Australian Postal Commission v Hayes & Anor

The history of the matter has been marked by disputes between the parties as to the adequacy of the respondent's reasons for decision and as to the completeness of the documents lodged with the Tribunal under s 37 Administrative Appeals Tribunal Act 1975 (AAT Act) as modified by s 14ZZF Taxation Administration Act 1953 (TA Act). It is to the credit of the parties and their representatives that these disputes have now been resolved, leaving outstanding only the question as to the confidentiality of certain documents comprised within T150.

On 4 January 1995, following an ex parte hearing attended only by the respondent, Deputy President McMahon made an order pursuant to s 35(2) of the AAT Act that until further order the documents set out in the schedule to the order should not be disclosed, except to the respondents to the proceedings and their legal advisers, and to members or staff of the Tribunal. The schedule listed the documents contained in T. 150 together with a letter dated 23 December 1994 from Mr I S Young of the Australian Tax Office to the Registrar of the Tribunal requesting the making of a s. 35 order. It is to the first of these documents, those contained in T150, that the applicants now seek access.

T150 constitutes the last of the 'T' documents lodged by the respondent pursuant to subsection 37(1) of the AAT Act as modified by subsection 14ZZF(1) of the TA Act (documents Nos. T1 - T49) or pursuant to an order under subsection 37(2) of the AAT Act as modified by paragraph 14ZZF(1)(b) of the TA Act (documents Nos T50-T150).

"(1) Subject to this section, the hearing of a proceeding before the Tribunal shall be in public.

(1A) If, at a time a hearing is in public, a person participates in the hearing by a means allowed under section 35A, the Tribunal is to take such steps as are reasonably necessary to ensure that the public nature of the hearing is preserved.

(2) Where the Tribunal is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason, the Tribunal may, by order:

(a) direct that a hearing or part of a hearing shall take place in private and give directions as to the persons who may be present;

(b) give directions prohibiting or restricting the publication of evidence given before the Tribunal, whether in public or in private, or of matters contained in documents lodged with the Tribunal or received in evidence by the Tribunal; and

(c) give directions prohibiting or restricting the disclosure to some or all of the parties to a proceeding of evidence given before the Tribunal, or of the contents of a document lodged with the Tribunal or received in evidence by the Tribunal, in relation to the proceeding.

(a) whether the hearing of a proceeding should be held in private; or

(b) whether publication, or disclosure to some or all of the parties, of evidence given before the Tribunal, or of a matter contained in a document lodged with the Tribunal or received in evidence by the Tribunal, should be prohibited or restricted;

the Tribunal shall take as the basis of its consideration the principle that it is desirable that hearings of proceedings before the Tribunal should be held in public and that evidence given before the Tribunal and the contents of documents lodged with the Tribunal or received in evidence by the Tribunal should be made available to the public and to all the parties, but shall pay due regard to any reasons given to the Tribunal why the hearing should be held in private or why publication or disclosure of the evidence or the matter contained in the documents should be prohibited or restricted."

1. Section 37, so far as is relevant to these proceedings, provides as follows:

"(1) A person who has made a decision that is the subject of an application for a review by the Tribunal shall, within 28 days after receiving notice of the application, lodge with the Tribunal such number of copies as is prescribed of:

(a) a statement setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision; and

(b) every other document or part of a document that is in his possession or under his control and is considered by him to be relevant to the review of the decision by the Tribunal.

(2) Where the Tribunal is of the opinion that particular other documents or that other documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal, the Tribunal may cause to be served on the person a notice in writing stating that the Tribunal is of that opinion and requiring the person to lodge with the Tribunal, within a time specified in the notice, the prescribed number of copies of each of those other documents that is in his possession or under his control, and a person on whom such a notice is served shall comply with the notice."

