Bills Digest no. 149 2005–06
Royal Commissions Amendment Bill 2006
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Royal Commissions Amendment Bill
2006
Date introduced: 25 May 2006
House: House of
Representatives
Portfolio: Prime Minister
Commencement: Sections 1 to 3 commence on the day of Royal Assent.
Schedule 1 commences the day after Royal Assent.
This Bill is to amend the
Royal Commissions Act 1902 (the Act) to clarify the
operation of the Act in respect of claims of legal professional
privilege (LPP).
Amendments were requested by the Commissioner of the current
Inquiry into Certain Australian Companies in relation to the UN
Oil-for-Food Programme (the Cole Inquiry), the Hon Terence Cole AO
RFD QC, following the Federal Court decision in AWB Limited v
Honourable Terence Rhoderic Hudson
Cole [2006] FCA 571.
The Bill intends to put beyond doubt that any current and future
Commissioner appointed under the Act may require the production of
a document in respect of which LPP is claimed, for the limited
purpose of making a finding about whether to accept or reject it.
The decision is still finally reviewable by the courts.
The Bill was debated on 30 May and passed the House of
Representatives on 31 May 2006. It is listed for debate in Senate
on 15 June 2006. The urgency of the Bill s passage and early
commencement date is referred to in the Explanatory Memorandum:
This is a relatively early commencement, due to the urgency of
the powers to be provided by the Bill being available for the
benefit of the current Inquiry into Certain Australian Companies in
relation to the UN Oil-for-Food Programme.(1)
Certain communications between a
lawyer and his/her client are privileged and neither the client nor
the lawyer can be compelled to disclose details of the
communication. The rationale for this privilege, as identified by
the High Court in 1976 in Grant v
Downs, is that:
it promotes the public interest because it assists and enhances
the administration of justice by facilitating the representation of
clients by legal advisers, the law being a complex and complicated
discipline. This it does by keeping secret their communications,
thereby inducing the client to retain the solicitor and seek his
advice, and encouraging the client to make a full and frank
disclosure of the relevant circumstances to the solicitor. The
existence of the privilege reflects, to the extent to which it is
accorded, the paramountcy of this public interest over a more
general public interest, that which requires that in the interests
of a fair trial litigation should be conducted on the footing that
all relevant documentary evidence is available. As a head of
privilege legal professional privilege is so firmly entrenched in
the law that it is not to be exorcised by judicial decision.
(2)
The common law in so far as it relates to privilege protects
certain communications in the context of the confidential
relationship of lawyers and clients but not communications in other
confidential relationships such as accountants and clients.
LPP is not merely a rule of evidence, it is a substantive common
law right. Unless expressly abrogated by statute, it applies beyond
judicial and quasi-judicial proceedings to statutory forms of
compulsory disclosure.
LPP essentially has two limbs. LPP attaches to confidential
communications between a legal adviser and a client (or in some
circumstances between one of those entities and a third party) if
those communications were made for the dominant purpose of:
- enabling the client to obtain, or the lawyer to give, legal
advice; or
- litigation that is actually taking place or reasonably
anticipated at the time the communication was made.
The litigation must at least be contemplated or anticipated.
Legal proceedings are anticipated where there is a reasonable
probability or likelihood that such proceedings will be commenced.
Whether such a probability or likelihood exists is determined by an
objective view, not the subjective view of the person making the
communication. A vague apprehension, or the mere possibility that
litigation might occur, is not sufficient. LPP extends to
communications made with the intention to obtain or give legal
advice or for the conduct of actual or contemplated litigation even
though it is not in fact used in the litigation.
LPP may also cover the following (non-exhaustive):
- notes, memoranda, minutes or other documents made by the client
or officers of the client or the lawyer of the client:
- of communications which are themselves privileged;
- -which contain a record of those communications; or
- which relate to information sought by lawyers to enable them to
advise the clients or conduct litigation for them;
- knowledge, information or belief of clients derived from
privileged communications made to them by their lawyers or lawyers'
agent.
The Cole Inquiry
On 14 April 1995, acting under Chapter VII of the United Nations
Charter, the Security Council adopted resolution
986, establishing the Oil-for-Food Programme, providing Iraq
with an opportunity to sell oil to finance the purchase of
humanitarian goods, and various mandated United Nations activities
concerning Iraq. The Programme, as established by the Security
Council, was intended to be a temporary measure to provide for the
humanitarian needs of the Iraqi people, until the fulfilment by
Iraq of the relevant Security Council resolutions, including
notably resolution
687 of 3 April 1991 .
