REASONS FOR JUDGMENT - NO. 7
THE PROCEEDINGS
This is yet another interlocutory dispute in what I described in my judgment of 24 December 1997 as "these protracted and extraordinarily costly proceedings". For convenience I attach a schedule which lists the judgments previously delivered in these proceedings. This is the seventh in the sequence, leaving aside sundry ex tempore judgments. Two motions are presently before the Court.
· The first is an application by the State of New South Wales ("the State") that BT Australasia Pty Limited ("BTA") and British Telecommunications plc ("BT plc") each produces for inspection by the State certain documents in respect of which client legal privilege has been claimed. The basis of the application is that BTA and BT plc (to which I refer collectively as "BT") have lost the privilege that would otherwise attach to the documents. This result is said to come about because BT have impliedly consented to the contents of the documents being disclosed (Evidence Act 1995 (Cth), s 121(1)) or because they have waived the privilege on common law principles. The State's application is supported by Telstra Corporation Limited ("Telstra"), which says that it has an independent interest in the fate of the motion. It was not seriously disputed by BT that Telstra has standing to be heard on the motion.
· The second is the motion by Telstra for an order that BTA produce for inspection certain legal advice, the substance of which is said to have been disclosed in financial statements published by BTA. That disclosure is said to have resulted in the loss of client legal privilege that otherwise would have attached to the advice. The State has filed a motion in identical terms and supports Telstra's position on this matter.
The nature of the proceedings and the pleaded issues have been set out in Judgment No. 5. I noted in that judgment that the
"proceedings relate, inter alia, to a dispute between the State and BTA. The dispute arose out of the management and development of an integrated telecommunications network for the New South Wales Public Sector. In September 1991, the State published a document entitled "Request for Tender for the Design Implementation and Operation of a Telecommunications Network for the New South Wales Public Sector" ("RFT"). In response to the RFT, BTA, which is the Australian subsidiary of BT plc, submitted a tender to the State in January 1992 for the "Supply and Management of the State Telecommunications Network". Subsequently, BTA and the State entered into a Telephone Data and Network Agreement ("TDN Agreement") which became binding and took effect from 20 November 1992.
I do not propose to repeat what is explained in that judgment, which should be read together with these reasons.
THE STATE'S MOTION
The State's motion was filed on 24 October 1997, amended on 10 December 1997, and amended further on 13 March 1998. The State filed written submissions on 23 February 1998. These relied primarily on what was said to be the common law principle that, where a litigant opens up for investigation and testing the source of and basis for its belief on a particular issue, inspection of documents relevant to that issue cannot be denied by a claim of legal professional privilege or, as it is known under the Evidence Act 1995 (Cth), ("Evidence Act") client legal privilege: Thomason v Council of the Municipality of Campbelltown (1939) 39 SR (NSW) 347 (S Ct NSW/FC); Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419 (S Ct Vic/Smith J); Benecke v National Australia Bank Ltd (1993) 35 NSWLR 109 (NSW CA); Ampolex v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 (S Ct NSW/Giles CJ Comm D). Telstra's submissions relied on the same principle, which is often described as "issue waiver".
Shortly before the hearing of the motions, a Full Court of this Court (Olney, Kiefel and Finn JJ) gave judgment in Adelaide Steamship Co Ltd v Spalvins, 2 March 1998, not yet reported. The effect of that decision, at least on one view, is that the Evidence Act has altered the common law of legal professional privilege, including the principles governing waiver or loss of the privilege for the purposes of the law of discovery. In particular, as was argued on behalf of BT, the decision in Adelaide Steamship may have the effect that loss of the privilege is to be determined exclusively in accordance with the provisions of the Evidence Act, notwithstanding that those provisions are, in terms, limited to the circumstances in which evidence is to be adduced and do not apply explicitly to discovery.
The oral submissions made on behalf of the State and Telstra took account of Adelaide Steamship and thus were cast differently from the written submissions. In the course of argument, Mr Stowe QC, who appeared with Mr Muddle and Mr Stack for the State did not seek to support the relief sought in the amended motion, as filed on 10 December 1997, but sought only a narrower form of relief. However, Mr Gleeson, who appeared with Ms Cheeseman for Telstra, put the argument on a wider basis.
Having regard to the course of oral argument, Mr Stowe sought and was granted leave to file a further amended motion. Although the further amended motion retained the terms of the earlier motion, it is only the relief sought by the amendments that need be considered. Mr Gleeson did not formally abandon the relief sought in the earlier motion, but it is fair to say that he did not vigorously pursue it. The State's argument (except insofar as Mr Stowe adopted Mr Gleeson's submissions) was directed only to par (1)(a)(3) of the further amended motion, reproduced below. Telstra's argument was directed primarily to par (1)(a)(1) of the further amended motion, although in the alternative Telstra sought the relief in par (1)(a)(3). Mr Stowe and Mr Gleeson adopted on behalf of their respective clients the submissions made by the other.
The terms of par 1 of the further amended motion, insofar as relevant, are as follows:
"An order pursuant to Order 15 Rule 11 that [BTA] and [BT plc] each produce for inspection by the State:
(a)(1) All documents defined as Category 1 documents in the Affidavit of Cameron Spenceley sworn 6 February 1998
(a)(2) ...
(a)(3) all documents over which either of them has made a claim to Legal Professional Privilege (LPP) and which relate to any advice sought or obtained by either of them prior to the submission by BTA to [the State] of BTA's Best and Final Offer (being an executed TDN Agreement) on or about 18 October 1992, which advice related to the entitlement of BTA to rely upon representations arising from any of the documents and things set out below, notwithstanding any provisions of the TDN Agreement, or generally any contractual limitation which the Government might seek to place on the entitlement to do so:
(i) the ability of [State] to bind Agencies ...;
(ii) the extent to which Agencies would be bound by the proposed TDN Agreement;
(iii) the Media Release ...;
(iv) the RFT ...;
(v) the Management Overview ...;
(vi) the Exchange Article ...;
(vii) the GT Act ...;
(viii) the Authority ...;
(ix) the network ...;
(x) the Benchmark TDN ...;
(xi) any of the matters alleged in Section B of the Second Amended Statement of Claim to be a representation by [the State];
(xii) BTA's response to the RFT;
(xiii) any of the Q and A s ...;
(xiv) the PN ...;
(xv) the VPN ...;
(xvi) the Information ...;
(xvii) any survey which preceded the RFT;
(xviii) the contractor's information ...;
(xix) the additional information ...; and
(xx) the whole of or any proposed term of the proposed TDN Agreement (being any version of that agreement)."
