FEDERAL COURT OF AUSTRALIA
Watson v AWB Limited (No 2) [2009] FCA 1047
Evidence Act 1995 (Cth), s 130
Office of National Assessments Act 1977 (Cth)
Alister v The Queen (1984) 154 CLR 404 applied
Attorney-General (NSW) v Chidgey (2008) 182 A Crim R 536 cited
Commonwealth v Northern Land Council (1993) 176 CLR 604 applied
Commonwealth v Northern Land Council (1991) 30 FCR 1 applied
Conway v Rimmer [1968] AC 910 applied
Esso Australia Resources Ltd v Commissioner of Taxation (1998) 83 FCR 511 applied
Northern Territory v GPAO (1999) 196 CLR 553 applied
R v Young (1999) 46 NSWLR 681 applied
Rogers v Home Department State Secretary [1973] AC 388 applied
Sankey v Whitlam (1978) 142 CLR 1 applied
NSD 2020 of 2007
FOSTER J
17 SEPTEMBER 2009
SYDNEY
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IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
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GENERAL DIVISION |
NSD 2020 of 2007 |
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JOHN WATSON AND KAYE WATSON IN THEIR OWN RIGHT AND AS REPRESENTATIVES OF THE GROUP MEMBERS Applicants
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AND: |
AWB LIMITED (ACN 081 890 459) Respondent
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JUDGE: |
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DATE OF ORDER: |
17 SEPTEMBER 2009 |
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WHERE MADE: |
SYDNEY |
THE COURT:
1. ORDERS that the Commonwealth of Australia acting through the Office of National Assessments and the Director-General of that office produce to the Court by no later than 25 September 2009 the 15 redacted reports used by Commissioner TRH Cole QC as the basis for the findings made by him in par 30.112 of Vol 4 of his Report of the Inquiry into Certain Australian Companies in relation to the UN Oil-for-Food Programme (the 15 reports) and all documents in the possession, custody, control or power of the Office of National Assessments which show or tend to show to whom in the Department of Foreign Affairs and Trade each of the 15 reports was sent and when each such report was sent to such persons (the distribution lists).
2. ORDERS that production of the 15 reports and the distribution lists be effected by delivering a legible copy of each such report and list in a sealed envelope to the Associate to the Hon Justice Foster, a Judge of this Court.
3. ORDERS that any further submissions to be made on behalf of either the Commonwealth of Australia or the respondent in these proceedings in respect of the public interest immunity claims maintained by the Commonwealth in respect of the 15 reports and the distribution lists be made in writing and be filed by no later than 25 September 2009.
4. RESERVES for further consideration and determination the public interest immunity claims pressed by the Commonwealth of Australia and the Director-General of the Office of National Assessments in respect of the 15 reports and the distribution lists, such determination to be given after inspection of copies of the 15 reports and the distribution lists by Foster J.
5. ORDERS that the Commonwealth of Australia and the Director-General of the Office of National Assessments be excused from producing any documents in the categories specified in the schedule to the subpoena for production dated 23 July 2009 issued at the request of the respondent and served upon the Proper Officer of that office other than those documents ordered to be produced in pars 1 and 2 above.
6. MAKES no order as to the costs of and incidental to the Notice of Motion filed by the Commonwealth of Australia on 17 August 2009.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
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IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
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general division |
NSD 2020 of 2007 |
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BETWEEN: |
JOHN WATSON AND KAYE WATSON IN THEIR OWN RIGHT AND AS REPRESENTATIVES OF THE GROUP MEMBERS Applicants
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AND: |
AWB LIMITED (ACN 081 890 459) Respondent
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JUDGE: |
FOSTER J |
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DATE: |
17 SEPTEMBER 2009 |
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PLACE: |
SYDNEY |
REASONS FOR JUDGMENT
1 The present action is a class action brought by and on behalf of certain shareholders in the respondent (AWB). Those shareholders allege (amongst other things) that AWB contravened the Corporations Act 2001 (Cth) and other Commonwealth legislation by concealing from the Australian stock market and from relevant authorities the fact that it had paid inland transportation fees and other payments in respect of wheat shipments to Iraq which were inflated and which exceeded the real costs to AWB of transporting its wheat in Iraq in order to make funds available to entities and persons associated with the Government of Iraq in breach of UN sanctions which were then in force.
2 The initial trial in the proceedings is fixed to commence on 30 November 2009.
3 AWB served a subpoena upon the Office of National Assessments (the ONA) requiring the production of various documents and reports.
4 The ONA was established in 1977 by the Office of National Assessments Act 1977 (Cth)(the ONA Act). The ONA is an independent intelligence agency which is directly accountable to the Prime Minister.
5 The ONA has applied to the Court seeking to be excused from being required to produce any of the documents called for by the AWB subpoena. It contends that it ought to be excused from compliance because all of the documents called for under the subpoena are protected by public interest immunity.
6 Prior to the hearing of the ONA’s application, AWB and the ONA agreed that the description of the documents specified in the Schedule to the subpoena should be narrowed so as to require production of the following documents only:
The 62 intelligence reports created in the period 1998 to 2004 which were produced to the Cole Inquiry on 24 February 2006 in response to Notices to Produce served by Commissioner Cole upon AWB in February 2006 (the 62 reports) and documents which show to which officers and employees of the Department of Foreign Affairs and Trade such reports were sent (the distribution lists).
