Cases
67 A number of cases relevantly inform the approach to be taken to the problem of legal professional privilege. Others deal with the question of invalidity as a result of irregularities in the exercise of a statutory power. In Baker the High Court was concerned with a warrant issued pursuant to s 10 of the Crimes Act 1914 (Cth), which purported to authorize the search and seizure of documents held by a firm of solicitors. Certain documents were subject to legal professional privilege. The question was whether or not the warrant justified their seizure. The High Court had previously held in O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 that the doctrine of legal professional privilege applied only in judicial and quasi-judicial proceedings and did not prevent a constable acting under the authority of a warrant from searching a solicitor's office or seizing documents which would be privileged in legal proceedings. In Baker, Gibbs CJ and Mason and Brennan JJ would have followed O'Reilly, holding that legal professional privilege is, in effect, a rule related to judicial and quasi-judicial proceedings and that it has no place in administrative procedures, including the execution of search warrants. The majority took the contrary view. The relevance of the case for present purposes lies in observations made by Mason, Brennan and Dawson JJ. At 76 Mason J said:
'Quite apart from the force of these considerations there is the problem which I mentioned in O'Reilly and Brennan J. referred to in Pyneboard Pty. Ltd. v. Trade Practices Commission, that of imposing upon unqualified persons the task of deciding difficult questions of legal professional privilege. Their decision of such a question would not be conclusive. A decision of a court (a) on a prosecution for contravention of the statutory obligation, or (b) in proceedings for a declaration as to the existence of the privilege, would be required in order to provide a conclusive answer.
In this respect it is scarcely to be supposed that Parliament, when it imposes the obligation to furnish information, intends that the course of an administrative inquiry or investigation should be delayed or interrupted by the necessity to obtain a final decision of a court on the question whether a claim for legal professional privilege can be sustained in relation to a particular answer or particular documents. This, of course, would be relevant to the existence of a statutory intention to abrogate the privilege, assuming it to be otherwise inherently available. Nonetheless, it is a material factor to be considered in deciding whether the privilege is capable of being claimed in administrative or investigatory procedures. The determination of a claim for privilege in curial proceedings stands in sharp contrast because it entails no similar delay or interruption.
68 At 105 Brennan J said:
'If the privileges which affect the obligation to testify or to produce documents in judicial proceedings are to be engrafted upon and to modify powers conferred on investigative agencies, some procedure for determining the validity of a claim of privilege has to be devised. The European Court of Justice prescribed such a procedure …, utilizing for the purpose the Commission's power to impose fines. But it is quite beyond the power of an Australian court to prescribe such procedures. If the power of search and seizure conferred by a s. 10(b) warrant does not extend to privileged documents, there is no judicial procedure prescribed to resolve contested claims. Declaratory relief or prosecution seem to be the only avenues of judicial resolution.'
69 Dawson J, who was a member of the majority, discounted these considerations at 131-132. Nonetheless, the present problem highlights the validity of the concerns expressed by Mason and Brennan JJ. Their Honours' observations suggest that such problems arise from the difficulties inherent in applying the rules of legal professional privilege to administrative action. When this difficulty is recognized, one is inclined to take a rather more liberal view of steps taken to deal with it.
70 In Citibank, a Full Court of this Court considered the operation of s 263. The search in question had been conducted at the Sydney office of Citibank, a large foreign bank. The ATO officers carried general authorizations which did not refer to the particular case. They were divided into six teams and assigned to different parts of the premises. Each team included one experienced member who was to advise upon any claim for legal professional privilege. However this depended upon there being such a claim, which claim could only be made if a member of Citibank's staff was available to do so. Two staff members asked for suspension of the search whilst legal advice was obtained. Each request was denied. Copies of many documents were made and taken away. Citibank challenged the validity of the authorizations and of the decisions to issue them and to conduct the search. At first instance, Lockhart J declared that the authorizations were invalid and that the decisions to enter and copy the documents were improper exercises of the power conferred by s 263. The declarations as to the authorizations were set aside on appeal. However the Full Court upheld the declarations concerning the decisions to enter the premises and make copies of documents. At 414-7, Bowen CJ and Fisher J said:
'The topic of legal professional privilege is a different matter. We agree with the conclusion of Lockhart J that the decision of Mr Booth to conduct the search in the manner in which it was conducted and the actual conduct of the search effectively denied to Citibank the right of asserting legal professional privilege. To be more specific, Citibank in our opinion was denied the opportunity to make adequate claims for privilege in relation to the documents of its clients which were being perused and copied.
