FEDERAL COURT OF AUSTRALIA

Bank of Valletta PLC v National Crime Authority [1999] FCA 791

PRODUCTION OF DOCUMENTS – statutory notice requiring disclosure of documents by foreign bank – whether compliance with notice would breach foreign secrecy laws – interpretation of foreign laws – expert evidence on foreign laws – extraterritorial operation of foreign laws – whether “reasonable excuse” for not complying with statutory notice – relevance of alternative method of obtaining access to documents – appropriate declaratory relief

WORDS AND PHRASES – “reasonable excuse” – “disclose” – “judicial or prosecuting authority”

Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 referred to

Yin v Public Prosecutor [ 1955] AC 93 referred to

Poole v Wah Min Chan (1947) 75 CLR 218 referred to

Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 considered

Brannigan v Davison [1997] AC 238 applied

Societé Internationale v Rogers (1958) 357 US 197 considered

Corporate Affairs Commission of New South Wales v Yuill (1991) 172 CLR 319 considered

Taikato v R (1996) 186 CLR 454 referred to

Ganin v NSW Crime Commission (1993) 32 NSWLR 423 considered

Pascoe v The Nominal Defendant (Queensland) (No 2) (1964) Qd R 373 referred to

Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504 referred to

Australian Securities Commission v Bank Leumi Le-Israel (Switzerland) & Others (1996) 69 FCR 531 cited

Australian Securities Commission v Bank Leumi Le-Israel (Switzerland) & Others (1995) 134 ALR 101 cited

In the matter of Two Grand Jury Subpoenas Duces Tecum Served Upon Union Bank of Switzerland (1993) 601 NYS 2d 253 referred to

In re Grand Jury Proceedings; United States v Field (1976) 532 F 2d 404 referred to

In re Grand Jury Proceedings; United States v The Bank of Nova Scotia (1982) 691 F 2d 1384 referred to

In re Spencer and The Queen (1983) 145 DLR (3d) 344 referred to

MacKinnon v Donaldson, Lufkin and Jenrette Securities Corporation (1986) 1 Ch 482 considered

FDC Co Ltd v The Chase Manhattan Bank NA (1990) 1 HKLR 277 considered

Adsteam Building Industries Pty Ltd v The Queensland Cement and Lime Company Ltd (No 4) (1985) 1 Qd R 127 considered

Medina v Copenhagen Handelsbank International SA (unreported, Spender J, 10 March 1989) cited

Williams v Usher (1955) 94 CLR 450 referred to

R v Treacy [1971] AC 537 considered

R v Markus [1976] AC 35 considered

Foster v Federal Commissioner of Taxation (1951) 82 CLR 606 referred to

Federal Commissioner of Taxation v Westgarth (1950) 81 CLR 396 referred to

Thompson v Riley McKay Pty Ltd (No 2) (1980) 42 FLR 279 referred to

Diamond v Bank of London and Montreal Ltd [1979] 1 QB 333 cited

Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 44 FCR 485 cited

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 considered

Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 referred to

Austin v The Queen (1989) 166 CLR 669 referred to

Frischke v Royal Bank of Canada (1977) 17 OR (2d) 388 cited

George v Rockett (1990) 170 CLR 104 referred to

National Crime Authority v A1 (1997) 75 FCR 274 cited

BANK OF VALLETTA PLC v NATIONAL CRIME AUTHORITY & AZIZ GREGORY MELICK

N 183 OF 1999

HELY J

17 JUNE 1999

SYDNEY

THE COURT DECLARES THAT:

1.         Any operation which s 34 of the Banking Act 1994 (Malta) or s 257 of the Criminal Code (Malta) may have in relation to the applicant by reason of its compliance with the Notice styled “Notice to Attend and Produce to the National Crime Authority” issued by the second respondent on 30 October 1998 does not constitute a reasonable excuse for failing to comply with that Notice.

THE COURT ORDERS THAT:

1.         The application is otherwise dismissed with costs.

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

REASONS FOR JUDGMENT

1                     The applicant (“the Bank”) seeks a declaration that it has a reasonable excuse, in terms of s 29 of the National Crime Authority Act 1984 (“NCA Act”) for failure to comply with a notice styled “Notice to Attend and Produce to the National Crime Authority” (“the Notice”) issued by the second respondent on 30 October 1998, insofar as the Notice calls for production of documents held by the applicant in Malta.  The Notice was addressed to the Bank at an address in Sydney.  There is evidence from the second respondent that the Bank is not registered in Australia as a foreign corporation.  However, it was not suggested that this method of service was inappropriate.  The application, as filed, sought other relief, but those claims were abandoned when the matter came on for hearing.

2                     Pursuant to s 29(1) of the NCA Act the second respondent required the applicant to produce the following documents to the second respondent, being documents that are said to be relevant to a special investigation being conducted by the National Crime Authority (“NCA”):

“1.        All documents, records and things evidencing deposits of $5,000 or more made in Australia between 7 January 1991 and 29 February 1996 to credit of account number 01-000-7433 at The Chase Manhattan Bank Australia Limited, operated in the name Bank of Valletta.

2.         All documents, records and things relating to the withdrawal and further transfer of funds referred to in (1) above and without limiting the generality hereof such documents, records and things to include any directions given or made by any depositor of those funds or such withdrawal or further transfer.

3.         All documents records and things which identify or tend to identify the name, address or telephone number of each depositor of the funds referred to in (1) above.

4.         All documents records and things evidencing applications for loans made by the Bank of Valletta PLC (formerly known in Australia as the Bank of Valletta Limited) or any of its associated entities between 7 January 1991 and the date of this Notice to depositors of the funds referred to in (1) above.”

3                     The Bank admits that it has documents in Malta which answer the description of the documents sought in the Notice.  How and why records relating to Australian banking transactions come to be located in Malta is a matter to which I will return later in these reasons.

4                     The NCA Act provides a mechanism for resolving disputes as to whether a person in the position of the Bank is entitled to refuse to produce documents, the production of which is required by a notice under s 29(1).  Objection to production is to be made in the first instance to the person to whom the documents are required to be produced, - in this case, the second respondent.  If he is not satisfied that the claim is justified, then the claim is to be referred to the first respondent for a decision as to whether, in its opinion, the claim is justified.  If that decision is adverse to the applicant, it may apply to this Court for an “order of review” subject to the documents called for by the Notice being produced to the first respondent, or placed in the custody of the Registrar of this Court: NCA Act, ss 29(5), 32(1)(b), 32(2), 32(3), 57.

5                     On 26 February 1999, the second respondent decided that he was not satisfied that the Bank had established a reasonable excuse for failing to comply with the Notice.  Proceedings were instituted in this Court on 4 March 1999.  The Bank’s claim was not the subject of a decision by the first respondent, because an interlocutory injunction was granted by Lehane J, which effectively prevented the first respondent from adjudicating on the applicant’s claim, except for the purpose of upholding it.

6                     Neither party submitted that there was any jurisdictional or discretionary bar or impediment to the making of the declaration sought, if the applicant was otherwise entitled to that relief.  It was common ground that there was a real practical utility in determining whether or not the matters relied upon by the applicant constituted “reasonable excuse” for the purposes of s 29(3), and that the present proceedings were an appropriate vehicle for the resolution of that question.  The Court has jurisdiction in this matter if only because orders of prohibition and certiorari were sought pursuant to s 39B of the Judiciary Act 1903 in relation to the Notice.  Section 21 of the Federal Court of Australia Act 1976 empowers the Court, in relation to matters in which it has jurisdiction, to make binding declarations of right.  That jurisdiction subsists even though the claim for prerogative writs was not pursued at the hearing: see Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212.

7                     The Bank relies upon the following matters as constituting a “reasonable excuse” within the meaning of s 29(3) of the NCA Act:

Ÿ                     Compliance with the Notice would involve the Bank in the commission of an offence under the laws of Malta.  The Bank is a public limited liability company registered and existing in terms of the Maltese Companies Act 1995, and Malta is its principal place of business.

Ÿ                     Conviction could trigger the imposition of restrictions on the Bank’s Maltese banking licence.

Ÿ                     There are avenues available to the NCA to obtain the information it seeks from the Bank, by approaching the Maltese regulatory authorities.  If that course were followed by the NCA, the Bank could and would produce the documents sought, but would not be exposed to criminal penalty.

8                     The Bank gave an undertaking to the Court that it will co-operate with an application made pursuant to s 8A of the Prevention of Money Laundering Act 1994 (Malta) and will submit to the production of the documents sought by the Notice pursuant to and with the protection of, an Investigation Order made pursuant to that section.  The Bank also consented to the document incorporating its undertaking to the Court and the Notice being provided to the Attorney-General of Malta and tendered on an application for an Investigation Order pursuant to s 8A of the Prevention of Money Laundering Act 1994 (Malta).

The Bank

9                     The Bank is incorporated in Malta, and carries on business in that country.  It is licensed to carry on the business of banking pursuant to a licence issued by the Central Bank of Malta in terms of the Banking Act 1994.  The balance sheet of the Bank as at 30 September 1997 records assets of Lm 1,042,273,000, liabilities of Lm 980,809,000, and shareholders funds of Lm 61,464,000 (the approximate exchange rate, at the present time, is 1 Lm = AUD 3.75).

