FEDERAL COURT OF AUSTRALIA

Woodroffe v National Crime Authority [1999] FCA 1128

EVIDENCE – public interest immunity – principles governing claim.

PRACTICE AND PROCEDURE – affidavit of documents – application to cross-examine deponent on public interest immunity claim – whether Court will allow cross-examination.

PRACTICE AND PROCEDURE – application for further discovery – whether further discovery necessary.

PRACTICE AND PROCEDURE – application to strike out parts of defence.

National Crime Authority Act 1984 (Cth) ss 7, 13(1), 19A, 29, 51 and 59

Crimes Act 1914 (Cth) ss 3C and 3E

Income Tax Assessment Act 1936 (Cth) s 166

Evidence Act 1996 (Cth) ss130 and 130(4)

Police Act 1952 (SA) ss 19B(3) and 27

Federal Court Rules O 11 r 16 and 15 r 15

Taxation Administration Act 1953 (Cth)

Eastman v R (1997) 158 ALR 107 applied

Alister v R (1984) 154 CLR 404 considered

Sankey v Whitlam (1978) 142 CLR 1 applied

Conway v Rimmer [1968] AC 910 considered

Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359 applied

Young v Quin (1985) 4 FCR 483 applied

Australian Securities Commission v Zarro (1992) 34 FCR 427 considered

Commonwealth v Northern Land Council (1993) 176 CLR 604 considered

Jackson v Wells (1985) 5 FCR 296 considered

Seymour v Price (1998) 1224 FCA considered

Propend Finance Pty Ltd v Commissioner of Australian Federal Police (1994) 72 A Crim R 278 considered

Rogers v Home Secretary [1973] AC 388 considered

Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 51 A Crim R 423 considered

Conway v Rimmer [1968] AC 910 applied

A v Hayden (1984) 156 CLR 532 considered

Gartside v Outram (1856) 26 L.J. Ch 113 considered

Allied Mills Industries Pty Ltd v Trade Practices Commission (1981) 55 FLR 160 considered

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 considered

Mulley v Manifold (1959) 103 CLR 341 considered

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 applied

Dey v Victorian Railways Commissioners (1949) 78 CLR 62 applied

JENNIFER JEAN WOODROFFE & JAJ HOTELS PTY LTD v NATIONAL CRIME AUTHORITY, DEPUTY COMMISSIONER OF TAXATION & CHARLES MARK WILLIAMS

S 24 OF 1999

MANSFIELD J

20 AUGUST 1999

ADELAIDE

THE COURT ORDERS THAT:

1.                  The first and third respondents do make available to the applicants for inspection such of the documents discovered by those respondents in respect of which they claimed public interest immunity that record the process of decision of the third respondent to apply on 22 May 1998 for the issue of the warrant granted under s 3E of the Crimes Act 1914 (Cth).

2.                  In producing documents for inspection by the applicants in accordance with par 1 hereof, the first and third respondents may mark such parts of any such documents as do not relate to or touch upon the process of decision of the third respondent to apply for the warrant.

3.                  The first and third respondents are otherwise entitled to withhold from inspection by the applicants the documents discovered by those respondents in respect of which they claimed public interest immunity.

4.                  The application for further discovery by the applicants is refused.

5.                  The application to strike out parts of the amended points of defence of the second respondent is refused.

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

REASONS FOR DECISION

1                     On 21 May 1999, after giving my decision in relation to various interlocutory matters in these proceedings, I gave directions so that the matter could be ready for trial.  Those directions included directions concerning the filing and service of points of claim by the applicant, and the filing and serving of points of defence by the respondents, and the filing and service of affidavits of proposed evidence, and for discovery.

2                     However, further interlocutory issues have arisen between the parties involving

(1)               a disputed claim by the first and third respondents to public interest immunity in respect of certain discovered documents,

(2)               a claim by the applicants for further discovery, and

(3)               a claim by the applicants to strike out parts of the second respondent’s points of defence.

3                     For the purposes of ruling on those applications, it is necessary to have regard to the issues raised in the respective points of claim and points of defence.  I have considered those documents carefully.  The applicants’ points of claim are a little difficult to understand fully, in part because there are apparently a number of alternative ways expressed of making the same point and partly because they contain some general and unparticularised allegations of matters which do not apparently relate to the main thrust of their complaints.  Paragraph 28 of the points of contention contains a number of such allegations.  Paragraph 5 alleges that in late 1966 the first respondent “without lawful authority or proper reason and for improper motives and/or purposes” obtained access to certain financial records of the applicants from the Police Credit Union, and par 5A alleges that the second respondent also obtained access to that information but does not allege impropriety in him doing so.  It is unclear where those allegations then are said to take the applicants.

4                     The summary below is only an overview of the main thrusts of the applicants’ claims.

5                     It is alleged that the first and second respondents were empowered to establish a joint task force known as “Swordfish” in September 1997 to investigate the affairs of the first applicant and others, comprising amongst others, officers of the second respondent.  The third respondent, who is a member of the South Australian Police Force, was seconded to the first respondent and became a member of that joint task force.  Thereafter, information acquired by the joint task force was made available to the second respondent, and the second respondent provided information to the joint task force.  It is alleged that those exchanges of information were in contravention of secrecy provisions under applicable legislation including the National Crime Authority Act 1984 (Cth) (“the Act”).

6                     It is then alleged that in about November 1997, the first respondent sought, and in about February 1998 was granted, a further reference to investigate the affairs of the first applicant and others.  The applicants’ claim was that that reference was not valid or was improperly obtained because there was no foundation under the Act for it being granted.

7                     The third step in the allegations is that on 22 May 1998 the third respondent procured a warrant under the Crimes Act 1914 (Cth) to search certain premises associated with the applicants (“the warrant”).  It is claimed that the third respondent wrongly procured the warrant because, having been seconded to the first respondent, he was not entitled to use his status as a South Australian Police Officer to do so.

8                     It is also alleged that the third respondent had no proper suspicion or reasonable grounds for suspecting the matters alleged in the warrant, and that full disclosure of all relevant facts to the issuing magistrate “would have militated against the issue of the warrant”.  No facts or particulars of that allegation are given, and, as the applicants have not yet seen the material upon which the warrant was sought or granted, it is difficult to understand how that allegation can be made.  The second respondent, by named officers, is alleged to have had knowledge of those matters.

9                     The warrant was executed on about 25 May 1998.  That too is alleged to have been improper.  The warrant is alleged to have been altered by obscuring the name of the issuing officer and in one other respect by removing certain attachments.  As noted above, it is also alleged that the third respondent, who was the nominated executing officer, was not entitled to obtain the warrant.  At certain points the applicants refer to a number of warrants.

10                  The applicants also allege that, in February 1999, the second respondent “motivated by improper purposes and objectives” purported to issue notices of assessment and amended notices of assessment to the second respondent.  By then, the applicants had asserted to the second respondent that they considered the warrant had been illegally obtained and executed, and that the materials procured in its execution could not lawfully be provided to, or used by, the second respondent.  No other bases for the alleged improper purposes or objectives are identified, although the fundamental complaint is repeated and expressed in a variety of ways.  The consequences, as against the second respondent, are said to be that the information provided to the second respondent is not information for the purposes of s 166 of the Income Tax Assessment Act 1936 (Cth), and is not information which could be used for the purposes of that Act.  It is claimed, as a result, that any taxation assessment made using such information is “invalid and of no force or effect”.

