Australian Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Limited

REASONS FOR JUDGMENT 1 There are two matters that require present resolution in this proceeding. The first relates to a disputed claim of legal professional privilege; the second is whether leave to amend the applicant's reply should be granted.

1. The legal professional privilege issue 2 Amongst the myriad of matters in issue in this proceeding is the question whether the respondent Hamilton was in breach of the exclusivity provisions of its Distribution Agreement with AMC, that agreement relating to the sale by Hamilton to AMC of certain pharmaceutical products for distribution in, inter alia, the Hong Kong market. Hamilton tendered in its case five emails from Lo & Lo, a Hong Kong law firm, to its own legal advisers together with attached invoices of sales of Hamilton products alleged to have been the subject of parallel importation into Hong Kong. Lo & Lo's client, Forward Company, is being sued by AMC in Hong Kong in separate proceedings arising out of the alleged parallel importation. The invoices in question were issued by Forward Company. 3 The first of the emails dated 4 July 2008 stated: Referring to your mail received this morning, I would like to attach 6 copy invoices issued by my client for sale of the subject product to WKM and 3 other wholesalers and/or drug stores for your information. 4 When Hamilton sought to tender the emails, objection to the tender was taken by AMC on the grounds that the tender would be unfair unless the email from Hamilton's lawyers which elicited the responses from Lo & Lo was also tendered. Hamilton indicated that it would claim privilege in any event in its lawyers' email. The short question now before me is whether in the circumstances privilege attaches to that email. For present purposes I am prepared to assume that the email could attract client legal privilege under s 119 of the Evidence Act 1995 (Cth). I should emphasise that because the question is whether the email ought to be adduced into evidence as part of the tender of the responsive emails, the matter falls to be resolved under the provisions of the Evidence Act and not at common law. 5 Section 126 of the Evidence Act provides: 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. 6 Put shortly, AMC's case is that it is necessary for a proper understanding of what Lo & Lo produced to understand what they were asked to produce by the respondent. Hamilton's contention is that the invoices speak for themselves and it is not necessary to have the Hamilton email disclosed to understand those invoices. 7 Section 126 has been the subject of little judicial consideration although it has been usefully considered by Sackville J in Towney v Minister for Land and Water Conservation (NSW) (1997) 76 FCR 401. For present purposes it is sufficient if I note that in that case his Honour indicated that the section contemplated the application of an objective standard. His Honour went on to observe at 414: In applying the standard specified by s 126 of the Evidence Act, it is to be borne in mind that the expression "proper understanding" is by no means narrow. The dictionary definition of "proper" includes "complete or thorough"; the definition of "understand" includes "to apprehend clearly the character or nature of" and "to grasp the significance, implications or importance of" (Macquarie Dictionary). It may or may not be correct to say that the test stated in s 126 of the Evidence Act, is, or appears to be, narrower than the principles governing implied waiver under the general law: cf Cross on Evidence (Aust ed), par 25300. Any precise assessment of the scope of s 126 must await further decisions. However, I think it fair to say that, if a privileged document is voluntarily disclosed for forensic purposes, and a thorough apprehension or appreciation of the character, significance or implications of that document requires disclosure of source documents, otherwise protected by client legal privilege, ordinarily the test laid down by s 126 of the Evidence Act will be satisfied. 8 While it is true that each of the invoices on its face requires no explanation of its contents (other than the need for translation from Chinese), the invoices themselves bear upon a number of potential questions. There is sharp disagreement between the parties over the incidence, effects and duration of the alleged parallel importation. The invoices that have been produced relate to a quite confined period in 2001 and 2002. For my own part I am satisfied that the significance properly to be attributed to them can only be discerned if one also is aware of the nature of the request that was addressed on Hamilton's behalf to Lo & Lo. Whether it was quite specific or quite general in character, for example, could markedly affect how one would forensically evaluate the significance of the invoices. Hamilton, having tendered the Lo & Lo emails and attachments, cannot now in my view properly resist putting into evidence its own lawyers' request. 9 In the circumstances I am satisfied that client legal privilege has been lost in relation to that request because the disclosure of the request itself is reasonably necessary to enable a proper understanding of the invoices.