Federal Court of Australia

Smith v National Australia Bank Limited [2022] FCA 1186

ORDERS

THE COURT ORDERS THAT:

1.    The application for preliminary discovery is dismissed with costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

LEE J:

A    INTRODUCTION

1    The background to this case reads like the plot of a novel picked up at an airport.

2    To understand the context out of which this application for preliminary discovery emerges, it is appropriate to set out this background, in all its remarkable detail.

3    A disappointed litigant, Mr Anthony Smith, failed in his attempt to have his company, AKS Investments Pty Ltd (AKS), obtain redress in the Supreme Court of Queensland against the National Australia Bank (NAB): AKS Investments Pty Ltd & Anor v National Australia Bank & Anor [2012] QSC 223. Mr Smith received advice from his legal representatives that he had limited prospects of success on any appeal, unless he could produce some evidence that a principal witness for the NAB, Mr Adam Gazal, had given untruthful evidence at trial. The appeals were subsequently dismissed by consent.

4    He decided to hatch a plan. Indeed, he hatched two of them – called (unimaginatively) “Plan A” and “Plan B”. The single objective of the plans was to extract what he had been told he lacked: evidence that Mr Gazal gave untruthful evidence. To put in place this self-described “covert operation” to obtain an admission, Mr Smith recruited a private investigator, Mr Michael Featherstone, and a public relations consultant, Mr Andrew Crook.

5    Plan A involved an elaborate hoax. Mr Gazal would be lured to a villa on the exotic island of Batam, Indonesia, with the promise of an interview for a job opportunity with a “big client” described simply as “Clive”. Mr Featherstone would conduct the fake job interview, with the hope that with the right coaxing and enough alcohol, Mr Gazal would “start bragging about how he will do whatever is required for his employer”, at which point Mr Featherstone would “start to get him to talk about the court case” and procure a confession that he provided false evidence.

6    As Plan A unfolded, Mr Smith was to eavesdrop on the fake job interview from a neighbouring villa. If Plan A succeeded, Mr Smith’s involvement would remain a secret. However, if Plan A miscarried, Plan B would be activated. The planners were careful not to commit to writing just what was involved in Plan B, save that it would involve Mr Smith revealing himself to Mr Gazal.

7    In any event, the “covert operation” culminated in Mr Featherstone, Mr Gazal and Mr Smith eventually being together in a room in Batam with two local men. Although the details of what transpired in the villa remain something of a mystery, what surfaced is a transcript of Mr Gazal’s alleged “confession” accompanied by video and audio recordings. However, segments of the recordings of what transpired before the alleged “confession” are missing and, upon leaving the island of Batam, a claim of duress was made by Mr Gazal. Investigators were engaged, charges were laid, and further litigation ensued. However, the prosecution was subsequently discontinued on account of Mr Gazal no longer wishing to give evidence.

8    In the wake of this saga, Mr Smith brings an application for preliminary discovery asserting a belief that he may have the right to obtain: first, damages for malicious prosecution; secondly, statutory compensation because of conduct which was misleading and deceptive, or dishonest, contrary to ss 1041H and 1041G of the Corporations Act 2001 (Cth) (Corporations Act); and thirdly, statutory compensation for conduct said to be misleading and deceptive contrary to ss 12DA and 12DB(1)(g) of the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act).

B    THE FACTS IN MORE DETAIL

B.1    The Initial Proceeding

9    Mr Smith’s dispute with the NAB and Mr Gazal commenced in 2009, when he caused AKS, as Trustee for the Smith Family Trust, to commence a proceeding in the Supreme Court of Queensland against the NAB and Mr Gazal, the relationship manager employed by the NAB and assigned to AKS and Mr Smith (Initial Proceeding). AKS asserted that certain representations had been made relating to the proposed grant of a $20 million credit facility to AKS and that these representations founded actions for breach of contract, negligence, misleading and deceptive conduct, and unconscionable conduct.

10    Following a trial in 2012, Applegarth J dismissed AKS’ claim: AKS v NAB. His Honour summarised the principal issues in dispute as follows (at [1]–[2]):

1.    This is a case about credit in more than one sense. The substantial issues are whether the defendants represented in 2007 that the first defendant (“NAB”) would provide a proposed $20M credit facility to the first plaintiff (“AKS”), Mr Anthony Kevin Smith and Ms Simone Smith, and whether on and after 27 December 2007 represented that NAB had established the proposed $20M credit facility. The issue of whether or not these representations were made turns largely on the credit of witnesses.

2.    AKS’s case depends largely on the credibility of the evidence given by its Managing Director, Mr Smith. Its case is that various communications, culminating in an alleged telephone conversation with NAB’s employee, Mr Gazal, on or about 10 December 2007, induced Mr Smith to believe that NAB would provide a $20M facility on the same terms and conditions as to accessibility of funds as an existing NAB $10M facility. AKS’s case is that if it had been informed that, in fact, it only had a $10M facility available to it on and from 27 December 2007 then it would have sold $10M worth of shares in MFS Limited (“MFS”) and would not have purchased an additional $2M worth of MFS shares on 10 and 11 January 2008.

11    Despite finding that Mr Smith presented as a “highly intelligent and well-prepared witness” (at [125]), Applegarth J emphatically rejected the evidence of Mr Smith, concluding that Mr Smith contrived both a “bogus claim” of $56 million against the NAB in respect of various shares and the claim in which he persisted, and that the case theory that Mr Smith developed and persisted in required him to give evidence about conversations that did not occur: AKS v NAB (at [128]).

12    The adverse credit findings were serious. His Honour found that Mr Smith “was prepared to resort to untruths to get his way and to secure an advantage”: AKS v NAB (at [125]–[128]). Examples of such “untruths” included preparing a letter, the contents of which Mr Smith knew to be false, making false statements, and undervaluing his property in a backdated transfer: AKS v NAB (at [126]). One example relevant to the present proceeding is the evidence concerning Mr Gazal. In his evidence in the Initial Proceeding, Mr Smith gave an account of a meeting at which Mr Gazal stated that there were things he wanted to “get off his chest”, which included several damning statements as to the $20 million credit facility: AKS v NAB (at [113]). Justice Applegarth found that during the conversation, Mr Gazal had made sympathetic remarks to Mr Smith who had experienced a major reversal in his fortunes; however, Mr Gazal certainly did not say that he wanted to “get things off his chest”: AKS v NAB (at [113]).

13    Justice Applegarth further stated that he had “no confidence that [Mr Smith] respects the truth in court proceedings”, given that he was “prepared to advance an unmeritorious and exaggerated claim for $56M” in the proceedings, for shares he accepted were worthless: AKS v NAB (at [122], [127]).

14    In contrast, Applegarth J’s assessment of both Mr Gazal and another witness who had worked near Mr Gazal, Mr Ryan Clarke, was that they were impressive and reliable witnesses and largely accepted Mr Gazal’s evidence and Mr Clarke’s corroboration.

15    In the light of these impressions of the witnesses and a review of the balance of the evidence, Applegarth J summarised his findings as follows (at [87]–[88]):

87.    The findings of fact that I have made, including my findings about:

(a)     what was said by Mr Gazal to Mr Smith on or about 10 August 2007 regarding the conditions that had been imposed on the proposed $20M facility;

(b)     subsequent communications about building conditions, and what was communicated between Mr Gazal and Mr Smith on 23 to 25 October 2007;

(c)     what was said by Mr Gazal to Mr Smith on or about 21 November 2007 to the effect that the $20M facility approval had been reduced to $10M; and (d) the fact that Mr Gazal did not say the words attributed to him by Mr Smith on 10 December 2007,

lead me to reject AKS’s case that by 10 December 2007 Mr Gazal, on behalf of NAB, represented, expressly or impliedly, that NAB would provide the proposed $20M facility to AKS, Mr Smith and Mrs Smith after the Westpac $10M facility had been closed. This “$20M Facility Representation” was not made. Mr Smith did not understand that a $20M facility would be provided once the Westpac securities were transferred to NAB. On the contrary, he understood, because Mr Gazal had told him on or about 21 November 2007, that the $20M facility approval had been reduced to $10M. Mr Smith also understood that there had been an impasse in establishing a $20M facility due to building conditions imposed by NAB’s credit department. He had no reason to believe that this impasse had been overcome. He also understood that the transfer of the Westpac mortgages was being attended to because this was a requirement of NAB‟s credit department in respect of security for the Portfolio Facility that had been reduced from $20M to $10M. The fact that the bank’s credit department was unhappy with the security position for the $10M facility was reiterated to Mr Smith by Mr Clarke in early December 2007. Mr Smith had agreed with Mr Gazal that they would revisit the $20M facility approval once the security was in order over all five lots. The $20M Facility Representation was not conveyed by Mr Gazal or anyone else on behalf of NAB to Mr Smith by 10 December 2007, or on any other relevant date. The $20M Facility Representation was not made and, accordingly, Mr Smith and AKS did not rely upon it in permitting the settlement with Westpac to proceed.

88.    It follows that because the $20M Facility Representation was not made the $20M Facility Establishment Representation also was not made. In settling matters with Westpac on 27 December 2007, employees of NAB did not represent that NAB had established the proposed $20M facility for AKS, Mr Smith and Mrs Smith. The settlement with Westpac occurred, as Mr Smith was told, in order to correct NAB‟s security position for the $10M facility that was then in place.

16    In September 2012, Applegarth J ordered that AKS pay part of the costs of the Initial Proceeding on an indemnity basis: AKS Investments Pty Ltd & Anor v National Australia Bank & Anor (No 2) [2012] QSC 282. In explaining his Honour’s reasons, Applegarth J stated (at [8]–[9]):

8.    … The matter, however, takes on a different character when regard is had to the steps resorted to by Mr Smith on behalf of AKS to fill a gap in AKS’ case and also to improve its prospects by contrived evidence that Mr Gazal said on 12 March 2008 that he “wanted to get things off his chest” and proceeded to make a confession of wrongdoing.

9.    The conduct of AKS’ case in that regard, with Mr Smith contriving evidence in relation to conversations that did not take place, was reprehensible. It was irresponsible conduct which justifies costs being ordered on the indemnity basis. It involved AKS persisting in a case which it knew depended upon false evidence.

