Greenough v Gaskell

The traditional rationale of legal professional privilege is that people should be able to seek legal advice confident in the knowledge that their disclosure to legal advisers will not be used against them. That privilege is not confined to communications connected with litigation which is intended or expected because no-one could then safely adopt precautions to render Òany proceeding successful or all proceedings superfluousÓ: Greenough v Gaskell (1833) 1 My & K 98 at 103 per Lord Brougham LC.

The operation of the privilege is to keep secret communications between client and solicitor. Its purpose is to induce the client to retain the solicitor, seek the solicitorÕs advice and make a full and frank disclosure of relevant circumstances to the solicitor. It is, however, to be confined to those documents brought into existence for the sole purpose of submission to legal advisers for advice or for use in legal proceedings Ð Grant v Downes (1976) 135 CLR 674.

The material for which privilege is claimed should be confidential in the context of the solicitor/client relationship. In OÕReilly v Commissioners of State Bank of Victoria (1983) 153 CLR 1 at 22, Mason J observed that to be privileged communications in writing Òmust still be confidential communications between solicitor and client made for the purpose of advice or for use in existing or anticipated litigationÓ. This would not extend to documents which merely evidence various transactions.

That limitation is consistent with the application of the privilege to documents which involve or include a compilation by the client for communication to the solicitor of information about the clientÕs affairs some of which may be on various public records. The confidentiality attaches to the communication rather than to its content. So a document brought into existence for the purpose of recording transactions and subsequently passed to a solicitor does not thereby attract legal professional privilege. Similarly, entries in a solicitorÕs trust account records did not attract legal professional privilege in Allen Allen & Hemsley v Deputy Commissioner of Taxation (NSW) (1989) 86 ALR 597.

Consistently with the purpose served by the privilege, notes, drafts, charts, diagrams, spreadsheets and the like prepared by a client as a way of marshalling information to be the subject of confidential communication to the clientÕs solicitors should also attract its protection. In Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 at 333, Anderson J observed:

ÒWhat is protected, of course, is that which is communicated between solicitor and client. It is the communication that is privileged. But this is not to say that material that is not literally a communication or manifestly the record of a communication is never protected. There are many instances of protection being extended to such material. The examples of the draft letter that never leaves the solicitorÕs office, the draft agreement and the draft statement of claim have already been referred to. The reason why such material is protected is often stated to be that disclosure of it will, or will tend to, reveal the privileged communication: see Attorney-General (NT) v Maurice ((1986) 161 CLR 475), per Dawson J (at 496). Thus a note made by a solicitor of a conference with his client will be privileged in so far as it is a record of the communication from the client (that communication being privileged) but also in so far as it might contain notes of the solicitorÕs own thoughts in regard to the matters communicated to him. Protection is afforded in the latter case on the ground that disclosure of that material might tend to reveal what had been communicated to the solicitor. There is much in the cases to support the view that this is the true basis upon which draft agreements, draft letters, draft pleadings and the like have long been accepted as privileged; that it is not so much because they are themselves ÒadviceÓ or ÒcommunicationÓ but because they will, if disclosed, reveal, or tend to reveal, the content of privileged communications.Ó

As his Honour went on to point out at 334 there are limits. The material must have been created solely for the purpose of fulfilling the engagement and it must be confidential. His HonourÕs remarks were directed to materials brought into existence by the solicitor in the form of drafts and notes. The principle which he applied extends with equal facility to materials brought into existence by the client for the purpose of communication to the solicitor whether or not they are themselves provided to the solicitor. In the case of a client who has a complex array of historical transactions and perhaps little consciousness of notions of relevance and necessity, such notes or drafts may be extensive. Such clients and such notes are within the experience of many who practice in the law. The question for the purpose of the application of legal professional privilege is whether or not they are to form the basis of confidential communications to the solicitor. It is not whether they lie within the confines of relevance and well ordered thought processes. The present case concerns primarily documents of this character said to have been brought into existence by Saunders for the purpose of communication with legal advisers from time to time. It was submitted for the Commissioner that on one view of the High CourtÕs decision in Baker v Campbell (1983) 153 CLR 52, the protection of documents to which legal professional privilege attaches applies conclusively only to documents in respect of which a claim for privilege is maintained at the time of execution of the warrant. On this view of Baker v Campbell it would follow that legal professional privilege could not attach to any of the documents in dispute in this case. This contention was based upon an observation of Sweeney J in Re Arno Ex parte Forsyth (1985) 9 FCR 557 at 572 where his Honour said, after reviewing various passages from the judgments in Baker v Campbell: ÒThere is, to put it at its lowest, a grave risk that, if documents to which legal professional privilege attaches and in respect of which it would otherwise be maintained are seized under a warrant, that privilege will be destroyed.