Candacal Pty Ltd v Industry Research & Development Board

LEE J: 1 This is an interlocutory application for the determination of issues that have arisen between the parties in respect of an order, made by consent, directing the respondent ("the Board") to give discovery of certain documents. 2 To understand how these differences have arisen it is necessary to set out the history of the litigation in some detail. The following account is extracted from the assertions of the parties in the pleadings and from the material tendered in support of the interlocutory application. It contains no findings of fact. 3 The applicants were members of a syndicate formed in June 1994 to carry out a project ("the project") comprising, or including, research and development activities, in particular, the development of a technology capable of providing a more efficient means of generating electricity from the energy produced by burning low grade coal. In addition to generating electricity at a lower cost the developed technology would capture the gases produced by burning the coal, in particular carbon dioxide, and thereby reduce the emission of those gases into the atmosphere. 4 As at June 1994 the Income Assessment Act 1936 (Cth) ("the Tax Act"), provided substantial incentives to encourage a person to engage in research and development activities that had prospects of commercial exploitation. Under s 73B of the Tax Act research and development expenditure incurred by an "eligible company" was an allowable deduction from the assessable income of that company in the year of income in which the expenditure was incurred. The amount deducted could be up to 150% of the sum expended. An "eligible company" was a company incorporated under a law of the Commonwealth or of a State or Territory. 5 It was contemplated by the Tax Act that such research and development activities may be a project carried out by eligible companies in partnership or as a syndicate. The Tax Act required that such companies be jointly registered under s 39P of the Industry Research and Development Act 1986 (Cth) ("the Act") in relation to the project. 6 The long title of the Act stated that it was an "Act to encourage certain research and development". The Act established the Board which, under Part IIIA of the Act (ss 39A-39V), was required to provide guidelines to assist eligible companies to ascertain whether a proposed project met the requirements of the Act as to "adequate Australian content" and "finance scheme" eligibility. It was also a function of the Board to provide certificates to the Commissioner of Taxation in respect of the matters described in ss 39LA, 39M, 39MA and 39N of the Act. 7 Further functions of the Board included registration of a company in relation to a year of income in respect of which the company had provided to the Board such information in relation to its research and development, or proposed research and development, activities as the Board reasonably required (s 39J) and joint registration of two or more companies in respect of the year of income or years of income in relation to a proposed project or projects comprising or including research and development activities (s 39P). As at 30 June 1994 s 39P of the Act read as follows: '39P(1)A person may apply to the Board on behalf of 2 or more eligible companies for the joint registration of those eligible companies in respect of a year of income or years of income in relation to a proposed project or proposed projects comprising or including research and development activities. (2) The application shall: (a) specify the companies concerned; (b) contain such particulars of the project, or each project, as the Board requires; (c) specify the total amount of the expenditure expected to be incurred by the companies in the year of income or years of income in respect of the research and development activities comprised or included in the project or projects; (d) specify, in respect of each company in relation to the research and development activities comprised or included in the project or each project, the amount of expenditure expected to be incurred in the year of income or each year of income in each of the following classes of expenditure: (i) research and development expenditure other than contract expenditure; (ii) plant expenditure; and (e) set out proposals for the exploitation of any results of the research and development activities. (3) If the Board is of the opinion in relation to the project, or in relation to a particular one or more of those projects, that: (a) the activities in respect of which the expenditure is proposed to be incurred are research and development activities; (b) at least one of the companies is not related to any of the others; (c) the total amount of the expenditure expected to be incurred as mentioned in paragraph (2)(c) will exceed $1,000,000; (d) if there was or is a finance scheme in relation to the research and development activities-the finance scheme is not an ineligible finance scheme; (f) the results of the research and development activities will be exploited: (i) on normal commercial terms; and (ii) in a manner that is for the benefit of the Australian economy; (g) the research and development activities will have an adequate Australian content; and (h) there are no grounds under section 39K on which the Board would be entitled to refuse to register either or any of the companies in respect of the year of income or any of the years of income under section 39J if the companies had made separate applications for registration; the Board may register the companies jointly in respect of the year of income or the years of income in relation to that project or in relation to that particular one or more of those projects, as the case requires. (3A) If the Board refuses to register the companies jointly in relation to the project or projects specified in the application, the Board must give notice in writing to the companies stating the reasons for the refusal. (4) If, after registering companies jointly under subsection (3) in respect of a year of income or years of income, the Board becomes of the opinion that: (a) the whole or any part of the money paid by the companies has not been or is not being expended in respect of research and development activities; (b) any of the results of the research and development activities have not been, or will not be, exploited as mentioned in paragraph (3)(f); (c) the research and development activities do not, or will not, have an adequate Australian content; or (d) either or any of the companies has, before the completion of the project or projects in respect of which money paid by the company has been expended, disposed of to another person all or any of the company's rights in respect of the exploitation of any of the results of the relevant research and development activities, or an interest (whether legal or equitable) in all or any of those rights; the Board may give to the Commissioner a certificate stating that it is of that opinion. (5) The Board shall not give a certificate under this section that affects a company or companies unless the Board has: (a) given notice in writing to the company or each company stating that the Board is considering giving the certificate and informing the company of its reasons for so considering; (b) given to the company or each company a reasonable opportunity to make a written submission in relation to the matter; and (c) if such a submission is made within a reasonable time, had regard to the matters raised in the submission.' 8 The applicants claim that in January, March, and August 1995, a syndicate manager, on behalf of the syndicate, applied under s 39P(1) of the Act for the 14 eligible companies that comprised the syndicate to be jointly registered in relation to the project in respect of the years of income ending 30 June 1994, 30 June 1995, 30 June 1996, 30 June 1997 and 30 June 1998. The three applications for registration resulted from errors in description, or omission of description, of syndicate members that occurred in the first and second applications. The Board admits that in February, March and October 1995 it advised the syndicate members that they had been registered in respect of the years of income ending 30 June 1995, 30 June 1996, 30 June 1997 and 30 June 1998. It would seem to follow, therefore, that the Board admits that it formed the necessary opinion that the project satisfied the requirements for registration set out in s 39P(3) of the Act. The material supplied by the syndicate members to the Board to enable the Board to be so satisfied referred to activities to be conducted and monies to be expended in relation to the project in the years of income ending 30 June 1994 to 30 June 1998. 9 The applications for registration lodged on behalf of the syndicate members informed the Board that a major cost of the project would be the payment of a sum of $182,000,000 for a sub-licence fee to obtain the "core technology" with respect to which the research and development activities would be conducted. The applications also stated that a sum of approximately $100,000,000 would be expended in the course of the project on other costs of the project. 10 Pursuant to ss 73B(1AB) and 73B(1) of the Tax Act, technology is core technology in relation to particular research and development activities if: '(a) the purpose of the activities was or is: (i) to obtain new knowledge based on that technology; or (ii) to create new or improved materials, products, devices, processes, techniques or services to be based on that technology; or (b) the activities were or are an extension, continuation, development or completion of the activities that produced that technology.' 