Procedure -Discovery and inspection - Production and inspection - Grounds for resisting inspection - Legal professional privilege - What constitutes - Copy of documents - Original document not privileged - Original document not accessible to party seeking production of copy - Copy obtained for use by legal advisers for purposes of the litigation. Commisioner, Australian Federal Police v Propend Finance Pty Ltd (1971) 71 ALJR 327, applied. (Aust Dig Procedure [447]).

HOBART, 1 December 1997 (hearing), 5 December 1997 (decision)

The plaintiff applied for an order that the fifth defendant produce for inspection the income tax return (or some other copy of it) referred to in par2 (the reference should have been to par3) of his affidavit sworn on 20 October 1997.

The plaintiff sued the defendants for damages arising out of alleged misrepresentations in the course of negotiations which led to it purchasing from the second, third, fourth, fifth and sixth defendants a business pursuant to an agreement dated 20 May 1993. The business had been conducted in partnership between those defendants. The first defendant was their estate agent. Essentially the plaintiff alleges that the defendants made misrepresentations about the trading experience of the business, in particular its takings.

On 8 September 1997 an order was made, on the application of the plaintiff, that the fifth defendant make, file and serve an affidavit stating whether any signed or unsigned copies of the income tax returns of the partnership for 30 June 1992 and 30 June 1993 were or had at any time been in his possession, custody or power, and if not then in his possession, custody or power stating when he parted with them and what had become of them.

The fifth defendant responded by affidavit sworn on 20 October 1997. In par2 he said that following the making of the order he arranged for his solicitors to undertake enquiries through his accountants and the Australian Taxation Office. In par3 he said that on 25 September 1997 his solicitors received from the Australian Taxation Office a copy of an income tax return for the financial year ending 30 June 1993 which had been filed for and on behalf of the relevant business conducted by the partnership. (It is with respect to that document that the plaintiff has applied for an order for inspection.) The fifth defendant stated that he objected to producing it on the grounds that it is privileged and came into existence and was made after this litigation was commenced and in view of it, for the sole purpose of obtaining for and furnishing to his solicitors evidence and information for their use to enable them to conduct this action and otherwise advise. By par4 of his affidavit he stated that from information provided to his solicitors he believed that he signed an income tax return for the business for the financial year ending 30 June 1993, for and on behalf of the partnership but neither he or his accountants retained a copy of it. By par5 he stated, based on that belief, that he once had in his possession, custody or power, for the purposes of signing it, the income tax return for the business for the financial year ending 30 June 1993 which he believed was sent by his accountants to the Australian Taxation Office on a date no longer recalled.

The income tax return of the business which was submitted for the year to 30 June 1993 to the Australian Taxation Office, and which is apparently held by that office, is not itself the subject of a claim to privilege by the fifth defendant. He only maintains a claim to privilege over the copy of the return to which he referred in par3 of his affidavit and which his solicitors recently received from the Australian Taxation Office. A problem for the plaintiff is that it has no means of seeing the original return in the possession of the Australian Taxation Office, because of the secrecy provisions of the Income Tax Assessment Act 1936, s16(2) and (3). It has no means of forcing the Australian Taxation Office to produce the original return to the court or to the plaintiff for its inspection. Counsel for the plaintiff accepted that if it was not for the secrecy provisions, the fifth defendant would be entitled to maintain his claim to privilege over the copy of the return referred to in par3 of his affidavit. Counsel argued that because of those secrecy provisions however, the fifth defendant is not entitled to maintain the privilege.

The plaintiff relied on the recent judgment of Brennan CJ in Commissioner, Australian Federal Police v Propend Finance Pty Ltd (1997) 71 ALJR 327. In that case Brennan CJ, and the four other members of the court who formed the majority, held that legal professional privilege applies to copies of documents in the possession of a legal practitioner which were made solely for the purpose of obtaining or giving legal advice or solely for use in legal proceedings, even where the original documents were not privileged. At 331 Brennan CJ said that was the prima facie rule and then went on to consider whether there was an exception to it. Keeping in mind that the case concerned the raising of legal professional privilege in opposition to the seizure of documents by police pursuant to a search warrant, the following statement by Brennan CJ of the exception he considered existed can be better understood. At 333 his Honour said:

"I would state the qualification in this way: if an original unprivileged document is not in existence or its location is not disclosed or is not accessible to the person seeking to execute the warrant and if no unprivileged copy or other admissible evidence is made available to prove the contents of the original, the privileged copy loses the privilege. The loss of privilege can be avoided by the production of a copy of the original (which might be produced by copying the privileged copy) the accuracy of which is verified by a person having knowledge of the contents of the original. So long as a copy of the unprivileged original (with verification if necessary) or other secondary evidence of its contents is available to be tendered to prove the contents of the original, the privilege attaching to any copy of the original can and should be maintained. Otherwise, I would hold the privilege of the privileged copy to be lost."

It was submitted by counsel for the plaintiff that I should apply what was said by Brennan CJ to the circumstances of this case and hold that because the plaintiff is unable to inspect the copy of the income tax return which is held by the Australian Taxation Office, the fifth defendant's legal professional privilege with regard to the copy of it should be held to have been lost. However I do not agree. The exception propounded by Brennan CJ was expressly limited to cases in which a person was seeking to execute a warrant. A careful reading of pages 331 - 333 of his Honour's judgment reveals that it was not intended that such an exception would apply in judicial and quasi-judicial proceedings where discovery and inspection of documents is generally permitted. No other members of the High Court declared there to be an exception of the kind argued by counsel for the plaintiff. I hold therefore that I should apply what was held by the majority in that case, that is to say that legal professional privilege applies to copies of documents in the possession of a legal practitioner which were made solely for the purpose of obtaining or giving legal advice or solely for use in legal proceedings, even in a situation where the original documents were not privileged. I add that is what was held by Green CJ in Wade v Jackson's Transport Services Pty Ltd [1979] Tas R 215 and by Underwood J in Davis v Lambert-Bain Pty Ltd [1989] TASSC 73; [1989] Tas R 274.

Accordingly the plaintiff's application for inspection will be refused.