Administrative Appeals Tribunal Act 1975 ss. 33, 35, 35(1), 35(2), 35(2)(c), 37, 37(1)(a), 37(1)(b), 37(2), 37(3), 39, 40, 40(1A)-(1E), 40(1D)

Freedom of Information 1982 ss. 9(1), 9(2), 37(1), 37 (1AB), 37(1AE), 37(3), 42(1), 42(2)

Migration Regulations 1994 Schedule 2

AM & S Europe Ltd v Commission of the European Communities [1983] QB 878; 1 All ER 705

Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475

Attorney-General for the State of Queensland v Australian Industrial Relations Commission (2002) 213 CLR 485; [2002] HCA 42

Cody v JH Nelson Pty Ltd [1947] HCA 17; (1947) 74 CLR 629

Commissioner of the Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501

Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577

Grant v Downs [1976] HCA 63; (1976) 135 CLR 674

Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1

MFA v The Queen [2002] HCA 53; (2002) 213 CLR 606

Re Fahey and Psychologists Board (1996) 44 ALD 394

Re Lindsey and Australian Postal Commission (1989) 18 ALD 340

Re Palmer and Minister for the Capital Territory (1978) 23 ALR 196

Re Pochi and Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 26 ALR 247

Re Thomas Cook Australia Pty Ltd and Collector of Customs (1994) 34 ALD 301

Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 209 ALR 271

The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543

DECISION AND REASONS FOR DECISION [2005] AATA 77

Re SPICER AXLE STRUCTURAL COMPONENTS AUSTRALIA PTY LTD

And SECRETARY, DEPARTMENT OF INDUSTRY, TOURISM AND RESOURCES

Decision: The Tribunal directs that:

the respondent give to the applicant a copy of the legal advice:

(i) which is referred to in the documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975; and

(ii) from which have been deleted the following words:

1. The applicant, Spicer Axle Structural Components Australia Pty Ltd ("Spicer Axle"), has sought access to a legal advice relied on by the respondent, the Secretary of the Department of Industry Tourism and Resources ("Department") ("Secretary"), in making a decision under the ACIS scheme. I have decided that the Secretary is required to give Spicer Axle a copy of that legal advice subject to the deletion of information that is confidential to the commercial interests of other unrelated entities.

2. Spicer Axle is registered as an automotive component producer under the ACIS Scheme. It is part of the Dana group of companies. The ACIS Scheme was established by the ACIS Administration Act 1999 ("Act"). The Secretary has decided that Spicer Axle has an unearned credit liability of 901,203 ACIS duty credits pursuant to s. 94(1)(b) of the Act. At the heart of his reasons for decision is his conclusion that automotive tooling intended to be used, and used, by Spicer Axle to produce automotive components for sale, has been acquired by another party. He has also concluded that the automotive tooling has been acquired by that other party under a contract providing for that other party to become its owner by way of purchase from Spicer Axle. The Secretary decided that the amount Spicer Axle expended to acquire that automotive tooling is necessarily ineligible for investment credit under the ACIS Scheme.

3. In submissions that Spicer Axle should have access to the legal advice on which the Secretary relied in making his decision, Mr Cavanough QC and Mr Caleo of counsel identified four references to that advice in the documents lodged under s. 37 of the Administrative Appeals Tribunal Act 1975 ("AAT Act") ("T documents") (T63 at 477, T64 at 479, T65 at 485 and T84 at 592). They contend that the preparation of Spicer Axle's case has been hampered by their not having access to the legal advice. On behalf of the Secretary, his solicitor, Mr Rawson, resisted disclosing the legal advice. Written submissions on behalf of both parties supplemented earlier submissions made at a directions hearing.

4. The Secretary lodged a copy of the legal advice after I had directed that he do so. The basis of my direction was that the legal advice might be relevant to the review of the decision by the Tribunal. I made that direction pursuant to s. 37(2) of the AAT Act.

5. The issue is whether I should direct that the Secretary should make the legal advice available to Spicer Axle or to its legal advisers.

6. Mr Cavanough relied on s. 37(1)(b) of the AAT Act. It provides that the decision-maker is obliged to:

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

7. Referring to passages in the documents already lodged pursuant to s. 37 of the AAT Act ("T documents"), Mr Cavanough submitted that the Secretary had relied on legal advice in making his decision (T documents, page 63 at 477, T64 at 479, T66 at 485 and T84 at 592). An accounting advice is referred to in T84 at 592. That has now been produced to Spice Axle's solicitors together with his letter of instructions to the accountants. The letter of instructions states that the legal advice was given to the accountants. Mr Cavanough went on to submit that the legal advice appeared to guide the Department in the manner in which the ACIS Scheme should be administered. That raises ss. 9(1) and 42(2) of the Freedom of Information Act 1982 ("FOI Act") and whether there is an obligation to make it available in any event. Quite apart from that, the Secretary has not claimed that the legal advice is subject to legal professional privilege.