10                  The Bank is one of five banks operating in Malta, and there is a highly competitive financial services market on the island.  The Bank is not authorised to conduct banking business in Australia.

11                  The Bank maintains four representative offices in Australia.  The activities of the representative offices are confined to purely liaison activities, principally with the Maltese community in Australia.  The main functions of the representative offices are to create an awareness of the Bank and its services within the Maltese community in Australia; to assist the Maltese community in Australia in remitting funds to Malta and to provide a link and channel of communication between the Maltese community in Australia and the Bank in Malta.

12                  The representative offices conducted their function as an intermediary in such a way that no records are kept by the Bank in Australia of deposits of money in Australia, by Australian customers of the Bank.  All such records are located in Malta.

13                  The procedures which were established by the Bank which produced that result are as follows:

In relation to deposits:

Ÿ                     A customer intending to open an account and make a deposit would be advised about the merits of the applicant as a bank.

Ÿ                     The customer would be provided by the applicant with a deposit slip (initially coded; later uncoded) to facilitate a deposit into its vostro account with another bank (initially Chase Manhattan and National Australia Bank, later Westpac and later still the Commonwealth Bank).

Ÿ                     After making the deposit into that vostro account, the customer would return to the applicant’s office with the original deposit slip bearing the other bank’s verification.

Ÿ                     That slip (which would not normally bear the customer’s name) would be sent to Malta together with details identifying the new or existing account.  A record would be retained at the applicant’s office.

Ÿ                     On receipt of confirmation from Malta, all records in Australia of the transaction would be destroyed (other than records merely showing that the amount had been deposited to the vostro account by someone).

In relation to withdrawals and transfers from the account

Ÿ                     Details of the proposed transaction would be sent by the applicant to its head office in Malta.

Ÿ                     The applicant would hold a reference number in Australia for about two weeks and destroy all records in Australia on receipt of confirmation.

14                  The person responsible for the establishment of these procedures was Mr De Caro, the General Manager (Operations) of the Bank.  He swore that the reason for the adoption of these procedures was a desire on the part of the Bank that the representative office should be, and be seen to be, no more than a channel of communication between the customer in Australia and the Bank in Malta.  According to Mr De Caro, it was important, if the client ever returned to the representative office to ask for some details about his account, that the representative office could do no more than refer him to the Bank in Malta, where the relevant information was located.  Once the transaction involving the representative office was concluded, there was no reason for the representative office to keep records any longer, and there was no purpose of the Bank which would be furthered by their retention.  It would assist in ensuring that the office could only operate as a representative office if records with respect to banking transactions of a customer were maintained in Malta, rather than in the Australian office.  I accept Mr De Caro’s evidence in this respect.

15                  The respondents submitted that the primary purpose underlying the procedures adopted by the Bank was a desire to make it impossible for any Australian investigatory authority to ascertain the name of a customer making a deposit with the Bank by means of its vostro account with an Australian bank.  Mr De Caro gave the following evidence:

“Q.      You see, I suggest to you that the reason you wanted documents in Australia destroyed was so that they could not be produced to any Australian authorities? --- No, that’s not correct.

Q.                And so that the Bank could take advantage of secrecy legislation in Malta to prevent itself from complying with the local law? --- No, that’s not correct.”

In the light of that evidence I am not satisfied that the purpose behind the Bank’s procedures was as the respondent contends.  I think that there was a genuine desire on the part of the Bank to ensure that it confined its activities in Australia to liaison activities, as required by the Reserve Bank, and that the systems which it put in place were associated with the limited role assigned to the representative office.

16                  Support for that conclusion is to be found in correspondence between the Bank and the Reserve Bank in 1995, before the present controversy arose.  The Reserve Bank had expressed concern that there may be a perception that the Bank’s representative office was conducting banking business in Australia.  One of the reasons for that concern was the practice of the representative office in issuing encoded deposit slips to customers to enable funds to be deposited in the vostro account conducted by the Bank with an Australian bank.  In its letter of 13 September 1995, the Bank proposed procedures for addressing that concern, which included typing the name and address of the customer on the deposit slip before it was handed to the customer for presentation to the Australian bank.  The Reserve Bank did not agree to these procedures, with the result, that the practice of issuing encoded deposit slips to the public ceased.  But it is of significance, having regard to the respondent’s submission, that the Bank offered to implement procedures, the result of which would have been that there would be a record in the Australian bank of the names and addresses of the Bank’s customers who were depositing funds for transmission to Malta.

The NCA investigation

17                  On 10 June 1998 the Minister for Justice, acting under s 13(1) of the NCA Act referred the matter set out in the Schedule to the Notification to the NCA for investigation.  The catalyst for the reference was a suspicious pattern of significant financial transaction reports under the Financial Transaction Reports Act 1988 involving large sums of money entering or leaving the banking system in Australia.  That implied the commission of offences under the Proceeds of Crimes Act 1987 which, in the experience of law enforcement agencies, are often connected with tax evasion and illegal drug dealing.

18                  On 30 October 1998 the s 29 Notice was issued to the Bank requiring the production of documents earlier referred to.  That Notice was endorsed with a notification that pursuant to s 29A of the NCA Act, disclosure of information about the Notice is prohibited except in the circumstances referred to in s 29B.

19                  On 5 November 1998 the Bank’s solicitors wrote to NCA drawing attention to the availability of avenues under Maltese law by which the NCA could seek the documents in question without requiring the Bank to commit an offence under Maltese law.  On 9 November 1998 the Bank’s solicitors again wrote to the NCA reiterating the Bank’s desire to co-operate with Australian regulatory authorities, and indicated the Bank’s preparedness to co-operate with any application for access to documents held in Malta which might be made by Australian authorities in the Maltese courts.  In this and other letters the Bank’s solicitors asserted that it was simply not open to the Bank wilfully to contravene the Maltese criminal law.  They asserted that the Bank had a reasonable excuse for not complying with the Notice issued by the NCA because compliance would involve the Bank in the commission of a criminal offence under Maltese law, and because there were available avenues under Maltese law by which the NCA could procure the production of the relevant documents without the Bank being required to commit an offence.

20                  On 26 February 1999 the second respondent gave his reasons as to why he was not satisfied that the Bank had established a reasonable excuse for failing to comply with the Notice.  On 31 March 1999 the Bank through its solicitors sought modification of the non-disclosure order endorsed on the original Notice so that the Bank could contact its customers and seek their informed consent to the release of the information sought by the NCA.  On 13 April 1999 the NCA declined, without explanation, to modify the terms of its Notice so as to permit this to occur.

21                  Section 30 of the NCA Act provides that subject to the exceptions and qualifications referred to in the section, it is a reasonable excuse for a natural person to refuse to produce a document required to be produced to the NCA, that the production of the document might tend to incriminate him.  However, s 30(9)(a) provides that it is not a reasonable excuse for a corporation to refuse to produce a document the production of which might tend to incriminate the corporation (except in the circumstances referred to in s 30(10), which are not relevant to the present problem).

Maltese law - offences

22                  Evidence as to Maltese law was given by two highly qualified experts – Dr Muscat and Dr Fenech.  They were agreed that a Bank’s duty of confidentiality, as a matter of Maltese law, is regulated by a number of statutory provisions, principally the Banking Act 1994, the Criminal Code, the Prevention of Money Laundering Act 1994 and the Professional Secrecy Act 1994 (“PSA”).  The complete picture of the statutory position can only be seen by examining the relevant provisions and the inter-relationship between them.

23                  In the view of Dr Muscat, compliance by the Bank or its offices with the notice issued by the NCA would amount to the commission of an offence by the Bank or its offices under both:

Ÿ                     section 34 of the Maltese Banking Act (although no criminal penalty has yet been prescribed);

Ÿ                     section 257 of the Maltese Criminal Code (which can attract a fine and a maximum sentence of two years imprisonment);

unless the Bank’s customer consented to the disclosure.  In either case, a conviction could trigger the imposition of restrictions on the Bank’s Maltese banking licence.

24                  Dr Fenech criticised aspects of the process of reasoning adopted by Dr Muscat.  But the essence of his position is that the sections in question are purely local in their operation, and would not apply to conduct occurring outside Malta.  In the respondent’s submission, any disclosure of confidential information by the production of documents in response to the Notice issued by the NCA would take place in Australia, as the Notice required the Bank by its proper officer to attend at an address in Sydney, and there to produce the documents called for by the Notice.  Alternatively, it was submitted that if the sections in question applied to conduct in Australia, then the provisions of the legislation allowing disclosure when required by law, should be construed as including a requirement of Australian law.  That alternative position was not supported by the evidence of Dr Fenech.

25                  Dr Muscat also gave evidence (T p 65) that he had no reason to think that the documents called for by the Notice could not be obtained by utilising the procedures set out in s 8A of the Prevention of Money Laundering Act.  Dr Fenech did not address this question.  For various reasons to which I shall return later the respondent submitted that those procedures were not available to it in the present circumstances.

Banking Act 1994

26                  Section 34(2) of the Banking Act provides:

“No person, including past and present officers or agents of a bank, shall disclose any information relating to the affairs of a bank or of a customer of a bank which he has acquired in the performance of his duties or the exercise of his functions under this Act except:

(a)               ...

