Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia S.R.L.

JUDGE: BESANKO J DATE: 24 july 2015 PLACE: ADELAIDE

REASONS FOR JUDGMENT 1 On 23 July 2015, I made the following order: That the second respondent discover and produce all documents recording or evidencing any communications between Clayton Utz, Nexans and/or its representatives, including Mr Noonan and Ms Poly, regarding the scope of Nexans' discovery obligations in this proceeding on or before 4:00 pm on Tuesday, 28 July 2015. I said that I would deliver reasons for making that order, and the reasons follow. 2 This proceeding was listed for trial for 10 days during the weeks commencing 13 July 2015 and 20 July 2015. The applicant concluded its case on 15 July 2015. The first respondent did not lead any evidence. The second respondent called evidence from Mr Patrick Noonan who is the senior corporate vice-president, general counsel, secretary general and secretary of the board of directors of the second respondent. Mr Noonan was cross-examined at some length by counsel for the applicant, and the cross-examination included questions about the process the second respondent had adopted to ensure that it had made proper discovery in the proceeding. In the interlocutory stages of this proceeding, the Court had ordered that the second respondent give standard discovery (see r 20.14 of the Federal Court Rules 2011 (Cth)). Mr Noonan's evidence was completed on 16 July 2015 and he returned to Paris, France. The second respondent indicated that that was its case, subject to the tendering of any further documents. It reserved its position in this way because counsel for the second respondent had not yet seen the final list of documents in the tender book. In order to give the parties an opportunity to prepare their closing addresses, I adjourned the hearing to 21 July 2015, and to continue, if necessary, on 22 July 2015. 3 When the hearing resumed on 21 July 2015, counsel for the second respondent indicated that he had some documents to tender, and that he would then close the second respondent's case. One of the documents he sought to tender ultimately led to the order which is the subject of these reasons. 4 Counsel for the second respondent applied to tender a letter from the second respondent's solicitors to Mr Noonan dated 24 April 2014 in which the solicitors gave the second respondent advice about its obligations under the order for standard discovery made by the Court ("the letter"). The letter referred to the Court's order and it contained a broad summary of the key allegations made by the applicant against the second respondent. It identified the second respondent's principal discovery obligations. It referred to the definition of document and the meaning of the words, "possession, custody or power". It contained a further explanation of the meaning of the words, "possession, custody or power" in an appendix to the letter (Appendix A). It contained a non-exhaustive list of categories of potentially relevant documents in Appendix B to the letter. It referred to the second respondent's obligations in terms of documents no longer in its possession, custody or power and of continuing discovery, and it referred to the right to claim legal professional privilege with respect to documents. 5 Neither the applicant nor the second respondent dispute the fact that the letter was a privileged communication between the second respondent and its solicitors, and that the second respondent had waived privilege over the letter. When applying to tender the letter, counsel for the second respondent referred to certain paragraphs in the applicant's outline of closing submissions. I had not made an order for the filing and serving of written submissions, but the applicant prepared such submissions, and the second respondent had had the opportunity to consider the submissions before the hearing resumed on 21 July 2015. The relevant paragraphs, according to the second respondent, appeared under the heading "Nexans' Discovery" (paragraphs 58-59). Those paragraphs, and the paragraphs around them, refer to cases where a failure in the discovery process had led to the setting aside of orders and an order for a new trial. They refer to the importance of a party's solicitor giving the party proper advice about his or her discovery obligations. 6 It was clear enough from the submissions that the applicant was alleging that the second respondent had not given proper discovery, and that certain inferences should be drawn from that fact. In addition to the paragraphs to which the second respondent referred, paragraphs 19 and 20 in the applicant's written submissions contained the following contentions: It is not a difficult inference to draw that Messrs Romand and Jay communicated those matters to the relevant staff members of Nexans and various Nexans subsidiaries who were actually engaged in the supply of particular high voltage cables and/or accessories in respect of all of the transactions which were the subject of the position sheets. Not to do so would render the cartel activity nugatory. The inference is more readily drawn that they did so in circumstances where, as Mr Noonan admitted in cross examination, there exist in Paris