17    AKS filed notices of appeal against both judgments. However, as noted above, the appeals were dismissed by consent and the reason for this withdrawal was described (in submissions later made on behalf of Mr Smith) as being that AKS had “received advice that its prospects of success were limited in the absence of fresh evidence demonstrating that Mr Gazal’s testimony at trial was untruthful.”

B.2    The Batam Plot

18    Despite these setbacks, Mr Smith did not give up. Rather, he embarked upon the “covert operation” outlined above. Given its importance as to providing the background and context to this application, it is appropriate to return to this course of conduct, which I will describe as the “Batam Plot”, in detail.

19    The tale can be pieced together from the email exchanges by which Mr Smith planned the operation with Mr Featherstone and Mr Crook. The process was described by Mr Smith in an email to Mr Crook dated 15 November 2012 as follows:

Who knows he might even start to slip up and say stuff in this meeting but most likely we need it to be a “grooming” meeting where he starts to think that not only is this going to be good for his career with the bank maybe there is a role with your “BIG” client that could earn him plenty

The next step then would be if possible to get him on Indonesian soil for the next meeting with [Mr Featherstone] and his BIG Boss - if we get that we will get all we need plus more

… when [Mr Gazal] gets up there in a “closed” environment [Mr Featherstone] can then start asking more loaded questions as part of a “due diligence” process for possibly employing him – if he has been drinking and wants to impress and if Mick is any good (which he is) he might start bragging about how he will do whatever is required for his employer and that is how Mick will start to get him to talk about the court case

If and only if required I will then be introduced to the meeting – you can imagine how he will feel when I walk in the room and we have all exits covered …

20    During his cross-examination before me, the following exchange occurred on the topic of this email (T22.21–23.24):

[Mr POMERENKE QC:] You regard it as important to get him on Indonesian soil for you to get what you needed; correct? It was convenient for me, correct.

It was important to you, wasn’t it, Mr Smith? It was an integral part of your plan to get what you needed? Well, it was convenient for me.

Can we have a look, then, at what else this plan involved. Can we read the next two paragraphs, please. Maybe we could do it all in the one meeting in Hong Kong. There’s no reason why you couldn’t have done it in Hong Kong if this were honest? Well, that’s what we were discussing there.

Now, and he gets up there in a closed environment, so on and so forth. What did you mean there by a closed environment? Well, an environment where you can sit and have a meeting. Not in a restaurant. That’s it.

All right. The next paragraph:

If and only if required I’ll then be introduced to the meeting. You can imagine how he’ll feel when I walk in the room and we have all exits covered.

Now, what did you intend to convey when you said you can imagine how he will feel? How someone would feel that he lied in court, and then, you know, presumably the person that they had lied in court about.

You thought he would feel uncomfortable? I guess he would feel uncomfortable because he knows the truth.

That was your intention, that he would feel uncomfortable? Well, he would feel how he should feel.

Your intention was that he would feel uncomfortable? Well, he may not have felt uncomfortable, but I thought if it was me, I would feel uncomfortable.

And I’m asking you about your intent. Your intent was that he would feel uncomfortable? Well, my intent was that he would see me, and then – because we were friends, Adam and I, so I guess he would have a feeling of being uncomfortable.

The discomfort that you wanted him to feel was a sense of intimidation, wasn’t it? Not correct.

No. You then say:

And we have all exits covered.

Why did you need to have the exits covered? It’s a turn of phrase.

What does it mean? Meaning we’ve got everything covered. It’s there. We’re ready. We’re going to get – hopefully get a confession from him. When he understands that, you know, by talking through it there’s no way to possibly lie to me; he hasn’t got you there defending him.

21    On 20 November 2012, Mr Smith sent an email to Mr Crook in the following terms:

Remember you only say the word “Clive” when you are on the phone or in person with him alone

You tell him that when you are with [Mr Featherstone] he is not to say his name under any circumstances otherwise it will put you in the shit with the company as everything until announced on this deal must be strictly confidential

Let me know how you go with getting the meeting in Melbourne

Can’t wait to get this dog to Jakarta

22    On 25 November 2012, Mr Smith sent another email to Mr Crook:

Starting to get pumped about this

If he bites down on the “job” opportunity then he is ours

Will talk to you Tuesday- start rehearsing your story and why you are chasing the “banker” on behalf of your client

He really needs to think that thru the guy you know at NAB (who referred you) that you are a “his” mate and the chance to get the best opportunity of his life

Even if he won’t go for the job getting your client as his client has to be “major” for him in his career and why he needs to work “with you”

Remember his role is Corporate Banking & lending for Australian clients with interests in Asia (I think he might be more lending even than banking but can’t be sure on that)

I really want to get this dog before Xmas

23    During his cross-examination, Mr Smith confirmed that the references to the “big client” were meant to create a false impression as to the involvement of the prominent businessman, Mr Clive Palmer (T21.38–22.2):

[MR POMERENKE QC:] Now, the big client, this is you creating a false impression that there’s Clive Palmer or some other great mining magnate who might be offering Mr Gazal the job? Correct. Correct. Correct.

And that was utterly false, wasn’t it? Of course. It was a covert operation.

It was utterly dishonest, wasn’t it? It was a covert operation. Correct.

It was utterly dishonest, wasn’t it? It was a covert operation. Correct.

24    As noted above, when the meeting took place on 26 January 2013 (Batam Meeting), Mr Smith alleges that Mr Gazal recanted aspects of the evidence he had given at the trial in 2012 (T14.41–15.15):

[MR POMERENKE QC:] All right. And were you overhearing what was going on in the fake job interview? Yes, I could hear. Yes.

All right. And there comes a point where you enter the villa; correct? Correct.

How long was it between the end of the fake job interview and when you entered the villa? Two minutes.

…

All right. Now, the period of time that you’re in the villa with these four other people: how long was that before you started the audio recording? Look, I – I can’t remember exactly. But I think – I think it was probably about 20 to 30 minutes.

All right. And then - - -? And that’s when ..... Adam broke down and then agreed to doing the interview.

25    In a letter to the NAB date 24 April 2013, Mr Smith described Mr Gazal’s “break down” as follows:

In a discussion with Mr Gazal about why an establishment fee was charged for the NAB margin loan Mr Gazal put his head in his hands and said words to the effect:- “… I am lying… I have been lying the whole time” he then started to cry and said:- “I am so glad that I have said it… I knew this day would come… I feel so much better now… what can I do to fix this?”

26    Mr Gazal gives a very different account of the events in Batam to that of Mr Smith, a broad summary of which is contained in the following extract of a report provided by the NAB to the QPS dated 30 January 2013 (which was received into evidence before me without limitation):

The employee has reported that Tony Smith then entered the room and proceeded to threaten him and required him to record a video tape purporting to confess that the evidence given by the employee in the AKS trial was false.

The employee has reported that the threats to him included:

“You are going to pay for what you and the fucking [NAB] put me through. Do you know the bank offered me $3 million dollars to settle the case one hour before the trial was finished? That was the time that I knew the bank thought their case was fucked. I didn’t take the money because blind Freddy could see in the evidence that l had been misled. Then that fucking judge fucked it all up. When I read that judgment I was fucking furious and I knew then that the fucking nab had paid off everyone”.

“Today is your lucky day because I’m going to give you a get out of jail free card and that is that you will do exactly what I am about to tell you and this all ends today. If you don’t then you are fucked". "I want you to roll over on everyone in NAB and tell me about how the Barristers and Judge were paid off by the NAB".

The employee has reported that the threat in relation to Justice Applegarth was:

“And that fucking judge, Applegarth, I’m going to fuck him over as well He’s next. He will never get another case again after I have finished with him’.

27    Mr Smith denied the accuracy of this report in no unclear terms (T43.23–26):

[MR POMERENKE QC:] You said that to Mr Gazal on 26 January 2013, didn’t you? It’s absolute rubbish. It’s absolute rubbish.

You deny that, do you? Of course, I do.

28    Despite this, Mr Smith does not give any account of what happened in the villa in Batam: (T30.12–46):

[MR POMERENKE QC:] He gave an involuntary confession when you came - - -? No, no. He volunteered his confession.

Now - - -? As it is, he corrected me in the confession, if you listen to that. So someone under duress doesn’t normally correct the person, would they?

You don’t get to ask the questions, Mr Smith. Now, in your affidavits, you haven’t actually offered any version of events as to what actually occurred over the course of 26 January 2013, have you? Correct.

You haven’t offered any version as to what happened over - - -? Not in this - - -

- - - 26 .....? - - - not in my affidavits, no.

You haven’t told the court your version of what happened over the course of 26 January 2013, have you? Correct.

You haven’t described, in your affidavits, the circumstances in which Mr Gazal came to be on Batam Island, have you? Correct.

And you haven’t described, in your affidavits, what you know went on in the room with Mr Featherstone - - -? Correct.

- - - before you entered the room. You haven’t described what was said or done when you entered the room, have you? I haven’t described any of it.

No. And you haven’t described the half-hour or so that occurred before events started being recorded as per the transcript, have you? Correct.

And did you not think it was relevant for the court to know these things? Well, my – the advice from my lawyers was what we put in the statements was all that was required.

You decided to withhold it from the court. Is that correct? No, no. That’s not correct.

29    Mr Smith submits that an audio and visual recording was made of Mr Gazal’s recanting. But, as noted above, the record of what occurred adduced into evidence is incomplete. The audio transcript provided to the Court is 17 minutes and 27 seconds long, the video recording provided to the Court during the hearing is only approximately three minutes long. Mr Smith says Mr Featherstone conducted a fake job interview with Mr Gazal for about 50 minutes, while Mr Smith was next door and could hear every word: T14.27–39.

30    There is no video or audio recording of Mr Smith entering the room with his two Indonesian “colleagues”, which he says occurred about two minutes after the conclusion of the fake job interview: T15.4–19. There is no video or audio recording of what Mr Smith said when he entered the room: T15.25–29. Indeed, there is then a period of about 20 to 30 minutes for which there is no video or audio recording at all: T15.10–12.

