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[2015] FCA 345
Federal Court of Australia
2015-04-16
White J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The decision concerns the entitlement of the applicants to inspect documents produced to the Court by a non-party in compliance with a subpoena. It is made in the unusual circumstance that, whilst the first and second respondents claim legal professional privilege in respect of some of the subpoenaed documents, they have chosen not to advance any evidence or submissions in support of that claim. 2 The applicants, Lifeplan and FPM respectively, sell prepaid funeral plans. FPM is a wholly owned subsidiary of Lifeplan. 3 Until his resignation on 29 December 2010, the first respondent (Mr Woff) was employed by Lifeplan in Melbourne as Manager of FMP. The second respondent (Mr Corby) was employed as National Sales Manager by Lifeplan and was also based in Melbourne. He reported to Mr Woff. Mr Corby resigned his employment on 25 November 2010. 4 Lifeplan and FPM allege that, during the course of their employment, Mr Woff and Mr Corby took, without permission, their confidential information and intellectual property. They allege that, since leaving their employment, Mr Woff and Mr Corby have established a new entity, Funeral Planning Australia Pty Ltd (FPA) to compete directly with their business. FPA, which is now in liquidation, is the third respondent to the proceedings. 5 Lifeplan and FPM allege that on 31 December 2010, Mr Woff and Mr Corby entered into employment contracts with the fourth respondent (Foresters): Mr Woff as General Manager and Mr Corby as National Sales and Marketing Manager. They also allege that on 31 October 2010, Foresters entered into an agreement with FPA in the nature of a joint venture pursuant to which FPA was to provide and market Foresters' funeral plan products. 6 Lifeplan and FPM allege that Mr Woff and Mr Corby have breached their employment and fiduciary duties by, amongst other things, taking and exploiting to their own advantage the applicants' intellectual property and confidential information. They allege further that, since the commencement of their employment by Foresters, Mr Woff and Mr Corby have infringed the applicants' copyright in materials which they have produced for use in the business of FPA. 7 FPA has taken no part in the proceedings. Foresters is separately represented. 8 On 14 October 2014, Lifeplan and FPM issued, by leave, subpoenas addressed to a number of persons. One of these was MGR Accountants Pty Ltd. The subpoena required MGR Accountants to produce: All documents describing, recording or constituting any communication or dealing with, or received from or provided to: (a) Noel Woff; (b) Richard Corby; (c) FPA or Funeral Planning Australia Pty Ltd or FPA or Funeral Planning Australia or Funeral Planning Australia Pty Ltd or Funeral Planning Australia Pty Ltd (in liquidation) ACN 147 314 663; or (d) Ancient Order of Foresters in Victoria Friendly Society Limited ACN 087 648 842 (including under the name "Foresters Friendly Society" or any other name), since 1 January 2010. 9 KellyHazellQuill Lawyers answered the subpoena on behalf of MGR Accountants on 28 January 2015, producing to the Court three folders of documents as well as documents in an envelope marked "Privileged Documents". In an accompanying letter, KellyHazellQuill Lawyers said that the defendants in the proceedings asserted legal professional privilege in respect of the documents in the envelope. They did not assert any claim of privilege on behalf of MGR Accountants themselves or on behalf of any other person. 10 It is evident that the defendants to whom KellyHazellQuill Lawyers referred were Mr Woff and Mr Corby. Foresters has not made any claim for privilege in relation to the documents contained in the envelope. 11 On the same day, a Registrar gave the parties leave to inspect and copy the documents produced by MGR Accountants over which no claim for privilege had been made and gave the legal representatives of Mr Woff and Mr Corby leave to inspect the documents in the envelope. The Registrar directed that any claim for privilege in respect of those documents, together with its basis, was to be notified to the other parties by 4:00pm on 4 February 2015. 12 Esser Legal, the solicitors for Mr Woff and Mr Corby, purported to comply with the Registrar's order by an email sent on 4 February 2015 which said: Our clients claim the privilege on the basis that each such document is a letter or communication passing between the client(s) and for the purpose of seeking or receiving legal advice. This is the only articulation of the basis of the claim for privilege which has been provided. As can be seen the articulated basis is quite narrow. 13 On 12 February 2015, Lifeplan and FPM filed an application seeking leave "to uplift and inspect" all documents in the envelope. At a directions hearing on 17 February 2015, Mr Esser from Esser Legal informed the docket Judge, Besanko J, that the application for leave to inspect was opposed. In order to avoid the possibility that his ability to hear the underlying proceedings may be compromised by his inspection of the documents, Besanko J referred the application for hearing by another judge. 