1. The respondent is seeking a continuation of the order under paragraph 35(2)(c) of the AAT Act. In doing so, it is primarily relying upon the judgment of Wilcox J in Australian Postal Commission v. Hayes & Anor [1989] FCA 176; (1989) 87 ALR 283. In that case his Honour set aside a direction of the Tribunal that the applicant in a claim under the Compensation (Commonwealth Government Employees) Act should be shown a video film at the commencement of her evidence before the Tribunal. The respondent in the AAT proceedings, the Commission for Employees' Compensation, urged that the film, which allegedly contradicted the applicant's complaints as to her symptoms and incapacities, should not be shown to her until she was under cross-examination. It was argued before Wilcox J that the Commission would be so impeded in the presentation of its case if it were not able to test the applicant's credibility in the manner it proposed, that it would amount to a denial of natural justice. Wilcox J accepted this proposition and said:

"In a case where there is a dispute as to the existence of a physical disability, being a disability whose existence or otherwise cannot be established by independent objective evidence and in relation to which the acceptance or rejection of the claimant's account of his or her symptoms is likely to be critical, counsel contend that the right to cross-examine effectively must include the right to test the credit of the claimant. One way of testing the credit of such a claimant, counsel say, is to ask questions which require the claimant to commit himself or herself in relation to the extent of the disability - the actions which he or she can, and cannot, perform - before confronting the claimant with a film depicting his or her actions. If it should happen, in such a case, that the film shows the claimant performing actions which have been said to be impossible, doubt may be cast upon the claimant's credit, causing the tribunal of fact to be cautious about relying on the claimant's evidence in relation to matters incapable of objective demonstration. If, in such a case, a claimant has seen the film before he or she has become committed to an account of the disabilities, the claimant may tailor his or her evidence so as to accommodate the film, leaving false evidence unexposed and uncontradicted.

I think that the above submission must be accepted. It is the everyday experience of those who attend courts that cross-examination is at its most effective when the evidence of a witness is able to be confronted by documents. But, as with any other cross-examination, it is normally necessary for the cross-examiner first to have the witness commit himself or herself to a precise version of relevant matters; the process which the late Mr J W Smyth QC called "closing the gates": see Bar News, the journal of the New South Wales Bar Association, Autumn 1988 pp 12-13. It is important, in that process, that a mendacious witness not be aware of the material available to the cross-examiner to contradict the evidence under manufacture." (p. 285-286)

1. His Honour went on to comment that he was making no assumption as to the veracity or otherwise of the applicant in those proceedings. He observed however that to deny the cross-examiner the opportunity of having the applicant commit herself to a version of relevant facts would be to deny the right fully to test her evidence, and accordingly would deny the Commission a reasonable opportunity of presenting its case.

2. Wilcox J distinguished between the situation where the video film had come into existence after the primary decision had been made and at the behest of a person other than the original decision-maker (as occurred in Hayes), from that where the document in question was used as a basis for the initial decision and was thus required to be lodged with the Tribunal under s 37 of the AAT Act. His Honour went on to observe however that even in the latter situation if it appeared that the production of a particular document at a particular stage to a particular person (even a party) would result in a denial of procedural fairness, then the Tribunal may make a direction restricting access at that stage. However, he regarded this as an exceptional case and observed that it would not be easy to envisage circumstances under which such a course would be necessary.

3. There have been few situations only in which s 35 has been sought to be invoked in order to restrict disclosure to parties of material which is considered relevant to the Tribunal's deliberations. The most frequently occurring situation relates to the identification of informants in criminal cases. In one such case, Pochi v Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 36 FLR 482 the then President, Brennan J, made the following observation:

"In the ordinary exercise of this Tribunal's jurisdiction, the Tribunal is required by its statute (s 36(4)) to apply the principle that the parties 'should be made aware of all relevant matters', and that is a principle from which the Tribunal departs with reluctance." (p. 510)

"the requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth. What the law requires in the discharge of a quasi-judicial function is judicial fairness. That is not a label for any fixed body of rules. What is fair in a given situation depends upon the circumstances." (p. 509)

This brings me to the circumstances of this case. It is difficult to discuss the issues openly without disclosing something of the contents of the documents. And whatever my own views may be about the disclosure of these documents, the respondent must be given the opportunity to test the matter on appeal, as Mr Young has already indicated he will consider doing in the event of an adverse finding. Accordingly I must discuss the matter in guarded terms.