31    To the extent it matters, after hearing the cross-examination, I consider the reason provided by Mr Smith for the temporary lapses in the recording is incredible. During cross-examination, Mr Smith suggested that the cessation of recordings was explicable by the fact that they “ran out of tape”: T15.39–45; T17.18–27. It is far more likely that a selective recording was made deliberately. Despite this, it is unnecessary to reach any conclusion as to what precisely occurred during the Batam Meeting to determine this application. The only substantive relevance of the cross-examination of Mr Smith is as to credit and, more particularly, to the extent it became relevant, my assessment of whether I am satisfied there is a basis for accepting Mr Smith’s evidence that he has a reasonable belief that he may have the right to obtain relief in this Court from the NAB, and that he does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief. Relatedly, (and as it will turn out more importantly on this application), issues as to credit are also relevant in assessing whether I consider Mr Smith is advancing the claim he has articulated bona fide and whether he is advancing aspects of his claim colourably to bring this controversy within federal jurisdiction. I will return to this topic in some detail below.

B.3    Investigations

32    Returning to the narrative, on 29 January 2013, the NAB advised the Queensland Police Service (QPS) of the relevant events known to them at the time, and subsequently sent the short report dated 30 January 2013 (referred to above) containing a synopsis of the information provided by Mr Gazal. Upon receiving and assessing all the information on hand, however, the QPS decided not to pursue a criminal investigation in Queensland due to “jurisdictional issues”. No doubt this was a reference to the meeting taking place in the Republic of Indonesia.

33    In April 2013, the solicitors for AKS sent the partial video and audio recordings of Mr Gazal’s alleged confession, along with a transcript, to the solicitors for the NAB and Mr Gazal. In May and June 2013, the solicitors for AKS sought to have the NAB agree to a meeting “to resolve the current issues”, however, no such meeting eventuated. Mr Smith was invited by the NAB to attend an interview with the QPS, which invitation Mr Smith accepted on the condition that Mr Gazal and Mr Clarke also attend. That condition was rejected, although it was stressed that the NAB’s invitation for Mr Smith to attend a meeting with the QPS and representatives of the NAB remained open.

34    In July 2013, Mr Gazal prepared a statement about the events at Batam with the assistance of an investigator from the NAB, Mr Paul O’Neill (Gazal Investigation Statement). Attached to that statement was a signed statement of Mr Gazal prepared for the Initial Proceeding against AKS (Gazal Trial Statement). The Gazal Trial Statement was not served on AKS or tendered at trial, but rather prepared for counsel’s use in eliciting viva voce evidence from Mr Gazal. Mr Clarke also prepared a witness statement in July 2013 with the assistance of Mr O’Neill to which was similarly attached a signed statement of Mr Clarke prepared for the Initial Proceeding against AKS (Clarke Investigation Statement). The Gazal and Clarke Investigation Statements were subsequently provided to the QPS sometime before November 2014.

35    Things then changed unexpectedly.

36    In March 2014, the QPS executed a search warrant at the premises of Mr Featherstone’s private investigation firm, Phoenix Global, in relation to an unrelated criminal investigation. In executing that search warrant, the QPS obtained the emails between Mr Smith, Mr Featherstone and Mr Crook discussing the Batam Plot. Sometime prior to November 2014, the QPS commenced an investigation into the complaint made by Mr Gazal, which became known as “Operation Mike Theory”.

37    In November 2014, Detective Sergeant Nathan McIntosh commenced involvement in the investigation, at which time he reviewed several documents, including the Gazal Investigation Statement (including its annexures), the Clarke Investigation Statement, and the computer records acquired upon execution of the warrant against Phoenix Global.

38    DS McIntosh “formed the belief that sufficient evidence existed” to charge Messrs Smith, Featherstone and Crook with “attempting to pervert the course of justice, attempted fraud and retaliation against a witness”. On 17 December 2014, DS McIntosh applied for an arrest warrant against Mr Smith as well as further search warrants. The QPS then executed those search warrants at the premises of Mr Smith, Mr Featherstone, Mr Crook, and Mr Smith’s solicitors.

B.4    Set-Aside Proceeding

39    Just prior to this, in November 2014, AKS also commenced a proceeding against Mr Gazal (but not the NAB) seeking an order setting aside the judgment of Applegarth J insofar as it dismissed AKS’s claim against Mr Gazal, in addition to the indemnity costs order (Set-Aside Proceeding). The statement of claim asserted that the evidence of Mr Gazal and Mr Clarke was knowingly false and particularised, in support of this allegation, Mr Gazal’s alleged Batam confession.

40    The defence filed in January 2015 pleaded that Mr Gazal was subjected to verbal and physical threats and harassment by Mr Smith and was “held against his will and proceeded under duress to make statements at the direction of Featherstone and Smith”. Mr Gazal further pleaded in his defence that the evidence he gave in the Initial Proceeding was true, and he “has not made any free and voluntary statement to the contrary”: see AKS Investments Pty Ltd v Gazal [2015] QSC 247 (at [8] per Daubney J).

41    On 19 March 2015, Mr Gazal applied for summary dismissal of the Set-Aside Proceeding. On 28 August 2015, Daubney J gave judgment for Mr Gazal but did not determine the underlying issues as to false evidence and duress. The Set-Aside Proceeding was dismissed on the basis that AKS had no real prospect of establishing that a different result would probably have been reached on the question of liability if Mr Gazal and Mr Clarke had not committed the alleged perjury: AKS v Gazal (at [75]).

B.5    The Charges

42    On 6 January 2015, Mr Smith was charged with the following alleged offences (Charges):

(1)    between 17 September 2012 and the 28 November 2014 at Brisbane and elsewhere in the State of Queensland, Mr Smith attempted to obtain an admission of perjury by threats and then using that admission obtained under duress to pervert the course of justice;

(2)    between 17 September 2012 and 28 November 2014 at Brisbane and elsewhere in the State of Queensland, Mr Smith attempted dishonestly to gain an advantage for himself and the yield to Mr Smith from the dishonesty was a value of more than $30,000, namely $460,000; and

(3)    between 17 September 2012 and 28 November 2014 at Brisbane and elsewhere in the State of Queensland, Mr Smith without reasonable cause threatened to cause detriment namely being charged with perjury, resigning from his employment and getting locked up in an Indonesian prison to Mr Gazal, a witness in retaliation because of evidence given against the interests of Mr Smith lawfully done by Mr Gazal in a judicial proceeding, namely the Set-Aside Proceeding.

43    Mr Featherstone and Mr Crook were also charged.

B.6    Warrants Proceedings

44    In February 2015, AKS and Mr Smith commenced proceedings in the Supreme Court of Queensland against the QPS, seeking a declaration that legal professional privilege attached to the documents seized by the QPS at the offices of their solicitors.

45    In March 2015, further proceedings were commenced by AKS, Mr Smith, Mr Featherstone, and Mr Crook against the QPS and the Crime and Corruption Commission Queensland. The second proceeding sought a declaration that AKS and Mr Smith were entitled to maintain a claim for legal professional privilege over documents seized from the offices of Phoenix Global and Mr Featherstone’s residence, as well as a declaration that the search warrants were executed unlawfully.

46    Both proceedings were heard together. Justice Burns delivered judgment in January 2018, ultimately finding that the search warrants were not executed unlawfully, although his Honour did uphold claims of legal professional privilege by AKS and Mr Smith: AKS Investments Pty Ltd & Anor v Queensland Police Service & Anor; AKS Investments Pty Ltd & Ors v Queensland Police Service & Anor [2018] QSC 4.

B.7    Committal Proceeding

47    The Charges proceeded to a committal commencing in November 2019 (Committal Proceeding). During the committal, the Director of Public Prosecution (DPP) offered no evidence in respect of the Charges, and they were dismissed; new charges were presented by the DPP (New Charges), and the Committal Proceeding continued.

48    In early 2019, Mr Smith caused to be issued out of the Magistrates Court a summons to the NAB in relation to the Charges, to produce, among other things, documents pertaining to Mr Gazal’s employment at the NAB (First Summons). The NAB objected to the First Summons on the basis that it had not been served correctly.

49    Mr Smith then caused a second summons to be issued out of the Magistrates Court to the NAB (Second Summons) requiring the same documents to be produced. On 23 May 2019, orders were made that narrowed the scope of the Second Summons and required the relevant documents to be produced by 6 June 2019. The NAB subsequently produced documents over the next two months.

50    Mr Smith’s solicitors, out of concern that the NAB was taking an unduly narrow approach to agreed categories for production, caused to be issued out of the Magistrates Court a third summons to the NAB in October 2019 (Third Summons).

51    On 22 November 2019, Mr Smith’s solicitors caused to be issued out of the Magistrates Court a fourth summons to the NAB (Fourth Summons), which required production of the following documents:

a.    All annexures to the signed witness statement of Gazal dated 11 October 2011 prepared for use in BS 8242 / 2009 [being the Gazal Trial Statement];

b.    Any draft version of the witness statement of Gazal dated 11 October 2011 prepared for use in BS 8242 / 2009 [being the Gazal Trial Statement] and any record of any interview or meeting in which his recollection of events was recorded for the purpose of preparing such statement;

c.    Any draft version of the witness statement of Ryan Matthew Clarke dated 3 October 2011 prepared for use in BS 8242 / 2009 [being the Clarke Trial Statement] and any record of interview or meeting in which his recollection of events was recorded for the purposes of preparing such statement;

d.    Any draft version of the witness statement of Gazal dated 23 July 2013 [being the Gazal Investigation Statement], witnessed by Mr Paul O’Neill, and any record of any interview or meeting in which Gazal’s recollection of events was recorded for the purposes of preparing such statement;

e.    Any draft version of the witness statement of Ryan Matthew Clarke dated 22 July 2013 [being the Clarke Investigation Statement] witnessed by Mr Paul O’Neill, and any record of any interview or meeting in which Ryan Matthew Clarke’s recollection of events was recorded for the purpose of preparing such statement; and

f.    The following documents referenced in the ten page statement of Ryan Matthew Clarke dated 22 July 2013 [being the Clarke Investigation Statement], witnessed by Mr Paul O’Neill:

i.    Any correspondence recording the communication referred to in paragraph 13;

ii.    Any correspondence recording the communication referred to in paragraph 16;

iii.    Any correspondence recording the communication referred to in paragraph 24;

iv.    The emails referred to at paragraphs 30, 38, 44, 47, 48 and 53.

52    In response, the NAB produced three boxes of documents, but claimed legal professional privilege in respect of documents falling within subparagraphs (b) and (c) of the Fourth Summons, being draft witness statements and records of interviews of Messrs Gazal and Clarke prepared for use in the AKS trial (Privileged Documents).