Paragraph (1)(a)(1) of the motion refers to Mr Spenceley's affidavit. In that affidavit, Mr Spenceley explained that BT have prepared a revised list of 2,157 documents in respect of which BT have made claims for privilege. For the purpose of supporting the claims for privilege, the documents have been grouped into one or more of fourteen categories. Category 1 comprises documents brought into existence concerning the retainer of Mallesons Stephen Jaques, solicitors ("MSJ"), to advise BT in connection with its bid to secure the TDN Agreement. That retainer continued until 20 November 1992, the date the TDN Agreement became operative. The documents in Category 1 include advices of various types, notes in relation to the drafting of the TDN Agreement, draft letters and "communications concerning a number of contractual issues arising under the proposed TDN Agreement".
Paragraph (1)(a)(3) of the further amended notice of motion adopts expressions that are defined or described in BTA's second amended statement of claim. The definitions and descriptions relevant to par (1)(a)(3) are these:
(i) "Agency" is defined as having
"the meaning ascribed to the term Government Agency in the Government Telecommunications Act [1991 (NSW)] as it exists at the date hereof and shall include such other public authority as may be notified in writing by the Government to the Contractor [BTA] from time to time".
(ii) "Media Release" means a release issued and published on 21 August 1991 by the State Minister for Administrative Services headed "Shortlist Announced for NSW Telecommunications Network".
(iii) The "Management Overview" means a management overview for the RFT distributed to certain persons in September 1991 by or on behalf of the State.
(iv) The "Exchange Article" means an article entitled "NSW Government Discusses Network Plan" published in a telecommunications industry newsletter known as "Exchange" on or about 4 October 1991.
(v) The "GT Act" means the Government Telecommunications Act 1991 (NSW), assented to on 17 December 1991.
(vi) The "Authority" means the New South Wales Government Telecommunications Authority established by the GT Act.
(vii) The "network" means the integrated telecommunications network in respect of which the State was requesting tenders.
(viii) The "Benchmark TDN" means Appendix C of the RFT, which set out details relating to the design and implementation of the TDN.
(ix) The "Q and A s" means written questions asked by the State and written responses provided by BTA between mid-January 1992 and November 1992 relating to BTA's tender.
(x) "PN" means the private network comprised in BTA's TDN proposal.
(xi) "VPN" means the virtual private network comprised in BTA's TDN proposal.
(xii) The "Information" means the information concerning volumes and dispersions of telecommunication traffic and the size of the TDN supplied to BTA by the RFT and Management Overview.
(xiii) The "contractor's information" means information gathered by independent contracts whose services had been engaged by the State relating to the volume and dispersion of telecommunications traffic in certain Agencies; and
(xiv) The "additional information" means information obtained by the State supplementing the contractor's information.
THE LEGISLATION
Division 1 of Part 3.10 of the Evidence Act deals with "client legal privilege". As the Full Court observed in Adelaide Steamship, ss 118 to 120 prohibit the adducing of evidence resulting in disclosure of confidential material on the ground of client legal privilege if certain conditions are fulfilled, while ss 121 to 126 remove evidence from the prohibitions in ss 118 to 120 if other conditions are satisfied.
Section 118 provides as follows:
"Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication made between the client and a lawyer; or
(b) a confidential communication made between 2 or more lawyers acting for the client; or
(c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client."
Section 119 extends the prohibition against adducing evidence if to do so would result in the disclosure of confidential communications made or the contents of a confidential document prepared for the dominant purpose of the client being provided with professional legal services relating to legal proceedings.
Section 121(3) of the Evidence Act states that Division 1 of Part 3.10 does not prevent the adducing of evidence of a communication or document "that affects the rights of a person". Section 122, insofar as relevant, provides as follows:
"122(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made:
(a) in the course of making a confidential communication or preparing a confidential document; or
(b) as a result of duress or deception; or
(c) under compulsion of law; or
(d) if the client or party is a body established by, or a person holding office under, an Australian law - to the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.
(3) Subsection (2) does not apply to a disclosure by a person who was, at the time, an employee or agent of a client or party or of a lawyer unless the employee or agent was authorised to make the disclosure.
(4) Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than:
(a) a lawyer acting for the client or party; or
(b) if the client or party is a body established by, or a person holding an office under, an Australian law - the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held."
Section 126 deals with loss of client legal privilege in related communications:
"126 If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document."
THE ADELAIDE STEAMSHIP CASE
In Adelaide Steamship, the Australian Securities Commission ("ASC") commenced proceedings in the name of a company against the company's auditors and other respondents. The main allegation was that the company's profits in a particular year had been overstated and that, as a result, dividends had not been paid out of profits. The ASC sought to amend the statement of claim to raise what was described as the "valuation issue", namely whether the respondents should have known that true value of the company was not such as to sustain the dividends paid in the year in question. The ASC filed an affidavit by an officer explaining the delay in applying to amend the statement of claim. That affidavit referred to advices that the ASC had received from senior counsel, concerning the form of the original statement of claim and the form of the proposed amendments to the statement of claim. The issue was whether the ASC had lost client legal privilege in respect of the advices referred to in the officer's affidavit. The primary Judge held that, on the principles of implied waiver of privilege discussed in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475, in particular the test of fairness where there has been no intentional waiver of privilege, the ASC had lost its privilege in the advices.
The judgment of the Full Court pointed out that Division 1 of Part 3.10 of the Evidence Act is not expressed to and does not apply to processes which are ancillary to a proceeding in which evidence is sought to be given. The Court also pointed out that there are important differences between the provisions of the Evidence Act and the principles of the common law, two of which are especially significant.
· The Evidence Act, s 118 adopts the "dominant purpose" test for determining whether, in the face of an objection, evidence can be adduced which discloses a confidential communication between client and lawyer on the contents of confidential documents proposed by the client or a lawyer. Section 119 adopts the same test in relation to the provision of professional legal services relating to litigation. This test is different from the common law's "sole purpose" test, formulated in Grant v Downs (1976) 135 CLR 674.