14 In an email to the Associate of Besanko J on 20 February 2015, Esser Legal said (relevantly): For your assistance we also now provide the following information: … 3. At present our clients are content to inform the Presiding Judge's Associate (by way of letter copied to all interested parties) that they continue to maintain their claim for legal professional privilege in respect of each and every of the documents kept for the time being in the sealed envelope. This position is in line with the claim for privilege which is already before the Court. 4. It follows we had no objection to the Presiding Judge breaking the seal on the envelope and examining each of the documents inside for the limited purpose of determining, whether as a matter of law, the privilege extends to the subject document. 15 Before listing the application for hearing, the Court sought an indication from the parties as to whether further affidavits would be filed as well as an estimate of the time required for the hearing. The substance of the response from Esser Legal on 2 March 2015 was as follows: As you know, we act for Noel Woff and Richard Corby, the first and second respondents in these proceedings. While we do not have instructions to file any further affidavits in connection with the application and we do not have instructions to appear, we are nevertheless instructed to maintain our objection to revealing any further documents to the Applicants and their solicitors, based on legal professional privilege. For the avoidance of doubt, we re-state that our clients' claim of legal professional privilege is made in connection with each and every document contained in the sealed envelope which we delivered to the Court in answer to the subpoena. It follows from our instructions we have no objection to His Honour, in Court, breaking the seal and then examining each document for the limited purpose of ruling whether the claim for privilege can be made or not. From memory there may have been about 30 documents in the file. We submit that, on its face, each such document is easily identified as privileged. We expect that it would take less than one hour for the judge to look at each document individually and to make a ruling. 16 There was no appearance by Mr Woff or Mr Corby, or any legal representative on their behalf, at the hearing on 5 March 2015 of the application by Lifeplan and FPM.
General principles relating to claims of privilege 17 Many of the relevant principles were summarised by Edmonds J in Quality Publications Australia Pty Ltd v Federal Commissioner of Taxation [2009] FCA 1293; (2009) 77 ATR 758. It is convenient to repeat his Honour's summary, but omitting the citations: [6] The [persons asserting the privilege] bear the onus of proving that each relevant communication was undertaken, or each relevant documentation was brought into existence, for the dominant purpose of giving or obtaining legal advice … That obligation is not discharged merely by an assertion of privilege in an affidavit verifying a list of documents …, nor is it established by the use of a verbal formula or by simple assertion that the communications were undertaken for the dominant purpose of obtaining or giving "legal advice" … [7] The determination of the dominant purpose is a question of fact that must be determined objectively. It is not the same as the "primary" or the "substantial" purpose … The dominant purpose may be best described as the ruling, prevailing, paramount or most influential purpose … Where the claim is in respect of communications in documents, the court may inspect the documents to ascertain the purpose for their creation … An appropriate starting point is to ask what was the intended use or uses of the document which accounted for it being brought into existence … If a court finds on the balance of probabilities that the entirety of the document was created for the requisite purpose, then the entire document attracts the privilege. If a court finds that parts, but not all of the document, were created for this purpose, then those parts will attract the privilege … [8] The dominant purpose for which a document is brought into existence must be determined at the time of its production … having regard to the evidence, the nature of the documents and the parties' submissions … The purpose will ordinarily be that of the maker, although this will not always be the case …, and evidence of intention of the document's maker, or the person who authorised or procured it, is not conclusive of the purpose … [9] The subsequent provision of that document to solicitors for advice is not determinative of the purpose for which it was created. This purpose is to be differentiated from the purpose for which the information is obtained … [10] While the nomenclature in case law often refers to documents it is to be remembered that "privilege protects confidential communications, and not documents as such. …
