AB v National Crime Authority [1996] FCA 533

CATCHWORDS

Procedure - Discovery and interrogatories - Particular discovery - Discoverability of documents in respect of which order sought better able to be determined at trial - Documents readily procurable if required - Order for discovery before trial refused.

Appellate Jurisdiction - Leave to appeal - From exercise of discretionary judgment concerning particular discovery - Circumstances relevant to exercise of power to grant leave examined.

National Crime Authority Act 1984 (Cth) - Divisions 1 and 2 of Part II.

AB v. NATIONAL CRIME AUTHORITY

VG765 of 1995

Jenkinson, Burchett and Whitlam JJ.

Melbourne

3 July, 1996

IN THE FEDERAL COURT OF AUSTRALIA )

VICTORIA DISTRICT REGISTRY ) No. VG765 of 1995

GENERAL DIVISION )

BETWEEN: AB

Applicant

AND: NATIONAL CRIME AUTHORITY

Respondent

CORAM: Jenkinson, Burchett and Whitlam JJ.

PLACE: Melbourne

DATE: 3 July, 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The application for leave to appeal from the order of the Honourable Justice Northrop made 7 March 1995 be dismissed.

2. The applicant pay the respondent's costs (including costs reserved) of the said application.

(Note: Settlement and entry of orders is dealt within Order 36 of the Federal Court Rules.)

IN THE FEDERAL COURT OF AUSTRALIA )

VICTORIA DISTRICT REGISTRY ) No. VG765 of 1995

GENERAL DIVISION )

BETWEEN: AB

Applicant

AND: NATIONAL CRIME AUTHORITY

Respondent

CORAM: Jenkinson, Burchett and Whitlam JJ.

PLACE: Melbourne

DATE: 3 July, 1996

REASONS FOR JUDGMENT

JENKINSON J.

Application for leave to appeal against refusal by Northrop J. of an order for particular discovery.

The respondent National Crime Authority ("the Authority") received two notices, one purporting to be a reference by the Commonwealth Minister of State administering the National Crime Authority Act 1984 (Cth.) ("the Act") in pursuance of s.13(1) of the Act, the other purporting to be a reference by the Minister of the Crown administering the National Crime Authority (State Provisions) Act 1984 (Vic.) in pursuance of s.5(1) of the latter Act. Counsel for the parties dealt with the application, as counsel had dealt with the motion to Northrop J. for discovery, solely by reference to the purported reference in pursuance of s.13. This court was informed that no relevant consideration arose in respect of the Victorian reference which did not arise in respect of the Commonwealth reference.

The applicant was summoned, in purported exercise of power conferred by s.28(1), by a member of the Authority to attend before the authority at a hearing to give evidence. Having been sworn at a hearing before the Authority held for the purposes of the "special investigation" conducted in the performance of the "special functions" imposed on the Authority by the references, the applicant claimed to be entitled to refuse to answer a question put to him. The Authority decided that the applicant's claim was not justified and the applicant applied to this court for an order of review in respect of that decision. (See ss. 4(1), 11(2), 13(1), 14(1), 25(1), 25(7), 28(1), 28(5), 30(2)(b), 32(1)(c), 32(2) of the Act.) In compliance with the requirement of s.28(2) that a summons of the kind served on the applicant should be "accompanied by a copy of .... each of the notices by which the matter .... to which the hearing relates was .... referred to the Authority under section 13", the summons to the applicant was accompanied by a copy of each of the notices to which I have referred. The categories of documents of which discovery was sought are described in a letter dated 6 November 1995 from the applicant's solicitors to the respondent's solicitor. The first six of the eight categories to which the letter refers are said to relate to two contentions to be advanced by the applicant on the hearing of the proceeding. First, it will be contended that the notice the giving of which is said by the Authority to have constituted an exercise of the power conferred by s.13(1) does not amount to a valid exercise of that power because the notice fails to identify with sufficient specificity "a matter relating to a relevant criminal activity", as the sub-section requires, and because the notice fails to comply with the requirement of paragraph 13(2)(a) that it "shall describe the general nature of the circumstances or allegations constituting the relevant criminal authority".