8. Referring to authorities to which I refer below, Mr Cavanough submitted that the obligation in s. 37(1)(b) is not limited to documents of a factual nature or dealing with matters admissible in evidence. In any event, he continued, there may be relevant factual information in the legal advice that has not yet been disclosed to either the Tribunal or to Spicer Axle. While any obligation to give the Tribunal documents under s. 37(2) is not conclusive of whether the documents should be made available to Spicer Axle, s. 39 of the AAT Act obliges the Tribunal to ensure that it has an opportunity to inspect any document to which it proposes to have regard. That obligation is subject only to the provisions of ss. 35, 36 and 36B.

9. In summary and relying on the meaning of the word "relevant", Mr Rawson submitted that the obligation in s. 37(1)(b) is limited to the documents that are probative to the review of the decision by the Tribunal and not simply those that may facilitate it. A legal advice is not probative but simply facilitative.

10. If the Secretary were obliged to produce the documents under s. 37(2), Mr Rawson submitted, the Tribunal should not provide a copy of the legal advice to Spicer Axle. Instead, it should make orders under ss. 35(2)(b) and (c). Section 37(1)(b), Mr Rawson continued, should not be used to obtain a document that could not be obtained on summons, is properly confidential and would not be of material assistance given that both parties are legally represented. The legal advice contains material that is commercial-in-confidence between motor vehicle producers and automotive component producers. The legal advice is substantially concerned with discussing those arrangements and their legal consequences under the ACIS Scheme. It would be impossible in practical terms to segregate the commercial-in-confidence material from the remainder of the material in the legal advice.

What is legal professional privilege and when may it be claimed?

11. Legal professional privilege is a rule of substantive law. A person may use it to:

"...resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings." (The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 at 552 [9])

12. The rationale for the rule is that a person needs to be able to turn to a lawyer for advice and help and, if proceedings begin, for representation. As was explained by Advocate General Sir Gordon Glynn, people:

... should be able to know what they can do under the law, what is forbidden, where they must tread circumspectly, where they run risks." (AM & S Europe Ltd v Commission of the European Communities [1983] QB 878; 1 All ER 705)

13. The party claiming legal professional privilege must establish it on the balance of probabilities and may do so:

"... by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by reference to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence." (Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 per Stephen, Mason and Murphy JJ at 689)

14. As a rule of substantive law, it has application beyond legal proceedings (Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 209 ALR 271 at 278 [24] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). It is not a rule that permits a court or tribunal to weigh a person's interest in resisting the production of the information or documents either against another's interest in seeing that information or those documents or against a background of the behaviour of the person claiming legal professional privilege. If information or a document is subject to legal professional privilege, a court or tribunal cannot order its production. Legal professional privilege may be waived and I will return to this below (at [39] to [49]).

15. Legal professional privilege may only be abrogated by the clear words of a statute or by necessary implication (Daniels at 553 [11] per Gleeson CJ, Gaudron, Gummow and Hayne JJ).

Is s. 37(1)(b) limited to documents that are factual in nature or does it extend to documents that are subject to legal professional privilege?

16. There is a suggestion in the Tribunal's decision in Re Thomas Cook Australia Pty Ltd and Collector of Customs (1994) 34 ALD 301 (Senior Member Handley) that documents required to be provided under s. 37(1)(b) must relate to matters of fact. It reached that conclusion after referring to s. 37(1)(a), which requires the decision maker to lodge:

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

"... To the extent therefore that the statement to be provided by the decision-maker pursuant to subs (1)(a) requires a setting out of the findings on material questions of fact, whilst also referring to the evidence or any other material upon which those findings were based, it necessarily follows that the documents that the same person is required to provide under subs (1)(b) must necessarily be the documents upon which the statement was based and which are necessarily factual and material in nature. They must also necessarily be 'relevant to the review of the decision by the Tribunal.'" (at 305)

As the legal opinion before it did not record any fact relevant to the decision-maker in making his decision, it did not come within the category of documents described in s. 37(1)(b). It would, the Tribunal concluded, be inadmissible as irrelevant and could not be probative of any fact sought to be proved or established.

