Appeal Panel - Internal CITATION: Cianfrano v Director General, Attorney General's Department [2008] NSWADTAP 10 APPELLANT Robert Cianfrano PARTIES: RESPONDENT Director General, Attorney General's Department FILE NUMBER: 079006 HEARING DATES: 21 January 2008 SUBMISSIONS CLOSED: 11 February 2008 DATE OF DECISION: 6 March 2008 BEFORE: Hennessy N - Magistrate (Deputy President); Pearson L - Judicial Member; Bolt M - Non Judicial Member CATCHWORDS: leave to extend to the merits MATTER FOR DECISION: Principal matter DECISION UNDER APPEAL: Cianfrano v Director General, Attorney General's Department [2007] NSWADT 8, Cianfrano v Director General's Attorney Genral's Department (No 2) [2007] NSWADT 231 FILE NUMBER UNDER APPEAL: 053411, 063055 DATE OF DECISION UNDER APPEAL: 01/09/2007 Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Administrative Decisions Tribunal Rules (Transitional) Regulation 1998 Freedom of Information Act 1989 Legal Profession Act 2004 CASES CITED: Neary v State Rail Authority [1999] NSWADT 107 247 Street v Hearne [2007] NSWCA 113 APPELLANT C Saggers, agent REPRESENTATION: RESPONDENT M Dalla-Pozza, solicitor ORDERS: 1. Leave is refused for the appeal to be extended to the merits of the Tribunal's decision 2. The Tribunal's order in the Cianfrano v Director General, Attorney-General's Department [2007] NSWADT 8 is affirmed. REASONS FOR DECISION Introduction 1 Mr Cianfrano is seeking access to documents held by the Crown Solicitor's Office (CSO). The documents are essentially the content of the CSO's legal files in relation to two matters in which it acted for the Premier's Department in proceedings before the Tribunal. Those proceedings related to requests by Mr Cianfrano for access to documents concerning the sale of the Sydney Markets at Flemington. The Tribunal agreed with the Respondent's decision that the majority of the content of the legal files did not have to be given to Mr Cianfrano because they were covered by the exemption for legal professional privilege in the Freedom of Information Act 1989 (FOI Act). The Tribunal also agreed with the Respondent that two invoices for legal fees were covered by the business affairs exemption. In a second decision, the Tribunal refused to exercise its discretion to give access to the exempt documents. Mr Cianfrano made it clear that he is not appealing against that decision. 2 Mr Cianfrano appealed on several questions of law and requested leave for the appeal to be extended to the merits of the Tribunal's decision: Administrative Decisions Tribunal Act 1997 (ADT Act), section 113(2). At the hearing Mr Saggers, Mr Cianfrano's agent, abandoned several grounds of appeal. We appreciate the fact that Mr Cianfrano has chosen to focus only on arguable grounds of appeal. Documents in issue 3 The documents in issue fell into the following seven categories: 1. Communications between the Crown Solicitor's Office and the Premier's Department made for the purpose of responding to Mr Cianfrano's FOI applications. 2. Communications between the Crown Solicitor's Office and counsel. These communications were made so that counsel could advise and appear in the Tribunal proceedings. 3. File notes of conversations between officers of the CSO and either counsel, clients or witnesses or reflect the thought processes of CSO employees. 4. Draft Court documents relating to Mr Cianfrano's FOI applications. 5. Copies of various documents made for the purpose of conducting research into the legal issues arising in Mr Cianfrano's FOI applications. 6. Communications within the Crown Solicitor's Office. 7. Invoices sent from the CSO to the Premier's Department, deleted so as to conceal the CSO's hourly rates. Legal Professional Privilege 4 Exemption. Several of Mr Cianfrano's grounds of appeal relate to the Tribunal's application of the exemption for legal professional privilege. That exemption is set out in Clause 10(1) of Schedule 1 to the FOI Act: A document is an exempt document if it contains matter that would be privileged from production in legal proceedings on the ground of legal professional privilege. 5 The common law privilege was described by the High Court in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 552 as a "rule of substantive law": It is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person 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. 6 As noted by the High Court, there are two categories of communication which are protected by common law legal professional privilege: (1) communications between a client and lawyer for the dominant purpose of seeking and receiving legal advice (advice privilege); and (2) communications between a lawyer and client or third party for the dominant purpose of providing legal services in connection with pending or anticipated proceedings (litigation privilege). 