7 During argument, Counsel for AWB further limited the scope of the subpoena by stating that his client would accept redacted versions of the 62 reports. AWB suggests that the masking of portions of those reports should be governed by the same principles that were applied to the masking of portions of 15 of those reports which were the subject of an agreed distillation in Mr Cole’s final report (at [30.112] of the Report) (the Cole distillation).
8 In other words, AWB ultimately submitted that the Court should require the production of:
(a) The 15 reports which were the subject of the Cole distillation, in the redacted form considered by Mr Cole;
(b) The remaining 47 reports produced to certain lawyers assisting the Cole Inquiry but not seen by the Commissioner himself redacted according to the same principles as were applied to the 15 redacted reports that were looked at by Mr Cole; and
(c) The distribution lists.
9 AWB is prepared to agree to limit access in the first instance to a small number of named lawyers in its legal team. It is also prepared to accept any sensible confidentiality regime in respect of the documents.
10 The ONA maintains its opposition to the production of all of the 62 reports even in redacted form. It also opposes production of the distribution lists.
11 The issues which arise for determination are:
(a) Whether the ONA can resist production of all of the documents now called for by the AWB subpoena on public interest immunity grounds;
(b) If not, whether all or only some and, if only some, which of the 62 reports and distribution lists should be produced and inspected. This issue raises the following further questions:
(i) Whether, for present purposes, the 15 Cole distillation reports are in a different category from the remaining 47 reports;
(ii) Whether it is appropriate or even possible for the Court to require the ONA to perform the process of redaction suggested by AWB in respect of the remaining 47 reports; and
(iii) Whether the Court should impose some further limitation on the number of reports required to be produced by looking at the real needs of AWB and by limiting the number of reports by reference to those real needs. One way of approaching the matter might be to require production of reports created over a more limited time span—say 1998 to 2002.
12 These issues overlap to a large extent. I will consider them together but will address the substance of each of them in that consideration.
The ONA and its Work
13 The ONA Act provides that there should be a Director-General of the ONA. The ONA comprises the Director-General and the staff of the ONA.
14 The ONA provides to the Prime Minister and to other ministers comprising the National Security Committee of Cabinet, advice and assessments on international political, strategic and economic developments which might affect Australia’s national interests. Information obtained by the ONA comes from many sources. The ONA draws on information provided by other intelligence agencies (including foreign agencies) and material obtained from open sources. It maintains close ongoing contact with intelligence agencies of several other countries. The ONA is also responsible for the co-ordination and evaluation of Australia’s foreign intelligence activities. It is in constant contact with Australia’s other foreign intelligence agencies.
The ONA’s Claims
15 The ONA relied upon two affidavits sworn by its Director-General. He testified that he had read the 62 reports. He has only recently been appointed to his current position and was not qualified to give evidence dealing with the circumstances in which those reports were created. He had, however, worked in the ONA for approximately eight years in two separate periods between 1978 and 1989 and had obtained other relevant advisory experience at the highest levels of government in the period 1991 to 1996.
16 The ONA also relied upon two further affidavits sworn by persons other than the Director-General which were read by me but otherwise kept confidential. These affidavits were not made available to AWB or to its legal representatives. For reasons briefly explained at the time when I made my ruling, I decided that these additional affidavits contained confidential information which ought not be disclosed, even to AWB’s legal representatives. With the consent of the ONA, I prepared a short document describing in general terms the nature of the contents of the two confidential affidavits. That document, which became confidential Exhibit B, was shown to Counsel for AWB and to its lead solicitor in Court at the time of the hearing upon terms that the contents of Exhibit B not be disclosed.
17 I have read and propose to take into account the contents of the two confidential affidavits.
18 The Director-General said that he was mindful of the matters alleged in pars 26, 27(a) and 28(a) of the Second Further Amended Statement of Claim when he read the 62 reports. Those paragraphs of the Statement of Claim (together with the balance of par 28) and the corresponding paragraphs in AWB’s Defence are the paragraphs in the pleadings relied upon by AWB as justifying production of the documents specified in its subpoena. In those paragraphs, the applicants in the proceedings assert that the true arrangements between AWB and its Iraqi purchasers involving the payment of inflated transport fees were concealed from and not known by the Department of Foreign Affairs and Trade (DFAT). AWB wishes to argue that, contrary to that allegation, DFAT was aware of these arrangements at all relevant times.
