Nine Films & Television Pty Ltd v Ninox Television Limited

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

NEW SOUTH WALES DISTRICT REGISTRY NSD 1820 OF 2004

REASONS FOR JUDGMENT Privilege 1 On 16 March 2005, I made a ruling that privilege had not been waived in respect of a legal opinion given by Mr Littlemore QC to the first and third respondents, Ninox Television Limited and John Charles McEwen (collectively referred to herein as "Ninox"). I reserved the question of costs in relation to this ruling. These are my reasons for that ruling. 2 The applicants, Nine Films & Television Pty Ltd and Nine Network Australia Pty Ltd (collectively referred to herein as "Nine"), seek discovery and production of documents referred to in Category 21 of the Applicants' List of Categories of Documents to be Discovered, filed on 22 February 2005, being: "A copy of all documents recording the advice and recommendations provided to the First or Third Respondent by Stuart Littlemore, QC (and referred to in the statements made by John McEwen to the Sydney Morning Herald/Stay in Touch as published on 17 March 2004)." 3 Ninox resisted discovery and inspection on the ground that the documents are the subject of legal professional privilege. Nine presses for discovery and production. The contention for Nine is that Ninox has waived its privilege in relation to the legal advice as a consequence of a voluntary disclosure by Ninox of the substance of the advice and the use of that advice in the media, namely, in an article in the Sydney Morning Herald. Nine contends that the advice has been used to support Ninox's threats to commence legal proceedings against it for copyright infringements. The advice of Mr Littlemore QC and associated documents are said to be relevant having regard to the nature of the issues arising by virtue of Ninox's defence and cross-claim in the proceedings. More specifically, Nine's contention is that the terms of the legal advice may be relevant to the question of whether the threats are justifiable. 4 There is no dispute between the parties that the advice was privileged when given. The area of dispute is whether that privilege has been waived, either by subsequent conduct or by the pleadings. 5 As Gleeson CJ, Gaudron, Gummow and Hayne JJ observed in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [9]-[11], legal professional privilege is a rule of substantive law and not merely a rule of evidence. It is an important common law right or immunity. Consequently, statutory provisions are not to be construed as abrogating the right to legal professional privilege in the absence of clear words or necessary implication to that effect: see Potter v Minahan (1908) 7 CLR 277 at 304 per O'Connor J and Baker v Campbell (1983) 153 CLR 52. It follows, therefore, that such a right is not to be waived unless there is clear conduct or language which evidences an intention to waive the privilege either expressly or by necessary implication. 6 The principles in relation to waiver of privilege were recently considered by the Full Court of this Court in Bennett v Chief Executive Officer of the Australian Customs Service (2004) 210 ALR 220 at [2]-[15] and [60]-[66] per Tamberlin J. The principle applied by the Court was that expressed by the High Court in Mann v Carnell (1999) 201 CLR 1 where, at [29], Gleeson CJ, Gaudron, Gummow and Callinan JJ said: "Waiver may be expressed or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is 'imputed by operation of law'. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege … What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large." (emphasis added) 7 At [34], their Honours continued: "Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client's actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect … considerations of fairness may be relevant to a determination of whether there is such inconsistency." 8 See also Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 at 481 and 488 per Mason and Brennan JJ, 493 per Deane J; Ampolex v Perpetual Trustee Company (Canberra) Ltd (1996) 137 ALR 28 at 34 per Kirby J; Ampolex v Perpetual Trustee Company (Canberra) Ltd (1996) 40 NSWLR 12 at 19 per Rolfe J; Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 at 431 per the Court. The task for the Court is to determine whether the specific disclosure is so clear and inconsistent with the maintenance of the privilege as to be unfair. 9 The actions and statements said by Nine to amount to a waiver of privilege in the present case are as follows. 10 By letter dated 10 December 2003, the second respondent, Television New Zealand Limited ("TVNZ"), one of the co-owners of the relevant copyright, wrote to Mr McEwen, the third respondent and the controlling mind of Ninox, in the following terms: "We have taken independent legal advice from Bell Gully, Barristers and Solicitors, in this matter. That advice is that there do not appear to be good grounds on which to issue proceedings against Nine Films and Television Pty Limited or Becker Group Limited." 11 Two days later, on 12 December 2003, the solicitors for Ninox wrote to the Managing Director of Nine stating that: "Ninox Films is currently investigating and seeking further advice in respect of the actions of your company and affiliated entities in production and broadcasting of "The Block" and in distributing and licensing to other parties the format of The Block." 12 It is contended by Nine that the subject matter of the proposed advice was plainly whether the format known as "The Block" infringed any copyright or other rights in the format known as "Dream Home". 