7 Privileged from production "in legal proceedings"? In order to be exempt, documents must be privileged from production "in legal proceedings". Mr Cianfrano submitted to the Tribunal that it should apply a decision of the Supreme Court in Ingot Capital Investments Pty Limited and Ors v Macquarie Equity Capital Markets Limited and Ors [2006] NSWSC 530 where Bergin J decided, at [55], that common law litigation privilege (as opposed to advice privilege) does not apply to documents created in the course of, or in preparation for, proceedings in Administrative Appeals Tribunal (AAT). The basis for the Supreme Court's decision was that proceedings in the AAT are not part of the adversarial system of justice. The proceedings in that case did not involve an application under the Commonwealth Freedom of Information Act. Bergin J listed several substantive and procedural characteristics of proceedings in the AAT, which put it outside the adversarial model. These characteristics included the following: a) there is no onus of proof on an applicant or a decision maker: McDonald v Director-General of Social Security (1984) 1 FCR 354; b) as a merits review Tribunal, the AAT stands in the shoes of the decision maker and is able to inform itself in any manner that it deems fit: c) the decision maker must "use his or her best endeavors to assist the Tribunal to make its decision in relation to the proceedings: Administrative Appeals Tribunal Act 1975 (Cth), section 33(1AA); and d) legal professional privilege does not apply to the documents, which a decision maker is required to lodge with the Tribunal: AAT Act, section 37(3); 8 We note that the AAT does not agree with the reasoning or conclusion in Ingot . It has decided that litigation privilege does apply in the AAT unless there is a clearly expressed abrogation of the privilege in the legislation governing the application: Farnaby and Military Rehabilitation and Compensation Commission [2007] AATA 1792 (21 September 2007). The AAT regarded the High Court's decision in Waterford v the Commonwealth [1987] HCA 25; (1987) 163 CLR 54 as binding authority for that proposition. It disagreed with the Supreme Court's interpretation and application of Waterford . 9 Tribunal's decision. The Tribunal distinguished Ingot on the basis that proceedings in the ADT were proceedings to which litigation privilege applies. The Tribunal said, at [96] that: Whether proceedings are correctly characterised as adversarial depends on many factors. These include: the overall nature of the proceedings whether the body is administrative in character whether the process is primarily inquisitorial whether the primary decision-maker has a statutory obligation of assistance to the review body whether the decision maker is able to go beyond the parties' submissions (such as by requiring the production of documents and generally informing itself in any manner it deems fit) whether legal representation is contemplated, and whether the body has the capacity to make legally binding determinations. 10 The Tribunal acknowledged that the ADT and the AAT share some common features. Both have a provision stating that they are not bound by the rules of evidence and may inform themselves in any manner that they deem fit. Both conduct merits reviews of administrative decisions and stand in the shoes of the administrator. However, the Tribunal found that the ADT does not have several of the so-called "inquisitorial" features of the AAT. In particular, in FOI proceedings in the ADT, the burden is on the decision maker to establish that the determination is justified: FOI Act , section 61. Placing the burden of proof on one party is a particularly significant feature of adversarial proceedings. Furthermore, the Tribunal pointed out that there is no equivalent in the ADT Act that a decision maker uses his or her best endeavors to assist the Tribunal. 11 Mr Cianfrano's submissions. Mr Cianfrano submitted that the Tribunal was wrong to distinguish the reasoning in Ingot because the ADT is no different from other merits review Tribunals such as the AAT. He said that, like the AAT, proceedings in the ADT are not sufficiently adversarial to be regarded as "legal proceedings" for the purpose of applying litigation privilege. He also said that proceedings in the ADT are not proceedings in a "court of law". Mr Cianfrano went on to make the point that the ADT must make the "correct and preferable" decision, is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit: ADT Act, section 73(2). He said that the ADT conducts "planning meetings" in an attempt to resolve the dispute without the need for a hearing. According to Mr Cianfrano, that is not a typical feature of adversarial proceedings. He also mentioned that Tribunal Members allow legal representation in relation to oral submissions pursuant to section 71(2) on the understanding that the lawyer's role is to assist the Tribunal. Mr Cianfrano made other submissions about the objects of the FOI Act and section 65 of that Act which we do not regard as being relevant to his argument. 