XY v UV[2024] QCA 244

SUPREME COURT OF QUEENSLAND

1. [1]
   THE COURT:  The appellant XY and the respondent UV are parties to an arbitration pursuant to the Commercial Arbitration Act 2013 (Qld) (CAA) as a result of the referral to arbitration of a dispute between them under a commercial agreement.  The commercial agreement provides for the arbitration to be conducted in accordance with the Resolution Institute Arbitration Rules for the time being in force (Rules), the rules of evidence to apply to the arbitration, and the arbitration to be private and confidential in accordance with the Rules and all obligations of confidentiality imposed by the commercial agreement also to extend to information relating to the arbitration.  The arbitrator is a retired judge of the Supreme Court of Western Australia.
2. [2]
   The arbitrator made Procedural Order No 1 (PO1) on 28 February 2024 (corrected on 4 March 2024 and further revised on 15 August 2024) that dealt with the procedures in respect of the arbitration, including the timetable for steps and the manner of communications between the parties and the arbitrator.  Paragraph 6 of PO1 dealt with document production and set out a process for each party delivering to the other a list of requests for documents or categories of documents that the party considers to be relevant to the issues in dispute and should be required to be produced and for the process for objection by the other party to such a request.
3. [3]
   There was a dispute between the parties that the respondent referred to the arbitrator for the purpose of determining the appropriate forum and procedure to determine any objections to production of documents on the ground of public interest immunity (PII).  The arbitrator decided at a hearing on 4 October 2024 that he had jurisdiction to determine objections to the production of documents on the grounds of PII and Parliamentary privilege (PP) and that he will exercise that power.  He delivered reasons for that decision on 5 October 2024 which he described as a decision on a preliminary question as to jurisdiction.
4. [4]
   After the hearing on 4 October 2024, the arbitrator issued Procedural Order No 2 (PO2) by which he made directions for the procedure he would follow to determine the objections to the production of documents on the grounds of PII and PP, including the appointment of an expert to assist him.  The first step in the procedure was for the appellant to provide evidence in support of its objections to the respondent.  It is likely that some of the objections to documents which the appellant claims that it does not have to produce on the basis of PP or PII will be resolved in favour of the appellant if the evidence put forward in support of the objections patently supports those claims.  In relation to documents that remain in dispute, the next step under PO2 is for junior counsel for both parties to confer to seek to narrow the scope of the challenges and to agree which challenges are to be resolved by an independent expert.  The procedure for the appointment of the independent expert is that the appellant is to propose to the respondent three retired judges, King’s Counsel or senior legal practitioners who are available to be appointed to act as an independent expert to prepare a written report under s 26 of the CAA in relation to any remaining challenges and the respondent is to select one of the three independent experts proposed by the appellant for the appointment as the independent expert by consent of the parties.
5. [5]
   On 18 October 2024 the appellant filed an application in the Trial Division for an order that it be relieved from production to the arbitrator and the respondent of certain documents on the grounds of PP and PII.  At the time of the hearing before the learned primary judge, the appellant claimed PII or PP in respect of 498 documents (in whole or in part).  In summary, the appellant claims PP in relation to five documents for which it asserts it is apparent on their face why PP attaches to those documents.  There are two broad categories of documents over which PII is claimed, namely documents prepared for Cabinet and those where the disclosure would prejudice an investigation, including by revealing investigative techniques and processes and the proper functioning of government within a particular office of the government.  The position in relation to Cabinet documents has the further complication that the State election on 26 October 2024 resulted in a change in the government and there is a convention that restricts access to past government’s Cabinet documents by the present government.
6. [6]
   The primary judge dismissed the appellant’s application on 1 November 2024: XY v UV [2024] QSC 262 (the reasons).
7. [7]
   The appellant appeals against that decision on the grounds:

