State of Victoria v Seal Rocks Victoria

Supreme Court of Victoria|2001-03-23|Before: Byrne J

ARBITRATION - Arbitrator rejects claim to public interest immunity - whether decision is an interim award - power of court to review decision - statutory power - inherent jurisdiction. Commercial Arbitration Act 1984 ss. 43, 47

The present proceeding concerns claims made by the State to the Arbitrator that certain documents be not produced or disclosed on the ground of public interest immunity. The Arbitrator received evidence, heard submissions on the claims to immunity and, having inspected the documents with the consent, if not the request, of the parties, determined that many of them should be produced and made available for inspection by Seal Rocks and its representatives. The State is aggrieved by these determinations and seeks declaratory and other relief to the effect of reversing them.

There were in fact claims to immunity in respect of three groups of documents. It is necessary that I identify each of these and briefly trace the processes which led to the determinations.

This comprised one document only. It is entitled "Cabinet-in-Confidence Second Draft - 30 March 2000 Submission - Seal Rocks". On or about 12 October 2000 Seal Rocks addressed a subpoena for production to the project monitor. This is, of course, an order of this Court directed to the witness to produce the documents to the Arbitrator[1]. By s. 17(2) the witness cannot be compelled to produce a document under this process which they could not be compelled to produce on the trial of an action. The project monitor is a person appointed by the State pursuant to cl. 21.1 of the Agreement to monitor compliance by Seal Rocks of its obligations under the Agreement and to produce an annual report to the State and to Seal Rocks[2]. The project monitor is a private company, Project Planning and Management Pty Ltd. Under the terms of the subpoena Project Planning and Management Pty Ltd was required to produce the documents before the Arbitrator on 18 October 2000. On that date a representative of the project monitor appeared before the Arbitrator. The attitude of the representative was described by the Arbitrator as "reluctant, for a variety of reasons, to produce all of them" to him. Opportunity was offered to counsel for the State to inspect these documents and to advise whether public interest immunity should be claimed.

Eventually, on 22 November 2000 a claim for public interest immunity was made on behalf of the State in respect of one document only. This claim was supported by an affidavit of David Imam Ali sworn 21 November 2000. The claim, a little misleadingly, refers to the document as being in "the possession, custody or power" of the State. In one sense it is correct, but the production, if production there be, was of a document in the possession of the project monitor. Mr Ali is the Acting Assistant Director, Cabinet Secretariat in the Department of Premier and Cabinet, an office he has held since 6 November 2000. The document in question is described by Mr Ali as "a draft submission to Cabinet. It is substantially similar to, but not exactly identical with, a submission which did go to Cabinet on 10 April 2000".

On 1 December 2000 the Arbitrator considered two identified grounds for immunity for this document. The first was that the document fell within the class of cabinet or state papers and is, therefore, immune from production whatever may be its content; the second, that upon an examination of its content the detriment to the public interest by its disclosure outweighed the detriment to the legal process by its non-disclosure. He rejected both grounds and proposed to direct that the document be produced to him and further that the document be made available to Seal Rocks and its representatives. It does not appear that a formal direction for production was made although the proceeding before me proceeded on the basis that such directions had been made on that date. These orders were treated as having been stayed pending a decision of this Court.

The parties made discovery in the arbitration by lists. There is some uncertainty whether this was done pursuant to the direction of the Arbitrator or voluntarily. In any event, pursuant to a direction of the Arbitrator given on 30 October, the State provided a list of documents in respect of which it claimed public interest immunity. Two such lists were produced dated, respectively, 22 December 2000 and 2 February 2001. The documents in the December list were divided into two categories. Those in category A were the subject of a class claim for immunity as documents prepared for the purpose of preparing submissions to Cabinet or to a Cabinet sub-committee, documents submitted to Cabinet or a Cabinet sub-committee or documents recording the deliberations or decisions of Cabinet or a Cabinet sub-committee. One hundred and sixteen documents were listed within this category. I am not concerned with the category B documents. The February list described certain of the category A documents from the December list more precisely and also included further documents.

