LOCKHART J The question for determination is whether legal professional privilege attaches to masked portions of certain documents discovered by the respondent, rendering them immune from inspection. The applicants submit that no portions of the documents are of the kind to which legal professional privilege attaches and that, to the extent to which they are of that kind, privilege has been waived by disclosure of the relevant material to the Commonwealth of Australia.

2. I shall mention the documents later. First it is desirable to state the relevant principles which apply in this matter.

3. Essentially legal professional privilege protects from disclosure "communications made confidentially between a client and his legal adviser for the purpose of obtaining or giving legal advice or assistance": R v Bell; Ex parte Lees [1980] HCA 26; (1980) 146 CLR 141 per Gibbs J at 144 and Attorney-General (N T) v Maurice [1986] HCA 80; (1986) 161 CLR 475 per Mason and Brennan JJ at 487 where their Honours said:

"The raison d'etre of legal professional

privilege is the furtherance of the

administration of justice through the fostering

of trust and candour in the relationship between

lawyer and client."

4. Their Honours said at 487 that the privilege is confined within strict limits:

"... because of this conflict between the public

interest in ensuring the availability of all

relevant evidence in a particular case and the

public interest in the administration of justice

through effective legal representation, ..."

See also Grant v Downes [1976] HCA 63; (1976) 135 CLR 674 per Stephen, Mason and Murphy JJ at 685.

5. In Trade Practices Commission v Sterling [1979] FCA 33; (1979) 36 FLR 244 I set out at 246 certain of the classes of documents for which legal professional privilege may be claimed, including communications passing between a party to litigation and a third party if they are made with reference to litigation either anticipated or commenced and at the request or suggestion of that party's solicitor; or, even without any such request or suggestion, if they are made for the purpose of being put before the solicitor with the object of obtaining his advice or enabling him to prosecute or defend an action (category (f)).

6. For privilege to apply the document must be brought into existence for the sole purpose either of obtaining advice for litigation or otherwise for the sole purpose of the litigation. Legal professional privilege attaches to confidential professional communications between government departments or agencies and their officers provided they are undertaken for the sole purpose of seeking or giving legal advice or in connection with anticipated or pending litigation: Waterford v The Commonwealth [1987] HCA 25; (1987) 163 CLR 54 per Mason and Wilson JJ at 63-4 and Brennan J at 74-5 and see Webb v Commissioner of Taxation (1993) 44 FCR 312.

7. I agree with the following passage from Cross on Evidence, 4th Australian edition (Byrne and Heydon) at para. 25,235 (p 700):

"In the case of third party communications,

therefore, privilege will not be available

unless the claimant can show (i) that the

document was brought into existence or the

communication was otherwise made at a time when

litigation was in existence or reasonably

contemplated, and (ii) that the document or

communication was brought into existence or made

for the sole purpose of obtaining advice for

that litigation or otherwise for the sole

purpose of the litigation."

8. The privilege is that of the client or others with whom the client has a common interest in the litigation. Common interest privilege is:

"A privilege in aid of anticipated litigation in

which several persons have a common interest.

It often happens in litigation that a plaintiff

or defendant has other persons standing

alongside him - who have the self-same interest

as he - and who have consulted lawyers on the

self-same points as he - but these others have

not been made parties to the action."

Buttes Gas and Oil Co v Hammer (No 3) (1981) QB 223 per Lord Denning MR at 242-243 Bulk Materials (Coal Handling) Services Pty Limited v Coal and Allied Operations Pty Limited (1988) 13 NSWLR 689 at 692-6.

9. There are four documents the subject of Telstra's claim for privilege. The first document is numbered for discovery K2907. It is a briefing paper dated 12 October 1993 prepared by a Telstra employee reporting directly to Mr G B Ward, the Director Corporate Planning of Telstra. It was prepared for a ministerial briefing by Teleconference Facility and it outlines for the Minister for Communications (the Minister) the reasons why Telstra wanted amendments made to the Telecommunications Act 1991.

10. The substance of legal advice given to Telstra by Queen's Counsel and Telstra's solicitors is included in the body of the briefing paper. In particular, Appendix C refers to this proceeding and summarizes legal advice given to Telstra evaluating its position in respect of substantive issues raised in the proceeding.