19 I shall deal with the pleadings in a little more detail later in these reasons.
20 The evidence before me showed that, on 24 February 2006, the 62 reports were furnished by the ONA to certain lawyers assisting the Cole Inquiry in response to Notices to Produce issued by the Commissioner. The ONA took that course on the basis that the contents of those reports would be kept confidential. The Cole Inquiry lawyers who were provided with those reports held a top secret security clearance which enabled them to read the 62 reports without thereby breaching the relevant Australian Government security protocols. The lawyers read all of the 62 reports. They considered 15 of the 62 reports to be sufficiently important to the Inquiry to be shown to Commissioner Cole. They formed the view that the remaining 47 reports were not sufficiently important to be shown to the Commissioner. The 15 reports which were identified as reports to be shown to Mr Cole were then redacted in consultation with the ONA. The 15 redacted reports were then provided to Mr Cole. He did not see any of the remaining 47 reports. Mr Cole, in consultation with the ONA, then produced a distillation of the 15 redacted reports which he had read and considered. That distillation is found at [30.112] of his final report. Mr Cole’s final report is publicly available. None of the 62 reports is publicly available.
21 The Director-General said:
These 15 reports [referring to the 15 reports shown to Commissioner Cole in redacted form] appear to be the documents that are most relevant to the matters described in the ONA subpoena.
22 I have attached as Attachment A to these Reasons the text of [30.112] of Mr Cole’s final report. Subparagraphs 1 to 9 of [30.112] comprise Mr Cole’s distillation of the 15 redacted reports which were made available to him in 2006.
23 The Director-General also said:
In my view, the Cole distillation is an accurate distillation of the 15 reports.
24 The Director-General also made clear that all of the information and material contained in the 62 reports was received from intelligence agencies of other countries (Australian intelligence partners) and had not been collected by Australian intelligence agencies. He said that the material was all unassessed intelligence. The reports were part of 750,000 unassessed intelligence reports distributed within the Australian Government in the period 1998–2004. Such reports are not regarded by those who read them as containing “proven facts”. To achieve that status, they would need to be assessed by qualified, experienced and competent analysts (ie put into context, examined, weighed and verified). Sources are never revealed in circulated unassessed intelligence reports.
25 At pars 18 and 19 of his affidavit sworn on 17 August 2009, the Director-General said:
18. Australia’s foreign intelligence agencies are generally prohibited by law from collecting intelligence on Australian citizens, permanent residents or corporate entities either in Australia or overseas. It is not generally the task of Australian intelligence agencies to monitor the behaviour of Australian companies. Where foreign intelligence results in the collection of incidental information about Australians, the standard practice is that the identity of the Australians or Australian bodies in intelligence reports is usually concealed through the use of generic terms such as ‘a named Australian’ or ‘a named Australian entity.’
19. None of the subpoenaed documents explicitly mentions the AWB, or any other Australian company, making improper payments to the Iraqi regime. Only one document refers to an Australian company. None of the documents specifies the wheat trade, with one exception. The exception was a November 2003 report which suggested that most large companies had refused to pay Iraqi imposed surcharges, citing as an example, wheat imports from Australia. Nothing in the subpoenaed documents could, in my view, be interpreted by an assessment agency as showing that any Australian company was engaged in making illicit payments to Iraq.
These remarks were addressed to all 62 of the reports.
26 Forty-five of the 62 reports are classified Top Secret. The remaining 17 are classified Secret. These classifications significantly restrict access to those documents within the Government and prevent disclosure outside Government circles. Many of the documents carry other classifications which cannot themselves be disclosed.
27 Three grounds of substance are advanced by the ONA in support of its claim for public interest immunity. These are:
(a) Disclosure of the contents of the 62 reports would prejudice Australia’s national security;
(b) Disclosure would damage our relations with other countries; and
(c) Disclosure would enable interested parties to conduct what is called in the intelligence community, a mosaic analysis, which might lead to an accurate picture of a relevant state of affairs being conveyed accidentally because an informed and interested reader of disparate pieces of information may be able to piece together a picture which would not readily present itself to less informed and less interested persons.
Ground (a) – Prejudice to National Security
28 The Director-General testified that disclosure of any part of the 62 reports would:
(a) Reduce Australia’s intelligence partners’ willingness to provide further information to Australia’s intelligence and law enforcement agencies; and
(b) Compromise sources and methods of intelligence collection and thereby seriously prejudice Australia’s national security, defence, law enforcement and foreign liaison interests.
29 The Director-General also relied upon the contents of the two confidential affidavits to which I have referred at [16] above.
Ground (b) – Prejudice to International Relations
30 The Director-General said that, in his view, disclosure of some of the material in the 62 reports could well seriously compromise Australia’s relationships with several countries and organisations. In particular, he said:
I consider that if it was revealed that Australia was collecting intelligence in relation to the activities of a number of these countries and/or organisations they would be surprised, offended and angry and it would undermine the mutual respect, trust and confidence established between Australia and these countries and/or organisations.
31 This was not an assertion made in respect of all of the documents but rather in respect of only some of them.
Ground (c) – Mosaic Analysis
32 As to this, the Director-General said:
“Mosaic analysis” is a well-established counter-intelligence tool. Mosaic analysis involves combining pieces of information to enable a “picture” to emerge from which inferences can be drawn by targets, or other persons of interest, about matters not otherwise known to them. Some of the pieces of information may appear to be disparate and/or benign; and specific (but important) items of information may only be known by the target(s) or other persons of interest (making it difficult to precisely assess the risk posed by mosaic analysis in any particular scenario). However, in my opinion there is a very high risk that, disclosure of parts of the subpoenaed documents [referring to the 62 reports], in conjunction with other facts already known to relevant persons, would enable them to draw reliable inferences in relation to sources and methods of intelligence collection of Australia’s intelligence partners.