Ó Of the majority in Baker v Campbell who held that the doctrine of legal professional privilege was not confined to judicial and quasi judicial proceedings, Murphy J expressed no view on the question whether legal professional privilege would be lost by the fact of seizure of a privileged document. Wilson J, in a passage cited by Sweeney J, said: ÒÉ I have been burdened by the consideration that to deny the relevance of a valid claim to legal professional privilege in the face of a search warrant would effectively deny the availability of the privilege in any prosecution that followed. The same is probably true in the case of other forms of legislation which provide statutory authority to extra-judicial measures requiring compulsory disclosure. The very existence of the privilege as providing any significant protection and thereby making its contribution to the public welfare must be threatened unless as a matter of principle the protection extends to all forms of compulsory disclosureÉ.Ó Deane J in a summary of the common law of legal professional privilege at 112 observed in passing that the privilege may be lost by waiver and, arguably, by the content of the communication ceasing to be confidential. And Dawson J at 129 noted that there is authority for the proposition that the privilege may be lost if a document to which it attaches comes into the hands of someone other than the legal adviser or the client, even dishonestly, so that secondary evidence of it may be given. With respect, these observations of the majority in Baker v Campbell fall a long way short of the suggestion that the seizure under warrant of a document the subject of legal professional privilege which has not been waived causes that privilege to be lost. The fact that the seizure may have occurred in circumstances in which the officer executing the warrant was unaware of the subsistence of legal professional privilege in the relevant document does not, in my opinion, lead to the conclusion that the privilege is lost. This is quite apart from questions of the lawfulness of the seizure in such a case. As Mason J noted in Baker v Campbell the rules that the claim for privilege is lost once the document passes into the possession of another have been criticised and the decisions upon which they are based may require qualification particularly in relation to documents obtained by illegal means or by deception. In my opinion there are both policy and significant practical considerations, evident in the present case, which militate against a principle that seizure of documents in respect of which legal professional privilege subsists and has not been waived but in respect of which the claim for legal professional privilege has not been made at the time causes the privilege to be lost. As in the present case circumstances can arise in which the question whether legal professional privilege exists is not able to be answered by simple inspection of the documents or within a timeframe consistent with the exigencies of the investigative process. In the circumstances, I do not accept the proposition, somewhat tentatively advanced by the Commissioner, that legal professional privilege attaches only to documents in respect of which a claim for privilege is maintained at the time of execution of the warrant. It was submitted by the Commissioner that the failure by Saunders to claim legal professional privilege at the time that the search warrants were executed was an intentional act with knowledge of the right to claim the privilege and accordingly constituted an express waiver of the privilege. Alternatively, it was said in the circumstances a waiver of privilege should be implied by operation of law. For reasons which I have set out later in this judgment, I consider there was no express waiver of the privilege. Waiver of privilege implied by operation of law was discussed by Goldberg J in Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 145 ALR 391. As his Honour pointed out in that case, at 403, there is authority for the proposition that waiver will be imputed where the person entitled to claim the privilege has performed some act which renders it unfair to another party that the privilege be maintained: Attorney-General (NT) v Maurice (1986) 161 CLR 475; Goldberg v Ng (1995) 132 ALR 57. His Honour said at 404: ÒThe question of fairness arises in my view where, due to an act of a party or his authorised agent, a document is disclosed to another party which is relevant to issues in the litigation. Is it fair to the party receiving the information that it cannot use the information in the proceeding?Ó On the facts of the present case no unfairness supporting an implied waiver of privilege arises.