11. The second document (discovery reference E7777) is a letter dated 4 March 1994 from the Chairman of the Board of Telstra to the Minister on the subject of amending the Telecommunications Act. Both the letter and its enclosed memorandum were produced by Mr Ward's directorate, and each contains passages summarizing legal advice given to Telstra by Queen's Counsel and Telstra's solicitors. A copy of the letter was sent to the Treasurer and Minister for Finance which, according to Mr Ward, reflects the reporting function having regard to the fact that its subject matter pertains to "shareholder value".

12. The third document (discovery reference K2224) is a letter dated 7 October 1993 from the Chairman of the Board of Telstra to the Minister on the subject of amending Part 9 of the Telecommunications Act. Both the letter and its enclosed memorandum were produced by Mr Ward's directorate, and each contains passages summarizing legal advice given to Telstra by Queen's Counsel and Telstra's solicitors.

13. The fourth document (discovery reference K7139) is a letter dated 29 April 1993 to Mr W J Henderson of the Department of Communications. The letter forms part of a chain of correspondence concerning the approach to be adopted by the Federal Government in amending the Telecommunications Act so as to permit certain types of "optional calling" plans. Mr Ward has sworn that in order to explain its preferred position it was necessary for Telstra to outline legal advice given to Telstra by Queen's Counsel and Telstra's solicitors.

14. The Commonwealth of Australia holds in its name 96 of the 100 shares in the issued capital of Telstra, the remaining 4 shares being held by 4 Commonwealth public servants who at relevant times were in the permanent employment of the Department of Transport and Communications. The 4 shares are held on trust for the Commonwealth.

15. Telstra's Articles of Association impose formal requirements that Telstra report to the responsible Minister who is relevantly the Minister of Communications. The relevant department was previously the Department of Transport and Communications.

16. A document produced annually, known as the Telstra Corporate Plan, contains an overview of Telstra's strategies across a range of areas which impact upon the financial performance of Telstra and consequently upon considerations of "shareholder value". The strategies and objectives which are set out for Telstra in the Corporate Plan make it imperative that the Australian Government, through the Minister and the Department, be kept informed of any matter impacting materially upon the achievement of the stated objectives of Telstra under the Corporate Plan. To this end Mr Ward is responsible for the provision by Telstra of quarterly reports to the shareholders of Telstra in compliance with Articles 33 and 61 of its Articles of Association. The quarterly reports are expressly stated to be made pursuant to Article 61 and contain reference both to financial matters falling under Article 33(3) and more general matters covered by Article 33(1).

17. In addition to the formal reporting requirements of the Articles of Association of Telstra, Mr Ward is responsible with other senior Telstra executives for what Mr Ward describes as Telstra's "due diligence" function, namely, that Telstra's Board and senior executives consider themselves bound to report to the Government as to any matter that may materially impact upon "shareholder value". On some occasions, reporting to the Minister will entail Telstra having to provide the substance of legal advice which it has obtained either from internal or external legal advisers. On matters of compliance with applicable legislation, the briefing of the Minister or the Department with confidential legal advice obtained by Telstra may be an integral part of the reporting function. In addition to the written reporting functions, there are regular oral briefing sessions with the Minister and representatives of the Department. These briefing sessions sometimes involve other relevant Federal Ministers including the Treasurer and Minister for Finance where "shareholder value" issues arise. The present proceeding in this Court have from time to time been the subject of briefing sessions with the Minister and the Department.

18. Mr Ward has sworn that the four documents with which this motion is concerned were provided by Telstra to the Federal Government as its shareholder:

"within the confines of the reporting obligation

to which Telstra is subject. But for the

relationship between Telstra and its shareholder

and the obligations of disclosure that

relationship entails, Telstra would not have

made its confidential legal advice available to

the responsible Minister or Ministers" (or to

the Department.)

19. Optus makes two principal submissions: first, that none of the documents is a document to which legal professional privilege attaches in its own right, and secondly, that to the extent to which the documents convey legal advice received by Telstra, any privilege has been waived by disclosure of that material to the Commonwealth. Both propositions are denied by Telstra.

20. Counsel for Telstra requested that the Court should not look at the documents if this could be avoided, because to do so would reveal the legal advice given to Telstra by its counsel and solicitors and as I am to be the trial Judge it is prima facie undesirable that this be so.