11 The core technology in this matter was intellectual property relating to the use of low grade coal for the production of electricity. The technology was property of the State of Victoria held through a government body, Generation Victoria. Generation Victoria granted a licence to use the technology to a government-owned company, HRL Treasury Pty Ltd ("HRLT"). After becoming the licensee of the technology HRLT was "privatised", that is to say, released from government control, and it then granted a sub-licence to the syndicate. The entity holding the controlling interest in HRLT was a member of the syndicate. 12 Prior to registration of the syndicate members numerous discussions took place between representatives of the syndicate and of a committee to which powers of the Board had been delegated, the Taxation Concession Committee ("the TCC"). The Board and the TCC were assisted by officers of the Department of Industry, Science and Technology as it was then named ("the Department"). In those discussions assurances were given on behalf of the Board that the syndicate members could be registered after 30 June 1994 "to cover the income year ended 30 June 1994 and subsequent income years during which the project would be undertaken". 13 The financial information provided in the forms lodged on behalf of the syndicate seeking registration of the syndicate members under s 39P of the Act showed that 10 of the 11 applicants in this proceeding would claim the contributions made to the cost of the sub‑licence fee, in aggregate $120,390,790, as deductions from their assessable income for the year of income ending 30 June 1994. The forms stated that the balance of the sub-licence fee, $61,609,210, would be paid by the three remaining syndicate members and the payments would be claimed as deductions from the assessable income of those companies in the year of income ending 30 June 1995. The forms showed that the total amount to be claimed by the applicants as "Section 73B Tax Deductions" for the year of income ending 30 June 1994 was $136,362,539. 14 In February 1995 a Departmental officer submitted a recommendation to the TCC that in respect of the application for registration lodged on behalf of the syndicate the syndicate members be registered for the "1994/95, 1995/96, 1996/97 and 1997/98 financial years". Similar recommendations were made in respect of the subsequent applications lodged in March and August 1995. No reason to deny registration for the year of income ending 30 June 1994 was identified in any recommendation. The omission of the year of income ending 30 June 1994 from the years for which registration was recommended may have been an error in transcription by the first recommending officer, repeated by other officers in recommendations made on the subsequent applications. It is to be noted that each recommendation recorded that the cost of the core technology of the project was $182,000,000. Each recommendation provided a box for endorsement of acceptance of the recommendation and the box was duly "ticked" by the TCC on each occasion it determined that the syndicate members be registered as recommended by the officers. 15 It follows from the foregoing that the Board, by its delegate the TCC, did not determine under s 39P(3)(h) of the Act that registration of the syndicate had to be refused. Section 39P(3)(h) provides that if the Board is of the opinion that there are grounds under s 39K of the Act on which the Board would be entitled to refuse to register a syndicate member in respect of a year of income if that company had made a separate application for registration under s 39J of the Act, it is unable to register the companies jointly in respect of the years of income in relation to the project. Accordingly, no notice of a refusal to register the syndicate members, and, of course, no reasons for such a refusal to register, were provided to the applicants as would have been required under s 39P(3A) of the Act if the Board had made such a decision. 16 The applicants, with some force, contend that at material times thereafter the Board understood that it had dealt with the syndicate's application for registration and had registered the syndicate members as sought by the Syndicate. Indeed in September 1996 (Ex. G(1) Doc 43)) the Department wrote to the then syndicate manager advising that the records for the registered syndicate were incomplete and the assistance of the syndicate was required in "supplying missing information". The information sought related to "Tax years of income for registration 1993/94-1997/98". 17 The applicants claim that the intent of the recommendation to the TCC, and of the decision of the TCC, was to register the applicants in the terms sought by them in the forms lodged. The forms, under the heading "Year or Years of Income for which registration is being sought" set out the years "1993/94, 1994/95, 1995/96, 1996/97, 1997/98" as the relevant years and set out the expenditure to be incurred in each of those years in carrying out the project. 18 The applicants contend that the recommendation endorsed by the TCC contained a simple typographical or clerical error and that the registration as formally recorded was inconsistent with the decision actually made by the Board through the TCC. 19 The alleged error in the record was not discovered until the project was substantially completed. At some time in 1998 the syndicate manager informed the Department that the notice of registration forwarded to the syndicate in 1995 purported to approve the syndicate's application for registration but did not recite the year of income ending 30 June 1994 as a year for which syndicate members were registered. In about March 1999 officers of the Department, ostensibly on behalf of the Board, obtained legal advice on the point and in late 1999, or early 2000, the Board invited the syndicate members to request the Board to deal with their application that the syndicate members be registered for the year of income ending 30 June 1994. Apparently the Board acted on an assumption that the forms submitted by the syndicate consisted of separate applications for registration for each of the five years of income and that an application for registration for the year of income ending 30 June 1994 remained undetermined. The applicants now contend that the Board had no authority to proceed in that manner, but in responding to the foregoing invitation from the Board the then solicitors for the syndicate members did not object to the Board dealing with the matter in the manner proposed by the Board. In September 2001 the Board purported to determine that registration of the syndicate members under the Act for the year of income ending 30 June 1994 be refused. 20 It appears that in or about September 2001 the applicants commenced a proceeding in the Administrative Appeals Tribunal ("the Tribunal") seeking review of the Board's decision. On 9 November 2001 the applicants commenced a proceeding in this Court in which the applicants sought a declaration that they had been duly registered for the year of income ending 30 June 1994, or alternatively, rectification of the record of registration by an order that a writ of mandamus issue directing the Board to record the applicants as registered for that year. 21 In its pleadings the Board now contends that at all material times the Board had no power to register the applicants for the year of income ending 30 June 1994 on an application for registration made after 30 June 1994. As indicated above, that was not the position adopted by Board in October 1995 when it registered the applicants for the year of income ending 30 June 1995 on an application made in August 1995. 22 At a directions hearing held on 13 December 2001 an order was made in terms agreed between the parties directing the manner in which preparation of the matter for trial was to proceed. Included in the order was a provision that the Board provide discovery of agreed categories of documents by 15 February 2002. The agreed categories were described as follows. '1. All documents considered or taken into account by: (a) The Industry Research and Development Board ("the Board"); or (b) The Taxation Concession Committee of the Board ("the TCC"); or (c) Any delegate of the Board or the TCC; or (d) Any person preparing any report or recommendation to the Board, the TCC or a delegate of either the Board or the TCC, in relation to the applications for Registration made by the applicants or various companies associated with the applicants under section 39P of the Industry Research and Development Act between 28 June 1994 and 3 October 1995. 2. All reports, memoranda, recommendations or other documents created or prepared by or for: (a) The Board; or (b) The TCC; or (c) Any delegate of the Board or the TCC; or (d) Any person on behalf of or at the request or direction of the Board or the TCC or a delegate of either the Board or the TCC, in relation to the applications for Registration made by the applicants or various companies associated with the applicants under section 39P of the Industry Research and Development Act between 28 June 1994 and 3 October 1995. 3. All letters, reports, memoranda, recommendations, filenotes of telephone conversations or other documents concerning the registration of any syndicate or company, or the application for registration of any syndicate or company, in respect of the technology known as integrated drying and gasification combined cycle ('IDGCC") under section 39P of the Industry Research and Development Act between 1 July 1993 and 28 June 1994.' 