Australian Hospital Care v Duggan [1999] VSC 96

Supreme Court of Victoria|1999-03-31|Before: Gillard J

Evidence - Legal professional privilege - Copy of privileged documents handed by

client to another - Whether copy protected - Whether privilege waived - Copy still protected - No waiver

By reason of Order 42 of the Rules of Court, a party to a proceeding may file a subpoena for production of documents requiring the person named in the subpoena to produce the documents to the Prothonotary.

The person named in the subpoena may object to the production of a document or its inspection and if he or she does so, is obliged to inform the Prothonotary in writing of that objection. See Rule 42.10(8). In addition, a party to the proceeding may object to the inspection by the party issuing the subpoena of any document identified in the subpoena and that party is also obliged to inform the Prothonotary in writing of the objection to inspection.

According to Rule 42.10(10) upon receiving any notice of objection, the Prothonotary is required to refer the subpoena to either a Judge or Master for hearing and determination of the objection.

On 9 March 1999 the plaintiffs' solicitors caused the issue of a subpoena for the production of documents to the Prothonotary by David John Beatty.

Mr Beatty, through his solicitors, lodged a list of objections to the production and inspection of the documents and the solicitors acting on behalf of the first to twenty first defendants in the proceeding also lodged a list of objections to the inspection of the documents.

As the proceeding is in the Commercial List the two lists of objections were referred to me for hearing.

At the hearing Mr Beatty who was represented by counsel complied with the subpoena by placing in the custody of the court three bundles of documents. The first category of documents was contained in a box and neither Mr Beatty nor the said defendants objected to the production and inspection of the documents by the plaintiffs' solicitors.

The second and third categories comprised folders, the first containing alleged confidential documents and the second containing documents alleged to be the subject of legal professional privilege.

Mr James Peters of Counsel who appeared for Mr Beatty informed the court that the parties maintaining the right to confidentiality and the claim for privilege were the first to twenty first defendants and as they were represented at the hearing to contest the inspection by the plaintiff, Mr Beatty was content to rely upon the arguments put by the parties and sought leave to withdraw.

Mr James Elliott of Counsel who appeared for the first to twenty first defendants informed the court that his clients objected to the inspection of some of the documents on the ground that they were communications protected by legal professional privilege from inspection.

As the dispute was between the parties to the litigation I granted leave to Mr Beatty and his Counsel to withdraw.

The claim for confidentiality cannot stand in the way of the production of relevant documents and upon the plaintiffs' undertaking through their counsel that until further order the documents would not be disclosed to any person other than their solicitors and counsel I ordered that the documents which were contained in the confidential folder could be released to the plaintiffs' solicitors. Mr Elliott did not oppose the order.

The issue before me came down to the question of privilege in relation to the third bundle of documents contained in the folder marked "privilege".

For present purposes it is unnecessary to describe the proceeding in any detail. The dispute between the parties concerns the sale of a diagnostic business carried on by the first to twenty first defendants in the proceeding. In simple terms the plaintiffs or one of them claim that they or it are entitled to purchase the said defendants' business. The claim is denied and the plaintiffs seek an order restraining the said defendants from completing the sale of business agreement entered into with the twenty-third and twenty-fourth defendants.

In support of the claim of legal professional privilege the said defendants rely upon two affidavits, the first by David John Beatty sworn 16 March 1999 and the second sworn by Ian Leslie Walker a member of the firm Minter Ellison, solicitors, for the first to twenty-first defendants.

The evidence reveals that on 11 August 1998 Mr Beatty received a letter of offer from the first to twenty first defendants to act as a facilitator and negotiator in a possible sale of their business to another. Mr Beatty accepted the offer and was appointed. It was a term of his retainer that all information pertaining to his retainer and his clients generally, "remain confidential at all times and no information shall be released to any other party without the specific consent of" his clients. During the course of his engagement certain documents were handed to him which contained communications between his clients and Arnold Bloch Leibler, solicitors, who were then the legal advisors to the first to twenty-first defendants.