Sub-sections 13(1) and 13(2) provide:

"(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) shall state that the relevant offence is, or the relevant offences are or include, an offence or offences against a law of the Commonwealth or a law of a Territory but need not specify the particular offence or offences; and

The Attorney-General's notice reads:

"PURSUANT to Subsection 13(1) of the NATIONAL CRIME AUTHORITY ACT 1984 and having consulted the Inter-Governmental Committee, I HEREBY REFER to the National Crime Authority for investigation the following matter relating to a relevant criminal activity insofar as the relevant offence or relevant offences are or include an offence or offences against the law of the Commonwealth or of a Territory.

MATTER

Whether any relevant offences have been committed as alleged in the allegations particulars of which are set out below, and if so the identity of the person or persons involved and the nature of their involvement.

PARTICULARS PURSUANT TO SUBSECTION 13(2)

(a) The general nature of the allegations is:

That, in and in relation to transactions concerning (directly or indirectly) the disposal and/or acquisition of securities in [a company I shall call "A 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 to 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 the discharge of the duties of their office as directors of the said A Ltd.

(b) The allegations constitute a relevant criminal activity because the alleged activities may have constituted, or may be continuing to constitute, an offence against a law of the Commonwealth or of a Territory:

(i) involving 2 or more offenders and substantial planning and organisation including the use of complex corporate structures and complex commercial transactions;

(ii) of a kind or kinds ordinarily involving the use of sophisticated methods and techniques, including the deployment of persons with extensive knowledge of company law and regulation and with expertise in the area of corporate structures and financing mechanisms;

(iii)of a kind or kinds ordinarily committed in conjunction with other offences of like kinds; and

(iv) involving fraud, company violations, matters of the same general nature as fraud, and matters of the same general nature as company violations.

(c)The offence or offences which may have been, or are being committed, are as follows:

(i) breaches of sub-s 229(1) of the Companies Act 1981 to which paragraph (b) of that sub-section applies;

(ii) breaches of sub-ss.229(3) and (4) of the Companies Act 1981.

(iii)conspiracy, contrary to s.86(1)(a) of the Crimes Act 1914, to commit-

- an offence or offences against sub-s.229(1) of the Companies Act 1981 to which paragraph (b) of that sub-section applies; and

- offences against sub-ss.229(3) and (4) of the Companies Act 1981.

(d)The purpose of the investigation is:

(i) to ascertain whether any or what relevant offences (including any offence deemed to be a relevant offence pursuant to s.4(2) of the National Crime Authority Act 1984) have been or are being committed against the laws of the Commonwealth or of a Territory;

(ii) to identify the offender or offenders;

(iii)to assemble evidence that would be admissible in the prosecution of offenders; and

(iv) to furnish the evidence to the Attorney-General of the Commonwealth of Australia or of a State or Territory or the relevant law enforcement agency for the prosecution of those offences."

The court was informed that the evidence before Northrop J. did not disclose the length of time the company named in the notice had existed before the giving of the notice, nor the length of time during which the company's name had been "A Ltd.". If the latter period were substantial, each of the first of the contentions to be advanced by the applicant might be thought justifiable by reference to the terms of the notice. (Cf. A1 v. Betty King Q.C. (No. VG75 of 1996; Merkel J.; unreported; judgment 26 June 1996)). But, in apparent disregard of that contention, the submission was advanced - and the grounds of the application for an order of review include allegations - which may be summarised in the terms of the originating application, thus:

"12.On or about [a specified date] the National Companies and Securities Commission proposed a matter to the NCA for investigation.

13. The aforesaid matter concerned allegations that certain directors of [a company I shall call "B Ltd"] (formerly A Ltd)(`A') associated with [a company I shall call "C Ltd"] (`C') might have committed offences under a number of
Commonwealth and State Acts and at common law in relation to a series of transactions whereby C acquired majority control of A in or about [a specified year] (the `C/A matter').