· The Evidence Act, s 122 contains its own test to determine when the privilege is lost. The test is "one which differs from and is inconsistent with that applied by the common law in allowing for loss by partial disclosure".
The Court, earlier in its judgment, had explained (at 12) that
"subject to the particular exceptions listed, s 122(2) and (4) enquire whether there has been a knowing and voluntary, or a consensual, disclosure of the 'substance of the evidence', that evidence containing the confidential communication or the contents of the confidential document of which s 118 and s 119 speak. The test is a quantitative one, which asks whether there has been sufficient disclosure to warrant loss of the privilege. If what is disclosed falls short of the test posed by the section, there is no waiver. Importantly, the subsections are not concerned with any principle of 'fairness' such as that developed by the common law and by which waiver may be imputed. It should, additionally, be said of the subsections' quantitative test that its application may result in privilege being lost in respect of a discrete part or aspect of a confidential communication or confidential document where the matter disclosed only relates to, or else relates sufficiently to, that part or aspect."
The Court accepted (at 15-16) that, in ancillary processes, it is the common law that determines the availability of a client legal privilege claim. However, the High Court's "well-known decisions" had considered the common law unencumbered by the terms of the Evidence Act. In the Court's view (at 16)
"such is the significance of the Act's provisions...that their advent has created an entirely new setting to which the common law must now adapt itself, and adapt itself in such a way as to 'include [the Act] as a fundamental part of its fabric'."
The Court gave three reasons for expressing this view. First, as an historical matter, legal professional privilege itself evolved as an exception to testimonial compulsion at trial and was then applied derivatively to ancillary processes as these emerged and developed. Any change to the "paradigm" should be reflected in the derivatives. It would be undesirable to have two streams, one legislative and one judicial, "capable of producing differing results depending upon the adventitious circumstances of when in the trial process the privilege claim is made".
Secondly, the Court could see no principled reason for ascribing different policies and purposes to the privilege, depending on whether or not the privilege is claimed when evidence is being adduced at trial. It followed that the sole purpose test laid down in Grant v Downs ought not be applied as part of the common law in Evidence Act jurisdictions. Thirdly, "impractical consequences could ensure" if differing principles were to be applied by the Act and by the common law.
The Court then made observations of importance to the present case (at 17-18)
"We do not need to express a concluded view on the questions (a) whether [Division 1] in fact codifies the law on client legal privilege and (b) whether the common law in Act jurisdictions ought in consequence be regarded as limited in its content to the principles in Division 1. We need however to emphasise that, insofar as previously established principles of the common law are now inconsistent with the Act and its purposes, they are to be taken as being modified correspondingly so as to avoid such inconsistency. Disclosure waiver falls into this category. We emphasise this for this reason. Mr Bennett QC submitted that s 122 of the Act should not be seen as precluding resort in all circumstances to the common law in cases of waiver, especially in circumstances where the protection of the common law is claimed to be more extensive than that of the Act. Reliance was placed upon that presumption in statutory construction against interference with fundamental rights.... The cases on 'issue waiver', it is said, fall outside the purview of s 122 but should nonetheless survive despite this. There are a number of answers to this.
We do not consider that guidance can properly be had from the principle of construction referred to. The Act, no less than the common law, seeks to maintain the privilege and for relatively similar public interest reasons. While the incidents and possible applications of its principles are not coextensive with those of the common law - the Act has its own considered scheme of the privilege - the fortuitous circumstances that in a particular instance the common law's principles may give a greater scope to the privilege than the Act's does not provide reason of itself for the survival of the common law's principles. Rather it merely illustrates the potential undesirability of having the two streams.... Further, we are not convinced that the so-called issue waiver cases amount to more than examples of disclosure waiver of the Maurice variety and, perhaps more usually, of implied consent waiver. These two manifestations of waiver have, in our view, now been displaced directly and derivatively for ancillary processes, by s 122(2) and (4) and s 122(1) of the Act. We would add that s 122 does not provide the sole basis upon which privilege may be lost. It may be the case, for example, that the principles contained in other sections of the Act, and we refer specifically to s 126 and to the difficultly worded s 122(3), may in a given instance result in the loss of privilege in circumstances where the common law would have procured a like outcome."
Their Honours considered that the circumstances of the case before them raised only an issue of disclosure waiver, since the legal advices to which access was sought were not "relevantly... put in issue by the actual claim that has been made in the principal proceedings". The test to be applied was that posed by the Evidence Act, not by the unmodified common law. The question posed by s 122(2) of the Evidence Act was whether the substance of the evidence, namely the confidential communication or contents of a confidential document providing the legal advice, had been disclosed. The answer to that question depended simply on whether and how much of the legal advice contained in or noted in the documents held by the ASC had been made apparent. The Court held that, in the case of one of the legal advices there had been no substantial disclosure, but in the case of the other there had been.
The Court made orders requiring the ASC to produce for inspection any document containing the advice the substance of which had been disclosed. The Court confined the order to the advice disclosed, subject to any further application that might be made, for example, under s 126 of the Evidence Act.
BACKGROUND FACTS
As I have already said, the pleadings have been analysed in Judgment No. 5. To enable the submissions to be understood, it is convenient to set out certain facts not in dispute for the purposes of the present motion.
The TDN Agreement, to which the State and BTA were parties, was the product of a lengthy tender and negotiation process. During this process, which continued for over a year, BTA was advised by MSJ. At least five solicitors from MSJ participated in the process. Indeed, in September 1992, following the State's rejection of a proposal for a managerial fee, BTA set up a negotiating team which included senior BT officers and MSJ solicitors. Particularly intensive negotiations took place in September and October 1992 during which the wording of particular clauses in what became the TDN Agreement were discussed at length. The documents brought into existence in connection with MSJ's retainer include advices, notes in relation to the drafting of the TDN Agreement and correspondence concerning contractual issues arising under the then proposed TDN Agreement.
The TDN Agreement, as executed, contained a number of acknowledgments by BTA (referred to therein as "the Contractor"). These included the following:
"3.3 Acknowledgments by Contractor
(a) ...
