NSW Court of Appeal considered Public Interest Privilege

The recent decision of the New South Wales Court of Appeal in Ku-ring-gai Council v Garry West as delegate of the Acting Director-General, Office of Local Government [2017] NSWCA 54, considered the question of public interest privilege and whether documents that fell into a class of documents were excluded by their nature (because they had been submitted to Cabinet) and not their content.

Background

On 6 January 2016 the NSW Minister for Local Government (the Minister) referred a proposal, along with other proposals, to the Acting Chief Executive, Office of Local Government (the Chief Executive) described as ‘for the merger of Hornsby Shire and Ku-ring-gai local government areas north of the M2.’  The Ku-ring-gai Council (the Council) was appellant in the present case.

Section 218F(1) of the Local Government Act (NSW) (LGA) required the Minister to refer any proposal for boundary alteration ‘for examination and report’ to the ‘Boundaries Commission or to the Departmental Chief Executive’. Under section 263(3)(a) of the LGA, the Delegate was ‘required to have regard to…the financial advantages or disadvantages…’ of the proposal.

The introduction to the proposal stated that the proposal was, ‘supported by independent analysis and modelling by KPMG’ and that the analysis by ‘KPMG shows the new council has the potential to generate net [sic] financial savings over 20 years [and]…is expected to generate, on average, around $6 million in savings every year from 2020 onwards…’

When referring the proposal, the Minister had acknowledged that the document had not been made publicly available, or available to the Delegate or Council.   The relevant document, ‘Merger Impacts and Analysis’ had been released in short form, and the short form suggested that the long form document addressed the ‘Long-Term Financial Plans’ for the involved councils. Another document, also prepared by KPMG, entitled ‘Implementation of Local Government Mergers: Business Case’ was also not released.  Together, these documents were referred to as the KPMG documents, and were subject to a claim of ‘public interest immunity’ by the Minister under sections 130 and 131A of the Evidence Act 1995 (NSW) (Evidence Act).  They were not before the Delegate at the time of making his report, nor before the court at first instance.

The Council sought access to the KPMG documents under Schedule 1 clause 2(1)(b) of the Government Information (Public Access) Act 2009 (NSW) on 8 January 2016.  Clause 2(1)(b) is in some ways similar to Schedule 3 Clause 2(1)(a) of the Right to Information Act 2009 (Qld).  The Director of the Department of Premier and Cabinet said that the documents were ‘prepared for submission to Cabinet and submitted to Cabinet regarding proposed local government reforms.’

The Council brought an application before the New South Wales Supreme Court on 22 March 2016 seeking judicial review of the report. The Supreme Court transferred the matter to the Land and Environment Court where it was dismissed by Moore J.

Having been unsuccessful in obtaining the KPMG documents prior to the completion of the Delegate’s report, the Council issued notices to produce in court proceedings. Objection was made by the Minister to the notices and an order sought under sections 130 and 131A of the Evidence Act to be excused from producing the documents on the grounds that it would be ‘injurious to the public interest to produce [them]’. The objections were upheld by His Honour Justice Moore in the Land and Environment Court.

On appeal, a number of the relevant questions turned on whether the primary judge was correct in upholding a claim of public interest immunity to the production of documents recording analysis of the financial advantages and disadvantages of a merger proposal.

Section 130 and 131A of the Evidence Act concern the exclusion of evidence of ‘matters of state’. This section allows a court to direct that information or a document not be adduced as evidence where the public interest in in adducing the document or information is outweighed by the public interest in preserving secrecy or confidentiality.  On appeal, Basten JA noted that the section ‘only applies if the appellant could rely upon the KPMG documents at the trial and sought to tender them into evidence.’

It was argued by Counsel for the Minister, that is was necessary to weigh the public interest in preserving secrecy and confidentiality against the public interest in the production of the document to the party issuing the notice.  The KPMG Documents fell into a class of documents which were excluded by their nature (being submitted to Cabinet) and not their content.  As such, the immunity was justified in that documents were excluded by their nature and could not be disclosed as disclosure might prejudice the ability of Ministers and Cabinet to obtain full and frank advice.

His Honour Justice Basten noted that it had been held, time and again, that section 130 ought to be interpreted in light of the analogous common law, and that section 9 of the Evidence Act required that it be.  Discussing Commonwealth v Northern land Council (1993) 176 CLR 604, and Sankey v Whitlam (1978) 142 CLR 1, his Honour noted that the court ought not to treat all documents sought to be excluded by their nature as entitled to the same protection.  The appropriate course, his Honour observed, was to scrutinise the rationale for such protection. His Honour noted that it was incoherent to assert that any documents presented to Cabinet to support the amalgamation of local government areas, the proposal of which had to be referred to the Chief Executive, should not be disclosed, particularly where the proposal expressly relied on financial information which was derived from the documents submitted to Cabinet.  His Honour also noted that KPMG would have produced its documents, knowing their use, on the assumption that the government may produce those documents.  As such, it was ‘fanciful’ in his Honour’s view, to submit that frankness of advice might be compromised.  His Honour noted that there were many factors for, which far outweighed those against, the public interest in the production of the documents.  His Honour held that the orders made at first instance upholding the application to excuse production of the documents should be set aside.

The position of the majority of the judges in the appeal court is best summarised by paragraphs [94]-[95] of the judgment:

In this case, the public interest in preserving confidentiality is so qualified as to carry little weight, and is inadequate to outweigh the public interest in the production of the documents.

Points to note

1. A document  submitted to cabinet may not always attract public interest privilege
2. The court will scrutinise the reasons as to why the protection is being claimed and may not exclude the document from production simply because of the nature of the document.

If you have any concerns with respect to claiming any type of privilege over a document or are served with a non-party disclosure notice and need assistance responding to it, please contact Paula Freeleagus on 30068141 of the Commercial Dispute Resolution Team.

^{The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.}