PRINCIPLE AND PRECEDENT
11 In the ordinary course of modern life it is commonplace for a person (natural or corporate) to have confidential communications with a professional adviser or advisers for the purposes of conducting that person's affairs. Whatever the significance that person may attribute to a particular communication so made, such communications are not ordinarily protected from disclosure in legal proceedings or from an authority exercising coercive powers requiring production of information to it. The exceptional case is the communication made with the dominant purpose of giving or obtaining legal advice.
12 Though the need and justification for this exception has been questioned on occasion: see Kennedy v Wallace, at [58]ff; Three Rivers District Council v The Governor & Company of the Bank of England [2004] EWCA Civ 218 at [39]; it is well established. The rationale given for it is that the "privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers": Esso Australian Resources Ltd, at [35]; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 508.
13 While a privileged communication may be oral, documentary or a combination of each, the issue of privilege most frequently arises in relation to documents and in the settings of discovery and of the exercise of coercive powers to produce. For present purposes it is only necessary to refer to the principles of advice privilege as they apply to documents.
14 The primary principle, stated by Barwick CJ in Grant v Downs (1976) 135 CLR 674 at 677 (in what was then a dissenting view on the issue of sole vs dominant purpose), is that:
"… a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection." Emphasis added.
15 I have quoted this statement rather than one of the many others in High Court decisions which emphasise that the question for the court is whether the dominant purpose of supplying a document to a legal adviser accounts for the existence of that document, for the following reason. As the matter emphasised in the quotation indicates, the person who brings the relevant document into existence need not necessarily be the person who "communicates" the document to the legal adviser. In the cases of the State (the Crown) and of corporate entities, the common (if not characteristic) lack of identity between the actual party who prepares a document and the party whose purpose suffices as the purpose of the State or the corporation necessitates that there be a principle which does not require there to be such an identity: cf the factual setting of Waterford v The Commonwealth (1987) 163 CLR 54.
16 Because of the interpretation given to Barwick CJ's statement of principle by recent English authority (see below), it is necessary that I express the following views on it. The setting for Grant v Downs involved a claim for litigation privilege. This notwithstanding, neither Barwick CJ's statement, nor for that matter that of the majority judgment (at 682), differentiated in any operative way between advice privilege and litigation privilege for the purpose of resolving the actual issue before the Court which related to the purpose ("sole" or "dominant") necessary to attract privilege. Rather the principle formulated by Barwick CJ was intended to be declaratory of the law for the future; was stated compendiously; and had equal application to both manifestations of the privilege. Such formulations are now the commonplace in this country irrespective of whether the actual issue in a given case has involved advice privilege or litigation privilege. The reasons of Stone J amply illustrate this. Further, I consider that the Chief Justice's related comments on what for convenience I will call the "lack of identity principle" in relation to the authorship of a documentary communication were likewise intended to have common application to both manifestations of the privilege. There is, with respect, nothing to suggest that they were intended to be confined to cases of litigation privilege. Nor, as I will indicate below, is there any reason in principle or authority why they should be so confined in this country.
17 The short question raised in these appeals can be put in the following terms: where there is no identity between the author of a document and the person whose purpose accounts for its existence, what (if any) legal relationship is required to exist between the two before the principle stated by Barwick CJ can be attracted? Is it sufficient that the author (whether as principal, agent or independent contractor) prepares the document in effectuation of the other's purpose?
18 It may be difficult as a matter of principle or policy to see what is the additional significance of an enquiry into the parties' legal relationship given the dominant purpose accounting for the preparation of the document in question. Nonetheless it is said authority demands there be such an enquiry with consequences fatal to these appeals.
19 Before turning to precedent, such as it is, there are two additional principles relating to documents that ought be noted. The first is that a document attracts the privilege if it was prepared with the dominant purpose of its being used as a communication with a legal adviser to obtain legal advice notwithstanding that it has not in fact been, and may never be, so used: Southwark and Vauxhall Water Co v Quick (1878) 3 QBD 515; Trade Practices Commission v Sterling (1978) 36 FLR 244 at 245. This principle, while obviously falling within the rationale of the privilege, qualifies to this extent the general proposition that legal professional privilege does not protect documents, as such, but protects communications between lawyer and client: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 543.
20 The second principle which is more directly tied to the protection of communications is that the privilege extends to any document prepared by a lawyer or client from which there might be inferred the nature of the advice sought or given. Examples include communications between the various legal advisers of the client, draft pleadings, draft correspondence with the client or the other party, and bills of costs: Propend Finance, at 569.