17. Mr Rawson supported this interpretation of s. 37(1)(b) by reference to the definition of "relevant":

"... 2 Bearing on; connected with, or pertinent to the matter in hand. ..." (2002, Shorter Oxford English Dictionary ("SOE"), 5th edition)

"A fact so connected, directly or indirectly, with a fact in issue that it tends to prove or disprove the fact in issue. All facts are admissible in evidence which are relevant and not excluded." (1993, Osborne's Concise Law Dictionary ("Osborne"), 8th edition, Sweet & Maxwell)

18. As a general principal of statutory interpretation, words are to be given their plain and ordinary meaning unless the context indicates that another meaning should be adopted (Cody v JH Nelson Pty Ltd [1947] HCA 17; (1947) 74 CLR 629 per Dixon J at 647). In this case, that is the meaning proffered in the SOE and not in a specialist law dictionary. It is a meaning consistent with that given in other dictionaries of general usage such as the Macquarie Dictionary (2003, revised 3rd edition). There is nothing in s. 37 that suggests that another interpretation should be adopted. In particular, there is nothing in either the word itself or in its context that suggests that an interpretation limiting it to a connection between facts or matters connected with facts.

19. If a document is to be relevant in the context of s. 37(1)(b), it must be relevant, and so connected with or pertinent to, the review of the decision by the Tribunal. The review of the decision by the Tribunal is not limited to a review of the facts or of the evidence on which those facts are found. Instead, it is to determine "...whether the decision under review is the correct or preferable one on the material before the Tribunal. ..." (Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 per Bowen CJ and Deane J at 589). It is a multi-faceted task. Sometimes it will be straightforward and at others more complicated but, at some level, it will always comprise:

 identification of the legislation to be applied;

 interpretation of that legislation in light of any applicable case law including:

(i) identification of material facts that must be found; and

(ii) consequences if those material facts, or some of them, are found or not found;

 analysis of the evidence;

 findings of material questions of fact based on that evidence;

 making a decision based on those findings of fact in light of the legislation; and

 if more than one decision is permissible, exercising a discretion in accordance with the discretions permitted by the relevant law.

20. The statement that the decision-maker must give under s. 37(1)(a) is not limited to setting out the findings on material questions of fact with reference to the evidence or other material on which those findings were based. That is only part of the obligation. The remainder of the obligation is to give reasons for the decision. The decision is only reached after each of the steps in the review process has been completed. A decision-maker will have reasons for reaching a conclusion on each of them. It must be those reasons to which s. 37(1)(a) is referring.

21. Returning to s. 37(1)(b), determination of what is "... relevant to the review of the decision by the Tribunal" must be a reference to what is connected with or pertinent to the multi-faceted task, or part of it, that the Tribunal must undertake. Part of that task is to identify and interpret the law. If it were not, the Tribunal would not spend the time that it does listening to submissions by counsel and other legal representatives on matters of law. In light of that, it follows that a legal advice directed to that task would be relevant and so should be lodged with the Tribunal under s. 37(1)(b).

22. I am supported in my conclusion by s. 37(3) of the AAT Act. It provides that the section:

"... has effect notwithstanding any rule of law relating to privilege or the public interest in relation to the production of documents."

Inherent in that statement is an assumption that a document that may be relevant to the review of a decision by the Tribunal may be the subject of legal professional privilege. The effect of the provision is that it must be included in the documents released under s. 37(1)(b). Although enacted some years before s. 9 of the FOI Act, the effect of s. 37(3) is consistent with the principle behind s. 9. Both the FOI Act and the AAT Act belong to the administrative law package passed by the Commonwealth Parliament with bipartisan support in the 1970s and 1980s. That principle is that the public should be able to find out the basis on which administrative decisions or recommendations may be made. Section 9(1) puts it into effect by providing that documents used:

"... in making decisions or recommendations under, or for the purposes of an enactment or scheme administered by the agency, with respect to rights, privileges or benefits, or to obligations, penalties or other detriments, to which persons are or may be entitled or subject ..." (FOI Act, s. 9(1))

must be made available for inspection and purchase by members of the public (FOI Act, s. 9(2)). Documents that come within this category are excluded from the exemption from disclosure afforded under the FOI Act to documents that are subject to legal professional privilege (FOI Act, s. 42(1)).

23. My reasoning differs from that adopted by the late President Curtis of the ACT Administrative Appeals Tribunal in Re Fahey and Psychologists Board (1996) 44 ALD 394 at 397-9 but our conclusions are identical. He emphasised the practical advantages to the Tribunal and to the parties of providing legal opinion relied on by the decision-maker. Those advantages are consistent with the non-adversarial nature of the Tribunal's proceedings, its emphasis on the exploration of settlements rather than hearings and the possibility that the Tribunal may be constituted by a member without legal qualifications.

Who decides what is relevant to the review of the decision by the Tribunal?