today more [than] 10,000 documents relevant to this cartel which were produced from the computers which were compulsorily seized by the European Commission at commencement of its investigation into the cartel in 2009, including numerous (possibly thousands) of emails of Messrs Romand and Jay which were not produced by Nexans in discovery in this case. Nexans has always had the ability to produce documents demonstrating beyond doubt (or, relevantly, on the balance of probabilities) that there was no influence exerted upon the officers of the Nexans subsidiaries who made bids or submitted prices in respect of these transactions or any aspect of the cartel arrangements or communications. Nexans chose not to deploy any such evidence. This greatly strengthens the inference that should properly be drawn based upon the principles in Jones v Dunkel and in Blatch v Archer, which are directly applicable in this case, that there was no evidence of any sort of in Nexans which would support its defence that the decision-making and communications in respective of these matters occurred at subsidiary company level alone, and that the activities of Messrs Romand and Jay (and possibly others) within Nexans at the highest levels of the organisation did not ultimately determine which transactions Nexans bid on and at what prices and what the relationship was between the decisions to make those bids and prices at which they would be made and the activities of A/R Cartel. 7 In applying to tender the letter, counsel for the second respondent submitted that it was necessary for the letter to be before the Court to rebut the allegations of professional failings (which he submitted were unfounded) made against the second respondent's solicitors. Counsel submitted that the letter showed that the solicitors for the second respondent had given the second respondent perfectly appropriate and adequate advice about its discovery obligations. 8 On reviewing a copy of the letter, the applicant immediately asked that it be given leave to cross-examine Mr Noonan further. After hearing submissions, I considered it appropriate that the applicant be given leave to cross-examine Mr Noonan further, and a time was fixed for this to occur on the following day (i.e., 22 July 2015) by video or audio link from Paris. In the result, that did not occur because the application for the order set out in [1] above was made and needed to be determined. 9 On 22 July 2015, the applicant applied for the order set out at the beginning of these reasons. It submitted that the second respondent's application to tender the letter (which was never withdrawn), or simply the production of the letter, constituted a waiver of legal professional privilege not only in relation to the letter, but also in relation to all other communications between Clayton Utz and the second respondent regarding the scope of the second respondent's discovery obligation in this proceeding. 10 It is necessary at this point to note two important matters. The first matter is that the second respondent submitted that there was no waiver of privilege over any associated material because the letter was tendered for the limited purpose of negating a suggestion of improper conduct by its solicitors. There are a number of difficulties with this submission. First, if evidence goes in, it generally goes in for all purposes. Counsel for the second respondent did not suggest a limitation under s 136 of the Evidence Act 1995 (Cth). Secondly, in any event, it would be unrealistic to limit the evidence in the manner suggested because there is clearly a considerable overlap between the issue of whether the second respondent's solicitors gave it appropriate advice, and the issue of whether the second respondent complied with its discovery obligations. In other words, it cannot be said that the advice the second respondent was given is irrelevant to whether it complied with its discovery obligations. The second matter is that it is not for me, at this stage, to make an assessment of the significance of the issue of whether the second respondent complied with its discovery obligations to the issues in the case. First, it would be difficult for me to do that at this stage because I have not heard closing submissions and, in fact, as I have said, there is likely to be further cross-examination of Mr Noonan. Secondly, and more importantly, I do not think that there is any discretion in determining implied waiver and, therefore, the degree or extent of relevance is immaterial. 