33 In dealing with this ground, the Director-General gave a detailed explanation as to how the Cole distillation had been prepared. All relevant intelligence agencies within the Australian intelligence community were consulted in order to ensure that the risk of a successful mosaic analysis being undertaken by persons likely to act contrary to the interests of Australia was minimised. In addition, there was a need to consult closely with the overseas foreign intelligence agencies which had supplied the intelligence or had an interest in the supply of that intelligence to Australian intelligence agencies in order to ensure that the concerns of those foreign agencies were met as far as possible. Drafts were held under tight security. Nonetheless, there was considerable displeasure expressed by the foreign intelligence agencies that any disclosure was being undertaken for the purposes of the Cole Inquiry. The Director-General made the point in his evidence that disclosure in 2006 for the purposes of the Cole Inquiry constituted a very different disclosure from that which is now being sought. The disclosure sought by AWB is for the purposes of a private civil action involving claims for money and not, for example, the liberty of any person. Nor is it sought for the purpose of satisfying the reasonable and proper demands of the United Nations, as was the case with the Cole Inquiry. The Director-General made the further point that, in 2005–2006, the former Prime Minister, Mr Howard, had requested Australia’s intelligence agencies to provide whatever assistance they could to the Cole Inquiry given that the United Nations had more or less demanded that national authorities take steps to prevent illegal practices being carried on by their citizens in relation to the supply of food under United Nations Food Programs.
34 The Director-General expressed the view that Australia’s intelligence partners would be extremely anxious and displeased if any of the information contained in the 62 reports were disclosed for the purposes of civil litigation between private citizens and that there was a very real prospect that, should such disclosure be ordered, those intelligence partners may be less inclined to provide intelligence to Australia’s intelligence and law enforcement agencies in the future. For reasons explained in the confidential affidavits, this would have serious consequences for Australian’s national security.
35 The evidence also demonstrated that 60 of the 62 reports under consideration were distributed to DFAT.
36 The contents of the confidential affidavits provided detailed support for the Director-General’s claims. In particular, they provided persuasive evidence to the effect that the disclosure of the contents of the 62 reports would be likely to:
(a) damage Australia’s relationships with some of its allies;
(b) damage Australia’s relationships with certain foreign intelligence agencies;
(c) place at risk the flow of intelligence to the Australian intelligence community from its foreign intelligence partners;
(d) compromise human intelligence services; and
(e) reveal secret and sensitive intelligence collection methods.
37 It is neither necessary nor desirable for present purposes for me to reveal more of the contents of the confidential affidavits.
38 I have not been given any of the 62 reports. For that reason, I have not looked at any of those reports. The ONA submitted that I should not require the production of any of those reports for inspection by me unless I form the view at this stage that its claims have probably not been made good and that I need to inspect the documents in order to decide finally whether the 62 reports or some of them should be made available to AWB’s legal representatives. This submission correctly encapsulates the relevant principles.
AWB’s Stated Forensic Purpose
39 In order to determine the threshold question posed by the ONA’s claims and in order to carry out the balancing exercise which I may then be required to carry out, I must understand the forensic purpose sought to be served by AWB requiring the production of the 62 reports and the distribution lists and to assess whether that purpose is both legitimate and of sufficient weight to justify the production sought or to justify at least some production.
40 As the foundation of its stated forensic purpose, AWB points to pars 26, 27(a) and 28 of the Second Further Amended Statement of Claim and to pars 26, 27, 28 and 29 of its Amended Defence. In pars 26, 27(a) and 28 of the Second Further Amended Statement of Claim, the applicants allege that:
(a) AWB concealed from DFAT and/or the United Nations the fact that it was paying artificially inflated inland transportation fees for the benefit of Iraqi entities and in breach of UN Resolution 661 and also concealed certain other payments from DFAT and the United Nations;
(b) The concealment of the material referred to in subpar (a) above was intended to induce the Minister for Foreign Affairs and Trade to grant permission for AWB’s wheat to be exported to Iraq in circumstances where that permission would not have otherwise been granted and could not have lawfully been granted;
(c) The concealment of the matters referred to in subpar (a) was also intended to induce the United Nations to approve the wheat contracts as being consistent with the United Nations Oil-for-Food Program and not contrary to United Nations sanctions;
(d) Had the information and facts concealed from DFAT been revealed to DFAT, the necessary permissions to export wheat to Iraq would not have been granted and could not lawfully have been granted; and
(e) Had the information and facts concealed from the United Nations been revealed to that organisation, United Nations approval of AWB’s wheat contracts with Iraq would not have been given.
41 In its defence, AWB denies the substance of these allegations. However, it admits that, during the period between 11 March 2002 and 13 January 2006, it did not disclose publicly the material which the applicants allege it concealed and contends that it was not under any obligation to disclose publicly those facts and matters. It also relies upon a number of matters in support of an allegation that this Court cannot and, in any event, ought not, exercise any jurisdiction in respect of any of the applicants’ claims.