(b)               for the purpose of the performance of his duties or the exercise of his functions;

(c)               when lawfully required to do so by any court or under a provision of any law.”

Section 35(3)(a) provides any person who contravenes or fails to comply with any of the provisions of the Act is guilty of an offence.  Section 35(4) provides that any person who is knowingly a party to, or procures or aids and abets the commission of any offence under sub-section (3) shall be guilty of an offence and shall be liable to the same penalties as the principal offender.  Section 35(5) provides that the Minister shall issue regulations prescribing penalties for offences against the Act.  A fine of not less than 100 Maltese Liri or greater than 500,000 Maltese Liri may be prescribed: s 35(6)(b).  Regulations under this section have not yet been published.

27                  Section 9(2) enables the competent authority (the Maltese Central Bank) to impose restrictions on a banking licence, or to revoke a licence if, inter alia, the holder fails to comply with any of the provisions of the Banking Act.

The Criminal Code

28                  Section 15 of the Professional Secrecy Act 1994 inserted a substituted s 257 into the Criminal Code as follows:

“257    If any person, who by reason of his calling, profession or office, becomes the depositary of any secret confided in him, shall, except when compelled by law to give information to a public authority, disclose such secret, he shall on conviction be liable to a fine (multa) not exceeding 20,000 Maltese liri or to imprisonment for a term not exceeding two years or to both such fine and imprisonment.”

Officers of financial and credit institutions are persons who, by reason of their calling, profession or office, fall within the scope of s 257: PSA s 3.  Section 8 of PSA provides as follows:

“For the purposes of s 257 of the Criminal Code, a person shall not be deemed to be compelled by law to give information to the public authority unless there is an express statutory requirement to that effect.”

29                  Proceedings for an offence under s 257 of the Criminal Code cannot be commenced without the sanction of the Attorney-General (PSA s 14).

30                  Section 257 of the Criminal Code was amended by the Medical & Kindred Professions (Amendment) Act 1998.  The following proviso to s 257 was inserted:

“Provided that, notwithstanding the provisions of any other law, it shall be a defence to show that the disclosure was made to a competent public authority in Malta or outside Malta investigating any act or omission committed in Malta and which constitutes, or if committed outside Malta would in corresponding circumstances constitute:

(a)               any of the offences referred to in sub paragraph (i) of paragraph (a) of sub section (2) of section 22 of the Dangerous Drugs Ordinance; or

(b)               any of the offences referred to in sub paragraph (i) of paragraph (a) of sub section (2) of section 120A of the Medical & Kindred Professions Ordinance; or

(c)               any offence of money laundering within the meaning of the Prevention of Money Laundering Act, 1994;

            Provided further that the provisions of the first proviso of this section shall not apply to a person who is a member of the legal profession or the medical profession.”

The Prevention of Money Laundering Act

31                  In 1998 s 8A was inserted into the Prevention of Money Laundering Act.  It provides as follows:

“8A.(1)            Where the Attorney General receives a request made by the judicial or prosecuting authority of any place outside Malta for investigations to take place in Malta in respect of a person (hereinafter referred to as ‘the suspect’) suspected by that authority of an act or omission which if committed in these Islands, or in corresponding circumstances, would constitute an offence under section 3 of this Act, the Attorney General may apply to the Criminal Court for an investigation order or an attachment order or for both and the provisions of section 24A of the Dangerous Drugs Ordinance shall mutatis mutandis apply to that application and to the suspect and to any investigation or attachment order made by the Court as a result of that application.”

The offence under s 3 of that Act is the commission of any act of money laundering.  “Money laundering” is defined in s 2 so as to include the conversion or transfer of property knowing that such property is derived from, or the proceeds of, criminal activity.  Criminal activity is in turn defined so as to mean any activity whenever or wherever carried out, which, under the law of Malta or any other law, amounts to a crime of a specified type.  The specified types of crimes include drug and narcotic offences.

32                  Section 4 of the Prevention of Money Laundering Act makes provision for an investigation order.  It is an order that a person who appears to be in possession of particular material or material of a particular description which is likely to be of substantial value (whether by itself or together with other material) to the investigation of, or in connection with, the suspect (ie a person suspected of having committed an act of money laundering), shall produce or grant access to such material to the person or persons indicated in the order; and the persons or persons so indicated shall, by virtue of the investigation order, have the power to enter any house, building or other enclosure for the purpose of searching for such material.

33                  It is convenient to turn to the notion of “reasonable excuse” in s 29 of the NCA Act before addressing the differences of opinion between the experts as to the application of Maltese law.  I shall do so on the assumption that there is at least a real and appreciable risk that for the Bank to produce the documents called for by the Notice would involve it in the commission of an offence under Maltese law.

Reasonable excuse?

34                  Section 29(3) of the NCA Act provides that a person shall not, without reasonable excuse, refuse or fail to comply with a notice served on him under the section.  Section 29(4) makes subsections 30(3) to (10) applicable to a notice issued under s 29(3).  Section 30(3) deals with the circumstances in which a legal practitioner is entitled to rely on legal professional privilege as a ground for refusing to comply with a notice.  Subsections 30(4) to (10) deal with whether or not circumstances which might otherwise attract the common law privilege against self-incrimination provide a reasonable excuse for refusing to comply with the notice.

35                  The starting point for a consideration of the scope of “reasonable excuse” is that the validity of the notice is no longer the subject of challenge.  The applicant accepts that the notice was validly issued.  It was not asserted that the decision to issue the notice is vitiated by unreasonableness.

36                  The existence of a “reasonable excuse” is a familiar ground of exculpation from what would otherwise be the operation of a statutory prescription.  Sometimes the ground of exculpation is expressed in terms of “lawful excuse” or “lawful authority”.  There may be a “lawful excuse” even though no “lawful authority” exists: Yin v Public Prosecutor [1955] AC 93 at 101; similarly there may be a reasonable excuse without a legal justification for the conduct in question: Poole v Wah Min Chan (1947) 75 CLR 218 at 232.

37                  In Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 the High Court considered whether the privilege against self-incrimination was a reasonable excuse for failure to produce books in response to a notice issued by the National Companies & Securities Commission.  The statutory context indicated an intention to exclude the privilege.  For that reason the defence of reasonable excuse did not include the privilege against self-incrimination so far as production of books is concerned.  “Reasonable excuse” (at p 392):

“... is directed to other matters, such as the physical or practical difficulties which may be involved in their production.”

38                  Clearly enough, the reference to physical or practical difficulties in complying with the notice was illustrative of matters which might constitute a reasonable excuse, rather than a description or definition of the scope of the concept.  Whilst s 30 of the NCA Act specifies some matters which constitute a reasonable excuse, and others which do not, the present problem is not dealt with either expressly or by implication by the stipulations in s 30.  There is a qualitative difference between the production of a document which might implicate the Bank in some prior criminal activity, and a case where the very production of the documents called for by the notice constitutes the criminal offence under foreign law: Brannigan v Davison [1997] AC 238; Societé Internationale v Rogers (1958) 357 US 197 at 211.

39                  The observations of Dawson J in Corporate Affairs Commission of New South Wales v Yuill (1991) 172 CLR 319 at 336 that “reasonable excuse” more aptly refers to any physical or practical difficulties in complying with the notice, rather than to legal professional privilege, is no more than an application of the point made in Controlled Consultants.  It is not a holding, as counsel for the respondent submitted, that in legislation such as this, exculpation expressed in terms of reasonable excuse, is confined to physical and practical difficulties in complying with the notice.  In any event the submission begs the question as to whether the fact that compliance with the notice may involve the Bank in the commission of an offence under the laws of Malta is a “practical difficulty”.  In Taikato v R (1996) 186 CLR 454 at 464, the High Court indicated that decisions on other statutes provide no guidance on what constitutes reasonable excuse in the instant case.

40                  In Ganin v NSW Crime Commission (1993) 32 NSWLR 423 Kirby P, with whom Meagher JA and O’Keefe AJA agreed, speaking of “reasonable excuse” (at 436), said that:

“... there is every reason to give the words used their ordinary construction.  They simply ask whether the refusal to answer the question was ‘without reasonable excuse’ ...  In accordance with orthodox canons of construction these words would not be given a narrow meaning.  They appear in a provision which imposes a criminal sanction for its breach.”

And at 439 said that:

“It is undesirable that different formulae should be substituted for that which parliament has enacted.

Nevertheless, in judging whether a “reasonable excuse” exists, it was clearly appropriate for the decision-maker to put out of mind imaginary and insubstantial fears or those which, in the practical world, are so remote as to be safely ignored or over-ruled as unreasonable.  In each case, a judgment must be made.”

41                  Ganin was cited by the majority in Taikato without disapproval.  Although Dawson J was in the minority in that case in the result, his Honour said (at 470):

“A reasonable excuse is no more or less than an excuse which would be accepted by a reasonable person.  It is different from a lawful excuse ...”

That is the same notion that Kirby J was describing in Ganin.  It is also the notion expressed by Mansfield CJ, in a rather different context, in Pascoe v The Nominal Defendant (Queensland) (No 2) (1964) Qd R 373 (at 378):

“What is to be determined is whether the applicant has shown any cause which can be deemed by the Court to be a reasonable excuse.  I think this means a cause which a reasonable man would regard as an excuse, a cause consistent with a reasonable standard of conduct ...”