I can safely say that T150 comprises three quite separate documents. In relation to each of them, Mr Young's letter dated 23 December 1994 seeks confidentiality as against the applicants on two main grounds: first that the right to procedural fairness carries a right to effectively cross-examine an opponent witness, including the right to test the veracity of his or her version. If the witness is given advance warning of adverse material upon which the cross-examination is to be based, then the evidence might be tailored so as to accommodate to this material, thus depriving the cross-examiner of the benefit of surprise. Mr Young suggests that the contents of documents in T150 themselves reflect on the credibility of the explanations proffered by the applicants as to the source of the overseas funds, and thus suggest that the applicants are prepared to depart from the truth when it suits them. The other main ground is that the disclosure of the contents of the documents might possibly frustrate further inquiries by the respondent.

Two further grounds are relied upon by Mr Young in relation to T150(i). It is difficult, if not impossible, to set out these grounds, let alone discuss them, without revealing something of the nature of T150(i) itself. Suffice it to say that on the basis of the material contained in Mr Young's letter and in T150(i) itself, I would not have concluded that these additional factors were sufficient to outweigh the normal presumption that documents lodged under s 37, being documents relevant to the Tribunal's determinations, should be disclosed to all parties.

I turn then to the two principal grounds relied upon by the respondent in seeking an extension of the non-disclosure order under paragraph 35(2)(c) of the TA Act. Under the first ground, relating to procedural fairness, Mr Young refers to Wilcox J's judgment in Hayes and asserts that the principle applies here. There is a real danger, he submits, that the applicants or some of them will tailor their evidence in order to adjust to this material if it is made available to them.

I do not understand Wilcox J in Hayes to be asserting as a general proposition that all documents to which a party would otherwise be entitled can routinely be withheld because it might alert that party to potentially adverse material and thus deprive a prospective cross-examiner of the benefit of surprise. Indeed his Honour himself described the situation in which this might occur as "exceptional". In Hayes the acceptance of the applicant's complaints as to her physical symptoms and disabilities was entirely dependent upon her being accepted as a witness of truth. The disabilities were not such as could be established by objective independent evidence. Accordingly, the veracity of the applicant on this matter was the central issue in the case.

This Tribunal is bound by the decision in Hayes. However, I consider that that case must be seen as the high point for a party who is seeking to have otherwise relevant documents withheld from disclosure to another party. Hayes was decided in 1989. The intervening years have seen increased openness in the litigation process, together with a move away from the traditionally adversarial "ambush" method of conducting trials. This in my view is to be applauded. Little is to be gained in my experience by adopting a confrontationist approach to litigation. This approach very frequently leads to an outcome which is welcome to no-one, at least to none of the parties. On the other hand, openness and co-operation can often serve to produce agreement where agreement had been thought to be impossible, and at the very least to isolate and focus upon the major issues in a case, thus containing what can sometimes be prohibitively expensive both in human and financial terms. This "cards on the table" approach has recently led the English courts to conclude that, in all but very rare personal injury cases, video films should be disclosed to plaintiffs. (Khan v Armaguard Limited [1994] EWCA Civ 19; [1994] 3 All ER 545)

The overriding consideration in all these situations is that of procedural fairness. Would a party be so impeded in the presentation of its own case and in the challenging of its opponent's case that fairness dictates that relevant material be withheld from the opponent? The situations in which this question were to receive an affirmative answer would, in my view, be rare indeed. It would certainly not be sufficient for a party merely to show that the material was capable of contradicting another party's version, even accepting that the credibility of that other party was critical to the case.