24. The obligation to prepare the statement under s. 37(1)(a) and to lodge the documents under s. 37(1)(b) rests with the person who made the decision (Re Palmer and Minister for the Capital Territory (1978) 23 ALR 196 (Fisher J, Deputy President, Senior Member Hall and CA Woodley, Member) at 204-5). In so far as the statement is concerned, the Tribunal may order the person to lodge a further statement. It may do that under s. 38 of the AAT Act when it considers that the statement lodged under s. 37(1)(a) "... does not contain adequate particulars of findings on material questions of fact, an adequate reference to the evidence or other material on which those findings were based or adequate particulars of the reasons for a decision ..." (s. 38(1)). Adequacy of the statement is therefore a matter for the Tribunal to assess.

25. Documents are treated differently. The Tribunal is not given any power to assess whether the decision-maker has lodged all of the documents that are relevant to the review of the decision by the Tribunal. That is not the decision-maker's obligation. It is limited to those that are "considered by the person to be relevant to the review of the decision by the Tribunal" (s. 37(1)(b), emphasis added). The Tribunal is not given any power to assess whether the decision-maker has, for example, acted in good faith in carrying out that obligation. That is in the realm of judicial review and outside the Tribunal's powers.

26. What the Tribunal can do is to consider whether there are other documents that "... may be relevant to the review of the decision by the Tribunal ..." under s. 37(2). Given the nature of merits review by the Tribunal, documents that are relevant in that way must be documents that are connected with or pertinent to the multi-faceted task, or a part of it, that the Tribunal must undertake. As part of that task is to identify and interpret the law, documents that are concerned with the interpretation or application of the pertinent law are relevant.

Is the decision-maker obliged to give a copy of the documents lodged under s. 37(1)(b) to each other party to the proceeding?

27. The effect of s. 37(1AE) of the AAT Act is that the decision-maker must give to each other party in a proceeding a copy of the documents lodged in the Tribunal under s. 37(1) or under s. 37(1AB). Section 37(1AB) relates to particular decisions or classes of decisions made the subject of specific directions by the President. As legal professional privilege has been abrogated by s. 37(3), the result would seem at first sight to be that documents lodged pursuant to s. 37(1) of the AAT Act must be given to each other party to the proceeding regardless of any claim for legal professional privilege.

28. I have said "at first sight" for s. 37(1AF) seems to contradict s. 37(1AE) by suggesting that the Tribunal could restrict the disclosure of the documents, or parts of them. That section provides that:

(a) a person who has made a decision that is the subject of an application for a review by the Tribunal would, apart from this subsection, be required under paragraph (1)(b) to lodge 2 copies of a document or a part of a document with the Tribunal in respect of the application; and

(b) within the period applicable under subsection (1) the person:

(i) applies to the Tribunal for a direction under subsection 35(2) in relation to the document or part of the document and lodges with the Tribunal, together with the application for the direction, 2 copies of the document or part of the document; and

(ii) serves a copy of the application for the direction on each party to the application for review;

the person is not required to comply with paragraph (1)(b) in relation to the document or part of the document unless and until the Tribunal, after hearing the application for the direction, directs the person to do so."

29. The resolution of the apparent contradiction lies in s. 37(1AF) itself for it effectively removes the decision-maker's obligation to lodge documents pursuant to s. 37(1)(b) until the resolution of his application for an order s. 35. No longer being under an obligation to lodge, s. 37(1AF) no longer imposes an obligation on the decision-maker to give a copy of the documents to each other party to the proceeding. That is the plain meaning of the section and there is no need to go to extrinsic material (Attorney-General for the State of Queensland v Australian Industrial Relations Commission (2002) 213 CLR 485; [2002] HCA 42 at 524-5 and [113]-[114]).

30. Even if I am incorrect in that and there is thought to be some need to go to the extrinsic material, it does not take the matter any further. The Second Reading Speech makes no specific reference to the amendment. In so far as it is relevant, the Parliamentary Secretary to the Attorney-General said that "... the bill amends the act to give effect to recommendations in the 1991 report of the review of the Administrative Appeals Tribunal" (Hansard, House of Representatives, 30 November 1995 at 4444). The Report of the Review of the Administrative Appeals Tribunal ("Report") given to the Attorney-General on 29 November 1991 recommended an amendment of the sort achieved in s. 37(1AF). The "problem" with the AAT Act in its then form was said to be that:

"There has always been some difficulty as to the procedure to be followed by the person upon whom the obligation rests to comply with s 37 where some documents or parts thereof are to be the subject of a claim for a confidentiality order under s 35. There is inefficiency in the requirement that the applicant's copy of the s 37 statements and documents to be lodged first with the Tribunal." (Report, Appendix 9, Recommendation 13)

