K-Generation Pty Ltd & Anor v Liquor Licensing Court & Anor [2008] HCATrans 197 (23 May 2008)

Last Updated: 29 May 2008

[2008] HCATrans 197

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A44 of 2007

B e t w e e n -

K-GENERATION PTY LTD

First Applicant

GENARGI KRASNOV

Second Applicant

and

LIQUOR LICENSING COURT

First Respondent

COMMISSIONER OF POLICE

Second Respondent

Application for special leave to appeal

KIRBY J
HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

FROM MELBOURNE BY VIDEO LINK TO ADELAIDE

ON FRIDAY, 23 MAY 2008, AT 10.12 AM

Copyright in the High Court of Australia

MR S.C. CHURCHES: If it please the Court, I appear for the applicant. (instructed by Starke Lawyers)

MR C.J. KOURAKIS, QC, (Solicitor-General for the State of South Australia): If the Court pleases, I appear with my learned friend, MR J.P. McINTYRE, for the respondent. (instructed by Crown Solicitor’s Office (SA))

KIRBY J: Yes, Dr Churches.

MR CHURCHES: Your Honours, this application is appropriate for a grant of special leave to enable this Court to determine whether an Australian legislature may enact provisions that order – and note “order” – a Chapter III capable judge to make a final determination at trial level, such determination going to good name and reputation on the basis of evidence not disclosed and described as not to be disclosed to the affected party.

KIRBY J: We know what the issue is and we have read the submissions. The submissions were written before this Court had delivered its decision in the Gypsy Jokers Motorcycle Case from Western Australia, which you both refer to. That decision has now been delivered. What is your submission as to the point of distinction between this case and the Gypsy Jokers Case, given the determination of the Court in the Gypsy Jokers matter?

MR CHURCHES: Yes, your Honour. If I could just check that your Honours have received the combined material compiled by both parties.

KIRBY J: Yes, we have a file of combined materials, but there were no supplementary submissions, I think, following the Gypsy Jokers decision.

MR CHURCHES: No, your Honour. Page 96 of the materials book is the relevant page of the joint judgment in Gypsy Jokers, your Honours, and then we see the relevant Western Australian legislation set out on the left-hand column at paragraph [30]. It is section 76(2). Then we see what the joint judgment said in respect of that section in the right-hand column at B on the right there, the point being that the joint judgment is clear that there remained a discretion in the Supreme Court. The joint judgment says:

it is for the Supreme Court to determine upon evidence provided to it whether the disclosure of the information might have the prejudicial effect spoken of in the subsection.

We go back to the relevant subsection on the left-hand column:

The Commissioner of Police may identify any information provided to the court . . . as confidential if its disclosure might prejudice the operations of the Commissioner of Police -

So far that is the Commissioner of Police’s determination, but the majority judgment, or the joint judgment, is quite clear that there is a discretion retained in the court as to how it will deal with the secret material or confidential material. In our submission, your Honour, that is totally different from the wording of the South Australian legislation, section 28A, which is set out in the materials book at page 24. Section 28A(1) and (5) make it quite clear that there is no discretion in a court whatsoever. Subsection (1):

No information provided by the Commissioner of Police to the Commissioner –

that is, the Liquor Commissioner and, of course, the Liquor Court then sits on a merits review from the Liquor Commissioner –

may be disclosed to any person (except the Minister, a court or a person to whom the Commissioner of Police authorises its disclosure) if the information is classified by the Commissioner of Police -

So there is a total withholding from any capacity in the court to release. That is amplified by subsection (5):

In any proceedings under this Act, the Commissioner, the Court –

that is the critical word there, that is the Liquor Court –

or the Supreme Court –

on appeal –

must –

note “must”. None of the other case law that my friends rely on has a “must” in it. There is always in the other cases a discretion at some point, but here the court:

must, on the application of the Commissioner of Police, take steps to maintain the confidentiality of information classified by the Commissioner of Police as criminal intelligence –

Furthermore, that has all got to be conducted –

in the absence of the parties to the proceedings and their [legal] representatives - - -

KIRBY J: We think we might be assisted at this stage – we may come back to you, Dr Churches – by hearing from the Solicitor-General.

MR CHURCHES: Thank you, your Honours.

MR KOURAKIS: Your Honours, a proper appreciation of section 28A depends on a number of other interrelated provisions, but before taking your Honours to them in a just moment, I just say the effect of those provisions is that neither the Licensing Commissioner and administrative body, nor any court, is required to receive information that is classified by the Commissioner. If the Commissioner classifies information, the scheme shows that it remains for the Licensing Commissioner and the court – they retain the discretion to receive it or not. Plainly, the consequences required by the legislature in section 28A to maintain the confidentiality of that information may well affect, indeed critically affect, the decision to receive it or not. Just to make those points good, can I ask your Honours to go first to section 51A - - -

KIRBY J: This is, is it not, something relatively new? Under legislation a court which has to be capable of receiving federal jurisdiction is required, at least authorised, but probably required, to receive evidence which is not disclosed to the party whose interests are involved and which will be affected by a decision based upon it. So we are really moving into a position of courts acting on secret and undisclosed evidence. That surely is something that is quite important.

