6.1 Letters Patent were originally issued on 10 November 2005. Appendix 2 is the Letters Patent in their final form, consolidated to include all subsequent amendments.
6.2 On 3 February 2006, having heard evidence relating to a transaction known as the 'Tigris transaction' (also referred to as the 'Tigris debt'), which involved AWB Limited and other companies not referred to in the Independent Inquiry Committee's final report, I gave reasons why I regarded it as appropriate to approach the Attorney-General seeking an extension of the terms of reference to enable me to make findings in relation to all parties involved in the Tigris transaction, not just AWB.[314] On 3 February 2006 I wrote to the Attorney-General enclosing a copy of my statement and a draft of the extended terms of reference sought. Shortly stated, it seemed to me to be incongruous and inappropriate that, in examining the Tigris transaction, which involved three Australian companies, I could make findings regarding one only, as it was the only one of the three referred to in the IIC's final report. Figure 3.1 in Appendix 3 is a copy of the letter and the statement of 3 February 2006 together with the suggested extended terms of reference.
6.3 On 6 February 2006 Letters Patent amending the original Letters Patent were issued.
6.4 On 3 March 2006 I wrote again to the Attorney-General, requesting an extension of time to report until 30 June 2006 (Figure 3.2 in Appendix 3).
6.5 On 10 March 2006 Letters Patent amending the prior Letters Patent by extending the time for reporting to 30 June 2006 were issued.
6.6 On 8 March 2006 Senior Counsel for AWB Limited questioned the width of the words 'decision, action, conduct, payment or writing'. He contended that unless such 'decision, action, conduct, payment or writing' was mentioned in the IIC's final report, it was beyond my terms of reference.[315] He further contended that it was not open to the Inquiry to investigate or report on internal inquiries made by AWB or its employees or consultants, or the response of AWB to the outcome of such inquiries, or the IIC final report. I did not agree with either submission. Nonetheless, for the avoidance of any uncertainty I requested amended Letters Patent to clarify the expressions used.
6.7 On 9 March 2006 I wrote to the Attorney-General seeking certain amendments clarifying, and if necessary expanding, the terms of reference to incorporate matters that, in my view, fell within the existing terms of reference. Figure 3.3 in Appendix 3 is a copy of my 9 March 2006 letter.
6.8 On 17 March 2006 Letters Patent amending the prior Letters Patent were issued.
6.9 On 15 June 2006 I wrote to the Attorney-General requesting an extension of time to report until 29 September 2006 (Figure 3.4 in Appendix 3).
6.10 On 22 June 2006 Letters Patent amending the prior Letters Patent by extending the time for reporting to 29 September 2006 were issued.
6.11 On 21 September 2006 Letters Patent amending the prior Letters Patent by extending the time for reporting to 24 November 2006 were issued.
6.12 The terms of reference require me to consider whether there might have been breaches of State laws. They also require me to decide whether, should I find there might have been a possible breach of State laws, the question should be referred to the relevant State agency. Section 6P of the Royal Commissions Act 1902 confers on me a power to communicate information or evidence which the Inquiry may have obtained that 'relates, or that may relate' to a contravention of a law of a State to nominated persons, including the Attorney-General of a State and the Commissioner of Police of a State.
6.13 AWB submitted:
The Commission is authorised by its Terms of Reference to investigate possible breaches of Commonwealth, State and Territory laws. As a matter of constitutional law, it is clear that it cannot investigate State offences unless the Commonwealth would have had power to enact that offence.
The authority for the submission was said to be R v Hughes (2000) 202 CLR 635. It was not clear whether AWB was submitting that I could not investigate and report on whether there might have been a breach of the State laws referred to in submissions-namely, breaches of the Crimes Act 1958 (Vic), in particular ss. 82, 194 and 195.
6.14 I wrote to the Attorney-General, seeking the Solicitor-General's advice on the constitutional issue perhaps raised. Had AWB raised the issue when the Letters Patent were first read at the commencement of the Inquiry-as it should have if it wished to take such a point-and had it been thought there was any validity in the submissions, no doubt the Commonwealth would have approached the Government of Victoria, seeking its agreement to confer upon me State Letters Patent in terms identical to those of the Commonwealth. That is the usual practice to resolve any perceived constitutional difficulties.