21 I merely note in passing that each of these principles is relied upon by the appellants, the first in particular because of the emphasis it places on the creation of a documentary communication as distinct from its communication in fact.
22 When one turns to such authority as there is on the question raised by these appeals, adherence to historical assumption appears to hold sway. As I indicated at the beginning of these reasons the apparent orthodoxy is that (i) a documentary communication authored by an employee which satisfies the dominant purpose test will be privileged whether or not communicated by the employee to the legal adviser; (ii) a documentary communication authored and communicated to the legal adviser on behalf of the principal by an agent at the principal's behest which satisfies the dominant purpose test will be privileged; but (iii) a documentary communication prepared by a third party (not being an employee or "agent") with the dominant purpose of the party procuring its creation being its being communicated by that party to the legal adviser is not privileged in the hands of the third party.
23 This last proposition is routinely accepted as being a consequence of the decision in Wheeler v Le Marchant (1881) 17 Ch D 675 notwithstanding that that case did not involve a documentary communication authored by a third party for transmission by its principal to a legal adviser to obtain legal advice: e.g. Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44. Rather it was one of a third party making a direct communication to the legal adviser at the legal adviser's request and not as agent of the client seeking advice: Nickmar at 53-54. Unsurprisingly Cotton LJ described the claim made in Wheeler and the vice in it, in the following terms (at 684-685):
"Their case is put, as I understand it, in this way: It is said that as communications between a client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communication between the representatives of the client and the solicitor must be also privileged. That is a fallacious use of the word 'representatives'. If the representative is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position as the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor. But these persons were not representatives in that sense. They were representatives in this sense, that they were employed on behalf of the clients, the Defendants, to do certain work, but that work was not the communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his representatives and the solicitor. In fact, the contention of the Respondents come to this, that all communications between a solicitor and a third person in the course of his advising his client are to be protected. It was conceded there was no case that went that length, and the question is whether, in order fully to develop the principle with all its reasonable consequences, we ought to protect such documents. … [I]t is not necessary, in order to enable persons freely to communicate with their solicitors and obtain their legal advice, that any privilege should be extended to communications such as these."
24 In my respectful view, the above observations are not only unobjectionable given the provenance of the relevant communications in that case, they also embody what I consider to be an appropriate limitation upon advice privilege. This privilege should not be given such rein as would allow the legal adviser unilaterally to bring third party communications under the umbrella of lawyer-client communications notwithstanding that the third party was not the client's agent for the purpose.
25 In Wheeler it was recognised that a distinct rule applied in relation to litigation privilege such that privilege would attach to third party communications with a legal adviser if made in contemplation of litigation for the purposes of giving advice or of obtaining evidence: see e.g. Nickmar, at 54; Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332. The somewhat distinct rationale for this particular application of privilege: see Mitsubishi Electric Australia, at 336; is not of present relevance although I note shortly that it relates to preparing a brief for litigation and as such is a "corollary of the common law mode of trial": ibid, 336.
26 In England, Wheeler has been regarded as part of a mid-nineteenth century group of English cases which established a distinct principle concerning communications between a third party (whether an employee, agent or otherwise) and a principal who intended to seek, or was seeking, legal advice. It was recently described by the English Court of Appeal in the following terms (Three Rivers District Council v Bank of England (No 5) [2003] QB 1556 at 1575):
"By the end of the 19th century it was … clear that legal advice privilege did not apply to documents communicated to a client or his solicitor for advice to be taken upon them but only to communications passing between that client and his solicitor (whether or not through any intermediary) and documents evidencing such communications."
27 Late twentieth century English authority on legal advice privilege to which the primary judge referred has adhered to this view: see Re Highgrade Traders Ltd [1984] BCLC 151; Price Waterhouse (a firm) v BCCI Holdings (Luxembourg) SA [1992] BCLC 583; and see also Three Rivers District Council (No 5) above; Three Rivers District Council v The Governor and Company of the Bank of England [2004] EWCA Civ 218 ("Three Rivers (No 6)").