12 Respondent's submissions. The Respondent's primary submission was that the Tribunal correctly applied the reasoning in Ingot to proceedings in the ADT. Mr Dalla-Pozza said that a further argument in support of the Tribunal's conclusion was that there is no equivalent in the ADT Act, or the FOI Act, to section 37(3) of the AAT Act. That provision has the effect that an administrator may not refuse to lodge documents with the AAT on the basis of a claim for privilege. While both section 58 of the ADT Act and section 37(1) of the AAT Act oblige a decision maker to lodge certain documents with the Tribunal, there is no provision in the ADT Act, which abrogates legal professional privilege in relation to those documents. On the contrary, nothing in the ADT Act requires the disclosure of a document if the Tribunal is satisfied that evidence of the document could not be adduced in proceedings before a NSW court by reason of the operation of the provisions in the Evidence Act 1995 relating to legal professional privilege: ADT Act, section 125. 13 The Respondent's alternative submission was that the Appeal Panel should follow the approach of the AAT in Farnaby and Military Rehabilitation and Compensation Commission [2007] AATA 1792. That approach is not to apply the reasoning in Ingot because it is inconsistent with the High Court's decision in Waterford. The Respondent submitted that in Ingot, Bergin J did not follow the decision in Waterford relating to litigation privilege. Instead, in her Honour's view, the claim in Waterford related solely to advice privilege (at [36]). She appears to have treated Mason and Wilson JJ's comments relating to litigation privilege as obiter dicta. That appears to be contrary to their Honours' statement at page 60 of Waterford: But the point of overriding importance to the appellant's argument focuses on the second category of documents to which the privilege attaches, that is to say, professional communications between a client and his legal adviser in connection with legal proceedings. It was to this category of documents that much of the appellant's request for access related. 14 As Downes P and Groom DP suggest in Farnaby (at [28]), this passage indicates that Mason and Wilson JJ considered that the case before them related to litigation privilege so that the judgment, as it relates to litigation privilege, is not obiter but is binding on the Tribunal and the Appeal Panel. The Respondent submitted that in the face of a division of authority, the Appeal Panel should follow the High Court's decision in Waterford . 15 Conclusion. We agree with the Respondent's submission that the decision in Ingot is not binding on the Tribunal. It is inconsistent with the High Court's decision in Waterford that litigation privilege applies in the AAT (and, by analogy, in the ADT) unless there is a clearly expressed abrogation of the privilege in the legislation governing the application. If this conclusion is not correct, and the Tribunal is bound by the decision in Ingot, we are of the view that the Tribunal was correct to distinguish proceedings in the AAT from proceedings in the ADT. 16 There are several significant features of FOI proceedings in the ADT, which bring those proceedings within the definition of "legal proceedings" in Clause 10 of the FOI Act. A respondent to an FOI application has no obligation to lodge relevant documents with the Tribunal: FOI Act, section 53(5). That is plainly because the Respondent has the onus of proving that its decision is justified: FOI Act, section 61. Section 125 of the ADT Act section 125 specifically preserves the substantive law in relation to legal professional privilege in proceedings before the Tribunal. Parties have a right to legal representation except that the Tribunal may exclude lawyers or other classes of agents from the presentation of oral submissions: ADT Act, section 71(2). The duties that every lawyer owes to the court apply equally in Tribunal proceedings. In our view, given these features, the Tribunal did not make an error of law in concluding that the Supreme Court's reasoning in Ingot does not apply to proceedings in the ADT. It does not matter whether the ADT is a court of law because the decision in Ingot did not turn on that question. Rather, it was based on a finding that litigation privilege does not apply because the AAT is outside the "adversarial system of justice". 