6.15 The Solicitor-General advised that there is no basis to doubt the constitutional validity of either the Letters Patent or the Royal Commissions Act 1902.
6.16 I agree with that advice and have acted on the basis that both the Letters Patent issued pursuant to the Royal Commissions Act 1902 and other Commonwealth powers and s. 6P of the Act are constitutionally valid exercises of the power of the Commonwealth.
6.17 The Letters Patent require that I report on whether certain matters 'might have constituted a breach of any law of the Commonwealth, a State or Territory'. This term is identical to that in the Letters Patent establishing the HIH Royal Commission. Justice Owen, sitting as the Royal Commissioner, wrote:
Paragraph (b) of the terms of reference also refers to conduct that 'might' constitute a breach of the law. The question is whether I have the power to make specific findings as to whether, for example, a civil cause of action or a breach of the criminal law has been made out on the evidence. Whatever might be the strict answer to that question, the terms of reference do not specifically require me to make findings of the kind identified. I am not required to decide whether there has been a breach of the law, and I have not done so. The terms of reference require me to determine whether there might have been a breach of the law.
There are several reasons for following that course. First, a finding in those terms would not be binding on or enforceable against anybody. It could become binding or enforceable only as a consequence of subsequent proceedings before or actions by other bodies. For example, a finding that the law has been breached is of no effect until it has been made by a court of competent jurisdiction.
Second, specific findings of that type could give rise to the serious risk of inconsistency with subsequent findings by courts or other bodies whose task it is to make binding and enforceable determinations in these areas. The rules of evidence would apply in any subsequent proceedings; they do not apply in this inquiry. The practices and procedures in the courts before which proceedings might subsequently come will be quite different from those adopted in the inquiry and include additional evidentiary and other safeguards. For these reasons alone, the inquiry's findings of fact may not necessarily be the same as those that a court would make. This explains why, when expressing conclusions that there might have been a breach of the law, I use phrases such as 'If, as I have found …' or, after referring to intermediate findings, 'On this basis …'
Third, an expression by me of a concluded view could prejudice any subsequent proceedings. This is especially so because the evidence adduced in the later proceedings may differ from that presented to the inquiry …
Thus, a finding that a person might have breached the law in a particular respect does not carry with it a finding that the person is guilty of a criminal offence or is liable to a civil penalty. If those charged with responsibility for considering the Royal Commission's findings deem it appropriate to initiate proceedings, it will be up to the relevant court to determine the guilt or civil liability of the person concerned.
In the submissions of some of the parties there was a suggestion that I should be satisfied either beyond reasonable doubt or on the balance of probabilities before concluding that there might have been a breach of the law. This would be contrary to the plain meaning of the terms of reference. For example, if I were to pronounce myself satisfied beyond reasonable doubt that certain conduct satisfied all of the elements of a particular criminal offence, I would in effect be saying there had been-not that there might have been-such a breach.
There is a further reason for declining to make findings of criminal (or, for that matter, civil) liability. A court makes legally binding determinations and because of that it will not make a finding unless it is satisfied to a specific standard. My determinations are not legally binding and there is no specific standard to which I must be persuaded before making a finding that there might have been a breach of the law.
The use of the word 'might' (rather than, for example, 'may') in paragraph (b) is significant. As a matter of language, 'may' suggests a serious possibility and 'might' a more remote possibility; it is a lower threshold. This distinction has been recognised in the authorities. Further, some parties argue that the words 'may' and 'might' are often used interchangeably. Given the gravity of the matters before me, I did not reduce the level of persuasion on account of the use of the word 'might'. It does, however, reinforce the proposition that it is not my role to find that impugned conduct actually contravenes the law. It follows that the threshold is still short of that required by the criminal or civil standards of proof. Talking in terms of civil or criminal standards of proof-that is, the 'balance of probabilities' or 'beyond reasonable doubt'-is not appropriate: the use of 'might' suggests possibilities (albeit real ones) rather than probabilities. Nor is it appropriate to use tests that are applied in, for example, committal hearings and applications for leave to appeal or for interlocutory injunctions.