   1. The primary judge erred in failing to determine that the appellant was relieved from producing to the arbitrator and the respondent the documents over which the appellant claimed PII and PP.
   2. The primary judge erred in disposing of the appellant’s application as a question of the exercise of discretion.
8. [8]
   The primary judge received submissions from the parties on costs and decided the costs of the application on the papers: XY v UV (No 2) [2024] QSC 283 (the costs reasons).  The appellant was ordered to pay the respondent’s costs of the proceeding on the standard basis.  The primary judge held (at [8] of the costs reasons) that, although the respondent did not succeed on both issues in dispute, it was successful in having the appellant’s application dismissed and (at [10]) that costs should follow the event.  The appellant also appeals against that costs order.
9. [9]
   The respondent filed a notice of contention that the decision of the primary judge should be affirmed for a different reason than those given by the primary judge.  The respondent contends the primary judge should have held that the jurisdiction of the Court had been displaced because any determination by the Court of PII or PP claims would amount to intervention in the arbitration contrary to s 5 of the CAA.

The reasons

10. [10]
    Before the primary judge, the appellant had argued that the Court’s inherent jurisdiction to rule on the existence of PII and PP exists by reason of “high public policy” which necessitates the weighing of competing public interests and that s 5 of the CAA did not abrogate that jurisdiction.  The appellant accepted that the arbitrator had jurisdiction to determine the claims for PP and PII but that the appellant was entitled to resist production and have the Court determine the claims.  The respondent argued before the primary judge that the Supreme Court did not have jurisdiction to rule on the PP and PII claims raised in the arbitration and the Court’s intervention was prohibited by s 5 of the CAA.
11. [11]
    The primary judge considered the position prior to the enactment of the CAA and (at [46] of the reasons) noted that on the basis of Commonwealth of Australia v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662 and, particularly, State of Victoria v Seal Rocks Victoria (Australia) Pty Ltd (2001) 3 VR 1 the Court’s inherent jurisdiction to rule on PP and PII claims had not been implicitly displaced by the earlier legislation governing the conduct of domestic commercial arbitrations that preceded the CAA.
12. [12]
    The primary judge proceeded (at [47]-[51] of the reasons) to consider the statutory framework created by the CAA, noting the paramount object of the CAA set out in s 1AC of the CAA which is “to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense”.  The primary judge noted (at [48]) that, subject to s 1AC, s 2A requires that “in the interpretation of this Act, regard is to be had to the need to promote, so far as practicable, uniformity between the application of this Act to domestic commercial arbitrations and the application of the provisions of the Model Law (as given effect by the International Arbitration Act 1974 (Cwlth)) to international commercial arbitrations and the observance of good faith”.  The Model Law is defined in s 2(1) of the Act to mean “the UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985, and as amended by the United Nations Commission on International Trade Law on 7 July 2006)”.
13. [13]
    The primary judge noted (at [49]-[50] of the reasons) the terms of s 5 of the CAA which is followed by s 6 that sets out functions referred to in specific provisions of the CAA which are to be performed by the Supreme Court.
14. [14]
    The primary judge then analysed the decisions on the construction of s 5 of the CAA.  The primary judge noted (at [54] of the reasons) the submission of XY that the continued existence of the inherent jurisdiction of the Supreme Court of South Australia to determine objections to the production of documents on the grounds of PP and PII was implicitly confirmed by Kourakis CJ in CPB Contractors Pty Ltd and Hansen Yuncken Pty Ltd v State of South Australia [2024] SASC 46.  That judgment did not expressly address the question of jurisdiction but in deciding the issue of costs, Kourakis CJ accepted the correctness of the submission made by the respondent that the questions of PII and PP were unable to be determined in the arbitral proceedings, so that the proceedings in the Supreme Court were necessary to ascertain whether the documents sought to be disclosed ought to be disclosed: CPB Contractors Pty Ltd and Hansen Yuncken Pty Ltd v State of South Australia (No 2) [2024] SASC 86 at [5].
15. [15]
    Even though the issues in Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd (2020) 55 WAR 435 were different to those of the current matter, Quinlan CJ (with whom Beech and Vaughan JJA agreed on the issue of whether s 5 of the CAA mandated a stay of the defences by parties to the arbitration that were filed in court proceedings commenced by non-parties to the arbitration) made observations (at [299]-[306]) on the construction of s 5 of the CAA which the primary judge set out at [58] of the reasons.  The essence of those observations is that in relation to matters governed by the CAA where the CAA confers upon the courts a variety of powers and functions in relation to which the Court may intervene in the arbitral process, the CAA is in relation to those matters intended to be a code.  Quinlan CJ concluded at [306]:

“In the particular context of s 5, in my view, the word ‘matters’ is used in the sense of ‘circumstances or things regulated by the Act’.  This construction is borne out by its context in the phrase ‘matters governed by this Act’.  The notion of a matter being ‘governed’ by the Act points to the kind of matters identified in [301] above.”

16. [16]
    As noted by the primary judge (at [59] of the reasons), and by Quinlan CJ in Hancock Prospecting at [307]-[308], the construction preferred by Quinlan CJ is supported by the commentary in the “Explanatory Note by the UNCITRAL secretariat on the 1985 Model Law on International Commercial Arbitration as amended in 2006”.  That commentary identifies two groups of provisions in the Model Law that envisage court involvement and paragraph 17 of the commentary then states:

“Beyond the instances in these two groups, ‘no court shall intervene, in matters governed by this Law’.  Article 5 thus guarantees that all instances of possible court intervention are found in the piece of legislation enacting the Model Law, except for matters not regulated by it (for example, consolidation of arbitral proceedings, contractual relationship between arbitrators and parties or arbitral institutions, or fixing of costs and fees, including deposits).  Protecting the arbitral process from unpredictable or disruptive court interference is essential to parties who choose arbitration (in particular foreign parties).”

17. [17]
    The primary judge concluded (at [62] of the reasons) that from the analysis of s 5 in Hancock Prospecting “that it is only matters which come within the phrase ‘matters governed by this Act’ in s 5 which come within the scope of that code” under the provisions of the CAA and that if a matter falls outside that description which is not regulated by the provisions of the Act, the prohibition on court intervention in s 5 will not apply.  The primary judge then identified the critical issue in determining the appellant’s application which was “whether the determination of PP and PII claims over documents sought to be produced in the arbitration is a matter governed by the CAA”.
18. [18]
    The respondent had relied on two Singaporean cases which considered the operation of s 5 of the Model Law.  The primary judge noted (at [64]-[65] of the reasons) that the analysis in L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125 accorded with that of Quinlan CJ in Hancock Prospecting.  The second Singaporean case relied on of Republic of India v Vedanta Resources plc [2021] 2 SLR 354 expressed a slightly different view and the primary judge observed (at [70]) that, to the extent that the second case involved a departure from the construction of s 5 adopted in Hancock Prospecting, the primary judge would not follow it because of the authority of Hancock Prospecting as a decision of an intermediate appellate court in Australia applying sections of uniform commercial arbitration legislation in force in each State.
19. [19]
    The primary judge therefore concluded (at [71] of the reasons) that s 5 of the CAA had not displaced the Court’s inherent jurisdiction to determine XY’s claims of PP and PII, notwithstanding the fact that those claims had been raised as the basis for objecting to the production of documents in the arbitration.  The primary judge noted (at [73]) that the absence of any statutory mechanism under the CAA that confers upon the Court the function of determining the PP and PII claims made by the appellant in the arbitration means that such determination by the Court is not a matter governed by the CAA within the meaning of s 5 and that the prohibition against intervention by the Court, except in accordance with the provisions of the CAA, does not apply to the determination of the PP and PII claims.  The primary judge further noted (at [74]) that this conclusion was supported by the observations made by Ormiston JA in Seal Rocks about the different character of the right to claim PP and PII.
20. [20]
    The primary judge then turned to the discretionary considerations that were urged by the respondent to refuse the relief sought by the appellant.  The primary judge considered (at [79] of the reasons) that the effect of the appellant’s submissions was that, if the Supreme Court’s inherent jurisdiction to decide PP and PII claims had not be displaced by s 5 of the CAA, it must follow the Court would exercise that jurisdiction rather than leaving it to the arbitrator to rule on the claims.  On the basis the relief the appellant sought was discretionary, the primary judge considered the circumstances of the case.  The primary judge noted (at [81]-[85]) the following matters:

    1. the arbitrator had made procedural orders to progress the arbitral proceedings towards an evidentiary hearing scheduled for February 2025;
    2. the duties imposed by the CAA on the parties to the arbitration (particularly s 24B(1) and s 24B(2)(a)) form part of the context for the exercise of the discretion;
    3. the appellant had raised the issue of the validity of its claims of PP and PII in the arbitration, when it complied with the decision of the arbitrator of 26 June 2024 to produce documents in the arbitration, subject to its claims of PP and PII;
    4. the appellant must have been aware by no later than 13 September 2024 that the respondent was challenging the appellant’s objections to the production of documents on the grounds of PP and PII;
    5. after the appellant failed at the hearing before the arbitrator on 4 October 2024 with its argument that the arbitrator did not have jurisdiction to rule on the claims of PP and PII, it did not seek a decision from the Supreme Court on the arbitrator’s jurisdiction under s 16(9) of the CAA but brought the subject application in the Supreme Court;
    6. the more appropriate course for the appellant would have been to bring the application seeking relief from the Supreme Court before the question of jurisdiction to rule on the PP and PII claims was argued before the arbitrator and decided by him;
    7. granting the relief sought by the appellant would prevent the arbitrator from determining the PP and PII claims and carry the risk of unduly delaying the further progression of the arbitration;
    8. the potential impairment of the appellant’s claim to PP and PII if the documents subject to objection are inspected by the arbitrator or an expert appointed pursuant to s 26 of the CAA for the purpose of ruling on the claims, as the possibility of inspection exists; and
    9. the process of ruling on the claims by either the arbitrator or an expert appointed pursuant to s 26 of the CAA and the confidential nature of the arbitral proceedings would not involve an intrusion upon, or impairment of, the claims of PP and PII that would be significantly different to that involved in a determination by the Court.
21. [21]
    On balance, the primary judge concluded (at [86] of the reasons) that the discretion should be exercised against granting the relief sought by the appellant and, given the stage that the arbitration had reached particularly the agitation of the PP and PII claims in the arbitration, it was appropriate to leave those claims to be determined by the arbitrator.

Issues on the appeal

22. [22]
    The claims of PP and PII are relevant when they are properly made.  It is implicit that the appellant by its application made to the Trial Division was seeking relief from production of documents for which there was a valid claim of either PP or PII.  The inherent jurisdiction of the Court is used “to protect the operation of the instruments of government at the highest level and for the benefit of the public in general, subject only to a court’s reaching a conclusion to the contrary on sound grounds that no other public interest, especially in the administration of justice, should prevail in the particular circumstances”: see Seal Rocks at [17].  The object of the protection is “to ensure the proper working of government”: see Sankey v Whitlam (1978) 142 CLR 1, 40.
23. [23]
    Where there is a dispute as to whether claims of PP and PII are properly made, that will need to be resolved before the question of protection by way of relief from production of the documents can be considered.  Ruling on the validity and primacy of claims of PP and PII may be an anterior step to the exercise of the Court’s inherent jurisdiction to protect a party’s claims of PP and PII.  This distinction between the role of the Court in protecting documents to which claims of PP and PII apply and the process by which it is determined as to whether those claims do, in fact, apply bears on how the issues to be decided on this appeal should be expressed.  Even though the primary judge described the competing submissions of the parties as whether the Supreme Court had jurisdiction to rule on the appellant’s claims of PP and PII, the jurisdiction question is more appropriately expressed in terms of whether the Supreme Court had jurisdiction to protect legitimate claims of PP and PII made by the appellant in the arbitration.
24. [24]
    The appellant appropriately accepted that the arbitrator may determine immunity claims made by the appellant as part of the referred dispute.  Section 17 of the CAA provides for the arbitral tribunal to grant interim measures at the request of a party, unless otherwise agreed by the parties.  Section 17(2) defines an interim measure and, without limiting s 17(2), s 17(3) (for which there is no equivalent subsection in the Model Law) provides that the arbitral tribunal may make orders with respect to any of the matters listed in paragraphs (a) to (g).  Section 17(3)(b) is “discovery of documents and interrogatories”.  Determining objections to discovery on the basis of PP or PII is incidental to the power of the arbitral tribunal to make orders with respect to discovery of documents.
25. [25]
    The two issues raised by the parties’ grounds of appeal and notice of contention should therefore be expressed as follows:

    1. Does s 5 of the CAA displace the jurisdiction of the Supreme Court to protect the appellant’s claims of PP and PII?
    2. If the Supreme Court has jurisdiction to protect the appellant’s claims of PP and PII which has not been displaced by s 5 of the CAA, is the Supreme Court bound to exercise that jurisdiction, when the arbitrator has jurisdiction to rule on the claims of PP and PII in the context of the arbitration?
26. [26]
    The second issue set out above is sufficient to cover both grounds specified in the appellant’s notice of appeal.  Ground (b) in the notice of appeal asserts error on the part of the primary judge in disposing of the appellant’s application as an exercise of discretion.  It does not challenge the outcome of the exercise of discretion, but challenges whether the primary judge should have decided the application on that basis.  That is another way of expressing ground (a) of the notice of appeal that the primary judge erred in failing to determine the appellant was relieved from producing to the arbitrator and the respondent the documents over which the appellant claimed PII and PP as the Supreme Court was bound to exercise that jurisdiction when the appellant sought the Court’s assistance in protecting the operation of government by upholding its claims of PII and PP.
27. [27]
    If the appellant did not succeed on its contention that the Supreme Court was bound to exercise the jurisdiction to protect the appellant’s claims of PP and PII, the appellant did not seek to challenge the weighing up of the relevant matters by the primary judge that resulted in the exercise of the discretion to leave the arbitrator to deal with the disputes between the parties on claims of PP and PII.

Does s 5 of the CAA displace the jurisdiction of the Supreme Court to protect the appellant’s claims of PP and PII?

28. [28]
    The construction of s 5 preferred by all members of the Court in Hancock Prospecting reflects the intention of article 5 of the Model Law.  It is appropriate to apply that construction.  As the High Court emphasised again in R v Falzon (2018) 264 CLR 361 at [49], “Australian intermediate appellate courts are bound to follow the decisions of other Australian intermediate appellate courts in both matters of statutory interpretation and matters of common law unless persuaded that those decisions are plainly wrong”.
29. [29]
    The protection of the proper working of government (by upholding a party’s claims of PP and PII) is not one of the matters governed by the CAA, as contemplated by s 5 of the CAA.  The ruling on such claims by an arbitrator that may be incidental to a dispute over discovery of documents in the arbitration is concerned with the matter of discovery of documents and may raise the same issues but that is a separate “matter” in the sense in which “matters” is used in s 5 of the CAA from the public interest in the operation of government that is protected when the Supreme Court exercises its jurisdiction to uphold claims of PP and PII.  The primary judge expressed the conclusion (at [76] of the reasons) by reference to the Court’s inherent jurisdiction “to determine the PP and PII claims made by [the appellant]” which is the process for exercising the jurisdiction to protect the public interest.  There was therefore no error in the primary judge’s conclusion that the prohibition in s 5 did not displace the inherent jurisdiction of the Court in making the determinations that are required for the protection of a party’s claims of PP and PII.

Was the Supreme Court bound to exercise the jurisdiction to protect the appellant’s claims of PP and PII?