The relevant claims for immunity are supported, in the case of each list, by an affidavit of Barbara Ann Poland sworn 24 January 2001 and 2 February 2001, respectively, which are in similar terms. The deponent defines "Cabinet documents" as being:

"Cabinet Submissions, Final Briefing Papers to the Premier as Head of Cabinet on Cabinet Submissions, Treasury and Finance Comments on Cabinet Submissions and the official records of decisions taken in Cabinet."

She says of the documents for which immunity is claimed in each case that she has examined them or is familiar with them. She then says:

"It is not in the public interest for the Cabinet documents to be disclosed. I am concerned that the disclosure of Cabinet documents may undermine the Cabinet process and system of Government that we have in Victoria. Cabinet operates under the conventions and principles established under the Westminster system of government where Ministers of the Crown are collectively responsible for the performance of the Government. The conventions of Cabinet solidarity are integral to the maintenance of unity amongst Ministers and is supported by the strict confidentiality attached to the business and decision making of Cabinet. Further, the pivotal role of the Cabinet in the government of the State necessitates that opinions and advice be given freely in confidence and in circumstances where there is no risk of disclosures. I am concerned that the disclosure of the Cabinet documents will undermine our system of Government, unduly expose individual Ministers to political criticism, restrict debate, engender ill-informed debate and inhibit informed decision-making and policy development by Cabinet."

It would appear from this, although she does not use this terminology, that this claim, like that made in respect of the subpoenaed document, is a class claim for Cabinet documents.

The Arbitrator heard argument from the parties on the discovered documents. He inspected them and on 8 February he announced his decision. He rejected the class claim and proceeded to perform what he described as a balancing exercise of competing public interest. He directed production of 109 documents (except document 19A) from the December list and of documents numbered 7, 9, 12, 18, 22, 31, 32, 36, 39, 40, 44, 50, 51, 52, 53, 55 and 56 from the February list.

The State has commenced this proceeding by originating motion filed on 15 December 2000. This was amended by leave following the determination of the Arbitrator on 8 February 2001 and it is to this document filed on 15 February 2001 that I now turn. The State seeks relief pursuant to sections 43 or 47 of the Commercial Arbitration Act 1984, alternatively pursuant to the inherent jurisdiction of the court. This relief is declaratory - declarations that the documents in question are subject to public interest immunity and should not be produced; and supervisory - orders setting aside the determinations of the Arbitrator of 1 December 2000 and 8 February 2001 and remitting the matter to him for further consideration. Further, and in the alternative, the State seeks injunctive orders restraining the Arbitrator from ordering the State to produce the documents to Seal Rocks. Finally, I mention that the State sought an order in the nature of prohibition, but this was not pursued.

Most of the argument before me concerned the power of the court to entertain this application, and it is to this that I now turn. I shall consider first, the statutory jurisdiction which the State would invoke. Sections 43 and 47 are found in Part 5 of the Act which is entitled "Powers of the Court". These powers include the power to review[3] or set aside[4] an award, to determine a preliminary point of law[5], to remove an arbitrator[6] and to make curative orders where there is delay in prosecuting the arbitration[7].

Counsel for Seal Rocks submitted that the determinations of the Arbitrator were interim awards and therefore awards within the meaning of s. 4. In Commonwealth of Australia v Cockatoo Dockyard Pty Ltd[8] Kirby P, speaking for the majority of the Court of Appeal, described as "hopeless" such an argument offered with respect to a procedural order that documents be not published to the world. His Honour observed that an award of the kind contemplated by the Act is one which is a final step in the arbitration.

The availability of the power in the arbitrator to make an interim award[9] does not detract from this. It is, historically, a power conferred on an arbitrator by agreement or statute to deal successively with matters referred to arbitration, a power which was denied at common law[10]. Interim in this expression is not to be understood as merely temporary. It is clear that a decision of the arbitrator is not an award of any kind unless it disposes of a matter referred to arbitration[11]. It is not appropriate to describe a merely procedural decision as an award.