53    In response to the NAB’s privilege claim in respect of the Privileged Documents, Mr Smith filed an application for access to the documents produced by the NAB in response to the Fourth Summons, including the Privileged Documents.

54    Following the hearing of the application, Magistrate Hay delivered reasons on 31 August 2020, finding that the NAB had waived its privilege in respect of the Privileged Documents and ordered that Mr Smith be permitted to inspect and make copies of each of the Privileged Documents (with the operation of such order to be suspended for 28 days). On 25 September 2020, sealed orders were issued granting Mr Smith access to the Privileged Documents (Access Orders).

55    However, on 25 September 2020, by letter from the DPP to counsel retained on behalf of Mr Smith, the DPP advised that the New Charges would be discontinued, stating:

I have spoken to Mr Adam Gazal whom (sic) has indicated that he does not wish to progress his complaint. There are matters personal to Mr Gazal which have informed his decision and his capacity to continue. I have explained to Mr Gazal that any change in mind due to a change in those circumstances will not be sufficient to reinvigorate the prosecution once discontinued and he has made his decision cognisant of this.

Mr Gazal has not resiled from his present evidence and I hold no adverse view of his credit such that it would inform me to discontinue. For obvious reasons the absence of Mr Gazal has consequential implications, and resulted in my assessment that the Crown has no reasonable prospects of securing a conviction against [Mr Smith] for either charge.

56    Understandably in these circumstances, the prosecutor withdrew the New Charges on 1 October 2020.

57    Consequent upon the DPPs decision to withdraw, the NAB (by its solicitors) sought to prevent Mr Smith from having access to the Privileged Documents. For reasons that are unclear, it was later agreed, and subsequently ordered, that upon the NAB’s undertaking to preserve the Privileged Documents for the duration of Mr Smith’s lifetime, the Access Orders would be withdrawn.

C    THE APPLICATION

58    It is against the above colourful and lengthy background that Mr Smith now seeks preliminary discovery pursuant to r 7.23 of Federal Court Rules 2011 (Cth) (FCR), in relation to, by way of summary, those documents produced in response to the Fourth Summons over which legal professional privilege was claimed (that is, the Privileged Documents), and any further records of any communications between any employee or agent of the NAB and the QPS concerning the Batam Meeting or the Charges (and New Charges).

59    Rule 7.23 contains a discretionary power to order discovery against a prospective respondent before the commencement of proceedings claiming relief in respect of which the discovery is sought. It provides, relevantly, as follows:

7.23    Discovery from prospective respondent

(1)    A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)    reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)    after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

    (c)    reasonably believes that:

(i)    the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)    inspection of the documents by the prospective applicant would assist in making the decision.

(2)    If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

60    The principles applicable to determining an application under FCR 7.23 are not in dispute and were outlined by Allsop CJ in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; (2017) 257 FCR 62 (at 65–66 [7]–[8]) and, more recently, by White J in Outback Stores Pty Ltd v Smith [2020] FCA 1785 (at [26]–[28]).

61    It is clear from Pfizer and subsequent cases that FCR 7.23(1)(a) has two features: first, there must be a reasonable belief as to a particular state of affairs; and secondly, that state of affairs must consist of the possibility that the prospective applicant has a right to obtain relief from the prospective respondent: Pfizer (at 90 [101] per Perram J). The prospective applicant must demonstrate a subjective belief and that the belief is a reasonable one objectively viewed: Pfizer (at 91–92 [107] per Perram J). Such belief might be shown not to be reasonable if it is untenable, irrational or baseless: Pfizer (at 81–82 [69] per Allsop CJ); HQ Insurance Pty Limited v Stonehatch Risk Solutions Limited (No 2) [2020] FCA 1010; (2020) 146 ACSR 159 (at 167 [41] per Thawley J).

62    The basis of the present application is said to be that discovery of the Application Documents is necessary for Mr Smith to ascertain whether he has the right to obtain the relief against the NAB for the tort of malicious prosecution, or misleading and deceptive, or dishonest, conduct, on account of the allegedly false statements made by the NAB to the QPS that ultimately led the QPS to issue the Further Warrants and lay the Charges (and the New Charges) against Mr Smith. In essence, Mr Smith says that he believes that:

(1)    Mr Gazal gave untruthful evidence at the Initial Proceeding before Applegarth J;

(2)    the NAB and Mr Gazal falsely asserted to the QPS that Mr Gazal was coerced at the Batam Meeting to make his statements recanting evidence that he gave at the Initial Proceeding and that the evidence that Mr Gazal gave at the Initial Proceeding was true;

(3)    by reason of these assertions, the QPS issued the Further Warrants and laid the Charges (and then the New Charges) against Mr Smith; and

(4)    Mr Gazal withdrew his complaint against Mr Smith because Mr Gazal feared being cross-examined during the Committal Proceeding upon the Privileged Documents, which include draft documents and interviews concerning matters in respect of which Mr Gazal had given untruthful evidence at the Initial Proceeding.

63    The relief which Mr Smith says he believes he may have the right to obtain is damages or statutory compensation for the legal fees incurred in relation to the Warrants Proceedings and in defending the Charges and the New Charges, which Mr Smith deposed amounts to over $2 million.

64    The issues raised by the parties were numerous but, importantly, jurisdiction has been disputed and, as Griffith CJ explained in Federated Engine-Drivers and Firemen’s Association of Australasia v The Broken Hill Proprietary Company Limited (1911) 12 CLR 398 (at 415), it is the “first duty of every judicial officer to satisfy himself that he has jurisdiction”. As it turns out, I am not satisfied that federal jurisdiction has been properly invoked and for the reasons that follow, the application should be dismissed on jurisdictional grounds.

65    I will now explain why the issue of jurisdiction is determinative.

D    JURISDICTION

D.1    Relevant Principles

66    As is well known, the Federal Court’s jurisdiction includes jurisdiction to hear all matters arising under any laws of the Parliament: s 39B(1A)(c) of the Judiciary Act 1903 (Cth) and s 76(ii) of the Constitution. Subject to minor qualifications, the scope of the subject matter jurisdiction of this Court can be described, in effect, as “plenary” federal civil jurisdiction: see Mulley v Hayes [2021] FCA 1111; (2021) 286 FCR 360 (at 378 [54]).

67    The principles as to the meaning of a “matter”, when a matter is one “arising under” a law made by the Parliament, and the fact that once a matter is within federal jurisdiction, the entire matter is within federal jurisdiction, are well known and it is unnecessary to repeat them here: see Mulley v Hayes (at 364–368 [7]–[13]). It suffices to note that the “matter” is the justiciable controversy between the actors involved, comprised of the substratum of facts representing or amounting to the dispute or controversy between them. It is not the cause of action and is identifiable independently of a proceeding or proceedings brought for its determination. Generally, a non-colourable assertion of a federal issue is enough to attract federal jurisdiction and the matter remains within federal jurisdiction regardless of how the federal issue or issues within it are ultimately resolved.

68    But where a claim is made for the improper purpose of fabricating jurisdiction, the claim is “colourable” and will not give rise to a federal matter: Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 (at 219 per Bowen CJ, Morling and Beaumont JJ). The term “colourable” connotes a lack of bona fides and is related to the notion of an abuse of process: see Burgundy Royale (at 219 per Bowen CJ, Morling and Beaumont JJ).

69    What is meant by colourability was most recently explained by the High Court in Citta Hobart Pty Ltd v Cawthorn [2022] HCA 16; (2022) 96 ALJR 476. There, the High Court examined whether it is necessary for a claim to satisfy some threshold degree of arguability in order to engage federal jurisdiction. The plurality (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ) stated (at 486–487 [35]–[37]):

35.    The resolution in principle is that for a claim or defence in reliance on a Commonwealth law or in reliance on the Constitution to give rise to a matter of a description in s 76(i) or s 76(ii) of the Constitution, it is enough that the claim or defence be genuinely in controversy and that it give rise to an issue capable of judicial determination. That is to say, it is enough that the claim or defence be genuinely raised and not incapable on its face of legal argument.

36.    That is what should be taken to have been meant by repeated acknowledgements that the assertion of a claim or defence will not give rise to a matter within the description in s 76(i) or s 76(ii) of the Constitution if the claim or defence is "unarguable" or if the claim or defence is "colourable" in that it is made for the purpose of "fabricating" jurisdiction.

37.    Thus, the State jurisdiction of a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii) of the Constitution is not denied, just as the federal jurisdiction of this Court under s 76(i) or s 76 (ii) or of another court under s 77(i) or s 77(iii) of the Constitution is not engaged, by the assertion of a claim or defence that amounts to "constitutional nonsense" or any other form of legal nonsense. But examination of what the prospects of success of a legally coherent claim or defence might be, were that claim or defence to be judicially determined on its merits, forms no part of the requisite assessment.

(Citations omitted, emphasis added).

70    The plurality reaffirmed that an assertion of a federal issue will generally be enough to attract federal jurisdiction if the facts relied on were raised bona fide, and are such as to raise the question: Citta Hobart (at 487 [39] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ), citing Hopper v Egg and Egg Pulp Marketing Board (Victoria) (1939) 61 CLR 665 (at 673–674 per Latham CJ). Such an approach entails two separate questions: whether the claim is colourable in that the matters relied upon were bona fide raised; and whether the claim or defence is incomprehensible or nonsensical such that it does not properly raise “a question calling for the exercise of Federal jurisdiction”: Troy v Wrigglesworth (1919) 26 CLR 305 (at 311 per Barton, Isaacs, and Rich JJ).

71    However, as Edelman J outlined in a separate judgment in Citta Hobart (at 493–496 [68]–[81]), these two distinct categories of abuse of process should not be conflated. It is now clear that federal jurisdiction will not be invoked by an incomprehensible or nonsensical claim or defence that is thereby incapable of legal argument and hence giving rise to a matter within s 76 of the Constitution. As noted in the plurality’s reasons in Citta Hobart (at fn 47), and subsequently explained in Tucker v McKee [2022] FCAFC 98; (2022) 402 ALR 254 (at 274 [69] per Allsop CJ, Kenny and Jagot JJ), this now means the colourful and well-known analogy adopted by Mr Owen Dixon KC in his testimony to the Royal Commission on the Constitution of the Commonwealth (Minutes of Evidence, 13 December 1927) (at 788) as being a sure guide to when federal jurisdiction is attracted, has outlived its usefulness.