14. Commencing in or about [a specified month and year] the NCA issued a series of requests under sub-sections 10(2) and 10(4A) of the NCA Act seeking approval from the Inter-Governmental Committee for the C/A matter to be referred by a Minister or Ministers to the NCA for investigation.

15. Following consideration of each of the requests by the Inter-Governmental Committee and by the Commonwealth Minister, the Victorian Minister and the South Australian Minister in accordance with the procedures established under the legislation hereinbefore referred to, the following references were issued from time to time in relation to the C/A matter:

(a) a reference from the Commonwealth Minister pursuant to sub-section 13(1) of the NCA Act dated [a specified date];

(b) a reference from the Victorian Minister pursuant to sub-section 5(1) of the Victorian Act and sub-section 14(1) of the NCA Act dated [a specified date];

(c) a reference from the South Australian Minister pursuant to sub-section 5(1) of the South Australian Act and sub-section 14(1) of the NCA Act dated [a specified date];

(d) a reference from the Victorian Minister pursuant to sub-section 5(1) of the Victorian Act and sub-section 14(1) of the NCA Act dated [a specified date];

(e) a reference from the Commonwealth Minister pursuant to sub-section 13(1) of the NCA Act dated [a specified date];

(f) a reference from the Victorian
Minister pursuant to sub-section 5(1) of the Victorian Act and sub-section 14(1) of the NCA Act dated [a specified date];

(g) a reference from the South Australian Minister pursuant to sub-section 5(1) of the South Australian Act and sub-section 14(1) of the NCA Act dated [a specified date].

PARTICULARS

Each of the references is in writing and copies thereof may be inspected at the offices of the applicants' solicitors by prior appointment.

16. By reason of the foregoing:

(a) the special function of the NCA under the NCA Act was the function of investigating the C/A matter insofar as the relevant offence was, or the relevant offences were or included, an offence or offences against a law of the Commonwealth or a law of the States of Victoria and South Australia;

(b) the NCA was authorised to conduct a special investigation (the `Special Investigation') into the C/A matter.

17. Under sub-section 28(1) of the NCA Act and sub-section 17(1) of the NCA Act a member of the NCA may summon a person to appear before the NCA at a hearing to give evidence and to produce such documents or other things (if any) as are referred to in the summons.

18. On or about [a specified date], 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 $[X] by [a company I shall call `Y Ltd'] (a subsidiary of A) in securities in [a company I shall call
`Z'] in or about [a specified month of the year before the year specified in paragraph 13 quoted above] (the `Z investment').

...............................................

[There follows an allegation that the question the applicant refused to answer related to the circumstances specified in paragraph 18 quoted above]

24. Further or in the alternative, a summons issued pursuant to sub-section 28(1) of the NCA Act or sub-section 17(1) of the Victorian Act only authorises the NCA to question a person in relation to a matter that relates to a special investigation.

25. Pursuant to the Summons the NCA has sought to require the applicant to answer a question relating to the Z investment.

PARTICULARS

The applicant refers to and repeats the particulars given under paragraph 19.

26. The Z investment is not connected to or related to the C/A matter.

27. By reason of the foregoing the NCA has sought to exercise its power pursuant to sub-section 28(1) of the NCA Act or sub-section 17(1) of the Victorian Act to issue a summons in order to question the applicant in relation to a matter which does not relate to the Special Investigation."

According to the submission by counsel for the applicant the documents comprehended by the first six categories to which the applicant's solicitors' letter refers, originating on and after a specified date and, presumably, before service of the notices, are discoverable as aids to the proper construction of the two notices. It was not submitted, although one might be forgiven for suspecting, that identification of the "matter" referred for investigation was to be alleged to be a process separate from, and anterior to, the process of determining what degree of success the draftsman of the notice of referral had achieved in his attempt to describe that matter. The allegations contained in paragraphs 12, 13, 14, 15 and 16 of the grounds of the application evoke the suspicion.