23 By a subsequent order the date for provision of discovery was extended to 15 March 2002. 24 On 20 March 2002 the Board provided a list of discovered documents verified by affidavit. The list identified 107 documents that were in the possession, custody or power of the Board and described, in general terms, other documents that had been but were not now in the possession, custody or power of the Board. A claim of client legal privilege was made in respect of 10 of those documents and inspection of those documents was denied. 25 On 15 August 2002 the Board provided another list of discovered documents in substitution for the list provided on 20 March 2002. An affidavit verified that the documents in the substituted list were the only documents to which the order made on 15 December 2002 applied. The substituted list discovered 759 documents in the possession custody or power of the Board of which 138 were subject to a claim of client legal privilege and were not available for inspection. 26 The grounds on which the claim of privilege was based was said to be that the documents were: '(i) Originals and copies of communications between the respondent and its legal advisers being confidential and made to or by the respondent's legal advisers in their professional capacity with the dominant view of obtaining or giving legal advice together with correspondence, memoranda and file notes produced pursuant to the said communications. (ii) Originals and copies of communications between counsel and the respondent's solicitors together with statements, memoranda, file notes, working papers together with any other correspondence of the respondent's solicitors being confidential and made to or by the respondent's solicitors in their professional capacity with the dominant view of obtaining or giving legal advice or assistance.' 27 On 3 September 2002, by consent, an order was made that the Board provide further and better descriptions of the documents subject to the claim for privilege. 28 On 4 December 2002 the Board provided a third list of discovered documents, verified by affidavit. Attached to the list was an annexure which set out the particular grounds on which client legal privilege was claimed in respect of the discovered documents. The list discovered 807 documents. With regard to the 138 documents subject to a claim of privilege the list stated that the claim of privilege was abandoned in respect of 10 of those documents and that one document did not exist and had been included in the list by "clerical error". 29 None of the foregoing verifying affidavits was sworn by a member or officer of the Board as required by O 15 r 9(d) of the Federal Court Rules ("the Rules"). The deponent was said to be a legal practitioner employed by the Department in the "Legal Services Unit" of "AusIndustry". It may be noted, however, that, as referred to later in these reasons, duties carried out by officers on behalf of the Board or the Department appeared to be conflated and in practical terms it may be accepted that it was likely that the deponent held a more detailed awareness of the number and content of the documents that related to matters in issue between the applicants and the Board. 30 Certification of the correctness of the three lists of documents and of the statements made in the lists, as required by O 15 r 6(8) of the Rules, was made, albeit imperfectly in respect of the third list, by Mr O'Donovan, a solicitor employed by the solicitor for the Board, the Australian Government Solicitor. 31 By a notice of motion filed on 5 March 2003 the applicants sought an order that the Board produce for inspection the originals of all documents said to be subject to a claim of client legal privilege and the originals of documents not included in the list of discovered documents, copies of which had been delivered to the applicants with deletions. 32 On 12 March 2003 the applicants foreshadowed amendment of their motion to seek a further order that the Board produce for inspection "copies of emails and other electronic data (including, but not limited to, registration data) held at any time during the period from 1994 to-date which fall within the terms of the agreed categories of discovery ordered by the Court on 13 December 2001". The parties treated the motion as amended accordingly. 33 On 20 March 2003 the Board filed a notice of motion seeking an order that it had no obligation to provide for inspection the documents referred to in the applicants' motion. 34 The two motions came on for hearing on 15 and 16 October 2003. At the hearing counsel for the applicants cross‑examined Mr O'Donovan. Mr O'Donovan had been seconded from Malleson Stephen Jacques ("Mallesons") to be employed by the Department between December 1996 and June 1997 in a branch of the Department described as the "AusIndustry Legal Unit". From June 1997 Mr O'Donovan became an employee of the Australian Government Solicitor. Mr O'Donovan's evidence was that he was responsible for preparing the lists of discovered documents referred to in the verifying affidavits. In the course of the cross-examination of Mr O'Donovan ex tempore rulings were made in respect of particular documents on matters of relevance and legal privilege and as to the extent to which inspection of the documents should be provided by the Board. 35 Before the cross-examination was completed it became apparent that the Board would have to make further enquiry as to whether further documents remained to be discovered and whether the claim to client legal privilege in respect of some documents should be reassessed in the light of the rulings made on other documents on which privilege had been claimed. 36 On 16 October 2003 further hearing of the motions was stood over to allow the parties to reach an accord on the documents to be discovered and inspected. Unfortunately the expectation that the parties would obtain sufficient guidance from the ex tempore rulings to be able to resolve remaining issues of discovery and would not require the motions to be relisted for further hearing was not fulfilled. 37 On 3 March 2004 the Board filed an amended defence in which it pleaded that the Board had no power to register the applicants for the year of income ending 30 June 1994 in that the application for registration was an "invalid" application not having been lodged before the end of that year of income. 38 On the 23 March 2004 the Board filed a "supplementary" list of discovered documents, also verified by an affidavit sworn by the deponent who had verified the earlier lists. It may be noted that certification of the list and of the statements in the list fell short of the requirements of O 15 r 6(8) of the Rules. The "supplementary" list added another 19 documents to those already said to be in the possession custody or power of the Board. 39 On 8 April 2004 the applicants filed an amended statement of claim which added a pleading that the Board had held out that officers of the Department had authority to advise the applicants on the requirements of the Act and that the applicants had sought and obtained advice from such officers and had relied on that advice in preparing and lodging the application to the Board for registration under s 39P of the Act. 40 On 16 April 2004, the applicants filed a reply to the Board's amended defence, which pleaded that the Board was estopped from contending that the application lodged by the applicants was "invalid". 41 On 12 August 2004 the Board filed a further amended defence to the applicants' amended statement of claim taking issue with the pleading of estoppel. 42 It can be seen from the foregoing that the continuing amendment to the pleadings potentially enlarged the scope of the discoverable documents. 43 The applicant filed a further notice of motion on 19 August 2004 seeking an order that the Board provide discovery in the following terms: '…all documents (including letters, reports, memoranda, minutes, recommendations, filed notes, notes of conversations, and including electronic documents or data) from 1990 to date: (a) recording or evidencing the fact of, or consideration of, registration of any syndicate in respect of a year of income before the year of income in which the application for registration was made; (b) recording or evidencing any policy, discussion or consideration concerning whether the Respondent could or would register syndicates in respect of years of income ending before the year of income in which an application for registration is made; (c) recording or evidencing any consideration, discussion or policy concerning whether the IDGCC Syndicate (whether named IDGCC Syndicate or SECV Syndicate or some other name) or the Applicants (or one or any of them) were being, are being or ought to be treated differently from other syndicates with respect to registration in respect of a year of income ending before the year of income in which the application for registration was made; (d) any document which expressly, or by implication, states, acknowledges or is based upon the assumption that the Applicants were, or the syndicate was, registered or considered to be registered in respect of the 1993/1994 year of income.' 44 On 1 September 2004 the Board filed a notice of motion seeking an order that the applicants' pleading of estoppel in the reply be struck out, and filed a further notice of motion on 10 September 2004 seeking an order that the issues raised by the Board in its amended defence be heard as separate questions, namely, whether the application for registration for the year of income ending 30 June 1994 lodged after the end of that year was an "invalid" application under the Act, and whether the Board had "no power" to register the applicants in relation to that year of income. 