I do not have before me the precise matters referred to the Arbitrator. The notice of arbitration dated 20 June 2000 and the amended notice of arbitration dated 27 October 2000 simply refer to unidentified disputes the subject of five identified notices of dispute. These notices are not in evidence. Nevertheless, I am confident that the question of the immunity of the documents now in question was not among the disputes referred, and I proceed on that basis. The determinations of the Arbitrator in question are not awards.

Section 43, the first statutory head of power relied on, is in the following terms:

"43 Court may remit matters for reconsideration Subject to section 38(1), the Court may remit any matter referred to arbitration by an arbitration agreement together with any directions it thinks proper to the arbitrator or umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration."

The power is expressed to be subject to s. 38(1), which denies to the court jurisdiction to set aside or remit an award on the ground of error of fact or law on the face of the award. This power is replaced by the new appellate jurisdiction conferred by s. 38(2) which is available in very restricted circumstances. One of the powers of the appellate court is to remit the award for reconsideration by the arbitrator[12].

It will be observed that the power of remitter conferred by s. 43 is to remit a matter, not an award, for reconsideration by the arbitrator[13]. Nevertheless, it appears that remitter is available only as "an adjunct to the disposal of proceedings in the Supreme Court concerning an award"[14]. It therefore presupposes that an award has been made. The same view has been taken in England with respect to s. 22 of the Arbitration Act 1950 which is in similar but not identical terms[15]. Furthermore, the Court of Appeal appears to be of opinion in the Cockatoo Dockyard case that the power of remitter is available only consequent upon a successful appeal under s. 38[16]. I note in passing that a different view has been expressed in New South Wales[17], in South Australia[18] and in Western Australia[19] and that there is in s. 38(3)(b) an express power of remitter upon appeal. Given this express power of remitter, it is difficult to see why s. 43 was enacted if it were to be limited to remission consequent upon appeal. I add for completeness that I do not read the observations of Smith J in Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd[20] as expressing any view on this point. It is, however, not necessary that I resolve this matter for there is in this case no award so that, in any event, s. 43 cannot operate.

"47. General power of the Court to make interlocutory orders The Court shall have the same power of making interlocutory orders for the purposes of and in relation to arbitration proceedings as it has for the purposes of and in relation to proceedings in the Court."

It should be noted that this section does not, in terms, confer on this Court any jurisdiction of an appellate nature; it speaks of the same power to make interlocutory orders as the court has in relation to its own proceedings. If the determinations presently in question had been made by a judge in the course of a trial which is continuing, there is no power in another judge to review them or set them aside[21]. The power which the State would have the court exercise is not conferred by the words of s. 47.

It was, however, put on the authority of the decision of the South Australian Full Court in the South Australian Superannuation case[22] that this Court is endowed by s. 47 with a general supervisory role in procedural matters to ensure that the arbitration is conducted fairly. I was referred, too, to a number of single judge decisions including three of this Court, where the existence of this jurisdiction appeared to have been accepted or, at least, not rejected[23]. I think it is fair to say that, on this point, the reasoning underlying the majority decision of the South Australian Superannuation case, but not its authority, has suffered a mortal blow at the hands of Rogers CJ Comm D[24]. Its authority, in the context of an Australia-wide legislative scheme, has been impugned by Commonwealth of Australia v Cockatoo Dockyard Pty Ltd where the Court of Appeal held that s. 47 does not provide a ready entitlement to secure a review of interlocutory orders made in an arbitration; the section "is intended to empower the Court, in cases properly before it, to make interlocutory orders to the extent that it is not elsewhere specifically provided for in other sections of the Act" [25].

For my part, I prefer to follow the Cockatoo Dockyard case and the reasoning of Bollen J, in dissent, in the South Australian Superannuation case. Section 47 is not available as a source of power to enable the court to review an interlocutory decision of an arbitrator made within power. Accordingly, s. 47 may not be called upon to support the present application.

