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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