High Court of Australia|1996-05-22|Before: Rolfe J, Kirby J

Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd [1996] HCA 15; 70 ALJR 603; 137 ALR 28 (22 May 1996)

AMPOLEX LIMITED v PERPETUAL TRUSTEE COMPANY (CANBERRA) LIMITED, GPG NOMINEES PTY LIMITED, ALLIED MUTUAL HOLDINGS PTY LIMITED, COUNTRY NATWEST SECURITIES AUSTRALIA LIMITED, SIR RONALD BRIERLEY, GARY HILTON WEISS. MAURICE WILLIAM LOOMES AND GRAEME JAMES CURETON, ROBERT BAIN THOMAS AND NIC CLAYHILLS, ANTHONY GREGORY BANCROFT AND OTHERS TRADING AS MALLESONS STEPHEN JAQUES AND AUSTRALIAN STOCK EXCHANGE LIMITED

High Court - Legal Practitioners - Evidence - Company Law

High Court - Practice and procedure - Stay and like relief pending hearing of application for special leave to appeal - Jurisdiction to provide relief - Extraordinary or exceptional character of - Ruling on legal professional privilege - Effective loss of confidentiality if relief refused - Balance of convenience affecting lengthy trial - Relief refused.

Legal Practitioners - Client privilege - Protection of confidences - Nature of privilege as defensive of civic rights - Loss of privilege by waiver - Whether client knowingly and voluntarily disclosed substance of advice - Decision of primary judge arguably correct - No substantial prospect of special leave to appeal being granted - Interim relief refused.

Evidence - Client's legal professional privilege - Waiver of confidentiality - Whether client had disclosed to another person the substance of the advice - Publication in company documents concerning receipt of legal advice supporting company's position - Decision that privilege waived arguably correct - Interim relief refused.

Company law - Part B statement - Independent valuer's report - Reference to existence of legal advice supporting the position of company - Whether reference constitutes waiver of legal professional privilege - Decision that it does arguably correct - No substantial prospect of grant of special leave to appeal to High Court - Interim relief refused.

1. Orders as sought in the summons refused, summons dismissed;

2. Stand over the application for special leave to appeal to the Registrar's

3. The applicant to pay the costs of the disputing respondents; and

4. Certify for counsel.

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

KIRBY J. Before the Court is a summons seeking an order restricting access to documents produced in a trial which is proceeding in the Supreme Court of New South Wales. The order is sought to secure, in effect, a stay of a decision made in the trial, pending determination of an application for special leave to appeal to this Court from that decision.

2. For the present purposes, the complex facts can be reduced to their bare bones. Ampolex Limited, the applicant in this Court ("Ampolex"), is the plaintiff in proceedings in the Commercial Division of the Supreme Court of New South Wales. In those proceedings Ampolex seeks, amongst other things, declarations that the proper conversion ratio of certain convertible notes issued by it is one share for one note. The proceedings are now in the seventh week of the trial which is being conducted by Rolfe J.

3. In February 1996 Mobil Exploration and Producing Australia Pty Ltd ("Mobil") announced an intention to make a takeover offer for securities in Ampolex. Mobil registered a Part A statement. This was subsequently revised after litigation in the Federal Court of Australia with which I am not concerned. Ampolex then prepared, and made available to the holders of the securities, a Part B statement. That statement is an exhibit before Rolfe J. The Part B statement was accompanied by an independent valuer's report. Page ii of that report made reference to the current dispute concerning the conversion ratio. It stated, relevantly:

"Ampolex maintains that the correct ratio is 1:1 AND HAS

LEGAL ADVICE SUPPORTING THIS POSITION". (emphasis added)

4. Following circulation of the Part B statement, County NatWest Securities Australia Limited ("County NatWest"), a defendant in the proceedings, and other parties, served a notice on Ampolex requiring the production of documents "recording or comprising legal advice" referred to in the Part B statement. On 14 May 1996, in answer to a call upon relevant portions of the notice to produce, Ampolex produced documents to the Court in a sealed envelope. The call was made during the cross-examination of Dr P E Power. Since 1987 Dr Power has been the Managing Director or a Senior Manager of Ampolex.