11 Given the short time each party had to prepare for the argument, they each relied on only one authority. The applicant relied on the decision of Young J in AWB Ltd v Cole and Another (No. 5) (2006) 155 FCR 30; [2006] FCA 1234 ("AWB"). In that case, Young J said that the test applied to determine the scope of any waiver of associated material is "whether the material that the party has chosen to release from privilege represents the whole of the material relevant to the same issue or subject matter". His Honour relied on various passages in the decision of the High Court in Attorney-General (NT) v Maurice (1986) 161 CLR 475 ("Maurice"). Young J was referred to the decision of the Court of Appeal of Victoria in British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524 ("British American Tobacco"), among other cases. With reference to the passage from British American Tobacco which I set out below (at [12]), his Honour said that, in his opinion, the Court had expressed too narrowly the proposition concerning waiver of associated material. His Honour said (at 77, [167]): But, with great respect to their Honours, the proposition concerning waiver of associated material is expressed too narrowly and in a way that is not consistent with the test propounded by the High Court in Maurice. The principle propounded by the Court of Appeal may work adequately enough in some circumstances, particularly where privilege is sought to be maintained over one part of a single piece of legal advice, but in other circumstances it will not give effect to the principles explained in Maurice. 12 The second respondent relied on the decision of the Victorian Court of Appeal in British American Tobacco. I was referred to various passages in that decision (at 562, [118], 563-564, [120]-[122], 565-566, [124] and [126], 567-569, [129]-[130]). Although the reasons as a whole must be considered, a key passage in the reasons is as follows (at 564-565, [121]): ... A reference in one letter of advice to an earlier letter of advice does not expose the latter to scrutiny by the other party to litigation merely because legal professional privilege is waived in relation to the former: implied waiver is not so generous a doctrine. As we apprehend it, where legal professional privilege is waived in relation to one piece (or part) of advice, the privilege is impliedly waived in relation to another if - and only if - that other is necessary to a proper understanding of the first. As established by the High Court (at least since Mann v Carnell) the test in such cases is whether it would be "inconsistent" for a party to rely upon, and so to waive legal professional privilege in respect of, the one without also being taken to have waived privilege in respect of the other. For example, there is no such inconsistency in waiving privilege in relation to the Clayton Utz letter of 7 July 1992 and maintaining privilege in relation to the "advice … previously provided in December 1985": it may be a matter for adverse comment, but it is not a matter of implied waiver. The letter of 7 July 1992 was complete in itself and there was no need to make reference to the earlier advice in order to properly understand the letter of 7 July 1992. (Citations omitted). 13 The plurality in Mann v Carnell (1999) 201 CLR 1 identified the basis of the species of implied waiver in issue in this case in the following passages (at 13, [29] and 15, [34]): Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. ... 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 maintenance of the confidentiality; not some overriding principle of fairness operating at large. ... ... Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client's actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency. ... 14 In AWB, Young J referred to the following passages from the respective reasons of Gibbs CJ and Dawson J in Maurice. Gibbs CJ said (at 482): … Similarly, where a party disclosed a document which contained part only of a memorandum which dealt with a single subject-matter, and then read the document to the judge in the course of opening the case, it was held that privilege was waived as to the whole memorandum: Great Atlantic Insurance Co v Home Insurance Co [[1981] 1 WLR 529]. In that case Templeman LJ said: ... the rule that privilege relating to a document which deals with one subject matter cannot be waived as to part and asserted as to the remainder is based on the possibility that any use of part of a document may be unfair or misleading, that the party who possesses the document is clearly not the person who can decide whether a partial disclosure is misleading or not, nor can the judge decide without hearing argument, nor can he hear argument unless the document is disclosed as a whole to the other side. Once disclosure has taken place by introducing part of the document into evidence or using it in court it cannot be erased. The same test must be applied in deciding whether the use in legal proceedings of one document impliedly waives privilege in associated material. In Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation [No 2] Mustill J dealt with this question and suggested the following test: ... where a party is deploying in court material which would otherwise be privileged, the opposite party and the court must have an opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood. (Emphasis added). Dawson J said (at 498-499): In Geo. Doland Ltd v Blackburn Robson Coates & Co waiver of privilege with respect to a conversation between solicitor and client, which took place before litigation was contemplated, was held to extend to any other communications in relation to the subject-matters of the conversation, although the implied waiver was held not to cover similar documents which came into existence for the purpose of prosecuting the litigation. This decision was not followed in General Accident Corporation Ltd v Tanter