The Claim for Public Interest Immunity

11                  The order for discovery was that the respondents should make discovery by 8 June 1999 of all documents or categories of documents appearing in a schedule to the order.  That schedule specified:

“1.    Any and all references which are or purport to be references pursuant to provisions of the National Crime Authority Act:

1.1               with respect to the applicants or either of them;

1.2               pursuant to which the National Crime Authority purported to act in investigating the applicants or either of them;

1.3               pursuant to which the National Crime Authority purported to act in obtaining the purported warrant dated 22 May 1998 (“the purported warrant”).

2.         Any and all affidavits, documents, evidence, transcript or other material or things which was or were in any way used or relied upon in:

2.1               deciding to apply for the purported warrant;

2.2               applying for the purported warrant;

2.3               executing or purporting to execute the purported warrant.

3.         Any and all documents evidencing or tending to evidence any communication or exchange or means or media or communication or exchange of information, documents or things between any respondent and any other respondent in so far as they relate to the provision of information concerning the applicants or either of them procured in the execution of the warrant referred to in paragraph 1 of the application as amended.

4.         Any and all decisions and/or authorisations by or from the Chairperson of the National Crime Authority relating to the release or dissemination of any information, document or thing, whether purporting to be pursuant to section 59 of [the Act] in so far as they relate to the provision of information concerning the applicants or either of them procured in the execution of the warrant referred to in paragraph 1 of the application as amended.

5.         Any and all signed instruments delegating or purporting to delegate to a number of staff of the National Crime Authority [all] or any of the Chairperson’s powers under sub-sections 59(7), (8) or (11), whether such instrument is signed or purported to be signed pursuant to section 59A of the NCA Act in so far as they relate to the provision of information concerning the applicants or either of them procured in the execution of the warrant referred to in paragraph 1 of the application as amended and in so far as such documents concern the provision of information to the second respondent.”

12                  That order was made after hearing submissions from the parties in relation to a “schedule of discovery categories” proposed by the applicants which was in very much more expansive terms.

13                  On 8 June 1999, the first and third respondents filed a list of documents in accordance with that direction.  Included in the documents discovered in Pt 1 of Sch 1 of that list of documents was a transcript of evidence of the third respondent before Mr Gurry SM on 20 May 1998 pursuant to an application for certain search warrants.  Schedule 1 Pt 2 of the affidavit of discovery claimed public interest immunity in respect of all documents in par 2 of the schedule of documents to be discovered.  It claimed that even the listing of those documents may render nugatory the claim for public interest immunity.  The applicants dispute that claim.

14                  The first and third respondents have filed, and rely upon, three affidavits of Marshall Philip Irwin (“Mr Irwin”) in support of the claim for public interest immunity.  He is a member of the first respondent.  He is obviously an appropriate deponent on behalf of the first respondent, constituted pursuant to s 7 of the Act.  His affidavits are sworn respectively on 18 June 1999, 30 June 1999, and 30 June 1999 (a confidential affidavit).  I shall refer to those affidavits as the first affidavit, the second affidavit and the confidential affidavit respectively.  A short affidavit of 27 July 1999 corrects two references in the second affidavit.

(a)               The basis of the claim

15                  The first respondent is established under the Act with the functions, inter alia, to investigate matters relating to certain criminal activities, including through Task Forces established for that purpose, and to coordinate investigations by such Task Forces.  Section 51 imposes specific and stringent secrecy obligations upon a member of the first respondent, and upon each of its staff members, in respect of any information acquired whilst performing duties under the Act.  It is a criminal offence to breach these obligations.

16                  Mr Irwin deposes to the fact that, pursuant to references under s 13(1) of the Act, the first respondent has been conducting a special investigation into the activities of the first applicant and others.  In the course of that investigation, the first respondent has obtained documents from certain persons pursuant to its coercive powers under s 29 of the Act.  The investigation is ongoing.  To date, no criminal proceedings have been instituted as a result of the investigation.

17                  In his first affidavit, Mr Irwin describes having examined the documents in issue.  He has arranged them in bundles numbered 1-52.  He described the documents only as “bundles” because he claimed that listing them may render nugatory the claim for public interest immunity.  He has since provided descriptions of 13 of the bundles.  He claims on behalf of the first respondent public interest immunity in respect of all but bundles 1, 4, 19, 31, 36, 50 and 52 and he has produced an expurgated version of bundle 49.  He has also provided a list of the number of pages in each bundle.  Somewhat oddly, bundle 5 has no documents.  Bundles 48 and 50 are part of bundles 29 and 51 respectively.

18                  Mr Irwin has considered the nature of the first respondent’s ongoing investigation, and he has examined the documents prior to claiming that they are privileged from production  He has considered the issues in this case.  He claims that to produce the documents other than those already produced would be injurious to the public interest and would adversely affect the proper functioning of the first respondent, because

(1)               they contain confidential information relating to the investigation of offences not the subject of these proceedings

(2)               their disclosure would “tend to have the effect” of alerting persons under investigation as to the nature and extent of the investigation so that the ongoing investigation and any subsequent prosecutions may be prejudiced

(3)               some of the documents refer to persons and entities who are not parties to this proceeding

(4)               their disclosure would reveal the methodology and strategies used by the first respondent in its investigations in discharging its functions, by disclosing the nature of the information gathered in the course of investigations, how the first respondent uses such information, and sources of information available to the first respondent; he fears that that knowledge would enable persons under investigation to take action to avoid detection by law enforcement agencies (particularly the documents in bundles 23, 26-29, 32, 34, 42, 43, 49 and 51).  The second affidavit explains why that concern applies to a number of the bundles separately.  Three of those bundles are described, namely bundle 28 being documents from the Department of Immigration and Multicultural Affairs (“DIMA”) containing 21 pages, bundle 49 being the application for the search warrants of the third  respondent comprising 16 pages, and bundle 51 being the Running Sheets for Operation ‘FIZZ’ comprising 82 pages

(5)               in the case of bundles 2, 3, 6-18, 20-28, 30, 32-35, 37-49 and 51 their disclosure “would tend to jeopardise” the continuing cooperation with other law enforcement agencies, governmental and statutory bodies, and non-governmental bodies.  Again, the second affidavit explains the claim in greater detail in respect of particular bundles.  That information was obtained on the basis that it would remain confidential and that its source would remain confidential.  He asserts that the disclosure of the material in those circumstances would make cooperation from such persons or entities, including potential informants, less likely in the future.  He identifies bundles 25-26, 32-33, 41-42 and 46 as having come from other law enforcement agencies, and bundles 20, 21, 28, 30, 34, 37 and 45 as having been received either with the first respondent providing a confidentiality undertaking or with the first respondent requesting that the fact of their provision be strictly confidential.  Bundle 22 is described as Lands Titles Office documents and comprises 67 pages; bundle 24 is described as Liquor Licensing Commission documents and comprises 367 pages; bundle 31 is described as Birth Certificates and comprises 2 pages; bundle 36 is described as Foxtel records and comprises 1 page; bundle 45 is described as SA Registration and Licensing Division, Department of Transport documents and comprises 26 pages; and bundle 47 is described as Consumer and Business Affairs documents and comprises 1 page.  Bundles 28, 49 and 51 are referred to earlier in these reasons.  None of the other bundles are described, except presumably in the confidential affidavit.

(6)               in respect of bundles 23, 43 and 51, their disclosure would reveal reports and analysis prepared by officers of the first respondent about investigations, including in some cases the sources of confidential information and assessments of the state of investigations and recommendations for future action.  They contain details of the nature and extent of the investigation to date.