(b) The Contractor acknowledges that it has not relied upon any representations, warranties or statements by the Government or any of its officers, whether oral or in any Document, except to the extent that such representations, warranties or statements are expressly set out in this Agreement.
...
20.4 Government not responsible for marketing or utilisation
(a) The Contractor acknowledges that the Government shall not be responsible for marketing or promoting the use by any Agency of the TDN or any service.
(b) The Contractor acknowledges that the Government has not given any warranty, made any representation or undertaken any commitment as to the minimum or any level of telecommunications traffic, level of utilisation of the TDN or any Services by any Agency or all Agencies.
(c) The Contractor acknowledges that it shall have no claim against the Government in respect of any of the matters set out in paragraphs (a) or (b)."
The TDN Agreement also contained other acknowledgments by BTA. For example, cl 16.8 provided as follows:
"The Contractor acknowledges that certain Agencies have entered into supply agreements for telecommunications services with a Carrier and the Agency Service Agreement with any such Agency shall specifically exclude such telecommunications services until the expiry of the relevant supply agreement. The Government shall procure that no Agency shall renew or extend the term of any such agreement, other than on a month to month basis, up to the date the relevant Agency Site is scheduled to be Cutover as set out in the Agency Cutover Plan."
Clause 17.7 stated that, subject (inter alia) to cl 16.8, BTA was to be the exclusive supplier of all "Required Services" to all Agencies other than an "Exempt Agency" (that is, an Agency exempted by the Minister pursuant to a power conferred by cl 16.6), a "Privatised Agency" and an Agency which had terminated its Agency Service Agreement in accordance with the terms of that agreement.
By the second amended statement of claim and the amended fourth cross claim, BT allege that the State made many representations to BTA and, through it, to BT plc. It is alleged, inter alia, that the State represented that the integrated telecommunications network would be used by all the State's Agencies; that the network would service a minimum number of sites and exceed a specified level of traffic; that the successful tenderer would have the exclusive right to supply all Agencies; that the tenderer could achieve satisfactory returns over specified periods; and that the network would retain both the PN (private network) and VPN (virtual private network). The representations are said to have constituted misleading and deceptive conduct by the State andto have induced BTA (inter alia) to submit a tender and to execute the TDN Agreement.
SUBMISSIONS
The State' Submissions
In its written submissions, which were prepared before the decision in Adelaide Steamship, the State pointed to what was said to be the disparity between the terms of the TDN Agreement and the pleaded representations on which BT claim to have relied. BT, in essence, was claiming that, despite its own extensive legal advice during the tender and negotiating process, it believed and relied on representations by the State which directly contradicted the terms of the negotiated contract. Moreover, BT was persisting in its claim notwithstanding that BTA had expressly warranted that it had not relied on any representations made to it by the State.
By pursuing these claims against the State, BTA and BT plc had directly raised as an issue the state of their respective corporate minds. This, in turn, opened up for investigation the sources of and bases for the beliefs pleaded, including the nature and extent of legal advice on which they relied. On principles of issue waiver, discussed in cases such as Thomason and Ampolex v Perpetual Trustee, BT could not resist inspection of documents relevant to those beliefs by invoking client legal privilege. The privilege had been lost.
Of necessity, at the hearing Mr Stowe had to modify the State's written submissions to take account of Adelaide Steamship. He submitted as follows:
· Adelaide Steamship should not be followed, insofar as the Court had expressed the view that the common law of disclosure waiver has been modified by the derivative application of the Evidence Act to ancillary proceedings.
· On common law principles, BT had waived privileged in documents bearing on the question of the corporate minds of BTA and BT plc.
Mr Stowe appeared to accept that, even if common law principles applied, the State was entitled to inspect only a narrow class of documents. He identified that class as including
· advice to BT as to whether contractual provisions could exclude them from the benefit of representations made during the negotiation period; and
· advice specifically as to the legal effect of the acknowledgment provision of the TDN Agreement.
However, as I have already noted, Mr Stowe later adopted the submissions put on behalf of Telstra, which were not so confined.
Telstra's Submissions
Mr Gleeson, who appeared with Ms Cheeseman on behalf of Telstra, made three submissions in support of the proposition that BT should produce for inspection the documents identified in par (1)(a)(1) or, alternatively, par (1)(a)(3) of the State's further amended motion.
· On the assumption that the Evidence Act applies to ancillary proceedings, BT had impliedly consented to the inspection of the documents, thereby attracting s 122(1) of the Act.
· As Mr Stowe had submitted, the common law had survived the Evidence Act, notwithstanding the decision in Adelaide Steamship. The common law notion of fairness, expounded by the High Court in Attorney-General v Maurice and Goldberg v Ng (1995) 185 CLR 83, necessarily meant that BT had lost privilege in the relevant documents.
· In the alternative, the documents "affect[ed] a right of a person" within s 121(3) of the Evidence Act. Mr Gleeson did not develop this argument in any detail.
Mr Gleeson tendered a number of extracts from statements filed in the proceedings on behalf of BT. His purpose in doing so was to demonstrate that senior officers of BT claimed that they believed and relied on the representations pleaded by BT, notwithstanding that BT had been represented in the negotiations by its legal advisers. According to Mr Gleeson, the statements filed on behalf of BT demonstrated that BT had impliedly consented to disclosure of otherwise privileged communications with its legal advisers.
As I followed his argument, Mr Gleeson also submitted that BT's implied consent to disclosure of the legal advice was to be inferred from BT's pleaded case. BT had pleaded that it had a state of mind concerning its "legal and practical entitlements" against the State, namely, that it believed all the telecommunications traffic of the Agencies would be committed to BT's network. This pleaded state of mind implied consent to the disclosure of legal advice bearing on the belief alleged in the pleadings.
BT's Submissions
Mr Lindsay SC, who appeared with Mr Margo and Mr Dicker for BT, made the following submissions:
· Adelaide Steamship should be followed, including the Court's comments on the common law concept of issue waiver. Thus, there was no room for the operation of the common law, insofar as it regarded legal professional privilege as waived in circumstances not contemplated by the Evidence Act.