30. [30]
    The appellant argued that the primary judge who had found that the Court had jurisdiction to determine whether the appellant’s claims of PII and PP were valid was duty-bound to determine those claims, rather than leaving those claims for the arbitrator.
31. [31]
    One of the issues considered in Sankey was whether the Magistrate correctly upheld the claim of privilege in respect of documents subpoenaed in a committal proceeding in the Court of Petty Sessions for two offences of conspiracy which the Commonwealth sought to withhold on the basis it was prejudicial to the public interest to disclose them.  Gibbs ACJ explained at 38-39:

“The general rule is that the court will not order the production of a document, although relevant and otherwise admissible, if it would be injurious to the public interest to disclose it. However the public interest has two aspects which may conflict. …

It is in all cases the duty of the court, and not the privilege of the executive government, to decide whether a document will be produced or may be withheld. The court must decide which aspect of the public interest predominates, or in other words whether the public interest which requires that the document should not be produced outweighs the public interest that a court of justice in performing its functions should not be denied access to relevant evidence.”

32. [32]
    See also statements to similar effect in Sankey by Stephen J at 58-59 and Mason J at 95-96.
33. [33]
    The passage quoted above from the judgment of Gibbs ACJ in Sankey drew a distinction between the making of a claim of PII by the executive government and the role of the court in deciding whether the claim should be upheld.  The reference to the “duty” of the court is not a reference to the court being “duty-bound” to make the decision.  Sankey did not deal with the circumstance where the court and an arbitral tribunal had jurisdiction to decide whether the claims for PII should be upheld.
34. [34]
    The relief that was sought by the appellant in reliance on the Court’s inherent jurisdiction did not deprive the Court of the discretion to decide whether it was appropriate to grant that relief in the circumstances.  The appellant asserts that the primary judge never confronted the question of whether the appellant should be relieved from producing to the arbitrator and the respondent in the arbitration the documents which the appellant claimed were subject to PP or PII.  The effect of the order that the appellant was seeking from the Court was to resist production at least to the arbitrator (or the expert appointed to do the report under s 26 of the CAA) in the first instance and stymie the arbitrator’s procedural order for the process of dealing with objections to production of documents including those based on claims of PP and PII.  It is implicit in the primary judge’s decision to exercise the discretion to leave the objections based on claims of PP and PII to the arbitrator that the primary judge declined to order the relief that the appellant sought that may have precluded the arbitrator dealing with the claims of PP and PII as proposed in PO2.
35. [35]
    It was most relevant, as the primary judge identified, that the parties had embarked on the arbitration in February 2024 with a view to the hearing taking place in February 2025 and selected an arbitrator who was eminently qualified and experienced to deal with objections to discovery, including claims of PP and PII.  Another relevant consideration for the primary judge in deciding whether to grant the relief that was sought by the appellant was the stage of the arbitration and the processes that had been set up by the arbitrator to deal with claims of PP and PII.  The contention of the appellant that the primary judge was duty-bound to proceed to determine the validity of the appellant’s claims for PP and PII in order to grant the relief that the appellant claimed to withhold documents from production to the arbitrator and the respondent to which valid claims of PP and PII applied takes no account of the discretion that remains in the Court as to whether it should exercise its inherent jurisdiction or power where that applies.  There was no error made by the primary judge in refusing to grant the relief sought by the appellant in the originating application.
36. [36]
    The fact that the primary judge decided that, at that stage of the arbitration and in the circumstances in which the appellant sought relief, the discretion should be exercised to leave the arbitrator to deal with any disputes between the parties on claims of PP and PII does not preclude the appellant approaching the Supreme Court at a later stage, if circumstances change or develop which may then suggest that is the appropriate step.

Costs

37. [37]
    The parties acknowledged during the hearing of this appeal that the costs of the appeal should follow the event.  The appellant put in issue the costs order made by the primary judge, so that it could seek a different costs order, if it succeeded on the appeal.  As the appellant has not succeeded in the appeal against the orders made on 1 November 2024, the costs order made by the primary judge should not be disturbed.

Orders

1. Appeal against paragraph 1 of the order made on 1 November 2024 and the order made on 8 November 2024 is dismissed.
2. The appellant must pay the respondent’s costs of the appeal.