Although established in April 1995, the
implementation of the Programme started only in December 1996,
after the signing of the Memorandum of Understanding (MOU) between
the United Nations and the Government of Iraq on 20 May 1996
(S/1996/356). The Programme was funded exclusively with the
proceeds from Iraqi oil exports, authorised by the Security
Council. The first oil was exported under the Programme in December
1996 and the first shipment of supplies arrived under the Programme
in March 1997.
The oil-for-food arrangement was not finalized,
however, until early December 1996, after six months of
negotiations between the Iraqi government, the Security Council and
the Secretary-General. The final plan permitted Iraq to sell $2
billion worth of oil over six months to raise funds to buy food,
medicines and other humanitarian goods. Funds earned from the oil
sales were to be placed in an escrow account in New York
administered by the United Nations. About $260 million was to be
reserved for the Kurdish population of northern Iraq, and $600,000
placed in a special fund established to compensate victims of the
Iraqi 1990 invasion. The UN Special Commission charged with
monitoring Iraq s destruction of its weapons of mass destruction
was to receive $20 million to cover operating expenses, with the
remainder of the money to be distributed in Iraq. The Security
Council could renew the oil-for-food plan after six months if Iraq
complied with conditions. Finding no major violations, the Council
extended the plan for a second six-month term in June 1997.
At the time of its termination on 21 November
2003, some $31 billion worth of humanitarian supplies and equipment
had been delivered to Iraq under the Oil-for-Food Programme,
including $1.6 billion worth of oil industry spare parts and
equipment. An additional $8.2 billion worth of supplies were in the
production and delivery pipeline.(3) The US-led military
action began on 20 March 2003.
Since its implementation, the oil-for-food scheme has been
criticized for chronic administrative delays. Allegations were made
that the program was directly benefiting Saddam
Hussein.(4)
In April 2004, United Nations Secretary General Kofi Annan
appointed an independent, high-level inquiry to investigate the
administration and management of the Oil-for-Food Programme in
Iraq. Following this, the United Nations Security Council
unanimously adopted
resolution 1538 (2004), which endorsed the inquiry and called
for full cooperation in the investigation by all United Nations
officials and personnel, the Coalition Provisional Authority, Iraq,
and all other Member States, including their national regulatory
authorities.
The appointed Independent
Inquiry Committee (IIC) is chaired by Paul Volcker, former
Chairman of the United States Federal Reserve. Committee Members
include Mark Pieth of Switzerland, an expert on money-laundering in
the Organization for Economic Cooperation and Development (OECD),
and Richard Goldstone of South Africa, former Prosecutor of the
International Criminal Tribunals for the former Yugoslavia and
Rwanda. It does not have the power to subpoena witnesses.
The IIC mandate states that it
shall collect and examine information relating to the
administration and management of the Oil-for-Food Programme,
including allegations of fraud and corruption on the part of United
Nations officials, personnel and agents, as well as contractors,
including entities that have entered into contracts with the United
Nations or with Iraq under the Programme.
The Final
Report (Manipulation of the Oil-for-Food Programme by the Iraqi
Regime) of the Independent Inquiry Committee issued on 27 October
2005 stated that AWB paid US$221.7 million to Jordan-based Alia
Transportation to transport wheat through Iraq, but the funds were
channelled to Saddam Hussein's regime.
Australia in response set up an inquiry with Royal Commission
powers. By Letters Patent dated 10 November 2005, Terence Cole was
appointed Commissioner to conduct an inquiry into and report on
whether decisions, actions, conduct or payments by Australian
companies mentioned in the IIC Final Report
breached any Federal, State or Territory law.
The Cole Inquiry has a
comprehensive webpage.
The original and amended
terms of reference can be accessed at:
http://www.ag.gov.au/agd/www/UNoilforfoodinquiry.nsf/Page/Terms_of_Reference
In late March 2006, Commissioner Cole rejected an LPP claim over
a particular document (Exhibit 665) which was inadvertently
admitted to the Inquiry by AWB Limited.(5)
AWB Limited applied to the Federal Court for review of
Commissioner Cole s decision, challenging not just the decision on
the particular document, but also his capacity to determine claims
of LPP. The matter was heard by the Federal Court (Justice Young)
on 24 April 2006.