Mr Walker deposes to the fact that he has inspected the documents in the privilege folder and he states that the first to twenty-first defendants have a claim for legal professional privilege in relation to the said documents "as they contain legal advice given to the first to twenty-first defendants by their solicitors Arnold Bloch Leibler or contain a record of legal advice given by Arnold Bloch Leibler as solicitors to the first to twenty-first defendants when these proceedings were in contemplation or threatened".

Mr Michael Wyles of counsel who appeared for the plaintiffs whilst critical of the affidavit of Mr Walker in that he did not depose that the documents were brought into existence for the sole purpose of legal advice nevertheless accepted that the omission could be overcome by another affidavit and accordingly accepted that the evidence established that the original documents were covered by legal professional privilege in accordance with the principles stated in Grant v. Downs [1976] HCA 63; (1976) 135 CLR 674.

However Mr Wyles submitted that there was no evidence as to the circumstances in which the documents or copies thereof were forwarded to Mr Beatty. I am prepared to draw the inference that copies were made of the documents which passed between the said defendants and their solicitors, Arnold Bloch Leibler, so that what Mr Beatty got were copies of original documents which were the subject of legal professional privilege.

Mr James Elliott did not contest that finding.

Mr Wyles submitted that the copy documents were forwarded to Mr Beatty for a purpose other than seeking legal advice or for use in legal proceedings. He submits that there is a difference between the original documents and the copy documents and if one isolates the copy documents and focuses on them, there is no evidence that they were handed over to Mr Beatty in circumstances which attracted the privilege which clearly attached to the original documents in accordance with the test established in Grant v. Downes.

Mr Wyles submitted that it was not a question of waiving the original privilege. The fact was that the copy documents were handed to Mr Beatty in circumstances where they did not satisfy the tests laid down with respect to legal professional privilege. I agree the copy documents were handed to Mr Beatty in circumstances where the communication would not be privileged. But does the copy stand in a different position to the original in the circumstances of this communication?

Mr Wyles relied upon a recent decision of the High Court which he said supported the proposition that the particular document in question and its communication had to be looked at to see whether it was or was not communicated solely for the purpose of obtaining legal advice or solely for use in legal proceedings and if not, it was not privileged.

The case is Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501. I will return to this case later.

As a general proposition a party to litigation has a right to adduce any relevant admissible evidence, viva voce and documentary, and there is a duty in all citizens to respond to that right. The general rule is subject to exemptions. In 1861 in the case of Ex parte Fernandez [1861] EngR 556; 10 CBNS 3 at 39[1861] EngR 556; , 142 ER 349 at 364, Willes, J said -

"Every person in the Kingdom, except the Sovereign, may be called upon and is bound to give evidence, to the best of his knowledge, upon any question of fact material and relevant to an issue tried in any of the Queen's Courts, unless he can show some exception in his favour, such, for instance, as that suggested to exist in this case, namely that to answer might put him in peril of criminal proceedings."

The principle applies to all save the Sovereign. In R. v. Baines (1909) 1 KB 258 the court was concerned with subpoenas directed to the Prime Minister and Home Secretary of England. As Their Lordships said, the mere fact that the persons subpoenaed held exalted positions did not excuse them from their obligation to give evidence if relevant and admissible.

One of the exemptions from the obligation to give or provide evidence is a communication made whether orally or in writing which was protected from disclosure by reason of legal professional privilege. The law has recognised this exemption for many centuries although the policy for its existence has changed.

By the late 1700s it was grounded on the basis to promote freedom of consultation between lawyer and client.