72    However, an analysis of whether a claim is legal nonsense is distinct from the question of colourability. An assertion that a claim is colourable does not mean that it is weak or infirm or otherwise misconceived. Rather, an improper purpose is an extraneous purpose and it is not an improper purpose to make a claim in order to attract federal jurisdiction to obtain relief that is genuinely sought: Tucker (at 274–275 [68]–[70]). The references in the cases to “fabricating jurisdiction” involve cases in which a party has sought to join parties or make claims which are unnecessary and unconnected to the real dispute solely to engage federal jurisdiction: see, for example, Burgundy Royale (at 219); Citta Hobart (at 487 [36]).

73    The weakness of a claim may be relevant to the extent it can rationally inform an assessment as to whether the claim is being advanced for the improper purpose of fabricating jurisdiction: Mulley v Hayes (at 382 [73]), citing Qantas Airways Ltd v Lustig [2015] FCA 253; (2015) 228 FCR 148 (at 169 [88] per Perry J). That is to say that the weakness of the claim may be a factor pointing to a conclusion that it is advanced for the improper purpose of fabricating jurisdiction.

D.2    Relevance of Jurisdictional Issues to Preliminary Discovery

74    As noted above, the “matter” is identifiable independently of any proceeding. This is of significance. Indeed, the fact the relevant controversy exists separately from, and prior to, the institution of proceedings was the foundation for the conclusion in Hooper v Kirella [1999] FCA 1584; (1999) 96 FCR 1 (at 15 [53] per Wilcox, Sackville and Katz JJ) that the procedure for preliminary discovery in the Federal Court was valid.

75    In Apache Northwest Pty Limited v Newcrest Mining Ltd [2009] FCAFC 39; (2009) 182 FCR 124 (at 127 [7]–[8]), a majority of the Full Court (Moore and Gilmour JJ) noted that a prospective applicant seeking preliminary discovery had failed “to establish the existence of a reasonable cause to believe it had a cause of action” arising under federal law and went on to observe:

7.    … Different considerations arise in relation to the contractual claim but it is unnecessary to detail them. We say that because we would refuse preliminary discovery as a matter of discretion in circumstances such as the present where it is not established that there is a reasonable cause to believe the existence of a right to obtain relief in relation to the federal aspect of the claim which, if ultimately pursued, would engage the jurisdiction of the Federal Court.

8.    The power of a judge of this Court to order preliminary discovery exists in aid of the exercise of the jurisdiction of the Court. If it is not apparent from the material filed in support of the application that the jurisdiction might be regularly invoked, then, in our opinion, no order should be made. That is not because we have concluded that the present application for preliminary discovery itself is colourable in the sense discussed in Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212. We have not. An application can fail without being stigmatised in this way. It is, in our opinion, unnecessary to enter the debate of whether, as a matter of power, preliminary discovery could be ordered in the present circumstances as, for the reasons we have set out, no such order should be made in any event. However, we do not doubt that this Court has jurisdiction to hear and determine this application.

76    In Essential Energy v Rose [2020] FCA 722; (2020) 145 ACSR 106 (at 110 [14]), I determined an application for leave to appeal and noted that, on reading the above paragraphs in Apache v Newcrest, it might be thought the majority were saying that because preliminary discovery aids the exercise of the jurisdiction of the Court, where there is no information before the Court suggesting that the “federal aspect” of the claim has merit, then no order can be made because the jurisdiction has not been engaged, even if the “federal claim” could not be stigmatised as being colourable. But then I said (at 110 [15]):

… on a close reading, I do not think that Moore and Gilmour JJ were making that point. Ultimately, the grant of relief by way of preliminary discovery is discretionary and the view actually expressed by their Honours was that, if the aspect of the controversy which causes the matter to be wholly within federal jurisdiction is devoid of any substance on the evidence before the Court, then this will be a discretionary factor mitigating against the grant of relief. It would be irreconcilable with fundamental aspects of the way in which federal jurisdiction operates for it to be read in any broader sense.

77    I further noted (at 114–115 [32]):

… given consideration as to whether a grant of leave should be made in order to dispel any misconceptions that may arise as to the proper scope of the majority judgment in Apache v Newcrest, but in the light of what I explained above, I did not, in the end, think that this was necessary when the comments made in that case are properly understood. Whether the discretionary consideration identified by their Honours is in truth a relevant consideration when one has regard to the obligation to deal with matters within the jurisdiction of the Court properly commenced, is not one that needs to be explored for present purposes.

78    Justice Jackson had cause to consider a similar issue in Davidson v Suncorp-Metway Limited (No 3) [2020] FCA 1593 when dismissing an application for preliminary discovery. When making reference to a common law claim, Jackson J observed (at [106]–[107]):

106.    The question which follows from that is whether that potential claim must be taken alone. That is, the question is whether this prospective claim, while having no federal character by itself, would nevertheless attract the jurisdiction of the court because, for the purposes of s 39B(1A)(c) of the Judiciary Act, it is part of the same 'matter' as other claims which do have the necessary federal aspect. Lee J considered this point in relation to preliminary discovery in Essential Energy v Rose [2020] FCA 722; (2020) 145 ACSR 106. His Honour held that this court could order preliminary discovery in respect of a claim which was not federal in character because it was part of the same matter as other claims which did have that character. That was so even if the federal claims were so unmeritorious that they were liable to be struck out, provided that they were not 'colourable', which imports improper purpose, or a lack of bona fides: at [12]. Lee J did not consider that the decision of Gilmour and Moore JJ in Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39; (2009) 182 FCR 124 at [7]-[8] was authority to the contrary. Rather, what their Honours held there was that if the only prospective claim where the prospective applicant has the reasonable belief would not attract the court's jurisdiction taken alone, that is a discretionary reason against ordering preliminary discovery in respect of that claim: see Essential Energy v Rose at [13]-[15].

107.    I respectfully agree with Lee J in relation to all of this. But I do not consider that it is applicable in the present case, because I do not consider that the [common law] prospective claim… is part of the same matter as any prospective claim with the necessary federal character...

79    But it is important to be careful when speaking about jurisdiction and any so-called “discretions”. References to the “federal aspect” of a claim or “federal claims”, although understandable, can be apt to mislead. There is only one matter. It is heresy to speak of concurrent state and federal jurisdiction; once federal, the matter is always and wholly federal (even if no cause of action arising under a law of the Commonwealth is ultimately pleaded or, if pleaded, is later found to have no merit). For this reason, although I consider I am bound to apply the law as it is stated in Apache v Newcrest, speaking for myself, I have real difficulty in understanding why it is consistent with how federal jurisdiction operates to dissect the claim and ascertain whether a component of it is somehow “more federal” than another component such that, if a view is formed it is not “federal enough”, then preliminary discovery can be refused on discretionary grounds on that basis. It is wholly federal or it is not federal at all; in the case of the former, the Court is required to deal with the claim if its subject matter jurisdiction is properly invoked. The approach of the majority in Apache v Newcrest arguably reflects the flawed historical conception that there is some “discretion” as to whether a federal court will accept “accrued” jurisdiction (a term, of course, now best avoided): see Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1; (2001) 204 CLR 559 (at 584–585 [48]–[51] per Gleeson CJ, Gaudron and Gummow JJ); Rizeq v Western Australia [2017] HCA 23; (2017) 262 CLR 1 (at 24 [55] per Bell, Gageler, Keane, Nettle and Gordon JJ).

80    With these principles understood, it can be seen that the initial question in the present case is whether the claim as articulated is being made for the purpose of fabricating jurisdiction. The NAB asserts that Mr Smith’s characterisation of the controversy as a matter in federal jurisdiction amounts to a stratagem or an abuse of process to bring the proceeding in this Court to avoid the Supreme Court of Queensland, where he has not only repeatedly lost, but there have also been serious adverse findings as to Mr Smith’s credit: T60.15–62.35. In this regard, the NAB points to the hopelessness of Mr Smith’s federal statutory claims as giving rise to the inference that they have been fabricated to invoke this Court’s jurisdiction in respect to Mr Smith’s claim for relief for the tort of malicious prosecution.

81    The submissions of the NAB as to jurisdiction ought to be accepted, at least in part. In explaining why, I will deal first with the lack of merit of the statutory claims and then turn to issues of credit and my findings generally relevant to the issue of jurisdiction.

D.3    The Statutory Claims

Proposed claim under the Corporations Act

82    Dealing first with the claim under the Corporations Act, Mr Smith deposed that he believes that he may have the right to obtain on account of misleading or deceptive, or dishonest, conduct on the part of the NAB contrary to ss 1041G or 1041H of the Corporations Act, either directly, or on account of being knowingly concerned in misleading or deceptive conduct on the part of Mr Gazal.

83    A cause of action under either ss 1041G or 1041H of the Corporations Act may only be brought in relation to “a financial product or financial service”. Mr Smith contends, in reliance on s 764A(1)(l), that the “margin lending facility” between the NAB and AKS that was the subject of the Initial Proceeding satisfies the definition of a “financial product”. However, the definition of a “margin lending facility”, for the purposes of Mr Smith’s proposed claim, is limited to a facility provided to a natural person: see ss 761EA(2) and 761EA(5). Given the facility between the NAB and AKS was not provided to a natural person, it necessarily falls outside the definition of a “margin lending facility” for the purposes of s 761EA and, thus, would not give rise to a claim under either ss 1041G or 1041H of the Corporations Act.