· There is no basis for regarding BT as having expressly or compliedly consented to disclosure of legal advice received in the course of negotiations for the TDN Agreement. In substance, the submissions on behalf of Telstra and the State sought to import into the Evidence Act a concept of imputed consent - that is, "consent" imposed by operation of law. There is no room for any such concept in the Evidence Act.
· Even if a litigant raising an issue in legal proceedings can be taken, in some circumstances, to have consented to disclosure of legal advice bearing on that issue, that could not be the case merely because the legal advice was relevant to an issue in dispute. Client legal privilege was a fundamental right, not likely to be lost. Thus, it was only where the nature of the legal advice was itself directly an issue in the proceedings, could consent to disclosure be implied.
WHAT IS THE TEST TO APPLY?
The first issue is to identify the test that should be applied when determining whether BT have lost or waived client legal privilege otherwise attaching to communications between them and their legal advisers.
Adelaide Steamship and Issue Waiver
The decision in Adelaide Steamship concerned the effect of what was said to be the voluntary disclosure of privileged communications or advice. As has been seen, the Full Court held that the test laid down by subs 122(2) and (4) of the Evidence Act, rather than the common law principles expounded in Maurice and Goldberg v Ng, determined whether the privilege had been lost. It was not necessary to the decision for the Court to address the effect of the Evidence Act on common law principles governing waiver of legal professional privilege in a non-disclosure case. As the Court itself noted, Adelaide Steamship was not a case of so-called "issue waiver". Nor did it turn on the operation of s 122(1) of the Evidence Act (providing for the adducing of evidence given with the consent of the client).
Nonetheless, the Court made important observations both on the construction of s 122(1) and on common law principles of waiver of legal professional privilege. In relation to s 122(1), their Honours considered (at 12) that "consent" in s 122(1) of the Evidence Act should not be confined to express consent, but should be read as including implied consent. The Court took this view despite the fact that the formula "with the express or implied consent of the client", which appears in s 122(4), is not reproduced in s 122(1).
The Court addressed the question of waiver at common law, with particular reference to issue waiver (at 13-14):
"Maurice's case and Goldberg v Ng made plain that whether fairness demands an end to the privilege and consequential disclosure will depend upon the circumstances of the case, in the context of the litigation between the parties and bearing in mind that privilege is considered a substantive doctrine of the common law. Consideration will usually then be required not only of the extent of the disclosure, but also of the use to which it has been put, especially in so far as it has affected the other party, and to the possible effect if privilege is maintained of the balance. In Maurice's case Gibbs CJ, Mason and Brennan JJ referred to the possibility of inaccurate perceptions being created by the balance of the communication remaining protected (482, 487-8). In particular as Gibbs CJ (481-2) and Dawson J (497) observed, it would be unfair to allow a party to use part of a document and claim privilege as to the remainder where it dealt with a single subject matter.
On the present appeal reference was also made to, and the respondents sought to rely upon, what was described as 'issue waiver'. In our view however it is no more than a particular manifestation of the principles applying either to waiver by disclosure or to implied consent to disclosure. The usual type of case said to illustrate issue waiver at common law is one in which, in order to establish a particular right, claim, or defence a party who previously has been legally advised, or has provided advice, needs to show that the advice so given did, or did not, have a particular character, for example that it was or was not negligent where the claim is for professional negligence against the adviser: see Kershaw v Whelan [1996] 1 WLR 358; that it was not based on full information or was not meaningful, in an undue influence claim: see Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 at 130-131; see also Bester v Perpetual Trustee Co Ltd [1970] 3 NSWLR 30 and Brusewitz v Brown [1923] NZLR 1106 or that it did not address or properly address a matter which, if addressed or properly addressed, would defeat or call into question the right or claim asserted as in claims where the applicant has to demonstrate he or she acted with or without adequate knowledge of a matter: see Thomason v The Council for the Municipality of Campbelltown (1939) 39 SR (NSW) 347; Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419; Pickering v Edmunds (1994) 63 SASR 357. In other words the cases are ones in which, in the substantive proceeding brought, the privilege holder has put in issue the very advice received. We observe in passing that it is questionable whether advice can properly be said to be in issue in a proceeding merely because it may be relevant to an issue in it: see Rhone-Poulenc Rorer Inc v The Home Indemnity Company 32 F 3d 851 (3rd Cir. 1994) at 863; save, perhaps, where the proceeding is between client and legal adviser and the advice is relevance to the adviser's defence of that proceeding: see Lillicrap v Nalder & Son [1993] 1 WLR 94.
For the most part, we would have thought that the conclusion reached in the types of case to which we have referred, could be accounted for on the basis of fairness in the sense in which that term is used in Maurice's case, at least where it could not be said that the case was in fact one of implied consensual waiver.
Later in the judgment their Honours, in a passage already extracted (at 17-18) rejected a submission that s 122 of the Evidence Act should not be seen as precluding resort to the common law in cases of waiver. The Court also specifically rejected a contention that the "issue waiver" cases fall outside the purview of s 122 and that they should be regarded as surviving the enactment of the Evidence Act. The fact that the Act's "considered scheme" and the common law were not co-extensive did not constitute a reason for the survival of the common law in its previous form. Moreover, the Court was not convinced that the so-called issue waiver cases amounted to more than examples of "disclosure waiver of the Maurice variety and, perhaps more usually, of implied consent waiver". These two manifestations of waiver had been displaced directly and derivatively for ancillary processes by s 122(1), (2) and (4) of the Evidence Act.
In my opinion, a number of propositions can be drawn from Adelaide Steamship. They include the following:
· The common law principles governing waiver of legal professional privilege in ancillary proceedings have been "adapted" by the Evidence Act, notwithstanding that the Act is, in terms, limited to the circumstances in which evidence may or may not be adduced.
· To the extent that common law principles are inconsistent with the Act and its purposes, they are taken to have been modified correspondingly.
· In the case of disclosure waiver, the test to be applied is that specified in subss 122(2) and (4) namely, whether the client has knowingly and voluntarily disclosed to another person the substance of the privileged communication or whether the substance of the communication has been disclosed with his or her express or implied consent.
· The test for loss of privilege by reason of disclosure provided by subss 122(2) and (4) is a quantitative one. It is inconsistent with the common law fairness test, enunciated in Maurice. The common law has to that extent been modified.