13 On 10 March 2004, Ninox, through its solicitors, wrote to Nine referring to its earlier letter of 18 December 2003 and stating that: "As foreshadowed, Ninox Films has now obtained the advice (including senior counsel's advice) referred to in our client's Notice of Format Rights and Reservation of Rights dated 12 December 2003." 14 That letter then demanded that Nine cease producing, publishing, distributing or licensing the television program called "The Block" and that it should not so act at any time in the future. The letter also demanded that Nine terminate all agreements purporting to license the program. 15 In its written submissions, Nine notes that this letter specifically referred to advice sought from senior counsel. Nine contends that a proper construction of the correspondence in context indicates that this advice was the basis for the threats made by Ninox. 16 On 10 March 2004, Ninox sent two letters to Nine in which it asserted that Nine had breached its intellectual property rights by producing "The Block" and required each of the recipients to preserve documents for the purpose of litigation. On the same day, the evidence discloses that Ninox sent letters to two overseas licensees of Nine, IDF International in the United Kingdom and TV Denmark, requiring each company to preserve documents for the purpose of anticipated litigation and asserting that Nine had infringed Ninox's intellectual property rights. 17 On the following day, 11 March 2005, Ninox wrote to a further two of Nine's overseas licensees, FremantleMedia North America, Inc of California and Southern Star Endemol Ltd of New Zealand, alleging infringement by Nine and requiring each of the recipients to preserve documents for the purpose of anticipated litigation. Nine says that these letters contained demands and threats, express and implied, by Ninox to institute proceedings for infringement of copyright. 18 On 17 March in the Sydney Morning Herald, Ninox is reported as intending to follow through with its threat to sue Nine over the format of "The Block". In that article, the third respondent, Mr McEwen, is quoted in these terms: "A week ago we put Nine and its executive producers and international affiliates on notice" (John McEwen of Ninox Films told Spike yesterday). "We've engaged Stuart Littlemore QC and he has reviewed everything in great detail and we're moving forward based on his recommendations." 19 Nine contends that this quote in the Sydney Morning Herald is an express public indication that Mr Littlemore QC had been engaged to review and recommend action and that his recommendation must be taken to be that Ninox is justified in threatening copyright infringement. The making of such a statement amounts to the use of the substance of the advice to reinforce the position taken by Ninox. 20 Nine refers to s 122(2) of the Evidence Act 1995 (Cth), which provides (subject to some exceptions which do not apply in this case) that legal professional privilege will be lost if the party has knowingly and voluntarily disclosed to another person the substance of the evidence. It is said that the conduct by Ninox involved the communication of the substance and effect of the legal advice provided by Mr Littlemore QC, namely, that Ninox was justified in bringing infringement proceedings against Nine because "The Block" infringed copyright in "Dream Home". 21 In my view, the conduct and correspondence referred to above and the admissible evidence are not sufficient to discharge the onus on Nine of establishing that there has been a waiver of privilege in this case. I do not consider that the documents referred to in the material above, either taken alone or cumulatively, can be said to be sufficiently clear and unequivocal as to amount to a waiver of legal professional privilege. 22 By way of illustration, the relevant part of the letter of 10 December 2003 simply refers to independent legal advice having been received from a firm of barristers and solicitors. The mere assertion that advice has been taken, and the fact that action is then taken, is not sufficient. If the advice and the action are linked so that it is apparent that the advice has been that action is taken there may be a sufficient basis to make a finding of waiver. But that is not this case. This does not have any direct bearing on the specific advice under consideration. 23 The reference in the letters of 10 December 2003 to Ninox currently investigating and seeking further advice does not carry the matter any further. Nor, in my opinion, do the letters to Nine of 10 March 2004, which state that Ninox had obtained advice, including senior counsel's advice, and required undertakings from Nine. This is, at best, equivocal. It does not specifically disclose the content of the advice provided by senior counsel. Nor, in view of the reference to other advice in the extract, is it apparent that the advice being relied on by Ninox is that of senior counsel. 24 The further correspondence of 10 and 11 March 2004 containing demands and threats does not advance the matter any further. 25 It is apparent that the content of the press statement reported in the Sydney Morning Herald is hearsay in nature and there has been no attempt by Nine to prove, by admissible evidence, that the statement attributed to Mr McEwen was in fact made. In my opinion, this hearsay cannot be relied on. It is not evidence from which I can infer a waiver of legal professional privilege by Ninox, having regard to the importance and substantive nature of the advice. In my view, the making of such a statement must be proven by admissible evidence and not by hearsay: cf Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1996) 188 CLR 501 at 513-4 per Brennan CJ, 546-547 per Gaudron J, 556 per McHugh J, 575-6 per Gummow J and 593 per Kirby J. To use the language of Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2, "'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences." 