(b)               The applicable principles

19                  Section 130 of the Evidence Act 1996 (Cth) (“the Evidence Act”) provides:

“If the public interest in admitting into evidence information or a document that relates to matters of state is outweighed by the public interest in preserving secrecy or confidentiality in relation to the information or document, the court may direct that the information or document not be adduced as evidence.”

20                  Subsection 4(c)-(d) provides that the circumstances in which a document is to be taken to relate to matters of State include that adducing it as evidence would:

“(c)   prejudice the prevention, investigation or prosecution of an offence; or

(d)      prejudice the prevention or investigation of, or the conduct of proceedings for recovery of civil penalties brought with respect to, other contraventions of the law; or

(e)   disclose, or enable a person to ascertain, the existence or identity of a confidential source of information relating to the enforcement or administration of a law of the Commonwealth or a State; …”

21                  Counsel for the applicants contended that, on the application, I should apply s 130 of the Evidence Act.  In my view I am bound by the decision of the Full Court in Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (1998) 83 FCR 511 to the effect that provisions such as s 130 of the Evidence Act relate to the process of admitting evidence at trial, rather than to pre-trial interlocutory processes such as discovery.  In a practical sense, I do not think that the contention alters the outcome.  The Full Court in Eastman v R (1997) 76 FCR 9 (von Doussa, O’Loughlin and Cooper JJ) (at 63) said in respect of a claim for public interest immunity in the course of that proceeding:

“The “balancing exercise” to which his Honour refers is that required by s 130(1) of the Evidence Act.  The trial judge must consider and weigh two competing aspects of the public interest, namely whether the public interest in admitting into evidence the material in the document that is a matter of state is outweighed by the public interest in preserving secrecy or confidentiality in relation to the material.  Section 130 closely reflects the common law position:  see the Australian Law Reform Commission Report 26  Evidence, Vol 1, pars 864-866.  Referring to the common law position, Gibbs CJ in Alister v R (1984) 154 CLR 404 at 412 said that the balancing exercise required the judge to consider whether harm would be done by the production of the documents, and whether the administration of justice would be frustrated or impaired if the documents were withheld, and to decide which of those aspects predominates.

The administration of justice would be impaired if by withholding the documents an accused would be denied a fair trial.  The question therefore arises in the balancing exercise whether the documents contain evidence material to the accused’s defence.”

22                  Although counsel for the applicants suggested that the balancing exercise dictated by s 130(1) may be a little more favourable to the applicants in proceedings because of the expression “outweighed” than the exercise at common law, no contention was developed in respect of that argument, and I do not need to address it for the purpose of this ruling.

23                  In Sankey v Whitlam (1978) 142 CLR 1, Gibbs ACJ at 38 said:

“The general rule is that the court will not order the production of a document, although relevant and otherwise admissible, if it would be injurious to the public interest to disclose it.”

24                  The public interest has two aspects which, in particular circumstances, may conflict.  His Honour quoted a passage from the speech of Lord Reid in Conway v Rimmer [1968] AC 910 at 940 to describe those conflicting aspects:

“There is the public interest that harm shall not be done to the nation or the public service by disclosure of certain documents, and there is the public interest that the administration of justice shall not be frustrated by the withholding of documents which must be produced if justice is to be done.”

25                  It is the duty of the Court to determine whether a document or documents should be produced or may be withheld, that is where the public interest ultimately lies in relation to those competing interests.  In making that decision, the Court has the power to inspect the documents privately to assist in determining whether to make an order for their production:  Sankey, eg. per Gibbs ACJ at 38, 39 and 42.

(c)                Should Mr Irwin be cross-examined?

26                  Counsel for the applicants applied to cross-examine Mr Irwin on his affidavits.  For the purpose of ruling upon that application, I did not read the confidential affidavit.  I was told by counsel for the first and third respondents that that affidavit exhibited a list of the documents in respect of which public interest immunity was claimed, and which are not otherwise identified, so that the Court could know how those documents were described by the first and third respondents.  It does not contain any additional information to warrant or support the claim for public interest immunity.  I did not think it was necessary or appropriate to read that affidavit for the purposes of ruling on the application to cross-examine Mr Irwin.

27                  The applicants contended that they should be permitted to cross-examine Mr Irwin for the following purposes:

(1)               to assist them in establishing that the first and third respondents have engaged in illegal conduct in procuring the issue of the warrant, so that no public interest immunity claim should be permitted;

(2)               to challenge the bona fides of the first respondent in making and maintaining the claim for public interest immunity, with a view to showing that his affidavits should be given little weight; counsel said the applicants wished to test the veracity and legitimate extent of the claim for public interest immunity; and

(3)               to elicit the existence and nature of documents by obtaining a description of them, and to get some information as to their content, so as to show that the balancing of public interest considerations should lead to the claim for public interest immunity being rejected.

28                  There were a number of matters identified by the applicants’ counsel in relation to Mr Irwin’s two affidavits (excluding the confidential affidavit) which were said to warrant his cross-examination.  It was put that the basis of the claim is not expressed as assertively as is sometimes the case in affidavits to support the claim for public interest immunity.  For instance, it was put that he does not say expressly that he has read each and every document in respect of which the claim has been made, although he has deposed to having examined and considered each of those documents.  Upon my perusal of those affidavits, I consider that he has said that he has addressed them individually, and I do not think that there is anything in the point.  The applicants also pointed out that Mr Irwin does not say that, in each case, the document would prejudice the investigation or prosecution of an offence, or would disclose or enable a person to ascertain the existence or identity of a confidential source of information, but refers only to disclosure of the documents as having a tendency to have such effects.  He has not sought to adduce a supplementary affidavit to refine or explain the expressions used in his affidavits, despite those contentions  It was also put that a number of the claims, as expressed by him, were demonstrably unsustainable because they were expressed too widely, or by reference to other material could be shown to be disingenuous.  An illustration of that was said to be that the affidavits of proposed evidence of the third respondent and of a Christopher Armando Bonnici (“Mr Bonnici”) describing the occasion of seeking the warrant on 22 May 1998 asserted that they were unable to recall the evidence given orally to the Magistrate from whom the warrant was sought, despite the discovery of the transcript of that evidence.  Another example given was from par 29 of the second affidavit which reads:

“Bundle 28 has previously been identified as record from DIMA [Department of Immigration and Multicultural Affairs].  The basis of the claim against the production of these records on this ground is that to do so will reveal the nature of the information which DIMA is able to disseminate to law enforcement agencies and, thereby, enable persons who wish to engage in criminal activity to adjust their conduct to minimise the risk of DIMA gathering such information concerning them.”

There were other examples given.

29                  It was also contended that the limiting of the claim to public interest immunity between the affidavits of 18 and 30 June 1999 was not explained, and that in itself gave reason to doubt the reliability of the claim as now expressed, and to provide reason for doubting that Mr Irwin had properly addressed the claim for public interest immunity.  It was also contended that Mr Irwin did not fully and accurately appreciate the issues in the proceedings, so he had not properly addressed the balancing of public interest issues in making the claim for public interest immunity.  As part of that submission it was pointed out that, in his affidavit of 30 June 1999, he had at various points dealt with comments made by the Court at a directions hearing 22 June 1999, and that he had inaccurately adopted a contention put on behalf of the first and third respondents by counsel at an earlier point in the proceedings.

