FEDERAL COURT OF AUSTRALIA

Watson v AWB Limited (No 4) [2009] FCA 1175

PRIVILEGE – consideration of public interest immunity claims at the second stage – requirement to consider and balance the requirements of the due administration of justice against the national interest and the interests of national security – access to most documents refused 

Evidence Act 1995 (Cth), s 69, s 183 

Watson v AWB Limited (No 2) [2009] FCA 1047 related 

JOHN WATSON AND KAYE WATSON IN THEIR OWN RIGHT AND AS REPRESENTATIVES OF THE GROUP MEMBERS v AWB LIMITED (ACN 081 890 459)

NSD 2020 of 2007

FOSTER J

15 OCTOBER 2009

SYDNEY

THE COURT ORDERS THAT:

1.                  Subject to Order 2 below, access by the parties and their legal representatives to the documents produced by the Office of National Assessments (the ONA) and the Commonwealth of Australia in response to Orders made by Foster J on 17 September 2009 be refused.

2.                  Upon giving to the Court an undertaking in writing duly signed in the form of the undertaking set out in Schedule 2 to these Orders, the persons named in Schedule 1 to these Orders be permitted to inspect and photocopy the redacted form of Statutory Declaration produced to the Court by the ONA and the Commonwealth of Australia in response to Orders made by Foster J on 17 September 2009 which is marked as “Confidential Exhibit 1” to these Orders.

3.                  Confidential Exhibits A1, A2 and B, the Judge’s copy of confidential Exhibits A1 and A2 and all other documents produced to the Court in response to the Orders made by Foster J on 17 September 2009 (with the exception of the redacted Statutory Declaration which is “Confidential Exhibit 1” to these Orders) be returned to Counsel for the ONA and the Commonwealth of Australia upon terms that those documents be retained in safe custody by him until the expiration of seven (7) days from the date of these Orders at the expiration of which time, if no further applications are made in respect of those documents, all of those documents may be returned to the ONA.

4.                  There be no order as to the costs of the further consideration given to the matter determined by the Reasons for Judgment published and the Orders made today.

SCHEDULE 1

Persons for the applicants who will need to see confidential material produced in answer to further amended subpoena to ASIC

1.                  John Sheahan SC

2.                  Michael Lee

3.                  Dale Bampton

4.                  Ben Slade

5.                  Jason Geisker

6.                  Jenny Tallis

7.                  Julian Schimmel

8.                  Addy Pong

Persons for the respondent who will need to see confidential material produced in answer to further amended subpoena to ASIC

1.                  Charles Scerri QC

2.                  Matthew Darke

3.                  Craig Phillips

4.                  Sally Gluyas

5.                  Duncan Travis

6.                  Eloise Dias

7.                  Michael Schoenberg

8.                  Carla Bongiorno

SCHEDULE 2

I, [Insert full name, usual residential address and occupation] hereby undertake to the Court that, without obtaining the prior leave of a Judge of the Federal Court of Australia:

(a)        I will not disclose to any person any of the contents of “Confidential Exhibit 1” to Orders of the Court made on 15 October 2009; and

(b)        I will not use any of the information contained in “Confidential Exhibit 1” to the said Orders for any purposes other than for the purposes of these proceedings.

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.

REASONS FOR JUDGMENT

1                     On 17 September 2009, I delivered Reasons for Judgment and made orders in the application by the Commonwealth of Australia and the Office of National Assessments (the ONA) whereby those parties sought to be excused from being required to produce documents in answer to a subpoena served upon the ONA by the applicants in these proceedings (Watson v AWB Limited (No 2) [2009] FCA 1047 (AWB No 2)).

2                     On that day, I ordered that the ONA 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 ONA 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 list).  I also directed that, by 25 September 2009, the ONA and the Commonwealth make any further submissions in support of their application that no access be granted to those reports.

3                     In accordance with the Orders which I made on 17 September 2009, the ONA and the Commonwealth produced to the Court the 15 reports and also made further submissions in writing.  Some of the reports are copies and some are originals.  A further document has also been produced in response to the orders which I made on 17 September 2009.

4                     The ONA and the Commonwealth continue to submit that no access should be granted to the documents which have been produced to the Court.  As a fallback position, those parties submit that, should access be granted, there should be further masking of the 15 reports.  They have provided to me copies of those reports with additional portions masked in order to give effect to this submission.  The additional masking leaves very little of the text of the reports open for inspection.  They also submit that access should be restricted to a small number of persons and that those persons should be required to give appropriate undertakings to the Court. 

5                     At [49]–[67] of AWB No 2 [2009] FCA 1047, I explained my reasons for making the orders which I did on 17 September 2009.  At [66] of AWB No 2 [2009] FCA 1047 I reserved for further consideration the question of whether the ONA’s claim that the documents produced in response to the orders which I made on 17 September 2009 should nonetheless be protected from disclosure on public interest immunity grounds.

6                     I have inspected all of the documents produced to me.  I have also considered the proposals advanced by the ONA and the Commonwealth as to the further masking which they submit is required should access be granted. 

7                     As I am now considering what should be done at the second stage of the process, I am required to undertake the balancing exercise to which I referred at [54]–[62] of AWB No 2 [2009] FCA 1047. 

8                     That exercise involves weighing up the requirements of the due administration of justice, having regard to the circumstances of the present case, against the public interest in protecting the documents from disclosure.  That public interest in the present circumstances involves the protection of the national interest and matters of national security.