42                  Thus whilst a reasonable excuse would include any current legal right to resist the compulsory production of documents, it is not confined to cases in which the resistance is on the basis of some right, privilege or immunity recognised by the general law.  Nor is it necessarily confined to physical or practical difficulties in complying with the Notice.  It includes any excuse which would be accepted by a reasonable person as sufficient to justify non-compliance with a notice lawfully issued by NCA, but bearing in mind the central role that such Notices play in the discharge by NCA of its statutory functions.

43                  Brannigan v Davison [1997] AC 238 is a decision of the Privy Council, on appeal from New Zealand, in a situation which, in some respects, is similar to the present.  There a Commission of Inquiry in New Zealand required the plaintiffs, who were citizens and residents of New Zealand, but who also practised as Chartered Accountants in the Cook Islands, to give evidence to the inquiry, about matters involving the Cook Islands, when the giving of that evidence was likely to render them liable to prosecution in the Cook Islands pursuant to that country’s secrecy legislation.  That legislation was enacted to promote the attractions of the Cook Islands as a tax haven.  The New Zealand legislation under which the Commission of Inquiry operated preserved the privilege against self-incrimination.  Under that legislation, a refusal to answer questions, to be punishable, must be “without sufficient cause” or without offering any “just excuse”.

44                  The Privy Council held that:

Ÿ                     The common law privilege against self-incrimination does not run when the criminal or penal sanctions arise under a foreign law.  That is because, having regard to the absolute nature of the privilege where it exists, the effect of its recognition would be to give primacy to the foreign law.  That would be an unacceptable encroachment on the domestic country’s legitimate interest in the conduct of its own judicial (and presumably, inquisitorial) proceedings.

Ÿ                     By the same process of reasoning the privilege does not run where the feared criminality under the foreign law, lies not in the previous conduct of the plaintiffs, but in the fact of them giving evidence to the Commission of what they know of the transactions which involved the Cook Islands.

Ÿ                     If the unqualified application of the privilege to foreign law is unsatisfactory, so also is the opposite extreme.  The opposite extreme is that the prospect of punishment under foreign law is neither here nor there.  This would be a harsh attitude which would be a reproach to any legal system.

Ÿ                     The “sufficient cause” and “just excuse” exceptions (which are synonymous) provide ample scope for all the circumstances to be taken into account.  Inherent in those expressions is the concept of weighing all the consequences of the refusal to give evidence: the adverse consequences to the inquiry if the questions are not answered, and the adverse consequences to the witness if he is compelled to answer.

Ÿ                     It was a matter for the Commissioner to determine whether the statutory exceptions were applicable.  Although he misdirected himself on that question he also conducted the weighing exercise which the Privy Council considered to be appropriate.  He held that the justification for compelling the plaintiffs to give evidence in New Zealand was so strong that no balancing considerations under the foreign state compulsion principle could lead to their being allowed to refuse to give evidence.  That decision was unassailable.

45                  Their Lordships noted (at 253E) an acceptance on the part of the Commission that the firm of accountants could not reasonably be expected to produce documents currently located in the Cook Islands.

46                  The Privy Council in Brannigan allowed a much broader scope, in the statutory context there under consideration, for the notion of “reasonable excuse”, or equivalent expressions, than did the NSW Court of Appeal in Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504, in the context of the Australian Securities Commission Act 1989 (“ASC Act”).  In Ampolex the existence of an undertaking to the Court to protect the confidentiality of documents was not regarded as a reasonable excuse for not complying with a notice which required their production.  The NCA Act differs from the ASC Act, and corresponding provisions commonly found in companies legislation, inasmuch as the NCA Act allows the recipient of a notice to claim to the person to whom he is required to produce the documents that he is entitled to refuse production (s 29(5)).  An adverse decision on that claim is the subject of an internal merits review (s 32(1)(b)), and to judicial review (s 32(2)).  The nature and extent of the provisions for determining an alleged entitlement to refuse to produce documents, particularly the internal review, suggests that the notion of “reasonable excuse” may be broader than common law privileges to the extent that they are preserved by s 30, and physical or practical difficulties in producing the documents called for by the Notice, particularly if “practical” difficulties is used in a narrow sense.

47                  I do not think that I am bound by the decisions of the High Court to which I have referred to find, or that I should otherwise find, that the structure of the NCA Act is such that “reasonable excuse” is confined to physical excuse (eg documents cannot be found or insufficient time allowed) and the specific categories of legal excuse referred to in s 30.  To the extent to which the structure of the NCA Act provides guidance on the question, it points in a different direction.  The result is that a value judgment has to be made in the circumstances of each individual case, as to whether the recipient of the Notice has a reasonable excuse, in the sense that this term is ordinarily understood, for not producing the documents in question.  If the range of factors which may be taken into account in making that judgment is as the Privy Council suggests, not all of them may be known to the recipient of the Notice at the time when production of the documents is called for, and each case may be highly sensitive to its own facts.  However, I should follow the decision of the Privy Council, which involves the making of an objective determination as to the existence or otherwise of a reasonable excuse.

The excuse relied upon

48                  “ ...  [I]t is no light matter to enforce Australian laws in circumstances which infringe the legislative policies of other countries”, particularly where the body against whom enforcement is sought has not acted in bad faith, or with the deliberate object of circumventing Australian law: Australian Securities Commission v Bank Leumi Le–Israel (Switzerland) & Others (1996) 69 FCR 531 at 552-3 per Lehane J.  In the same case, but  at first instance (Australian Securities Commission v Bank Leumi Le-Israel & Others (1995) 134 ALR 101 at 148) Sackville J expressed the view that in general, Australian Courts should strive, so far as is consistent with Australian legislation, to avoid a situation where an individual or corporation is caught between the conflicting requirements of Australian law and foreign law:

“In particular, if a foreign corporation finds itself unable to comply with the requirements of Australian law, because it has been unavoidably placed in a position where to do so would conflict with the law of the country in which it does business, an Australian court would regard this as a very powerful reason to excuse a contravention of Australian law.”

In the particular circumstances of the case, Sackville J declined to exercise the statutory power to excuse contravention of Australian law.

To similar effect are the observations of the United States Court of Appeals for the District of Columbia Circuit in Societé Internationale v Rogers (1958) 357 US 197:

It is hardly debatable that fear of criminal prosecution constitutes a weighty excuse for non production [of documents on discovery], and this excuse is not weakened because the laws preventing compliance are those of a foreign sovereign.”

(At 211.)

49                  Since Rogers, US lower courts have engaged in a case by case balancing exercise to determine when to accept as a defence to discovery or subpoena demands, the contention that foreign law forbids the production of the documents in question: see Neate, Bank Confidentiality (2^nd Edn) 1997, 536-8.  The Restatement of the Law Third, The American Law Institute, The Foreign Relations Law of the United States § 442(1)(c) suggests that in deciding whether to issue an order requiring production of information abroad, a United States Agency or Court should take into account:

Ÿ                     The importance to the investigation or litigation of the documents requested.

Ÿ                     The degree of specificity of the request.

Ÿ                     Whether the information originated in the United States.

Ÿ                     The availability of alternative means of securing the information.

Ÿ                     The extent to which non-compliance with the request would undermine important interests of the United States.

Ÿ                     The extent to which compliance with the request would undermine important interests of the state where the information is located.

50                  In In the matter of Two Grand Jury Subpoenas Duces Tecum Served Upon Union Bank of Switzerland (1993) 601 NYS 2d 253 the Supreme Court of New York set aside Grand Jury subpoenas where compliance would involve the Swiss Bank in violation of Swiss secrecy laws, and where the documents could be obtained within 2-3 months by application to the Swiss authorities.  Weissberg J held that before the Bank would be required to engage in conduct which violated Swiss secrecy laws, the Court would need to be satisfied, considering the comity involved, that the information was crucial to the Grand Jury investigation; that the information cannot otherwise be obtained in a timely fashion, and that there was a failure of good faith attempts on the part of the Bank to comply with the subpoena.

51                  On the other hand, in In re Grand Jury Proceedings; United States v Field (1976) 532 F 2d 404 the United States Court of Appeals of the Fifth Circuit began with the proposition that the fact that obedience to the subpoena would subject the witness to criminal prosecution in his country of residence was insufficient of itself to prevent enforcement of the subpoenas.  The Court then undertook a balancing exercise in relation to the interests involved which it resolved in favour of assisting the Grand Jury to obtain information which might possibly uncover criminal activities of the most serious nature.  Whilst reasonable efforts should be made to avoid placing a person in a position whereby obedience to one law results in a breach of another:

“... this court simply cannot acquiesce in the proposition that United States criminal investigations must be thwarted whenever there is conflict with the interest of other states.”

52                  Field was followed by the Eleventh Circuit in In re Grand Jury Proceedings; United States v The Bank of Nova Scotia (1982) 691 F 2d 1384 and applied to a situation in which the subpoena called for the production to the US Grand Jury of documents located in the foreign country, rather than testimonial evidence.  The Court rejected the proposition that application should be made to the foreign court for an order permitting disclosure because of the cost in time and money involved and the uncertainty of success.  The United States ought not to be put in the position of seeking the permission of a foreign court to be allowed to do something which is lawful under United States law.