· Section 122(1) provides for the loss of client legal privilege where the client expressly or impliedly consents to disclosure.
· The so-called issue waiver raises are to be regarded as particular manifestations of the principles applying either to waiver by disclosure or to implied consent to disclosure. They do not fall outside the purview of s 122 of the Evidence Act.
The first four propositions are, at least arguably, part of the ratio decidendi of Adelaide Steamship. The last two are not. However, I think I should follow the carefully expressed views so recently stated by a Full Court on the relationship between s 122 of the Evidence Act and issue waiver. In reaching this conclusion, I appreciate that the law relating to client legal privilege is in transitional phase and that not all have been convinced by the reasoning in Adelaide Steamship: see, for example, Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd, Goldberg J, 18 March 1998, unreported, at 29-30. I also appreciate that the Court in Adelaide Steamship did not have the benefit of detailed argument on the "ancillary" operation of s 122(1) of the Evidence Act. Nonetheless, I think that the appropriate course for a trial Judge is to apply the considered dicta of the Full Court. If the approach of the Full Court is to be modified, this should be done by another Full Court.
The Issue Waiver Cases
If I have understood Adelaide Steamship correctly, so-called issue waiver cases are to be determined by the "derivative" application of the principles stated in s 122 of the Evidence Act. In other words, the test to be applied is whether there has been disclosure of the substance of the privileged communication or consent (express or implied) to its disclosure. This implies that the criteria to be applied in determining whether the privilege has been lost are different from the test of fairness stated in Attorney-General v Maurice and Goldberg v Ng. It is helpful, then, to consider whether the issue waiver cases can be explained (as the Full Court in Adelaide Steamship suggested) as particular manifestations of disclosure or implied consent waiver.
It is convenient to start with a case that can be explained on this basis. In Thomason v Campbelltown Council, the plaintiff claimed damages in respect of the death of her husband, in an action against the husband's former employer under the Compensation to Relatives Act 1897 (NSW). An issue in the proceedings was whether the plaintiff had elected to claim benefits under the Workers' Compensation Act 1926 (NSW). If so, she was debarred from suing the employer in negligence.
The plaintiff had signed a statement in the workers' compensation proceedings, stating that she had been advised by a solicitor of the election available to her, and that she had elected to claim the benefits prescribed by the Workers' Compensation Act. Jordan CJ held that the statement involved a waiver of her privilege for the purposes of the negligence action against the employer. Having regard to the circumstances in which the statement was made, it is not difficult to regard Thomason as a case of voluntary disclosure of otherwise privileged advice and, perhaps, of implied consent to disclosure of the advice.
However, Jordan CJ gave a broader alternative ground for his decision. In a well-known passage, which has been followed in subsequent cases, his Honour said this:
"in effect, one of the issues in the case was what advice, if any, the plaintiff received from legal advisers as to her alternative legal rights. In these circumstances, since the fact and nature of the advice is an issue in the case, I am of opinion that privilege cannot be raised to prevent the proof of the advice. The position is analogous to that which arises in the suit in Equity to set aside a transaction on the ground of undue influence. In such a suit, it has always been the practice for the defendant to cross-examine the plaintiff with a view to proving that the plaintiff had competent legal advice when he entered into the transaction, and to call and examine the legal adviser if he is available; and I have never known it to be suggested that such evidence is inadmissible on the ground of the plaintiff's privilege: cf In re Coomber [1911] 1 Ch 723 at 725; Inche Noriah v Shaik Allie Bin Omar [1929] AC 127, at 130-131."
This passage suggests that "issue waiver" can occur even where there has not been substantial disclosure of the privileged communications and the client has not truly consented, whether expressly or impliedly, to any disclosure of the communication.
The duality of approach evident in Thomason can be discerned in cases relating to waiver of privilege where a client sues his or her solicitor. The authorities establish that, under the general law, a client who sues his or her solicitor for negligence waives the privilege otherwise arising from the confidential relationship between them, at least to the extent necessary to enable the defendant to establish any defence to the cause of action: see Lillicrap v Nalder & Son [1993] 1 WLR 94 (CA), at 98-99, per Dillon LJ. This, too, can be seen as an example of disclosure waiver, since in a negligence case the client necessarily reveals part of what would otherwise be privileged communications with his or her legal adviser or makes assertions about the contents of those communications. Yet the rationale for this line of cases is not said to be disclosure, but prevention of
"the unfairness which would arise if the plaintiff were entitled to exclude from the court's consideration evidence relevant to a defence by relying upon a privilege arising from the solicitor's duty of confidence."
Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow [1995] 1 All ER 976 (QBD), at 986, per Coleman J. This broad rationale has led courts to hold that a client who sues his or her solicitor has waived privilege, for example, in relation to communications made in previous transactions with the same firm (Lillicrap v Nalder & Son) or with other legal advisers (Kershaw v Whelan [1996] 1 WLR 358 (QBD), provided the communications concern the matters in issue in the principal proceedings. See also Benecke v National Australia Bank, at 111, per Gleeson CJ; at 116, per Clarke JA (a case where a client gave evidence of conversations with her senior counsel and was held to have waived privilege in relation to those conversations).
The broader rationale is evident in other recent cases. In Hongkong Bank of Australia Ltd v Murphy [1993] 2 VR 419 (S Ct Vic/Smith J), the Bank claimed that it had been induced by misleading conduct of a trustee (the old trustee) to take an assignment of mortgage. The successors in title to the trustee (the new trustees) pleaded that the Bank had participated in a breach of trust by the old trustee and that the purported assignment was ineffective. The Bank, in its reply, asserted that if the old trustee had assigned the mortgage in breach of trust, the Bank was a bona fide purchaser for value without notice of the breach.
The new trustees sought orders, inter alia, that the Bank produce advices from its solicitors relating to the enforceability of the assignment, or to the ability of the old trustee to grant the assignment. Smith J (at 435-436) cited Thomason and quoted from a passage in Wigmore in Evidence (vol 8, par 2327), describing the relevant principle as follows:
"It is only where the client directly or indirectly puts in issue the substance of the privileged communication that the privilege is lost and then only insofar as is necessary to do justice between the parties."