Dramatis Personae Ð The Legal Advisers A number of legal advisers to Saunders were called as witnesses in the case. Roger Gibson was engaged in legal practice in Western Australia between 1980 and 1987, after which he moved to South Australia. From 1982 until 1987 he acted for Saunders and companies with which he was associated. Saunders often sought advice from him on taxation matters and in relation to corporate and trust structures. He would often provide Gibson with spreadsheets, tables and diagrams at GibsonÕs request to facilitate their discussions. Saunders took detailed notes at their meetings and sometimes prepared reports. Gibson had been shown Òmany hundredsÓ of documents by Saunders in the course of his work for him. He could not be sure that he had seen specific documents shown to him in cross-examination but assumed he had on the basis that they dealt with matters in relation to which he was providing advice. Christopher Lalor is a legal practitioner who ceased practising in June 1984. He is Executive Director of a mining company, Sons of Gwalia Ltd. Prior to ceasing practice he acted for Saunders on a number of occasions particularly in relation to an action by a company with which Saunders was associated, Tortola Pty Ltd. That action concerned a dispute over mining tenements at Mt Seabrook in Western Australia. It proceeded from the Wardens Court at Meekatharra to the Supreme Court of Western Australia and ultimately to the High Court. Lalor has had many dealings with Saunders over the years through his involvement in the mining industry. Although he has not formally acted as SaundersÕ solicitor since 1984, Saunders had on a number of occasions sought advice from him on legal issues. He would frequently seek such advice informally in circumstances where he would not have to pay for it. Saunders agreed that he had obtained advice from Lalor unofficially on numerous occasions when he questioned him in hotels or while they were travelling together on other business. He accepted that he was effectively obtaining free legal advice but had no compunction about this as he considered that Lalor owed him Òa favour or twoÓ for work he had put into establishing the Sons of Gwalia NL float which he regarded as having effectively set Lalor up for life. Saunders appeared to Lalor to be an habitual note-taker and would often make a written note in the course of conversations. Lalor was shown a particular document among those seized headed ÒRamsgate Ð Getting Rid of JarrahmondÓ. He had not seen the document before a copy was sent to him by Saunders with a request that he provide an affidavit in connection with these proceedings. The document made reference to him giving advice in relation to Ramsgate. He recalled that Saunders had discussed with him aspects of a difficulty involving joint ownership by his company Bewick Moreing Pty Ltd and the company called Jarrahmond with a third company called Ramsgate. The issue involved dealing with an exploration licence within one year of grant. Lalor could not recall the advice he gave. Agostino Irdi, whose offices at Leederville were the subject of one of the warrants, provided legal services to Saunders through a specialist law clerk, Greg Dunn, between 1993 and 1995. Irdi had never provided Saunders with advice himself. Dunn was a graduate in business with a commercial law major from the West Australian Institute of Technology (now Curtin University). He lectured and tutored there in commercial contract law and taxation law in 1981 and 1982 and for six years thereafter worked as a law clerk for Lavan Solomon which subsequently became Phillips Fox. As a law clerk employed by Lavan Solomon and Phillips Fox he was devoted exclusively to research and preparation of advice in the areas of taxation law and contract. In 1988 he was employed by Irdi as a consultant on tax matters. He was subject to very general supervision by Irdi. In February 1994 Irdi & Associates was approached by a firm of accountants acting for Saunders and asked to assist him in relation to the income tax investigation then underway by the Australian Taxation Office in relation to his business activities. At that time a s 264 notice dated 22 February 1994 had been issued. This was DunnÕs first dealing with Saunders. DunnÕs recollection subsequently was of doing work for Saunders exclusively in relation to taxation matters. Irdi & Associates did not undertake litigation and litigation on tax matters was referred to Solomon Brothers. SaundersÕ accountant was of the view that the Tax Office investigation involved a challenge to SaundersÕ status as a bona fide prospector for the purposes of s 23PA of the Income Tax Assessment Act. This was a status that he had enjoyed for more than ten years. To properly prepare for the pending Taxation Office investigation in DunnÕs view it was necessary to look at all SaundersÕ business activities during the period of time that his status as a bona fide prospector might be challenged. The accountantÕs perception about the focus of the Taxation Office investigation was confirmed in DunnÕs view by the first meeting he attended between Saunders and officers of the Australian Taxation Office early in 1994. Dunn, at an early stage, asked Saunders to try to gather the facts as to what had happened during the previous ten years when it appeared he had enjoyed bona fide prospector status. He found Saunders to be erratic in the manner in which he recalled events and portrayed them. He asked him to set out chronologically a sequence of events and facts and to put them into a format that would assist in obtaining information and get SaundersÕ thought processes running along chronological lines. He requested details and complete chronologies of events with flowcharts, diagrams and lists. From time to time Saunders produced spreadsheets, charts, diagrams lists and chronologies and detailed descriptions of his activities. Dunn recalled one occasion when Saunders came to his office and spread out on the couch a large number of spreadsheets, charts and lists. He asked Dunn whether he wanted to go through them at that time. Dunn said he did not that it could be left until closer to the time for objections to anticipated assessments to be drafted. Not long after that particular incident SaundersÕ tax affairs were handed over to Solomon Brothers. At the time Saunders was introduced to Dunn he had an involvement in the affairs of three companies, Bewick Moreing Pty Ltd, Finwest Pty Ltd and Tonto Pty Ltd, each of which was a trustee of a discretionary trust. Saunders said he was approaching his fiftieth birthday and wished to wind down his involvement in business to a parttime basis. He discussed with Dunn the possible restructuring of his business arrangements. Dunn made no reference to this aspect of the work in his affidavit evidence but in cross-examination he said it was a development of the initial brief which he described as ÒÉa seed that grew into a treeÓ. He gave advice to Saunders that new corporate entities should be established and assets transferred from existing entities to new entities. The advice was not followed. That is to say the companies were not restructured as proposed. Paul Fletcher is a partner in the firm Solomon Partners. He currently acts for Saunders. His firm is solicitor on the record for Saunders in these proceedings. He had, in May to November 1995, a series of meetings with Saunders in relation to an application in the Supreme Court of Western Australia by the Deputy Commissioner of Taxation seeking an injunction to restrain Saunders from dealing with assets. He also acted in relation to objections to income tax assessments issued to Saunders in April 1995 in respect of the years ended 30 June 1984 to 1990 inclusive and 1992. They had numerous meetings during that period. One of the issues which they considered was whether or not monies derived from the sale of mining tenements and shares were derived by Saunders or by an alleged associate, Richard Forbes Donald-Hill. Fletcher asked Saunders to give him details of money movements and payment or repatriation of funds to Donald-Hill. Saunders did produce handwritten documents to him (S43 and S45) in connection with his inquiry. Fletcher had retained those documents on file but the only copies he could now locate were those attached to affidavits filed in the proceedings. He also recognised another document, S44, as a copy of a single page of a handwritten notes provided to him by Saunders in connection with the preparation of either objections to income tax assessment or a response to a document file with the Administrative Appeals Tribunal in connection with appeals against the CommissionerÕs disallowance of SaundersÕ objections to income tax assessments. Arthur Auguste is a legal practitioner who has known Saunders since the mid 1970Õs and has been his next door neighbour since 1990 when Saunders moved into 258 Marine Parade, Swanbourne.