26 Even assuming that this statement had in fact been made by Mr McEwen, I still do not consider that it would amount to a waiver of legal professional privilege. Whilst I accept that, in some circumstances, a clear disclosure of the "bottom line" of the advice, and the course of conduct taken thereafter, may be sufficient to amount to waiver of legal professional privilege, I do not think these matters have been established in the present case. On a fair and reasonable reading, the statement to the effect that senior counsel had been engaged and that he had reviewed matters in detail and that steps were being taken based on his recommendations is not sufficient to amount to a waiver of the legal advice. The substance or content of the advice is not disclosed with specificity or clarity. Questions of waiver are matters of fact and degree and, in this instance, I am not persuaded that the conduct, assertions or admissible evidence are sufficient to warrant the necessary implication that legal professional privilege has been waived. 27 A further contention for Nine is that because the issues raised on the pleadings involve allegations as to misleading conduct and misrepresentations under the Trade Practices Act 1974 (Cth) and questions as to whether the threats were justified under s 202 of the Copyright Act 1968 (Cth), the privilege does not apply. This is said to be because, in order to resolve these questions, the intent of Ninox and Mr McEwen is made relevant by the pleadings. 28 So far as the trade practices claims are concerned, the legal principle involved is that to which I refer in Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 34 IPR 225, namely, that a respondent may be held to have engaged in conduct likely to mislead or deceive because an intention to mislead can more readily be inferred where there is such an intention: see also Australian Home Loans Ltd t/as Aussie Home Loans v Phillips & Technocrat Computing Pty Ltd (1998) 40 IPR 392. The evidentiary principle as to more readily inferring deception only means that the contents of the advice may be relevant but it does not compel the conclusion that the privilege has been waived as a consequence of the pleading. This issue was considered in DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 127 FCR 499 at [114]-[115] per Allsop J. See also the cases there discussed in detail. The present case is distinguishable from cases where the state of mind of the parties is put directly in issue on the pleadings, for example, in a suit for alleging mistake or undue influence where legal advice may be waived: DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 127 FCR 499 at [121] per Allsop J. 29 In relation to the claim under s 202 of the Copyright Act 1968 (Cth), the submission is that the contents of the legal advice have been put in issue because the advice could have a bearing on justification. However, there is authority to the effect that intent or bona fides is not relevant in s 202 proceedings. In S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1980) 30 ALR 657 at 661, Lavan SPJ said: "It does not, in my opinion, avail the plaintiff to be able to say that its proposed action was being taken with the intention of protecting its rights. If a threat is made it is no defence to an action under s 202(1) that the threats were made in good faith in the honest belief that the act complained of was an infringement of a valid claim: see Skinner v Perry [1893] 10 RPC 1, per Smith LJ at p 8. It seems to me that to uphold the plaintiff's argument would in effect mean that a defendant could rarely, if ever, obtain an injunction to restrain a plaintiff under s 202(1). 30 Further support for this approach can be found in Skinner & Co v Perry (1893) 10 RPC 1, where A. L. Smith LJ said at 8: "I will say this, that my reading of the section is that you shall not threaten legal proceedings unless the manufacture to which the threat applies infringes the legal right of the threatener, or unless the threatener is about to forthwith bring an action to show the validity of his threats. If he cannot bring himself within these two what I call saving clauses at the end of the section, then the section absolutely forbids a man threatening legal proceedings with regard to a patent at all, and in my opinion it is nihil ad rem to say that what he did was bona fide, or that what he did was on a privileged occasion, because the section says you shall not threaten unless you come within those two provisions at the end." (emphasis added) 31 I therefore reject the alternative submission by Nine that by virtue of the pleadings privilege in the advice has been waived. 32 Accordingly, for the above reasons, I conclude that legal professional privilege subsists in the advice under consideration.

I certify that the preceding 32 numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Counsel for the Applicants: D T Kell

Solicitor for the Applicants: Gilbert and Tobin

Counsel for the First and Third Respondents: D R Sibtain

Solicitor for the First and Third Respondents: McCullough Robertson

Counsel for the Second Respondent: Did not appear

Solicitor for the Second Respondent: Blake Dawson Waldron

Date of Hearing: 16 March 2005

Date of Judgment: 5 April 2005