30                  In Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359, Giles J gave reasons for declining to permit cross-examination of a deponent upon an affidavit sworn in support of a claim to client legal privilege of certain discovered documents.  His Honour reviewed the authorities touching on that question at some length.  It would serve no purpose to repeat that review in these reasons.  His Honour’s conclusions, with which I respectfully agree, were as follows (at 366):

“The affidavit of discovery is generally conclusive not only in relation to the amplitude of discovery but also in relation to any claim to protection from inspection of a discovered document, including a claim to legal professional privilege; and in particular cross-examination of the maker of the affidavit will not be permitted.  No relevant exception to this position has been introduced by rules of court.  It is to be noted that, in Brambles Holdings Ltd v Trade Practices Commission (No 3) (1981) 58 FLR 452 at 454, Franki J refused to permit cross-examination of the maker of an affidavit of discovery in which a claim was made to legal professional privilege.  His Honour said (at 454) that he considered Manifold v Mulley as sufficient authority for this:  I respectfully suggest that it is not direct authority, but other decisions extend the general conclusiveness of the affidavit of discovery to which Menzies J referred to a claim to legal profession privilege.”

31                  Although the issue arose in a somewhat different context in Young v Quin (1985) 4 FCR 483, Bowen CJ said at 486 that it would be “a very rare case indeed” where the court would permit cross-examination of a deponent in respect of a claim for immunity in respect of documents.  Sheppard J, after referring to Sankey v Whitlam (1978) 142 CLR 1 at 38 per Gibbs ACJ (as he then was) said at 488-489 that, in a case involving a claim for immunity from production of documents on public interest grounds:

“… cross-examination of the deponent of the affidavit claiming immunity is not usually permitted.  The court may accept the affidavit as conclusive, or it may require the production of the documents so that it may inspect them for the purpose of determining whether it will accede.  The documents will not be available for inspection by the requesting party.  In some case not only the documents, but also the affidavit, may not be made available to him.”

I refer also the observations of Beaumont J at 494-496.

32                  Consequently, whilst there may be circumstances in which it is appropriate to permit cross-examination of a deponent in support of a claim that public interest immunity protects documents from being produced, those circumstances will be rare.  It will be a matter for the court in each instance to address the particular circumstances to see if cross-examination should be permitted.  It appears from the reasons for decision of Drummond J in Australian Securities Commission v Zarro (No 2) (1992) 34 FCR 427 at 431 that, in the circumstances of that case, his Honour permitted such cross-examination.

33                  In the course of submissions, it was acknowledged that no information obtained from Mr Irwin by cross-examination was necessary to advance the contention that the conduct of the first and third respondents in procuring the issue of the warrants was illegal.  Indeed I was asked to rule upon that contention prior to ruling upon whether Mr Irwin should be cross-examined.  I declined to rule on that contention, as I considered that the various grounds upon which the claim for public interest immunity was said by the applicants not to exist should be dealt with at one time rather than piecemeal.  Given the acknowledgment in submissions that there was no need to cross-examine Mr Irwin to advance the applicants’ claim that no public interest immunity could exist in the circumstances, I did not consider that it was appropriate for him to be cross-examined for that purpose.

34                  I also do not consider that I should permit cross-examination for the other two purposes identified by counsel for the applicants.  To the extent that the affidavits do not, as the applicants submit, go far enough or are not assertive enough, in my view the appropriate course is simply to take them as they stand and to give them such weight in the balancing process as is appropriate having regard to the way in which they are expressed.  I do not think the Court would be assisted by cross-examination testing the degrees of the tendency that disclosure of the documents would have upon the first respondent.  I also do not think that cross-examination to test whether Mr Irwin fully understands the issues in this proceeding would be of assistance.  It is ultimately for the Court, and not the deponent, to make the judgment as to where the public interest lies, and in doing so it will have regard to the issues in the proceedings.  I indicate that I was not persuaded that Mr Irwin did not properly appreciate the issues in the proceedings in any event.  His misdescription of a submission put by counsel for the first respondent on an earlier occasion also falls into the category of matters upon which cross-examination would not be of assistance.  The misdescription does not affect the essential nature of the claim made.

35                  The wider claim, supported by illustrations, that Mr Irwin’s credit should be permitted to be challenged is a significant one.  I do not accept all the contentions in support of that claim.  For instance, in my view, the affidavits of Mr Bonnici and of the third respondent of their proposed evidence do not give cause for the applicants to assert Mr Irwin’s credit is challengeable.  It is not significant, in my view, that the second affidavit responds to particular matters raised by me at an earlier directions hearing.  It is within the province of the Court, on an application such as the present, to invite and even to require further evidence on a particular aspect or aspects of the claim, as well as to call for and inspect the documents in question.  I consider that the second affidavit is a response to my earlier invitation, when I expressed concerns about certain aspects of the first affidavit.  However, I accept certain of the observations made by the applicants about the affidavits.  The absence of any reason for the changed attitude in respect of certain documents by reason of their re-examination for the purposes of the second affidavit, and the nature of the now disclosed documents previously said to be prejudicial to the first respondent even if described and not merely produced, both are curious features.  It is concerning, for example, that the first affidavit claimed that to disclose that the first respondent held birth certificates of the first applicant’s children would significantly prejudice the first respondent.

36                  However, the consequence of such matters, as the applicants’ counsel acknowledged, was to lead the applicants to seek to challenge the accuracy of the claim to public interest immunity in the documents now in issue.  That necessarily involves exploring in cross-examination the nature and content of the material presently not disclosed to assess the reliability of Mr Irwin’s claims.  That process, irrespective of any attack upon Mr Irwin’s reliability, is also contemplated by the third of the reasons given for wishing to cross-examine Mr Irwin.

37                  I do not consider that sufficient reason has been shown to warrant that course of action.

38                  It is for the Court to determine the claim for public interest immunity.  It may do so not simply upon the assertions made by Mr Irwin in his affidavit, but via the balancing process which the Court is obliged to adopt.  For that purpose, the Court may if necessary have regard to the documents and in an appropriate case should do so:  Commonwealth v Northern Land Council (1993) 176 CLR 604; Jackson v Wells (1985) 5 FCR 296; Seymour v Price (1998) FCA 1224, unreported, Full Court, French, O’Connor and North JJ, 8 September 1998.  In adjudicating upon the claim, and in embarking upon the balancing process required, the Court will have regard to the way in which the claim is expressed in Mr Irwin’s affidavits.  Whether the claim as expressed is sufficient to warrant the Court looking at the documents concerned where the deponent Mr Irwin has not described in any detail the nature of the information, and has treated all of the information within a particular bundle as falling into the one category (albeit after his individual consideration of the documents in that bundle) is a matter for the Court.

39                  Having regard to those considerations, and in particular that the consequence, and in part the purpose, of the proposed cross-examination is to elicit information about the nature and content of the documents in issue for the purpose of challenging the claim that public interest immunity protects them from production, I rejected the claim that Mr Irwin be cross-examined in his affidavits.

(d)        Consideration of the claim

40                  I have referred above to the nature of the issues in this proceeding.  Although the allegations in the points of contention are broadly expressed, and in some instances lack particulars, the primary claim of the applicants remains firstly that the procuring and execution of the warrants was wrongful, and that the respondents were all complicit in that wrongdoing, and secondly that the use of the material procured upon execution of the warrants including its dissemination to the second respondent was also wrongful.  By reason of one or both of those matters, remedial orders are sought, including orders that the second respondent is not entitled to make use of that information to issue assessments or amended assessments of taxation payable by the applicants and others.  Categories 1, 3, 4 and 5 of the discovery order touch upon those issues in various ways.  The respondents have discovered, and made available for inspection, those documents.  They relate to the status of the Task Force or investigative operation, and the dissemination of information between the first and second respondents.