17 A further argument which supports the Tribunal's ultimate conclusion, but which neither party raised, is that the "legal proceedings" referred to in the clause 10 exemption for documents subject to legal professional privilege are hypothetical legal proceedings, not legal proceedings in the ADT. In Secretary, Department of Justice v Osland [2007] VSCA 96 (17 May 2007) Ashley J said, at [105], when interpreting the equivalent provision in the Freedom of Information Act 1982 (Vic), that that provision: . . .deals with an hypothetical situation. A document is exempt if it is of such a nature that it would be privileged on the ground of legal professional privilege. The putative legal proceedings do not exist. The documents, which are prima facie exempt, are documents of such a nature that they would be privileged if there were legal proceedings. 18 If this interpretation of clause 10 were accepted, the decision in Ingot would not be relevant. However, it appears to be contrary to the High Court's decision in Waterford (1987) 163 CLR 54 where, in circumstances which were very similar to the present case, the High Court regarded the reference to "legal proceedings" in the equivalent provision to clause 10 ( Freedom of Information Act 1982 (Cth), section 42(1)) to be a reference to proceedings in the AAT. As the argument was not raised before the Tribunal, there is no need for us to determine this issue. 19 No solicitor/client relationship. Mr Cianfrano's alternative ground of appeal in relation to the exemption for legal professional privilege was that there was no solicitor/client relationship between the CSO and the Premier's Department. The same issue was raised before the Tribunal. Mr Cianfrano said that the services the CSO provided to the Premier's Department were "core" work, that is, work about which the Department must brief the CSO. The Respondent did not dispute that the work was core work and that while the Department was billed for that work, fees were not paid from the Department's budget. Mr Cianfrano said that the CSO and the Department were not in a solicitor/client relationship, rather the CSO officers, themselves government employees, were giving expert advice to Government. According to Mr Cianfrano, that is akin to advice given by an in-house lawyer to assist the government in the purely executive function of decision making. 20 The Department asserted that the relationship of the CSO and the Premier's Department was a professional relationship between lawyer and client. There was evidence that the Director General of the Premier's Department gave instructions to the CSO to act in relation to both Mr Cianfrano's original applications for documents under the FOI Act. There was also evidence that counsel was briefed and witness' statements prepared. 21 Conclusion. In Waterford (1987) 163 CLR 54, Mason & Wilson JJ said at [4] that: To our minds it is clearly in the public interest that those in government who bear the responsibility of making decisions should have free and ready confidential access to their legal advisers. Whether in any particular case the relationship is such as to give rise to the privilege will be a question of fact. It must be a professional relationship, which secures to the advice an independent character notwithstanding the employment. 22 The Tribunal decided at [76] that it was satisfied that there was a solicitor/client relationship between the CSO and the Premier's Department. This was a finding of fact based on the evidence. Mr Cianfrano has not identified any error of law that the Tribunal made in making that finding. 23 Improper purpose. Legal professional privilege will not be applicable where the communication contained in the document furthers some wrong doing. The wrong doing may be a crime including fraud, an abuse of statutory power or some improper purpose: Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501 at 545; Attorney-General (NT) v Kearney [1985] HCA 60; (1985) 158 CLR 500.) Mr Cianfrano submitted to the Tribunal that statements of evidence filed in the Tribunal were not correct and that the way in which his application was processed was improper. He did not put on any evidence in support of this submission. 24 The Tribunal decided at [70] and [71] that: Where a challenge is mounted to a claim of legal professional privilege on the basis that the communication was made in furtherance of an improper purpose, the onus lies on the person making that claim to show 'reasonable grounds'. If the purpose of a decision has to be ascertained by inference, a presumption of regularity operates. An improper purpose will not lightly be inferred and, by application of a presumption of regularity, will only be inferred if the evidence cannot be reconciled with the proper exercise of the power: Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649 per Gaudron J at [23]. I agree with the Department that Mr Cianfrano has not discharged the onus on him in relation to his allegation of impropriety or improper conduct. 