31. This passage presupposes that the obligation under s. 37(1) was qualified by the confidentiality requirements of s. 35 as the AAT Act was then drafted. To accept that as justifying a conclusion that it was indeed qualified would seem to be contrary to the High Court's stricture that:

"... In recent years, in many contexts, this [High] Court has insisted upon close attention to the language of applicable legislation in preference to other formulations derived from pre-statutory expositions, post-statutory explanations and (in this case) the language of foreign legislation ...". (MFA v The Queen [2002] HCA 53; (2002) 213 CLR 606 at 620; [46] per McHugh, Gummow and Kirby JJ)

32. Although there remain questions regarding the inter-relationship of ss. 35, 37(1)(b), 37(1AE), 37(1AF) and 37(3), it is not necessary to answer them in this case. The obligation to give a copy of the document to the other party to the proceeding only arises when the decision-maker is under an obligation imposed by s. 37(1)(b). In this case, the Secretary did not consider that he was under an obligation to lodge the legal advice under s. 37(1)(b). I cannot question his view on the matter. Therefore, the related obligation to give it to the other party to the proceeding under 37(1AE) does not arise and nor does the Secretary's entitlement to seek amelioration of his obligation by virtue of s. 37(1AF).

Is the decision-maker obliged to give a copy of the documents lodged under s. 37(2) to each other party to the proceeding?

33. When the Tribunal directs the decision-maker to lodge further documents by issuing a notice under s. 37(2), all documents meeting the description of those specified in the notice must be lodged. They must be lodged regardless of whether or not there is any rule of law relating to privilege or public interest immunity. That again is the effect of s. 37(3). There is, however, no requirement matching s. 37(1AE) in relation to those documents. That is to say, there is no provision stating that the decision-maker who is required to produce documents under that provision is also required to give a copy of them to each other party to the proceeding.

34. Whether or not those copies are given to other parties must be a matter for the Tribunal to decide. Its power to do so must be drawn not from s. 37 but from the more general powers of s. 33 to determine its procedures. It must exercise that power in light of s. 39 which provides that, subject to certain qualifications, the Tribunal must ensure that every party to the proceeding is given, among other matters, a reasonable opportunity to inspect documents to which it proposes to have regard in reaching a decision and to make submissions in relation to those documents. Among the qualifications is s. 35. That means that the Tribunal's obligation to make the documents available for inspection is subject to any confidentiality order the Tribunal has made under that section.

35. Section 35(2)(c) provides that the Tribunal may "... give directions prohibiting or restricting the disclosure to some or all of the parties to a proceeding of ... the contents of a document lodged with the Tribunal ...". It may do so where it "... is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason ..." (s. 35(2)). No guidance is given other than the general provision in s. 35(1) that, subject to the section, "the hearing of a proceeding before the Tribunal shall be in public". As to how the power in s. 35(2) should be exercised, Brennan J in Re Pochi and Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 26 ALR 247:

"... the powers conferred upon this Tribunal by s 35(2) are not intended to lie dormant - they are there to be exercised, albeit sparingly. The purpose of their exercise is to secure to the Tribunal the availability of as much relevant information as possible, without violating the confidentiality which a party, a witness or the public is properly entitled to preserve (though a proper entitlement to confidentiality is not lightly established). ..." (at 272)

It could be added that the power under s. 35(2) is to be exercised without violating the substantive law of which legal professional privilege is a part.

36. Section 33 does not incorporate a provision in terms of s. 37(3). Section 33(2A)(a) provides that the Tribunal may require any person who is a party to the proceeding to provide further information in relation to the proceeding. There is nothing express or implied in that paragraph or in the section generally to the effect that the law relating to privilege or to the production of documents is abrogated. In the absence of any express or implied abrogation, it is clear that the Tribunal is bound to have regard to legal professional privilege when making directions under s. 33. This accords with the decision reached in Re Lindsey and Australian Postal Commission (1989) 18 ALD 340 at 344-5.

37. Section 40 of the AAT Act is concerned with various powers of the Tribunal and provides the third avenue for the production of documents. Among those is its power to issue a summons to require the production of books, documents or things (AAT Act, ss. 40(1A)-(1E)). Like s. 33, it does not contain any express or implied provision to do away with any privilege. Certainly, s. 40(1D) provides that a presidential or senior member may give a party to the proceeding leave to inspect a document produced under a summons. Unlike s. 37(3), however, there is no express provision that the documents must be produced regardless of any claim of privilege. It is unnecessary to read such a qualification into the section in order to make sense of it. Section 40(1D) does not oblige the presidential or senior member to give a party leave to inspect the summonsed documents. Instead, it gives a discretion to give that leave. The discretion must be limited by the AAT Act and, in the absence of any express or implied abrogation of the substantive law, by any rule of that substantive law. Legal professional privilege is a rule of that substantive law and it must prevail in any interpretation of s. 40.

