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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Practice and Procedure - documents produced pursuant to subpoenas served on Secretary, Department of Transport and Communications and plaintiffs - application by defendant for inspection of documents - contention by Secretary of Department that documents should not be produced because of the provisions of the Navigation (Marine Casualty) Regulations - objection by plaintiffs to production of documents prepared by their solicitor on the grounds that the documents came into existence solely for the purpose of anticipated litigation or the making or meeting of an anticipated claim.Navigation (Marine Casualty) Regulations, regs. 15, 16, 19, 21, 26, 27 and 28.
HEARING
SYDNEY Counsel for the Plaintiffs (Respondents to
application for inspection of documents): Mr B.W. Rayment QC and
Mr A.J. Meagherapplication for inspection of documents): Mr W.W. Caldwell QCSolicitors for the Plaintiffs: Ebsworth and Ebsworth
Counsel for the Defendant (Applicant in
and Mr P.E. KingTransport and Communications: Mr D. Rowland of the AustralianSolicitors for the Defendant: Dunhill Madden Butler
Solicitor for the Secretary, Department of
Government Solicitor's Office
ORDER
THE COURT ORDERS THAT:-Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
1. The documents produced by the Secretary of the Department of
Transport and Communications, being documents marked "B" and
"C" for identification, be made available for inspection by
the parties and their solicitors subject to any application
made by the Secretary on or before 17 August 1992 that
inspection of such documents be limited to particular
persons or classes of persons.
2. The documents produced by the solicitor for the plaintiffs,
being documents marked "D" for identification, not be made
available for the inspection of the defendant or its
solicitors but be returned to the custody of the plaintiffs'
solicitor to be kept by him until the determination of these
proceedings.
3. There be no order as to the costs of any party to these
proceedings.
DECISION
The trial of this action is fixed for 31 August next. There has arisen a question concerning the inspection by the respondent of certain documents some of which are in the possession of the Department of Transport and Communications and others which are in the possession of the plaintiffs or their solicitors. The Department, although it has produced the documents to the Court, objects to their being made available for inspection by the parties. The plaintiffs do not seek inspection of the documents which came into existence as a consequence of the investigation by the Department of the incident which gives rise to these proceedings.2. On or about 14 February 1991 the vessel "Sanko Harvest" ran aground off the port of Esperance in Western Australia. The vessel was a large bulk carrier carrying a cargo of phosphate from Florida to Western Australia. Eventually the vessel broke up on the night of 17/18 February 1991. Both the vessel and its cargo were a total loss.
3. The person in charge of the investigation made by the Department was Captain Filor. Amongst the documents produced to the Court by the Department are notes of interviews conducted by Captain Filor on 16 February 1991. The interviews were with the Master of the vessel and its Second Officer. Further interviews were conducted on 17 February 1991. Amongst the persons interviewed was Mr Sensui who is the Manager, Marine Section, Ship Management Department, of the Eastern Shipping Company Limited. Mr Sensui had come to Australia from Japan because of the grounding. It is unnecessary to mention the other persons interviewed on 17 February because their statements are not the subject of contention in this application. The notes of interview are contained in a notebook which has been marked for identification "C" and, so far as the Master is concerned, also in typed questions and answers which have been marked for identification "B". A note of the persons who were interviewed is contained on page v of the report made by the Department pursuant to regulation 8 of the Navigation (Marine Casualty) Regulations. This report is one of the documents included in a bundle of documents produced by the Department and marked "A" for identification. The Department has no objection to its contents being inspected by the parties.
4. The action brought by the plaintiffs is one in which they seek to limit their liability to pay damages for the loss of the cargo. The first plaintiff ("Sanko") was the time charterer of the vessel and the second plaintiff was the bare boat charterer of it. Both plaintiffs are members of a P. and I. Club (Protection and Indemnity Club) which is known as Gard Protection and Indemnity Association ("Gard"). It is a Norwegian company.