His Honour saw the question as whether the Bank, "in raising and persisting with issues which concern legal advice it received", should be regarded as having waived the privilege in the advice it had received. He gave an affirmative answer to this question (at 438-439):
"In the present proceedings, the communications between [the Bank] and its lawyers are and will be an issue in the case.... [T]he reality is that the issues of which the alleged privileged communications form a part, are central to [the Bank's] claim....
In this case if [the Bank] is permitted to rely on a claim for privilege for the documents in question, the fact-finding task of the court will be seriously compromised."
Hongkong Bank v Murphy, in my opinion, is difficult to regard as a case of voluntary disclosure, or implied consent to disclosure, of legal advice. Unlike Thomason and Benecke, for example, the Bank had not revealed the contents of communications with its legal advisers. Unlike some of the solicitor cases, it had not pleaded its legal advice as an element in its cause of action. It is true that the advice received by the Bank was relevant to the truth of its plea that it was a bona fide purchaser for value without notice. But the Bank's pleadings did not assert that it had received particular advice or, indeed, any advice at all. While it may have been unfair (as Smith J thought) for the Bank to plead that it was a bona fide purchaser without notice, yet at the same time decline to reveal legal advice relevant to that issue, it had not disclosed any part of the advice it had received. Nor had it consented, expressly or impliedly, to disclosure of the advice. Any "consent" to that course could only have been imputed to the Bank as a matter of law, independently of its own wishes, by reason of the apparent unfairness of its conduct.
Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405, was a similar case. There, purchasers of convertible notes in Ampolex alleged that Ampolex induced them to believe that the notes were issues on a particular basis, and that Ampolex was estopped from departing from that position. Giles CJ, Comm D, held (at 411) that the purchasers had waived privilege in respect of legal advices received on the effect of the convertible notes:
"having exposed to scrutiny their corporate states of mind, being states of mind to which their legal advice is likely to have contributed, [the purchaser] cannot withhold the advice from their opponent. I emphasise that the legal advice is likely to have contributed to the states of mind of [the purchasers], as was plain from the dates of and descriptions of the documents: were that not so, the principle may not have applied."
The Test
It seems to me to follow from the reasoning in Adelaide Steamship that a litigant who raises particular issues in the course of the litigation thereby loses client legal privilege if, by raising those issues, he or she
· expressly or impliedly consents to the privileged communications being disclosed (s 122(1), (4)); or
· knowingly and voluntarily discloses the substance of the privileged communications (s 122 (2)).
Of course, privilege may be lost in other circumstances dealt with in the Evidence Act, such as those specified in ss 121(3), 122(6) and 126. These may be put to one side for present purposes, although I shall return to s 121(3).
It also seems to me to follow from Adelaide Steamship that the test for determining whether the privilege has been lost is not whether the non-disclosure of the privileged communication would be unfair. The Court expressly stated that the "quantitative" test for disclosure waiver displaced any principle of "fairness" by which waiver could be imputed. The Court also stated that it was not convinced that cases of issue waiver amounted to more than disclosure waiver of the Maurice variety and perhaps more usually of implied consent waiver. It may be that another Full Court will hold that the unfairness test, as previously applied in issue waiver cases, has survived the enactment of the Evidence Act. But I think that that step, if it is to be taken, is not the province of a trial Judge.
One consequence of the approach in Adelaide Steamship is that, in a particular case, the circumstances in which the privilege is lost may be narrower than under the general law. That is, there may be circumstances in which there has been no substantial disclosure of privileged communications, or consent to disclosure, yet a court might consider it unfair for the privilege to be maintained. Under the pre-Evidence Act common law, the privilege would be waived. Under the post-Evidence Act common law the privilege would not be lost. Hongkong Bank v Murphy may be an illustration of such a case.
The Court in Adelaide Steamship did not explicitly provide a policy justification for this conclusion. However, the judgment distinguished between proceedings in which legal advice is put in issue and those in which legal advice is merely relevant to an issue. In support of that distinction, the Court cited an American case, Rhone-Poulenc Rorer Inc v The Home Indemnity Company 32 F 3d 851 (3rd Cir, 1994). In that case, the Court of Appeals for the Third Circuit suggested a policy justification for taking a narrow approach to the circumstances in which the conduct of litigation can lead to loss of client legal privilege. The Court said this (at 863-864):
"There is authority for the proposition that a party can waive the attorney client privilege by asserting claims or defenses that put his or her attorney's advice in issue in the litigation. For example, a client may waive the privilege as to certain communications with a lawyer by filing a malpractice action against the lawyer. See Wigmore, [par] 2327, at 638. A defendant may also waive the privilege by asserting reliance on the advice of counsel as an affirmative defence....
In these cases, the client has made the decision and taken the affirmative step in the litigation to place the advice of the attorney in issue. Courts have found that by placing the advice in issue, the client has opened to examination facts relating to that advice. Advice is not in issue merely because it is relevant, and does not necessarily become in issue merely because the attorney's advice might affect the client's state of mind in a relevant manner. The advice of counsel is placed in issue where the client asserts a claim or defense, and attempts to prove that claim or defense by disclosing or describing an attorney client communication....
Finding a waiver of the attorney client privilege when the client puts the attorney's advice in issue is consistent with the essential elements of the privilege. That is, in leaving to the client the decision whether or not to waive the privilege by putting the attorney's advice in issue, we provide certainty that the client's confidential communications will not be disclosed unless the client takes an affirmative step to waive the privilege, and we provide predicability for the client concerning the circumstances by which the client will waive that privilege. This certainty and predictability as to the circumstances of a waiver encourage clients to consult with counsel free from the apprehension that the communications will be disclosed without their consent."
APPLICATION OF THE TEST
In the present case, BT have not pleaded that they relied on legal advice. Nor have BT pleaded that their officers or agents received any legal advice in connection with the TDN Agreement. BT's case, insofar as relevant to the present question, is essentially that the State made misrepresentations which induced BTA (inter alia) to enter the TDN Agreement and to incur expenditure. If attention is confined to the pleadings it is difficult to conclude that BT have disclosed the substance of legal advice in fact received by them or their officers. Nor do I think that BT's pleadings constitute implied consent to disclosure of legal advice received in the course of negotiations, whether generally or in relation to the specific matters referred to in par (1)(a)(3) of the further amended motion.