38. Having regard to the provisions of ss. 33, 35, 39 and 40 as well as of s. 37, I have concluded that the Tribunal may not ignore a claim for legal professional privilege when making an order disclosing documents lodged in compliance with an order under s. 37(2). If a claim for legal professional privilege is made out, it may not order disclosure of that document to any party to the proceeding other than the decision-maker.

Has a claim for legal professional privilege been made out in this case?

39. No evidence has been produced on behalf of the Secretary to support his claim for legal professional privilege. At my request, the document for which legal professional privilege has been claimed has been lodged in the Tribunal. Having read it, I am satisfied that it is a document whose dominant purpose was to give legal advice to the Department and so is a document in relation to which legal professional privilege may be claimed if it has not been waived.

40. The Secretary has not expressly waived legal professional privilege. The effect of Mr Cavanough's submission is that he has impliedly waived it as reference has been made to it in four passages in the T documents.

41. The person claiming legal professional privilege may waive that privilege, either intentionally or by implication (Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 481 per Gibbs CJ and at 493 per Deane J). As Gibbs CJ said:

"... where there is no intentional waiver the question whether a waiver should be implied depends on whether it would be unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with it, is privileged from production." (at 481)

42. Except in one limited area, the authorities do not pay any regard to the person's general behaviour with regard to the other party in a proceeding or with regard to other matters. That limited exception arises in relation to communications in furtherance of a fraud or crime (Commissioner of the Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 556 per McHugh J) but is not relevant to explore in this case. It is the use that is made of the communication by the person who is claiming legal professional privilege and notions of fairness that are relevant in deciding waiver. As the majority of the High Court said in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1:

"... Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of confidentiality which the privilege is intended to protect. ... 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." (at 13; [29])

43. The legal advice was disclosed to the accountants, Ernst & Young. That voluntary disclosure did not necessarily waive privilege (Mann v Carnell at 14; [30]). It was disclosed for the purpose of assisting Ernst & Young in understanding the issue upon which they had been asked to comment i.e. whether the practice of "... entering the manufacturing machinery [which, I understand to mean its automotive tooling] in its 'fixed asset register' ..." is a practice in line with general accounting practice. That is disclosure to a limited group of people being, at its narrowest, the partner to whom it was addressed and, at its widest, the firm of Ernst & Young. That is disclosure for one clearly stated and circumscribed purpose. In those circumstances, the Secretary has not used the legal advice in a way that is inconsistent with his claiming that it is confidential.

44. What of the references to the legal advice in the T documents? That has occurred in the following contexts:

(i) An email sent by, Mr Peter Clarke, an officer of the Department, to other officers, including officers of AusIndustry within the Department, advising that he and others had received on 31 January:

"... a visit from FAPM [Federation of Automotive Products Manufacturers] along with representatives of Dana Corporation (v large multinational parts mfer) on the issue of vendor tooling (the term they used was 'recoverable tooling', but there seems little difference between the two terms. In this case, Ford orders a part and as condition of the contract obtains title to the particular tool used to make the part)."

The officer's email goes on to summarise what was said and reads in part:

The consultant who made the presentation, Andrew Dawson, put forward a number of propositions:

 ...

 AusIndustry had signalled that it regarded that these tools as 'trading tools', which Dana disputed

 Dana regarded these goods as theirs until final payment is made. The goods are entered into the asset register and so able to be claimed under ACIS

...

We responded along the following lines:

 ...

 ...

 From our sighting of standard form contracts, it was apparent that title to the tooling passed from the parts producer to the vehicle producer either when it made the tool or when it was bought by them from a toolmaker. The contracts made it clear that the tool was then on loan to the parts producer. The date of payment does not determine ownership if the contract says otherwise (They had not apparently looked at the contract and did not have it with them). We had legal advice on the issue.

..." (T documents, T63 at 477)

(ii) An email sent by Mr Tony Weber, who is an officer of the Automotive Policy Section of the Department, to other officers. It was in the form of a file note of the same meeting held on 31 January 2003 and reads in part:

"Peter Greer (Dana), Andrew Dawson (Dawson, Evans and Associates), Peter Upton, Paul James (FAPM), Garry Wall, Peter Clarke, Todd Heyman and myself met on Friday 31 January 2003 to discuss a tooling claim that has been made by Dana under ACIS.

Dana design and develop tools for axles they produce for Ford. Dana stated, that as part of their contract they sell their tools to Ford after an extensive period of testing and production. Dana refer to this arrangement as recoverable tooling.