42 Counsel for AWB informed me that his client was seeking the 62 reports and the distribution lists in order to demonstrate that DFAT had knowledge of the nature and extent of the payments made by AWB which the applicants assert were concealed. Counsel made clear that, in addition, some of the early wheat contracts that were submitted to DFAT by AWB did, in fact, explicitly disclose that transport fees were being paid. He emphasised, however, that AWB was not in a position to assert that it told DFAT of all of the relevant payments and that, for this reason, AWB needed to obtain evidence that would establish or tend to establish that DFAT knew of the payments, in any event. It was AWB’s contention that the 62 reports comprised a good collection of documents which were likely to contain information and material that might prove or tend to prove that DFAT had the requisite knowledge.
43 AWB’s contentions in this regard are advanced as matters of defence directed to the allegations made by the applicants in the proceedings to the effect that DFAT (and, in particular, the relevant decision-makers in respect of the approvals given to AWB) was not aware of the nature and extent of the impugned payments. AWB submitted that it was rational and sensible for it to assume that, at trial, the applicants will be able to adduce sufficient evidence to discharge at least an initial evidentiary burden directed to proving the negative propositions which they have pleaded so that, unless AWB were able to adduce evidence to the contrary either in cross-examination of witnesses called by the applicants or in documents sought to be tendered as part of AWB’s own case, it would run the risk that the Court might accept the contentions being advanced by the applicants. AWB submitted that the allegations made in pars 26, 27(a) and 28 of the Second Further Amended Statement of Claim raised significant issues in the case and that it should be allowed to defend itself against those allegations by having access to the 62 reports and to the distribution lists. AWB submitted that it required those reports in order to test the evidence which the applicants are likely to adduce in support of the allegations made in those paragraphs of the Statement of Claim. The applicants’ claim is very substantial and has great significance for all parties to the proceedings. AWB submitted that it will not be able to tender the Cole distillation at the trial and that, if it wanted to prove the matters set out in that distillation, it would need to have available for tender the 15 redacted reports which underpin the Cole distillation. Counsel submitted that those 15 reports would be admissible as business records, even in their redacted form. For these reasons, AWB argued that it was entitled to require the production of the 62 reports and the distribution lists.
44 I accept that the allegations made by the applicants in pars 26, 27(a) and 28 of the Statement of Claim are an important part of the case which the applicants will seek to make against AWB at trial. AWB has therefore satisfied me that its purpose in seeking production of the 62 reports and the distribution lists is legitimate and actuated by a genuine desire to bring to Court documents which might assist it to defend itself against the serious and significant allegations made by the applicants in pars 26, 27(a) and 28 of the Statement of Claim.
Consideration and Decision
Should the ONA be Excused from Producing All 62 Reports?
45 Had the ONA not co-operated with the Cole Inquiry in the way that it did and had the Cole distillation not been produced and made public, I would have answered this question: Yes. But, in the events which have happened, I answer the question: No.
46 My conclusion is that the ONA should be required to produce to the Court for inspection by me in the first instance the 15 redacted reports furnished to Mr Cole, and only those reports. It should also be required to produce all documents which show or tend to show to whom in DFAT each of those 15 reports was sent and when each such report was sent to such persons. I will then inspect all of the documents produced to me in order to determine whether the ONA’s claim that the documents are protected by public interest immunity should be upheld. At this stage, I am not persuaded that the claim has been made out in respect of those documents although, after inspecting them, I may be so satisfied.
47 I am, however, satisfied that the ONA’s claim to be excused from producing the remaining 47 intelligence reports and those distribution lists which relate only to those 47 reports has been made out. I will make appropriate orders giving effect to that conclusion. This conclusion obviates the need to consider whether I could or should order the ONA to undertake a masking exercise in respect of these 47 reports.
48 I will now state my reasons for these conclusions.
Which Reports and Distribution Lists should be Produced for Inspection
49 The present application involves the application of the relevant principles at the earliest stage of the Court’s processes designed to ensure that relevant evidence is brought to Court and is available for tender. The claim of public interest immunity is being made in order to justify the excusing order which the ONA seeks. Such a claim is governed by the common law (Esso Australia Resources Ltd v Commissioner of Taxation (1998) 83 FCR 511 at 516519 and at 564–566; Northern Territory v GPAO (1999) 196 CLR 553 at [16] (p 571); [135] (p 606); [199] (p 624); and R v Young (1999) 46 NSWLR 681 at [37] (p 691); [50] (p 692); [217] (p 721); [318] at (p 741); and [345] (p 747)).
50 If documents are ordered to be produced, the future disposition of them will fall to be controlled by the Court. Should any party seek to tender any of them or any part of any of them at the trial, any claim for public interest immunity made by the ONA at that point will be governed by s 130 of the Evidence Act 1995 (Cth). My decision in relation to the present application by the ONA may be very relevant and highly persuasive in relation to a public interest immunity claim made in respect of a proposed tender at trial but it would not necessarily be determinative of such a claim.