5. In the proceedings before Rolfe J, Ampolex is seeking, amongst other orders, rectification of a trust deed entered in 1988. It is in the course of that application that an issue has arisen concerning the conversion ratio, the disclosures made to the public about the conversion ratio and the veracity and completeness of those disclosures. Dr Power's credit is said to be in issue in relation to his evidence on those points. It was during the course of his cross-examination that the notice to produce was served on Ampolex and called upon. Presumably, County NatWest and other parties hope, or expect, that the legal advice will not, in substance, bear out the assertion in the Part B statement quoted above. If it does not, it is presumably hoped that in some way this may damage Dr Power's credit. I emphasise that no conclusion has been reached on any of these points in the way that the matter developed.

6. Having produced the envelope, Ampolex objected to the tender of the documents in it on the ground of the legal professional privilege enjoyed by Ampolex. On 15 May 1996 Rolfe J upheld the claim for access to the documents. He rejected the claim of legal professional privilege. He held that Ampolex had waived its entitlement to legal professional privilege in respect of the contents of the documents. There was, he found, a knowing and voluntary disclosure of the substance of the legal advice as contemplated by s 122(2) of the Evidence Act 1995 (NSW). He held that the waiver in question occurred by the publication to the shareholders and the public of the Part B statement. Rolfe J thereupon admitted the contents of the sealed envelope into evidence. However, he ordered that access to the documents in the envelope be stayed pending an application to the New South Wales Court of Appeal which was foreshadowed on the part of Ampolex.

7. On 16 May 1996 Ampolex duly filed in the Court of Appeal a summons for leave to appeal from what I will neutrally call, without prejudgment, Rolfe J's decision. The summons was filed with a notice of motion seeking an order that, pending further order of that Court, no access be granted to the subject documents so as to preserve the privilege which was the subject of the application for leave to appeal. After procedural steps, which I do not need to recount, on 20 May 1996, Ampolex's application came for hearing before the Court of Appeal. After hearing submissions, Ampolex's application was dismissed by the Court. In order to protect its claim for privilege, Ampolex then sought a further order so that the documents should remain in the sealed envelope pending a hearing in this Court. By majority, the Court of Appeal ordered that, until 4 pm this day, the documents should remain in the sealed envelope, inaccessible to examination. The application to the High Court was duly filed. It was returned with maximum expedition this morning before me.

8. Ampolex wishes to make an application to this Court for special leave to appeal from the orders of the Court of Appeal. In support of the proposed application, and to protect its utility, Ampolex seeks from the Court a stay or other order effectively preventing access to the subject documents pending the hearing of the special leave application. The motion by Ampolex is supported by members of the legal firm Malleson Stephen Jaques who were not, I should say, the authors of the subject legal advice but are otherwise involved in the proceedings, although the transcript before Rolfe J reveals that the legal advice in question was not tendered as against those parties. The other respondents before me either made no submissions or, in most cases, opposed the grant of the stay or the making of the orders sought by Ampolex. Applicable principles governing stay and like relief

9. It is useful to recall to mind once again the relevant principles which govern the provision of a stay or equivalent order in an application such as the present.

1. The High Court has an inherent jurisdiction to order a stay of proceedings pending the determination of an application for special leave to appeal (1).

Submissions were put for County NatWest, supported by other respondents, that this Court lacked jurisdiction, or at least a proper procedural foundation, for granting relief in this case. I would wish to make it clear that I do not rest my conclusion on that basis. The inherent jurisdiction of this Court to grant a stay or to make another order protecting the utility of its process is extremely large, and properly so, as befits the ultimate court of appeal of this country, defending the rule of law (2).

2. Although stays are now more readily granted to protect the utility of appeals in some courts under the High Court (3), in this Court it is still commonly stated that the jurisdiction to grant a stay, or to provide an order having that character, is "extraordinary" (4). It is commonly said that it will only be exercised in "exceptional circumstances" (5).

3. The reasons for the rule that the jurisdiction of the High Court to provide a stay and orders in the nature of a stay is "extraordinary" or "exceptional" include (a), that ordinarily, as in the present case, a stay will have been sought and refused by the courts below. They typically have the opportunity to consider, at greater length, the merits of the point in contest. This Court has made it clear that, before seeking a stay in the High Court, parties should ordinarily approach the court of trial or the appellate court supervising that court (6) and (b), that the appeal to the High Court does not now lie as of right. Leave to appeal must be sought which, in most cases, involves special leave. Such leave is so described because it is usually necessary to establish that there are special considerations of general importance or of principle involved in the proposed appeal to which the proposed stay or similar order is adjunct, before special leave to appeal will be granted (7).