Accordingly, phrases with which lawyers are generally familiar-such as 'a prima facie case', 'an arguable case' or 'a serious issue to be tried'-are not apt to describe the intellectual process demanded by the making of findings following an inquiry of this type. In any event, I am reminded of the passage in A v Hayden where Dawson J warned against being misled by overly strict application of verbal formulas.
I assessed each matter by looking at the evidence conscientiously and dispassionately and, where there were competing hypotheses, weighing them against the background of all available and relevant material. I then employed a process of inductive reasoning to make findings of fact and draw inferences that are rationally based although not binding in the sense that they do not give rise to legally enforceable rights and obligations. The purpose of this process was to see whether there was sufficient evidence to warrant consideration of the question of future proceedings. Having completed that process, I formed conclusions-in accordance with the language of the terms of reference-about whether there might have been a breach of the law.
Even though it is not part of my role to see whether the facts so found would justify a conclusion measured against either the criminal or civil standard of proof, I have not acted flippantly or according to whim. I approached the task from the viewpoint that the result must be intellectually sustainable and must be tempered by restraint. To the forefront of my thinking was the passage in the judgment of Dixon J in Briginshaw v Briginshaw:
The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved.
As the High Court made clear in Neat Holdings Pty Ltd v Karajan Pty Ltd, there are only two legal standards of proof, and Briginshaw does not establish a third. The approach enunciated in the authorities reflects the conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct. Thus, the more serious the allegation the greater the caution needed in deciding whether to make any particular finding. In this instance the relevant findings are those that are necessary to allow me to report whether there might have been a breach of the law.
In looking at each suggested breach of the law, I bore in mind the public interest in alleging illegal activity against an individual only in cases where the circumstances justified it. I was also mindful of the individual's private interest in the protection of reputation. In carrying out the task I took the following steps:
6.18 I respectfully agree with that analysis and followed the same reasoning and processes. Only after conducting the process referred to in the four dot points last quoted did I make a determination whether the matters being considered might have constituted a breach of the law.
6.19 Paragraph (b) of the terms of reference requires that, if I form the view that there might have been a breach of a law of the Commonwealth, a State or a Territory, I consider whether the question of criminal or other legal proceedings should be referred to the relevant Commonwealth, State or Territory agency.
6.20 The use of the phrase 'the question of' makes plain that what may be referred is not the bringing of criminal or other legal proceedings but the question of whether such proceedings should be brought. Whether such proceedings are to be brought is not a matter for me to decide. That is a decision to be taken by the relevant agency after that agency has considered the question so referred. Referring such a question does not constitute a recommendation that such proceedings be brought. Rather, it means 'there is sufficient evidence to warrant the agency's consideration of whether or not to initiate proceedings'.[317] The 'evidence' on which I based my decision to refer a question whether proceedings should be brought was the material placed before the Inquiry, not necessarily evidence that would be admissible in civil or criminal proceedings in a court.
6.21 Many factors were taken into account in reaching a decision to refer to the relevant agency the question whether proceedings should be brought. When a view was formed that there might have been a breach of the law, I had a disposition towards that question being considered by prosecuting authorities. Possible breaches of the law should not go unexamined. However, in reaching my decision I took into account, amongst other factors, the seriousness of the conduct, the seniority of the persons involved, the quality of available evidence, and the public interest in the possibility of successful proceedings being brought.
6.22 AWB submitted that, in reaching my determination whether to refer 'any of the matters raised by Counsel Assisting' to a prosecuting authority, I should have regard to certain matters.[318] The submission erroneously overlooked that what I must decide is not referral of a 'matter' or 'finding' but rather 'the question' of criminal or other legal proceedings. Putting that to one side, it was contended I should have regard to:
I did not overlook such matters in reaching my conclusions.