41                  When I asked about the potential significance to the applicants’ case of the sort of information for which public interest immunity has been claimed, counsel for the applicants identified the following issues:

(1)               the information put to the magistrate when the warrant was sought because

“we want to suggest that the approach to [the Magistrate] was incomplete, inaccurate, less than frank …”

in the fact of the obligation to disclose fully the relevant material to the Magistrate.  He said that to be able to assess that, the applicants want access to all the information available to the first respondent

(2)               if there was a “preconcerted plan” to alter the warrants as issued, the respondents would like to know that fact

(3)               there is nothing in the expurgated version of the affidavit of the third respondent (bundle 49) that the applicants were at risk of prosecution, and there still has been no prosecution, and there is the prospect that the investigation was really that of the second respondent, with a possible improper purpose because it did not concern investigation of a relevant criminal activity, and so no prosecution may ever have been contemplated

(4)               the material recording the process of the decision to apply for the warrant under s 3E of the Crimes Act rather than applying under the Act, touching upon the awareness of the respondents of the possible consequences of or benefits of those alternative possible sources of power to issue the warrants

(5)               the nature of the information gathered in the investigation to disclose its sources, its content, and potential witnesses available to the first respondent and the information they have provided, and

(6)               “regulatory issues” concerning the establishment of the joint task force, the role of the respondents in procuring and executing the warrants, the relationship between the respondents and regulatory agencies providing information to them, and the process by which the third respondent was seconded to the first respondent.

42                  With the exception of the purpose in (4) above, it is in my view apparent that the applicants have no real foundation for the allegations made in the points of contention to which those categories of uses might relate.  In the way it was expressed, category (2) was speculative only.  Category (3) also can be no more than speculation.  In respect of those two uses, there is no allegation in the points of claim concerning a state of mind on the part of any respondent to the effect asserted.  Categories (1), (5) and (6) relate to whether information was withheld from the Magistrate upon which the warrant was sought:  cp Propend Finance Pty Ltd v Commissioner of Australian Federal Police (1994) 72 A Crim R 278.

43                  There is no issue about the obligation of the first and third respondents to have disclosed to the magistrate from whom the warrant was sought all material factors that may have affected the decision to issue the warrant: see per Davies J in Propend (above) at 280-281 and the authorities referred to in those reasons.  In that case, there was an application to set aside notices to produce all documents relating to an investigation held at the time when the application for the warrants was sought.  The mere allegation that there had been a failure to disclose all relevant material was insufficient to enhance the claim to production beyond a “fishing” request (at 284), and the notices to produce were set aside.  Davies J did not have to determine whether they should not be produced on the ground of public interest immunity.

44                  In the present circumstances, the documents in issue have been discovered pursuant to the order made on 21 May 1999.  But there is nothing to indicate that, with the exception mentioned, the applicants have any foundation in fact for the allegation that proper disclosure was not made to the magistrate.  No particular has been given of any such foundation.  No affidavit evidence identifies any such foundation.  Having briefly examined the sworn application for the warrant (bundle 49); as Davies J concluded upon a similar process in Propend, I did not identify any material further which ought to have been disclosed to the magistrate and which was not disclosed.

45                  Those considerations, in my judgment, must be put into the balance when addressing the present issue.  If there were a clear and serious issue raised about a particular type of information not brought to the magistrate’s attention, or about particular material not brought to the magistrate’s attention, the significance of what was disclosed and perhaps the existence and contents of documents relating to that type of information or material would be greater.  The public interest in ensuring a just outcome for the proceedings in those circumstances would require significant weight to be given in favour of disclosure.  Where the allegation is not particularised, and seems to be essentially fishing, the administration of justice does not demand so strongly disclosure of the documents.

46                  On the other hand, disclosure of the material in issue would clearly be injurious to the public interest.  The person taking the objection, Mr Irwin, is a member of the first respondent.  He has inspected the documents.  He has explained the reasons for the objection.  I accept those reasons.  They are not reasons which in all respects are of great significance.  For instance, the extent to which cooperation with other governmental bodies might be jeopardised by their disclosure is, in my view, not of particular moment bearing in mind the first respondent’s powers under s 19A of the Act.  On the other hand, the disclosure of the identity of informants may have grave adverse consequences to the public interest in the identification, investigation and prosecution of criminals:  Sankey at 61; Rogers v Home Secretary [1973] AC 388.  One well recognised category of documents in respect of which public interest immunity has been acknowledged is documents disclosing methods of police investigation and plans in relation to ongoing police investigations:  eg. Young v Quin at 495; Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 51 A Crim R 423 at 436-438 and on appeal (1991) 31 FCR 523.  Those considerations find statutory expression in s 130(4) of the Evidence Act.

47                  I am satisfied in respect of all the bundles of documents to which objection against production is taken, that there is a firm public interest in their continued non-disclosure, although the weight to be attributed to each of the bundles in the weighing process is not equal.  As I have indicated above, I do not consider that the interests of justice require that generally the documents in issue should be disclosed, notwithstanding their discovery by the first and third respondents.  Their significance to the applicants is speculative only.  There is nothing of substance to suggest that their disclosure is required to serve the administration of justice in the particular circumstances.  I am firmly of the view that the claim for public interest immunity is made out.

48                  I noted above one area in which the public interest in the administration of justice might nevertheless require disclosure of certain of the documents in the bundles.  That is material recording the process of the decision to apply for the warrant under s 3E of the Crimes Act rather than under the Act.  I make it clear that the documents to which I am referring are those which address the topic of how to apply for the warrant, including such matters as who should make the application, the various statutory powers potentially available to procure the warrant, the categories of person or persons to whom the application might be made, the selection of the process of making the application under s 3E of the Crimes Act, and the selection of the person or category of persons to whom that application was made.  There are clear grounds specified in the points of contention why the warrant was not properly sought under s 3E of the Crimes Act.  Those grounds are described in more detail in the next part of these reasons, when addressing the claim that the claim for public interest immunity must fail because the first and third respondents acted illegally in procuring the warrant.  I am not satisfied by Mr Irwin’s affidavit that it is necessary in the public interest that any such document should not be disclosed.  He has not specifically identified any such documents or explained why they, in particular, should not be disclosed.  There is no reason to think that such documents will contain confidential information relating to the investigations of the joint task force, or alert persons under investigation of proposed ongoing investigations.  It is only in a limited way that they will disclose the methodology of the first respondent, and on the other hand it is a methodology about which the applicants have made detailed allegations and which, if the applicants are correct, may reveal improper conduct by the first and third respondents.  There is also no reason to think that particular documents will disclose sources of information to the first respondent, or the nature of information procured by it.  It may be that there are no such documents.  I do not know.  Short of calling for, and examining, all the documents in issue, it is not possible for the Court to determine that question for itself.  I do not think that that is an appropriate course.