45 On or about 8 October 2004 the Board gave notice under s 78B of the Judiciary Act 1903 (Cth) to the Attorneys-General of the Commonwealth, States and Territories advising that the applicants' pleading that the Board was estopped from contending that it had no power under the Act to register the applicants, involved a matter arising under the Constitution and interpretation of the Constitution as to the extent of the judicial power referred to therein. 46 The part-heard motions came on for further hearing on the 20 and 21 October 2004 preceded by submissions on the Board's motion for the trial of the separate questions identified above. Orders in the terms sought by the Board on that motion would have made some of the outstanding issues in relation to discovery redundant and it was appropriate to deal with the motion before resuming hearing of the part-heard motions. 47 At the conclusion of the submissions it was ordered that the motion for the trial of separate questions be dismissed. Ex tempore reasons were provided for that order. 48 On 21 October 2004 the applicants filed a further amendment to the notice of motion filed on 5 March 2003 and amended on 12 March 2003. The applicants sought a further order that the Board provide inspection of the original documents discovered, where the Board had provided inspection limited to redacted copies of those documents and that the Board provide inspection of the original documents where copies of those documents had been provided to the applicants by the Board, not being documents included in the list of discovered documents. 49 On completion of the cross-examination of Mr O'Donovan on 21 October 2004 orders were made that the parties file submissions in writing in respect of the motions. Those submissions were duly filed and have been considered in the preparation of these reasons. 50 The applicants contend that the Board failed to give adequate discovery by limiting inspection of the documents discovered to redacted copies thereof; by making inappropriate claims of legal professional privilege; and by failing to have the lists of discovered documents verified by an affidavit sworn by a member or officer of the Board. 51 The Board contends that by reason of the uncertain terms of the orders made for discovery of documents the ambit of the discovery to be provided was difficult to ascertain. It submitted, however, that it had not failed to provide discovery in the terms of the orders and contended that limited inspection of discovered documents by provision of redacted copy documents was proper in the circumstances. The Board contends that verification of discoverable documents was deposed to by an appropriate deponent. 52 It is convenient to deal first with the documents produced by the Board for inspection as copy documents from which excisions have been made, said by the Board to have been made for the purpose of excluding irrelevant or confidential material. 53 The starting point for compliance with an obligation to discover a document is to provide access to the document in full. If the document contains confidential material and the public interest, or a statutory duty, requires the disclosing party to maintain the confidentiality of that material, excision of that material from an otherwise discoverable document will be permitted. (See: Gray v Associated Book Publishers (Aust) Pty Limited [2002] FCA 1045 at [14]-[18]). 54 Discovery of a document requires that the document be produced in its entirety subject to exclusions that are acceptable for the purpose of protecting recognised interests. (See: Australian Competition & Consumer Commission v McMahon Services Pty Ltd [2004] FCA 353 at [10]-[12]). 55 To resolve the issue whether excisions had been properly made for the inspection provided by the Board, the parties agreed that copies of the discovered documents in unredacted form be supplied to the Court. 56 Comparison of the documents in their two forms reveals that the excisions made for the reason of lack of relevance had a material effect upon the context of the document and impinged upon the adequacy of the discovery. For example, some or all of the following deletions were made to minutes of TCC and Board meetings - the description of the document; the names of persons participating in the meeting; the time spent at the meeting; the text of any item discussed that did not refer directly to the applicants. Documents in that form lost their character and importance as a record of how meetings had been conducted and, in particular, how policies or principles had been applied or followed. Deletions of a similar character were made to copies of the agendas prepared for those meetings. 57 In some cases the deleted material may have had the effect of deflecting consideration of whether complete discovery has been provided in the terms of the order. For example, in Ex A(3) Doc 511 the substantial excisions from the minutes of a TCC meeting held on 6 and 7 April 1994 include a reference to a report on the status of the registration database. Issues relating to the recording of the registration of eligible companies under the Act, of course, arise in this matter. Although truncated discovery in the form of the documents produced for inspection in this case may have been thought by the Board to have served a proper purpose by excluding material considered to be irrelevant, it was not open to the Board to exercise that judgment and inspection of the entire documents should have been provided by the Board, save for excisions or deletions made to maintain confidentiality or to protect client legal privilege. 58 With regard to the excisions made for the purpose of maintaining confidentiality the following comments may be made. 59 Section 47 of the Act provides as follows: '47(1) The Board, a committee, a member or an acting member of the Board, a member of a committee or a member of the staff assisting the Board or assisting a committee shall not, except for the purposes of this Act, of the Census and Statistics Act 1905, of the Income Tax Assessment Act 1936 or of the Industrial Research and Development Incentives Act 1976 or unless required or permitted by law to do so, supply information to a person if the supplying of the information would constitute a breach of confidence. (2) Subsection (1) does not apply to the supply of information to: (a) the Minister; (b) the Secretary to the Department; or (c) an officer of the Department designated in writing by the Secretary to the Department as being an officer who is to receive information under this Act.' 60 Insofar as s 47 requires the Board to refrain from supplying information where the supply would constitute a breach of confidence, that requirement does not overtake an obligation at law to discover relevant documents in litigation in which the Board is a party and does not permit the Board to exclude from production part of a document where inspection of that excluded material would not in itself constitute a breach of confidence. 61 Therefore, where the Board has done more than excise the names of persons whose applications have been put before the Board for consideration and has excised broad descriptions of projects on which the Board has been required to make determinations under the Act, decisions made thereon and the reasons therefor, such further excisions do not on their face protect a confidence and have the effect of withholding from disclosure how the meetings of the Board were conducted and how decisions were made. 62 It follows that excisions of that character, (e.g. Ex. L(1) Doc 510), constitute inadequate production of a discoverable document. 63 Upon perusal of the unredacted documents I am not satisfied that an order should be made that production of the discovered documents for inspection be limited to the inspection provided by the Board and it should be ordered that the Board produce any part of a discovered document hitherto excised unless production of that part would constitute a breach by the Board of its obligation to maintain confidentiality of the identity of third parties in matters dealt with by the Board. (See: Westfield Management Ltd v Brisbane Airport Corporation Ltd [2004] FCA 611 at [22]). 64 I turn now to the documents in respect of which claims of privilege are made by the Board. 65 A document prepared or received by a party as a communication between client and lawyer where the document is created for the dominant purpose of obtaining for or providing to that party independent legal advice or assistance or for use in legal proceedings, allows that party to refuse to produce that document for inspection by another party preparatory to, or in the course of, litigation between those parties. (See: Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49). 66 The foundation for the privilege to refuse production is said to be based in the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers. To the extent that exercise of the privilege may fetter access to, and disclosure of, information relevant to a litigation proceeding the doctrine of client legal privilege represents a balance struck by the common law between those competing interests. (See: Esso per Gleeson CJ, Gaudron, Gummow JJ at [35]). The requirement that the legal purpose of the communication be the dominant purpose is the balancing point. 