5. On the day of the grounding, 14 February 1991, Mr Stuart Hetherington, who is a member of the firm of Ebsworth and Ebsworth, the solicitors for the plaintiffs, was contacted by a Mr Timmins of the Sydney office of Sanko. He was told of the grounding. Mr Timmins asked him to act on behalf of Sanko and its P. and I. Club. Mr Hetherington telephoned Gard on that day and advised it of the casualty. During the morning of 15 February 1991 Mr Timmins told him that the Department of Transport was sending an investigator to Esperance to conduct a preliminary inquiry. He requested Mr Hetherington to attend the vessel in Esperance "for the purposes of advising the Master and crew at that inquiry". Mr Hetherington also received a telex from Gard which requested him to make certain inquiries as to the cause of the casualty.
6. Mr Hetherington flew to Esperance and was present with the Master of the vessel at the Office of the Harbour Master in Esperance where Captain Filor asked the Master a number of questions. He was also present with the Second Officer when he was asked questions by Captain Filor. Mr Hetherington said that he made notes of those meetings "for the sole purpose of advising Gard and Sanko as to the cause of the grounding and their potential liability."
7. Mr Hetherington was in Esperance on 15, 16 and 17 February 1991. During this time he conducted further interviews with the Master and the Second Officer and made notes of those interviews "solely with a view to ascertaining the cause of the sinking and advising Gard and Sanko as to their potential liability."
8. Mr Hetherington returned to Sydney on 17 February before the vessel broke up. On 19 February he received a request from Phillips Fox, a firm of solicitors in Perth, that Gard provide security for cargo claims which they were instructed to make. This request was followed up by a letter from Phillips Fox to Ebsworth and Ebsworth dated 20 February 1991. The letter noted that Mr Hetherington acted for the owners of the vessel and the relevant P. and I. Club. It said that Phillips Fox had been instructed "by cargo interests" in respect of damage suffered following the loss of the cargo of phosphate shipped under certain bills of lading as a result of the vessel running aground and sinking off Esperance. Their client's loss was said to be approximately $A11.2 million for which the owners were held responsible. The letter asked Mr Hetherington no later than 5.00 p.m. on 20 February 1991 to advise whether the owners accepted liability and were prepared to provide some acceptable form of security for the claim together with a submission to the jurisdiction of an Australian court. Legal proceedings were threatened in the event that no satisfactory response was received.
9. Mr Hetherington said that on his return to Sydney on 17 February, he devoted the majority of the time spent in relation to the vessel to liaising with experts whom he had appointed to oversee the salvage, wreck removal and oil pollution problems relating to the casualty and negotiating the question of security for the cargo claim with Phillips Fox.
10. On 28 February 1991 he forwarded draft statements and a preliminary
advice which he had prepared as a result of his discussions
with the Master
and Second Officer in Esperance to Gard and Sanko as part of his report into
the circumstances of the grounding.
Mr Hetherington said that the only reason
that the statements were prepared for the Master and Second Officer was to
enable Gard
to be aware of the circumstances of the grounding so that his
advice as to their potential liability to the cargo owners could be
understood. Mr Hetherington continued:-
"I was never requested by the P and I Club to advise whether11. Mr Hetherington went on to say that, although part of his ongoing instructions from the P. and I. Club was to advise in relation to oil spill clean-up costs, and for that purpose a marine surveyor and two other experts were retained by him on behalf of the Club, the statements which he drafted for the Master and the Second Officer were not prepared with oil pollution claims in mind.
there was a bona fide claim. In that regard, of course, the
insurance provided to a member by a Protection and Indemnity
Association is indemnity insurance, to indemnify the member
against any claims which are made against it. Thus it is
not claims made by the member against the Club but claims
made by third parties against the member which are in
contemplation when a casualty takes place. The P and I Club
does not of course insure the member in respect of the loss
of the hull and I was not instructed by the hull
underwriters to attend and therefore there was no question
of considering whether or not scuttling arose and I was not
instructed to give any consideration to that."
12. Mr Hetherington said that Captain Filor, when in Esperance, gave him a tape recording of the Master's interview. He arranged for that to be transcribed and has a copy in his possession. He said that the purpose of having that statement transcribed was further to assist him in preparing a statement for the Master and advising his clients of their potential liability in relation to the casualty.
