issues arise. A common factual basis to all issues relates to references made by Ministers under section 13 of the NCA Act dated 21 December 1989 and 10 September 1990 and related references under complementary State Acts. These references relate to conduct in relation to activities by PQR Ltd, XYZ Ltd and related companies. An issue arises whether the matters being investigated by the NCA in the present case come within the terms of those references since these matters relate to activities of STU Ltd. Apart from considering the proper construction of the references, the applicant contends that insofar as the questions relate to the activities of STU Ltd, the investigation does not constitute a special investigation and thus the powers conferred on the NCA by section 28 of the NCA Act have no application. The applicant contends further that the questions are being asked for a purpose other than for the purpose of a special investigation. The applicant contends further that the references sought to be relied upon by the NCA are invalid for failing to comply with the provisions of the relevant legislation.

During the hearing of the matter, it became apparent that the question of discovery arose because the applicant desired to go beyond the terms of the references being relied upon by the NCA and to investigate the matters giving rise to the making of the references.

In their reply, counsel for the applicant formulated a summary of the grounds of the application as follows:

"1. The applicant is entitled not to answer questions relating to STU Ltd because:

(a) the matter referred to the NCA for investigation under s.13(1) of the NCA Act (and the State equivalent) was the PQR Ltd/XYZ Ltd matter;

(b) the STU Ltd subject matter is not related to the PQR Ltd/XYZ Ltd matter within the meaning of s.28(3) of the NCA Act.

2. The applicant is entitled not to answer questions relating to STU Ltd because:

(a) the matter referred to the NCA for investigation under s.13(1) of the NCA Act (and the State equivalent) was the PQR Ltd/XYZ Ltd matter; and

(b) the NCA seeks to ask questions about STU Ltd for a purpose other than the purpose of investigating the PQR Ltd/XYZ Ltd matter in contravention of s.28(7) of the NCA Act.

3. The applicant is entitled to refuse to answer questions relating to STU Ltd because:

(a) under s.13(2)(a) of the NCA Act (and the State Equivalent) a reference, in order to be valid, must describe the general nature of the circumstances or allegations constituting the relevant criminal activity;

(b) the September references are invalid because they do not comply with the aforesaid requirements."

The terms of the relevant references are not before the Court but the request for particular discovery, as contained in the letter of 6 November 1995, illustrates the nature of the contentions that are likely to be made on behalf of the applicant. The relevant parts of the letter are set out:

"1. Letter from the National Companies and Securities Commission to the NCA dated 16 November 1989 (the "NCSC Letter"); [This letter relates to a request for a reference]

2. All file notes, minutes of meetings, memoranda, correspondence, draft references or other documents relating to the proposed special investigation referred to in paragraph 2(c) of the Statement of Defence, being the "PQR Ltd/XYZ Ltd matter";

3. All requests made and supporting material given from time to time by the NCA in the period from 16 November 1989 to 20 September 1990 under section 10 of the NCA Act seeking approval from the Inter-Governmental Committee for the PQR Ltd/XYZ Ltd matter to be referred by a Minister or Ministers to the NCA for investigation;

4. All minutes of meetings, file notes, memoranda, correspondence or other records relating to the deliberations from time to time of the Inter-Governmental Committee or any relevant Minister or Ministers in respect of each request referred to in paragraph 3;

5. The references referred to in paragraph 15 of the Application (the "References"); [These refer to a number of references in the PQR Ltd/XYZ Ltd matter]

6. All file notes, minutes or meetings, memoranda, correspondence, draft references, transcripts or other documents relating to or evidencing the scop of the special investigation authorised by any of the References;

7. All file notes, minutes of meetings, memoranda, correspondence, draft references, transcripts or other documents relating to or evidencing the purpose of the NCA in investigating the STU Ltd investment (as defined in the Application);

8. Transcripts of hearings conducted by the NCA containing questions and answers relating to the STU Ltd investment."

From these matters it is readily apparent, that the applicant is seeking to distinguish the PQR Ltd/XYZ Ltd references from matters affecting STU Ltd to the extent that it can be contended that the first group references cannot be relied upon to support the investigation into the activities of STU Ltd even though that investigation arises out of or is in connection with the subject matters of the PQR Ltd/XYZ Ltd investigations. Implicit in this is a contention that the STU Ltd investigation is not a special investigation in its own right sufficient to support the compelling of the giving of evidence under section 28 of the NCA Act.

The terms of the references in the PQR Ltd/XYZ Ltd investigations are not before the Court but part of one of those references is contained in the outline of submissions on behalf of the applicant filed in Court. That part is set out:

" ... whether any relevant offences have been committed as alleged in the following allegations ...