Dana claimed the tools they developed for Ford under this arrangement as an ACIS investment in 2001. In August 2001, Dana claimed they were audited by Ausindustry and this investment was not subject to any adverse comment. Subsequently, Dana applied for and received ACIS credits to the value of approximately $841,000.

In late 2002, Ausindustry informed Dana they were going to serve them with an $841,000 unearned credit liability on the basis that they were not eligible to claim this activity under ACIS. Dana are now questioning why:

 they are unable to claim the activity when they invest in tooling and assume the development risk and then only sell tools to Force once the technology is proven;

 Ausindustry apparently changed their opinion in the year between the alleged first audit and their decision in late 2002.

...

Peter Clarke and Garry Wall made the following points:

 ITR [Department] are unable to judge the appropriateness of Ausindustry's decision without seeing more details.

 Our legal advice is that only one party can claim tooling investment.

 The party which can claim for tooling under ACIS is the one which invests in the tooling.

 If a firm produces a tool with the intention of selling that tool at a later stage, that firm has not made an investment any more than with trading stock.

 The contract between Dana and Ford would determine who could claim the investment under ACIS.

 While we have not seen the contract between Dana and Ford, we have seen the standard Ford tooling contract and it results in the ownership of the tool residing with Ford from the time it is built or acquired by the component producer from a toolmaker.

..." (T documents, T64 at 479-80)

(iii) A File Note sent by Mr Brett Freeland, an officer of the Victorian office of AusIndustry, recording a meeting held on 6 February 2003. Present at the meeting were:

"Peter Greer, Michael Folino, Steven Baccini (DANA-SASCA)

Peter Upton, Paul James (FAPM)

Andrew Dawson

Stephen Stoddart, Brett Freeland"

The File Note summarised what was said by each participant in the meeting. In so far as it is relevant, it reads:

"PU [Peter Upton, FAPM]: FAPMs general advice to industry was that in year 1 of the ACIS Scheme audits had found appropriate treatment of ACIS P&E [plant and equipment] claims. - Consideration of what companies are doing needs to be considered in light of modulation, is it material?

SS [Stephen Stoddardt, AusIndustry]: In 2002 the issue has emerged more clearly as we began to see the other side of the transaction sale of the P&E by companies and the backing out of claims).

P&E for tooling makers/components is never owned by that company (some is explicit, others less tightly defined).

All MVPs [motor vehicle producers] have been consulted and consideration has been given to their purchase orders, contracts, invoices, etc. Consideration was given to who owns the P&E, external legal advice was sought.

Relates back to legislative definition of what P&E is under section 6, the Act then moves to Regulations and relates to what is allowable P&E. Must meet the initial definition of the Act. Aspects beyond legislation will not over-ride/overcome definitions required of what is eligible.

Regulation 13(c) 'capitalised' was changed in the regulations update such that P&E is not required to be a 'fixed-asset'.

Overall industry approach will be to take this view to definition precedents and then consider the treatment. Spicer is not the first company to incur UCL [unearned credit liability] on this basis. Companies who have been found have 'accepted' the position and treatment.

..." (T documents, T66 at 485)

(iv) A letter dated 29 July 2003 from Mr Stephen Stoddart, ACIS Product Manager at AusIndustry to Mr Dale Thompson, Financial Controller at Spicer Axle. It was headed "Commercial-In-Confidence". Mr Stoddart advised Mr Thompson that AusIndustry's review of Spicer Axle's recoverable/vendor tooling claims had resulted in an unearned credit liability to the company. The letter reads, in part:

"AusIndustry does not consider claims relating to recoverable/vendor tooling to be the company's investment in ACIS allowable plant and equipment as defined in s6(1) of the Act and cannot be claimed in future.

By definition, recoverable/vendor tooling involves one party contracting another to produce a tool. Under this relationship the seller (the party producing the tool) enters into a commercial relationship to produce and sell the tool to the buyer (the party commissioning the tool). Consequently, this tooling relationship involves the sale of a good as described by Regulation 12(2)(a) of the ACIS Amendment Regulations 2000 (the Regulations).

While recoverable/vendor tooling contracts may vary as to when the title of the tool transfers to the buyer, the seller ultimately sells the tool and the buyer has an enforceable claim to the tool through the contract. It is common practice for the vendor tooling relationship to involve the seller using the tool at its site to produce components for the buyer. This practice does not change the underlying seller/buyer relationship.

Our legal and accounting advice points to the intention to transfer title and control as determining whether the seller in a vendor tooling relationship can claim the tool as investment of allowable plant and equipment under the Act. Therefore, the seller cannot claim the tool as an investment in plant and equipment and cannot claim ACIS credits.