9                     At [39]–[44] in AWB No 2 [2009] FCA 1047, I discussed the forensic purpose to which AWB asserted that it would put the documents were they made available to it.  I will not repeat what I said in AWB No 2 [2009] FCA 1047 concerning that matter.  However, it is the forensic purpose to which I have made reference in those paragraphs which I am weighing in the balance when considering the exigencies of the administration of justice in the present case.  In essence, Counsel for AWB submitted that the 15 reports would constitute a body of evidence which might establish or which might tend to establish that the Department of Foreign Affairs and Trade (DFAT) knew of the payments which AWB stands accused of concealing from it.  In particular, it was submitted that, because the Cole Distillation was not admissible in evidence, AWB needed access to the documents from which that Distillation was derived in order to be able to tender those documents at the trial in its own case as business records. 

10                  Whilst the tender of the 15 reports, or one or more of them, was an important part of the submissions made on behalf of AWB, Counsel did not suggest or accept in his submissions that the tender of the documents in AWB’s case was the only use to which the documents might be put.  

11                  Having inspected the 15 reports and having read them carefully, I am firmly of the view that none of them could be tendered in evidence pursuant to s 69 of the Evidence Act 1995 (Cth) (the Evidence Act).  Whilst AWB may well be able to satisfy some of the requirements of s 69 in respect of the 15 reports, it will not be able to satisfy the personal knowledge requirements laid down in subs (2) and (5) of that section.  None of the reports is signed.  Although some of the reports, in their unredacted form, clearly refer to sources of information, it is not possible to attribute to any particular statement in the reports any particular source, let alone come to a view as to whether that source had the requisite personal knowledge of the relevant facts.  It would thus be impossible for the Court, when confronted with the tender of these documents, to be satisfied that the requirement of personal knowledge has been made out.  The capacity to draw inferences pursuant to s 183 of the EvidenceAct would not ameliorate this difficulty. 

12                  In addition, there is a very real and substantial question as to whether any of the contents of the 15 reports would be held to be sufficiently relevant to justify the tender of those reports.  As I pointed out in AWB No 2 [2009] FCA 1047, AWB is not mentioned in any of the reports, only one document refers to any Australian company or entity and none of the documents specifies the wheat trade, with one exception.  That 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.

13                  It is highly unlikely that AWB would wish to tender the November 2003 report to which I just referred.  It is also unlikely that the contents of any of the 15 reports would, in any event, be regarded at trial as being sufficiently relevant to justify their tender, even if they were prima facie admissible under s 69 of the Evidence Act.

14                  There is also the problem which the existing masking presents for any tender.  Although the masking, on its own, may not prevent the tender of at least some of the documents, it would probably do so in some cases. 

15                  I have exercised my mind as to whether, notwithstanding that the documents would not be able to be tendered, they might provide a useful source of material for the cross-examination of witnesses intended to be called in the applicants’ case or might provide a basis for an appropriate train of enquiry which could lead to a real benefit to AWB in the conduct of its own case.  As matters presently stand, the only witnesses who might be cross-examined about the contents of the 15 reports are Mr Othman, who was the General Manager of Alia Corporation, and the former Foreign Minister, Mr Downer.  It is always difficult for a Judge in advance of a trial to comment upon or anticipate the utility of documents in cross-examination.  Counsel briefed in the proceedings are almost always better placed to form views about matters such as that than the Judge would be.  However, in the present context, I think that I should at least consider whether the 15 reports could conceivably be of any use in cross-examining the two witnesses whom I have mentioned in respect of the issues raised in the proceedings which are said to justify the production of the 15 reports and the granting of access by the parties to them. 

16                  There is nothing in the 15 reports which could directly assist AWB in its cross-examination of those two witnesses.  Further, it is extremely difficult to discern any more subtle and less direct cross-examination that would be appropriately served by AWB having access to the 15 reports.

17                  Further, I do not think that the 15 reports will provide any useful train of enquiry in respect of the alleged knowledge on the part of DFAT of the relevant payments. 

18                  Consistent with what I said at [64] of AWB No 2 [2009] FCA 1047, the mosaic analysis argument is the only argument which continues to find favour with me for resisting AWB’s application for access to the 15 reports.  It is extremely difficult for a Judge to second guess clear evidence to the effect that any disclosure of the contents of the 15 reports might lead to that sort of analysis being undertaken by persons who represent a threat to Australia’s national interest.  In AWB No 2 [2009] FCA 1047, I said that I did not accept that this argument carried much weight at the time I delivered those Reasons.  That is why I ordered that the 15 reports be produced to the Court.

19                  Now that I have inspected the reports and considered them carefully, I still tend to think that the mosaic analysis argument does not carry a great deal of weight in the present case.  However, for the reasons which I have discussed at [9]–[17] above, I am quite firmly of the view that the 15 reports will be of very little or no use to AWB in the pursuit of its defence to the allegations of concealment contained in pars 26, 27(a) and 28 of the current Statement of Claim.

20                  In the end, I think that the risk of harm to the national interest does outweigh the needs of AWB in the present proceedings and I propose to order that access not be granted to any person to the 15 reports which have been produced pursuant to the orders which I made on 17 September 2009.

21                  Several of the 15 reports bear no particular mark or indication as to whom (if anyone) at DFAT the reports were sent.  However, the ONA and the Commonwealth have produced in response to the orders which I made on 17 September 2009, a Statutory Declaration made in 2006 for the purposes of the Cole Inquiry.  At par 37 of that Statutory Declaration, the declarant has made certain statements concerning the identity of the persons within DFAT to whom each of seven of the reports was sent.  I think that the Statutory Declaration, redacted as proposed by the ONA and the Commonwealth, should be produced for inspection by the legal representatives of the applicants and AWB.  The redacted version of that document will provide the names of persons within DFAT who might conceivably have some knowledge of matters relevant to the present proceedings.  I think that the parties are entitled to consider whether they wish to take steps to interview those persons or involve those persons in some way in the present proceedings.  I will make orders accordingly.

Associate:

Dated:         15 October 2009