53                  In Brannigan the Privy Council referred to the decision of the Ontario Court of Appeal In re Spencer and The Queen (1983) 145 DLR (3d) 344.  That case went on appeal to the Supreme Court of Canada (1985) 21 DLR (4^th) 756, but the appeal was dismissed.  A witness was required to testify notwithstanding his exposure to conviction under foreign law.  Estey J agreed with the majority, but indicated that, in his view, it would have been preferable for the proceedings at first instance to have been stayed, so as to allow application to have been made to the foreign court for an order permitting disclosure of the evidence sought to be adduced.

54                  ALRC Report No 80, Legal Risk in International Transactions, refers to the balancing exercise undertaken by courts in the USA between the interests of the US plaintiff as litigant and the integrity of any US laws involved in the dispute on the one hand, and any interests of the foreign bank and the foreign jurisdiction on the other.  The report states (4.24) that in England, the balancing approach has been supplemented by an emphasis on the sovereignty of the foreign state, and the legitimate interests of professional confidentiality.  MacKinnon v Donaldson, Lufkin and Jenrette Securities Corporation (1986) 1 Ch 482 was cited in support of that proposition.

55                  MacKinnon v Donaldson, Lufkin and Jenrette Securities Corporation concerned a subpoena and order served upon Citibank in London (which was not a party to the proceedings) to produce books and papers held in its New York office, relating to transactions that took place in New York on an account maintained by a Bahamanian company.  Hoffmann J held that, exceptional circumstances apart, a court should not require a foreigner to produce documents which are outside the jurisdiction, concerning business transacted outside the jurisdiction:

“The principle is that a state should refrain from demanding obedience to its sovereign authority by foreigners in respect of their conduct outside the jurisdiction.”

(At 493.)  Banks are in a special position because documents which they hold relate not only to their own affairs, but also to the affairs of their customers.  A duty of confidence is owed to the customer, regulated by the law of the country where the account is kept.  That duty is, in some countries, reinforced by criminal sanctions:

“If every country where a bank happened to carry on business asserted a right to require that bank to produce documents relating to accounts kept in any other such country, banks would be in the unhappy position of being forced to submit to whichever sovereign was able to apply the greatest pressure.”

(At 494.)  Application to secure production of the documents could have been made to the courts in New York.  His Lordship held (at 499) that where alternative procedures are available, an infringement of sovereignty can seldom be justified except, perhaps, on the ground of urgent necessity.

56                  FDC Co Ltd v The Chase Manhattan Bank NA (1990) 1 HKLR 277 is a decision of the Court of Appeal in Hong Kong, to similar effect.  A subpoena had been issued by the United States Internal Revenue Service against the Bank in America designed to obtain information about the account maintained by the plaintiff, an American firm, with the Hong Kong branch of the defendant Bank.  The Court held that a Bank’s duty of confidence is not subject to territorial limits, and it restrained the defendant from complying with the subpoena, and from transferring the information to the USA.  The Court recognised the dilemma in which the Bank found itself – if it transferred the information to the USA it might be prosecuted in Hong Kong; if it did not do so it might be proceeded against in New York for contempt.  Nonetheless, the Court declined to treat that difficulty as an overriding factor, and was not persuaded that the importance which the law of Hong Kong attaches to the preservation of the confidence between the Bank and its customers is outweighed by other interests to which the law attaches importance.

57                  These cases focus on the circumstances in which courts will or will not allow their own procedures to be used to compel the production of documents or disclosure of information where production or disclosure is forbidden by foreign law.  They are not directly applicable where the question is whether a person has a reasonable excuse for not complying with a notice lawfully issued by a body such as NCA.  But where the excuse relied upon is the commission of an offence under foreign law they provide some assistance by way of analogy.

58                  It was accepted by the Bank that the documents called for by the Notice are relevant to the inquiry being conducted by the NCA pursuant to the Ministerial reference.  I have no evidence as to the importance of the documents to that investigation.  It may be that until the documents are produced and examined, any assessment of their importance would be little more than speculation.  I mention the absence of evidence on this topic to indicate that, whilst the onus lies on the Bank to establish a reasonable excuse, it may be incumbent on NCA to bring forward evidence of a particular matter if it wishes to rely upon it, having regard to the fact that NCA has joined in the adoption of the declaratory procedure so as to determine whether, in the particular circumstances of the present case, foreign law provides a reasonable excuse for non-production of the documents in question.

59                  The most important factor, in any balancing exercise, is that the documents called for by the Notice relate to transactions undertaken by, or in relation to, the Bank in Australia, with persons in Australia, where the records which once existed in Australia relating to those transactions have either been destroyed, or removed, to Malta because it was convenient for the Bank to proceed in that way.  I use the expression "transactions undertaken by, or in relation to, the Bank" so as not to convey any view as to whether the Bank was or was not conducting the business of banking in Australia in the years in question, as that matter has not been the subject of submissions by either side.  And it will be recalled that I have already found that the Bank’s procedures were not adopted for the purpose of circumventing investigation of the Bank or its customers by Australian regulatory authorities.

60                  In those circumstances, a reasonable person would conclude (subject to the issue of the availability of alternative means of securing the information in question, to which I shall return), that the Australian public interest in the investigation of criminal activity in Australia, possibly involving organised crime, outweighs any public or private interest in the maintenance of banker/customer confidentiality under the laws of Malta.  This is particularly so when those laws themselves recognise that the confidentiality of that relationship is, in some circumstances, to be displaced in favour of the investigation and prosecution of particular criminal activity, and when it is suspected that the Australian banking system has been used in connection with criminal activity, or the proceeds thereof.

61                  Accordingly, I would hold that (subject to the issue of alternative availability) even if there is a real and appreciable risk that for the Bank to produce the documents called for by the Notice would involve it in the commission of an offence under Maltese law, that would not constitute a “reasonable excuse” for non-production of the documents in question.  That is so whether or not the proviso to s  257 of the Criminal Code, referred to at paragraph 30 above, provides an available defence.  If it does, then that would provide an additional reason for coming to that conclusion.

62                  Does it make any difference if the NCA is able to obtain the documents the subject of the s 29 Notice by means of an investigation order issued by the Criminal Court of Malta under s 8A of the Prevention of Money Laundering Act 1994?  In one sense it may seem odd that the existence of an alternative means of obtaining the information in question should provide a reasonable excuse to the recipient of a Notice for not producing the documents, if the NCA decides to proceed by that route.  It is for the NCA to decide how it will proceed, and unless the decision to proceed by one means rather than another is vitiated by Wednesbury unreasonableness, the existence of an alternative is of no avail to the recipient of the Notice.

63                  But the Courts have treated the availability of alternative means of securing the information in question, which does not involve any risk of prosecution under foreign law, as relevant to the issue of whether the Court’s processes should be used to compel its production.  And the weighing exercise to which the Privy Council referred to in Brannigan would be undertaken on a false basis if there were left out of account the fact (assuming it to be a fact) that the information sought could be obtained by another means which would not expose the recipient of the Notice to the risk of prosecution, without materially adverse consequences to the inquiry.

64                  Accordingly, I would hold that if NCA could obtain the documents called for by the Notice by means of an investigation order under Maltese laws, without materially adverse consequences to its inquiry, then a real and appreciable risk of prosecution under Maltese law if the documents were produced to NCA pursuant to the Notice, would constitute a reasonable excuse for non-production of the documents in question.

65                  NCA has submitted that the true operation of Maltese law is that it cannot obtain the documents in that way.  This issue was raised for the first time in closing submissions.  To that issue I shall return.  But a consequence of the NCA's participation in the declaratory procedure is that the responsibility for adducing evidence as to any prejudice to the inquiry, should the NCA proceed to seek an investigation order under Maltese law, falls upon it.  It is beside the point that if the matter had proceeded in a different way it would have been the NCA, rather than the Federal Court, which would have been charged with the responsibility of determining the factual question of prejudice to the inquiry.

66                  My attention has not been directed to any reasons put forward by the NCA in correspondence, for not taking up the offer made on behalf of the Bank in its solicitor’s letter of 9 November 1998 (referred to at par 19 above) to co-operate with the making of an application by Australian authorities in the Maltese Courts.  Whilst the second respondent, in his reasons for decision given on 26 February 1999 stated that he had “a clear duty” to weigh up the competing questions of the NCA’s investigative needs and the matters put forward by the Bank’s solicitors, including possible breaches of Maltese law and alternate sources of information, he did not thereafter advert to the possibility of an application being made to the Maltese authorities, or mention any adverse effects to the investigation should NCA proceed in that way.

67                  The second respondent swore an affidavit on 13 May 1999 designed to establish that the s 8A procedures were not available because the information then available to the NCA did not identify the commission of any relevant offence, nor did it identify any particular suspect person in relation to any offence, upon which an application could be made to the Maltese Attorney-General for assistance.  No other reference was made to any adverse consequences for its inquiry if NCA was to proceed in that way.

68                  In cross-examination, Mr Melick indicated that any application to the Maltese Attorney-General would be made through the Attorney-General’s Department on behalf of the NCA through the mutual assistance scheme.  He got no advice as to the time it would take to make such an application and obtain the documents under Maltese law.