49                  I accordingly propose to direct that the first and third respondents disclose to the applicants any documents of the character identified.  That will require the bundles, or at least some of them, to be re-examined.  I propose to give leave to the first and third respondents to mask in an appropriate way the contents of any such documents which do not relate to the topics I have referred to, if it is feared that the disclosure of the full document may have adverse consequences to the public interest.  That leave is intended to relate only to the parts of such documents which do not touch on the topics described above.  If the applicants nevertheless claim to be entitled to inspect any part of such a document, which has been masked, it may then be necessary for the Court to examine it to determine whether its full contents should be disclosed.

(e)        Has illegality caused the claim to public interest immunity to be lost?

50                  In A v Hayden (1984) 156 CLR 532, the High Court refused to restrain the Commonwealth from disclosing to the Commissioner of Police for Victoria the identity of officers of the Australian Secret Intelligence Service (“ASIS”) who were alleged to have committed criminal offences in the course of a security training exercise.  In the course of their reasons, some members of the Court considered and explained the pithy observation of Wood V.C. in Gartside v Outram (1856) 26 L.J. Ch 113 at 114 that “there is no confidence as to the disclosure of iniquity”; see per Gibbs CJ at 545, and Wilson and Dawson JJ at 572.

51                  That case was relied upon by the applicants for the contention that, because the claim for public interest immunity has been made “in circumstances where there has been demonstrable illegality” the claim in its entirety must be rejected.

52                  I do not consider that that decision stands for such a broad proposition.  The claim to non-disclosure was made by the ASIS officers themselves, based upon an alleged enforceable obligation, at least partly arising under contract, not to disclose their identities.  The Commonwealth wished to disclose those names; it did not assert that public interest immunity precluded that course.  The outcome was that the obligation of confidentiality under the respective contracts of employment was unenforceable (per Mason, Murphy, Wilson, Brennan, Deane and Dawson JJ).

53                  I agree that there is a strong public interest in the disclosure of iniquity (per Sheppard J in Allied Mills Industries Pty Ltd v Trade Practices Commission (1981) 55 FLR 160 at 166), but as Gibbs CJ said in Hayden at 545-546 there is nevertheless a balancing process, albeit one heavily weighted in favour of disclosure in the case of serious crime; see also the observations of Mason J at 559-560, and of Wilson and Dawson JJ at 577.  It was not contended that the documents in issue could not be the subject of a claim to non-disclosure by reason of the circumstances in which they came into existence.  The argument was that whatever public interest existing in their non-disclosure was lost by the illegality alleged.  It is, as the applicants acknowledge, incumbent upon them to demonstrate a clear prima facie case of illegality:  see Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 per Brennan CJ at 514, Toohey J at 532, Gaudron J at 546, McHugh J at 556, Gummow J at 573-574 and Kirby J at 591-592.

54                  It also follows from Propend, in my view, that illegality will displace the privilege only in respect of the particular illegality alleged:  see eg. per Gaudron J at 545, McHugh J at 556, and Gummow J at 563.  Indeed, it would be surprising if it were otherwise.  The discoverable documents in a matter involving a prolonged investigation may extend over a period of years, and there may be very sound reasons which the public interest is best served by the non-disclosure of those documents.  If, in the course of that investigation, an act of illegality occurred (perhaps by accident or through ignorance) in the investigation, it would not follow that the public interest in the non-disclosure of all those documents would reverse.  It may do so in respect of the part of those documents which involve the illegality.

55                  The applicants submit that, because the third respondent was seconded to the first respondent, his powers under the Police Act 1952 (SA) and under any other law are suspended:  ss 19B(3) and 27 of the Police Act.  Then, it is put, his entitlement to apply for a warrant under the Crimes Act is lost because, by virtue of that suspension, he is no longer a “constable” under s 3 of the Crimes Act and so is not entitled to apply for or execute the warrant:  ss 3C and 3E of the Crimes Act.  Those requirements must be strictly adhered to:  George v Rockett (1990) 170 CLR 104 at 110-111.  The applicants also contend that there is evidence of the alteration or deletion of the name of the issuing magistrate from the warrant, and of the name of the third respondent, although the first and third respondents rely upon ss 3(h)(5) and 3E(5) of the Crimes Act for such alterations as were made.

56                  I am satisfied that the applicants have made out a prima facie case of illegality in the third respondent applying for and executing the warrant.  I do not, however, consider that that conclusion destroys all the claims for public interest immunity made by Mr Irwin.  I have ruled that the claim for public interest immunity does not protect from disclosure documents which relate to the process of deciding to apply for the warrant.  It is that category of documents which, once produced for inspection, may reveal how and why s 3E of the Crimes Act came to be used to procure the warrant.  I am not, however, persuaded that any of the respondents were aware of the alleged illegality.  The documents to be produced may disclose that to have been the case.  If it were, the consequence may be that documents procured in the execution of the warrant, or other documents, might also be vulnerable to disclosure although at present I have ruled that public interest immunity protects them from disclosure.  As I am not presently persuaded that the alleged wrongdoing (if established) was deliberate, or prima facie is shown to have been deliberate, I consider the appropriate order is to direct disclosure only of those documents which may tend to expose any such illegality.  I do not consider that the authorities relied upon by the applicants oblige me to make any more extensive order at this point.

57                  Consequently, in the light of those conclusions, presently I do not propose to make any additional order for the disclosure of documents in respect of which a claim for non-disclosure for public interest immunity has been made.

The claim for further discovery

58                  The applicants have also sought further discovery of seven categories of document.  They are:

(1)               Administrative records demonstrating control by or separation from the Crown, Governmental functions and operations.

(2)               Documents relevant to formation of Task Forces and membership of ATO officers on Task Forces, their duration, purposes, powers and functions.

(3)               Documents evidencing decision and authority to disseminate information [it is alleged that a letter from the first respondent of 23 February 1999 to the second respondent, already discovered, indicates that there may be documents of the first respondent containing admissions of illegality in disseminating information].

(4)               Documents reconciling denial of having obtained documents with production of notices under s 29 of the Act, and with the fact of documents having been obtained by the first respondent from the Police Credit Union.

(5)               “Expurgated” version of the application by the third respondent, so as to disclose the grounds upon which the warrant was sought.

(6)               All documents concerning the second respondent authorising his officers to join the Task Force and reporting to him of activities.

(7)               All documents evidencing the information upon which assessments were purportedly made and the purposes for which they were used.

59                  The list of documents already filed on behalf of the first and third respondents discovers a series of documents under the heading “Commonwealth and State references”, “ANCA dissemination to ATO”, “Instruments of Delegation”, “Warrants”, “Photographs”, “Transcript” (being transcript of evidence given on 22 May 1998 in support of the application for the warrant).  Those documents meet the discovered discovery order, categories (1), (3), (4) and (5) set out above.  It is category (2) which has attracted the claim for public interest immunity.  The second respondent has also filed and served a list of documents in respect of all of the categories of discovery ordered to date.

60                  Pursuant to O 15 r 15 of the Rules, the Court should not make an order in the nature sought unless it is satisfied that the order is necessary at the time when the order is made.  In determining that question, regard should be had to the interests of justice in the particular case so as to ensure a fair trial, and to the economic and efficient disposition of the case.

61                  In support of each of their claims, the applicants have identified particular paragraphs of the points of claim and points of defence.  I shall refer briefly to them in determining the particular request.

62                  It is alleged that the first respondent is “an authority or agency of the Crown in right of the Commonwealth of Australia”, that the second respondent is an office or agent of the Crown, and that the third respondent is an officer, servant or agent of the Crown.  Those allegations are either denied or not admitted.  However, I do not think the discovery sought on that issue is necessary.  The status of the first and second respondents will be determined by reference to the statutory framework in which they are established and in which they operate.  The status of the third respondent has been the subject of some discovered documents.  I am not satisfied that documents of the type sought are necessary for the applicants to address those issues.  The claim, in any event, is far too wide.  It would impose an oppressive burden upon the first and second respondents to have to comply with it.