4. In recent times, in applications such as the present, this Court has generally applied the approach to stay applications, and applications of a similar kind, expressed by Brennan J in Burgundy Royale (8):

"In exercising the extraordinary jurisdiction to stay, the

following factors are material to the exercise of this Court's discretion. In each case when the Court is satisfied a stay is required to preserve the subject-matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies."

Different considerations, somewhat more protective of the applicant's rights, may arise where the liberty of the subject is involved (9). Different considerations may perhaps arise in other cases. However, they are not involved in this case.

5. Necessarily, in judging whether there is a substantial prospect that special leave to appeal will be granted, the Justice hearing the stay application will not, by that decision, pre-empt the special leave question. He or she must usually make a decision under constraints of time and often with less than a full and perfect appreciation of the intricacies of the parties' arguments (10). The Justice is but one member of the Court. Upon many questions which come before this Court, judicial minds can differ. Predicting the outcome of appeals is sometimes as perilous for a single Justice as it is for the legal profession (11). As a matter of law, nothing said or done in a stay application forecloses the right of a party to persist with its application for special leave to appeal.

6. Nevertheless, in some cases, the stay or equivalent order will be more crucial than in others. Where a refusal will effectively have the result of foreclosing the utility of an appeal, this is a very important consideration (12). If overlooked, this consideration will invite the intervention of the appellate court as it did in Paringa Mining and Exploration Co Plc v North Flinders Mines Ltd (13). That case was extraordinary in that the primary judge was held to have denied the applicant any distinct and separate consideration of the application for an injunction pending the substantive appeal to the Full Court. No such issue arises in this case.

7. In the present case, a stay or an order equivalent to a stay would, in my opinion, be needed, to preserve the utility of the subject matter of the litigation, namely the confidentiality of the legal advice in respect of which Ampolex claims privilege. Once that advice is disclosed, particularly if disclosed to all parties in a public trial, the genie cannot be returned to the bottle. The privilege is effectively lost. It cannot be retrieved. The applicant has taken all steps necessary to secure a stay or other order in the court in which the matter stands pending. I must therefore focus my attention, as Dawson J did in Re Duke Group (14) and as I earlier did in Bryant v Commonwealth Bank (15), upon whether the applicant has shown that there is a substantial prospect that special leave to appeal will be granted to it; whether, if so, a grant of a stay or similar order would cause loss to the other resisting parties; and where the balance of convenience lies.

8. It is unnecessary for me to determine whether the decision of Rolfe J effectively granting access to the legal opinions was an "order" giving rise to a right to apply for leave to appeal to the New South Wales Court of Appeal. That Court was prepared to assume, despite some contrary authority of its own (16), that it was and to deal with the matter on its merits. I will also proceed in that way. The following considerations are then relevant to the remaining questions before me. The ruling arose in the seventh week of a lengthy and complex trial. Any appellate court, but this Court particularly, will be extremely reluctant to disturb such proceedings by permitting an interlocutory appeal. The reasons for such reluctance are obvious. A trial judge must make many such rulings virtually every day. The rulings often involve discretionary considerations or at least considerations involving judgment and degree. The rulings sometimes touch upon the practice and procedure of the court of trial. The trial judge will normally have a much better idea of the relevance and merits of the point in issue in the context of the matters truly in dispute. Disrupting the course of the trial involves great cost and inconvenience to other parties and to the public use of courts and the scarce time of judicial officers and other court staff. Wealthy or powerful litigants should not be encouraged to think that they can readily interrupt the course of a trial, once begun. As a matter of law, appellate rights for errors in interlocutory rulings ordinarily remain for exercise at the end of a trial, if still then considered important (17).

9. The law of legal professional privilege is an important branch of the law protecting the basic rights of persons in a society such as ours. Those rights include the right to approach lawyers without concern that matters disclosed, and advice received, in confidence will ordinarily enjoy the protection of the law. Increasingly, in recent years, this Court and other courts of high authority, have described such rights in the language of basic civic rights (18). They have also been explained as rights pertinent to the just operation of the adversarial system rather than, as they have sometimes been explained in older or other authorities, as rules of evidence or procedure. Within this Court, there have been divisions of opinion on this point. However, generally speaking, I consider that the trend of recent authority supports the submission that legal professional privilege constitutes an important civic right to be defended, as such, by the law.