The Contested Documents Concessions have been made on both sides of the case about claims of legal professional privilege in various of the documents seized. However a number of the documents remain in issue. The Commissioner makes the general contention that Saunders has claimed privilege too late and has waived it in any event. Saunders contests those assertions and contends, in addition, that there was an arrangement made between him and/or his representatives and the officers executing the warrants which deferred, without resolving, the privilege question. It is convenient first to consider the extent to which privilege would subsist in those of the seized documents which now remain in issue if privilege has not been waived. The documents remaining in issue were conveniently set out in a schedule attached to closing submissions made on behalf of the Commissioner. They are referred to in the submissions of both parties by a series of numbers prefixed with the letter ÒSÓ.

Documents S1, S2, S4, S5 and S6 Ð Seized from Koala Self Storage These documents were said by Saunders to be component spreadsheet documents which formed part of a composite spreadsheet prepared by him at the request of Dunn of Irdi & Associates. They were prepared, it was said, for the sole purpose of obtaining legal advice. Dunn referred to the documents in his affidavit of 7 July 1997. He could not recall the precise documents but did recall that Saunders produced for him at his request from time to time: ÒÉspreadsheets such as these in order that I could establish a chronological sequence of relevant eventsÉ.Ó In cross-examination he said that the spreadsheets or similar documents were essential to enable him to provide to Saunders the advice which he was requesting. The advice related to the likely outcome of the Tax Office investigation. It was put to Dunn that some of the events recorded in these spreadsheet documents went back to 1981. He responded that the scope of taxation investigations would not necessarily be confined to the scope initially specified in the s 264 notice. SaundersÕ case for legal professional privilege generally was criticised as relying upon a level of generality which was incapable of supporting the claim with respect to particular documents. DunnÕs evidence, it was said, was typical of such generality. That is not surprising however given the lapse of time since he was directly involved with Saunders and the latterÕs prolific production of notes, charts, lists and the like in relation to his affairs. The question of the necessary relationship between much of the information contained in the documents and the work for which Dunn had been engaged was agitated in argument. In relation to the restructuring of SaundersÕ companies and trusts it was said that no convincing case was made by either Saunders or Dunn for the need to produce information going back ten years in relation to the three companies whose restructuring was under consideration. Most of the information on the spreadsheets S1, S2, S4, S5 and S6 was not demonstrated to be connected with legal advice relating to a corporate restructuring taking place in 1994 or advice connected with the Australian Taxation Office inquiries at that time. Dunn, it was said, could not demonstrate any substantial relationship between the information in any of the spreadsheet documents and the bulk of the information requested by the ATO in the original s 264 notice. The inference was offered by the Commissioner that none of the spreadsheets was created in circumstances claimed or for the purposes claimed by Dunn and Saunders. It is most likely, it was said, that they were created by Saunders for purposes unrelated to matters the subjects of legal advice given by Dunn in 1994. At page 93 of the transcript when this was put to Dunn he said: ÒI think you need to have a fairly reasonable handle on what the companiesÕ activities have been, particularly when thereÕs a taxation investigation pending and particularly when the instructing accountantÕs belief is it challenges a status, or they believe challenged a status which goes back a number of years.Ó When it was put to him that he would have no possible interest about what had happened ten years earlier with respect to the commercial activities of the companies, he said: ÒThat proposition sounds logical however itÕs fatally flawed. Its fatally flawed for the following reasons Ð that a balance sheet in 1994 hopefully Ð and I stress hopefully Ð reflects at that particular point in time what has happened through the past and that reflects Ð and I recall in relation to those trusts Ð loans. One wants to ascertain that the loan that is reflected in the balance sheet is correctly reflected, so that requires you to get behind the loans and see how they have been constructed through time.Ó Accepting that much of the information provided to Dunn by Saunders may have been strictly unnecessary for the purposes for which advice was being sought, that is not an answer to a claim of legal professional privilege. It is not uncommon in legal practice that clients will provide a mass of irrelevant information in respect of which it is the adviserÕs task to identify what is relevant and what is necessary for properly advising on the case at hand. In addition, it may be that the adviser asks for more than is strictly necessary in order to obtain a proper historical perspective on the clientÕs commercial activities. Having reviewed the documents in question and having regard to the evidence of Dunn and in light of the time that has passed and the kind of client that Saunders was, I conclude that on the balance of probabilities the spreadsheets in question were prepared for the purpose of obtaining legal advice from Dunn albeit they may have been intermediate stages in the preparation of a composite document which was annexed to an affidavit sworn by Dunn. The fact that the documents may not have been shown to him but were supplanted for that purpose by a more elaborate or complete version is does not defeat the privilege that attaches to them as part of the process of confidential communication with a legal adviser. On the face of it the purpose of this paperwork was clear enough. It was the compilation of a fairly comprehensive history of transactions to properly instruct legal advisers. Legal professional privilege would attach to these documents.

Documents S7; S11-S16; S18-S34; S40-S41; S43-S47; S79; S85-S96

S7 is a portion of lined note paper which sets out a list of money amounts against various dates in 1991, 1992 and 1993. The amounts are annotated by apparent reference to transaction descriptions. They were found, with a number of other documents put in issue, in an envelope marked ÒMoney TrailÓ at Koala Self Storage. The document was not on the Irdi & AssociatesÕ file. According to SaundersÕ affidavit evidence S7 was one of a number of tables, lists, notes, diagrams and spreadsheets created by him as an aid to producing the spreadsheets S1 to S6 and Òsummary of transactionsÓ documents S21 to S30. It was his recollection also that documents S8 to S10 were shown by him to Dunn because they demonstrated cashflows relating to certain aspects of the financial transactions involved.

In his affidavit evidence Dunn said that he had no recollection of having seen S7.

S11-S16 were also documents of which Dunn had no recollection. Nevertheless they were consistent with the documents which Saunders was producing and supplying to him in the course of obtaining advice from Irdi & Associates with respect to his tax affairs. The Commissioner submitted in relation to them that they comprised extracts created by Saunders to record various accounting and company transactions. In my opinion, however, having regard to the general content of the documents, it is improbable that they were recorded purely for SaundersÕ own purposes, but rather for the purpose of either providing him with an aide memoir for better communication with his legal representatives or providing the information in written form to his legal representatives. In so saying, I accept that the documents were not on the Irdi & AssociatesÕ file, having been found in the envelope marked ÒMoney TrailÓ. They referred to dealings and transactions over various periods between 1986 and 1992.

The documents S18-S34 fell into the same broad category. They had all been found in the envelope marked ÒMoney TrailÓ and none of them were on the Irdi & Associates file. In respect of these documents I have formed the same general conclusion that I have with respect to S11 to S16 namely that they were prepared by Saunders for the purpose of either providing him with an aide memoir for better communication with his legal representatives or providing the information in written form to his legal representatives. I am inclined to think the former is the more likely.

It was submitted for the Commissioner that in relation to documents S21 to S30 SaundersÕ evidence did not demonstrate any significant relationship between the information that they contained and the information in the spreadsheets. None of them were shown to Dunn or discussed with him. It was put to Saunders that there was very little, if any, relationship between the information found in the spreadsheets and the information found in those documents. The Commissioner criticised SaundersÕ evidence on the basis that it could not support his statement that the documents were used as an aide to producing the spreadsheets other than by making the general assertion that it was true. Moreover it was said to be clear beyond doubt that no legal advice was sought or obtained with respect to those ÒintermediateÓ documents. They were prepared by Saunders for his own use and as a part of his general practice of keeping notes. It was submitted that they could have been prepared at any time for any number of possible purposes unrelated to advice being sought and given in 1994 to 1996.

As a general proposition I have some difficulty with that contention. In that period Saunders was the subject of a significant Australian Tax Office investigation. The question of the restructuring of his business affairs was also under consideration. It is difficult to imagine any useful purpose to which these and many of the other notes and diagrams were prepared other than for the purpose of marshalling information for the purpose of instructing legal advisers. As noted earlier, that is not to say that the information was either relevant or necessary to that advice but the questions of relevance and necessity are the very questions which a client expects his legal adviser to address.