67 It may be noted that such a development of the common law in Australia and the United Kingdom appears to have departed from the path originally taken by courts of equity. The earlier practice in Chancery had been to limit the effect of a claim of client legal privilege upon the obligation to provide discovery. (See: Flight v Robinson (1844) 8 Beav. 22,34, Glyn v Caulfield (1851) 3 Mac & G at 463, 474-475; Anderson v Bank of British Columbia (1876) 2 Ch. D. 646; Wheeler v Le Marchant (1881) 17 Ch.D. 675). 68 The following commentary upon the recent decision of the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2004] 3 WLR 1274 which confirmed the breadth of a claim to client legal privilege, asks the question whether the doctrine may need to be reviewed to meet current community expectations: 'The principal justifications for the privilege appear to have been first, the encouragement it offers to consult lawyers; second, preservation of the privacy of communication with such lawyers; and third, discouragement of speculative litigation in the hope of discovering some evidence to support it. These justifications are, it is submitted, somewhat unconvincing in modern conditions, both in general and on the particular facts of this case. There is little empirical evidence that the availability of legal advice privilege does cause those who would not otherwise have consulted lawyers to do so. Increasing use of accountants for advice about tax avoidance fortifies doubt. It could however well be the case that lawyers believe that it may do so, and this no doubt explains the intervention in the argument by the legal professional bodies in this case. Such attitudes also surface in turf wars between different professions over such matters as statutory exemption on the basis of privilege from obligations to disclose information in relation to money laundering and taxation avoidance schemes. On the facts it seems highly unlikely that the Bank would have abstained from retaining lawyers to assist with the preparation of evidence for submission to the Bingham inquiry were it not for the availability of legal advice privilege. The policy of preservation of privacy in respect of communications with a lawyer as set out by Knight Bruce L.J. in Pearse v Pearse (1846) 1 De G. & Sm. 12 at 28 in a famous passage approved by the House, has a somewhat archaic ring when a large public body consults a large firm of solicitors about a matter where the greatest concern is to reveal as transparently as possible what the conduct and motivation of the public body was in the relevant respect. It hardly accords with current espousal of the principle of freedom of information. It needs also to be remembered that there remains a quite separate obligation upon the lawyer to preserve his client's confidence unless and until required to disclose such information in the public interest in the administration of justice. It is not over cynical to suppose that the privilege is often invoked more to keep secret information about the substance of the case which will assist the other party, and to which he is entitled, than to preserve confidence in the advice which has been requested or received. While speculative litigation is to be deplored, the disparity of knowledge and prior access to information between an individual claimant and a large corporate defendant is likely to be immense, and it is somewhat questionable whether a further weighting of the scales in favour of the latter is desirable. In this particular case it had been determined that there was a case to answer, and it was not in dispute that the relevant documents would have been helpful to the claimants, as noted by Lord Carswell himself (at [68]) in recalling the remark of Tomlinson J. at first instance that if this was a "fishing expedition", the waters were likely to be stocked with fish much to the taste of the fishermen. .... The time may have arrived for radical reappraisal, not only of the contours of legal advice privilege, and its relation to litigation privilege, but of the whole of the law of private privilege.' (C.F.H. Tapper: Note: "Privilege, Policy and Principle" (2005) 121 LQR 181 at 184‑185). 69 In the conduct of the business of government departments or government bodies there may be multiple purposes served by internal communications between staff and between staff and persons external to the department or body. For example, such communications may relate to, or consist of, instructions for the carrying out of administrative duties; may be intended to be a record of the manner of performance of administrative functions and the means of informing superior officers thereon; may provide a record of an investigation and conclusions as to facts perceived to be relevant in relation to matters arising in the course of the conduct of the affairs of the department or body. If the communication is in writing, the question whether the dominant purpose of preparation of the document was to obtain legal advice or assistance may have to be assessed by determining whether the document displays that, notwithstanding multiple purposes served by the document, it is the legal purpose that accounts for the document coming into existence. 70 The claim of privilege is not established by mere assertion that privilege applies to particular communications. Documents the subject of a disputed claim of privilege may be examined by a court and the deponent of the affidavit in which the claim of privilege is made may be subjected to cross examination. (See: National Crime Authority v S (1991) 29 FCR 203). 71 It is presupposed that the deponent is a person able to speak to the basis on which the claim is made, namely, that the dominant purpose of the document was for the obtaining of legal advice or assistance. Accordingly the deponent may be cross examined as to the existence and strength of such a purpose. (See: Telstra Corporation v Australis Media Holdings unreported Supreme Court of New South Wales, Equity Division, McLelland CJ, 18 March 1997 at [1]). 72 I turn now to the documents which the Board claims record or constitute communications between the Board, through its agents, and legal advisors. 73 It may be said that the Board and the Department were instruments of the Executive performing public services and that before any prospect arose that the applicants would commence litigation against the Board such legal advice as the Board or Departmental officers sought and received was advice directed to informing the Board on the nature of its duties under the Act. It may be thought accordingly that there was as much a public interest in the dissemination of such advice as there was an entitlement in the Board to claim that it was a communication in respect of legal advice on a matter in which the Board had a discrete and private interest that it was entitled to protect. 74 The applicants have asserted that the legal advice was obtained by the Board to cloak a claimed improper purpose of the Board, namely, to prevent the applicants being recorded as registered under s 39P of the Act in respect of the year of income ending 30 June 1994, and that, therefore, no claim of privilege can be maintained in respect of communications relating to that advice. I will return to that submission later in these reasons. 75 The applicants also submitted that the Board should be held to have waived its claims to privilege in respect of all communications, or at least to have waived such privilege in relation to all documents recording such communications, that had been delivered by the Board to the Australian Tax Office ("the ATO") or where documents had been prepared by the Board which volunteered a disclosure in substance of the legal communications. 76 The circumstances that will give rise to a presumption of waiver to the right to claim client legal privilege were discussed by the High Court in Mann v Carnell (1999) 201 CLR 1. The following extract presents an appropriate summary of the relevant principles: 'At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that if often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received. Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognised the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank [(1993) 35 NSWLR 110] the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.' (Gleeson CJ, Gaudron, Gummow, Callinan JJ at [28]-[29]) 77 With regard to the submission that legal advice in respect of which privilege is claimed by the Board has been disclosed in substance by, or on behalf of, the Board in other discovered documents the applicants have tabulated an extensive list of documents on which this submission is based. It is sufficient at this point to deal with one example identified in the applicants' argument. 78 The Board has discovered a document described as a letter from Mallesons dated 4 June 1997 containing legal advice provided to the AusIndustry Legal Unit and claims client legal privilege in respect of that document. Although the functions and duties of officers of the Department go well beyond the provision of occasional services to the Board it is not contended by the applicants that officers of the Department deployed to the AusIndustry Legal Unit, who sought and obtained legal advice for that branch of the Department, were acting other than as agents of the Board at material times. The Minister attended meetings of the Board from time to time and s 20 of the Act empowered the Minister to give directions to the Board, and required the Board to comply with those directions, with respect to the policies and practices to be followed by the Board in the performance of its functions, and the exercise of its powers under the Act. An intermingling of acts on behalf of the Department and on behalf of the Board appeared to result. 