It was submitted that the notice given under s.13(1) was an "instrument", within the meaning of that word in s.46(1)(a) of the Acts Interpretation Act 1901 (Cth) and that s.15AB(1)(b)(i) of that Act directed the court to give consideration to "any material .... capable of assisting in the ascertainment of the meaning of" those parts of the notice which are "obscure". But that sub-paragraph is to be read "[s]ubject to subsection (3)", paragraph (a) of which provides:

"(3)In determining whether consideration should be given to any material in accordance with subsection (1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to:

(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act;"

Like the statutory provisions under consideration in Mannah v. State Drug Crime Commission (1988) 13 N.S.W.L.R. 43, ss. 13 and 28 have in combination the effect of constituting a notice
given under s.13(1) the only certain source of information to a person summoned in purported exercise of the power conferred by s.28(1) as to the scope of the special investigation for the purposes of which he is to be questioned under oath. The requirement of s.28(2) that a summons to give evidence at a hearing for the purposes of a special investigation shall be accompanied by a copy of that notice clearly has among its objects the provision to the person summoned of information by reference to which he may form a judgment as to whether the proposed interrogation may be for the purposes of a special investigation and therefore authorised by ss. 28 and 30, and as to whether any particular question he may be asked at the hearing is for the purposes of that special investigation. If the proper construction of such a notice were to be influenced by a consideration of documents to which the person summoned had not access, attainment of the latter object would be prejudiced. Further, the references in paragraph 14 of the grounds of the application to requests directed by the Authority to the Commonwealth Minister under s.10(4A) and the references to consideration of those requests "in accordance with the procedures established under" the Act may be thought to suggest that exercise of the power conferred by s.13(1) is in some way conditioned upon there having been made such a request, and is in some way limited in subject matter by reference to the subject matter of the request. I find no such a condition or limitation in the Act in respect of the exercise of power conferred by s.13(1), whatever may be said in respect of the power conferred by s.14(1) on Ministers of the Crown of a State. The exercise of the power is conditioned, in my opinion, only upon there having been prior consultation between the Commonwealth Minister and the Inter-Governmental Committee.

For the foregoing reasons it seems to me very unlikely that at trial the judge will be persuaded to call in aid of his construction of the notices any extrinsic material. If he is so persuaded, those materials will no doubt be readily available and the trial judge will be able to take in respect of them such a course as then seems to be required in the interests of justice. Discovery of such materials is not in my opinion presently necessary.

The seventh and eighth categories of documents are said to relate to the issues raised by the respondent's denial of the allegations contained in paragraphs 26 and 27 of the grounds of the application, which have been quoted above. The member of the Authority presiding at the hearing decided that the applicant's claim to be entitled to refuse to answer the question was not justified on the day the question was asked and at the same time stated her reasons for that decision, in the course of which she stated reasons for her conclusion that the "Z investment" was connected and related to the "C/A matter". Those reasons in my opinion are persuasive to that conclusion. It was submitted that the question was asked, not for the purpose of investigating that connection, but for another purpose. There was before the learned judge no evidence to suggest the existence of that ulterior purpose in a member or officer of the Authority, and the motion for discovery of documents of the seventh and eighth categories which might disclose the existence of such a purpose, if it had existed, was in my opinion correctly characterised by Northrop J. as "mere fishing".

I would dismiss the application for leave to appeal, with costs.

I certify that this and the 12 preceding pages are a true copy of the Reasons for Judgment of the Honourable Justice Jenkinson.

Associate

Dated: 3 July, 1996

IN THE FEDERAL COURT OF AUSTRALIA)

)

VICTORIA DISTRICT REGISTRY ) VG 765 of 1995

)

GENERAL DIVISION )

APPLICATION FOR LEAVE TO APPEAL FROM AN ORDER OF A JUDGE OF

THE COURT

BETWEEN: AB

Applicant

AND: NATIONAL CRIME AUTHORITY

Respondent

CORAM: Jenkinson, Burchett and Whitlam JJ.