As to documents S40 and S41, again Dunn confirmed that he had no recollection of having been provided with those documents by Saunders. However, they were consistent with the types of documents Saunders was producing and supplying to him in the course of obtaining advice with respect to his tax affairs. The same was true of S43 to S47, S79 and S85 to S96.

Fletcher recalled the documents S43 and S45 being produced by Saunders at a meeting or meetings at his office during the period May to November 1995. They were produced in the course of Fletcher providing legal advice concerning an application made in the Supreme Court of Western Australia in May 1995 by the Deputy Commissioner of Taxation for the State of Western Australia. The application involved a claim for an injunction to restrain Saunders from dealing with certain assets. The documents were also relevant to meetings that Fletcher had with Saunders concerning the objections which had been lodged to income tax assessments issued to him in April 1995 in respect of the years ended 30 June 1984 to 1990 inclusive and 1992.

One of the questions which Fletcher understood to arise at the time of the meetings concerning the assessments was whether money derived from transactions involving the sale of mining tenements and shares had been derived by Saunders or by an associate, Richard Forbes Donald-Hill. In taking instructions from Saunders, Fletcher had asked him to provide details on money movements and in particular the payment or repatriation of funds paid to Donald-Hill. SaundersÕ preparation of documents S43 and S45 was done in connection with FletcherÕs inquiry.

Fletcher recognised S44 as a note provided to him by Saunders in connection with the preparation of objections to income tax assessments or a response to the CommissionerÕs statements of findings on material questions of fact.

In the event I am satisfied that legal professional privilege attaches to S43 to S45 inclusive.

Documents S46 and S47 were not on Irdi & AssociatesÕ file. They were not given to Dunn nor were they apparently discussed with him. In respect of S46 and S47 DunnÕs affidavit evidence covered these documents with the general comment that they were consistent with the types of documents which Saunders was producing and supplying to Dunn in the course of obtaining advice with respect to his tax affairs.

I am satisfied that these are covered by legal professional privilege for the same reasons as the other documents to which I have referred.

S79 was a document in an envelope marked ÒTenement RecordÓ. It was not on Irdi & AssociatesÕ file and it was neither given to nor recognised by Dunn. Saunders explained this document as having been prepared by him outlining the sale of tenements to various parties between 1983 and 1990. It was created for the purpose of preparing spreadsheets and intermediary sheets in 1994. The tenements referred to had been sold after October 1990. Saunders accepted that no copy had ever been given to Dunn.

S85 to S96 were also tenement records outlining the sale of tenements to related parties. Saunders accepted that he had never given copies of these documents to Dunn. He had never discussed them with him. He had them there should he be asked on a specific item and he may have referred to specific projects but he could not recall. On the face of it these documents were notes recording a sequence of sales. They also contained some commentary as was the case of S93. On the same basis as the attachment of legal professional privilege to the documents earlier referred to, I am satisfied also that these documents are covered by legal professional privilege.

Documents S169-174; S184-187; S189-S191 Ð Seized from Koala Self Storage These are documents in respect of which privilege is claimed on the basis that they were handwritten notes created by Saunders for the purpose of obtaining legal advice from Roger Gibson and Christopher Lalor or else were notes made after meetings with them. In his affidavit evidence Saunders said these notes were created by him in 1985-1986 in relation to a matter he referred to as the ÒRamsgate ProjectÓ. The evidence in relation to each of this group of documents may be summarised as follows: 1. S169-S170 according to Saunders referred to a settlement with a Harry Mason and a dispute with Jarrahmond, both issues on which he sought advice from Gibson and Lalor. Gibson said in his affidavit that he gave legal advice to Saunders on a number of occasions from 1982 to 1987 in relation to Ramsgate (later renamed Zatoox Pty Ltd). He said the company held some mining tenements and a dispute had developed involving Murray Longman of Jarrahmond Holdings Pty Ltd and a geologist, Harry Mason. He gave Saunders legal advice on the dispute and the subsequent sale of the tenements to the Capital Oil Group and related taxation matters. He recalled the dispute with Longman because he worked in the same building and knew him. He did not recall the advice he gave. He recognised S169 and S170 as containing handwritten notes by Saunders concerning matters discussed by them at a meeting in November 1986. However he conceded in cross-examination that his recollection about these and related documents was Òless accurate than it was for other events and other matters upon which I acted for the applicantÓ. Lalor had not seen S169 and S170 previously. He did not ask Saunders to produce them and gave no advice in respect of them. 2. S171- S172. These documents described the Ramsgate deal and specifically, in respect of S172, what Saunders called Òpotential complicationsÓ which he remembered discussing with both Gibson and Lalor. Gibson again recognised these documents as containing handwritten notes by Saunders relating to matters discussed by them at a meeting in about June 1986 relating to the Ramsgate Pty Ltd deal with Capital Oil. As with the previous two documents he was not able to offer precise evidence about when he first saw them. Lalor had not seen either document previously. He had not asked Saunders to produce them and did not give advice in respect of them. 3. S173. Saunders described this as a handwritten note relating to Zatoox describing certain tax aspects of the Ramsgate deal. It was, he said, a note created by him solely for the purpose of obtaining legal advice from Gibson or Lalor. Gibson recognised this document as containing a handwritten note relating to matters discussed by them at a meeting in about February 1986 relating to the affairs of Zatoox Pty Ltd and the involvement of Mason. Lalor had not seen the document before. 4. S174. This was described by Saunders as a handwritten note headed ÒINVOLVEMENT OF H. MASONÓ detailing his involvement in the Ramsgate deal. He recalled creating the document for the sole purpose of seeking legal advice from either Gibson or Lalor. Again, Gibson recognised that document as containing a handwritten note by Saunders relating to matters discussed at a meeting in February 1986. Lalor had not seen it before. 5. S184-187. These were described by Saunders as notes recording legal advice given to him by Lalor in 1985 on Òdealing with the transfer to TortolaÓ and Ògetting rid of JarrahmondÓ, two specific issues that he discussed with Lalor. Gibson identified S184 as containing handwritten notes by Saunders relating to matters discussed at a meeting with him in February 1985 relating to the dispute with Longman and the possible sale of tenements to Tortola. In cross-examination Lalor described S184 as Òringing a bell only because of the reference to TortolaÓ. However he did not remember a reference to Longman or another reference contained in that document. S185, S186 and S187 were exhibited in photocopy form to LalorÕs affidavit in which he said he had not seen the documents before a copy was sent to him by Saunders in connection with his request to provide an affidavit in the proceedings. He noted that one of the documents made reference to him giving advice in relation to Ramsgate. He recalled that Saunders had discussed with him aspects of a difficulty involving joint ownership by his company Bewick Moreing Pty Ltd and a company called Jarrahmond of a third company called Ramsgate. The issue had involved the question of dealing with an exploration licence within one year of grant. He could not recall the exact advice he gave. 6. S189 Ð S191. According to Saunders these were handwritten notes on the Ramsgate deal produced solely for the purpose of obtaining legal advice from Gibson to do with issues mentioned in the notes and specifically the mechanics of the main transaction and the consideration there referred to. Gibson said he recognised them as containing handwritten notes by Saunders relating to matters discussed at a meeting with him in or about 1986 relating to Ramsgate and its business with the Capital Oil Group. This evidence of GibsonÕs was subject to his general comment in cross-examination that his recollection was less accurate for these documents and the matters to which they related than it was for other events and matters upon which he acted for Saunders. He accepted in cross-examination that he had been shown many hundreds of similar documents to those in respect of which privilege is in issue in this case. In relation to these documents generally they, and many others like them in this case, bore out the view that Saunders was an inveterate notetaker, that he prepared notes prior to discussions and took notes at or after discussions. Given the content of the notes generally, I am satisfied on the balance of probability that the various documents in the categories I have outlined above, were prepared either to be used as aide-memoirs for discussions with legal advisers or for tendering to them. The relevant legal adviser in this case was, for the most part, Roger Gibson, although Lalor may have been involved in particular in relation to the Tortola matter. In my opinion on the balance of probability the numbered documents did attract legal professional privilege.