Finally, it was submitted on behalf of the State that the orders sought might be made under the inherent jurisdiction of the court. It was accepted that this jurisdiction exists only in respect of determinations and orders of the arbitrator which are beyond the scope of the arbitration. Authority for this is to be found in the following passage from the judgment of Kirby P in the Cockatoo Dockyard case[26] which I venture to quote in full:

"Where a matter is within the scope of an arbitration, I would unhesitatingly give effect to the foregoing consideration and exclude the availability of the inherent power of the Supreme Court or the power expressly elaborated by s. 23 of the Supreme Court Act. But I find unacceptable the proposition that the Court is incapable of providing relief, and has lost its powers altogether, simply because parties have entered into a private contract by which they have submitted a dispute to arbitration. The proposition may be tested this way. Imagine that a government and a private company for their own purposes agreed to private arbitration and further agreed that information of profound importance to the community and of legitimate public interest were to be suppressed from public access. Can it seriously be suggested that their private agreement can, endorsed by a procedural direction of an arbitration, exclude from the public domain matters of legitimate public concern? It is no answer to this question to state that, in the present case, the arbitrator reserved powers of exempting the Commonwealth and liberty to apply for variation in his orders for that purpose. In issue here is the scope of the arbitration itself and the ambit of the orders that may properly be made by an arbitrator within that scope. Allowing that a large circle will be drawn within which the arbitrator may make procedural orders, the circle is not without limit. A point will be reached where the edge of the circle will be arrived at and passed. When passed, the Court, upholding the other interests which lie outside the legitimate scope of the arbitration, will retain its powers to intervene. To deny those powers is to accord too great a right to the parties or the arbitrator to define the limits of the commercial arbitration which the Act protects from external curial intervention. The power to define the boundaries and to prevent directions which go beyond them, remains in the Court. Any other view permits the parties and the arbitrator to define, without limitation, the territory which they occupy pursuant to their private agreement. That cannot be. The rule of law requires that the Court, protective of other competing public and private interests, will define and, where necessary and appropriate, declare the limits beyond which the purported powers in pursuit of private arbitration intrude into competition with other legitimate public and private rights and duties."

The question, then, is whether the determinations in question were within the scope of the arbitration. It was accepted in argument before the Arbitrator and before me that the documents in question were relevant to the matters in dispute. The arbitrator is empowered by s. 14 to "conduct proceedings... in such manner as the arbitrator... thinks fit". The arbitrator is obliged by s. 22(1) to determine "any question that arises for determination in the course of proceedings under the agreement" according to law. Section 19(3) provides that the arbitrator is not bound by the rules of evidence. Although I was not referred to any contrary agreement, neither party placed any weight on this provision in the course of argument before me.

Clause 38.2 of the Agreement provides that the disputes are submitted to arbitration in accordance with the Institute of Arbitrators Australia Rules for the Conduct of Commercial Arbitrations. These rules are in evidence before me. Rule 13 obliges the arbitrator to "make such directions or rulings in respect of procedural and evidentiary matters as he or she sees fit".

Counsel for the State accepted that the Arbitrator in this case had power to direct production and the disclosure of documents to which a claim for immunity has been made where he has reached a conclusion, properly founded, that the power should be exercised. A conclusion reached otherwise, however, is beyond power and this Court might intervene. Alternatively, it was put that an erroneous conclusion on this point was in the misuse of power so that the inherent jurisdiction might be invoked to protect the interest of the State from such a misuse.

Faced with the strong line of authority which would deny to the court any inherent jurisdiction generally to review a procedural determination or evidentiary ruling of an arbitrator, I would be very reluctant to act upon the distinction which these submissions would require the court to draw. The submission provides no line to indicate when an error by an arbitrator on such a point is an excess of power and therefore reviewable, or when it is merely an error of fact or law within the scope of the arbitration, which is not. Nor was any suggested, whether by reference to the egregious nature of the error or otherwise. The acceptance of such a distinction would place an intolerable burden on the arbitrator and perhaps on the parties an unacceptable prospect of interruption to the arbitral process by application to the Court. Nor was I able to derive comfort from the suggestion put by counsel for the State that I should limit my acceptance of their submission to cases involving public interest immunity.