84    Clearly enough, there are insurmountable difficulties with this cause of action. At the commencement of the hearing, it seemed to me that Mr Smith had, in essence, conceded the hopelessness of this claim in his reply submissions, which did not raise any contention to the contrary. Rather, Mr Smith sought to introduce an alternative claim under the ASIC Act. Those submissions provided:

… even accepting there was no relevant financial product or service because the NAB Margin Loan was not a margin lending facility within the meaning of the Corporations Act, then:

(i)    the Applicant can rely on s12DA of the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act) (which is the analogue of s1041H of the Corporations Act) as applying to the Assertions concerning the NAB’s $10M line of credit facility ($10M Facility), the proposed $20M line of credit facility (Proposed $20M Facility) and the NAB margin loan; and

(ii)    the Proposed Relief is available under ss12GF and 12GM of the ASIC Act…

85    It will be necessary to return to the manner in which the claim under the ASIC Act was raised. For present purposes, it is necessary to note that, despite not responding to the obvious deficiencies of the claim, counsel for Mr Smith maintained on the first day of the hearing that they did not abandon the claim under the Corporations Act: T59.8–10. By the second day of the hearing, this position was revised such that Mr Smith no longer presses the Corporations Act claim for the purposes of the application, however, counsel for Mr Smith reaffirmed that he did not abandon the possibility that he may have a claim under the Corporations Act “in the future”: T59.08–10. The effect of this was that although it was only faintly pressed (if at all) I cannot proceed on the basis it was abandoned.

Proposed claim under the ASIC Act

86    Upon this belatedly introduced cause of action, Mr Smith asserts that the communications made by the NAB to the QPS by way of assisting and encouraging the QPS to investigate Mr Smith and to bring charges against him amount to misleading and deceptive conduct under ss 12DA and 12DB(1)(g) of the ASIC Act. Those communications are particularised as follows:

(1)    providing to the QPS the Gazal and Clarke Investigation Statements, together with the Gazal and Clarke Trial Statements;

(2)    making the initial complaint to the QPS on or about 30 January 2013 regarding what occurred at the Batam Meeting;

(3)    subsequently providing information to the QPS, including documents from the NAB’s possession, regarding the NAB’s dealings with Mr Smith regarding the line of credit and margin loan facilities; and

(4)    the direct communications of Messrs Gazal, Clarke and O’Neill to the QPS, including providing the QPS their witness statements.

87    The claim pursuant to s 12DB(1)(g) of the ASIC Act is also beset with obvious problems. That section provides that a person must not, in trade or commerce, in connexion with the supply or possible supply of financial services, “make a false or misleading representation with respect to the price of services”. It is risible to suggest the NAB’s alleged conduct could possibly have been related to the price of any financial service.

88    Despite an invitation to particularise further the basis of this cause of action, Mr Smith did not elaborate on this point further in his written or oral submissions. Rather, similarly to the manner in which the claim under the Corporations Act was maintained, this claim appears to have been raised, but not seriously pursued for the purposes of the application.

89    Turning now to the cause of action under s 12DA of the ASIC Act for misleading and deceptive conduct, s 12DA relevantly provides:

12DA    Misleading or deceptive conduct

(1)    A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.

…

90    The apparent flaw in this proposed cause of action is that the conduct identified was not “in trade or commerce”, nor was it “in relation to” a financial service.

91    Section 52 of the Trade Practices Act 1974 (Cth) was, and its analogues, including s 12DA, are concerned with the conduct of a corporation towards persons with whom the company has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character: Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 (at 604 per Mason CJ, Deane, Dawson and Gaudron JJ). The conduct must be in trade or commerce; conduct “in relation to” or “in connection with” trade or commerce will not be sufficient: Toben v Jones [2012] FCA 1193; (2012) 298 ALR 203 (at 211 [40] per Yates J), cited in Fletcher v Nextra Australia Pty Ltd [2015] FCAFC 52 (at [31] per Jackson J).

92    Mr Smith submits that the NAB’s communications to the QPS were in trade or commerce by reason of the fact that the NAB was in an ongoing commercial dispute with AKS over the proposed $20 million facility and the NAB margin loan that was the subject of the Applegarth J’s judgment in the Initial Proceeding. On this basis, the relevant communications are said to have furthered the NAB’s commercial interests by deterring Mr Smith from continuing to rely on the confession at the Batam Meeting, putting pressure on Mr Smith to abandon his plans to have Applegarth J’s judgments in the Initial Proceeding set aside, and bringing to an end the long-running dispute with Mr Smith over the NAB facilities.

93    This submission appears to me to be devoid of merit.

94    First, the relevant communications were not directed towards anyone with whom the NAB had a trading or commercial relationship; they were directed to the QPS. At the time of the communications, there was no “long-running dispute” with Mr Smith over the NAB facilities. The relationship between the NAB and AKS had ended prior to the delivery of judgment in the Initial Proceeding and AKS’s appeal from that decision had been dismissed by consent. Equally, the Set-Aside Proceeding was not commenced until 27 November 2014, over 18 months after the NAB first made its complaint to the QPS. Accordingly, the communications cannot be said to have been made in the context of an extant commercial relationship between the NAB and AKS or Mr Smith.

95    Secondly, the subject matter and purpose of the conduct did not concern trade and commerce. As Finn and Jacobson JJ stated in Hearn v O’Rourke [2003] FCAFC 78; (2003) 129 FCR 64 (at 67 [8]), for representations to have the necessary character of being “in trade or commerce”, they must be made in dealings “in the course of an activity which, of its nature, bears a trading or commercial character”. Although communication between a corporation and a regulatory body may, in certain circumstances, be said to have occurred “in trade and commerce”, this proposition has no bearing on the circumstances of the present case. The relevant communications concerned the alleged criminal activity of Mr Smith and others, which included providing the QPS with witness statements concerning the events surrounding the Batam Meeting.

96    Communicating with the police as to the evidence one could give in a possible prosecution is not an aspect or element of trading or commercial activity. One might consider that such communications would fall into what Beazley JA described as “witness conduct”, that is, giving details concerning the very matter about which a person may be required to give evidence as a witness: see Commonwealth of Australia v Griffiths [2007] NSWCA 370; (2007) 70 NSWLR 268 (at 298 [141] per Beazley JA). The mere fact that the proposed $20 million facility or the margin loan the subject of the Initial Proceeding may have, at least initially, created the stage for the activity in question, does not mean the communications were made in “trade or commerce”: see, for example, Pertzel v Qld Paulownia Forests Ltd [2008] QCA 287; (2008) 228 FLR 127 (at 144–145 [49] per Mackenzie AJA). Whatever the origins of the anterior dispute quelled by judicial determination, the subsequent dispute between the parties following the events of the Batam Meeting was of an entirely new character outside of trade and commerce.

97    For similar reasons, Mr Smith’s submission that the NAB’s conduct was “in relation to” financial services, because a major subject of the NAB’s communications to the QPS referred to the dealings between the NAB and Mr Smith, is highly problematical. A “financial service” is defined in s 12BAB(1)(a) of the ASIC Act to include dealing in a financial product, which in turn is defined in s 12BAB(7) to include applying for or acquiring a financial product, or issuing or varying a financial product.

98    Although the words “in relation to” are undoubtedly general and far-reaching, there nevertheless needs to be some relationship or correlation between the two subject matters, which is presently lacking: see Australian Securities and Investments Commission v Narain [2008] FCAFC 120; (2008) 169 FCR 211 (at 214 [9] per Finkelstein J, 222 [68] per Jacobson and Gordon JJ).

99    There is a further and separate reason to consider this proposed statutory claim apparently meritless.

100    A claim for damages under s 12GF of the ASIC Act must be commenced within six years after the day on which the cause of action accrued: s 12GF(2). A cause of action for damages under s 12GF accrues, and the limitation period begins to run, when loss is first suffered as a consequence of the alleged conduct that relates to the contravention: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 (at 525 per Mason CJ, Dawson, Gaudron and McHugh JJ).

101    The loss claimed by Mr Smith is for legal fees said to be incurred in defending the criminal charges laid against him, initially on 6 January 2015, and in bringing the Warrants Proceedings on 6 January 2015. Mr Smith gave evidence that he commenced paying legal fees in January 2015, and by the end of 2015 he had paid a significant quantity of legal fees: T45.12–43. Although it is dangerous to draw a conclusion on limitations issue in the absence of making all relevant findings at a trial, given Mr Smith’s cause of action accrued when he first suffered loss, that is, in January 2015, any claim in reliance on s 12DA of the ASIC Act is apparently now statute-barred.

102    Mr Smith asserts that there is “good reason to believe that there was significant correspondence between the NAB and the QPS within the past 6 years.” For example, it is asserted that there would “necessarily have been communication between the QPS/DPP and the NAB to arrange for those witnesses to be called to give evidence at the committal proceeding” and correspondence regarding their evidence. However, any ongoing or subsequent loss does not generally affect the commencement of the limitation period: James v Australian and New Zealand Banking Group Ltd (1986) 64 ALR 347 (at 392 per Toohey J) applied in Kedem v Johnson Lawyers Legal Practice Pty Ltd [2013] FCA 432 (at [76] per Mansfield J). By the end of 2015, the Charges and the Warrants Proceedings had already been set in motion and Mr Smith was incurring legal costs in respect of them. There appears no separately identifiable loss that occurred within time (at least none was articulated for the purposes of this application).

103    My role is not to deal with a summary dismissal application but, in this part of the reasons, to consider whether the statutory claims can reasonably ground a claim of any apparent merit and, if not, how this conclusion bears upon the related but distinct question of colourability. I have reached the conclusion the statutory claims are so weak as to be apparently devoid of any merit, and can reach this conclusion without addressing the further, somewhat complicated question of how witness immunity relating to “preparatory steps” (including statements made to investigators for the purpose of litigation) would operate as a further obstacle to the statutory claims, even if they were otherwise available: see Commonwealth v Griffiths [2007] NSWCA 370; (2007) 70 NSWLR 268 (at 288 [91]–[93] per Beazley JA); Borody v Vickers [2021] FCA 618 (at [24]–[36] per Thawley J).

D.4    Findings Relevant to Jurisdiction

Credit

104    Mr Smith was an unimpressive witness. He was persistently non-responsive, argumentative and after observing him in the witness box, I obtained the firm impression that he was willing to tell untruths if he thought it supported his position. The most telling example is his evidence related to the way in which the recording of the Batam Meeting stopped when Mr Smith came into the villa with Mr Gazal. As outlined above, the mysterious cessation of recording was explained away by the fact that they “ran out of tape”: T15.39–45; T17.18–27. The obvious difficulty with this assertion is that the recording device was digital, and so did not use “tape”. In any event, there was enough “tape” for the audio and video recordings to resume when Mr Gazal started giving his “confession”.