The rationale for the rule was stated in Anderson v. Bank (1876) LR 2 Ch D 644 by Jessel, MR at 649 -

"The object and meaning of the rule is this: that as, by reason of the complexity and difficulty of our law, litigation can only be properly conducted by professional men, it is absolutely necessary that a man, in order to prosecute his rights or defend himself from an improper claim, should have recourse to the assistance of professional lawyers, and it being so absolutely necessary, it is equally necessary to use a vulgar phrase, that he should be able to make a clean breast of it to the gentleman whom he consults with a view to the prosecution of his claim, or the substantiating his defence against the claim of others; that he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him should be kept secret, unless with his consent (for it is his privilege, and not the privilege of the confidential agent) that he should be enabled properly to conduct his litigation. That is the meaning of the rule."

More recently in Grant v. Downes Stephen, Mason and Murphy, JJ at p.685 said:

"The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The evidence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interest of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision. Nonetheless there are powerful considerations which suggest that the privilege should be confined within strict limits."

The privilege covers not only communications made to the lawyer but also the communications made by the lawyer to his client. This has always been the law and is not in doubt. Further, the privilege is that of the client and not that of the lawyer and can only be waived by the client.

Even if the client is not a party to litigation the lawyer cannot give evidence which is the subject of the privilege without his client's consent.

A principle which is well established and has never been doubted, and is of importance in the present matter, is that once a communication is protected from disclosure, the privilege remains until waived.

In Bullock v. Corry (1878) 3 QBD 356 Cockburn, CJ said at p.358 -

"The privilege which attaches by the invariable practice of our courts to communications between solicitor and client ought to be carefully preserved. In my opinion the rule is, once privileged, always privileged."

(Emphasis added)

In Hobbs v. Hobbs and Cousens (1960) P 112 at 117, Stevenson, J said:

"There is, however, an abundance of authority in support of the proposition that once legal professional privilege attaches to the document ... that privilege attaches for all time and in all circumstances."

See Giannarelli v. Wraith (No. 2) [1991] HCA 2; (1991) 171 CLR 592 at 601.

This general rule applies even after the end of litigation, the death of the client, death of the lawyer or even where the client obtains further legal advice.

Mr Wyles submitted that the particular communication had to be looked at and unless that communication answered the test laid down in Grant v. Downes then there was no legal professional privilege attaching to the communication. He submitted that that proposition was supported by the High Court case of Commissioner of Australian Federal Police v. Propend Finance Pty Ltd, supra.

That case was concerned with the execution of a search warrant by the Federal Police at the office of a solicitor. Certain documents were seized. The solicitor claimed legal professional privilege in respect of the documents. The documents seized included copies of documents the originals of which were not privileged.

It was held by a majority that the privilege did attach to a copy document which was provided to the lawyer if the copy was made solely for the purpose of obtaining legal advice or solely for use in legal proceedings even where the original document was not privileged.

Mr Wyles submitted that the case supported the converse approach. Namely, that where a copy document is communicated to another in circumstances which did not satisfy the tests in Grant v. Downes the mere fact that the original was covered by legal professional privilege was not to the point and accordingly the copy would not be protected by privilege.

In my opinion the Propend Finance case did not establish such a proposition. The High Court was concerned with a situation where an original document was not privileged but a copy became privileged because of the use made of it. The court was not concerned with a copy of a document which was privileged. The issue before the High Court commenced with a document not protected by legal professional privilege and the use made of a copy. The starting point was the copy of an unprivileged original.

Here the starting point is a document which is protected and the effect, if any, with respect to that privilege, upon first, the making of a copy and secondly, handing it to another.

The privilege attaches to the communication which is evidenced by the document.

As McHugh, J said in the Propend case, supra at p.552 -

"Legal professional privilege is concerned with communications, either oral, written or recorded and not with documents per se."

The mere fact that a copy is made of the document cannot destroy the privilege which attaches to the original. The original is protected for all purposes and in all circumstances until the client waives the privilege.

In order to give effect to the purpose of the protection the privilege must also attach to the copy. To hold otherwise would be to emasculate the "rationale of this head of privilege".