21. I endeavoured to decide the questions before the Court without examining the documents but found it was very difficult, if not impossible, to do so. Accordingly, I took the course of reading the documents except Appendix C to document K2907; but where I saw reference to matters which plainly related to communications between Telstra and its solicitors, or advice given to Telstra by its counsel or solicitors, I glanced at the documents merely to understand their general tenor. The most sensitive part of document K2907 was said to be Appendix C which is marked "Privileged and Confidential - Do Not Copy". In the circumstances I preferred not to read the document and did not do so.

22. Document E7777 contains certain blank spaces and the words "Legal Professional Privilege" are inserted there, so I am not aware of the matter that is said to constitute the legal professional privilege. Similarly with respect to document K7139 and K2224.

23. I should add that even if I had observed anything which reflected advice given by counsel or solicitors as to prospects of success in the case, or relating otherwise to their assessment of issues in the case, it would not have the slightest impact upon me in deciding the issues to be resolved at the final hearing of the matter.

24. I found it necessary to examine the documents, not to deal with the question of waiver of privilege, but with the first submission made on behalf of Optus that the documents are not of a kind to which legal professional privilege attaches in their own right.

25. Document K2907 is essentially a brief to the Minister by Telstra seeking to have amendments made to the Telecommunications Act, in particular with respect to ss. 183 and 184. Amendments to the Telecommunications Act were in fact made to ss. 184 and 185 of that Act by Act No. 67 of 1994 and received the Royal Assent on 30 May 1994, but operated retrospectively to 15 March 1994 (s. 2). The amending legislation repealed s. 184(3) of the Telecommunications Act; it is a provision which is the basis of certain of the claims made by Optus in the present litigation. Also, one of the issues in the litigation is whether Telstra is in a position to dominate any relevant telecommunications market in Australia by reason of regulatory constraints. K2907, and indeed the other documents, bear upon that issue in the sense that they relate to the question whether Telstra is able to exert influence in the relevant market.

26. The other three documents are substantially to the same effect as K2907 in that they relate to the same general subject matter, so it is convenient to consider them together, and this was the course followed by counsel in the course of their submissions to the Court.

27. The documents were prepared and sent to the Minister by Telstra for more than one purpose. I accept that one of the purposes was pursuant to the reporting obligations of Telstra. But another purpose is plain on the face of the documents themselves, namely, that they are documents written by Telstra in pursuit of its objective to achieve legislative changes to the Telecommunications Act which concern certain of the issues in this litigation. Doubtless it was Telstra's relationship to the Federal Government, a question addressed by Mr Ward in his affidavit, that provided the appropriate vehicle for the communications to be made to the Minister; but one of the objectives of the communications was to achieve legislative change at least partially to benefit Telstra.

28. The documents as a whole cannot answer the description of documents that were brought into existence for the sole purpose of obtaining legal advice or communicating that advice.

29. Telstra's claim for privilege is put on the basis that parts of the document contain statements of legal advice which was communicated to Telstra by its senior counsel and solicitors in circumstances which attracted legal professional privilege. Telstra does not claim privilege for the whole of each document.

30. Most of the masked portions of the documents are said to record legal advice given to Telstra by its legal advisers.

31. It is well established that parts of documents may be masked so as to attract legal professional privilege to the masked portion: Grofam Pty Limited v Australia and New Zealand Banking Group Limited (1993) 43 FCR 408, a judgment of Heerey J; and the earlier judgment of the Full Court of the Supreme Court of Queensland in Curlex Manufacturing Pty Limited v Carlingford Australia General Insurance Limited (1987) 2 QdR 335. See also Kettlewell v Barstow (1872) LR 7 Ch 686.

32. The question is whether passages in documents which are masked are properly the subject of a claim for legal professional privilege. I agree with Heerey J in his judgment in Grofam that objection can be taken to production of part only of a document on the ground of legal professional privilege.

33. The masked portions of the documents for which legal professional privilege is claimed refer to advice given by Telstra's legal advisers either as to matters directly relevant to the present litigation or to Telstra's legal position generally. Doing the best I can, on the material before me, the masked portions are included in the documents for the sole purpose of conveying legal advice received by Telstra from its legal advisers. The documents as a whole are for mixed purposes, but the masked portions are not.