63                  The points of claim allege that in September 1997 a joint Task Force was formed by the first respondent known as “Swordfish”, which included officers of the second respondent, and which was to investigate the first applicant and others.  It is then alleged that neither the first nor second respondents had the power or authority to establish that joint Task Force, or to permit its members to use information acquired by it for any purpose whatsoever, including under the Act and for the purposes of considering the issuing of taxation assessments under the Taxation Administration Act 1953 (Cth).  It is alleged that the members of that joint Task Force became officers of the first respondent, bound by the obligations of secrecy imposed by ss 51 and 59 of the Act.  The points of defence indicate that the establishment of the joint Task Force, including officers of the second respondent, for the purpose alleged is admitted.  It is also admitted that the members of that Task Force fell within the definition of members of the staff of the first respondent, so as to be bound by the obligation of secrecy imposed by s 51 of the Act.  It is pointed out that s 59 of the Act does not create an obligation of secrecy.  The allegation of having acted beyond power is denied.  The applicants contend that the issue on the pleadings in respect of which further discovery is sought concerns the third respondent becoming and remaining a member of the joint Task Force and as to the formation of Task Forces generally.

64                  Again I am not satisfied that the discovery sought is necessary.  The fact of the establishment of the joint Task Force is not in issue.  Discovery categories (1), (3), (4) and (5) concern the existence of any relevant references under the Act, and documents as to the circumstances in which communication of information between the first and second respondents occurred specifically by reference to the provisions of the Act.  Counsel for the applicants acknowledged that the documents sought to be discovered are generic, rather than limited to those specifically relating to the joint Task Force alleged.  There is no current issue that the joint Task Force was established.  The powers of the first and second respondents concerning its establishment or the participation of officers in it, and the obligations of those officers as members of that joint Task Force, are matters which in my judgment can be adequately addressed by reference to the legislative framework and to the documentation already discovered.  The third respondent, in his affidavit of proposed evidence sworn on 8 June 1999, has identified his personal status and his role in relation to the joint Task Force.  In my view, the broad nature of the documents described in (2) above in respect of which discovery is sought is not necessary in those circumstances for the fair determination of the proceedings.

65                  The third category of documents relates to the first and second respondents.  The issue upon the pleadings is said to be the decision of the first respondent to disseminate information to the second respondent in accordance with the Act, so as to explore the lawfulness of the exchange of that information.  One document to which the applicants have already had access is a letter from the regional director of the first respondent to the second respondent dated 23 February 1999.  It refers to earlier correspondence concerning the provision of information to the second respondent.  It asserts that the earlier disseminations of information were made under s 59(9) of the Act, and purports to redisseminate that information pursuant to s 59(7) of the Act.

66                  The respondents contended that the documents in respect of which discovery is now sought were encompassed within the terms of pars (3)-(5) of the discovery order made on 21 May 1999.  I have considered the terms of that order.  The applicants did not indicate the way in which the order now sought operated beyond those earlier orders.  In my view, the affidavits of discovery should not be treated as insufficient, certainly in the absence of any affidavit or other material from the applicants to demonstrate clearly any such insufficiency:   Mulley v Manifold (1959) 103 CLR 341.  I do not regard the letter of 23 February 1999 as indicating such insufficiency.  It is part of the process of the exchange of information.  Assuming documents exist reviewing a decision of the District Court of South Australia (referred to in the letter) in relation to a provision of the Act, and its significance in relation to practices of the first respondent in disseminating information, such documents would not provide evidence of the flow of information between the first and second respondents.  In my judgment, the earlier order for discovery, which requires discovery of the documents indicating the process of the flow of information between the first and second respondents, is sufficient for the applicants to identify and to prove that process.  The legal consequences of the process adopted is a matter for argument.  Internal documents of the first respondent as to its legal consequences, whether reviewed in the light of a court decision or otherwise, are not necessary to show the process itself.  Accordingly, in my view, that application ought to be refused.

67                  The basis of the fourth category of documents sought is said to be pars 5 and 5A of the amended points of claim.  It is alleged that in late 1996, the first respondent improperly and without authority obtained access to the financial records of the applicants held on their behalf at the Police Credit Union, and that at some other time the second respondent obtained access to those records.  The first respondent denies the allegation concerning it.  The second respondent admits obtaining access to records concerning the applicant’s financial affairs from the Police Credit Union.  Notwithstanding the denial of the first respondent, the first respondent has discovered documents in a bundle (bundle 1) obtained from the Police Credit Union under s 29 of the Act.

68                  I do not consider that the documents described in category (4) are necessary to be discovered in this proceeding.  The denial to which the applicants refer may relate to the precise terms of the allegation.  It may relate to the way in which the pleading is expressed, compositely, to include the allegation that the obtaining of that information was “without lawful authority or proper reason and for improper motives and/or purposes …”.  It is not surprising that the first respondent denied the allegation as so expressed.  I do not think reconciliation of its denial with the production of documents obtained from that source pursuant to s 29 of the Act is necessary.  The second respondent has admitted having obtained those documents, and no impropriety is alleged against it.  The pleading, however, asserts that it obtained those documents “for purposes unknown to the applicants until full discovery is made …”.  In my judgment no sufficient reason is shown by virtue of that allegation to warrant the making of the order sought against the second respondent.

69                  The fifth category of documents is a particular document.  The document is one discovered by the first respondent in respect of which, other than in its expurgated form, is the subject of the claim for public interest immunity.  I have ruled above that the claim for public interest immunity in respect of that document, beyond the material already discovered and made available for inspection, is a proper one.

70                  The sixth category of documents, in the course of contentions, was acknowledged by the applicants to involve substantially a re-expression of the claims for discovery in categories (2) and (3) above.  In my view, for the reasons expressed in respect of those two claimed categories of further discovery, the claim should be rejected.

71                  The seventh category of documents in respect of which discovery is sought is against the second respondent only.

72                  The applicants identify the issue to which those documents go as being “use of documents by DCT and purpose of use; misfeasance in public office”.  A number of paragraphs of the points of contention have been identified.  Essentially, they may be reduced to the proposition that, in various ways, to the knowledge of the second respondent or with the involvement of the second respondent, documents obtained by the first respondent or by the joint Task Force were wrongfully obtained and/or wrongfully provided to the second respondent for the purposes of engaging in the making of the amended assessments.  However, par 28 of the points of claim seems to go beyond that.  It alleges that, notwithstanding that conduct, the three respondents

“… engaged in improper, illegal and oppressive conduct and/or evinced improper motives and/or purposes in the purported exercise of powers and/or the purported performance as duties as follows:

…

DCT either personally or by his servants or agents;

28.3.1                   made unfounded and improper allegations of tax fraud to the applicants’ accountant and staff on or about 8 December 1998;

28.3.2                   had no regard whatsoever to the notice given to him of illegal conduct on the part of NCA and/or Williams by the said letters and issue of the within proceedings;

28.3.3                   recklessly or wilfully utilised or continued to utilise the documents;

28.3.4                   purported to issue notices of assessment and reassessment utilising;

28.3.5                   having obtained undertakings from the applicant Woodroffe not to deal [with] her own assets or in those of JAJ, breached undertakings to the Federal Court given n 6 April 1999 not to further utilise the documents or information or to issue further assessments by issuing further assessments against JAJ and others;

28.3.6                   having obtained undertakings from the applicant Woodroffe not to deal [with] her own assets or in those of JAJ, purported to issue a notice of statutory demand pursuant to Corporations Law section 459E against JAJ;

28.3.7                   has failed to withdraw the said notice of statutory demand;

28.3.8                   has evinced by his conduct of the within proceedings an intention to rely upon the notices of assessment and re-assessment notwithstanding any illegality inherent in or associated with them.”

