More on Law Institute records and public interest immunity

I have previously posted about Justice Pagone’s rejection of the Law Institute’s blanket invocation of public interest immunity to excuse production of documents required for production under a statutory power of compulsion available to the Tax Man.  Now his Honour has decided the case based on the kind of specific arguments he considered to be necessary: Law Institute of Victoria Limited v Deputy Commissioner of Taxation (No 2) [2009] VSC 179. The documents sought by the Tax Man were divided into 3 categories:

  • The first were documents about the practice history of the solicitor of interest to the Tax Man, which included copy practising certificates, records of when the solicitor held a practising certificate, and of what kind, and change of address forms.
  • Secondly, the Tax Man sought records of audits of the solicitor’s trust accounts;
  • Thirdly, he sought ‘all records in respect of the cessation of [the solicitor’s] registration as a practising lawyer, including documents stating Mr Kephala’s election not to renew his practising certificate, or notification of his ineligibility, or notification of the requirement for investigations to be conducted before it could be renewed.’

His Honour held that the first and third documents were not protected by public interest immunity, but the second was.  The reasons in relation to the audit documents are set out below.  Some of the documents produced by the Institute contained information to persons other than the solicitor in whom the Tax Man is interested.  His Honour also hinted strongly that a responsible regulator ought to advise them that information relating to them was proposed to be produced to the Tax Man, and that the Institute had not done so.  His Honour contrasted that course with that adopted in Federal Commissioner of Taxation v Coombes (No 2) (1998) 160 ALR 456.His Honour’s reasons for recognising a public interest privilege to disentitle the Tax Man from inspecting the audit documents produced by the Institute were:

‘9 The second category of documents sought in the Notice are in a different position. The second category of documents sought by the Commissioner are all records of any audit conducted in respect of [the solicitor]’s trust accounts and the errors/discrepancies revealed. The LIV has identified 35 documents falling within this category which have been filed with the Court as Schedule 2 in a confidential exhibit and marked 1B to 35B. All of these documents were produced as part of the LIV discharging its statutory function of regulating the legal profession. All of these documents came into existence in the expectation that they would be kept confidential. None of the documents were prepared in contemplation that they might be made available to the Commissioner or might in some way bear upon or affect [the solicitor]’s taxable income. Many of the documents contain conclusions and opinions from source documents which may readily be available to the Commissioner directly from others. The opinions and conclusions in the documents in Schedule 2 were expressed and drawn for the statutory function exercised by the LIV and not for the quite different function to be exercised by the Commissioner.

10 The disclosure of the information and content of these documents does interfere with, and potentially damages, the discharge of the duties and functions by the LIV in the regulation of the legal profession. The considerations arising in the preparation of an audit for the LIV in the context of its statutory duty and function to regulate the legal profession are different from those arising in an audit to determine the taxable income of a solicitor from his or her practise. The disclosure to the Commissioner of documents prepared in the discharge of the LIV’s duties and functions carry with it the risk that the discharge of the LIV’s function needs to take into consideration the potential impact on matters otherwise, and properly, wholly extraneous to the LIV’s statutory task. There may be circumstances when it would nonetheless be proper for disclosure to the Commissioner of documents created by or for the LIV in the exercise of its statutory duty and function. However, I do not consider this to be one such case. The reports themselves are all based upon other material. The conclusions drawn by the auditors are conclusions and opinions by the auditors for the LIV’s statutory task and do not establish anything independently of the source documents beyond opinions or conclusions wholly drawn for the LIV’s statutory function. These documents contain no more information than the Commissioner could create himself by undertaking the task of having someone analyse source documents. The Commissioner has not sought to rely upon any material in support of disclosure of these documents beyond a power to require the documents, the existence of an audit and the possibility that these documents might be of assistance. He has not sought to assist the Court by indicating (either in an open affidavit or by some confidential affidavit or exhibit) what source information is currently available to the Commissioner, what steps have been taken by the Commissioner to obtain the source information, or whether the need to secure the conclusions drawn from these documents are more likely to assist the Commissioner than for the Commissioner to draw his own conclusions and himself undertake the work which the LIV’s auditors have done. In short, no material has been put before me on behalf of the Commissioner beyond an assertion of power, the existence of an audit, and the possibility that disclosure of the documents might be of assistance, from which I should conclude that the balance of competing interests favours disclosure of these documents to the Commissioner. In my opinion the balance I must strike in this case favours the preservation of them from disclosure. To disclose these documents, in the absence of anything tipping the balance in favour of the Commissioner, adversely interferes and affects the public policy evident in the acquisition of the documents by the LIV with an obligation to keep them confidentially.

11 Some of the documents in this category were supplied to the LIV by [the solicitor]. I assume that, for example, copies of correspondence between [the solicitor] and the LIV are available to the Commissioner from [the solicitor]. None of the affidavit material relied upon by the Commissioner has indicated any difficulty in obtaining any such information from [the solicitor]. Requiring the LIV to provide documents which the Commissioner can, I assume, readily obtain directly from [the solicitor] potentially interferes and damages the proper workings of the LIV in the discharge of its functions and duties. A different conclusion might be required if the Commissioner had been frustrated in his attempts to obtain material shown to be probative, or likely to be probative, for his statutory task and which could only be obtained from the LIV. This is not such a case. It may be that the Commissioner is entitled to undertake fishing enquiries but when such fishing expeditions are undertaken in waters attracting public interest immunity it is, in my view, not enough for the Commissioner to rely only upon power, the fact of an enquiry and the possibility that there might be fish in the pond, to tip the balance of the competing public interests in his favour.’

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