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Lockhart J held correctly in our opinion, that the doctrine of legal professional privilege applied to restrict the powers of the Commissioner under s 263. He went on to say that in his view Mr Booth, whose decision it was to make a search and who had the conduct thereof, paid only lip service to that doctrine. We think with respect, that that comment underestimates the attention which Mr Booth gave, particularly in providing that one member of each team, was given the task of advising on such matters. But in making that decision Mr Booth appears to have completely overlooked the necessity to ensure that in a search so extensive Citibank had the opportunity adequately to protect its clients' documents and to make claims on their behalf. Mr Booth failed to give adequate or any consideration to this aspect and his manner of conducting the search denied Citibank the opportunity adequately to protect the interests of its clients. He concentrated his attention on the determination of the question whether a claim for privilege could properly be made, appointing to each team an officer whom he considered to be qualified to advise on this question. Attention was even given to the qualifications of certain of Citibank's officers and in particular whether those who were legally qualified held practising certificates. As neither Mr Chippendale nor his predecessor Mr Crameri held these certificates, a Tax Department officer Mr Dinsdale, was of opinion that he would decide whether documents were subject to legal professional privilege.
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It was in this regard in our opinion that Mr Booth fell into error. It was not sufficient for him to give consideration only to the question whether a claim made for privilege was justified. He was obliged to ensure that Citibank and it particular its staff had in the circumstances an adequate opportunity to make claims of privilege.'
71 At 438, French J observed:
'The need for the Commissioner and his officers to take account of legal professional privilege as a limiting factor, however, reflects a broader principle. The right of access may only be exercised for the purposes of the Act. On premises such as those occupied by the Bank, there will be many documents the subject of a contractual duty of confidence between banker and customer, the examination and copying of which would serve no purpose contemplated by the legislation. In my opinion, the Commissioner and his officers in planning an exercise such as that presently in issue, must take into account those limits on their rights to ensure that so far as is practicable they are not exceeded. And to the extent that such planning would seek to deny to the subject of the access a reasonable and legitimate opportunity to approach the Court for relief, it is calculated not to respect those limits and the access is an improper exercise of power. The Commissioner and his officers are armed with powerful investigative instruments in ss 263 and 264. The very width of those powers demands a watchful concern that their limits not be exceeded.
For present purposes, in my opinion, it is sufficient to say that having regard to the appellant's failure to make proper provision for the assertion and testing of claims of legal professional privilege, the way in which the right of access was exercised was beyond power.'
72 Thus it was held that both the decision to enter the premises and the decision to copy documents were improper exercises of the power under s 263 because no proper provision was made for the assertion and testing of claims of legal professional privilege. As a result, the decisions were void.
73 In Propend, police, in the course of executing a warrant to search a solicitor's office, followed the procedure which had been agreed between the Law Council of Australia and the Commissioner of the Australian Federal Police to which I have referred above. The solicitor and some of his clients sought declarations that the search and decisions leading to it were void, largely upon the basis of a claim to legal professional privilege over some or all of the seized documents. However it seems that the matter proceeded as a claim for return of those documents involving resolution of the disputed claim to privilege.
74 At first instance, Davies J declared that certain documents listed in the order 'are not subject to legal professional privilege' and 'that copies of documents made for the purpose of obtaining legal advice, the originals of which are not subject to legal professional privilege are not privileged.' These declarations were set aside on appeal by the Full Court. In the High Court the Commissioner of Federal Police appealed from that decision. At 513-4, Brennan CJ said, concerning principles governing legal professional privilege:
'The application of these principles to the instant case presents some difficulty. The difficulty arises because the claim for declaratory relief seems to have been regarded as an incident of, or a step towards, the granting of relief by way of judicial review of the application for search warrants, the issuing of the search warrant and the conduct of the police in executing the search warrants. In truth, the determination of the claim for declaratory relief was not, and could not have been, determinative of the claims for judicial review. The fact that there were privileged documents (or documents that were prima facie privileged) in the premises in respect of which search warrants were sought says nothing as to the validity of the applications for warrants to search those premises, assuming that such applications were "decisions" or "conduct" amenable to review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) or were reviewable pursuant to s 39B of the Judiciary Act. There was nothing to show that the applications were made in bad faith to obtain warrants authorising a search for and seizure of privileged documents. Nor was the decision to issue the warrants invalid. The issuing justice restricted the execution of the warrants so as to ensure observance of the guidelines for dealing with documents in the event that a claim of privilege was made. The conduct of the police in executing the warrants complied with the guidelines. In accordance with those guidelines, the documents for which privilege was claimed were seized under the warrant but were sealed up and delivered to a third party. The guidelines provide, in effect, that when the documents are sealed up and delivered to a third party, the execution of the warrant be suspended pending the decision in proceedings to establish the privilege. If no such proceedings are taken or such proceedings fail, the documents are released into the possession of a police officer to be dealt with under the warrant. In this way, an accommodation is reached between the legislative intention expressed by s 10(1) and the decision in Baker v Campbell.