"That, and in relation to transactions concerning (directly or indirectly) the disposal and/or acquisition of securities in PQR Ltd, certain directors of that company, alone, or in concert with other persons, improperly used their positions as directors of that company, and improperly used information acquired by virtue of those positions, in order to gain an advantage or advantages for themselves or some other person or persons or cause detriment to that company and that with fraudulent intent, certain directors of that company, alone, or in concert with other persons, failed, in and in relation to the said transactions, to act honestly in the exercise of their powers and discharge of the duties of their office as directors of the said PQR Ltd.""

In the present case the summons served on the applicant to attend the hearing was accompanied by a copy of each of the notices by which the matter or matters to which the hearing relates was or were referred to the Authority under section 13 of the NCA Act, but the notices are not before the Court. In all probability the notices related to the PQR Ltd/XYZ Ltd references or some of them. Normally, in order to determine whether a line of investigation comes within a particular reference it is necessary to construe the terms of that reference. In the present case, the applicant desires to go further. The applicant wants to investigate the events leading up to the making of the references possibly on two bases. First, as an aid to construction of the terms of the references and secondly to show that in truth what the NCA is now investigating is a separate and distinct matter from the PQR Ltd/XYZ Ltd investigations and thus cannot come within the authority of those investigations and in truth is not a special investigation. This second limb comes very close to challenging the validity of an investigation being carried out by the NCA in proceedings not permitted by reason of section 16 of the NCA Act. The Court does not decide this matter on that point.

The only reference to material given to the applicant in purported conformity with section 13 of the NCA Act is contained in the applicants "statement of claim" as follows:

"18.On or about 23 August 1995, in purported reliance upon sub-section 28(1) of the NCA Act and sub-section 17(1) of the Victorian Act, a member of the staff of the NCA served the Summons upon the applicant requiring the applicant to attend a hearing (the "Hearing") to give evidence in relation to the nature of and circumstances surrounding an alleged investment of $--- by MNO Ltd (a subsidiary of PQR Ltd) in securities in XYZ Ltd in or about July 1988 (the "XYZ Ltd investment").

The NCA is conducting an investigation into matters referred to in the PQR Ltd/XYZ Ltd references. In so doing the NCA is performing an administrative function and in so doing is allowed a degree of latitude that is absent in judicial proceedings. Nevertheless, the line of enquiry being pursued by the NCA must come within the terms of the references. Whether it does or not cannot be decided at this stage, but counsel for the applicant contended that the discovery sought was necessary (see Order 15 rule 15 of the Federal Court Rules) for the purpose of construing the scope of the references, for determining the purpose of whether the references were validly made and for the purpose of determining the purpose of the enquiry into the XYZ Ltd investment.

In elaboration of these contentions, counsel submitted that, although on their face the references were limited with respect to persons and activities, they were unlimited as to time. The terms of the references were so wide that some limitation must be imposed. The necessity for discovery, so it was said, was to ascertain whether the references were to be limited as to time or as to type of activities. In particular, it was submitted that the line of enquiry sought to be pursued by the NCA relates to matters other than matters coming within the references. It was contended that on proper analysis the investment of funds by PQR Ltd in STU Ltd had no connection with the subject matters of the PQR Ltd/XYZ Ltd references. Discovery was necessary to establish a basis for these contentions to succeed.

In my opinion, the discovery sought by the applicant should be refused. By way of background material, counsel for the applicant gave an outline of the factual matters relating to the line of enquiry being undertaken by the NCA but it is not for the Court, at this stage, to express a view on whether that line of enquiry comes within the terms of the PQR Ltd/XYZ Ltd references. The Court is concerned with procedural matters only.

For present purposes, it can be accepted that the PQR Ltd/XYZ Ltd references are instruments within paragraph 46(1)(a) of the Acts Interpretation Act 1901 and thus the provisions of section 15AB of that apply to the interpretation of the references. In cases such as this where the NCA is conducting investigations into alleged criminal activities as part of the administrative functions of Australia and of the States, its source of power for so doing must be construed by reference to the terms of the references themselves. Normal rules of construction must be applied. Here the person making the decision has given reasons for that decision. At the hearing of this application for an order of review, more facts may be proved but weight must be given to the discretion conferred upon the NCA. Lines of enquiry which may appear to have no relationship to a reference may lead to the uncovering of matters of vital importance. An investigating body should not be compelled to disclose its plans except in exceptional circumstances.