PLACE: Melbourne

DATE:

REASONS FOR JUDGMENT

BURCHETT & WHITLAM JJ:

This is an application for leave to appeal from the interlocutory order in AB v National Crime Authority (1996) 40 ALD 557, being an order refusing particular discovery. The principles upon which such an application should be decided were stated in Decor Corporation Pty Ltd v Dart Industries Inc. (1991) 33 FCR 397. What was there described as the "litmus test for the general run of cases in which leave to appeal from an interlocutory decision is sought" is a twofold test in which the court asks, first, whether in all the circumstances the decision is attended with sufficient doubt to warrant its being reconsidered by a Full Court, and secondly, whether substantial injustice would result if leave were refused, supposing the decision below to be wrong. Where the interlocutory decision relates to a point of practice, the High Court has made it clear that an appellate court should not too readily allow itself to be swayed to the granting of leave: Adam P. Brown Male Fashions Proprietary Limited v. Phillip Morris Incorporated (1981) 148 CLR 170 at 177.

The present application relates to a practice decision upon the discretionary question whether particular discovery should be ordered. The issues to which that discovery would relate, if ordered, and the setting within which the decision was reached, are set out in the reasons of Jenkinson J, a draft of which we have had the advantage of reading. We agree with the orders his Honour proposes, but wish to state quite briefly our own reasons for doing so.

The focus of counsel's argument was on the construction of the notice under s.13 of the National Crime Authority Act 1984. It was urged that an order to secure the production of the documents in question was "necessary" within the meaning of Order 15 rule 15 for the purpose of examining the context of the notice. In our opinion, there is much to be said for the view that, in the context of the Act and the purposes it attempts to secure, a notice under s.13 must stand upon its own terms, irrespective of the terms of the documents which preceded it. This view would accord with the language of s.13(2)(b), by which it is left to the Minister to "state that the relevant offence is, or the relevant offences are or include, an offence or offences against a law of the Commonwealth or a law of a Territory", without being required to specify the particular offence or offences. That plainly means that the legislature has committed a significant decision on which the applicability of the procedure turns to the determination of the Minister. It would be consistent with this approach to construe the section as empowering the issue of a notice the construction of which would be governed by the principles stated in Mannah v State Drug Crime Commission (1988) 13 NSWLR 43. However, we do not think it is necessary to come to a final conclusion about that. The whole question is best determined at the trial. Nothing was put before the court to suggest a reason why it is necessary in this situation to make an order for particular discovery. As Jenkinson J. has pointed out, the materials are likely to be readily procurable at the hearing, if required.

The learned trial judge rejected the application for particular discovery, holding (at 563) that "in reality, the applicant is engaging in a fishing exercise". He cited WA Pines Pty Ltd v. Bannerman (1980) 30 ALR 559 at 567, where, in the absence of a special entitlement, a party's right to discovery of a category of documents was required to be based on the existence of evidence raising at least a suspicion that he had a good case proof of which might well be aided by discovery. In these days, when rules of court make provision for discovery before action designed to ascertain whether a case exists, it would be strangely inconsistent if judges routinely denied discovery after action upon an objection of "fishing", simply because substantial evidence to support the case alleged was lacking. But the rule as formulated in WA Pines Pty Ltd v. Bannerman does not go so far. It allows an order to be made, in the discretion of the court, in a case of suspicion sufficiently grounded.

The judge at first instance applied the correct principle; there was evidence to support his application of it; and even if he was wrong, the matter is capable of cure at the hearing. Accordingly, leave to appeal should be refused with costs.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of their Honours Justice Burchett and Justice Whitlam.

Associate:

Date:

Counsel for the Applicant: Dr P. Buchanan, QC and Mr P.W. Collinson

Solicitors for the Applicant: Clayton Utz

Counsel for the Respondent: Mr J.E. Middleton, QC

and Mr B.E. Walters

Solicitors for the Respondent: Australian Government Solicitor

Date of hearing: 7 June 1996

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