Solicitors and barristers invariably make copies of all correspondence and memoranda of advice. The members of the legal profession would be aghast if the mere copying of the written communication resulted in the copy not being protected by the privilege.

The test to determine privilege is based on the purpose for which the document was brought into existence.

Brennan, CJ in the Propend case said at p.508 -

"The test is anchored to the purpose for which the document was brought into existence; the use to which a document is put after it is brought into existence is immaterial."

The original was brought into existence in circumstances where legal professional privilege attached to its disclosure, and in my opinion a copy of the same document does not of itself affect the purpose for which the document was brought into existence.

As Brennan, CJ said in seeking for an appropriate test to determine whether a document is privileged, the reason for legal professional privilege has to be considered - supra at p.508. In considering the reason for the existence of the privilege, in my opinion it would be nullified if the mere making of a copy meant that the copy was not protected by the same privilege.

Privilege is concerned with communication whether oral or in documentary form. The person who has a document supplied to him by his lawyer in circumstances which makes the communication privileged from production or disclosure is entitled to use the document for his own legitimate purpose. If he makes a copy this does not lose the protection. To hold otherwise would mean emasculating the true object of the rule. In my opinion this conclusion accords with practical common sense giving effect to the policy underlying the privilege.

The submission of Mr Wyles taken to its logical conclusion would mean that the copying of a document covered by legal professional privilege would mean the copy would lose the privilege if it handed to somebody else for a purpose which had nothing to do with legal proceedings or the obtaining of legal advice. One can consider any number of examples which demonstrate that the result would be unjust and defeat the purpose of the rule. For example, the secretary of the company making copies of legal advice to the company for the purpose of discussion by directors or taken the extra step by providing copies of privileged documents to shareholders for discussion. Or a client taking a copy of a legal advice to a bank in order to persuade the bank to provide funds for litigation which the client hoped to bring. Surely in those circumstances the privilege would not be lost by merely making a copy and providing it to some other person for a legitimate purpose.

Does the result depend upon whether the original is only produced and hence protected but lost if copies are produced? Would the protection be lost if the copy is handed to the bank manager but not if he is shown the original? Surely the conduct of serious business does not depend upon such quirks of fate?

In reaching the conclusion that the mere taking of a copy does not affect the legal professional privilege I am supported by dicta in a number of cases.

In Buttes Gas and Oil Co v. Hammer (No. 3) (1981) 1 QB 223 Lord Denning at p.244 after referring to legal professional privilege said -

"In applying this principle, a word is necessary about copies. If the original document is privileged (as having come originally into existence with the dominant purpose aforesaid), so also is any copy made by the solicitor."

In Brambles Holdings Ltd v. Trade Practices Commission (No. 3) [1981] FCA 83; (1981) 58 FLR 452 at 458, Franki, J said -

"Unless the document was brought into existence for the purpose of putting it before the legal adviser legal professional privilege does not attach to it. Whilst neither of the cases I have mentioned deal specifically with the question of copies I am satisfied that legal professional privilege attaches to a draft or copies of a document which is itself entitled to that privilege, at least if the existence of a draft or copy represents a reasonably necessary stage in the preparation of the document to which the privilege attaches."

See also Vardas v. South British Insurance (1984) 2 NSWLR 652 at 655.

In the Federal Court decision of Anne Carnell v. Arnold Mann, unreported, delivered 4 December 1998 the Full Court said at p.5 the following -

"Where a document satisfies the test for legal professional privilege at common law, any copy or copies of that document may also fall within the ambit of the protection afforded by that doctrine. Indeed it has been suggested that a copy of a privileged document which is brought into existence for non-privileged purposes is itself privileged: Brambles Holdings Ltd v. TPC (No. 3) [1981] FCA 83; (1981) 58 FLR 452 at 458 per Franki, J; Cross on Evidence, 5th Aust. edn (1996) at 710. A copy of a document containing purely legal advice may be regarded, prima facie at least, as privileged, absent evidence to suggest the copy was brought into existence for a purpose wholly unconnected with the purpose behind the creation of the original. Indeed, it has now been determined that, at common law, legal professional privilege may attach to copies of non-privileged documents when those copies were brought into existence solely for use in obtaining legal advice, or for use in apprehended litigation: Propend (supra)."