28 I mean no disrespect in not analysing those decisions in detail. However I would observe, as the judges in some of those cases have recognised: see BCCI Holdings at 590; Three Rivers (No 6); that for the most part the relevant documents would not in any event have been privileged as they were not brought into existence for such a dominant purpose as would have attracted advice privilege. The reason I have taken the course I do is because in Three Rivers (No 5) the Court of Appeal, after referring to the statement of principle of Barwick CJ in Grant v Downs, indicated (at [22]ff), that if the Chief Justice intended to refer to legal advice privilege separately from litigation privilege, he must have intended to depart from Wheeler v Le Marchant and from the law as understood at the end of the nineteenth century. As I have indicated, I do not consider that Barwick CJ was limiting his observations to litigation privilege notwithstanding that the context in Downs was that of litigation privilege: see also the formulation of majority in Downs at 682. Nor do I consider that the Chief Justice's statement of principle is inconsistent with Wheeler given the view I take of that case, though it clearly is inconsistent with the "clear" nineteenth century law to which the English Court of Appeal referred.
29 While there is a deal of Australian authority (mostly at first instance) on third party communications with legal advisers, there is little that touches directly on the issue in dispute in these appeals. The courts have shown no propensity to depart from the actual ruling in Wheeler v Le Marchant or from the distinct litigation privilege exception to it: see e.g. Australian Rugby Union Ltd v Hospitality Group Pty Ltd, at [27]-[28]. There is one reported example at first instance of Wheeler v Le Marchant being applied, and in my view unwarrantedly extended, to prevent non-agent third party documents attracting privilege where, as here, they were supplied to the principal that requested their creation: Macedonia Pty Ltd v Federal Commission of Taxation (1987) 87 ATC 4,565 at 4,568. In contrast, there have been a number of statements of principle made at first instance which are capable of suggesting that privilege attaches to documentary communications authored by a third party for the purpose of obtaining legal advice by the party requiring their creation, but which are to be communicated by that party to the legal adviser.
30 In Morlea Professional Services Pty Ltd v South British Insurance Company Ltd (unreported, Supreme Court of NSW, Foster J, 27 September 1984) the third party communication issue arose in a fire insurance setting where the prospect of litigation "was at least likely". After noting that many of the communications in issue (which were produced by investigators and assessors) were made otherwise than as direct communications between solicitor and client, Foster J indicated:
"The submission was put in the present case, based upon the old authority of Wheeler v Le Marchant (1881) 17 Ch D 675 that documents from third parties which come into existence at the request of a legal advisor for the purpose of his giving or preparing to give advice (apart from circumstances of anticipated or actual litigation) can never be privileged. Under this submission it was sought that I exclude, in particular, experts' reports obtained by the defendant's solicitor himself or sent direct to the solicitor at the defendant's request for the purpose of the solicitor advising the defendant in relation to the claim in those proceedings.
I do not consider that Wheeler's case is authority for so wide a principle (see Cairns: The Law of Discovery in Australia, p 116). I am satisfied that if it is established that the documents came into existence for the sole purpose of the solicitor rendering advice to the client it does not matter whether the document was forwarded to the solicitor by the client or by the maker of the document at the client's request, nor does it matter that the document was obtained direct by the solicitor from the maker at the client's request. The essential requirement is that it came into existence for the sole purpose of the solicitor rendering advice to the client." Emphasis added.
31 In GSA Industries (Aust) Pty Ltd v Constable [2002] 2 QdR 146 Holmes J held that a third party report prepared by a firm of accountants for their client and which was supplied to the client before communication to the client's solicitor attracted legal advice privilege as, at the time it was produced, the client had the dominant purpose of it being used to obtain legal advice. The trial judge in that case rejected an alternate claim based on litigation privilege as she was not satisfied that the required likelihood of litigation was anticipated at the time. Surprisingly, the primary judge in the present matter regarded Holmes J's decision as being one based on litigation privilege.
32 What is notable about these two decisions in particular is that to the extent that they have been seen to suggest lapses (real or apparent) from orthodoxy, later judges have sought to explain or reinterpret them to accord with Wheeler v Le Marchant: see e.g. Nickmar Pty Ltd at 54-55 for its treatment of Morlea Professional Services; see also the primary judge's consideration of GSA Industries at [48]-[51]. In my view, neither involves a departure from Wheeler insofar as direct communications between a non-agent third party and a legal adviser are concerned, and both are consistent with Barwick CJ's principle to the extent that there can be a lack of identity between the author of a documentary communication and the party who actually communicates it to the legal adviser.