79 The applicants submit, however, that other internal documents prepared by officers of the Department for the instruction of the TCC, the Board or other officers of the Department in the AusIndustry Legal Unit set out the substance of the advice received from Mallesons on 4 June 1999 and, therefore, the Board, through its agents, had waived its claimed privilege in respect of that advice. (See: Bennett v Chief Executive Officer, Australian Customs Service (2004) 210 ALR 220). 80 I have perused the various documents identified by the applicants and those documents do not reflect inconsistency between the conduct of the Board, through its agents, and the maintenance of a claim to confidentiality by the Board. (See: Ex. G(1) Doc 36 (at p.169)). 81 The documents in the main are internal memoranda which, as noted above, provided an account to the Board of action taken by departmental officers and have been prepared to instruct the Board in its deliberations and in the performance of its statutory duties. References to the legal advice obtained were in broad terms sufficient to bring to the notice of the Board that legal advice had been obtained where required and to inform the Board where that advice may be perused. 82 The documents identified contain no disclosure to an external party and above all no step was taken therein that was inconsistent with the purpose of the privilege. There is no apprehension raised from the content of those documents that if the Board were to claim client legal privilege in respect of that advice and inspection thereof was sought by the applicants such a position would be wholly inconsistent with the Board's prior conduct and would, therefore, be stamped as an unfair practice. 83 The foregoing conclusions apply equally to the further examples of waiver sought to be relied upon by the applicants as identified in the annexure appended to their submissions. 84 However, a further and separate argument of imputed waiver of privilege by the Board appears to arise with regard to the legal advice referred to, and relied upon, by the Board, in the decision of the Board made on 18 September 2001 to refuse to register the applicants in respect of the year of income ending 30 June 1994. 85 The minutes of the meeting of the Board held on 18 September 2001 (Ex. G(1) Doc 41) which considered whether the earlier recommendation of the TCC that registration of the applicants be refused was to be accepted, suggest that concern had been expressed by some members of the Board as to whether it was necessary, or appropriate, to make a decision that the applicants be registered in respect of the year of income ending 30 June 1994 given that the Board had "already approved the Scheme". The minutes recorded that in relation to the foregoing issue "the Board was advised that the Syndicate was registered on a yearly basis...[o]ther approvals do not alter the fact that the Syndicate was not registered for the year 1993/94". 86 It may be assumed that the advice referred to and relied upon by the Board was legal advice. The briefing paper prepared for the TCC meeting held on 25 June 2001 which recommended that registration of the syndicate "in respect of the 1993/94 year of income" be refused, (Ex. G(1) Doc 38), indicated that legal advice to that effect had been obtained. (See also: Ex. G(1) Doc 36 (at p.169)). 87 If that is so, it should be concluded that the Board incorporated that advice into the administrative decision it made and that proper understanding of the decision, and of the decision-making process undertaken by the Board, will depend upon examination of the advice relied upon. It follows as a matter of fairness that the Board could not purport to maintain a claim to client legal privilege in respect of that advice. (See: Lovegrove Turf Services Pty Ltd & Anor v Minister for Education [2003] WASC 213 per Johnson J at [21]). 88 The applicants submitted that in respect of documents transmitted by the Board to the ATO relating to the application made by the applicants for registration under the Act, the Board waived any claim to client legal privilege in respect of documents recording or constituting communications between the Board, or persons on its behalf, and legal advisors. 89 I am unable to accept that submission. If it be accepted, which at this point is the case, that the Board performed a function it was authorised to do under the Act by informing the ATO of matters relating to the applicants being matters that required the attention of the ATO in the performance of its functions, it would not follow necessarily that the Board waived its claim for privilege in respect of documents recording the seeking and obtaining of legal advice on that matter by the Board. 90 It may be taken that the Board expected the ATO, consistently with the statutory obligations imposed on the Board in that regard, to treat the legal advice provided to the Board as confidential information and that disclosure of that information to the ATO by the Board was for the limited and specific purpose of assisting the ATO to carry out functions it was required to perform under statute. The voluntary disclosure by the Board of the content of legal communications in which it had been involved was not inconsistent with the retention of a claim to privilege in respect of those communications. (See: Esso per Gleeson CJ, Gaudron, Gummow JJ at [30]). 91 In addition to the foregoing submissions the applicants made a general submission that the seeking and obtaining of legal advice from Mallesons through Mallesons staff seconded to the AusIndustry Legal Unit were not communications with legal practitioners providing independent legal advice but reports by legal practitioners instructed to conduct administrative investigations using skills available to them as legal practitioners. 92 The submission was to the effect that because the performance of the administrative functions was the principal duty being performed by such personnel, the incorporation of legal advice in the performance of those duties could not satisfy the requirement that any communications that sought or provided that advice were communications made for the dominant purpose of obtaining or providing that advice. 93 Perusal of the relevant documents in respect of which privilege is claimed shows a clear separation from administrative functions when legal advice was sought and provided. The documents recording communications in respect of such advice are shown to be discrete and to reflect the expectation and acceptance of the performance of duties to be carried out by independent legal practitioners. 94 A number of documents were identified by the applicants as falling within this submission. Perusal of the documents shows that in respect of the foregoing documents the submission cannot be sustained. However, in respect of the documents identified below the submission must be upheld. 95 Where officers, by internal memoranda addressed to the Board, or to other officers, stated that action taken or recommended by those officers was supported by legal advice, or have reported on administrative acts conducted by Mallesons, those statements neither amount to waiver of privilege nor constitute a communication to which client legal privilege attaches. The deletions made to the following documents on the ground of such privilege should not have been made and the documents must be produced in full. The documents concerned are those identified in Part 2 of Schedule 1 of the Third List of Documents filed by the Board being documents numbered 1, 2, 4, 5, 8, 9, 11, 14, 15, 17, 18, 19, 24, 55 (save for paras after first para of folio 361), 62, 66, 67, 69, 70, 73, 74, 83, 85, 87, 88, 89, 90, 92, 93, 94, 95, 96, 97, 99, 100, 101, 102, 103, 104, 106 (save for last para of folio 262), 109, 110, 111, 112, 114, 115, 116 (save for penultimate para of folio 137), 117, and 129. 96 The applicants submitted further that where a practitioner who had been asked to provide, and had provided, advice to or for the Board was a practitioner who did not hold a current practise certificate no client legal privilege could attach to the communications between the client and that practitioner. (See: Vance v Air Marshall McCormack [2004] 154 ACTR 12at [28]-[48]). 97 It does not seem to be in issue that the locus of the performance of the duties performed by the legal practitioners concerned was that of the Board and of the Department, namely, the Australian Capital Territory ("ACT") and that all practitioners had been admitted to, and remained on, a roll of practitioners maintained by a State or Territory. 98 If that were the case the terms of s 55D of the Judiciary Act 1903 (Cth) would appear to authorise such a practitioner to practice as a barrister and solicitor in the ACT without being required to be the holder of a current practise certificate issued by a State or Territory. 99 In the end the question is one of fact, namely, whether the client and the practitioner expected and accepted that the obligations of an independent legal practitioner were to be met by the practitioner. If a practitioner employed as an officer of a government department or entity was regarded as, and accepted the responsibilities of, a legal advisor, then the fact that he or she was not practising his or her professional skill on his or her own account, or as an employee of a firm of practitioners, would not result in the denial of client legal privilege for communications with that practitioner regarding the seeking and providing of such legal advice. A person admitted to a roll of practitioners and practising law under the authority under s 55D of the Judiciary Act remains bound to uphold the standards of conduct and observe the duties undertaken upon admission to the roll of practitioners maintained in the relevant Supreme Court of a State or Territory and may be subject to the disciplinary procedures of that court. (See: De Pardo v Legal Practitioners Complaints Committee (2000) 97 FCR 575). 