The litigation was in the context of long-running disputes over
the production of documents by AWB Limited. In February 2006,
Commissioner Cole said the situation with AWB s claim for LPP had
almost reached the point of absurdity .(6) Commissioner
Cole further revealed on 30 May 2006 that he was not yet satisfied
that the company had fully responded to fourteen formal requests
for documents over the last five months. It was reported that 1200
documents or categories of documents, with a further long list of
hundreds of documents, may have been the subject of LPP claims by
AWB.(7) It was speculated in the press that these
documents are in relation to Project Rose and Project Lilac , based
on in-house legal advice from AWB counsel Jim Cooper relating to an
internal legal review of the trade with Iraq.(8)
In his judgment
of 17 May 2006, Young J held that the application by AWB should be
dismissed, the document in question was not subject to LPP, and
Cole had the power in the circumstances of the case (as the
document had been inadvertently provided to the Inquiry) to form an
opinion on whether the document was subject to LPP.
However, the decision cast some doubt on whether Commissioner
Cole (or any future person appointed under the Royal Commission
Act) has the power to require the production of a document for
inspection where a claim to LPP has been made.
The Explanatory Memorandum states that Commissioner
Cole made a request to amend the Act to the Government on 19 May
2006:
Mr Cole has expressed his concerns with the decision to the
Australian Government and has sought urgent amendments to the RCA,
noting that LPP claims have been made in respect of many documents
that have not been produced to his Inquiry.(9)
In response the Attorney-General issued a press release on 23
May 2006 stating that the Government would immediately introduce a
Bill to amend the Act and clarify the position for the Cole Inquiry
and future Royal Commissions.(10)
The ALP raised LPP concerns about the Cole Inquiry in March
2006. In a joint press release by Nicola Roxon, Shadow
Attorney-General and Shadow Foreign Affairs spokesperson Kevin
Rudd, they alleged that AWB Limited was abusing LPP and trying to
frustrate the Cole Inquiry process.(11)
The ALP position on the Bill was summed up in the second reading
debate as too little too late ,(12) but the substance of
the Bill was not opposed. Ms Roxon notes concerns by the Law
Council that inspection of a document that is later held to be
privileged could nonetheless pollute the mind of the
commissioner(13) but finds that the Bill has sufficient
safeguards against bias allegations and merely streamlines the
process by putting the onus for commencing litigation on the
claimant, not the commission .(14)
The ALP focused more generally in the second reading debate on
what they perceive as the limited terms of reference of the Cole
Inquiry.
Schedule 1
Amendment of Royal Commissions Act 1902
Item 2 would amend existing section 1B
(definition of reasonable excuse ). The current definition of
reasonable excuse is in relation to any act or omission by
a witness or a person summoned as a witness before a Commission
means an excuse which would excuse an act or omission of a similar
nature by a witness or a person summoned as a witness before a
court of law .
Existing subsection 3(5) provides a defence of reasonable excuse
for a person served with a notice under subsection 2(3A).
The amendment to the definition makes it clear that reasonable
excuse can also apply to a person served with a notice under
existing subsection 2(3A)(15) or new 6AA(3).
Item 3 inserts a new subsection to clarify that
references in the Act to a requirement to produce a document, or
refusal or failure to produce a document, include references in
relation to part of a document.
Item 4 adds a provision to the end of section 2
which would make clarify relevant offence provisions to provide
that the power in section 2 to require production of a document
extends to a power to require production of a document that is
subject to LPP.
The Explanatory Memorandum states:
This amendment responds to comments by Young J in AWB v
Cole ([2006] FCA 571 at paragraph 51) that in the absence
of clear and unmistakable language, a compulsive notice such as
that which can be issued under s 2(3A) will not be construed as
requiring the production of legally privileged documents
.(16)
New subsection 2(5) notes that there is an
obligation to produce such documents, when requested though the
obligation is subject to the procedure to be provided under
proposed section 6AA (see item 5) and subject also to the powers of
courts to make binding determinations on the existence of LPP.
This amendment is not intended to enable a Commission to obtain
a court order compelling production of a document which is in fact
subject to LPP. Only proposed section 6AA, supported by the
offence provision in new subsection 6AB(2), will provide a basis to
compel production of such a document, and only for the purpose of
inspection.
Item 5 inserts new section 6AA
and new section 6AB for the making of decisions on
claims of LPP and the powers available for that purpose, and
related offence provisions.
New section 6AA is designed to ensure that,
in the case of a defence based on LPP, the person making the
claim must justify the claim before the Commission; a person who is
not satisfied with a decision by the Commission in respect of a
claim will be able to seek review of that decision in the Federal
Court.