33 Beyond the above there are occasional statements (usually in dicta) describing advice privilege but in terms of sufficient generality to be of no particular assistance in resolving the present question. Illustrative of these are the observations of Batt JA in Mitsubishi Electric Australia at [9] that "[advice privilege] is not available where one of the parties to the communication is a third party who is not the agent of the client for the purpose of the communication". In that case the documents in question were reports commissioned by Mitsubishi's solicitors and for that reason were rightly regarded as not admitting of a claim of advice privilege. Given the primary judge's reliance on Batt JA's observations, I would observe that they do not address a case such as the present where the author of an intended documentary communication is to provide it, not to legal advisers at their request, but to the party who commissioned it and who intends to communicate it to those advisers.
34 In the absence of binding authority, or for that matter Australian appellate authority which we should follow as a matter of comity, the present question falls to be decided by reference to principle, legal policy and to such authority of other jurisdictions as is persuasive when considered in our domestic setting.
35 Where the issue, as here, is with whether a document attracts legal advice privilege at the time it is brought into existence (as distinct from whether a copy of it is privileged when communicated at a later date: cf Propend Finance), the obvious starting point is with what was the intended use (or uses) of that document which accounted for it being brought into existence: Grant v Downes, at 692; Propend Finance, at 508. In answering that question - which is a question of fact: Waterford v The Commonwealth (1987) 163 CLR 54 at 66 -attention necessarily must focus on the purpose (or purposes) of the person who created the document, or who, if not its author, had the authority to, and did, procure its creation: Grant v Downs, at 677; Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557 at 568-569; Mitsubishi Electric Australia, at 338; Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 at 1036ff.
36 In the present matter that person was, seemingly, Mr O'Halloran of Pratt Holdings. As I have already indicated her Honour did not find it necessary to make findings as to what Mr O'Halloran's (hence Pratt Holdings') purpose or purposes were in procuring the preparation of the Pricewaterhouse report.
37 Let it be assumed that his dominant purpose was to personally communicate that report or its contents to ABL for the purpose of obtaining the required legal advice. This assumption, I should interpolate, conceals the real difficulties that can arise in a case such as the present - a matter returned to below.
38 It is accepted that, when Pratt Holdings received the report and sent it to ABL in effectuation of its purpose, that communication with its solicitors attracted legal advice privilege. What is not accepted is that the step which was a necessary precondition to effectuating that purpose - i.e. the transmission of the report from Pricewaterhouse to Pratt Holdings for its submission to ABL - resulted in the report and its pendant documents, if I might so describe them, having or retaining the character of privileged documents in Pricewaterhouse's hands for which Pratt Holdings could claim privilege.
39 I have already commented upon what I consider to be the patent artificiality flowing from the denial of privilege in such circumstances. If Pratt Holdings had its own and appropriately qualified accounting staff which prepared a like report, that report would have been privileged. Equally, if it had directed Pricewaterhouse to send the report directly to ABL, it would likewise be privileged as Pratt Holdings would have thus constituted Pricewaterhouse its agent to make the, or else a part of the: see Propend, at 571-572; communication by Pratt Holdings to ABL for the purpose of obtaining legal advice.
40 Pricewaterhouse was not relevantly Pratt Holdings' agent in this matter. With all due respect to Holmes J in GSA Industries (Aust) who appears to have held to the contrary (at [22]) where accountants prepared and then passed on a report to their client who communicated it to the client's lawyer, I do not consider that a party in the position of Pricewaterhouse "is properly to be regarded as the agent of [Pratt Holdings] for the purpose of collecting and communicating the information contained in the report". Notwithstanding the growing elasticity of meaning of the term "agent": see e.g. the discussion in Bowstead & Reynolds on Agency, 1-001 ff (17th ed, 2001); Pricewaterhouse simply did not assume such a representative function on Pratt Holding's behalf as the agency concept presupposes: see South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at [136]-[137]. Pricewaterhouse did work for its client Pratt Holdings which it delivered to Pratt Holdings. I would add that the mere relabelling of Pricewaterhouse as Pratt Holdings' "representative" does not affect the essential character of the parties' relationship for present purposes: see the comments of Cotton LJ on this in Wheeler v Le Marchant, at 684.