6.23 AWB submitted that, if I was of the view that an offence might have been committed and there should be a reference to an appropriate authority, I should not make public that recommended reference.[319] In this instance I do not agree with that submission for several reasons. First, the Letters Patent require that I report on that matter. Sound reasons would need to be advanced why my recommendations in that respect should not be included in that portion of the report likely to be tabled in the Parliament. Second, it was not demonstrated that AWB or its officers would be harmed by such publication. Indeed, they may be benefited by publication of my recommendations, which are narrower in compass than the submissions of Counsel Assisting. The Inquiry did not make those submissions available to the media or the public, restricting them to persons who may have had an interest in responding to them. Nonetheless, there was published in the media, contrary to a non-publication order I made, aspects of those submissions. It is important that the true position of my findings and recommendations be clarified. Third, as I repeat, a reference by me to an appropriate authority is not a recommendation that a prosecution be brought. I refer only the question whether such proceedings should be brought. It is for others to decide that question. Whether the prosecuting authorities decide to bring proceedings flowing from references from the Inquiry will be determined by such authorities in accordance with their usual considerations, including difficulties of proof in a court of law.
6.24 There was much parliamentary and public debate about the scope of the Letters Patent. In particular, there was debate about whether the terms of reference permitted me to make findings of illegality against the Commonwealth or any of its officers. On 3 February 2006 I made a statement that the Letters Patent did not permit me to make such findings (see Figure 3.1 in Appendix 3).[320]
6.25 On 3 February 2006 I said:
The present terms of reference … do not permit me to make findings of illegality against the Commonwealth or any of its officers.
13. It is not the function of a Commissioner exercising the powers of a Royal Commission to set his terms of reference. That is the function of the Executive Government. However, if in the course of exercising conferred powers, a Commissioner enquiring into possible illegality by nominated companies or persons, encounters material which might constitute illegality by others, it may be appropriate for the Commissioner to suggest to the Executive Government that the terms of reference be expanded to permit the Commissioner to examine that prospective illegality by others.
14. Accordingly, if, during the course of my inquiry, it appears to me that there might have been a breach of any Commonwealth, State or Territory law by the Commonwealth or any officer of the Commonwealth related to the subject matter of the terms of reference, I will approach the Attorney-General seeking a widening of the terms of reference to permit me to make such a finding.
15. That position has not been reached. The position may change as inquiries continue and evidence is called.[321]
6.26 I closely examined the role of the Commonwealth, and particularly that of the Department of Foreign Affairs and Trade, in relation to the operation of the Oil-for-Food Programme, with particular emphasis on the Department's role in the export of wheat to Iraq by AWB during the programme.
6.27 I found no material that is in any way suggestive of illegal activity by the Commonwealth or any of its officers. There was thus no basis for my seeking any widening of the terms of reference in that respect.
6.28 By letter dated 10 March 2006 the Honourable KM Rudd MP, Shadow Minister for Foreign Affairs, Trade and International Security, wrote to me:
In relation to the scope of the Terms of Reference I respectfully submit that you should seek by way of expansion a change in the Terms of Reference which will give you power to investigate and make findings about compliance by Australia with the international obligations imposed on it by reason of Art 25 of the Charter of the United Nations by reason of cl 4 of UNSCR 661, as well as the performance of the Minister of State for Foreign Affairs and Trade and officers of the Commonwealth advising him with respect to the Minister's functions under subreg 13CA(2) of the Customs (Prohibited Exports) Regulations 1958-all specifically and only with respect to the conduct of the three Australian companies mentioned in the Volcker Report.[322]
Mr Rudd's letter was accompanied by a submission and opinion of Mr Walker SC.[323]
6.29 The solicitor for the Inquiry responded, stating:
As Mr Walker correctly states in his opinion, it is not the function of a commissioner to determine his terms of reference. Seeking amendment to clarify terms of reference, or to address peripheral and anomalous circumstances which arise during the course of an inquiry may be regarded as appropriate conduct by a commissioner. However, it would not be appropriate for a commissioner to seek amendment of the terms of reference to address a matter significantly different to that in the existing terms of reference. The suggestion, implicit and perhaps explicit in the opinion and submission forwarded by you, that the Commissioner should seek amendments to the terms of reference to enable him to determine whether Australia has breached its international obligations, or a Minister has breached obligations imposed upon him by Australian regulations falls, with respect, within the latter category.