10. There is no doubt that legal professional privilege may be extinguished by clear statutory provision (19). It may also be waived by decision of the client. In New South Wales, the scope of the privilege and exceptions by waiver are now dealt with by the Evidence Act 1995 (NSW). By s 118 of that Act,

"(e)vidence is not to be adduced if, on objection by a

client, the court finds that adducing the evidence would result in disclosure of:

...

(c) the contents of a confidential document ... prepared by

for the dominant purpose of the lawyer ... providing legal advice to the client."

Prima facie, that section applies to the legal advice in question here. However, by s 122 of the Act, it is provided that such privilege may be lost. The prohibition does not prevent the adducing of evidence if a client has "knowingly and voluntarily disclosed to another person the substance of the evidence". There are, in turn, various exceptions to that provision, including where the disclosure was made under compulsion of law. However, I am not convinced that the precise disclosure which occurred here falls, in its terms, within any of these exceptions.

Ampolex stated that it had "legal advice supporting its position". Rolfe J concluded that this statement was, within s 122, disclosure of the "substance of the evidence". The disclosure suggested, to reasonable inference, that the legal advice supported Ampolex's stated position. Ampolex drew attention to the limits of "substance" suggested by such decisions as Derby and Co Ltd v Weldon (No 10) (20). I agree that a mere reference to the existence of legal advice would not amount to a waiver of its contents. Rolfe J appears to have acknowledged this distinction by later rulings to which I was taken during the course of argument. But at least in respect of the substance of the legal advice supporting Ampolex's assertion about the correct ratio, which is in contest here, it is strongly arguable that the public reference to the supporting legal advice, waived the privilege as to the precise content of the legal advice on that point. I cannot say that the ruling is attended by such doubt as to promise a substantial prospect of a grant of special leave to appeal to this Court. On the contrary, on my present understanding of the facts and as a tentative view, the opinion expressed in the ruling seems arguably correct.

11. Sometimes the balance of convenience is considered by the Court in cases such as the present if the issues are otherwise delicately poised (21). In the present case there is no doubt that the balance of convenience strongly favours the refusal of a stay or of the specific order sought. Such a stay or order would delay a very substantial enterprise of litigation for which several months of hearing remain. Rolfe J pointed this out in a passage in the transcript to which I was taken. Rescheduling the trial, re-engaging so many legal representatives for later dates, and re-arranging witnesses would all be a major task for the Supreme Court and the parties. Finding time for the hearing of the appeal in this Court, under the press of its many urgent and important obligations, would not be easy, for several months at the earliest. Meanwhile, there is a public interest in the earliest possible conclusion of the litigation which, I remind myself, concerns a public company and the rights of its shareholders.

Another factor relevant to the balance of convenience is the advantage which this Court ordinarily enjoys in having, before it proceeds to hear an appeal by special leave, the considered opinions of the courts below. The issues relevant to the elucidation of any questions which arise under s 122 of the Evidence Act will surely arise again in the future and in cases where this Court has that advantage (22). It does not have that advantage in this case.

12. The requirement to show that an application for a stay, or an order of that nature, enjoys a substantial prospect of success rests squarely upon the applicant. It is sometimes described as a heavy onus. Having been refused by the court in which the matter is pending, such orders are not readily made by this Court. Although this Court will ever remain vigilant against what seems to be a significant legal error or a serious injustice, as Paringa illustrates, the grant of a stay to support an interlocutory appeal in a case such as the present will be rare indeed for reasons, some of which I have now stated.

10. In the conclusion which I have reached, it is unnecessary to deal with other arguments which were advanced by the contesting respondents, including criticism of the form of the order sought by Ampolex. Nor do I need to consider other and later orders made by Rolfe J in subsequent rulings on claims for legal professional privilege. The only relevance of the latter, as it seems to me, is that they illustrate how many such rulings can arise in the course of a trial such as this and the wisdom of appellate courts not to interfere in them, except in a clear case.

11. Ampolex has failed to show that it would have reasonable prospects of securing special leave to appeal from the orders of the Court of Appeal. Still less has it shown that there is a substantial prospect of its doing so. I have taken into account the fact that this conclusion, and the refusal of relief defending the status quo, will effectively deprive Ampolex of the opportunity of having its claim to privilege ventilated and decided on appeal to this Court before the privilege is lost. But I also take into account the serious inconvenience to other parties and to the public which would be involved in the grant of a stay which would interrupt, at least for many months, the major and complex trial which is now proceeding before Rolfe J.