Consideration 18 It is Mr Woff and Mr Corby who bear the onus of proving that each communication for which privilege is claimed was undertaken, and each document brought into existence, for the dominant purpose of giving or obtaining legal advice. That onus is not discharged merely by a generalised assertion of privilege in respect of a bundle or collection of documents. 19 I have emphasised the location and content of the onus of proof because there are some indications that Esser Legal or Mr Woff and Mr Corby may be under a misapprehension in that respect. When the solicitors for Lifeplan and FPM informed Esser Legal that the claim of privilege was challenged, Esser Legal responded by putting the applicants "on notice to provide a factual basis, within seven days in writing, to support the challenge of privilege our clients have made in this case". The applicants' solicitors responded the same day seeking an affidavit from Mr Woff and/or Mr Corby listing individually each of the documents in respect of which privilege was claimed and setting out the basis of the claim in relation to each. Esser Legal then responded: Thank you for your note, but we must refer you back to our earlier email. On what precise basis and for what reason do you challenge our claim of privilege? 20 Since then, Mr Woff and Mr Corby have not done anything to justify their claims of privilege. As noted, they did not appear at the hearing of the application so that these matters could be raised with them. Nor have they even provided a list, with a brief description of each document, which could inform the Court's consideration. 21 Irrespective of the belief of Esser Legal or of Mr Woff and Mr Corby, it is not for a party disputing a claim for privilege to justify its challenge. When a challenge is made, it is for the party asserting the privilege to establish its claim. 22 On disputed claims for privilege, the Court must determine the questions of fact involved by evidence. In some cases, the very nature of a document for which privilege is claimed may provide that evidence but usually it is necessary for the claimant of privilege to adduce positive evidence of the circumstances in which the document was brought into existence, and the purpose for which the communication was made. 23 As para [8] in the passages quoted from Quality Publications indicates, the purpose to be established is ordinarily that of the maker of the statement, or of the person who prepared the document in question. That means that some evidence from the person who made or prepared the statement, or who caused the statement to be made or the document prepared, will usually be necessary. At the very least, such evidence is desirable if the claim for privilege is to be properly substantiated. The Court should not be required to engage in speculation or surmise as to whether any of the classes of documents or communications to which legal professional privilege may attach is applicable in the case of any given document, nor whether the privilege does in fact exist. 24 The authorities emphasise the need for focused and specific evidence in order to ground a claim for privilege: Barnes v Commissioner of Taxation (Cth) [2007] FCAFC 88; (2007) 242 ALR 601 at [18]. The Full Court in Barnes went on to say at [18]: Where possible the court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document. The fact that generalised evidence is not challenged in cross-examination does not mean that such evidence must be accepted, particularly when it is manifestly inadequate as it is in this case. There is no such evidence in the present case. 25 Instead, Mr Woff and Mr Corby have relied on the Court's power to inspect the documents, apparently in the belief that that will be sufficient to establish the privilege. 26 The Court may inspect documents in respect of which the existence of privilege is disputed. In Grant v Downs (1976) 135 CLR 674 at 688-9, Stephen, Mason and Murphy JJ observed in relation to the Court's power: It is well accepted that the court in allowing production and inspection of documents exercises a judicial discretion. In so doing it needs to scrutinise with care claims of privilege made on the ground now under consideration. It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence. (Emphasis added) 27 On my understanding, the plurality in this passage were referring to the Court's use of its power to inspect a document in the context of a hearing in which the claimant of the privilege is an active participant. Inspection in that context will often be a valuable aid to the determination of the disputed issues of fact. However, I do not understand the plurality to be suggesting that a party may rely on the Court's power to inspect as a substitute for the provision of proper evidence, at least other than in straightforward cases. 28 In Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No 2) [1972] 2 QB 102 at 129, Lord Denning MR referred to the power to inspect as being "a safeguard against abuse [available if] there is any doubt as to the propriety or validity of a claim for privilege". 