105    Furthermore, there were numerous occasions on which Mr Smith was evasive and refused to make obvious concessions. For example, Mr Smith’s suggestion that his reference to having “all exits covered” when he entered the villa was merely “a turn of phrase” and not a reference to his intention to create a “sense of intimidation” was fanciful: T23.12–24. Equally, Mr Smith asserted that the only basis for conducting the Batam Plot in Indonesia was “totally for [his] personal convenience”: T18.5–35. Yet, the evidence reveals that, when reassuring Mr Crook that he was “not in a position where [he was] doing anything wrong”, Mr Smith stated:

[Mr Featherstone] has said that the evidence can 100% be used in a Qld court so there is nothing illegal about a covert operation – there is no law against it in Indonesia.

(Emphasis added).

106    By the conclusion of the cross-examination, I had formed the view that his credibility was such that I could not have any confidence in his evidence absent corroboration or where it coincided with inherent probabilities. It should go without saying, but I should record that my assessment of his credit was not influenced by extraneous matters such as adverse credit findings made in previous litigation.

107    I reject Mr Smith’s evidence that he is genuinely advancing the statutory claims. His claim, such as it is, is for damages for the tort of malicious prosecution (or, although this was unarticulated, in deceit). In his attempts to fasten upon some federal aspect to the controversy, his lawyers have been forced to settle upon claims with so many obvious and apparent difficulties, even accepting the underlying substance of his story. I am satisfied any statutory claim is a misconceived attempt to bring the matter within federal jurisdiction and is being advanced solely for that purpose. These claims are unnecessary and unconnected to any real dispute (such as it is) and have been made solely to engage federal jurisdiction. In making this finding I have had regard to its seriousness as required by s 140 of the Evidence Act 1995 (Cth).

108    The question arose at the hearing as to whether the allegation that he is not genuinely advancing the statutory claims was put to Mr Smith. This is of some significance as the allegation, as have I previously pointed out, is one of a want of bona fides.

109    Despite its length, it is useful to set out the following exchange, which exhibits how I ensured there was no unfairness in making the finding as to a lack of bona fides urged upon me by the NAB (T60.29–62.23):

MR O’DONNELL QC: I didn’t understand it to be put to Mr Smith in cross-examination that the foreshadowed claim under the ASIC Act was made for the purpose of fabricating jurisdiction in this court.

HIS HONOUR: Well, I mean, I had understood the proposition was being put that the – bringing the proceeding in the Federal Court was lacking in bona fides, which encompassed that notion.

MR O’DONNELL QC: I thought it was put on the basis that you’re wanting to overturn some of the findings of the trial judge in the Supreme Court with which you remain in disagreement, but not that the foreshadowed claim under the ASIC Act was one made simply in order to fabricate a jurisdiction.

HIS HONOUR: Well, I must say, I had thought that that was what was being put. Let me seek clarification. It’s important that we have clarity in relation to that, Mr O’Donnell.

MR O’DONNELL QC: Thank you.

HIS HONOUR: Has that contention been put?

MR POMERENKE QC: Yes, your Honour.

HIS HONOUR: Yes. Well, what – paragraph 116 of the submissions filed on behalf of the NAB say:

NAB reserves for the hearing the question of whether proposed claims under the Corporations Act are colourable and, thus, the question whether there is a jurisdictional impediment in the claim for a malicious prosecution.

So I had understood that that was squarely in the arena, Mr O’Donnell. Are you – do you point to any prejudice as to what issue?

MR O’DONNELL QC: No, your Honour. I don’t point to any prejudice.

HIS HONOUR: I’m happy for Mr Smith to be – if you think it wasn’t squarely put to Mr Smith – I thought it was encompassed in a more general contention of a lack of bona fides, but if you think it – Mr Smith wanted to make a particular response to it, then I’m happy for him to be recalled and it be put to him, if you think that’s necessary.

MR O’DONNELL QC: No. Well, in my submission, it wasn’t squarely put to him.

HIS HONOUR: Well, if you say it needs to be squarely put to him, then he can be recalled, and it can be squarely put to him, if you think that’s necessary.

MR O’DONNELL QC: I think it’s up to my learned friend. He is not here. He was asked did he need to come today, and we said, “No. Your cross-examination is finished.”

HIS HONOUR: Well, is he in Brisbane?

MR O’DONNELL QC: I’m not sure, your Honour. He is in Brisbane.

HIS HONOUR: I’m not having this case go off on some sort of – what I think is quite a[n arid] Browne v Dunn point, so if you think it’s necessary for him to be recalled – I mean, I presume what he’s going to do is get in the witness box and deny it – deny that he’s seeking to invoke these causes of action in order to – the invocation of these causes of action is colourable and lacking in bona fides in order to attract the jurisdiction of this court. I presume he’s just going to deny it. If we can have to go through that kabuki dance, well, we will go through that kabuki dance. But I - - -

MR O’DONNELL QC: I would expect he would deny it. I expect he wouldn’t understand it.

HIS HONOUR: Well, are you making a point about the fact that it hasn’t been squarely put or not? Because if you are making the point it hasn’t been squarely put, then I will allow him to be recalled so that can be put to him. I mean, I would have thought it’s quite – I am working on the assumption that he – that he’s acting – his evidence, as I understood it, was that he was acting on the basis of legal advice, and he believes he has a valid claim, and, accordingly, he would – he denies that any part of his action in bringing this proceeding is lacking in bona fides.

MR O’DONNELL QC: Yes. In my submission, that would be – that’s essentially what his affidavits go to.

HIS HONOUR: Well, in those circumstances, is it necessary that he be recalled to put the question that I identified or not?

MR O’DONNELL QC: No. I’m not submitting that, your Honour.

HIS HONOUR: So you’re not taking a Browne v Dunn point on that.

MR O’DONNELL QC: No.

HIS HONOUR: All right.

MR O’DONNELL QC: No. I’m not.

110    In the circumstances of this case, I adhere to the view I expressed at the hearing that there can be no doubt that the question of colourability was squarely in contention between the parties.

Returning to the determinative issue of fabricating jurisdiction

111    Returning, however, to the determinative issue, what is most striking about the present application is that the conduct upon which the contemplated proceedings are founded was all done in close connexion with the Initial Proceeding in the Supreme Court of Queensland: see, similarly, Shaw v MAB Corporation Pty Ltd [2013] FCA 1231 (at [39] per Jessup J). There was no answer given as to why the preliminary discovery application was not commenced in that Court.

112    When Mr Smith was cross-examined as to why he was commencing this application in the Federal Court, he said that it was “[o]n the advice of [his] lawyers”: T41.46–47. However, counsel for Mr Smith stated that he was unaware of any reason why the proceedings were commenced in this Court: T63.14–17.

113    As I indicated at the hearing, the Uniform Civil Procedure Rules 1999 (Qld) have now been amended to provide for preliminary disclosure: see Uniform Civil Procedure (Preliminary Disclosure) Amendment Rule 2021 (Qld). Although it should be recognised that this amendment was only introduced after this proceeding was commenced in July 2021, if, contrary to my view, this Court did have jurisdiction, real questions would have arisen as to whether the application ought to be cross-vested to the Supreme Court of Queensland: see, for example, Prasad v Google LLC [2020] FCA 67 (at [20] per Wheelahan J). When I raised this matter with counsel for Mr Smith, the only reason suggested as to why it was appropriate that the proceedings continue in this Court was the federal statutory claims, particularly those made under the ASIC Act: T63.45–64.1. But this is no answer at all given the Supreme Court clearly is invested with federal jurisdiction to deal with these claims.

114    As the risk of repetition, in addition to the conclusion that after repeated setbacks Mr Smith now wishes to avoid maintaining his claim in the Supreme Court, the absence of any discernible merit whatsoever as to the federal statutory claims strongly supports the conclusion that the claims were fabricated for an improper purpose. Further, the manner in which the claims under the ASIC Act were introduced raises serious doubts as to their genuineness. As indicated above, the initial application did not contemplate any relief pursuant to the ASIC Act. It was only after the deficiencies with the claims under the Corporations Act were identified, and the issue of jurisdiction was brought into question by the NAB, that the new claims for relief were introduced. Contrary to the circumstances in Mulley v Hayes (at 382–383 [74]–[75]) and McCully v Sydney Trains [2021] FCA 562 (at [53] per White J), it is apparent that Mr Smith’s introduction of the claim for relief under the ASIC Act was motivated by an attempt to address the problem caused by the demonstrated difficulties with maintaining he had a reasonable belief in a potential claim for relief under the Corporations Act.

115    As stated by Jessup J in Shaw v MAB (at [40]), here the federal statutory claims have in effect been laid “like a tarpaulin across a miscellany of grievances and aggravations which are otherwise concerned with Supreme Court proceedings, procedures and outcomes”. In this case, it is a tarpaulin that is apparently full of holes.

Is the Court’s jurisdiction otherwise invoked?

116    Before concluding this topic, it is necessary to consider an alternative basis upon which federal jurisdiction is said to be attracted in this matter. Counsel for Mr Smith made reference to what I described by way of obiter in Oliver v Nine Network Australia Pty Ltd [2019] FCA 583 (at [16]) as one of the more recondite ways in which federal jurisdiction may be attracted; that is, it being “arguable” that if a respondent is a corporation, such as the NAB, the relevant matter arises under a law made by the Parliament within the meaning of s 39B(1A)(c) of the Judiciary Act. In Mulley v Hayes (at 377–379 [47]–[58]), I had cause to explain why I considered that such a contention was “arguable”. It is unnecessary to return to those reasons here, save as to observe that there might be thought to be “some uncertainty at the boundaries” of when a matter is one “arising under” a law made by the Parliament by reason of the fact that the ability of a corporation to be sued is conferred by, and depends upon, s 124 of the Corporations Act.