25 Mr Cianfrano submitted to the Appeal Panel that there is no need for him to bring evidence of an improper purpose. He says that all he needed to do was give "colour" to an allegation of improper purpose and then the Tribunal was obliged, pursuant the power given to it in section 73(2), to investigate those allegations and come to its own conclusion. In our view, section 73(2), which allows the Tribunal to "inquire into and inform itself on any matter in such manner as it thinks fit", is not a general duty of inquiry. 26 In AWB v Cole (No 5) [2006] FCA 1234 at [218] Young J discussed the nature of evidence necessary to raise the issue of improper purpose: It is not necessary to prove an improper purpose on the balance of probabilities. The 'prima facie' test arguably reflects the fact that issues of legal professional privilege are usually dealt with in the interlocutory stages of a proceeding, but the authorities have not departed from that formulation where a declaration is sought in relation to privilege issues. It must also be established, on the same prima facie basis, that the communication which is the subject of the claim for privilege was made in furtherance of, or as a step preparatory to, the commission of the fraud or wrongdoing. (References omitted.) 27 The Tribunal referred to the decision in Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649. That decision refers to the presumption, which applies to official acts, that all necessary conditions and formalities have been satisfied until the contrary is proved. To the extent that any alleged conduct of the CSO can be characterised as an "official act" that presumption applies. 28 The Tribunal applied the "reasonable grounds" test. Even if the test is that there must be "prima facie" evidence, Mr Cianfrano's had no evidence whatsoever of improper purpose. Consequently this ground of appeal fails. Business affairs exemption 29 The Respondent claimed that the exemption relating to business affairs applied to two invoices to the Premier's Department, which contained hourly rates and times worked. Only those parts of the document, which disclosed the hourly rates, were deleted. Clause 7(1)(c) of Schedule. 1 to the FOI Act states that: (1) A document is an exempt document: (c) if it contains matter the disclosure of which: (i) would disclose information (other than trade secrets, commercial-in-confidence provisions or information referred to in paragraph (b)) concerning the business, professional, commercial or financial affairs of any agency or any other person, and (ii) could reasonably be expected to have an unreasonable adverse effect on those affairs or to prejudice the future supply of such information to the Government or to an agency. 30 At [24] and [25], the Tribunal set out its reasons for accepting that this exemption applied: 24 The expression "financial affairs" has been held to include expenditure on professional services, the negotiation of fee arrangements with external providers, hourly rates and the actual amounts paid, as well as reports concerning information about the money management, including credit arrangements, of an agency: Neary v State Rail Authority [1999] NSWADT 107. In regard to the question of whether disclosure of information would have an unreasonable impact on an agency's business for the purposes of clause 7(1)(c)(ii) the Tribunal's President stated at [35]: 35 An objective view must be brought to bear on an agency's claim that release will have an adverse impact on its financial affairs. The Tribunal should approach issue from the viewpoint of a reasonable administrator. The administrator should have reasonable grounds for his or her perception. There must be more than a mere risk. While the key word used in the relevant provision - `expect' - carries a firmer connotation than words such as `anticipates', it is not necessary that the level of risk be such that it be assessed as more probable than not. Nor is it necessary for the administrator to apply a balance of probabilities calculus similar to that used to set the burden of proof in litigation. All relevant factors, including public interest considerations, should be taken into account. The extent and nature of the effect will be relevant, and often decisive. It is necessary to assess what is reasonable in the circumstances. 