When a claim of privilege attaching to a document seized under a warrant comes to be determined judicially, the court must ascertain for itself whether the document was brought into existence solely for a privileged purpose and, if it be found or assumed that the document is a copy of an unprivileged original but was brought into existence solely for a privileged purpose, whether the privilege has been lost. In determining the claim of privilege, the court is not reviewing judicially an executive action but is determining a distinct controversy between the person who seeks to inspect the seized document and the person who seeks to maintain its immunity from inspection on the ground of legal professional privilege. To determine that controversy, the court must act upon admissible evidence … .'
75 At 567-8 Gummow J said:
'Baker v Campbell did not decide that the warrant in question was, to any degree, invalid. Rather, the Court answered in the negative the question whether the documents the subject of the privilege might properly be made the subject of a search warrant issued under s 10. It follows that the objective of the respondents in initiating the present litigation, namely to protect privileged communications, was not to be attained by seeking judicial review of the decisions leading up to the issue of the warrants. The power conferred upon the authorities designated in s 10 to grant search warrants is to be so construed, in accordance with s 46(1)(b) of the Acts Interpretation Act 1901 (Cth), that any warrant granted thereunder is to be read so as not to exceed that power. The power did not extend to restrict the application of the doctrine of legal professional privilege.
Of course, in the execution of warrants, issues arise as to the application of the privilege and thus the operation of the warrant. The Guidelines were designed to provide a means of preserving the status quo pending curial resolution of a dispute as to the existence of the privilege. In the present case, the means for curial resolution were provided by the application for injunctive and ancillary relief, founded upon s 39B of the Judiciary Act. It was for the respondents, as the party seeking injunctive relief, to establish that the privilege applied in respect of those documents otherwise falling within the terms of the warrant.'
76 Both passages suggest that claims to legal professional privilege which arise in the course of executing a search warrant will not affect the validity of the decision to issue the warrant or the validity of the search as a whole, at least in the absence of bad faith. I see no reason to apply any other approach to conduct pursuant to s 263. It may be that the views of Brennan CJ and Gummow J are inconsistent with the approach taken in Citibank.
77 The correctness of the decision in Citibank was questioned by the Full Court of South Australia in Question of Law Reserved (No 1 of 1998) (1998) 70 SASR 281. The Court was there concerned with the exclusion of evidence on public policy grounds and whether seizure of documents was rendered unlawful where the relevant police officer had not considered the possibility that legal professional privilege might exist. It was submitted that failure to allow an adequate opportunity to claim legal professional privilege in respect of a document meant that seizure was unlawful, whether or not the document seized was properly the subject of legal professional privilege. Those propounding this argument relied upon the decision in Citibank. Doyle CJ said, at 293, that the decision of Lockhart J and that of the majority of the Full Court appeared to be based upon the proposition that the power conferred by s 263 must be exercised reasonably and that only a search in the course of which adequate opportunity was given to make a claim to legal professional privilege met that description. Doyle CJ considered that the following passage, which appears at 437 of Citibank, disclosed the reasoning of French J:
'The rights or powers conferred by s 263 are therefore limited to the extent that they will not authorise access to or copying of books, documents or papers which attract the common law privilege. Where no practical or realistic opportunity is provided for the assertion and testing of claims of legal professional privilege, then the purported exercise of the right of access travels beyond that limit and is beyond power.'
78 As Doyle CJ understood the decision in Citibank, it rested upon the proposition that failure to allow an adequate opportunity to claim privilege will invalidate the exercise of the power because its exercise will not have been reasonable. At 294, Doyle CJ observed:
'I accept, of course, that a statutory power must be exercised for the purpose for which the power is conferred, and that an exercise of an extraneous purpose will take the exercise beyond power. I have already indicated that. I also accept, as is well established by the cases, that an exercise of a power of search will fail if a statutory condition, such as reasonable cause to suspect some matter, is absent. I also accept that the exercise of a statutory power can be reviewed on the ground of its unreasonableness, in certain circumstances: see M Aronson and B Dyer, Judicial Review of Administrative Action (1996), p 361ff. In that context, "unreasonableness" is encountered in two different senses. The first sense embraces matters such as having regard to extraneous considerations, or acting upon an improper purpose. The second sense refers to decisions that are, to put it loosely, decisions that no reasonable person could have reached. But, as far as I am aware, whatever scope there might be for judicial review on the grounds of unreasonableness in that latter sense, the courts of Australia have not yet taken the view that a statutory power is invalid unless exercised in a manner that is objectively reasonable, having regard to the limits upon the power being exercised.