73                  There is no issue that the second respondent used information provided by the first respondents, including information procured in the execution of the warrant, for the purposes of determining to issue amended notices of assessment.  I suspect that it is not intended that the allegations in par 28.3 of the points of contention extend beyond the alleged misuse of that material in the circumstances in which they were obtained under the warrants, or disseminated.  However, they might be read to go beyond that, in particular in that pars 28.3.1, 28.3.4, 28.3.5, 28.3.6, and 28.3.7 are worded in such a way that that may not be limited to matters concerning the warrants and the dissemination of information obtained in their execution.  If that is what is to be alleged, it is not properly pleaded.  It does not provide any factual allegations upon which I would be disposed to make an order for discovery.  As the second respondent has acknowledged that notices of assessment and amended assessment were issued having regard to information in documents provided to the second respondent by the first respondent, and being material procured in the execution of the warrants, I do not think there is any need for further discovery by the second respondent of the nature described.  If it is sought, beyond that, to demonstrate that the second respondent in issuing the notices of assessment somehow acted in bad faith (so as to found the argument that the assessments are reviewable in this proceeding), then an appropriately specific pleading would need to be made.  Accordingly I do not consider that that application should be acceded to.

74                  In my judgment the application for further discovery by the applicants should be refused.

The points of defence of the second respondent

75                  The applicants seek to strike out pars 2, 3, 28.3.1 and 31 of the amended points of defence of the second respondent to the applicants’ amended points of claim.  Although those documents have been amended from time to time, the paragraphs in issue remain unaltered.

76                  Paragraph 2 of the amended points of defence of the second respondent does not admit that the first respondent is “an authority or agency of the Crown” as alleged.  It admits its statutory foundation under the Act.  Paragraph 3 does not admit the same allegation against the second respondent, but again acknowledges his statutory foundation.  The applicants contend that the pleas are unsustainable in law, and are simply an attempt to avoid acknowledging that the second respondent is bound by s 51 of the Act.  The application is made under O 11 r 16 of the Federal Court Rules, and should be granted only in a clear case:  General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.

77                  In my judgment, those paragraphs of the amended points of defence complained of should not be struck out.  I do not think that they cause any embarrassment to the applicants.  There is no issue as to the applicable statutory provisions.  There is no suggestion of any additional fact which might inform the status of the first and second respondents:  cp O 11 r 10.  I discern, as I was told in submissions, that the form of the plea is simply because the second respondent is uncertain as to what is encompassed in the applicants’ allegation beyond the relevant statutory foundation underlying the first and second respondents.

78                  The applicants also sought to strike out pars 3.5, 3.6 and 3.7 of the amended points of defence of the second respondent.  They respond to allegations that the second respondent has certain obligations not to use certain information in the performance of his functions.  The points of defence, in my judgment, are proper responses to the points of claim.  They clearly indicate the second respondent’s position.  They respond, in some detail, to the general allegations of the applicants.  Ultimately, whether the allegations of the applicants are correct, or the response of the second respondent is correct, will depend largely on the relevant legislation.  I decline to strike them out.

79                  Finally, the applicants sought to strike out pars 3.7, 28.3.1 and 31 of the amended points of defence of the second respondent.  That application is made under O 20 r 2 as well as under O 11 r 16.  The same degree of caution should be exercised in determining that application:  General Steel Industries (above); Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.

80                  The complaint of the applicants is twofold.  First it is submitted that par 28.3.1 contains unparticularised allegations of fraud.  Secondly it is submitted that the averments that the second respondent is “entitled to use illegally obtained material” for the purposes of taxation assessments is unsustainable in law, and is inadequately pleaded.

81                  I reject the first submission.  Paragraph 28.3.1 is responsive to the points of claim that the second respondent made improper allegations of tax fraud to the applicants’ accountant on 8 December 1998.  No details of what was alleged, or the facts upon which it is claimed that the allegations so made were improper, are given.  The second respondent has admitted making allegations of tax fraud, but denies that they were improper or without foundation.  I do not consider that the applicants, in the circumstances, are entitled to further particularity.  If they wish to allege clearly that they have a cause of action against the second respondent which is amenable to proceedings in the Court by reason of the second respondent making allegations of tax fraud to their accountants on 8 December 1998, they can plead that cause of action properly.  If they wish to contend that generally the second respondent had no reason to investigate their affairs and no power to do so (as distinct from his procedures in using information obtained upon the execution of the warrant), so that they have some cause of action on that basis, they must plead that cause of action properly.  Such claims will involve identifying the cause of action and the statutory foundation upon which the jurisdiction of the Court is invoked.  If they wish to dispute the second respondent’s assessments, except arguably where the allegation is that the assessments were made in bad faith, they will need to persuade the Court that this proceeding is the appropriate avenue to do so.  I have, elsewhere in these reasons, made similar observations about certain other sub-pars of par 28 of the applicants’ points of contention.  I am not prepared to accede to the present application, which would treat the claim as including an inquiry into the propriety of the second respondent having made such allegations, or into the foundation for the second respondent having such views.

82                  The second respondent has denied in par 3.7 that it is bound not to use information from sources when he knows that information has been obtained illegally or improperly.  Paragraph 31 asserts that he may use documents provided by the first respondent whether or not their seizure or dissemination to him was lawful.  The second respondent has indicated that he is entitled, and indeed is obliged, under s 166 of the Income Tax Assessment Act 1936 (Cth) to do so.

83                  I do not regard that contention as unarguable, having regard to the terms of s 166 of that Act.  Furthermore, as I indicated in the reasons for decision given on 21 May 1998, its outcome may depend upon the precise findings of fact.  In my discretion, I consider it desirable that the issue raised should be left to be decided when those findings of fact have been made.  I have considered the arguments of the applicants, which they enhance by reference to the affidavits of proposed evidence filed by the respondents.  They particularly relied upon the affidavits of the third respondent and Mr Bonnici.  Notwithstanding those matters, the terms of s 166 are sufficient to rule that the matters pleaded by the second respondent should be permitted to proceed to trial.

84                  I do not consider that the pleading, as expressed, is unfair to the applicants.  Indeed, they sought to have that issue determined as a separate and preliminary issue in these proceedings.  For reasons given on 21 May 1999, I declined to do so.  The applicants complain that the pleading does not expressly say what the second respondent’s position is in relation to the status of the third respondent.  I do not consider that the pleading complained of is inadequate.

85                  As noted earlier, the second respondent’s position includes that he may use the information however obtained.  He has pleaded, in addition, that the information was obtained by him lawfully and additionally that any impropriety on the part of the first and third respondents was not impropriety in which, by his officers, he was complicit or of which he was aware.  I do not consider that the finding is of the character that it ought to be struck out.

86                  The applicants’ claim to have certain paragraphs of the points of contention of the second respondent struck out is refused.

Associate:

Dated:              20 August 1999