69                  Mr Melick gave the following evidence at T p 30:

“To do that, your Honour, I’ve got to explain how we make mutual assistance requests, that’s all.  The Attorney-General’s Department makes mutual assistance requests on our behalf.  They refer to the Mutual Assistance Act and they insist that we have a suspect, a series of evidence and that we can show that the evidence we get from another country will materially assist in the prosecution of that offender.  If you don’t get to that threshold, they’re not interested.

MR PEMBROKE:       Because of the opinion which you’ve expressed about your lack of satisfaction about sufficient evidence to prove the commission of an offence involving the Bank of Valletta, you don’t think that the mutual assistance program can be enlivened? --- It’s a question of law whether or not it can be enlivened or it’s a matter of practicality, I don’t think it can be.

The practicality gets back to your opinion about the lack of sufficient evidence to prove the commission of an offence? --- Yes, it does.”

And at p 34 Mr Melick gave the following evidence under cross-examination:

“When a fresh notice was issued in 1998, did you take steps to make any inquiry from persons expert in Maltese law as to the availability of the procedure which is now being considered? --- No, because I considered the procedure to be completely impractical.

Is that because of the evidence you have given this morning, based upon your opinion as to the sufficiency of the evidence to prove the commission of an offence? --- In part, that was one of the reasons.  The other reason was my experience with such applications which can take up to seven years to complete.  The average time of a mutual assistance application, of the ones I’m aware of in our office at the moment, is several years, and we have one that has gone for eight years now.”

70                  Mr Melick justified not seeking advice as to the Maltese position on the basis that the NCA had enough experience with the “Mid Med Bank applications which got us nowhere”.  But those applications related to the enforcement of forfeiture orders.  What was proposed here was an application for an Investigation Order made with the co-operation of the Bank which would be the subject of the Order.  Mr Melick professed to have a general understanding, based on some advice from a Maltese friend of his, presumably at about the time of the Mid Med application that:

“... in places like Malta, Guernsey, Israel, Switzerland, Cayman Islands; any organisation; any country which has a banking system designed to facilitate free trade, and I think it is probably to express it, that the courts make it very difficult for an MA request to succeed and I’m not aware of even a simple MA request which hasn’t even opposed being achieved in under 18 months to two years.”

71                  Mr Melick was present when Dr Muscat gave evidence to the effect that he had no reason to think that the documents called for by the Notice could not be obtained by utilising the procedures set out in s 8A of the Prevention of Money Laundering Act.  Dr Muscat was not cross-examined upon that contention.  It is self evident that there would be some cost and some delay associated with the making of an application.  However, in the light of the failure to cross-examine Dr Muscat, and the generally unspecific nature of the understanding to which Mr Melick referred, and the failure to advert to any practical problems associated with making an application to the Maltese authorities in the correspondence, or in the second respondent’s decision, or in the evidence in chief, I am not satisfied if NCA can obtain the documents called by the Notice by means of an investigation order under Maltese law, that any materially adverse consequences would flow to the NCA’s inquiry, or that the inquiry would be materially prejudiced by pursuit of that course.

The role of the expert

72                  The content of foreign law is a question of fact about which evidence is receivable.  Divergent views have been expressed as to the process by which the local court resolves a conflict between the expert testimony, and the extent to which the local court is entitled to examine the text of the foreign law for itself.  TristramHodgkinson, Expert Evidence Law and Practice 1990 at p 306 refers to the “constructionist” approach and the “factual” approach to the resolution of the problem.  On the former approach, where there is no satisfactory expert evidence, or an unresolved conflict between expert witnesses, then the judge should proceed to construe the foreign law himself.  On the factual approach, it is impermissible for the judge to construe the foreign law for himself.  Any conflict between experts is to be resolved in the same manner as any other factual contest.

73                  Illustrations of the factual approach are to be found in Adsteam Building Industries Pty Ltd v The Queensland Cement and Lime Company Ltd (No 4) (1985) 1 Qd R 127 at 141, and in Medina v Copenhagen Handelsbank International SA (unreported, Spender J, 10 March 1989) at 16.  However, in Scruples Imports Pty Ltd v Crabtree & Evelyn Pty Ltd (1983) 1 IPR 315 Powell J analysed the role of the expert as follows (at 325):

“... the task of identifying what is the relevant law and of expounding what, in general terms, is its meaning and effect, is, primarily, the task of the expert witness; ... if, in a case in which the relevant law is reduced to writing, which writing becomes part of the evidence, the expert witness fails to demonstrate how the law has been interpreted and applied, or essays an exposition which provides no assistance as to its interpretation (see, for example, Williams v Usher (1955) 94 CLR 450 at 453-4) or which produces results which might be regarded as bizarre, the court is free to interpret the law for itself according to the rules of statutory construction normally applied in this court: ...when expert witnesses have given conflicting views on the question, the court must resolve the question for itself, if need be by undertaking a like exercise.”

74                  It was common ground between the parties to these proceedings that what I have referred to as the constructionist approach was the appropriate process by which to resolve conflict in the expert evidence in the present case.  That is consistent with the decision of Powell J.  In Williams v Usher at 454 the parties were agreed that the foreign law was contained in a particular text and the court considered that it was entitled to look at the relevant provisions and to consider their proper meaning without the assistance of expert evidence.

75                  Accordingly, I consider the approach explained by Powell J to be correct, and that I am entitled to have regard to the terms of the Maltese statutes which have been tendered in evidence, in resolving the difference in expert opinion.

Maltese law – revisited

76                  It is not self-evident that either s 257 of the Criminal Code, or s 34(2) of the Banking Act apply to the Bank itself as opposed to its officers and employees.  However, both experts proceeded upon the basis that this was so, and I shall do likewise.

77                  Each section makes it unlawful to “disclose” certain information unless one of the statutory exceptions is operative.

78                  The applicant contends that production of its documents in compliance with the Notice would contravene these provisions, either because the offence is committed in Malta, as the place from which the information is dispatched, or because the relevant provisions have extraterritorial operation.  The respondent contests each of these propositions. 

79                  In his original report, Dr Muscat did not directly address the issue of the place at which disclosure occurred.  Nor did Dr Fenech directly address that issue in his report, although the underlying assumption of his report was that disclosure would occur outside Malta, but that would not involve the Bank in the commission of any offence against Maltese law, as the relevant laws did not have extraterritorial operation.

80                  In his report in reply Dr Muscat expressed the opinion that disclosure by the Bank of the information called for by the Notice would constitute an offence committed in Malta.  That was because conduct essential to the commission of the offence, namely the release and dispatch of the information by the Bank would occur in Malta and because, in the application of Maltese law, considerable weight should also be given to the place where the harm proscribed by the offence occurs.  In expressing those views Dr Muscat relied upon R v Treacy [1971] AC 537 and R v Markus [1976] AC 35.

81                  It was not sought to adduce evidence by way of rejoinder from Dr Fenech, nor was Dr Fenech cross-examined.  Nonetheless, it seems to me that there is a conflict in the expert evidence as to whether, if the Bank were to respond to the Notice, there would be the commission of an offence in Malta, and as to whether the Maltese statutes have extraterritorial operation.  That is a conflict which I have to resolve myself taking into account the views of the experts and my own assessment of the effect of the statutes in question.  Maltese law is in part derived from or based upon English law.  The authorities relied upon by Dr Muscat in support of his opinion are English authorities.  Neither expert has suggested (subject to one qualification to which I will later refer) that matters peculiar to the civil law, on which aspects of Maltese law are also based, are germane to the resolution of the present problem.

Disclosure

82                  In Foster v Federal Commissioner of Taxation (1951) 82 CLR 606 Latham CJ held (at 615):

“Disclosure consists in the statement of a fact by way of disclosure so as to reveal or make apparent that which (so far as the ‘discloser’ knows) was previously unknown to the person to whom the statement was made.”

Similarly, in Federal Commissioner of Taxation v Westgarth (1950) 81 CLR 396 Fullagar J held (at 415-416):

“Apart from the ancient saying that ‘lex non cogit ad impossibilia’, both the etymology of the verb ‘disclose’ and its normal popular use involve, in such a context, the idea of revealing to others something which is known to oneself.”

83                  The context to which Fullagar J averted was that of a statutory obligation to make “a full and true disclosure” for death duty assessment purposes.  Foster concerned a statutory requirement for “full and true disclosure” of all material facts for income tax purposes.  Whilst the factual matrices of these cases are far removed from the case at hand, in my opinion, the above passages are in point.  The word “disclose” is not a term of art.  Central to “disclosure” is the concept of revelation.  One cannot reveal something to no one.  It follows that the place of disclosure would ordinarily be the place at which an otherwise unknowing recipient has information revealed to him or her by an informed person.

84                  In Thompson v Riley McKay Pty Ltd (No 2) (1980) 42 FLR 279 Deane J observed (at 289):

“It is implicit in the ordinary use of the word “represent” that there be an intended representee, to whom the relevant representation is directed.”

In this sense representations are somewhat analogous to disclosures.  But Deane J added the following qualification (at 289):

“There is not, however, implicit in the word ‘represent’ any requirement that the representation actually reach, or be understood by, the intended representee.  The act of representing is complete once the subject matter is irrevocably set forth or disseminated upon the course which is intended to lead to the intended representee or representees.”