12. I depart from this case by making clear what I said during argument. My understanding of what Rolfe J has done is that his Honour has admitted into evidence an envelope containing the subject legal advice but he has kept access to that exhibit under his control by requiring that the envelope remain sealed. Access to the legal advice therefore remains under his Honour's direction, and rightly so. The courts will protect a client's legal professional privilege to the full extent possible and subject, in this case, only to the extent of any waiver that is established. For all I know, the documents in the envelope contain matters going beyond the substance of the assertion in the Part B statement. As the judge of trial, Rolfe J will doubtless be conscious of the need to protect any other confidences which are not the subject of waiver as s 122 of the Evidence Act provides. I did not take the respondents to dispute his Honour's power to control access to the documents so as to reveal those parts which have been held to be covered by the waiver and to protect those parts which are not. Such determination can safely be left to Rolfe J to whom the proceedings shall now be returned.

1. Orders as sought in the summons refused, summons dismissed;

2. Stand over the application for special leave to appeal to the Registrar's

3. The applicant to pay the costs of the disputing respondents; and

4. Certify for counsel.

1 Re Marks and Federated Ironworkers' Association; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1981) 55 ALJR 395 at 396; 34 ALR 208 at 211; Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) [1986] HCA 84; (1986) 161 CLR 681 at 683.

2 cf Tait v The Queen [1962] HCA 57; (1962) 108 CLR 620 at 624.

3 See eg Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 at 693-694.

5 eg Re Duke Group (In Liq) [1994] HCA 3; (1994) 68 ALJR 196 at 197; [1994] HCA 3; 119 ALR 401 at 403.

7 Bryant v Commonwealth Bank [1996] HCA 3; (1996) 70 ALJR 306 at 309; 134 ALR 460 at 464.

8 [1986] HCA 84; (1986) 161 CLR 681 at 685.

9 See Narain v Director of Public Prosecutions (1987) 61 ALJR 317; 71 ALR 248; Grassby v The Queen [1989] HCA 45; (1989) 168 CLR 1 at 20.

10 See Marsden v Amalgamated Television Services Pty Ltd, unreported, 6 May 1996 at 7 per Gummow J.

11 See Bryant (1996) 70 ALJR 306 at 308; 134 ALR 460 at 463.

12 See Elliott v Seymour [1993] HCA 70; (1993) 68 ALJR 173 at 175; [1993] HCA 70; 119 ALR 1 at 5; Re Duke Group (1994) 68 ALJR 196 at 197; [1994] HCA 3; 119 ALR 401 at 403.

13 [1988] HCA 53; (1988) 165 CLR 452.

14 [1994] HCA 3; (1994) 68 ALJR 196 at 197; [1994] HCA 3; 119 ALR 401 at 403.

15 [1996] HCA 3; (1996) 70 ALJR 306; 134 ALR 460.

16 Smith v Tabain (1987) 10 NSWLR 562; National Employers Mutual General Insurance Association Ltd v Manufacturers Mutual Insurance Ltd (1988) 17 NSWLR 223; see also The Commonwealth v Mullane [1961] HCA 28; (1961) 106 CLR 166 at 169.

17 See Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at 177.

18 See eg Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 490.

19 eg Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52.

20 (1991) 1 WLR 660 at 668; (1991) 2 All ER 908 at 917; cf Goldberg v Ng [1995] HCA 39; (1995) 69 ALJR 919 at 924, 932; [1995] HCA 39; 132 ALR 57 at 64, 75.

21 Burgundy Royale (1986) 161 CLR 681 at 685; Re Duke Group (1994) 68 ALJR 196 at 198; [1994] HCA 3; [1994] HCA 3; 119 ALR 401 at 403.

22cf Cohen v Peko-Wallsend Ltd [1986] HCA 70; (1986) 61 ALJR 57 at 59; [1986] HCA 70; 68 ALR 394 at 397.

Ampolex Ltd v Perpetual Trustee Company

At a glance

Court

Decision date

Before

Source

Judgment (71 paragraphs)

Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd [1996] HCA 15; 70 ALJR 603; 137 ALR 28 (22 May 1996)

Parties

Cases Cited (18)