13. The evidence given by Mr Hetherington to which I have so far referred is contained in an affidavit. He gave some additional evidence orally and was cross-examined. The oral evidence in chief which he gave dealt with the question whether, in his experience, solicitors advising P. and I. Clubs attending the scene of a marine casualty were often concerned with questions of scuttling (a matter referred to in Mr Hetherington's affidavit) to determine whether the claim of the Club member was a good claim. He said that such a question would not arise because local representatives would be seen to be too close to the ship owner to advise it. He added, "... we have a dual role in these sorts of circumstances that we are acting for the ship owner as well in attending a casualty to assist them in determining the cause and to provide them with some advice."
14. Another matter dealt with by Mr Hetherington concerned introductory remarks made by Captain Filor before he began the interviews. Mr Hetherington said that Captain Filor explained to the Master that the inquiry was a confidential one and "that he should feel relaxed about talking to him because of the confidentiality of it."
15. In cross-examination Mr Hetherington said that he understood the request
from Gard was to pass back to it the information he
obtained together with his
advice as to what the potential liabilities were that flowed from it. He said
that the same was true
of the information to be passed back which he himself
had obtained as a result of his own interviews. He agreed that one of the
purposes of asking him to attend the scene was to enable him to pass back
information he obtained from the two officers. Mr Hetherington
said that the
question of advice was not mentioned by Gard expressly to him. It was a
matter that "must be inferred." He said that
he did not have a specific
recollection of someone saying "you must advise us on this." He added:-
"During subsequent conversations over that weekend we were16. Mr Hetherington was asked whether or not, at the time the interviews were held, which was before the cargo was lost, it was doubtful whether it would be lost. Mr Hetherington said that there was still a question mark but he did not think that anyone held out very much hope by the time he got to Esperance that the vessel would be able to be pulled off. But he agreed that there was still a hope. Mr Hetherington's evidence proceeded as follows:-
talking about limitation of liability and all the issues
that arise in a cargo situation as well as circumstances of
the grounding and what had led up to it. I think there may
be some confusion as to P and I Clubs' representatives' role
in this situation. Clubs sometimes engage surveyors to
investigate circumstances. They sometimes engage lawyers.
I would've thought that when they were engaging lawyers they
are doing so because they want advice in the light of what
the lawyers uncover and so we take it for granted that that's our
role and it certainly was right from the start in this."
"Mr CALDWELL: Is it the position that the statements were17. The documents referred to in Mr Hetherington's affidavit have been produced to the Court but the plaintiffs oppose inspection of them by the defendant. The documents, which comprise notes of interviews, have been marked "D" for identification. I have made a cursory examination of the notes. They do not provide a continuous narrative and could not be fully understood without the aid of the person who made them, that is, Mr Hetherington.
prepared with a view to sending them to GARD? ---Certainly
sending them to GARD was part of an overall package of
materials that were going to them together with my advice.
HIS HONOUR: But you could not advise without knowing what
the facts were, could you? ---No, your Honour, that's why I
was in Esperance to ascertain the facts in order to give
that advice.
When you have anybody giving advice he has to have a factual
basis for the advice? ---Yes, your Honour.
Is that what you were doing? ---Yes, your Honour."
18. The issue between the parties is whether the documents came into existence solely in anticipation of or for the purposes of meeting a potential claim by the cargo owners. See Grant v. Downs [1976] HCA 63; (1976) 135 CLR 674 and National Employers' Mutual General Insurance Association Limited v. Waind [1979] HCA 11; (1979) 141 CLR 648.
19. It is to be observed that the issues concerning the inspection of the
documents which have been produced by the Department and
those concerned with
the inspection of the documents produced by Mr Hetherington raise different
considerations. It is convenient
to deal with them separately. I deal with
those produced by the Department first of all.
The Departmental Documents
20. The Department relies on regulation 15 of the Navigation (Marine
Casualty) Regulations made pursuant to the provisions of para.