It is, of course, open to the executive government to change the terms of reference. That is a different matter to whether it is appropriate for a commissioner to seek such a change. [324]
6.30 In my view, the solicitor for the Inquiry's view expressed in his letter is correct.
6.31 Royal commissions and executive commissions of inquiry have a long history, dating back in England almost 500 years.[325] For the last 200 years they have played an important part in government, being a means whereby government can inform itself about matters upon which it may be appropriate for government to consider legislative or executive action. The nature of royal commissions or commissions of inquiry is investigative. It is the function of the executive government to define the scope of that which it wishes to have investigated. To that end, s. 1A of the Royal Commissions Act 1902 provides that the Governor-General may issue a commission authorising a nominated person 'to make inquiry into and report upon any matter specified in the Letters Patent, and which relates to or is connected with the peace, order and good government of the Commonwealth, or any public purpose or any power of the Commonwealth'.
6.32 This makes plain that the obligation of the person receiving the Letters Patent is to inquire into the matter so specified by the Governor-General. The law is clear that terms of reference contained in Letters Patent are not to be narrowly construed, but this does not mean that a 'Commission can go off on a frolic of its own'.[326] The premise upon which Letters Patent are issued is that the Executive Government knows the subject matter, and the scope of the subject matter, into which it wishes an inquiry to be conducted. It is not for a commissioner appointed to conduct such an inquiry to presume that he or she is the custodian of the public interest or the person authorised to determine the scope of any inquiry that might be related to or connected with the 'peace, order and good government of the Commonwealth, or any public purpose or any power of the Commonwealth'. The Royal Commissions Act 1902 confers that power on the Executive Government exercised through the Governor-General.
6.33 That does not mean that a commissioner conducting an inquiry should not seek an amendment to clarify that which the Executive Government intended or suggest an amendment affecting a matter peripheral to the subject matter the Governor-General has directed to be investigated. Such a request is properly to be regarded as ancillary to the exercise of the powers conferred on the commissioner. It would be altogether a different matter for a commissioner to request the Executive Government to grant him or her powers to investigate matters materially different from the subject matter the Letters Patent require him to investigate.
6.34 The Letters Patent conclude by requiring me to 'report the results of your inquiry and such recommendations as you consider appropriate'.
The power to make recommendations does not expand the scope of the Letters Patent or the subject matter on which I must report. It enables me to make recommendations related to that subject matter. Improvements to legislation or administrative procedures that might in the future prevent the occurrence of offences the Inquiry finds might have been committed are recommendations in that category.
Notes
[314] TRH Cole AO RFD QC, Statement by Commissioner, <http://www.oilforfoodinquiry.gov.au/agd/www/UNoilforfoodinquiry.nsf/Page/Statements>, 3 February 2006.
[315] T.4158.9 and following.
[316] HIH Royal Commission, The Failure of HIH Insurance, vol. I, Commonwealth of Australia, Canberra, 2003, pp. 10-13.
[317] HIH Royal Commission, The Failure of HIH Insurance, vol. I, Commonwealth of Australian, Canberra, 2003, p. 13.
[318] AWB submission, para. E1.
[319] AWB submission, paras D18-19.
[320] TRH Cole AO RFD QC, Statement by Commissioner, <http://www.oilforfoodinquiry.gov.au/agd/www/UNoilforfoodinquiry.nsf/Page/Statements>, 3 February 2006.
[321] TRH Cole AO RFD QC, Statement by Commissioner, <http://www.oilforfoodinquiry.gov.au/agd/www/UNoilforfoodinquiry.nsf/Page/Statements>, 3 February 2006.
[322] Ex 693, INQ.0011.0075.
[323] Ex 693, INQ.0011.0077.
[324] Ex 693, INQ.0011.0072.
[325] W Harrison Moore, 'Executive commissions of inquiry', Columbia Law Review, 1913, vol. 13, p. 500.
[326] Ross v Costigan (1982)59 FLR 184, 201 (Ellicott J). See also Harper v Costigan (1983) 72 FLR 140, 153-4 (Morling J); Lloyd v Costigan (No . 2) (1983) 76 FLR 279, 282 (Bowan CJ, Lockhart and Morling JJ); Lloyd v Costigan (1983) 77 FLR 294, 304 (Toohey J); and Kennedy v Lovell [2002] WASCA 217, [11]-[14] (Malcom CJ, with whom Murray and Steytler JJ agreed).
