CHALLENGE TO DOMINANT PURPOSE
12 Allphones submits that the documents are privileged because they were prepared for the dominant purpose of seeking legal advice or assistance or for use in reasonably anticipated litigation. The claim is that, while the documents may have been prepared also for other subsidiary commercial purposes, those other purposes were subservient to the purpose of obtaining legal advice, assistance or use in litigation. That latter purpose is claimed to have been 'dominant' in the sense that it was the most influential or paramount purpose.
13 Hoy submits that Allphones, as the party asserting the claim of privilege, bears the onus of proof of the elements of the privilege. To this end, it relies on the comments of Spigelman CJ in Sydney Airports Corp Ltd v Singapore Airlines [2005] NSWCA 47 at [3]. Hoy also argues that it is not sufficient to discharge this onus for the party claiming privilege simply to depose an affidavit making conclusory assertions as to the purpose for which the documents were brought into existence together with a statement about the category of legal professional privilege which applies. To this end, it relies on the decision of the Full Court in Kennedy v Wallace (2004) 142 FCR 185 at [12]-[16] (per Black CJ and Emmett J) and [144]-[145] (per Allsop J). Hoy submits that Allphones has not discharged its onus because Mr Lloyd's affidavits are insufficient and because, after having regard to non-privileged correspondence between the parties, it is clear that the dominant purpose for the creation of the documents was a commercial one. It argues that the documents were created in the course of an ongoing business relationship between the parties, rather than for the dominant purpose of legal assistance or obtaining material for use in legal proceedings.
14 Hoy further submits that it is a fair inference that an important purpose for most of the communications was the formulation of a commercial strategy or the taking of steps in the future management of the franchise relationship. If this inference were correct, the documents would go far beyond the scope of communication which was merely for the dominant purpose of legal advice. Although legal advice may have been contemplated or involved, Hoy contends that Allphones has not shown, nor should it be inferred, that the communications were made for the dominant purpose of obtaining legal advice or assistance in litigation. Hoy submits the evidence indicates that the communication was for the purpose of dealing with the dispute by progressing through dispute resolution procedures required by the franchise agreement, which requires the parties to resolve disputes commercially in order to enhance their future business relationship. In short, it is highly improbable, having regard to the context, history and evidence in the matter, that the communications were made for the dominant purpose of contemplated legal proceedings because such proceedings could not properly be contemplated before commercial decisions, strategies and dispute resolution procedures had been conducted, agreed upon or dismissed. The documents for which privilege is claimed are said to be within the latter category.
15 The evidence of Mr Lloyd has also been attacked in submissions by Hoy on the ground that it simply expresses the views of the lawyers involved and does not discharge the onus of proof as to the purpose of the creation of the documents. For example, Hoy says there is no witness from Allphones to give evidence of primary thought processes as to why the communications came into existence. Consequently, there is no clear paramountcy of purpose, it is said, which establishes that the documents were created in the course of giving or seeking legal advice or assistance. Contrary to the position of Mr Lloyd, Hoy argues that the communications were created for non-privileged purposes, namely preparing material for procedural meetings between the parties, investigating and preparing material for comment or response from Hoy, or investigating facts to formulate a business or commercial strategy.
16 The time at which the question of legal professional privilege falls to be determined is when the document is brought into existence. The question as to whether privilege will attach to a document is usually determined by considering the purpose which the creator of the record had in mind when it was brought into existence. The best evidence would normally be evidence given directly by the person creating the document as to the purpose of its creation, provided his or her evidence is specific, not inconsistent with the contents of the document and not weakened by cross-examination. However, matters such as the factual context and the contents of the document are also relevant in determining the question of privilege. Evidence based on information and belief can be given as to purpose of a document's creation by someone who did not create it, provided that he or she specifies the source of that information and belief. In many cases it may well be impractical to expect that the author or originator of every document should swear an affidavit.
17 In circumstances where parties to a dispute are taking steps to resolve the dispute through discussions, meetings and/or procedures required by an agreement, it will not necessarily be the case that the 'dominant purpose' of records created during that period of consultation is other than the purpose of obtaining legal advice or assistance. Where there is a legal retainer in existence during a period when the disputed documents came into existence, it is prima facie reasonable to conclude that a party is seeking legal advice and guidance. The mere fact that parties are communicating with respect to such dispute resolution procedures does not mean that litigation is not reasonably anticipated during that period. A party may well, quite reasonably, contemplate such litigation, and thus continue taking steps to obtain material for use in the event that negotiations break down. Often legal guidance may be necessary as to how the proceedings are to be carried out. Such a situation is not, of itself, inconsistent with the creation of documents for the dominant purpose of legal advice or assistance. In many cases parties will, for the sake of attempting to maintain a valuable business relationship, seek to negotiate a resolution to a dispute and work towards a modus vivendi, while at the same time contemplating and preparing for litigation.
18 In this case the thrust of Hoy's submission is that, on the available evidence, the dominant purpose of the documents is not to seek legal assistance but rather to work out an overall strategy to determine the ongoing commercial relationship of the parties. The reality is that parties to a dispute may have dual purposes, in which the seeking of legal advice remains the dominant purpose. Indeed, the notion that there may well be other purposes, such as managerial or commercial objectives, which account for the existence of a record is inherent in the 'dominant purpose' test itself: see Three Rivers District Council v Bank of England (No 6) [2005] A.C. 610 at 650 (per Lord Scott of Foscote).
19 In considering whether a particular document is privileged, it is helpful to consider the documents as a whole and have regard to the whole stream of communications passing between the parties, rather than to examine each document in isolation. This is because, by standing back and looking at the overall course of communication across a period of time, a picture may emerge which characterises the nature and purpose of each individual communication more clearly. Such an approach enables a decision to be made more confidently as to whether a specific document is privileged. In this case, the overall course of communication, when considered in its factual context together with the contents and form of the documents and the specific evidence provided by Mr Lloyd as to the provenance of the documents, is sufficient to persuade me that the dominant purpose for the creation of each of the documents presently in dispute was to obtain legal advice or assistance or to be used in anticipated litigation. Accordingly, I am of the view that each of the communications is privileged. In particular, I do not accept the submission that the steps taken towards the dispute resolution procedure provided for in the franchise agreement is sufficient to displace the strong, detailed and specific evidence supporting the claim for privilege, especially when considered in light of Allphone's retainer of Bartier Perry on 14 June 2006 and the commencement of litigation on 1 September 2006 by Hoy.