425(1)(ea) of
the Navigation Act 1912. Regulation 15 is in the following terms:-
"Confidentiality21. In the course of the argument, there was raised by counsel both for the plaintiffs and the defendant, the question whether the Department was also relying on public interest immunity. Reference was made to Sankey v. Whitlam [1978] HCA 43; (1978) 142 CLR 1 and to the decision of McLelland J. in Spargos Mining NL v. Standard Chartered Aust. Limited (1989) 1 ACSR 311. Mr Rowland, who appeared for the Department, sought a short adjournment to obtain instructions upon the question whether he was to raise public interest immunity. When the matter resumed, he said that he had no such instructions and relied entirely on the provisions of regulation 15. No evidence was led by the Department. It relied simply upon the nature of the documents which were produced and the regulation.
15.(1) If the Inspector or an investigator makes a record
of evidence under paragraph 10(d), he or she must not
divulge that record, in whole or in part, except in the
performance of duties or in the exercise of powers under
these Regulations, to any person other than:
(a) the person who provided that evidence; or
(b) a Board appointed to investigate the
incident to which the evidence relates; or
(c) the Secretary; or
(d) the Minister.
(2) A person to whom a record of evidence is
divulged under subregulation (1), and any person under the
control of that person, is subject to the same rights and
obligations under that subregulation as if the person were
the Inspector or an investigator."
22. The question argued was whether it was to be inferred from the proper construction of regulation 15 that there was a legislative intent not to empower a court to compel the production of documents of a kind referred to in the regulation. There was no issue that the documents here in question were of that kind. Essentially the question becomes one in which one has to determine whether the words "to any person" which appear prior to the lettered paragraphs of subregulation (1) include a court. There are authorities in relation to legislation other than that in question here which suggest that in legislation of this kind, the word "person" does not include a court. The first case to which reference should be made is Canadian Pacific Tobacco Co. Limited v. Stapleton [1952] HCA 32; (1952) 86 CLR 1 which was concerned with the provisions of s.16 of the Income Tax and Social Services Contribution Act 1936. Subsection 16(2) provided that, subject to the section, an officer should not either directly or indirectly, except in the performance of any duty as an officer, divulge or communicate to any person any information of the kind referred to in the section. Reference should also be made to subsec.16(3) which provided that an officer should not be required to produce in court any return, assessment or notice of assessment, or to divulge or communicate to any court any matter or thing coming under his notice in the performance of his duties as an officer except when it was necessary to do so for the purpose of carrying into effect the provisions of the Act. Dixon C.J. thought (p 6) that the words "to any person" "probably" could not apply to courts, "which would hardly be called persons". His Honour went on to consider some other matters including the significance for the case in question of subsec.16(3). Dixon C.J.'s judgment went on appeal. But the meaning of the words "to any person" was not the subject of consideration by the judges sitting on the appeal; see pp.10-11.
23. The matter was again referred to by the High Court in two later authorities. In Miller v. Miller [1978] HCA 47; (1978) 141 CLR 296 Gibbs J. (as he then was) dealt with (p 277) a provision of the Telephonic Communications (Interception) Act 1960. He expressed views similar to those expressed by Dixon C.J. in Stapleton. In Hilton v. Wells [1985] HCA 16; (1985) 157 CLR 57 Mason and Deane JJ. referred (p 87) to what Dixon C.J. had said in the Stapleton case. The two judges adopted Dixon C.J.'s words and said that, as a matter of ordinary language, the words "divulge or communicate to another person" were inappropriate to refer to the giving of evidence before a court "which would hardly be called another person". Reference may also be made to the judgment of Clyne J. in Stapleton v. Wilson noted in (1956) QWN 48, Irving v. Whitrod (1978) Qd R 137, Parkes Management v. Perpetual Trustee Co. Limited (1979) 4 ACLR 63 at 64-5 and Federal Commissioner of Taxation v. Nestles Australia Limited [1986] FCA 368; (1986) 69 ALR 445 at 450. In the latter case it was held that subsec.16(2) of the Income Tax Assessment Act could not avail the Commissioner in his assertion that it rendered him or his officers immune from the processes of discovery and inspection.