25 The President concluded at [40]-[41]: "40 As to the information in relation to expenditure on services provided by the Crown Solicitor's Office, release of information as the total amounts paid does not, I consider, place at risk in any meaningful way the nature of the arrangements that might exist between the agency and that Office. The only information shown in the invoices, which might, arguably, fall within the protection of the exemption is the reference (found in hand-writing on two of the invoices) showing a multiple of a number (the hours of service rendered) and an hourly rate. 41 That information does, I consider, bear on the contractual relationship between the agency and the Office. It gives an insight into what rate the Office charges for a certain class of work. That information, if known to others with whom the agency deals in relation to the provision of legal services, might give an advantage to those third parties in negotiation of rates. Consequently, applying the tests referred to, I consider that the hand-written references to the hours and hourly rates should be exempted from disclosure." 31 Mr Cianfrano disagrees with that conclusion because he says that the work done by the CSO was "core work" and the Premier's Department had no choice but to instruct the CSO. In circumstances where the CSO is not operating in a competitive environment disclosure of that information could not reasonably be expected to have an unreasonable adverse effect on its business affairs: clause 7(1)(c)(ii). Mr Cianfrano also said that the decision in Neary was wrong and that, in any case, the CSO has disclosed its hourly rate in previous Tribunal proceedings. 32 Conclusion. Disagreement with the Tribunal as to a finding of fact does not amount to a question of law. In Neary v State Rail Authority [1999] NSWADT 107 at [40] and [41], O'Connor P decided that the hourly rates charged to a particular agency by the CSO were exempt from disclosure under the business affairs exemption because they may provide an advantage to third parties when negotiating their hourly rates. Mr Cianfrano disagreed with this factual finding and said that it should not have been applied in the present case. The Tribunal applied the correct test and addressed each limb of section 7(1)(c). We agree with the Respondent's submission that it was open on the evidence before the Tribunal to find that the information about hourly rates was exempt. 33 Even if Mr Cianfrano had established before the Tribunal that the CSO had disclosed its hourly rates in a document tendered to the Tribunal, that does not mean that disclosure of the CSO's hourly rates in response to an FOI application would not have an unreasonable adverse effect on its financial or business affairs. Giving a person access to a document under the FOI Act is, effectively, publication to the world. Procedural grounds 34 Finally, Mr Cianfrano said that the Tribunal had erred by accepting into evidence a confidential annexure to the affidavit of Ms Elissa Strathis without giving him even a general description of the content of that material. The Tribunal is entitled to admit confidential evidence. Section 55 of the FOI Act states that: In determining a review application, the Tribunal: (a) is to ensure that it does not, in the reasons for its decision or otherwise, disclose any exempt matter, and (b) is to, where in the opinion of the Tribunal it is necessary to do so in order to prevent the disclosure of any exempt matter, receive evidence and hear argument in the absence of the public, the review applicant and the applicant's representative. 35 Mr Dalla-Pozza, representing the Respondent, submitted that section 55 modifies the rules of procedural fairness so as to allow the admission of confidential material where that material discloses exempt matter. We agree that in light of section 55, there was no breach of procedural fairness in admitting the confidential annexures into evidence. Extension to the merits 36 Mr Cianfrano applied for his appeal to be extended to the merits of the Tribunal's decision, but he made it clear that he was not appealing against the Tribunal's decision not to exercise its so-called "override" discretion. Mr Cianfrano has not raised any issues relating to the fact finding process or any other reason justifying the appeal being extended to the merits of the Tribunal's decision. In those circumstances we refuse to extend the appeal to a review of the merits of the Tribunal's decision. Orders 1. Leave is refused for the appeal to be extended to the merits of the Tribunal's decision 2. The Tribunal's order in the Cianfrano v Director General, Attorney-General's Department [2007] NSWADT 8 is affirmed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.