This may be taken to suggest that a representation can occur at the place of its dissemination and need not be conveyed to the intended representee.  There is authority inconsistent with such a suggestion: see Diamond v Bank of London and Montreal Ltd [1979] 1 QB 333 at 345-346 and Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 44 FCR 485 at 493.

85                  Regardless, in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 the High Court held that the place of a representation is not ascertained by application of any general rule.  Instead, where a representation is made in any given case is to be determined by reference to the relevant events and asking where, in substance, the act took place: Voth at 568.  In Voth the representation in question was an omission by an accountant in Missouri, USA to provide certain tax advice to a company incorporated and resident in New South Wales.  The High Court held that that failure, which may have been tortious, was, at least, initiated and completed in Missouri and therefore, in substance, occurred in Missouri.

86                  A Full Court of this Court applied Voth in a trade practices context in Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539.  Relevantly, in Sydbank a person in Australia (A) made a telephone call to a person in Denmark (D).  In the course of discussion D made representations which were later acted on by A in Australia.  A’s employer sued D’s employer for damages alleging misleading and deceptive conduct.  The Full Court held (at 547) that the representations were made in Australia because A made enquiries from Australia and acted upon the same in Australia.

87                  Whilst representing and disclosing are not congruous acts, as noted above, they do bear similarity, such that even if it cannot be said that the place of disclosure is ordinarily the place at which an otherwise unknowing recipient has information revealed to him or her by an informed person, one can look to the “substance” test in Voth for guidance.  In the present case the documents to be disclosed are situated in Malta.  They are sought by an Australian statutory body to facilitate investigations being conducted in Australia.  They concern transactions conducted by persons resident in Australia in Australian currency with an Australian bank.  The contents of the documents would not be revealed other than in Australia.  In all these circumstances the act of disclosure would occur in Australia.  Certainly the substance of any disclosure takes place in Australia.

88                  A simple example demonstrates the point.  Assume documents are sent in a sealed package from Malta to Australia for the purpose of production in accordance with the Notice.  Then, on their arrival, the first respondent decides not to rely on the Notice.  So the documents are simply returned in the unopened sealed package to Malta.  It cannot be said that any disclosure has taken place.  Whilst the documents were sent from Malta with the intent of answering the Notice, they were not disclosed by this action.  Disclosure would only have taken place if the seal of the package was at some stage broken and the contents of the package revealed.  If the place at which this had have occurred was Australia, then Australia would be the place of disclosure.

89                  Dr Muscat gave evidence to the effect that the release of documents from Malta would constitute a disclosure because such conduct was essential to the commission of the relevant offences.  He cited R v Treacy [1971] AC 537 as authority for this proposition.  In that case the House of Lords held by a majority of 3 to 2 that a written demand was made at the place of posting rather than receipt.  The case concerned the construction of s 21 of the Theft Act 1968 (UK) and turned on the construction of the words “makes any unwarranted demand”.  As the High Court observed in Austin v The Queen (1989) 166 CLR 669 at 675, insofar as making a demand is concerned:

“[i]t is the behaviour of the offender in making a demand with menaces or threats which is the gist of the offence ...” [emphasis added].

For this reason their Honours held that the offence of demanding money with menaces or threats is complete when the demand has been made in circumstances apt to achieve its communication to the person to whom the demand is directed and with the necessary intent.

Demanding something of someone and disclosing something to someone are quite distinct acts.  A blackmailer considers himself or herself as having made a demand at the time of its dissemination.  By its nature a demand is complete upon issuance.  It is a request commanding observance.  Whether compliance ensues may have certain consequences but it does not alter the fact that the demand has been made.  In sharp contrast, as I have already indicated, one cannot make a disclosure to no one.  The essence of disclosure is the revelation to the unknowing.  Accordingly, the place of disclosure is the place of revelation.

90                  Reliance by Dr Muscat on R v Markus [1976] AC 35 is misconceived.  That case (at 61) refers to the well established rule that in the case of a “result crime” in English law, the offence is committed in England and justiciable by an English court if any part of the proscribed result takes place in England.  That does not lead to the consequence that a breach of s 257 or s 34(2) occurs in Malta, when there is a disclosure in Australia, because of some consequential erosion of the trust which people in Malta place in the confidentiality of the banking system.

91                  There are authorities in other countries which propose that the release of information constitutes disclosure at the place of release: see Frischke v Royal Bank of Canada (1977) 17 OR (2d) 388 at 399 and FDC Co v Chase Manhattan Bank at 284.  These cases suggest that the sending of information protected by confidentiality obligations (that a bank owes to its customers at general law) amounts to a disclosure because, if it were otherwise, a bank could readily evade its secrecy obligations.  The secrecy obligations which a bank owes to its customers under the civil law are not subject to territorial limitations.  But whether a bank, or anyone, has committed an offence by transgressing a statutory provision is to be determined by process of statutory interpretation.  Either a person offends the statute, as a principal or as an accessory, or not.  This does not leave scope for any doctrine of incrimination on the basis that the ambit of proscribed conduct should be broadened so as to ensure that persons cannot circumvent the law.

92                  The applicant also placed reliance on the decision of McPherson J in Adsteam Building Industries Pty Ltd v The Queensland Cement and Lime Company Limited (No 4) (1985) 1 Qd R 127.  In that case an order for further discovery was sought against a Swiss corporation.  An expert in Swiss law swore that the production in Queensland of the documents sought would offend a Swiss statutory provision aimed at protecting commercial secrets.  That evidence was uncontroverted and was accepted by McPherson J.  On the basis that production of the documents in question would constitute a Swiss offence, his Honour proceeded to consider who would be liable.  That is, whether the person responsible for sending the documents from Switzerland would be liable, or only the agent producing the documents in Queensland.  On this point there was no evidence.  So McPherson J resorted to provisions of the Queensland Criminal Code which were assumed to be applicable.  In particular, McPherson J had recourse to s 12(1) of the Code which stated that it was sufficient for the initial element of an offence to be committed in Queensland to render the person acting guilty.  His Honour also relied upon s 7(d) of the Code which proscribed conduct accessorial to criminal conduct.

93                  I do not consider Adsteam as particularly instructive for present purposes.  In Adsteam the question of whether the production of documents would constitute an offence was resolved in the affirmative by expert evidence.  To whom that liability extended was then determined by the court by reference to Queensland law.  Here, the expert evidence conflicts as to whether compliance with the notice would amount to an offence.  Dr Muscat says the release of documents from Malta for production in Australia would be an offence.  Dr Fenech disagrees.  Regardless of which expert’s view is preferred, the issue requiring resolution is whether compliance with the notice would constitute the relevant offences; not who would be guilty, assuming an offence is committed.  Adsteam does not assist in determining the competition between the competing expert views.

Extraterritorial operation

94                  The experts generally agreed that Maltese criminal law is territorial in its operation absent a statutory intention that it should have a wider effect.  Thus, prima facie, Maltese criminal law only applies to offences committed in Malta.  Defences expressed in terms of obedience to a law or order of a court are, prima facie, to be taken as referring to a Maltese law, or to an order of a Maltese court.

95                  The point of difference between the experts is that, in the view of Dr Muscat, a legislative intention that s 257 of the Criminal Code applies to disclosures of secret information abroad can be discerned:

Ÿ                     from s 5 of the Criminal Code, and

Ÿ                     from the proviso to s 257.

Dr Muscat did not express the view that s 34(2) of the Banking Act had an extraterritorial operation.

96                  Section 5(1) of the Criminal Code specifies the circumstances in which a criminal action may be prosecuted in Malta according to the laws thereof.  It essentially follows a strict territorial application, except for particular instances which are specifically mentioned, sometimes by reference to the section number of the Criminal Code which creates the offence in question.  Section 257 of the Criminal Code is not included.  That may be contrasted with the offence mentioned in s 133 of the Criminal Code (which is specifically referred to in s 5).  Thus should any public servant wrongfully disclose any official secret to any person outside of Malta, then the Maltese courts will have jurisdiction to hear a criminal action brought against the offender by virtue of the fact that the offence described in s 133 is specifically mentioned in s 5(1)(d) of the Criminal Code.

97                  However, s 5(1)(d) of the Criminal Code also includes the following:

“5(1)   A criminal action may be prosecuted in Malta, according to the laws thereof –

(d)               ... against any citizen of Malta ... who in any place ... shall have become guilty ... of any other offence against the person of a citizen of Malta.”

98                  In the view of Dr Muscat, a breach of professional secrecy is regarded by Maltese law as an offence against the person, and subject to prosecution even though the offence takes place outside Malta, as long as the “victim” of the disclosure is a citizen of Malta (or a permanent resident of Malta).  Assuming that at least some Australian customers of the Bank who made deposits into the vostro account in the period in question, were and are citizens of Malta, then the requirement that the offence must be committed “against the person” of a citizen of Malta will be satisfied.