24. Subject to one matter relied upon by Mr Rowland and counsel for the plaintiffs to distinguish the present case from those referred to, it would seem that there is a clear preponderance of authority for the view that the words "to any person" do not apply to a court. The point of distinction relied upon was based upon the provisions of para.(b) of subregulation (1) which authorises the divulging of the record to a Board appointed to investigate the incident to which the evidence relates. It was submitted that in, the language of the draftsman of the regulation, such a Board was a person. This, so it was submitted, was sufficient to warrant the conclusion that the word "person" was intended to have a wider meaning than had been given it in the cases to which reference has been made. In ordinary language a quasi judicial body such as the Board referred to in para. (b) would not be considered to be "a person". But it was said that the presence of it along with the other persons and office holders mentioned in the regulation ought lead one to conclude that the word "person" was intended to cover all persons and bodies other than those expressly excepted with the consequence that courts were excluded from those to whom documents might be divulged.
25. I see the force of the considerations underlying this argument but I think that it ought to be rejected. The provisions of regulation 15 are intended to achieve a situation in which people interviewed by an inspector or investigator may give information knowing that the information they give will not be divulged to others. But excepted from those who may not have the information are the Secretary of the Department and the Minister. Regulation 16 provides that the inspector may prepare a report concerning an incident being investigated and give it to the Secretary. At the conclusion of an investigation the inspector must prepare a report setting out the results of the investigation.
26. Part 4 of the regulations provides for Boards of Marine Inquiry. The functions of the Board are to investigate the incident in relation to which it is appointed, to identify the circumstances in which it occurred and to determine its causes; see regulation 19. Regulation 21 provides that if the Inspector or an investigator has investigated an incident in relation to which a Board has been appointed, the Inspector must, as soon as practical, provide to the Board all information that he has obtained and copies of all reports prepared under regulation 16. The Board has wide powers. It may authorise persons to enter premises (regulation 26), it may issue search warrants (regulation 27) and it may issue summonses requiring witnesses to appear before it (regulation 28). Although the regulations do not appear to contain any provision expressly dealing with the matter, it would seem from the way in which Boards are constituted, that they would normally sit in public. Certainly they would have power to do so.
27. Despite the reasons which there are for the presence of regulation 15 in the regulations, the regulations relating to investigations by the Inspector and investigators and the provisions of the regulations relating to marine inquiries show that disclosures made by persons interviewed in the course of an investigation may become public. The very procedure which is set in train may well lead to that occurring. No person interviewed can therefore safely assume that what he or she says will not or may not eventually become public.
28. Courts entrusted with the task of settling disputes between citizens have an important public function. There is a public interest in the proper administration of justice. The powers of courts to compel the production of documents have an ancient origin and have been restated and, in the case of courts having a statutory origin, re-enacted many times. This Court's powers to compel the production of documents are provided for in the Federal Court of Australia Act 1976 (s.38 and para. 59(2)(d) and the rules made pursuant thereto (Order 27). One would not lightly infer that those powers were circumscribed in any way. That is why the legislature, when enacting the Income Tax Assessment Act 1936, has been careful to include in s.16 an express provision limiting the powers of courts to compel the production of documents. Even so, the courts have nevertheless held that the Commissioner remains, in an appropriate case, obliged to give discovery of documents in a case in which he is a party; the Nestles case (supra).
29. The courts themselves have been conscious that there may be cases in which Crown privilege should be afforded to some documents. Public interest immunity very often provides a reason why a court will not require the Crown or an instrument of the Crown to produce documents. But that ground is expressly not relied upon in this case.
30. The analysis of the regulations which I have made establishes that persons interviewed by investigators can have no confidence that what they say will not become public. That circumstance coupled with the broad public interest which there is in the administration of justice leads me to conclude that nothing in regulation 15 was intended to impair the courts' ordinary powers to compel the production of documents in a civil case which is to be heard by it. Whether one decides the matter upon those broad considerations or simply takes the view that, despite the reference to Boards of Marine Inquiry in the regulation, "any person" does not refer to a court, is immaterial. In my opinion the regulation does not provide any basis for the denial of the ordinary entitlement to inspect documents which a party issuing a subpoena has.
31. The regulation is headed "Confidential". There may be reasons why, at
least for the time being, some order should be made restricting
the persons
who are to have the right to inspect the documents. If that matter is of
concern to the Department, I shall hear Mr
Rowland on the form of the
appropriate order. But subject to that matter, the documents produced by the
Department will be made
available for inspection by the defendant and its
legal advisers.