34. I uphold Telstra's claim that the masked portions of documents are immune from inspection on the ground of legal professional privilege.

35. Certain of the masked portions of document K7139 and K2224 are, however, conceded by Telstra to be not the subject of legal professional privilege; but Telstra contends that they are immune from disclosure to Optus because the masked portions are irrelevant. I accept the submission of counsel for Telstra that the masked portions in question are irrelevant. It is well established that it is permissible to mask irrelevant material in documents that are otherwise discoverable: Curlex; and G E Capital Corporate Finance Group Limited v Bankers Trust Co (1995) 1 WLR 172. Generally, masking on the ground of irrelevance is permissible only where that ground is deposed to in an affidavit from the party or the appropriate officer of a party if it is a corporation: see Curlex and G E Capital Corporate Finance Group Limited. But it is for the Court in the exercise of its discretion, to decide in a particular case whether this ground has been established.

36. The questions which arise for consideration in this motion have arisen in the course of an interlocutory skirmish preparatory to the hearing of a complex matter which is expected to take many weeks to hear. Doing the best I can on the material before me at this stage, I am satisfied that the objection taken by Telstra to inspection of parts of documents by Optus on the ground of irrelevance is established and I propose to uphold it.

37. It was not suggested in argument that the communications between Telstra and the Minister or the Department are to be regarded other than as communications between Telstra and a third person for the purposes of the law relating to third party communications. In other words, it was not suggested that the Court ought to regard the client, for the purposes of the rule relating to legal professional privilege, as including together Telstra and the Federal Government (the latter in particular being the Minister and the Department).

38. I turn then to the question whether the legal professional privilege of Telstra has been impliedly waived.

39. First, there is no absolute rule that disclosure of legal advice to a third party necessarily constitutes a waiver of privilege in respect of that advice: Goldberg v Ng (1994) 33 NSWLR 639 at 676.

40. Certain of the documents, namely, K2224 and K2907, were produced on discovery inadvertently. Optus does not assert that this in itself constitutes a waiver of legal professional privilege. Rather Optus asserts that, to the extent to which the documents convey legal advice received by Telstra, any privilege has been waived by disclosure of that material to the Commonwealth.

41. Whether there is an implied waiver of legal professional privilege turns generally upon whether there has been some conduct, on the part of the party asserting privilege, that renders it unfair to maintain that privilege against the opposite party in litigation: Attorney-General (N T) v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 483, 487 and 493. The circumstances in which unfairness may arise will vary, but not uncommonly unfairness arises in circumstances where it is misleading or unfair to allow a party to refer to or use privileged material, and yet assert that the material itself (or material associated with it) is privileged from production. The privilege may be waived, for example, if part of a document is read to the Court at a trial by counsel when the remainder is said to be privileged: Atlantic Insurance Co v Home Insurance Co (1981) 1 WLR 529. It is unfair for a person asserting privilege to be allowed to abuse the privilege for the purpose of creating a false or inaccurate perception of the protected communication: Maurice at 488.

42. There are many cases where waiver of privilege occurs. In the case of a document that is made available to a third party to litigation, but where the disclosure is made for a specific and limited purpose without elements of unfairness to the opponent, waiver is not lightly implied: see British Coal Corporation v Dennis Rye Limited (No 2) (1988) 3 All ER 816 where a plaintiff delivered to the police privileged material which had been brought into existence for the purpose of civil proceedings in order to assist the police in their investigation into allegations of fraud; also Dingwall v Commonwealth of Australia [1992] FCA 627; (1992) 39 FCR 521 is an instance of privileged material being given by a party to proceeding to a potential expert witness, and privilege was not waived in that case.

43. Where a party to litigation discloses privileged material to a third party pursuant to a duty to do so, that generally will not be interpreted as implied waiver as it would be contrary to public policy if such disclosure was to have that consequence: British Coal Corporation at 822 and Goldberg at 651-2 and 675-6. Also, where a party asserting privilege in respect of a document makes a limited disclosure of it to a third party on the condition that privilege and confidentiality will be maintained, a condition which is accepted by the recipient, the inference of waiver will be even less readily drawn unless the privileged material has been used to the disadvantage of the other party to the litigation: Goldberg at 651 and 677.