New subsection 6AA(1) has the effect that LPP
will not be effective as a defence in a prosecution unless the
claim for privilege has been upheld by a court, or the claim was
made in a timely fashion before the Commission.
New subsection 6AA(2) makes plain that, where
LPP is claimed before a Commission, the Commission can decide
whether to accept or reject the claim.
The Explanatory Memorandum states:
A discretion is provided, so that where it is not a priority for
a Commission to pursue further a document which has been the
subject of an LPP claim, the claim can be concurred to on a de
facto basis. It is not intended to provide the Commission with a
discretion to make a decision on grounds other than satisfaction or
otherwise that the legal basis for a claim of LPP has been
established.
An intended effect of the express provision is that a Commission
s finding on a claim of LPP will be a decision under an enactment,
and therefore subject to judicial review under the
Administrative Decisions (Judicial Review) Act 1977 as
well as under section 39B of the Judiciary Act 1903.
(17)
Where LPP has been claimed before the Commission, new
subsection 6AA(3) clarifies that the Commission may
require production of the document for inspection, by the
Commissioner and/or an authorised person or persons, for the
purpose of deciding whether to accept or reject the claim.
New subsection 6AA(4) addresses the
circumstance of a document produced for inspection and the claim
for privilege being accepted. The document must in that case be
returned to the person who provided it. In a case where a claim
of LPP is accepted in respect of part only of a document, a further
requirement might be issued for production of so much of the
document as is not subject to LPP.
The contents of a document that have been found to be subject
to LPP will not be able to be used for the purposes of any report
or decision the Commission makes.
New subsection 6AA(6) makes clear that the
Commission can use its powers under section 2 in relation to
consideration of the claim of LPP, for example to require
information about the circumstances in which a document came into
existence, and to examine witnesses in relation to the claim.
New section 6AB inserts additional offences,
closely paralleling the existing offences in section 3.
New subsection 6AB(1) establishes an offence
occurs where a person fails to produce a document despite rejection
of a claim for LPP under new section 6AA by a
member and a further requirement to produce.
New subsection 6AB(2) provides the sanction in
relation to the obligation to provide a document for inspection,
for the purpose of making a decision on a claim of LPP under
new section 6AA.
These are offences of strict liability (as defined in section
6.1 of the Criminal Code), with maximum penalties
expressed as $1,000 or 6 months imprisonment.
Reasonable excuse as defined in amended section 1B is available
as a defence, but LPP cannot constitute a reasonable excuse unless
established by a court.
It is also a defence to a prosecution for an offence against
this section if the document in question was not relevant to the
matters into which the Commission was inquiring. This parallels
existing subsection 2(6).
Item 6 amends subsection 6A(1) by inserting or
section 6AB after subsection 3(2B) or (5) so that a defence of
self-incrimination will not be available in relation to the new
section 6AB offences. This mirrors the removal of the defence of
self-incrimination in relation to the existing offences in section
1E.
Item 7 adds or subsection 6AA(3) to the end of
paragraph 6DD(1)(b) to ensure that evidence produced by a witness
in order for a claim of LPP to be determined by the member under
subsection 6AA(3) cannot be used against that witness in any civil
or criminal proceedings (known as use immunity ).
Item 8 amends subparagraphs 6F(1)(a)(ii) and
(c)(ii) by inserting or 6AA(3) after subsection 2(3A) , in each
provision. These amendments make plain that documents produced by a
witness in order for a claim of LPP to be determined by a member
under subsection 6AA(3) may be inspected by the member and the
member may make copies of them.
Item 9 provides that the amendments made by
Schedule 1 apply, after the commencement of the Schedule, in
relation to the proceedings of any Commission after that
commencement, whether the Commission was established before or
after that commencement. Therefore the provisions will be able to
be used by the current Cole Inquiry.
It is not certain that the Bill will in fact allow the Cole
Inquiry to quickly obtain and use in its report the material
over which AWB is claiming LPP. This is because the Bill properly
allows the courts to be the final arbiter of whether LPP attaches
to a document. AWB have already commenced proceedings regarding LPP
claims over a large number of documents in the Federal
Court.(18) Presumably AWB could ask the court for an
injunction to prevent the Cole Inquiry from proceeding until those
claims are resolved.
The Bill will allow Commissioner Cole to obtain and sight the
documents, even if the Commissioner is then prevented from
relying on evidence contained in them in his final report or
subsequent proceedings.
