ASIC v Rich

5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS JUDGMENT (Claim to waiver of privilege in respect of Document 17) 1 HIS HONOUR: This judgment has been prepared in response to written submissions of the parties, namely the submissions numbered DS 14, AS 19 and DS 15. I have also taken into account a note from counsel for ASIC dated 20 October 2004 referring to an additional case. 2 ASIC has produced substantial quantities of documents under claims to client legal privilege, and has supplied the defendants with lists of those documents. The defendants have challenged some of the privilege claims. This has led to Mr Breckenridge, a solicitor who is part of ASIC's legal team, swearing an affidavit dated 14 October 2004, to which he annexes a schedule giving descriptions of documents over which privilege is claimed. 3 Document 17 in the schedule to Mr Breckenridge's affidavit is described as handwritten notes of Ms Redfern on 4 December 2001 of a conversation with Michael Ball (lawyer for Mr Murdoch) "with respect to gathering potential evidence for use in these then anticipated proceedings". The proceeding referred to in that way is the present proceeding, which commenced on 12 December 2001. 4 The defendants contend that ASIC has waived privilege over these handwritten notes, by the species of waiver of privilege sometimes called "disclosure waiver". 5 Disclosure waiver may arise where a party to litigation discloses part of a privileged communication. The disclosure of part may, in certain circumstances, be taken to remove the privilege otherwise attaching to the communication: Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529. 6 The basis of disclosure waiver was explained by Mason and Brennan JJ in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475, 488 as follows: "The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of a protected communication. As Professor Wigmore explains: ' [W]hen his conduct touches upon a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder.' (Wigmore, Evidence in Trials at Common Law (1961), vol 8 par 2327, p 636.) In order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of a protected communication should result in waiver as to the rest of the communication on that subject-matter." 7 In their written submissions the parties disagreed as to the scope and basis of the disclosure waiver principle, in two ways. 8 First, according to ASIC, it is necessary for a party alleging waiver to show unfairness, either by reference to an unfair advantage accruing to the other party, or an unfair prejudice accruing to the party asserting waiver by reason of the partial production. The defendants accused ASIC of focusing narrowly on "unfairness", and neglecting to take full account of the decision of the High Court in Mann v Carnell (1999) 201 CLR 1. According to the defendants' submission, in that case Gleeson CJ, Gaudron, Gummow and Callanan JJ relegated general "unfairness" to a subsidiary role, when they said: "What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and the maintenance of the confidentiality; not some overriding principle of fairness operating at large." 9 Secondly, ASIC cited General Accident Assurance v Tanter [1984] 1 All ER 35, 48, for the proposition that "the mere production of the document on discovery, or in some pre-trial procedure, cannot in the ordinary course be treated as a waiver of anything beyond the document itself" (per Hobhouse J; ASIC's written submission noted that the further statement of Hobhouse J (at 47) that such waiver can only occur if the document is actually introduced into evidence, may go too far (citing Sevic v Roarty (1988) 44 NSWLR 287, 297-8 and other authorities)). ASIC referred to the Great Atlantic Insurance Co case (at 539) and GE Capital Corp v Bankers Trust [1995] 2 All ER 995, 997 per Hoffman LJ for the proposition that disclosure takes place by introducing part of the document into evidence or using it in court, rather than merely producing the document on discovery, and emphasised that the passage in Wigmore concerning implied waiver, cited by the High Court in Maurice, was concerned with a waiver resulting from an offer of "testimony". In a short supplementary submission, ASIC also referred to an unreported decision by McLelland J in United States Surgical Corp v Hospital Products International Pty Ltd (13 October 1981), which is referred to in Ritchie's Supreme Court Procedure, vol 2, p 8545-8547. The defendants, on the other hand, asserted that disclosure waiver can arise by virtue of the production of part of a privileged communication, at a stage before anything is put into evidence at the hearing. 10 It is unnecessary for me to resolve the differences of opinion between the parties on these points, and I shall not do so. In my opinion, the defendants' contention that privilege has been waived fails at a much more basic level, on the facts. 11 Partial disclosure is said to have arisen in the following manner. On 6 December 2001 Ms Redfern wrote to Mr Ball, asking him to obtain Mr Murdoch's instructions on a question, which she set out in her letter. The question was whether, if Mr Murdoch had been aware as at 30 March 2001 of matters set out in the schedule to Ms Redfern's letter, relating to One.Tel's financial circumstances, he would have taken the same action then as he in fact took on 29 May 2001. In the annexure to his affidavit, Mr Breckenridge identified this letter as document No 18. On 7 December 2001 Mr Ball responded, saying that his client would have done so. ASIC has produced these two letters in answer to a notice to produce, and does not now claim privilege in respect of either of them, as the schedule to Mr Breckenridge's affidavit confirms. 12 The defendants draw attention to the proximity of the communication recorded in the handwritten notes to the letter of 6 December, and submit that it is likely that the conversation on 4 December between Ms Redfern and Mr Ball dealt with the same subject matter as the 6 December letter, or that it constitutes part of a chain of communications on the same subject matter. Their submission is that ASIC cannot, in fairness, disclose part only of this series of communications and maintain privilege over the remainder. 13 Mr Breckenridge's description of the notes of 4 December, as a confidential communication between the lawyer for the proposed plaintiff and the lawyer for a proposed witness concerning the witness' evidence, is sufficient to give the notes the prima facie character of a privileged communication. In my opinion, there is no plausible ground for inferring, for the purpose of applying the law as to disclosure waiver, that the conversation on 4 December dealt with the same subject matter as the letter of 6 December, or that they constituted parts of a chain of communications on the same subject matter. The letter of 6 December and the reply of 7 December stand alone as an exchange concerning a very specific subject matter, namely whether the witness would have taken a certain action had he been aware of specifically enumerated matters as at 30 March 2001. 14 The fact that the parties to the earlier conversation were also the parties to the correspondence suggests that there may have been some common threads to the conversation and the correspondence, in the sense that the conversation probably related in some way to the prospect that Mr Murdoch would give evidence as a witness for ASIC in the proceeding. But that is not enough to warrant treating the conversation and the correspondence as part of the same communication for the purposes of disclosure waiver. 15 Consequently, in my view, there has been no waiver of the privilege prima facie the attaching to Ms Redfern's notes of 4 December. Document 17 has retained its character as a privileged communication.

Last Modified: 11/17/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.