44. The disclosure of the legal advice for which privilege is claimed by Telstra was made to the Minister and the Department in the four documents with which this motion is concerned for the purposes mentioned earlier. The disclosure was for specific, limited and defined purposes.

45. Nor is there any element of unfairness to Optus if it is not made aware of the contents of Telstra's legal advice. As was observed in Webb at 319 by Cooper J the mere fact that a party is left in ignorance of the content of the legal advice cannot be said to be unfair because that is the inevitable consequence of the operation of the doctrine of legal professional privilege. Nor, it seems to me, does Optus suffer any evidentiary disadvantage from non-disclosure.

46. For these reasons, in my opinion Optus is not entitled to inspect the relevant documents or parts thereof for which legal professional privilege is claimed by Telstra.

47. There remains a question distinctly different from the questions of legal professional privilege and waiver. On 6 October 1993 another judge of the Court (Whitlam J) made orders to the effect that inspection of documents be limited to counsel and solicitors for the parties who had first signed an undertaking not to disclose the contents of those documents to any person who had not signed a similar undertaking. Appropriate undertakings were subsequently given. Optus seeks to have the partners of the firm of solicitors retained by them, and solicitors employed by that firm, released from those undertakings in respect of three categories of documents, only one of which now remains in contention, namely, a category described as "The documents listed in the Schedule to the letter from Gilbert and Tobin to Mallesons Stephen Jaques dated 31 January 1995". That letter of 31 January 1995 is annexure "F" to the affidavit of Ms Halls sworn 13 February 1995 and the documents listed in the Schedule to the letter are reproduced in exhibit CAH3 to that affidavit. All the documents relate to what is described as Telstra's Strategic Partnership Tariff, which was discontinued in June 1994.

48. I am satisfied that there are issues in the proceedings as to whether the provision of telecommunication services in connection with the Strategic Partnership Tariff was discriminatory within the meaning of s. 183(1) of the Telecommunications Act, or able to be "cost justified" under s. 185 of that Act.

49. Counsel and solicitors for Optus say that, in the absence of any release from the undertakings, the solicitors for Optus are in practical terms unable to advise Optus, or seek instructions from them, in relation to those issues. They say that if the documents truly remain commercially sensitive, that restriction would be appropriate, but on their face the documents remain only of historical interest.

50. Counsel for Telstra referred to a course of practice which has developed between the parties whereby, if dissemination of documents was desired beyond the legal representatives of the parties, it could be achieved upon appropriate undertakings being given by external consultants. This involved identifying the individuals to whom disclosure was required, and ascertaining whether there was any objection to the disclosure to those persons or not. I have been informed that this practice has worked fairly satisfactorily to date with the legal advisers and external consultants. It appears that the documents that concern the strategic partnership agreements relate to major customers of Telstra in long term agreements including pricing strategies, customer preferences, relativities and matters of this kind. They are said by Telstra to be still of an ongoing sensitive commercial nature. Telstra has said that if a wider dissemination of the material is desired, and if the people are identified by Optus and appropriate undertakings are given, there may be no difficulty with those people being allowed to see the documents and therefore to instruct counsel and solicitors for Optus.

51. It is difficult for the Court to determine at this stage the extent to which the documents in the category mentioned above (those listed in the Schedule to the letter from the solicitors for Optus of 31 January 1995) are still properly the subject of a claim for confidentiality. Counsel for Telstra asserts that they are, and on the face of the documents as identified to the Court I am not persuaded that the documents are not of a commercially sensitive nature.

52. I urge the parties to try and resolve this matter within the existing framework of inspection of documents by legal advisers, experts and others. If a particular problem arises which is insoluble then it can be brought back to the Court for determination.

53. In conclusion, I see no reason to make specific orders at this stage with respect to the motion before the Court; but I am prepared, of course, to hear further submissions from counsel with respect to the matter at an appropriate time.

54. In complex litigation such as this where interlocutory applications are not infrequent, it is not desirable that costs be argued once the result of each such application is known. It absorbs an undue amount of the time of the Court; legal advisers and the parties generally. Generally, it is better that costs be reserved and argued at the trial. I reserve the costs of this motion.