MR KOURAKIS: Your Honour, it is important. My concern is that on a proper construction - - -

KIRBY J: We have a difference in the Full Court and there does seem to be an arguable distinction from Gypsy Jokers which, in the end, went off on the interpretation of the Western Australian legislation, and there is an arguable similarity to the Queensland legislation which was struck down by the unanimous decision of the Court of Appeal of Queensland. So it has a lot of hallmarks of a special leave grant.

MR KOURAKIS: Your Honour, my concern is only to draw your Honours’ attention to certain statutory provisions which, in my submission, will ultimately have the same consequence that the Western Australian Act properly construed had in Gypsy Jokers. The consequence is that the constitutional question will fall away. Your Honours, the Act does not require the information to be received. It certainly does authorise it.

KIRBY J: Where are you referring to? We had better have a close look at the statute. What is the page you are referring to? This is in the Liquor Licensing Act, is it?

MR KOURAKIS: Yes.

KIRBY J: Very well. What section?

MR KOURAKIS: Section 51A(3) is the provision which obliges the Commissioner to provide information about convictions and it gives the Commissioner of Police a discretion to provide other information to the Licensing Commissioner whenever an application is received. At this stage there may not even be a contested hearing. The information under 51A is provided in the same way that information may be provided to a court by subpoena, but, of course, not necessarily received. All 51A does is have the information provided to the Licensing Commissioner and administrative tribunal.

If we go to 28A(1), your Honours, that provision was enacted at the same time as 51A and plainly on its terms subsection (1) refers to information provided under 51A and no more. At this stage, no material has been received in evidence. Section 28A simply requires the information, not evidence, provided administratively to be kept confidential.

Your Honours, the power of the Commissioner to receive evidence and inform himself or herself is found at section 18 and the power of the Licensing Court at section 23. But unless either the Commissioner or the Licensing Court choose in their discretion to inform themselves for the purpose of any issue before them by reference to confidential information, they will not, and it will remain therefore a very relevant and, as I said earlier, if not critical consideration to the Commissioner that if the information is received, 28A in its own terms, not by action of the Commissioner but by legislative command, will require in any subsequent proceedings the maintenance of certain confidentiality of that information.

Your Honours, if I can skip over subsections (2), (3) and (4) by simply saying this. Section 28A(2) concerns reasons and it does not oblige a court to keep information out of its reasons. It simply provides that it is not an error for the court to do anything more than refer to the public interest in any decision it makes.

KIRBY J: Yes, but where is the power, as there was held to be in Gypsy Jokers, in the court to reach its own determination which might be contrary to and different from that of the Commissioner?

MR KOURAKIS: As to whether the information is confidential, there is not and that is a point of distinction. But the discretion that this Act gives is not to receive the evidence at all and if the information, which must - - -

HAYNE J: So if there is a discretion not to receive information that is relevant to the grant, is that the point you are making?

MR KOURAKIS: Yes.

HAYNE J: It is a rather quaint discretion, is it not, that a body should be empowered to choose not to receive information which, by hypothesis, is relevant to the decision which it is called upon to make? That is the key point you seek to make, is it?

MR KOURAKIS: With respect, your Honour, it is neither quaint nor unusual. The common law itself excludes much evidence that is relevant, hearsay of course being the most obvious example, but equally the common law excludes relevant information if its receipt would have a prejudicial effect on the hearing. The submission I make is no different to that, no different to very accepted, common law methods of proceeding in a hearing.

KIRBY J: Yes, but that really is not, at least at the moment, in my thinking, a good analogy because the common law arguments are then fought out in the well of the court on the basis of knowledge, whereas here the information must not be disclosed and, therefore, how can it be contended that the court should not receive it? The very complaint of the applicant is that there is a serious procedural unfairness, an injustice here because they may not know that the court has received it and they will not know what its content is.

MR KOURAKIS: Your Honour, they must know that the court has received it. It will not be received unless someone hinders it, asks the court to have regard to it. The contents of the information, if the court receives it, will be kept confidential but the court will not make an order adverse to any party unless - - -

KIRBY J: How can the party affected adversely by it make sensible submissions about it without knowing what the contents are?

MR KOURAKIS: As to whether the authority should receive the evidence, the submission the party will make is that it should not receive it because the party will not have any opportunity to test it and for that reason it should not be received.