100 As stated by Mason, Wilson JJ in Waterford v Commonwealth (1987) 163 CLR 54 at 62, 63‑64: 'To our minds it is clearly in the public interest that those in government who bear the responsibility of making decisions should have free and ready confidential access to their legal advisers. Whether in any particular case the relationship is such as to give rise to the privilege will be a question of fact. It must be a professional relationship which secures to the advice an independent character notwithstanding the employment. ... The common law, in the view that we have taken, recognizes that legal professional privilege attaches to confidential, professional communications between government agencies and their salaried legal officers undertaken for the sole purpose of seeking or giving legal advice or in connexion with anticipated or pending litigation. Provided that the sole purpose test enunciated in Grant v Downs is satisfied, there is no warrant to draw an arbitrary line through the functions of government in order to exclude the privilege from those described as of an administrative nature. All the functions of the executive government may be so described. No distinction can be drawn between a decision to grant a pension and a decision whether to defend a claim in tort or contract. The growing complexity of the legal framework within which government must be carried on renders the rationale of the privilege, as expressed in Grant v Downs, increasingly compelling when applied to decision-makers in the public sector. The wisdom of the centuries is that the existence of the privilege encourages resort to those skilled in the law and that this makes for a better legal system. Government officers need that encouragement, albeit, perhaps, for reasons different to those which might be expected to motivate the citizen.' 101 Of course, by reason of the later decision of the High Court in Esso the word "sole" is now to be read as "dominant" wherever it appears in the foregoing passage. 102 Although Deane J (at 81) stated in Waterford that it was a requirement that a salaried practitioner hold a current practising certificate neither Mason, Wilson JJ nor by Brennan J or Dawson J in their respective reasons stated that there was such a requirement before client legal privilege could arise. 103 In respect of the documents identified by the applicants as those in which a claim of client legal privilege could not be maintained according to the foregoing submission, each practitioner concerned was a practitioner admitted to a roll of practitioners in a State or Territory. 104 The question to be answered, therefore, is whether in fact the practitioners concerned maintained a professional relationship with the Board, or its agent the Department, to secure the provision of independent legal advice notwithstanding the employment of those practitioners with the Department. The applicant submitted that the required relationship did not exist. 105 The material presented to the Court on that issue was rather sparse. The deponent to the affidavits which verify the truthfulness of the discovery given by the Board was not called by the Board to give further evidence and was not required by the applicants to be produced for cross-examination. Mr O'Donovan was cross-examined by the applicants as the solicitor instructed by the Board to certify to the correctness of the manner in which discovery had been provided by the Board. The Board relied on inferences to be drawn from an affidavit sworn by Mr O'Donovan (Ex.(1)) and from the content and context of the relevant documents to establish that a professional relationship existed between the Board and the legal practitioners employed by the Department. 106 It may be inferred that the AusIndustry Legal Unit was formed to meet a continuing requirement of the Board that it be provided with access to "on-hand" legal advice on matters arising, or likely to arise, at meetings of the Board. It may be assumed that the AusIndustry Legal Unit, comprised of employed and seconded practitioners, carried out its work as a specialist sub-branch of the Department for the purpose of providing legal advice and assistance to the Board at the request of other officers of the Department. 107 Perusal of the following documents withheld from inspection pursuant to the claim of privilege but provided to the Court, reveals that the terms and structure of the documents bespeak the conclusion that the officers of the AusIndustry Legal Unit were regarded as legal practitioners able to provide advice of an independent character notwithstanding co-employment within the Department with the officers seeking the advice on behalf of the Board. The relevant documents are those numbered 41, 43, 45, 47, 48, 49, 50, 51, 78, 80, 82, 98, 105, 119, 136, and 138 in Part 2 of Schedule 1 of the Third List of Documents. 108 It should be concluded that at material times the legal officers of the AusIndustry Legal Unit were treated by others as a professional group, the competence and independence of whose legal advice could be relied upon and, therefore, that client legal privilege attached to the foregoing documents. With regard to those of the foregoing documents that were produced subject to excision of passages the subject of a claim of privilege, it may be said that Document 98 should have been produced in the same form as Document 78, the former being a draft of the latter. 109 I turn now to a submission made by the applicants that an improper purpose underlay the seeking and obtaining of legal advice on behalf of the Board in March 1999 and that, therefore, no client legal privilege arose in respect of legal communications undertaken in that regard. 110 It may be accepted that where a government department or entity instructs a legal practitioner to provide advice on a matter and the instructions provided omit material that is relevant to the provision of full, frank and independent advice on that matter, the omission being made for the purpose of obtaining advice that will assist a purpose of concealing an abuse of statutory power, the common law will not recognise a claim of client legal privilege in respect of the communications relating to that advice. That is to say, if the purpose of bringing the communications into existence is an improper purpose, being a purpose contrary to the public interest, privilege will not attach to the communication. 111 A party relying upon that ground to oppose a claim of privilege made in respect of such communications must be able to show reasonable grounds for believing that such an improper purpose underlay the creation of the communications. 112 As Brennan CJ said in Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 514: 'In determining whether a claim of legal professional privilege can be upheld, it is open to the party resisting the claim to show reasonable grounds for believing that the communication effected by the document for which legal professional privilege is claimed was made for some illegal or improper purpose, that is, some purpose that is contrary to the public interest. I state the criterion as "reasonable grounds for believing" because (a) the test is objective and (b) it is not necessary to prove the ulterior purpose but there has to be something "to give colour to the charge", a "prima facie case" that the communication is made for an ulterior purpose. (footnotes omitted). 113 The applicants submit that inferences may be drawn from the relevant documents discovered by the Board that are sufficient to support a conclusion that reasonable grounds exist for believing that the Board, through Departmental officers, sought and obtained legal advice to aid an ulterior purpose that was contrary to the public interest. 114 First, the applicants contend that animus to the syndicate was displayed by certain officers of the Department in internal memoranda prepared by those officers. The applicants rely upon the following example to support that submission. In a memorandum prepared for a TCC meeting dated 28 July 1998 (Ex. G(1) Doc 21), an officer reporting upon the performance by the syndicate of its research and development obligations, stated that "...it is exceedingly difficult to find matters of non-compliance. If we get something we will let the TCC know." The report confirmed that Departmental officers had informed the ATO of issues relating to the "Core Technology Valuation" ("CTV") submitted by the syndicate and had provided "the ATO with a list of technical experts to support the ATO in their (sic) attack of (sic) the CTV". The report then stated that "We must be careful to ensure that any process we undertake does not interfere with the attack on the CTV by the ATO". 115 As noted earlier in these reasons the applicants paid their contributions to the sub-licence fee and claimed taxation deductions for those payments in the year of income ending 30 June 1994. The applicants submit that the relevant Departmental officers believed the applicants to be registered under the Act in respect of that year and were seeking grounds on which the taxation deductions claimed by the applicants for that year of income by reason of the registration of the syndicate under the Act, could be disallowed by the ATO. 116 The applicants contend that when those officers became aware that formal registration of the applicants under the Act had not been recorded in respect of the year of income ending 30 June 1994 they regarded that circumstance as an aid to the "attack on the CTV by the ATO". 