These observations lead to what, in my opinion, is the crux of the issue raised by the matter before the Court. In submissions, counsel for the applicant referred to documents which had been produced to the Court under subpoena directed to third parties which identified some of the correspondence from the National Companies and Securities Commission relating to the request for the PQR Ltd/XYZ Ltd references as well as other documents. These documents illustrate what might be brought to light if discovery was ordered and thus could be used as an aid to the construction of the references, their validity and the purpose of the present line of discovery. This supports the view, in my opinion, that in reality, the applicant is engaging in a fishing exercise.

The application filed by the applicant is for an order of review of the decision made by the NCA. In that sense it is not like an ordinary application commenced under Order 4 of the Federal Court Rules. The grounds of the application have been identified by counsel for the applicant. Submissions were made that discovery may disclose matters not directly in issue but which could have an effect on the construction of written documents, the validity of documents and the nature of powers being investigated. There is no material before the court to support these allegations or suggestions except the fact that a large number of documents must be in existence leading to the making of the PQR Ltd/XYZ Ltd references.

One of the issues considered in W.A. Pines Pty Ltd v Bannerman (1980) 41 FLR 175 was whether an applicant was entitled to discovery in proceedings where it alleged that the respondent did not have the requisite cause to believe to support the giving of a notice under section 155 of the Trade Practices Act 1974. In his reasons for judgment, with which Bowen CJ agreed, Brennan J said at 181-2:

"Though the power to require discovery be acknowledged, how should it be exercised? It depends upon the nature of the case and the stage of the proceedings at which the discovery is sought. In the present case, discovery is sought before there is a tittle of evidence to suggest that the Chairman did not have the requisite cause to believe which par.6 of the statement of claim would put in issue. Some assistance was sought to be derived from cases where discovery had been given to a party before he was required to give particulars of his claim: cases such as Ross v. Blakes Motors Ltd. [1951] 2 All E.R. 689, but in cases of that kind there is either an anterior relationship between the parties which entitles one to obtain information from the other, or sufficient is shown to ground a suspicion that the party applying for discovery has a good case proof of which is likely to be aided by discovery. This is not such a case. This is a case where a bare allegation is made by par.6 of the statement of claim and, the paragraph being denied, the applicant seeks to interrogate the Chairman and ransack his documents in the hope of making a case. That is mere fishing. As Smithers J. said in Melbourne Home of Ford Pty. Ltd v. Trade Practices Commission and Bannerman: "In the absence of such evidence the proceeding is essentially speculative in nature. In such circumstances for the court to assist the applicants by making available to them the processes of interrogatories and discovery would be to assist them in an essentially fishing exercise and from this the court on established principles should refrain" (1979) 36 F.L.R., at p.460. His Honour's refusal of discovery was right and it ought not to be disturbed."

More recently a Full Court of this Court has considered the matter at some length, see Australian Securities Commission v Somerville (1994) 51 FCR 38 per Black CJ, Ryan and Olney JJ at 45-53. At 53 the Court said:

"Doubtless in many cases by reason of an absence of dispute as to the primary facts, or by virtue of reasons and particulars furnished pursuant to s13 of the Judicial Review Act the occasion for making an order for discovery will not arise. But in a case where the court called upon to make the decision has available to it sufficient material, either in the form of pleadings or evidence, to enable it properly to exercise its discretion, an order for discovery, either general or particular, may be made."

In the present case, the primary facts are not in dispute. The terms of the relevant references under section 13 of the NCA Act can be placed before the Court. The applicant has been informed of the line of enquiry being pursued by the NCA. The applicant is seeking to go beyond the terms of references for a number of different reasons. There is no material before the Court to suggest there is any need to do this to establish the validity of the reference or the nature of the line of enquiry. It is not appropriate, in cases of this kind, to do this in an attempt to construe the terms of the references. In all the circumstances this is a case where the applicant "seeks to ... ransack [the NCA] documents in the hope of making a case. That is mere fishing."

Accordingly, the Court refuses to order discovery as sought by the applicant. The applicant should pay the costs of the NCA of the matter heard and determined by the Court.

I certify that this and the preceding sixteen (16) pages are a true copy of the Reasons for Judgment of The Honourable Justice R.M. Northrop.

Associate:

Date:

ATTACHMENT

Counsel for the Applicant: Dr P. Buchanan QC

P.W. Collinson

Solicitor for the Applicant: Clayton Utz

Counsel for the Respondent: J.E. Middleton QC

B.E. Walters

Solicitor for the Respondent: Australian Government Solicitor

Date of Hearing: 7 December 1995

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