As this Bill is so heavily contextualised by AWB s behaviour
before the Cole Inquiry, it is important to note that the Bill will
apply to all future Royal Commissions. LPP is a centuries-old
common law right based on sound public policy
reasons.(19)
As the ALP noted in the second reading debate, concerns have
been raised by legal experts about whether the Commissioner will be
influenced by the content of such documents when writing the
report.(20) The concern is that this may in turn lead to
allegations of actual or apprehended bias by affected parties. This
may be especially important in cases such as the Cole Inquiry where
the Commissioner is making findings of liability for individuals
and corporations.
Where LPP has been claimed before the Commission, new
subsection 6AA(3) makes it clear that the Commission may
require production of the document for inspection, by the
Commissioner and/or an authorised person or persons, for the
purpose of deciding whether to accept or reject the claim.
It is worth noting that in practice under the Rules of Court in
Australian jurisdictions, if it is undesirable for the judge who
will hear the case to see the document in relation to which the
claim of privilege is made, a discretion is allowed for the court
to decide that the question of privilege should be decided by a
different judge. The judge ultimately responsible for a finding on
a particular matter would then never see the document upon which
LPP is claimed if LPP is successfully made out before another
judge. Issues of bias are completely avoided by this process.
Although this is an option under new subsection
6AA(3) of this Bill, it is not a specific
requirement. The Commissioner could ask an authorised person to
decide the claim so the contents of the document are never before
him or her and could not influence the findings contained in the
final report.
Parliament may wish to consider whether a Commissioner should be
given a specific discretion to have another authorised person
related to the inquiry decide questions of privilege so that the
final report is not influenced in any way by the material contained
in documents which properly attract LPP.
- Explanatory Memorandum, p. 3.
- (1976) 135 CLR 674; (1976) 11 ALR 577. See also Daniels
Corporations International Pty Ltd v Australian Competition and
Consumer Commission (2002) 213 CLR 543 per McHugh J at 563
[44].
- John G. Ruggie,
The U.N. Oil-for-Food Programme: What Went Wrong and Right?
UN Association of USA Policy Brief, no.
3, 7 June 2004. See further: Resources
& Links regarding the Oil-for-Food Programme.
- Susan Sachs and Judith Miller,
Under Eye of U.N., Billions for Hussein in Oil-for-Food Plan
, The New York Times, 13 August 2004.
- See further Dan Silkstone and Sarah Smiles, AWB legal bid to
keep papers secret , The Age, 31 May 2006, p. 6; David
Marr, AWB vows long legal fight to keep files secret , Sydney
Morning Herald, 31 May 2006, p. 8.
- Canberra Times, 'Bizarre' twist stops lawyer from
telling all , 23 February 2006, p. 2.
- David Marr, AWB vows long legal fight to keep files secret
, op cit.
- Caroline Overington, Dossier deadline for AWB , The
Australian, 30 May 2006, p. 8. Note recent jurisprudence that
LPP can apply to in-house lawyers communications that satisfy the
dominant purpose test. In Sydney Airports Corporation Ltd v
Singapore Airlines Ltd and Qantas Limited [2005] NSWCA 47 the
New South Wales Court of Appeal stated the fact that an in-house
solicitor is entitled to claim privilege on behalf of his or her
employer client is now well established (per Spigelman CJ at
18).
- Explanatory Memorandum, p. 1.
- Attorney-General, The Hon. Philip Ruddock,
Government agrees to amend Royal Commissions Act , media
release (093/2006), 23 May 2006.
- Nicola Roxon and Kevin Rudd, Cole must be allowed to get to the
truth of the wheat for weapons scandal , media release, 12
March 2006.
- Nicola Roxon, House of Representatives, Debates, 30
May 2006, p. 47.
- Comment actually made by Norman O Bryan SC. Matt Drummond,
Ruddock takes risky route on privilege , Australian Financial
Review, 26 May 2006, p. 58. Law Council president John North
reported at stating: There is a real danger that allowing a royal
commissioner to view documents subject to a proper claim of
privilege will create a perception of bias, as information
contained in those documents could improperly influence the
commissioner's thinking .
- Nicola Roxon, House of Representatives, Debates, 30
May 2006, p. 48.
- A member of a Commission may, by written notice served (as
prescribed) on a person, require the person to produce a document
or thing specified in the notice to a person, and at the time and
place, specified in the notice.
- Explanatory Memorandum, p. 4.
- ibid., p. 5.
- David Marr, AWB vows long legal fight to keep files secret ,
op. cit.
- Grant v Downs, op cit.
- Matt Drummond, Ruddock takes risky route on privilege , op.
cit.
Sue Harris Rimmer
7 June 2006
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
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