117 The applicants submit that by restricting the facts disclosed to the legal practitioners and by limiting the questions on which legal advice was sought, the Departmental officers attempted to promote the foregoing purpose. The instructions provided to the AusIndustry Legal Unit for the provision of legal advice are set out in Ex. H(1) Doc 78. 118 It is apparent that those instructions did not raise the issue whether an omission to record the applicants as parties registered under the Act for the year of income ending 30 June 1994 could be regarded as a formal error capable of rectification and, therefore, specific advice was not sought on that question. Accordingly the instructions did not address facts relevant to that issue, and, in particular, did not inform the legal practitioners whether any explanation had been sought from the officers and TCC personnel concerned with the recommendations that the syndicate members be registered under the Act and the decisions that the syndicate members be registered. 119 It may also be noted that the material supplied to the AusIndustry Legal Unit, described as "background" in Ex. H(1) Doc 78, may have tended to understate some of the relevant facts. By stating that "no reasons for the failure to register" were recorded on file the instructions omitted to state whether information had been sought from the officers concerned to determine how the "failure to register" was to be explained. Further the instructions given indicated that expenditure on the project by the applicants in the year of income ending 30 June 1994 was a matter of recent discovery by Departmental officers, which may have tended to colour the instructions by suggesting that registration of the syndicate members for the year of income ending 30 June 1994 was not a material issue at the time the decision to register was made. As noted earlier in these reasons, expenditure by the applicants of approximately $136,000,0000 in the year of income ending 30 June 1994 was part of the project set out in the forms on which the decisions to register the syndicate members under the Act were made. 120 The foregoing, and the further material referred to by the applicants in their submissions, raises for examination the question whether the manner in which the Departmental officers sought and obtained legal advice on the issue of registration of the syndicate members presented reasonable grounds for believing that they acted for a purpose contrary to the public interest. 121 The applicants submit that the communications with legal advisors sought to confine the legal advice to that which would be less likely to impede the ATO in its "attack on the CTV" of the project and that by failing to seek and obtain any advice that could have derogated from that cause, the officers refrained from performing their proper duties and acted contrary to the public interest. 122 Such a claim when made is of a serious nature and it must follow that the material presented in support must appear to have cogency and be sufficient to establish prima facie that the claim is made out. Whilst I am satisfied that the claim by the applicants is open on the material referred to and that the claim has been made honestly, I am not satisfied that it is shown to the requisite degree that agents of the Board undertook communications with legal practitioners for an ulterior and improper purpose. 123 It is possible that the departmental officers who prepared the communications seeking legal advice in March 1999 failed to appreciate that an argument could be raised that the TCC, on behalf of the Board, had determined that the syndicate members be registered under s 39P of the Act as requested by the syndicate, and that all that remained thereafter was for the form of registration to be perfected. It is possible, therefore, that the failure by the officers to present that question to the legal practitioners did not reflect a conscious concealment of relevant facts but a lack of awareness of the scope of the issues raised. 124 It is to be noted that the solicitors then acting for syndicate members in November 1999 did not contend that the Board completed its function when the decision to register the syndicate members was made in October 1995 and did not state that syndicate members now required the Board to correct the inaccurate registration entered on the register. It must be noted, however, that the syndicate members were not privy to, and therefore, could not instruct their solicitors on the explanations provided by relevant Departmental officers, and the TCC, for omission of the year of income ending 30 June 1994 from the recommendations and decisions as to the years in respect of which the syndicate members were to be registered under the Act. 125 Having considered all of the foregoing I am not satisfied that it has been shown at this point that there are reasonable grounds to believe that the communications seeking and obtaining legal advice on this issue came into existence for an improper purpose, namely, a purpose contrary to the public interest. 126 Finally, the applicants submit that the discovery provided by the Board has been an inadequate compliance with the Court's order and that in consequence an order should be made for general discovery. 127 This matter involves a substantial number of documents and a case in which the content of those documents will have a significant role in the conduct and determination of the trial. It is important that the discovery ordered be complied with to the letter and spirit of the order. 128 The applicants support their submission by the contention that Mr O'Donovan was not the appropriate person to supervise the provision of discovery by the Board in that he was an active participant in relevant events whilst he was a solicitor seconded from Mallesons to the AusIndustry Legal Unit and, therefore, could not provide the frank and independent advice to the Board as an employee of the solicitor instructed by the Board in this proceeding. (See: Seven Network Limited v News Limited [2005] FCA 142 per Tamberlin J at [22]). 129 It is, of course, a question of degree in each case. I do note, however, that there is a prospect that Mr O'Donovan may be a witness at the trial of the matter and further that the conduct of persons who were co-employees of Mr O'Donovan in the Department, may become an issue in the proceeding. I have seen Mr O'Donovan cross-examined and have heard his explanation as to how he carried out his duties and I am satisfied that to this point the discovery provided by the Board meets the broad requirements of the order. (See: Reading Entertainment Australia Pty Ltd v Birch Caroll & Coyle Pty Ltd (2002) FCAFC 109 per Beaumont J at [63]-[71]). Furthermore, the orders that result from these reasons will provide further and better discovery. I will allow the applicants liberty to apply in respect of further discovery if inspection of the documents provided pursuant to these reasons raises further issues in that regard. With regard to the amendment to the applicants' motion referred to in [28] there is no requirement for an order for inspection if the discovery provided indicates that no documents of that type existed. However, the grant of liberty to apply will allow the applicants to revisit the issue if it is raised by further inspection of other documents discovered. 130 Meanwhile it is apparent that amendments to the pleadings made since the order for discovery was made, have expanded the issues in respect of which discovery is appropriate and insofar as there is any doubt as to the scope of a discovery required under the order made by consent, I am satisfied that orders for further discovery should be made in the terms of paras 1(a), (b), (c) and (d) of the applicants' Notice of Motion filed on 19 August 2004. 131 I will not order that Mr O'Donovan not be involved in the provision of further discovery. It is sufficient to note that the solicitor for the Board is under a continuing duty to the Court in regard to compliance by the Board with the Rules. How further discovery is to be carried out, verified and certified will be a matter on which the solicitor must provide the Board with appropriate advice. 132 In addition to the foregoing matters relating to discovery the applicants have given notice of an application for leave to amend the statement of claim and leave to file an amended reply. The Board contends that the issues between the parties would be better defined by directions that the parties file outlines of their cases and of their proposed evidence in support thereof. 133 Given that the matter has proceeded on pleadings and that it is plain that the real dispute between the parties is an emergent issue I propose to allow the applicants to amend their pleading in the terms foreshadowed in their submissions, to be embodied in due course in an appropriate notice of motion. Insofar as these amendments include an application for relief under the Administrative Decision Judicial Review Act 1977 (Cth) an extension of time will be granted within which the applicants may make such an application. I certify that the preceding one hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

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