51 Where an objection to the production of documents in answer to a subpoena is based upon a claim of public interest immunity, the usual practice—established many years ago—has been for the grounds of the claim to be set out and explained in an affidavit made by either the Minister who is the political head of the particular department concerned or the Secretary of that department (Sankey v Whitlam (1978) 142 CLR 1 at 43). The weight to be afforded to that affidavit is governed to some degree by the extent of the knowledge which the deponent possesses concerning the documents which are the subject of the claim (Sankey v Whitlam 142 CLR at 44). The knowledge of those documents which must be considered comprises not only knowledge of the contents of the documents but also knowledge of the circumstances in which they came into existence. When the claim is based partly or wholly on national security grounds, very considerable weight must be given to the views of the responsible Minister or the permanent head. In the present case, because we live in dangerous times and matters of national security are at the forefront of the ONA’s responsibilities, very considerable weight must be given to the views of the Director-General expressed, as they were, on his oath (Alister v The Queen (1984) 154 CLR 404 at 435).
52 The Director-General of the ONA has read all of the 62 reports. He has also read the confidential affidavits (one, as sworn, and the other in final draft form, but not yet sworn). It is apparent from the terms of his affidavits that the Director-General has also relied upon information conveyed to him by his staff as to the circumstances in which the Cole distillation came into existence. It is generally to be expected in cases such as the present that the relevant deponent will testify that he has read all of the documents for which the immunity is claimed (Sankey v Whitlam 142 CLR at 43–44; 96 and 108). The deponent will also need to explain why the disclosure of the documents is detrimental to the proper functioning of the Executive Government and of the Public Service (if appropriate).
53 At [27] above, I have summarised the bases upon which the ONA seeks to claim public interest immunity in respect of the 62 reports and the distribution lists.
54 Claims of public interest immunity require the Court to decide whether the administration of justice will be impaired or perhaps even frustrated by the withholding of relevant evidence in favour of a greater public interest, namely, that harm shall not be done to the nation or the Public Service by the disclosure of the material in contest (Conway v Rimmer [1968] AC 910 at 940; Rogers v Home Department State Secretary [1973] AC 388 at 400; 406–407; Sankey v Whitlam 142 CLR at 38–39; 60; and 94; Alister v The Queen 154 CLR 404 at 412; and 434; and Commonwealth v Northern Land Council (1993) 176 CLR 604 at 616–617).
55 In Commonwealth v Northern Land Council (1991) 30 FCR 1 at 31, a Full Court of this Court said:
Threshold criteria for the balancing process
When a claim for public interest immunity is raised, there may be a threshold question to be resolved by the court. That is whether the documents in question are or may be of sufficient importance to the case that the court should undertake the exercise, which may involve their inspection, of balancing the public interest in withholding production against the public interest in the administration of justice. The Commonwealth submitted that before the “balancing process” described in Sankey v Whitlam was undertaken this Court had to be satisfied, as a matter of likelihood rather than mere speculation, that the materials in question would contain evidence for tender at trial. The Council denied there was any such requirement imposed upon it. We agree there is no requirement in the terms contended for by the Commonwealth.
56 According to the Director-General’s evidence, none of the 62 reports explicitly mentions AWB, or any other Australian company, making improper payments to the Iraqi regime. Indeed, only one of the documents refers to an Australian company at all. The only document which mentions the wheat trade tends to suggest that some companies had refused to pay the Iraqi imposed surcharges citing, as an example, wheat imports from Australia. Forty-seven of the 62 reports were not considered by lawyers assisting the Cole Inquiry to be sufficiently important to be shown to the Commissioner. Yet the Cole distillation makes clear that Commissioner Cole was very much focussed on the extent of DFAT’s knowledge of the impugned payments and the basis upon which those payments had been made.
57 As Counsel for AWB submitted, the 15 redacted reports shown to Mr Cole seem to support the proposition that unassessed intelligence reports did indicate that Alia (the company said to have received the surcharge payments from AWB) received fees in Jordan for the discharge and inland transport within Iraq of goods purchased by Iraq under the Oil-for-Food Program. It received these fees as agent for the Iraqi government. The Cole distillation also suggested, if only by inference, that all essential food items imported into Iraq under the Oil-for-Food Program were subjected to the requirement that the surcharge fees be paid. The 15 redacted reports seem to contain information and material that is much closer to the type of material AWB seeks in order to support its case. Those reports cover the entire period with which the present proceedings are concerned.
58 It seems to me that it is sufficiently “on the cards” that there may be something in the 15 redacted reports shown to Mr Cole which, either alone or in combination with other evidence, might advance the case which AWB seeks to put in answer to the allegations made against it by the applicants in the present proceedings in pars 26, 27(a) and 28 of the Second Further Amended Statement of Claim. The “on the cards” test is explained by the NSW Court of Appeal in Attorney-General (NSW) v Chidgey (2008) 182 A Crim R 536 at [58]–[80].
59 However, given that the remaining 47 reports were read and considered by lawyers assisting the Cole Inquiry and not thought by them to be of sufficient relevance and importance to be passed on to the Commissioner himself for his consideration and given the clear evidence of the Director-General set out in pars 18 and 19 of his affidavit sworn on 17 August 2009 (which I have extracted in full at [25] above), I do not think that it can fairly be said that it is “on the cards” that there will be information and material in the remaining 47 reports which might advance AWB’s case in defence of the allegations made in pars 26, 27(a) and 28 of the Statement of Claim.