41 To deny that a third party is an agent in such circumstances does not, though, provide a sufficient or principled reason for denying privilege to the documentary communication (or contents) it has authored. The important consideration in my view is not the nature of the third party's legal relationship with the party that engaged it but, rather, the nature of the function it performed for that party. If that function was to enable the principal to make the communication necessary to obtain legal advice it required, I can see no reason for withholding the privilege from the documentary communication authored by the third party. That party has been so implicated in the communication made by the client to its legal adviser as to bring its work product within the rationale of legal advice privilege.
42 There are, in my view, clear reasons of policy that support extending the privilege to such third party authored documentary communications. Whether a natural person or a corporation, a party seeking to obtain legal advice may not have the aptitude, knowledge, skill and expertise, or resources to make adequately, appropriately or at all such communication to its legal adviser as is necessary to obtain the advice required. Such is commonplace today where advice is sought on complex and technical matters. To deny that person the ability to utilise the services of a third party to remedy his or her own inability or inadequacy unless he or she is prepared to forego privilege in the documents prepared by the third party, is to disadvantage that person relative to another who is able adequately to make the desired communication to a legal adviser by relying upon his or her own knowledge, resources, etc.
43 For the law to provide such an incentive not to utilise the services of third parties in such circumstances is to undercut the privilege itself. It would not facilitate access to effective legal advice nor would it facilitate effective communication with legal advisers for the purpose of obtaining legal advice.
44 I earlier indicated that, for the purposes of the above, I had assumed that Pricewaterhouse's report had been prepared at Mr O'Halloran's direction with the dominant purpose in mind of it being, or being part of, Pratt Holdings' communication to ABL to obtain legal advice. That assumption is a large one.
45 While the question of Pratt Holdings' purpose(s) in this matter is simply one of fact, particular care needs to be taken in evaluating evidence of purpose in a setting in which the third party performs a professional function for a principal in a non-litigation setting but in a matter in which legal advice is to be or is being sought by that principal. There is a number of reasons why this is so. First, the third-party principal relationship (be it accountant-client, assessor-client or otherwise) will not as such attract privilege to any exchanges made in it: Baker v Campbell at 66, 75, 94 and 128. For this reason alone caution needs to be taken in determining whether the parties' relationship has a character other than the above for privilege purposes.
46 Secondly, the matter or transaction in respect of which legal advice is sought may well be one in which the principal considers it necessary or appropriate to obtain advice as well from other professional and business sources. In determining the preferred structure of a business transaction, for example, a person might consult not only a lawyer, but also one or more of an accountant, a financial planner and a merchant banker for advice: cf Kennedy v Wallace at [60]. The advices given by such other advisers will rarely be capable of attracting privilege for the reason that they will almost invariably have the character of discrete advices to the principal as such, with each advice, along with the lawyer's advice, having a distinctive function and purpose in the principal's decision making - albeit all of the advices may be interrelated in the sense of providing collectively a basis for informed decision by the principal. Those other advices will not later acquire the character of privileged documents in the respective adviser's hands: cf Propend; merely because the principal subsequently makes the advices available to his or her lawyer when obtaining legal advice. Importantly, as Deane J observed in Baker v Campbell at 112, privilege does not "extend to protect things lodged with a legal adviser for the purpose of obtaining immunity from production". Neither does it extend to third party advices to the principal simply because they are then "routed" to the legal adviser.
47 Thirdly, notwithstanding the principal's stated purpose in having a documentary communication brought into existence, the principal may have so conducted himself or herself in the matter as to indicate that the intended use of the document authored by the third party was not its communication to the legal adviser as the principal's communication, but rather it was to advise and inform the principal concerning its subject matter, with the principal then determining (a) in what manner, if at all, the whole or part of the document would be used by the principal in making its own communication or (b) the purpose(s) for which the document could or should be used. The less the principal performs the function of a conduit of the documentary information to the legal adviser, the more he or she filters, adapts or exercises independent judgment in relation to what of the third party's document is to be communicated to the legal adviser, the less likely it is that that document will be found to be privileged in the third party's hands. This will be because the intended use of the document is more likely to be found to be to advise and inform the principal in making the principal's communication to the lawyer (whether or not that communication embodied wholly or substantially the content of the document) and not to record the communication to be made.
48 I have dealt at a little length on the care that needs to be taken in determining the principal's dominant purpose in a case such as the present for this reason. The primary judge's narrative of the circumstance in which the documents in question were created suggests that the present is a case calling for that care. In saying this I again emphasise her Honour did not make and, on the view she took of the applicable law, did not need to make any finding as to what Pratt Holdings' dominant purpose was in creating those documents.