117    In any event, the current state of the law is that this argument as a foundation for jurisdiction is incorrect. Specifically, in DJ Builders & Son Pty Ltd (in liq) & Anor v Queensland Building and Construction Commission (No 3) [2021] FCA 1041; (2021) 156 ACSR 539, in the course of summarising the relevant principles, Derrington J considered my observations in Oliver, finding (at 544–545 [16]):

… Although Lee J’s catechism on the scope of the Court’s jurisdiction is both erudite and illuminating, the issues before his Honour did not necessitate the making of any determination as to whether jurisdiction was attracted merely by reason of the respondent being a corporation. In any event, I accept Mr Forrest’s submission that the right or duty in question in that case, being the defaming of the applicant by the respondent and the subsequent suffering of damage, did not relevantly owe its existence to the status of the defendant company as a corporation. Whilst it is true that the status of the corporate entity was necessary in order for it to be sued, that was merely part of the context in which the right, duty or liability arose. However, neither the right, duty nor liability “in question in the matter” owed their existence to the company’s status. The importance of this discussion is that it emphasises that attention must be focused on the relevant “controversy” in question rather than on the characteristics of the parties to it or the matrix of surrounding facts in which it arose. This was made explicit in [CGU Insurance Limited v Blakeley [2016] HCA 2; (2016) 259 CLR 339], where the majority opined (at 349 [24]) that, “Jurisdiction with respect to a particular subject matter is authority to adjudicate upon a class of questions concerning that subject matter”. Where no question arises as to the corporate existence of a defendant, there is no relevant federal subject matter requiring an adjudication. If, however, an issue in the controversy was a purported company’s entitlement to sue by reason of a question concerning its corporate status, different issues would arise.

(Emphasis added).

118    Notwithstanding my comments by way of obiter in Oliver (where I described the alternative view as “arguable”), it cannot be said that the ratio of DJ Builders is plainly wrong. Therefore, in accordance with usual principle (as summarised in Hicks v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 757 (at [75]–[76] per French J)), as a matter of comity, I ought to follow DJ Builders. On the current state of the authorities, and unless and until a Full Court says otherwise, the mere fact that the respondent’s ability to be sued is conferred by and depends upon the Corporations Act is insufficient to attract federal jurisdiction.

E    PRELIMINARY DISCOVERY

119    Given I have decided the case on jurisdictional grounds, it is unnecessary to determine the underlying merits of Mr Smith’s application. For completeness, however, I should note that my concerns as to the evidence go well beyond colourability.

120    It will be recalled Mr Smith gave evidence that he believes: (a) Mr Gazal gave untruthful evidence at the Initial Proceeding; (b) the NAB and Mr Gazal falsely asserted to the QPS that Mr Gazal was coerced and that the evidence that Mr Gazal gave at the Initial Proceeding was true; (c) by reason of these assertions, the QPS took action; and (d) Mr Gazal withdrew from giving evidence because Mr Gazal feared being cross-examined during the Committal Proceeding upon the Privileged Documents.

121    Although the issue of whether some of these beliefs are honestly held was not directed squarely to Mr Smith in cross-examination, Mr Smith’s overarching belief that Mr Gazal gave untruthful evidence at the Initial Proceeding, and that his alleged confession was voluntary, was tested throughout the cross-examination: see, for example, T30.12–46 (extracted above); T32.22–45; T38.24–26; T39.18–25.

122    Given my concerns as to Mr Smith’s evidence, and evidence concerning the events in Batam more generally, I am left with a feeling of disquiet about accepting Mr Smith’s evidence that he subjectively truly believes Mr Gazal’s alleged confession was voluntary or the NAB and Mr Gazal falsely asserted to the QPS that Mr Gazal was coerced. Equally, I have difficulty accepting Mr Smith’s evidence that he has a reasonable belief that he may have the right to obtain relief in this Court from the NAB.

123    To the extent it might be said these specific propositions were not challenged directly in cross-examination, this is not an adequate answer to my state of non-satisfaction as to his evidence of belief. As Sir Owen Dixon emphasised, a party bearing the onus will not succeed unless the whole of the evidence establishes a “reasonable satisfaction” on the preponderance of probabilities such as to sustain the relevant issue (Axon v Axon (1937) 59 CLR 395 (at 403, 407)), and the “facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied”: Jones v Dunkel (1959) 101 CLR 298 (at 305).

124    Even if I am wrong as to my factual findings which have informed my view that the statutory claims are colourable and as to Mr Smith’s subjective belief, I would nevertheless refuse relief. I do not consider that Mr Smith’s belief that he may have the right to obtain relief pursuant to those claims is objectively reasonable due to their obvious deficiencies. I have already dealt with the want of merit of the statutory claims, and for the following reasons, I consider the malicious prosecution claim also suffers from obvious difficulties.

125    First, there is not a jot or tittle of evidence upon which to base any belief, let alone a reasonable belief, that the QPS’s decision to bring the Charges and the New Charges against Mr Smith was initiated by the NAB’s complaint, or otherwise beyond the exercise of their independent prosecutorial discretion: A v State of New South Wales [2007] HCA 10; (2007) 230 CLR 500 (at 502–503 [1], 512–514 [34]–[39] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ). The decision to lay the Charges was made only after the computer records detailing the Batam Plot were acquired in March 2014, during the execution of unrelated search warrants against Phoenix Global. Indeed, as stated above, when the NAB first advised the QPS of the events that occurred in Batam in January 2013, the QPS declined to pursue a criminal investigation.

126    Secondly, there is no evidence to support the belief that the NAB acted maliciously in providing information to the QPS. Malice involves acting for a sole or dominant purpose that is other than a proper purpose of instituting criminal proceedings: A v State of New South Wales (at 519 [55], 531 [91] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ). Mr Smith does not explain any rational basis for any belief that the NAB acted maliciously, or any case theory as to what motivated the NAB to provide information to the QPS other than for the purpose of instituting criminal proceedings. Rather, counsel for Mr Smith submits that there is a reasonable basis, inferred from the “sequence of events”, to believe that the NAB acted maliciously in privately “agitating” the QPS to defeat any further claim that Mr Smith might bring against the NAB. Yet, such a belief finds no reasonable foundation in the evidence. It is to be remembered that the NAB first reported the events in Batam to the QPS on 29 January 2013 and, when Mr Smith subsequently raised the prospect of further litigation in April 2013, the solicitors for the NAB stated that they would “accept service of any originating process [Mr Smith] wishes to serve in relation to this matter”. Further, the fact that the NAB did not accept Mr Smith’s invitation for Messrs Gazal, Clarke and Smith to attend a meeting with the QPS together, was not only reasonable, but to do otherwise would have been absurd given the alleged threats made against Mr Gazal. Even so, the NAB’s invitation for Mr Smith to attend a meeting with representatives of the NAB remained open, but was not accepted.

127    Thirdly, and in any event, an action for malicious prosecution will not be available where the material before the prosecutor at the time of initiating or maintaining the charge: (1) persuaded the prosecutor that laying the charge was proper; and (2) would have been objectively assessed as warranting the laying of a charge: A v State of New South Wales (at 519 [56] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ). There is nothing that suggests that the NAB knowingly put forward a false version of events to the QPS such that it did not have a reasonable or proper cause to consider that Mr Smith may have engaged in criminal conduct. To the extent that Mr Smith submits that Mr Gazal knew his evidence was false, and that knowledge alone is sufficient to prove malice against the NAB, Mr Smith merely begs the question of why he does not already have sufficient information to decide to commence a proceeding for the tort of malicious prosecution.

128    Although not initially in evidence before the Court, Mr Smith already has in his possession an extensive record of documents relevant to the communications between the NAB and the QPS, including the QPS’ brief of evidence for the Committal Proceeding containing statements and diary entries from police officers detailing their communications with the NAB. Despite this, Mr Smith deposed in his affidavit sworn 21 July 2021 (at [13(b)]) that he does not know “what communications passed between the NAB and the QPS in relation to the Batam Meeting, the Charges or the New Charges, and the context and content of such communications”. The accuracy of this statement was challenged over the course of the cross-examination (T44.33–45.10):

So a moment ago you told me that by 13(b) of your first affidavit you were intending to convey that you had no information about communications between the NAB and police? That are relevant to – to the evidence that the NAB claiming legal and professional privilege over.

Your evidence to me earlier that you had no information was wrong, wasn’t it? About the – no, no. Well, you’re not listening to what I’m saying. It was in reference to the information that we – we’re asking that we can inspect, but you’re pointing out things we don’t need to inspect. We’ve already got it. The whole reason we’re here is I’m hoping that this court will allow me to inspect those documents. I’m not sure why they even need to be hidden.

Yes. You didn’t put the police brief of evidence in evidence before this court, did you? No, because we want to inspect what the NABs wouldn’t hand over in the criminal charges. And when they did, Gazal miraculously withdrew his – his complaint. And now again you don’t want to hand over the documents again.

Yes. The failure to put in the police brief of evidence enabled you to make a statement in your affidavit that you had no information about these matters, didn’t it? As far as the – the – the documents that we’re seeking to inspect.

Yes. What is the incremental advantage that you’re hoping to get by looking at more documents? Well, I’m hoping that my legal team will be able to advise me the likelihood of getting up on a case against the NAB.

(Emphasis added).

129    As is evident from the whole of the evidence and as is borne out in the above extract, Mr Smith has no more than suspicion or conjecture, that he might find something in the Privileged Documents, or any further records of any communications between the NAB and the QPS, that would assist him in bringing any claim for malicious prosecution. Moreover, having already in his possession an extensive record of documents evincing the communications between the NAB and the QPS, there is nothing to suggest reasonably that the Privileged Documents, which include draft witness statements and records of interviews of Messrs Gazal and Clarke prepared for use in the AKS trial, would assist in making the decision to bring the tort of malicious prosecution.

130    It follows that if this Court (contrary to my view) did have jurisdiction, and I was also mistaken as to my lack of persuasion as to Mr Smith subjectively holding a belief as to the state of affairs required by FCR 7.23(1)(a), any such subjective belief would not be tenable, rational or reasonably based (such that it would not be objectively reasonable) and the requirements for preliminary discovery would not be made out.

131    Finally, for completeness, I should record what I would have done in the event: (1) I was correct in my finding that an attempt was made to fabricate jurisdiction; but (2) the subject matter jurisdiction of the Court was attracted because the prospective claim arises because of NAB’s status as a corporation able to be sued; and (3) I should have found Mr Smith somehow fell over the line in establishing a reasonable belief and a need for the documents. In such circumstances, I would nevertheless deny relief relying upon on discretionary grounds. The inappropriate attempt to fabricate federal jurisdiction, the lack of candour in the evidence of Mr Smith to this Court, and the apparent weakness of the proposed case, taken together, overwhelm all other relevant considerations in the exercise of the discretion to grant relief in the circumstances of this case.

F    ORDERS

132    The application for preliminary discovery must be dismissed with costs.

Associate:

Dated:    6 October 2022