The Plaintiffs' Solicitor's Documents
32. I turn to consider the documents produced by Mr Hetherington. Counsel for the defendant approached the matter in two ways. He submitted that I should not be satisfied that the notes comprised in Marked for Identification "D" came into existence solely for the purpose of meeting an anticipated claim for the loss of the cargo. He also said that the notes were of interviews with critical witnesses. They were records of what these witnesses had said shortly after the grounding and for that reason did not form the basis of advice given or to be given the defendant. Notwithstanding that the notes were made by a solicitor, they were in effect an investigator's notes of conversations with material witnesses. The Court should not be denied the benefit of these when it comes to the task of determining how the grounding occurred.
33. In support of his submissions that the notes were not made for the sole
purpose of meeting or anticipating a claim by the owners
of the cargo, counsel
for the defendant specified a number of additional purposes which he said Mr
Hetherington would probably have
had. These were:-
1. Whether the P. and I. Club liable to pay for the damage may34. Of course the defendant carries no onus in this matter. It is for those claiming the privilege to establish its existence. That was the purpose of Mr Hetherington's affidavit to which I have earlier referred.
have agreed to pay without resort to litigation. Litigation
was only one of a number of possible eventualities.
2. The consideration of what role the P. and I. Club and Sanko
should take in relation to the clean-up operation that would
be necessary. Again this may not necessarily have involved
litigation. If steps had been taken quickly to assist in
the clean-up process, litigation would or might have been
avoided.
3. The consideration of the question whether or not security
should have been offered in respect of the claim for the
cargo loss. Again this would not necessarily have led to
litigation.
4. The consideration of what should be done in relation to the
Departmental inquiry into the casualty. This either did not
involve litigation or might not necessarily do so.
35. In my opinion the problem which confronts the defendant is the clear evidence given by Mr Hetherington of the purpose for which his notes came into existence. It is true that, at the time they were taken, the cargo had not been lost. It was certainly in danger, but the vessel had not then broken up. Nevertheless it was highly likely, even if it had been possible to get the vessel off the reef and salvage it, that there would have been a cargo claim. As it happened, the vessel did break up and the cargo was lost. A claim in respect of the loss of it was made on 19 February only five days after the grounding.
36. Mr Hetherington was cross-examined but the cross-examination did not affect the statements he made in paras. 4 and 5 of his affidavit which I have earlier quoted. In particular nothing that he said about his sole purpose in making the notes being to advise Gard and Sanko as to the cause of the grounding and their potential liability or the interviews being conducted solely with a view to ascertaining the cause of the sinking and advising Gard and Sanko as to their potential liability was affected by the cross-examination. I am satisfied that I should accept his evidence. I am re-inforced in this conclusion by the fact that the circumstances of the case and the probabilities support the view that Mr Hetherington was acting as he said he was. I would therefore reject the first basis upon which counsel for the respondent sought inspection of the notes.
37. Although the notes were of interviews with material witnesses, their character has been established as notes which came into existence solely for the purpose of dealing with and advising on an anticipated claim. It is true that, if they were explained by Mr Hetherington, they would probably amount to notes of interviews he had with material witnesses as to the facts of the matter, that is as to what occurred on the vessel prior to and at the time of the grounding. But, as I understand the authorities on this question, if a solicitor takes statements from witnesses solely for the purpose of advising his or her client in relation to an anticipated claim either to be made by or against the client, the statements are privileged. I was much pressed by counsel for the defendant about this matter. He relied strongly on the decision of Wood J. of the Supreme Court of New South Wales in Nickmar Pty. Limited v. Preservatrice Skandia Insurance Limited (1985) 3 NSWLR 44. But, having read that decision I do not consider that Wood J. decided the matter before him inconsistently with my own understanding of the law.
38. In the result Mr Hetherington's notes will not be made available for inspection by the defendant. They have been marked for identification "D" as I have said and they will be returned to Mr Hetherington but should be retained by him intact in case of any further need to refer to them.
39. In summary therefore the documents produced by the Department will be made available for inspection by both parties. The documents produced by Mr Hetherington will not be made available to the defendant. In the circumstances there will be no order as to the costs of any party to these applications.
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