where a distinction was drawn between the waiver of privilege before a trial and the further waiver of privilege by calling evidence in a trial. In the latter situation the waiver was held to extend to the transaction constituted by the privileged communication but not to the subject-matter of that communication arising upon other privileged occasions. General Accident Corporation Ltd v Tanter has been criticized for the distinction which it draws between waiver by the tender of evidence of a privileged communication and waiver by the disclosure of the communication in some other way and for the restriction which it places upon the extent of associative waiver: see Phipson on Evidence, par 15-20. In Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation [No 2], a broader view was taken by Mustill J that "... where a party chooses to deploy evidence which would otherwise be privileged the court and the opposition must, in relation to the issue in question, be given the opportunity to satisfy themselves that they have the whole of the material and not merely a fragment". This view was approved by the Court of Appeal in Great Atlantic Insurance Co v Home Insurance Co. In the United States it has been widely held that voluntary disclosure of the content of a privileged attorney communication constitutes waiver of the privilege with respect to all other such communications upon the same subject-matter: Weil v Investment/Indicators, Research and Management and the cases there cited; Diotima Shipping Corp v Chase, Leavitt & Co; United States v Aronoff; In re Sealed Case. (Emphasis added, citations omitted). 15 In my opinion, the passages cited by their Honours from the reasons of Mustill J in Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation [No 2] [1981] Com LR 138 ("Nea Karteria") are particularly important in the circumstances of this case. 16 In Fulham Leisure v Nicholson Graham & Jones [2006] All ER 599 ("Fulham Leisure"), Mann J said (at 604, [11]): Based on the authorities which I am about to refer to, it seems to me that the relevant process should be as follows: (i) One should first identify the 'transaction' in respect of which the disclosure has been made. (ii) That transaction may be identifiable simply from the nature of the disclosure made - for example, advice given by counsel on a single occasion. (iii) However, it may be apparent from that material, or from other available material, that the transaction is wider than that which is immediately apparent. If it does, then the whole of the wider transaction must be disclosed. (iv) When that has been done, further disclosure will be necessary if that is necessary in order to avoid unfairness or misunderstanding of what has been disclosed. That chain is not articulated in terms in the authorities to which I am about to refer, but it seems to me that it is apparent from it. 17 For the reasons I have given, the use of the letter cannot be confined in the manner advanced by counsel to a rebuttal of any suggestion of a failure by the second respondent's solicitors to advise the second respondent properly as to its discovery obligations. Nor can the use of the letter be confined to a particular point in time, that is, 24 April 2014, and whether the second respondent appreciated its discovery obligations on 24 April 2014 and, by inference, intended to or did comply with them on 24 April 2014. There is evidence in the case in the cross-examination of Mr Noonan that there might be other communications by way of an agreed protocol and discussions between the second respondent and its solicitors. The letter is dated 24 April 2014, and the second respondent's List of Documents was in late June 2014. I do not think it is a matter of the weight to be accorded to a disclosed communication in circumstances where there is reason to believe that there is associated material. The problem in approaching the issue in that way is that it might be put in any case where a question of implied waiver arises, and there is reason to believe that there is associated material. 18 I think that this is a case where to refuse the order sought by the applicant would be to risk injustice because the applicant would be deprived of the opportunity to satisfy itself that it has the whole of the material as to the communications between the second respondent and its solicitors regarding the scope of the second respondent's discovery obligations in the proceeding, and not merely a fragment (Mustill J in Nea Karteria). Another way of putting the matter is that the relevant "transaction" is the whole of the advice given by the second respondent's solicitors to the second respondent regarding the scope of the second respondent's discovery obligations in this proceeding (Mann J in Fulham Leisure). In my opinion, there would be an inconsistency in the deployment of the letter by the second respondent and the maintenance of confidentiality over other communications between the second respondent and its solicitors regarding the scope of the second respondent's discovery obligations in this proceeding. 19 It was for these reasons that I made the order set out at the beginning of the reasons. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.