I should also say that it would be very unfortunate indeed if any rule of practice or procedure were to be developed within the Tribunal which assumed that witnesses before the Tribunal, whether they be parties or otherwise, were likely to lie upon their oath and to temper their evidence according to their knowledge of the material which was available to their opponents. It is important to maintain the distinction between safeguards designed to ensure that parties before the Tribunal are given the opportunity to present their cases fully and fairly, and devices which are designed to trap and expose unwary witnesses.

This returns me to the circumstances of this case. Certainly the truthfulness or otherwise of the applicants' version as to the origin of these monies will be central to the outcome of the case. But this is not a situation where the acceptance of their truthfulness is solely dependent upon what they say. It is, after all, the actual origin of the monies which will determine the outcome of the proceedings. No doubt the accounts given by the applicants will constitute part of the evidence on this subject - perhaps a very important part - but it cannot be said that it will be the only evidence capable of throwing light on the matter.

The Tribunal is bound, under s 33 of the AAT Act, to conduct its proceedings with as little formality and technicality as the circumstances permit. It is of course bound to apply the rules of procedural fairness. But unless these rules or a legislative enactment require that relevant material be withheld from a party, then the fundamental principles under which the AAT operates - as enshrined in subsections 35(3) and 36(4) of the AAT Act - dictate that there be openness in its proceedings, and that each party be made aware of all relevant material in the possession of the other. The principle of trial by ambush is in retreat even in the court system. It has never held sway in this Tribunal and I hope it never will. One of the great strengths of the AAT is its capacity to deal flexibly and informally with a wide range of disputes. Co-operation rather than confrontation has been encouraged at all levels of its proceedings, an approach which has generally proved extremely successful. Forensic devices designed for adversarial purposes have no part to play in the normal processes of the Tribunal.

The disclosure to the applicants of the documents contained in T150 would certainly deprive the respondent of the forensic advantage of surprise. To this extent the effectiveness of its cross-examination might well be curtailed, at least to some extent. But if this were sufficient to amount to a breach of the rules of procedural fairness then it would mean that a large number of documents lodged with the Tribunal under s 37 could routinely be withheld from applicants under subsection 35(2). This was never envisaged by Wilcox J in Hayes. To the contrary, his Honour considered that this would be necessary only in exceptional circumstances. Moreover it would be entirely contrary to the principle set out in subsection 35(3).

For the above reasons I propose to allow the applicants to have access to the documents contained in T150 prior to the commencement of the hearing of these matters.

I turn now to the second basis relied upon by the respondent for withholding disclosure of T150 to the applicants. This relates to the possible frustration of further inquiries to be made by the respondent. And I can deal with this issue very briefly, for Mr Walker QC, who appears for the applicants, does not dispute the reasonableness of the documents being withheld for this purpose, so long as access is allowed to the applicants well before the commencement of the hearing. Accordingly, the only outstanding issue under this head is one of time.

Without disclosing the nature of the three documents in T150, the only one of them which I would have expected to require any substantial time or effort to investigate would be T150(i). This document has been in the respondent's possession for a long time now, and I would hope that any investigations would be well under way and possibly close to completion. Accordingly, I have adjourned the directions hearing so that the respondent can inform me as to the timing of any further inquiries, and so that we can set a timetable for the future progress of this case. This timetable will include the release of the three documents T150(i), T150(ii) and T150(iii) to the applicants before the commencement of the hearing of these cases. Mr Young's letter dated 23 December 1994 which currently also is treated as confidential under s 35(2) is not sought by the applicants and will not be made available to them.

I CERTIFY THAT THIS AND THE . .................. PRECEDING PAGES ARE A TRUE COPY OF THE DECISION AND REASONS FOR DECISION HEREIN OF JUSTICE JANE MATHEWS, PRESIDENT

SIGNED...................................................