HAYNE J: How does that arise in this matter where the court in fact received the information? How does that theoretical possibility to which you refer have any relevance to the present application?

MR KOURAKIS: Your Honour, if the challenge that the applicant had taken was to the lawfulness or correctness of the decision to admit and receive the evidence and have regard to it, that question would arise and could have been agitated before the Licensing Court. The Licensing Court, for example, could well have decided that it was wrong to receive evidence of that nature, having looked at it, that it could not be disclosed under section 28A to the other party. And, ultimately, judicial review of the Licensing Court’s decision could be taken if one of the grounds for judicial review could be shown. But in this case that objection was not taken.

No objection was taken to the receipt of the material. Indeed, before the Commissioner and the Licensing Court it was accepted that the court should have regard to it and act on it. On judicial review no point was taken on the decision to receive the evidence. The point below was simply that, having received the evidence, it ought to have been disclosed. The response to that is that section 28A, Parliament’s instruction, is that it was not to be disclosed and that is how - - -

KIRBY J: Yes, you keep referring to Parliament’s instruction, but you know as well as we do that Parliament’s instruction is subject to the Constitution and the point that is now being raised is that this instruction is an invalid instruction because, given to a court that must be able to receive federal jurisdiction, it is instructing the court to act in a way that is alien to the exercise of judicial power, as the Constitution postulates.

MR KOURAKIS: Your Honour, I meant no more by that other than to explain how that constitutional question arose given the course of the proceedings below. It having arisen, the point that I now make is that on a proper construction of the Act there is a protection for which reason that the scheme is valid and that is that the Licensing Commissioner and the Licensing Court have a discretion to exclude the evidence.

HAYNE J: And where is that discretion to exclude the evidence, where statutorily?

MR KOURAKIS: It is in sections 18 and 23 for the Commissioner and the court - - -

KIRBY J: Section 18 is only a section that says they have to act economically and quickly. It seems to be a very high level of generality.

MR KOURAKIS: Your Honours, it does not have the phrase - - -

KIRBY J: “Act without undue formality”, “not bound by the rules of evidence but may inform” itself “as the Commissioner thinks fit”.

MR KOURAKIS: Exactly. That means that it can decide not to have regard, as the Commissioner can - - -

KIRBY J: There is an air of unreality about that submission, Solicitor, given that in an application before the Commissioner, the Commissioner will not receive evidence which is said to be highly critical of the applicant and relevant to the subject matter to be decided.

MR KOURAKIS: Your Honour, it would not, with respect, be in any way unreal or surprising for the Licensing Commissioner or the Licensing Court to say, notwithstanding its apparent relevance, it will not be received because its prejudicial effect will far exceed any probative value given the command in section 28A not to disclose it. It would be a perfectly acceptable submission and authorised by the Act.

If I turn, your Honours, to section 58A(5) simply to make this point. Despite the mandatory language in the use of the word “must”, the section, in my submission, properly construed would read, must on the application of the Commissioner of Police take steps that in the opinion of the court are necessary to maintain the confidentiality mandated by section 28A(1) of the information classified by the Commissioner.

HAYNE J: What have you just done, Mr Solicitor? What have you just done with the last clause of that paragraph other than ignore it or read it out of the Act, “including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives”? What effect are you giving to those words, Solicitor?

MR KOURAKIS: Your Honour, the effect that a judge of the court thinks they ought to be given insofar as those steps, including receiving evidence in private, are necessary to maintain the confidentiality mandated by section 28A. That section could not be construed consistent with common law principle in a way that would require a court to adopt whatever suggestion was made in an application by the Commissioner of Police. In fact, the reading in, with the greatest respect, your Honour, is no different to the reading in of the words in section 76(2) in Gypsy Jokers, the steps that - - -

CRENNAN J: But it is all directed to achieving the result that the court never has an opportunity to review the Commissioner’s categorisation of
the documents as confidential. That is excluded by the very terms of the sections you are relying on.

MR KOURAKIS: Yes. I accept, your Honours – and this case does raise the constitutional point insofar that that is so – that there is no discretion to review the classification as confidential. As I have already said a number of times, your Honours, in my submission, the retention of a discretion to exclude it altogether is what saves the provision constitutionally, if the Court pleases.

KIRBY J: It may be that that is a matter which we will have to look at. Is there anything else you want to say?

MR KOURAKIS: No, if the Court pleases.

KIRBY J: Dr Churches, is there anything that you need to say in reply?

MR CHURCHES: No, your Honour, only to note that the discretion apparently begins at section 51 - - -

KIRBY J: What do you say about the point that the Solicitor raised that you have lost this point in your case because you did not take the objection to the material being received, that you should have preserved your rights at that point and once it was received, it is too late to be arguing it in this Court?