Documents S222 to S233 Ð Seized from Marine Parade SaundersÕ evidence about document S222 was that it was a note prepared at a meeting with Irdi & Associates solely to record legal advice given and that it includes the phrase ÒG. Dunn agreed that.Ó. DunnÕs evidence was that he had no recollection of seeing this document although he did recognise SaundersÕ handwriting and confirmed that the content of the document in part reflected issues the subject of discussions held between Saunders and himself. I accept that in the circumstances the fact that Dunn did not recollect seeing the document is not significant. Documents S224, S225 and S226 were conceded by Saunders during cross-examination. As to documents S227 to S233, these were prepared in response to DunnÕs request for information in 1994 and specifically for the preparation of the spreadsheet S6. It was put to Saunders in cross-examination that these were documents in respect of which he had only recently claimed privilege. He accepted that that was the case. There was reference to a P. Brown in some of the documents, a name used by Donald-Hill. S227 was in the form of a cashbook in the name of P. Brown. According to Saunders, it was all part of Òdoing the footwork requested by Greg DunnÓ in order to generate the spreadsheet that he wanted and to identify income and cashflows. From SaundersÕ point of view he had to start at first principles which meant drawing up the transactions as best he knew, going back to source documents, tabulating them and then having tabulated them in cashbook form, compressing the data and recreating it on the spreadsheet and on the documents intermediate to the preparation of the spreadsheet. It was put to Saunders that the document was not created for the purpose of assisting in the preparation of spreadsheets but for a different purpose. He denied this. S229 bore a heading ÒJ. LeeÓ which, according to Saunders, was also a pseudonym of Donald-Hill. It recorded by transactions by Donald-Hill under the name J. Lee and was a preliminary document. It apparently referred to share transactions. It was a document created in order to provide Dunn with information he had requested in 1993 or 1994. As to S229 to S233 inclusive, Saunders accepted that he hadnÕt necessarily shown them to Dunn but rather used them as source documents. Again, it was put to Saunders that he had created S232 in 1987 or 1988. He denied this and said the reason it had a reference to 1987 to 1988 at the top was that that was the period to which it referred. I am satisfied on the balance of probability that these documents were prepared either to be used as aide-memoirs for discussions with legal advisers, for tendering to them or to record legal advice given. I am satisfied that they did attract legal professional privilege.

LE(1)(6) to LE(1)(9) Ð Seized from Irdi & Associates These documents were drafts of a possible affidavit to be sworn by Donald-Hill which were prepared by Dunn and at least one of which was sent to Saunders. There is a covering fax note from Dunn to Saunders. There was also a fax of a communication from Saunders to Dunn dated 16 March 1994 (LE(1)(9)) referring to a change in one of the drafts. There was no proceeding on foot at the time to which the draft affidavit related. Dunn said it was prepared as a consequence of issues that he believed would arise out of the s 264 notice in the tax investigation. It was unclear to him precisely what was the relationship between Donald-Hill and Saunders. He only had SaundersÕ version of the facts and he wanted to be quite clear in his mind before giving advice as to what Donald-Hill had to say about the relationship between the two. It would also assist, he thought, should the Commissioner allege that Donald-Hill was a pseudonym or nothing more than a ÒdupeÓ for Saunders. The drafts were prepared in or about March 1994. Although these drafts and the associated memoranda were not prepared in connection with any pending litigation and although a question mark might be raised about their practical utility, they formed part of the confidential communications between Dunn and Saunders and are, in my opinion, covered by legal professional privilege.