To require, as a condition of validity, that a statutory power be exercised in a manner that the court regards as reasonable, having regard to the scope of the power, is a far reaching proposition. It may be that the point has not attracted much attention to date because powers of search and seizure are usually expressed in terms of the existence of a reasonable cause on the part of the searching officer to suspect some state of affairs. The problem arises because the exclusion of privileged documents from the power to search and seize is absolute. It is unconditional.'
79 At 296-7, his Honour continued:
'I agree that the power to enter is to be read as a power to enter using such force as could reasonably be considered to be necessary. The same applies to the power to search and to seize. I agree also that the extent of the search and seizure that can be effected is subject to a limitation. The search that is authorised is a search to the extent that could reasonably be regarded as necessary to locate the items searched for. The power of seizure is similarly limited. It follows that I agree in substance with what was said by the Full Court in Crowley v Murphy.
But, in my respectful opinion, it does not follow that every aspect of the entry, search and seizure is subject to a requirement, limiting the validity of the search, that the power be exercised reasonably. The principle of statutory interpretation, to which Franki J referred, limits the scope of the relevant intrusion upon a common law right. The intrusion is entry, search and seizure, using force if necessary. Other aspects of the exercise of the power, such as the time chosen for the exercise of the power, the demeanour of the searchers, and so on, are not for the courts to control.
In other words, the relevant principle is not, in my respectful opinion, that the powers conferred by a general search warrant must be exercised reasonably because they interfere with common law rights. The principle is that the force used to effect the authorised entry and search and seizure must be reasonable, as must the extent of the search and of the seizure.
It follows, in my respectful opinion, that there is no principle that powers under a general search warrant are exercised unlawfully and ineffectively merely because they are not exercised reasonably. It follows that such a principle cannot be used to support a conclusion that failure to allow a reasonable opportunity for legal professional privilege to be claimed means that the power is exercised invalidly. To that extent I respectfully disagree with what was said in Citibank.
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An approach that conditions the validity of a search upon the reasonableness of the manner in which the power is exercised will engage the courts in lengthy retrospective scrutiny of the conduct of searches. If validity depends upon the reasonableness of the manner in which the power is exercised, it is not easy to see why matters such as the time of day at which entry is made, the number of persons used to effect entry, the manner in which the search is conducted and so on would not become relevant. It is necessary to bear in mind that search warrants are executed under a wide variety of circumstances. The exercise of powers of search and seizure would, or could, become a legal minefield. As it is, the entitlement to challenge the validity of a search warrant by a collateral attack in the course of a criminal trial can disrupt the orderly management of a trial: see Ousley v The Queen (1997) 71 ALJR 1548 at 1566, per McHugh J. If validity were to depend upon a judicial assessment of the reasonableness of the manner of exercise of the powers, the scope for disruption of trials would be all the greater.
As well, there is the difficulty, illustrated by the cases referred to, of deciding what is a reasonable manner of exercising powers of entry, search and seizure.
The courts must be, and are, careful to protect the rights of individuals. But they must be careful not to assume powers that they are ill-equipped to exercise. They must also find a firm basis for a limit placed upon powers apparently conferred by Parliament. Concern over the scope of a power, and recognition of the desirability of a limit, are not, of themselves, a principled basis for a limitation.'
80 Finally, it is appropriate to refer to the decision of the majority of the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [91]-[93] where McHugh, Gummow, Kirby and Hayne JJ said:
'An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. …
Traditionally, the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority. Cases falling within the first category are regarded as going to the jurisdiction of the person or body exercising the power or authority. Compliance with the condition is regarded as mandatory, and failure to comply with the condition will result in the invalidity of an act done in breach of the condition. Cases falling within the second category are traditionally classified as directory rather than mandatory. …
… [A] court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and object of the whole statute".'
81 In my view, it would be inconsistent with the decision in Project Blue Sky to treat inadequate attention to the question of legal professional privilege as invalidating the exercise of the power conferred by s 263, at least in the absence ofbad faith. The object of s 263 is to facilitate the Commissioner's performance of his duty under the Act. For the purposes of the Act he and his officers are entitled to access to documents and to copy them, subject only to any valid claim to legal professional privilege. As Mason and Brennan JJ foresaw in Baker, there are real problems in resolving such a claim in the course of an access visit or in executing a search warrant. The power under s 263 cannot be exercised without regard to these problems, but valid exercise of that power is not dependent upon the design of a reasonable method of dealing with them. It may be that Citibank is no longer good law. For reasons which I will give at a later stage, it is not necessary to decide that question.