60 Accordingly, in my view, AWB has failed to demonstrate that the 47 reports not seen by Mr Cole are or may be of sufficient importance to its case that the Court should undertake the exercise of balancing the public interest in withholding production against the public interest in the administration of justice. Accordingly, it has failed to satisfy the threshold question posed in respect of those 47 reports.
61 Because I have come to the conclusion that AWB has failed to satisfy the threshold question in respect of the 47 reports not seen by Mr Cole, it is unnecessary and inappropriate for me to embark upon the balancing exercise required by the relevant authorities in respect of those 47 reports. However, I should record that, were I required to carry out that balancing exercise in respect of those 47 reports, I would have no doubt that the significant public interest in keeping the contents of those documents confidential far outweighs the competing interest in the administration of justice that might suggest that AWB should have access to those reports. If those reports were disclosed, there is a strong likelihood of great harm being caused to Australia’s security and its national interests and very little likelihood that the contents of those reports will advance AWB’s case.
62 I turn now to carry out the balancing exercise in respect of the 15 redacted reports shown to Mr Cole.
63 Counsel for AWB submitted that, given that the Cole distillation was in the public domain, it was unreal for the ONA to press its claim for public interest immunity in respect of these documents. It is not a question of waiver, for public interest immunity cannot be waived. However, once the contents or the substance of the contents of a document have been disclosed, there is no longer any reason to deny to the Court access to that document if it provides evidence that is relevant and otherwise admissible (Sankey v Whitlam 142 CLR at 45). The public interest in non-disclosure would either be much reduced or destroyed by the prior publication of the contents of the document (Sankey v Whitlam 142 CLR at 64).
64 The only argument or ground advanced by the ONA which might survive the fact that the Cole distillation has been made public is the argument advanced under the heading “mosaic analysis”. I do not think that the other two grounds advanced by the ONA now have much weight in light of the fact that the substance of the 15 redacted reports was disclosed to the public at large in the Cole distillation. Any angst felt by Australia’s foreign intelligence partners will not be as great as it was in 2006 and, given the way in which the Cole distillation was compiled, there is little chance that production to the Court of the 15 redacted reports and the distribution lists relevant to those reports will harm national security.
65 The ONA submitted that, notwithstanding the publication of the Cole distillation, the revelation of the actual contents of the redacted 15 reports shown to Mr Cole may well lead to a mosaic analysis being carried out by undesirables, thus threatening Australia’s security and its national interests in the manner adumbrated by the Director-General of the ONA and by the deponents of the confidential affidavits. I do not accept this submission at the moment. Production to the Court for the purposes of inspection and further consideration of the ONA’s claims cannot have the effect suggested by the ONA. Nor do I accept that I should further limit production by reference to a shorter period of time than that covered by the 15 reports.
66 Accordingly, for the reasons I have stated, I propose to order the production to the Court for inspection by me of the 15 redacted reports and associated distribution lists. The ONA will be excused from being required to produce the remaining documents called for by the subpoena. I will reserve for further consideration the question of whether the ONA’s claim that the documents which I will require to be produced should nonetheless be protected from further disclosure on public interest immunity grounds.
67 The Commonwealth of Australia was justified in making the claims for public interest immunity which it made in support of the order which it sought in its Notice of Motion filed on 17 August 2009. Indeed, on one view of the matter, it was bound to make those claims. AWB, on the other hand, is faced with serious allegations which it is entitled to seek to meet by attempting to have brought to Court the documents called for by the subpoena which it issued to the ONA. It seems to me that each of the parties before me on the present application has behaved reasonably and legitimately in the proper pursuit of its best interests. Further, each of those parties has had some success, although neither party has been entirely successful. In the end, it seems to me that the issues which have been dealt with by these Reasons for Judgment were issues which had to be litigated and determined by the Court. For these reasons, I think that there should be no orders as to costs and that each party should bear its own costs of and incidental to the present application.
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I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. |
Associate:
Dated: 17 September 2009
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Counsel for the Applicant: |
Mr MBJ Lee (appeared but was excused) |
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Solicitor for the Applicant: |
Maurice Blackburn Pty Ltd |
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Counsel for the Respondent: |
Mr MJ Darke |
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Solicitor for the Respondent: |
Allens Arthur Robinson |
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Solicitor for the Commonwealth of Australia (acting through the Office of National Assessments): |
Mr AP Berger of Australian Government Solicitor |
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Dates of Hearing: |
10 September 2009 |
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Date of Judgment: |
17 September 2009 |
EXTRACT FROM VOLUME 4 (FINDINGS) OF THE COLE INQUIRY REPORT
Information from the Australian intelligence community
30.112 During the period 1998 to 2004 agencies within the Australian intelligence community produced a number of intelligence reports that, in general terms, concerned issues or events relating to the Oil-for-Food Programme. Pursuant to notices to produce served on agencies within the Australian intelligence community, a number of reports were produced to the Inquiry and inspected by counsel and solicitors assisting. Of the reports inspected, 15 documents were found to be of relevance. Public interest immunity was claimed by the Commonwealth on behalf of the Australian intelligence community in respect of the 15 for the reasons set out in confidential statutory declarations provided by the heads of the agencies that produced the relevant reports. The claim for public interest immunity was upheld, and the reports were tendered as a secret exhibit (secret exhibit 4). However, I prepared a document that distilled the content of the relevant reports and their distribution, without disclosing the source of the information within them or any other matters adverse to the public interest. The distillation was in the following terms:
1. In 1998 the AIC held unassessed intelligence indicating that Alia Corporation (Alia), based in Jordan, was part owned by the Iraqi Government and that it was involved in circumventing United Nations sanctions (sanctions) on behalf of the Iraqi Government.