29 In Trade Practices Commission v Sterling (1979) 36 FLR 244 at 246-7, Lockhart J referred with approval to the following passage in the judgment of Jenkins LJ in Westminster Airways Limited v Kuwait Oil Co Ltd [1951] 1 KB 134 at 146: But there is nothing in the rule, or in the authorities, to constrain the court to hold that, in every case where a claim to privilege is made and disputed, the party seeking production is entitled to come to the court and (as it were) demand as of right that the court should go behind the oath of the opposite party and itself inspect the documents. The question whether the court should inspect the documents is one which is a matter for the discretion of the court, and primarily for the judge of first instance. Each case must depend on its own circumstances; but if, looking at the affidavit, the court finds that the claim to privilege is formally correct, and that the documents in respect of which it is made are sufficiently identified and are such that, prima facie, the claim to privilege would appear to be properly made in respect of them, then, in my judgment, the court should, generally speaking, accept the affidavit as sufficiently justifying the claim without going further and inspecting the documents. 30 Although Jenkins LJ in this passage was addressing inspection on the application of the party disputing the claim for privilege, it too indicates that inspection by the Court is usually an aid to the proper resolution of doubtful claims. Nevertheless, as the reasons of the plurality in Grant v Downs indicate, there may be some documents or classes of documents in which inspection of the disputed documents will be sufficient, by itself, to satisfy the Court that the claim for privilege is properly made. 31 I observe that in AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 at [44(1)], Young J said that the onus on the claimant for privilege "might also be discharged by reference to the nature of the documents, supported by argument or submissions". His Honour did not exclude the possibility that inspection of a disputed document may, by itself, be sufficient but, in general, some evidence or submissions is required. 32 In the present case, my mind has wavered about whether to inspect the documents. Mr Woff and Mr Corby have chosen not to provide the Court with any evidence bearing upon the circumstances in which, or purpose for which, each document was brought into existence. This being so, there is the real possibility that even after the inspection, the Court will still be in a position of having to speculate about whether a document is within any of the recognised classes of documents for which privilege is available. Further, the Court has no evidence at all to indicate that the confidentiality of the documents for which privilege is claimed has been maintained so that there has been no relevant waiver. This raises questions as to whether inspection will have any utility. 33 On the other hand, legal professional privilege is a substantive legal right (Baker v Campbell (1983) 153 CLR 52 at 118) and it would be undesirable that that right be lost if there is a communication which must, on any view, attract the privilege. Further, I need not be concerned about inspection compromising my ability to be the judge at trial. 34 Ultimately, I have decided to inspect the documents. I have done so for the reasons just stated together with the fact that the number of documents in the envelope does not appear to be large. 35 I have carried out the inspection having regard to ss 117 and 118 of the Evidence Act 1995 (Cth), bearing in mind the relatively narrow basis for the claim of privilege articulated by Esser Legal in its email of 4 February 2015. It may be that, on reflection, Mr Woff and Mr Corby would regard the basis articulated by Esser Legal as being too narrow, but that is all the Court has to go on. 36 I have proceeded on the basis that, in the absence of evidence or submissions from Mr Woff and Mr Corby, the claim should be upheld only if it is obvious on the face of a document that the claim for privilege is in fact properly made, as opposed to being possibly justifiable. I have considered it inappropriate to speculate whether inspection of a document by the applicants may, indirectly, infringe upon the privilege of Mr Woff and Mr Corby. Further, if, on its face, a document indicates that there may have been two or more purposes for the document having been brought into existence one being privileged and one not, the claim should not be upheld, given the choice of Mr Woff and Mr Corby not to provide evidence in support of their claim. 37 Following my inspection of the documents, I am not satisfied that the claim for legal professional privilege, on the basis articulated by Esser Legal, should be upheld in respect of any of them. It is possible that, in respect of some, a proper claim could be made on an alternative basis, but in the absence of an assertion of such a basis with supporting evidence and a proper articulation, I cannot reach that stage of satisfaction. It is not necessary, in the circumstances of this case to provide reasons in respect of each individual document. 38 Accordingly, the application of the applicants succeeds. I grant the applicants leave to uplift and inspect all the documents produced by MGR Accountants on 28 January 2015 which are contained in the sealed envelope. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.
Lifeplan Australia Friendly Society Ltd
Woff
(2006) 155 FCR 30
(1983) 153 CLR 52
(2007) 242 ALR 601
(1976) 135 CLR 674
(1979) 36 FLR 244