MR CHURCHES: As I understand it – and I must say this is a very new point in argument – as it has unfolded today, section 51A(3)(b) is the critical provision and that provides that the Commissioner of Police “may make available to the Commissioner” – that is, the Liquor Commissioner – “other information”, that of course being the criminal intelligence. Now, I assume that that is the basis of the argument for a discretion in the court. That misfires, in our submission, immediately, your Honours, because it is a discretion apparently available between the Police Commissioner and the Liquor Commissioner. The Liquor Commissioner is the beginning of a conveyer belt and by the time the matters get to the Liquor Court, the die is cast.

Whether or not my predecessor should have objected at the very beginning of all this in front of the Liquor Commissioner is neither here nor there. By the time it had got to the Liquor Court staffed by a District Court judge the evidence was well and truly afloat. It is going to be very difficult at that point to start resisting the bundle of materials that came over, of course, the file that came from the Liquor Licensing Commissioner’s office, which contained - - -

HAYNE J: I would have thought, Dr Churches, the answer you have is rather narrower and simpler than the one you are dealing with. It is that the proposition that the court could refuse to receive the material on the basis that its receipt is unfair is itself demonstrative of the constitutional infirmity alleged, that is, a court armed with power to receive information of this kind which cannot be tested by the court or by the parties as falling within the requisite category but must be kept secret from the parties and from their representatives, tenders itself the constitutional issue which is sought to be agitated.

MR CHURCHES: Yes, thank you, your Honour.

KIRBY J: Very well. Now, let us have a look at your ground of appeal. You propound this in a somewhat curious way by quoting the Full Court. Solicitor, is there any comment by you on the ground of appeal propounded? It is on page 94 of the application book. It is a sort of double negative really, “does not impose on the Licensing Court a procedure which is constitutionally incompatible”, instead of propounding a positive statement of the error which is contended in the decision of the Full Court which this Court is being asked to consider on appeal. Perhaps you and Dr Churches could have a word during the next hearing and see if you can come forward with some shorter and clearer statement of the Kable type objection. Are you prepared to do that, Solicitor?

MR KOURAKIS: Yes, your Honour. It does not cause me any difficulty but it might help define the issue better if we work on that.

KIRBY J: Yes, I think it might be desirable that it is put in terms of the parties rather than in the language which it is being negative of the Full Court.

Subject to the ground of appeal being clarified – and that can be announced at the end of the next application – the Court will grant special leave. This matter will be heard by a Full Court – that means that it will be heard after the appointment of the incoming Chief Justice, probably after August – in September or October. Have the section 78B notices been given? They are not in the application book.

MR CHURCHES: I am instructed that they were issued in time and we have a proof of service which has been delivered to the Crown, your Honour.

KIRBY J: Yes, I have just been handed a proof of service of the 78B notices, but it would be necessary to renew notice to the potential interveners of the grant of special leave. I assume that this would be a one-day case, is that correct, depending on the number of interveners?

MR CHURCHES: I think the answer to that, your Honour, will depend how many interveners want to be heard. The States may well - - -

KIRBY J: How long did Gypsy Jokers take for hearing, do you remember?

MR CHURCHES: Just over a day, your Honour.

KIRBY J: It may be that it will take a little more than a day. We will note that. You can announce any new form of the ground of appeal at the end of the next application.

MR CHURCHES: May it please the Court.

AT 10.38 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.58 AM:

KIRBY J: Dr Churches, have you an alternative formulation?

MR CHURCHES: Yes, your Honour; I am indebted to my learned friend, the Solicitor-General, as it has been substantially his drafting. If I could read - - -

KIRBY J: I am afraid I cannot hear you, you are breaking up.

MR CHURCHES: I am sorry, your Honour. Ground 2 – that is, paragraph 2 of the draft notice of appeal – should now read:

The Full Court erred in law in finding that section 28A of the Liquor Licensing Act –

and then delete everything thereafter and insert –

is valid insofar as it requires the Liquor Licensing Court to hear and determine a review pursuant to section 23 of the Liquor Licensing Act without disclosing to the applicant information classified as “criminal intelligence”, relied on by the Liquor Licensing Commissioner in refusing an application for a licence.

KIRBY J: You are content with that formulation, Solicitor?

MR KOURAKIS: Yes, your Honour.

KIRBY J: Very well. You will have that engrossed and sent to the Court as an amended ground. You have leave to make that amendment and the Court grants, as I announced earlier, special leave to appeal on that ground. The matter will not be heard until September and we will report that it will take a day and perhaps a little more.

That concludes the Adelaide list.

AT 11.00 AM THE MATTER WAS CONCLUDED