In my opinion the privilege attaches to both the original and a copy unless the privilege is waived.

It follows that to approach the question in the present matter by applying the test in Grant v. Downes to the communication is not correct. That test is concerned with whether or not a documentary communication is privileged. That is not the position here. The original is privileged and the mere making of a copy does not destroy that privilege. The privilege is only lost if it is waived by the client.

The starting point must be that the communication is protected by privilege and the next step is to consider whether it has been waived.

Mr Wyles disavowed any reliance upon the doctrine of waiver. Nevertheless, in my opinion that is the only issue here.

This conclusion is supported by what occurred in the High Court case of Goldberg v. Ng [1995] HCA 39; (1995) 185 CLR 83.

Most cases are concerned with implied waiver. Indeed it would be a rare case where a client who had the protection of the privilege admitted that he intended to abandon the right.

The question of waiver was discussed by Deane, Dawson and Gaudron, JJ in Goldberg v. Ng, supra at 95. Their Honours said -

"The circumstances in which a waiver of legal professional privilege will be imputed by operation of law cannot be precisely defined in advance. The most that can be done is to identify a number of general propositions. Necessarily, the basis of such an imputed waiver will be some act or omission of the persons entitled to the benefit of the privilege. Ordinarily, that act or omission will involve or relate to a limited actual or purported disclosure of the contents of the privileged material. When some such act or omission of the person entitled to the benefit of the privilege gives rise to a question of imputed waiver, the governing consideration is whether 'fairness requires that his privilege shall cease whether he intended that result or not.' That does not mean however that an imputed waiver must completely destroy the privilege. Like an express waiver, it can be limited so that it applies only in relation to particular persons, materials or purposes."

Their Honours went on to hold that whether or not there had been waiver "ultimately falls to be resolved by reference to the requirements of fairness in all the circumstances of the particular case."

They quoted with approval what Gibbs, CJ said in Attorney-General (NT) v. Maurice [1986] HCA 80; (1986) 161 CLR 475 at 481 when he said -

"The question of whether a waiver should be implied depends on whether it would be unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with it, is privileged from production."

The first to twenty-first defendants sought advice from their lawyers. They received advice. They placed a copy of the advice and related documents in the hands of Mr Beatty who was employed by them on a confidential basis to sell their business. The privileged documents were no doubt handed to Mr Beatty to enable him to be better informed in order to discharge his retainer in the interest of his clients. In my opinion the requirements of fairness in all the circumstances of this case do not lead to the conclusion that there has been a waiver by the first to twenty-first defendants by the provision of copies of documents which were covered by legal professional privilege from disclosure to Mr Beatty.

The copies were brought into existence in furtherance of the purpose of obtaining the advice in the first place.

It follows that the objections raised by both the first to twenty-first defendants and Mr Beatty are well-founded with respect to the folder of documents marked privilege and in my opinion the plaintiffs are not entitled to production or inspection of the said documents.

In my opinion and subject to any contrary submission of counsel, the most appropriate order to make is a declaratory order.

Accordingly, I propose to make the following order -

Declare that the documents produced to the court by David John Beatty contained in a folder marked "privilege" are protected from disclosure by reason of the first to twenty-first defendants', right to legal professional privilege and the plaintiffs are not entitled to production or inspection of the said documents.

I will hear the parties on the question of costs.

I certify that this and the 12 preceding pages are a true copy of the reasons for judgment of Gillard, J of the Supreme Court of Victoria delivered on 31 March 1999.

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Judgment (93 paragraphs)

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Cases Cited (7)