Distribution
The intelligence reports comprising this information were distributed on or about the date of their creation to other AIC members. Each was also distributed on or about that date to the Department of Foreign Affairs and Trade (DFAT), various areas of the Department of Defence including the International Policy Division and the Office of the Deputy Secretary Intelligence and Security (Defence), the Office of the Inspector-General of Intelligence and Security (IGIS) and to the Department of the Prime Minister and Cabinet (PMC)
2. By the first quarter of 2000 the AIC held unassessed intelligence indicating that Alia received fees in Jordan for the discharge and inland transport within Iraq of goods purchased by Iraq under the Oil for Food Program (OFFP). It received these fees as agent for the Iraqi Government. The fees, less a small commission, were paid into accounts accessible by Iraq in violation of sanctions. The amounts involved were very substantial.
Distribution
The intelligence report comprising this information was distributed on or about the date of its creation to other AIC members. It was also distributed on or about that date to DFAT, Defence, IGIS and PMC.
3. By November 2000 the AIC held unassessed intelligence indicating that Iraq’s transport charges for humanitarian goods under the OFFP had been very substantially increased. Alia was one means by which these transport fees were paid to Iraq. The AIC also held unassessed information that such fees would probably be used for procurement purposes outside Iraq.
Distribution
The intelligence reports comprising this information were distributed on or about the date of their creation to other AIC members. Each was also distributed on or about that date to DFAT and Defence. Only 3 of the 4 were sent to IGIS and PMC; the reports sent to IGIS and PMC did not contain the intelligence on the increased transport charges or the probable use of fees for procurement outside Iraq.
4. By March 2001 the AIC held unassessed intelligence of endeavours by Iraq to breach sanctions by, amongst other methods, collecting commission on contracts for humanitarian goods imported into Iraq under the OFFP. It included unassessed information that Iraq violated sanctions by charging a “commission” of at least 10% on imported humanitarian goods under the OFFP and that the 10% commission was rigidly enforced.
Distribution
The intelligence reports comprising this information were distributed on or about the date of their creation to other AIC members. Each was also distributed on or about that date to DFAT, Defence and IGIS. One report was distributed to PMC; this report did not contain the intelligence that the 10% commission was being rigidly enforced.
5. By September 2001 the AIC held unassessed intelligence indicating that inland transport fees for humanitarian goods, including fees paid through Alia, were proposed to be increased very substantially by Iraq. This increase was on top of the 10% commission already paid and the fees were payable in advance of delivery. The proposed increase in transport fees was to apply to all humanitarian goods delivered under the OFFP through the port of Umm Qasr.
Distribution
The intelligence report comprising this information was distributed on or about the date of its creation to other AIC members. It was also distributed on or about that date to DFAT, Defence and IGIS.
6. By December 2002 the AIC held unassessed intelligence that Iraq was enforcing the 10% commission on imports under the OFFP and that one means by which it continued to be paid was by payment into accounts in Jordan.
Distribution
The intelligence report comprising this information was distributed on or about the date of its creation to other AIC members. It was also distributed on or about that date to DFAT, Defence, Customs, the Australian Federal Police, the Office of the Foreign Minister, the Office of the Minister for Trade, the Prime Minister’s Office, the Australian embassy in Washington and the High Commission London.
7. Between June 2003 and January 2004 the AIC held unassessed intelligence that the former Saddam regime had forced suppliers under the OFFP to pay Iraq the 10% commission.
Distribution
The three intelligence reports comprising this information were distributed on or about the date of their creation to other AIC members. Each was also distributed on or about that date to DFAT. Two of the reports were distributed to Defence, the Australian Embassy Washington and the High Commission London. One was distributed to the Australian Representative Office Baghdad, one to Treasury and one to the Department of Industry, Tourism and Resources.
8. The intelligence held by the AIC between 1998 and 2004 did not mention any Australian company by name. Unassessed intelligence held in November 2003 included that not all large companies had agreed to pay the Iraqi imposed surcharges, and cited as an example wheat imports from Australia.
Distribution
The intelligence report comprising the information held in November 2003 was distributed on or about the date of its creation to other AIC members. It was also distributed on or about that date to DFAT, Defence, the Australian Embassy Washington, the High Commission London and the Australian Representative Office Baghdad.
9. None of the details or particulars of information contained in secret exhibit 4 is inconsistent with the distillation above save that the details above do not include details of the distribution of the certain documents within secret exhibit 4 after the commencement of this Inquiry.