The concept of consent, including implied consent, seems to me to incorporate the notion of voluntary assent to a particular course. Thus, in The Law of Consent (1986), Mr Justice Young commences his discussion of the meaning of consent by quoting dictionary definitions (at 12):
"The Oxford definition which is nearest the usual sense in law is 'voluntarily to accede to or acquiesce in a proposal, request etc; to agree, comply, yield'. The Australian Pocket Oxford puts it even more simply when it speaks of consent as meaning 'agreement; compliance; permission'.
The Macquarie Dictionary defines the noun as 'assent; acquiescence; permission; compliance. Or agreement in sentiment, opinion, a course of action etc'."
These definitions and the other sources discussed in Chapter 2 of the book suggest that voluntariness is an element of consent.
It might be argued that the concept of consent, as embodied in s 122(1) of the Evidence Act, embraces not merely express or complied consent, but consent that should be imputed to the actor having regard to the circumstances of the particular case. This would be a means of preserving the common law test of fairness, yet allowing it to operate within the confines of the common law as derivatively altered by the enactment of the Evidence Act. In my view, this approach would expand the concept of "consent" beyond the meaning it can reasonably bear. If the merits of the common law test are such that the test should be retained, I think that this should be done more directly than by expanding beyond breaking point the notion of "consent" as used in s 122(1) of the Evidence Act.
As I have noted, Mr Gleeson did not rely merely on BT's pleaded case, but tendered extracts from statements of evidence filed on behalf of BT in the principal proceedings. These extracts show that BT received legal advice in the course of negotiations with the State. Indeed, solicitors from MSJ formed part of BT's negotiating team. In their statements of evidence, officers of BT claim to have believed representations to the effect of those pleaded by BT. That claim is made, notwithstanding that at least some of the officers received legal advice during the critical negotiations with the State. There is therefore little doubt that the content of any legal advice relating, for example, to the effect of the acknowledgments in the TDN Agreement or the relationship between representations and the terms of the TDN Agreement, could be material to any assessment of the reliability of evidence by BT's officers as to their state of mind.
The point can be illustrated by the statement of Mr Aleppo, a member of the Group Commercial Contracts Department of BT plc, extracts from which were admitted into evidence. Mr Aleppo says that he believed the traffic volumes and dispersion figures stated in the RFT were accurate and that, if he had been told they were not, "alarm bells" would have rung. He also says that was involved in reviewing and commenting on various drafts of the TDN Agreement and that he participated, with MSJ solicitors, in intensive negotiations over the wording of particular clauses in the TDN Agreement. Exhibit 2, a list of documents in respect of which BT has claimed privilege, shows that privilege has been asserted by BT over a number of communications between Mr Aleppo and MSJ, and between Mr Aleppo and Mr Lornish (who was then BTA's Senior Commercial Manager). These communications took place at the time the negotiations concerning the TDN Agreement took place.
Mr Gleeson submitted that Mr Aleppo's statement, and statements of evidence to similar effect by others within BT's camp, show that BT have impliedly consented to disclosure of otherwise privileged communications with MSJ. Mr Gleeson put this submission on the basis that BT are relying on evidence as to the state of mind of their officers, at a time when, on the officers' own evidence, they were receiving legal advice which, as a matter of probability, was concerned with the same issues. In these circumstances, BT must be taken to have consented to the disclosure of any legal advice relevant to the officer's state of mind.
For the reasons I have given, I do not think that the fact that legal advice received by BT's officers is likely to be material to their state of mind on issues pleaded by BT, of itself, constitutes implied consent to the disclosure of that advice. There will be cases in which the pleadings can be taken as implied consent to the disclosure of advice referred to therein. There will also be cases in which the evidence adduced or relied on in legal proceedings amount to implied consent to disclosure. For example, if a party to litigation files evidence which specifically refers to legal advice as supporting the witness's state of mind, the party can be taken to have assented to the disclosure of that advice. This would not be a case of imputing consent because it is thought unfair for the privilege to be maintained. It would be a case of the party voluntarily invoking legal advice in support of its case and thus impliedly consenting to disclosure of that advice. Even if the substance of the advice had not been disclosed, the party's actions could constitute implied consent to disclosure of the advice.
In my opinion, the conduct of BT in the present case did not amount to implied consent to disclosure of their legal advice in connection with the negotiation of the TDN Agreement. BT have not directly raised the content of the legal advice received by them or their officers in support of their case, either in the pleadings or in statements of evidence. It is true that the legal advice produced by MSJ is likely to be material to whether Mr Aleppo and other officers had the state of mind outlined in their statements. But this does not, of itself, amount to consent to disclosure of the legal advice or other privileged communications.
SECTION 121(3)
I do not think that Mr Gleeson's reliance on s 121(3) of the Evidence Act takes the matter any further. The Law Reform Commission said that the expression "communication or document that affects the right of a person" was required
"to cover situations where a communication between the client and the lawyer has had the result of creating, limiting or terminating a person's rights."
The illustration given of such a communication is one creating a secret trust: LRC, Evidence (Report No 38, 1987), par 196, n 13. Whatever the scope of s 121(3) of the Evidence Act, it does not apply to communications between BT and their legal advisers in the course of negotiations relating to the TDN Agreement.
CONCLUSION ON THE STATE'S MOTION
Paragaraph 1(a) of the State's motion should be dismissed. The State and Telstra should pay BT's costs in relation to par 1(a) of the State's motion.
TELSTRA'S MOTION
Terms of the Motion
Telstra seeks an order pursuant to FCR, O 15, r 11 that BTA produce for inspection by Telstra of
"all documents whether by way of correspondence, letter, file note, memoranda, diary note, advices, including all legal advice evidencing, recording, relating to and/or constituting
(a) the advice received from Queens Counsel in relation to these proceedings referred to in the Notes to and forming part of the financial statements of BTA for the period ending 31 March 1996;
(b) the advice taken by BTA from Queens Counsel in April 1996 in relation to the first cross-claim in this proceeding and BTA's claims in the proceeding;
(c) all documents identified in Schedule 1 annexed hereto."