..." (T documents, T84 at 592)

45. The first three extracts reveal that reference was made to the legal advice at two meetings; one held on 31 January 2003 and the other on 6 February 2003. Neither email suggests that information was given in confidence. Given the organisations from which people attended, I am unable to draw any conclusion that either meeting was conducted on a confidential basis. Representatives of the industry body, FAPM, and Spicer Axle together with a consultant to one or other or, perhaps, both, and the Department were present at both meetings.

46. The first two emails refer to the meeting on 31 January 2003. In relation to the legal advice, they have a slightly different emphasis. Mr Weber's email could be read as stating only that the meeting was informed that the legal advice was revealed on only one matter i.e. that legal advice to the effect that only one party can claim tooling investment. It could also be read as meaning that the legal advice on the matters revealed in the other dot points in the paragraph was revealed. That would mean that legal advice as to who can claim for tooling was revealed and how that conclusion is reached was revealed. From Mr Clarke's email, it appears that the Department's officers revealed legal advice as to how that conclusion was reached and the manner in which the ownership of the tooling was to be determined. Reading the two notes together and in the absence of any other evidence, I have concluded that the officers purported to reveal that the Department had received legal advice regarding the wider issues and not simply the narrower issue.

47. The file note is also a little ambiguous. Again, there is no evidence other than the note itself. It could be read narrowly to suggest that external legal advice was sought regarding who owns the plant and equipment and that what follows in no way relates to the legal advice that was given to the Department. I think that would be an unduly narrow interpretation of the file note. Mentioning that external legal advice had been received in a meeting including representatives of FAPM, the Dana group and Spicer Axle would be to no point unless the Department intended those representatives to understand that what followed was underpinned by that legal advice. What followed, I find from the file note, was the manner in which the ownership of plant and equipment was to be determined for the purposes of the ACIS Scheme. The letter written by AusIndustry to Spicer Axle reflected the same legal advice.

48. Having regard to the three occasions on which the Department has referred to the legal advice, I am satisfied that it has conveyed to Spicer Axle and to members of the industry group, FAMP, both the conclusions it has reached regarding the facts and the relevant law and that they are both underpinned by legal advice that it has received. That legal advice underpins the decision that it has reached and that is now reviewable by the Tribunal. It would be inconsistent with the principle of legal professional privilege to allow the Secretary to now claim that it is confidential. His Department has previously disclosed its existence without qualification to an industry group as well as Spicer Axle and has used it to underpin its arguments in discussions with Spicer Axle. The Secretary has reached a decision consistent with the position argued by his Department in those discussions.

49. Having in mind considerations of fairness between the parties, it would be inconsistent to permit the Secretary to maintain the confidentiality of the legal advice when his Department has referred both to it and its contents to others without asserting confidentiality and it underpins his decision. In those circumstances, I am satisfied that the Secretary must be taken to have impliedly waived any claim to legal professional privilege.

50. There is one final matter. Mr Rawson submitted that some of the material is commercial in confidence. I consider that I should use my powers under s. 35 of the AAT Act to delete that material which can identify the commercial interests of those other than Spicer Axle. It seems to me that this can be achieved by the deletion of the names of any company other than Spicer Axle that appears in the legal advice. That would mean the deletion of the material identified in my decision below.

the respondent give to the applicant a copy of the legal advice:

(i) which is referred to in the documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975; and

(ii) from which have been deleted the following words:

(b) paragraph 9:

sub-paragraph 3, line 1, second word

sub-paragraph 3, line 5, sixth word

sub-paragraph 5, line 6, eleventh word

sub-paragraph 7, line 2, eighth word

sub-paragraph 8, line 1, fifth word

line 1, word ninth word

(d) paragraph 26:

line 2, first word

line 4, ninth word

(e) paragraph 28:

line 1, fourteenth word

line 2, twelfth word

line 5, seventh word

line 7, tenth word

line 1, tenth word

line 2, eighteenth word

line 3, sixteenth word

line 5, eighth word

line 2, twelfth word

(k) paragraph 34:

line 2, fourteenth word

(l) paragraph 35:

line 1, fifth word

line 3, fifteenth word

(m) paragraph 36:

line 8, eighth word

I certify that the fifty one preceding paragraphs are a true copy of the reasons for the decision herein of

Deputy President S A Forgie,

Signed: ...............................................................

Nathaniel Wills Associate

Date of Decision 24 January 2005

Counsel for the Applicants Mr Cavanough QC and Mr Caleo

Solicitor for the Applicants Hunt & Hunt Lawyers

Solicitor for the Respondent Mr Rawson for the Australian Government Solicitor