In support of the excess of power submission, reliance was placed again upon the judgment of Kirby P in the Cockatoo Dockyard case[27]. This was a case where the arbitrator imposed a restriction upon the public use of a document before him. As his Honour observed, this was not a document produced under compulsion of court process so that the usual equitable prohibition against extraneous use did not apply[28]. Moreover, the use which a party might make of a document outside the arbitral process was not a matter incidental to the conduct of the arbitration[29]. The order of the arbitrator therefore could not be supported by the arbitration agreement or any power, contractual or statutory, conferred upon the arbitrator by this agreement. The position in the present case is altogether different for the arbitration agreement requires the Arbitrator to determine whether a relevant document should be made available for the purposes of the arbitration. I should add that, in this case, it would seem that such disclosure would be the consequence of the compulsion of the subpoena process and the discovery process so that the usual restrictions would apply to those to whom disclosure is made.

I should not leave this case without expressing my concern that my conclusion be not seen as denying to the court in every case the power to intervene to prevent production in the appropriate case. I refer to the powers conferred on the court by s. 18(1) if the State be in receipt of a subpoena to produce a document or, being a party, after forming the view that immunity should be claimed, declined to produce documents for inspection as part of the discovery process or when required to do so by the arbitrator. It will be recalled, moreover, that the State may not find itself in either situation. It may simply have an interest in maintaining its public interest immunity in respect of documents the subject of the discovery or subpoena process addressed to another. It would be very remarkable if two private citizens could by their agreement, confer on a third private citizen the right to override the public interest which obliges the document or class of documents to be kept confidential. In any of these situations it may be of little comfort to the State to know that it, if a party, may be able to remove the arbitrator for misconduct evidenced by the adverse determination on the point or, possibly, set aside the award upon appeal. The prospect of either relief being granted is remote and in any event would not provide relief until long after the disclosure had been made.

It may be that, in the appropriate case, the State, like any party claiming a legal right to confidentiality or property in a document, might approach the court to enforce that right against a party seeking to contravene that right in an arbitration. Such an application would not involve reviewing any determination of the arbitrator, assuming a determination had been made. As to the prospects of success of such a contention, particularly in a case such as the present where the State had submitted the question for the determination of the Arbitrator, I express no view. No argument was presented on these matters.

It follows from this that I conclude that the court has no power to set aside the determination of the Arbitrator on any of the bases contended for on behalf of the State. I would propose that the application be dismissed with costs.

[11] In Three Valleys Water Committee v Binnie & Partners (1990) 52 BLR 42 at 52, Steyn J refers to such a determination as a "pre-award ruling".

[14] Commonwealth of Australia v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662 at 673, per Kirby P.

[15] Fletamentos Maritimos SA v Effjohn International BV (No. 2) [1997] 2 Lloyd's Rep 302 at 306, per Waller LJ, Morritt and Simon Brown LJJ concurring.

[17] See Sabemo Pty Ltd v Malaysia Hotel (Australia) Pty Ltd unreported, Giles J, 4 June 1992; Hashman v Downie (1996) 39 NSWLR 169 at 180-1, per Rolfe J.

[18] In the matter of the Commercial Arbitration Act 1986; South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327 at 336, per White J, Mohr J concurring.

[19] Cooper & Oxley Construction Co Pty Ltd v Shire of Swan (1995) 11 BCL 194n, per Ipp J.

[21] Cf Bryarley Pty Ltd v Fletcher [1992] VicRp 67; [1992] 2 VR 272 at 276, per Tadgell J.

[22] South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327 at 354-6, per White J.

[23] Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1994] VicRp 67; [1994] 2 VR 386 at 408, per Smith J; Vaughan Constructions Pty Ltd v Owften Pty Ltd, unreported, BC 9606537, 25 October 1996, Hampel J; Varnsdorf Pty Ltd v Fletcher Construction Australia Ltd [1999] VSC 235 at [22]- [23], per Mandie J.

[24] Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653. See, too, M. Jacobs QC, "The Spectre of Section 47 of the Model Uniform Legislation" (1995) 69 ALJ 822.

Arbitration Act 1984

Arbitration Act 1950

Arbitration Act 1986

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