General Observations It has been said more than once in the course of evidence that Saunders was an inveterate notetaker. And, as the evidence indicates, in the preparation of instructions for his legal representatives he made extensive, albeit rather disordered and untidy notes, to try to bring together the various strands of his complicated arrangements. Each of the documents to which I have referred is consistent with the purpose for which he asserted it was prepared albeit it may have ranged beyond what was either necessary or relevant to the advice which was being sought. As I have already indicated, Saunders was the subject of a significant investigation by the Australian Taxation Office which was perceived by his advisers as going to his status as a prospector. And as Dunn said his brief grew like a tree. A judgment on the balance of probabilities must be made on the question of legal professional privilege and in my opinion the documents in dispute in this case were prepared in circumstances that attracted that privilege. The question then remains whether that privilege was lost or waived.

The Execution of the Warrants Ð Waiver of Privilege

At about 7am on 12 February 1997 officers of the Australian Federal Police led by Federal Agent Stephen Paynter, attended at SaundersÕ house at 258 Marine Parade, Swanbourne. Other officers present were Agents Hicks, Leonhardt, Marning, Elliott and McDonald. Paynter saw Saunders Òrunning across Marine ParadeÓ towards his neighbourÕs house. His neighbour was Robert Auguste who shared his house with his brother Arthur, who is a solicitor. Saunders was in fact returning from an early morning swim at nearby North Cottesloe beach when his attention was attracted by Robert Auguste.

Arthur Auguste arrived as Paynter spoke to Saunders and told him he wanted to execute a search warrant on his premises. Saunders then had a discussion with Arthur Auguste who agreed to represent him while the warrant was executed. Parts of the subsequent proceedings were tape recorded by Agent Leonhardt who used what was described by Paynter as an Òovert tape recorderÓ. Auguste denied that he ever saw the tape recorder in use but nothing turns on that for present purposes. Auguste read the terms of the search warrant and explained it to Saunders. After about 20 minutes Saunders, Auguste, Leonhardt and Paynter went into SaundersÕ residence. There a copy of the warrant was given to Saunders who was also handed a copy of a form explaining an occupierÕs rights in the circumstances of the execution of a warrant.

Paynter asked Saunders where would be the best place to find documents relating to the matters raised in the warrant. Saunders directed Paynter to his office. Elliott, Saunders, Auguste and Paynter then went to the office. Elliott checked that computer lines were not connected to a modem and ensured that material contained on the computer was secured. Saunders asked if he could call his usual solicitor, Paul Fletcher at Solomon Brothers. Paynter said he could telephone Fletcher and Saunders did so leaving a message for Fletcher to call him.

Elliott sat down at the computer. Auguste stood behind observing. Paynter sat next to Elliott. Elliott began to look through each document stored on the computer and examined each individually. Paynter does not recall whether they were looking at the index of files or the actual documents themselves. At this point Saunders said there might be privileged documents on the computer. Paynter said that anything Òthat was addressed to Solomon BrothersÓ would not be looked at by Elliott or himself.

While sitting at the computer in SaundersÕ office Paynter had a number of discussions with Auguste as to whether particular documents were within the terms of the warrant. In relation to a number of documents, almost every document according to Paynter, Auguste asserted that it was not within the terms of the warrant. Paynter told Auguste he did not want to engage in legal discussions in relation to each and every document and warned him that he could not hinder the execution of the warrant.

Because the time taken to search individual documents on the computer was slow, Elliott suggested that all the computer generated documents be downloaded onto a magneto optical disk (MO drive) and sealed in an envelope signed by Saunders and Auguste to be examined at a latter date. Saunders agreed to this. Subsequently the documents on the MO drive were examined by Saunders and Fletcher and legal professional privilege was claimed in relation to some of them.

Following the downloading of the disk the rest of the office was searched by the remaining AFP officers. Saunders and Auguste were present throughout the search. Saunders saw the warrant as being very long and complex and did not fully understand it. He felt that Paynter was unable to adequately explain to him documents which were within and those which were outside the warrant and why. He asked Paynter to speed up the search and, according to Saunders, Paynter then suggested that because he was unable quickly to determine which documents were covered by the warrant and which were not, he would seize what he thought were relevant and take them back to the station on condition that he would allow SaundersÕ solicitor and Saunders to check them at a later date to determine which items were challenged for whatever reason. In other words, any decision would be delayed to a later date convenient to Fletcher. Saunders discussed that proposal with Auguste who said it would be difficult for him to attend all day at 258 Marine Parade. On this basis, according to Saunders, he accepted PaynterÕs proposal.

It was PaynterÕs evidence that Fletcher had returned Saunders telephone call and that Saunders faxed a copy of the warrant to Fletcher. Once he had finished talking on the phone to Fletcher the search of his office continued. Paynter said that Saunders raised claims of legal professional privilege with him by telling him that he thought documents could not be seized. In the event, according to Paynter, no documents were found or seized from any part of the premises other than the office.

Auguste, in his evidence, agreed that Saunders was claiming privilege with respect to certain documents located in the office. On behalf of Saunders from time to time he raised claims of privilege himself and claims that certain documents were otherwise outside the ambit of the warrant. Auguste, in similar vein to SaundersÕ evidence, said that Paynter stated that because there was such a large number of documents and that he was unable readily to determine which were within the terms of the warrant and which outside, he would, if Saunders agreed, take those he thought were probably covered by the warrant, give a receipt for them to Saunders, and remove them to the AFP offices on the same basis as the computer disk. This was that the seizure of those documents would be conditional on Saunders being entitled to examine them with his tax solicitor (Fletcher) and to press any claims in relation to any of the documents that they were not lawfully seized being either privileged or otherwise outside the ambit of the search warrant. According to Auguste, Saunders told Paynter that this arrangement would be acceptable.