99                  No evidence was adduced from Dr Fenech on this issue, but neither was he cross-examined so as to put Dr Muscat’s viewpoint to him.  The Solicitor-General put the following to Dr Muscat (T p 60):

“I want to put this example to you and ask you if in your view this would be an offence in Malta.  A Maltese citizen migrates to Australia which is his permanent home, his permanent residence and he is employed by the Commonwealth Bank.  While employed by the Commonwealth Bank, he discloses a secret relating to a banking transaction, having nothing to do with Malta but in breach of his Australian obligations to the Commonwealth Bank, he discloses that in relation to a customer who is also a citizen of Malta.  You say he has committed an offence under Maltese law for which he can be prosecuted in Malta? --- Right.  So let me go through that again with paragraph (d) in mind.  Paragraph (d) requires that the offences committed by a Maltese citizen ---

He is that? --- And he is that against the person now a breach of professional secrecy is an offence against the person, against a citizen of Malta and the customer would be a citizen of Malta.  In that case, the natural conclusion would be that a judicial prosecution could arguably be instituted in Malta.  It would be unlikely obviously in the circumstances but, yes, I think the Maltese courts would have that jurisdiction.”

That raises at least a question in my mind whether the view for which Dr Muscat contends is correct.  That is particularly so, as one would not, at least from an Australian viewpoint, ordinarily regard a breach by a bank of secrecy obligations as an offence against the person.

100               However, Dr Muscat gave the following evidence (at T p 58):

“You say in 4.1, paragraph 2, just below halfway down the page:

            ‘The Criminal Code makes it clear that the offence of breach of professional secrecy is an offence against the person.’

Do you get that from anything other than the heading? --- I get that from two sources actually.  To begin with, the way that the Criminal Code is structured is that it divides all the offences into a number of divisions, into a number of categories.  Example, there are a number of sections collectively referred to as crimes against the Government.  There are other sections collectively referred to as crimes against the goodwill of families.  Now, there is also a number of sections which are entitled of crimes against the person.  Now, within that particular category there are a number of specified offences.  Top on the list obviously would be wilful homicide, voluntary bodily harm, and so on.  Within that list there is also defamation and the disclosure of secrets.  There is no doubt in my mind that all these offences are considered to be as offences against the person.  Not just, however, because they find themselves within this category in the way that the Code is organised but also because this has been the view expressed by the most eminent author on criminal law in Malta this century when he discusses this particular aspect – in particular he refers to Italian authors, I believe there is Carrara on this, and he concludes that a number of offences fall within the general framework of the offences against the person.  And he specifically includes the disclosure of secret information as one of those offences.”

101               Whilst the respondent invited me to reject Dr Muscat’s evidence on this issue, I do not think that I am equipped to do so.  The only sections of the Criminal Code in evidence are ss 5 and 257.  I do not have the other sections of the Code referred to in s 5(1)(d).  I do not have the texts on which Dr Muscat relies (except for Exhibit E).  Nor do I have any contradictory evidence from Dr Fenech.  Whether Maltese law regards a contravention of s 257 as an offence against the person involves a level of familiarity with that law and apparently with civil law concepts, which I do not have, and which Dr Muscat clearly does.

102               Accordingly, absent specific contradiction, I accept Dr Muscat’s evidence on this point.  It therefore follows that I am satisfied on the evidence that a disclosure by the Bank in Australia of secret information could involve the Bank in a contravention of s 257, if the information relates to persons who were at the time of the transactions in question, and are at the time when disclosure is required, citizens of Malta or permanent residents of Malta.  Whilst there is no direct evidence that this is so, the general nature of the Bank’s operations during the period in question are such that it is a reasonable inference that at least some of the transactions would be with persons who satisfy that description.

103               It is therefore unnecessary for me to reach a view upon the effect of the proviso to s 257.

Alternative means of securing the information

104               The question is whether NCA can obtain the documents referred to in the Notice by means of a request to the Attorney-General of Malta pursuant to s 8A of the Prevention of Money Laundering Act 1994, resulting in an investigation order being made against the Bank for the production of the documents in question (see pars 31 and 32).

105               NCA is not a judicial or prosecuting authority of Australia.  Its functions are set out in s 11 of NCA Act.  It is an investigatory body operating in an inquisitorial manner.  The difference between the typical police investigation, and the method of operation of the NCA was described by the Full Court in National Crime Authority v A1 (1997) 75 FCR 274 at 284-285.  The concern is with possible, undiscovered and incomplete offences, rather than with the investigation of an offence known to have been committed by someone.

106               Whilst the NCA is not a judicial or prosecuting authority, I do not regard that as fatal to the availability of the s 8A procedure.  The Attorney-General of the Commonwealth is a prosecuting authority who would be entitled to make a request under s 8A without the need for specific Commonwealth legislation authorising or empowering the Attorney-General to act in that way.  The Attorney-General could do so at the request of the NCA.

107               It is not necessary that there be both a suspect, and a third person against whom the investigation order is sought.  If, for example, the Bank were a suspect, whether as a direct offender or as an accomplice, then an investigation order could be obtained against it.  In other words there is no reason why the “person” and the “suspect” may not be the same person or entity in particular circumstances. But the section can only operate if a person is suspected by the Australian authorities of conduct which, if committed in Malta, would constitute the offence of money laundering in connection with particular crimes such as drug and narcotics offences.

108               Whether the NCA, and any prosecuting authority whose assistance it might enlist, suspects that a person has committed an offence of the specified type is a question of fact:

“The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown.”

George v Rockett (1990) 170 CLR 104 at 115.

109               Dr Muscat’s original report, insofar as it dealt with s 8A, was properly and necessarily based upon an assumption that the NCA would qualify as a foreign “judicial or prosecuting authority” and upon an assumption that any request to the Attorney-General of Malta would be in respect of a person or persons suspected by the NCA of crimes which would attract the operation of the section.  I did not regard his evidence (T p 65) that he had no reason to think that the documents called for by the Notice could not be obtained by utilising the procedures set out in s 8A of the Prevention of Money Laundering Act as retracting those assumptions.

110               In a report dated 21 May 1999 Dr Muscat expressed the following opinion:

“In my opinion, a Maltese bank, which is suspected of being a party to a scheme that is a means of avoiding the provisions of the Financial Transactions Reporting legislation in Australia for customers who wish to conceal money in Australia from the Australian authorities by sending the monies overseas clandestinely, would, in my view, undoubtedly be a person suspected of an offence of money laundering within the meaning of s 3 of the PMLA, because of the extended operation of the definition of ‘money laundering’ in s 2 of that Act.  In this connection, I am assuming that the monies were sent overseas clandestinely because they directly or indirectly derived from a criminal activity or activities within the meaning of s 2 of the PMLA.”

But the issue is not one of the operation of Maltese law.  It is purely a question of fact.

111               Mr Melick has sworn to the following effect:

“At the time of the s 29 Notice dated 30 October 1998 the information then available to the NCA did not identify the commission of any relevant offence, nor did it identify any particular suspect person in relation to any offence, upon which an application could be made to the Maltese Attorney-General for assistance.”

112               The applicant complained that it was at a disadvantage in testing this evidence, because the raw material upon which that evidence was based was not exposed by Mr Melick, and Notices to Produce designed to elicit that material were met with the response that disclosure of the documents was prohibited either by specific statutory enactment, or by a claim for public interest privilege.  It was submitted that for this reason, I should either exclude the evidence of Mr Melick under s 135(a) of the Evidence Act 1995, or give it no weight, a course which I declined to adopt.

113               Given the charter of the NCA, and its method of operation, I do not find Mr Melick’s evidence to be inherently incredible or improbable.  I accept what he says.  Whilst the applicant referred to various references in the communications between the parties, and in Mr Melick’s report which might be consistent with the NCA possessing the requisite suspicion, they are not such as to cause me to reject Mr Melick’s evidence to the opposite effect.

114               Whether the NCA’s enquiries have matured to such a stage, that it suspects that a person has engaged in criminal activity of the requisite kind is peculiarly a matter for the NCA.  I do not mean that the NCA could pretend that it does not have the requisite suspicion, when in fact it does.  But whether the requisite suspicion exists may involve matters of opinion and degree.  Given my acceptance of Mr Melick’s evidence I am not satisfied that the necessary foundation exists for a request to be made of the Attorney-General of Malta to take the necessary steps to obtain an investigation order against the Bank.

Conclusion

115               Even though the Bank may be exposed to a liability under s 257 of the Criminal Code of Malta if it complies with the Notice issued by the NCA, that exposure does not establish a reasonable excuse for not complying with the Notice, for the reasons which I have given.

116               The respondent submitted that if I came to that conclusion, I should not simply dismiss the application, but I should declare that the Bank does not have a reasonable excuse for not complying with the Notice.  I take account of the observations of Cole JA in Ampolex at 542G-543B, but the Bank has asked the Court to determine whether its exposure to conviction under Maltese law constitutes a reasonable excuse for non-compliance with the Notice.

117               Accordingly, whilst I consider it to be inappropriate to make a declaration in the terms suggested by the respondent, I consider it is appropriate to declare that any operation which s 34 of the Banking Act 1994 (Malta) or s 257 of the Criminal Code (Malta) may have in relation to the Bank by reason of its compliance with the Notice styled “Notice to Attend and Produce to the National Crime Authority” issued by the second respondent on 30 October 1998, does not constitute a reasonable excuse for failing to comply with that Notice.

118               The application is otherwise dismissed with costs.

Associate:

Dated:              17 June 1999