In his oral testimony Paynter denied any such arrangement. He said: ÒWell, thereÕs a number of reasons why I am certain there wasnÕt an agreement, because I did not enter into an agreement to that effect. There are no provisions as far as I can see under the Crimes Act that allows me to enter into an agreement where I can remove documents without seizing them.Ó

Asked whether he had ever done that in the hundred or so occasions in the past when he had executed search warrants he said he had never done so. It was not standard practice. It would, in his view, make the seizure unlawful. He said: ÒIf I did remove them under the said agreement, then I should have sealed all of those documents in a bag as per the LPP guidelines if there was an issue of privilege. At the end of the day there was no need for me to even consider an agreement where I was just to remove documents because with the amount of documentation that I seized throughout that period I was able to raise the required belief.Ó

He claimed to have examined all of the documents seized.

Fletcher had gone to Marine Parade at about 2pm following his telephone conversation with Saunders. The search was still underway at that time. He said he had a brief conversation with Paynter and recalled that Paynter said the search warrant had been executed smoothly and with co-operation. Paynter told him, according to Fletcher, that the job was nearly finished and that he would review at the Police Station the documents taken to see whether they were within the ambit of the warrant and that he would return any which were not and that Saunders would then have the opportunity to raise a challenge in relation to any particular documents then retained whether or not they had been lawfully seized.

According to Fletcher Paynter showed him a sample of the documents selected. He had queried with Paynter how the documents he was shown could possibly fall within the ambit of the warrant and that if that were any indication there would certainly be a challenge to the right of the AFP to seize some of the documents. One of the documents he recalled handed to him by Paynter, was a photocopy of several pages from a passport. He said that before he left the premises Paynter told him that he had already reconsidered those particular documents and had decided that they did in fact fall outside the ambit of the warrant.

In oral testimony, Paynter said he did not recall having had any such discussion with Fletcher. It was submitted for the Commissioner that at no time in subsequent lengthy correspondence had Fletcher claimed the existence of an arrangement at Marine Parade including issues of waiver of privilege being taken. Fletcher had inspected some of the documents already seized. He had the opportunity to object to the seizure of documents and in some cases did object. In cross-examination he maintained his understanding that although the warrant was being executed and the documents seized at the time when he was present at the premises it was ÒÉsubject to an arrangement to the effect that the rights of the applicant to dispute that any of the documents taken away fell within the ambit of that warrant had been entered intoÓ. This was based substantially on what he had been told by Saunders.

Auguste was cross-examined on the arrangements also. He maintained his position that there was an arrangement under which Saunders reserved his rights in relation to documents which were seized. His recollection of the substance of his conversation with Paynter was that Paynter had said:

ÒThis is taking a long time. ThereÕs a lot to go through. We can have the same arrangement as with the computer.Ó

Auguste was pressed on this in cross-examination to the point where it was suggested that he was not telling the truth. It is difficult to understand what motivation he would have for not telling the truth as he perceived it about such a matter. Accepting that the search warrant had been executed and the documents seized, I am satisfied that at least from the point of view of Saunders and his advisers he had reserved his rights to pursue objections to the seizure of particular documents after the event. Although PaynterÕs testimony seemed to focus on the issue of seizure the reservation of rights to later raise objections about the retention of particular documents or as to legal professional privilege was not necessarily inconsistent with the fact of a lawful seizure. There may have been some mutual misunderstanding about the issues between the parties. I do not accept, however, that Saunders, Fletcher and Auguste are all fabricating their understanding that some arrangement involving reservation of SaundersÕ rights was made.

In the circumstances I do not consider that there was any waiver of legal professional privilege. A waiver which to be effective must be knowing and intentional would have been quite inconsistent with the general position being taken by Saunders and his advisers at the time of the execution of the warrant.

The same is true, in my opinion, in respect of the seizure of documents at the other premises. There was no basis upon which a waiver of legal professional privilege could be erected.

In relation to the execution of the warrant at Koala Self Storage, evidence was given that Philippa Buxton arrived at SaundersÕ house at about 9.35am. At this time Paynter asked her whether she was the owner of the self storage unit located at the Koala Self Storage complex in Osborne Park. She did not know what he was talking about and went downstairs and spoke to Saunders and Auguste. Paynter followed her down, stayed outside the office and after several minutes interrupted the conversation and asked Saunders whether he wanted to attend the execution of the warrant. In evidence which was controverted by other witnesses, Saunders, according to Paynter, went Òquite paleÓ and said he needed to go to the bathroom. According to Paynter at no time during the day did Saunders ask to attend at Koala Self Storage for the purpose of claiming legal professional privilege in relation to documents to be seized or otherwise.

As was pointed out by counsel for Saunders in closing submissions, the course of conduct engaged in after the seizure of the documents from Koala Self Storage was consistent with the reservation of a right to challenge the validity of the seizure of certain documents on the basis that they were either outside the ambit of the warrant or were subject to claims for legal professional privilege. There was a consensual approach under which the Australian Federal Police were sorting documents seized at the self storage unit and returning those which they acknowledged were outside the ambit of the warrant and giving Fletcher an opportunity to inspect those which they maintained were within the ambit of the warrant. The same is true in respect of documents seized from the premises of Irdi & Associates. Irdi himself appears not to have asserted any claim of legal professional privilege. The privilege was his former clientÕs. His failure to claim privilege was not based on any instructions. I do not regard that failure as a waiver by Saunders.

In my opinion there was no knowing and intentional waiver of legal professional privilege in relation to any of the seizures of SaundersÕ documents. And in the circumstances of this case, the complexity of the issues and the ongoing litigious debate which has ensued about the subsistence of privilege, there is no unfairness to support an implied waiver.

For the above reasons, I conclude that legal professional privilege is made out in respect of the documents in issue and that the privilege has not been waived.

I certify that this and the preceding twenty nine (29) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

Associate: Dated: 15 December 1998 Counsel for the Applicant: Mr A. Siopis

Counsel for the Respondent: Mr S. Owen-Conway QC and Ms L.F. Wood

Solicitor for the Respondent: Commonwealth Director of Public Prosecutions

Date of Hearing: 26, 27 and 28 October, 10 November and 11 December 1998