reasoning
14 Section 51A of the TP Actprovides as follows:
'(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2) For the purpose of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3) …' (Emphasis added.)
15 It will be noted that s 51A(1) of the TP Act provides that a representation by a corporation as to a future matter is taken to be misleading if the corporation 'does not have reasonable grounds for making the representation'. The section does not say that a corporation escapes the effect of s 51A(1) if a representation made on its behalf was 'an objectively reasonable view'.
16 In Sykes v Reserve Bank of Australia (1998) 88 FCR 511, Heerey J (with whom Sundberg J agreed on this issue) noted (at 513) that if a party has made a representation as to a 'future matter', s 51A requires the representor to show (or at least to adduce evidence of):
'● some facts or circumstances
● existing at the time of the representation
● on which the representor relied
● which are objectively reasonable and
● which support the representation made'. (Emphasis added.)
17 Paragraph 28A of the defence pleads that the view expressed by Seven Network in the Letter was 'an objectively reasonable view'. Six reasons are given why this was so at the relevant time. Conspicuous by its absence is any pleading that Seven Network, or anyone on its behalf, relied on any or all of these matters in making the representation in the Letter.
18 I infer that the defence has been carefully drafted so as to avoid pleading anything that could be taken to allege that Seven Network, or persons acting on its behalf, had a particular state of mind or a particular set of beliefs at the relevant time as to the date on which Seven Network would lose the AFL rights. No application has been made to strike out par 28A(b) of the defence. Nonetheless, it is difficult to see how the matters pleaded in par 28A(b) in its present form are capable of establishing that Seven Network had 'reasonable grounds for making the representation' within the meaning of s 51A(1) of the TP Act. Heerey J's observations in Sykes v Reserve Bank simply reflect the language of s 51A(1). There must not only be 'objectively reasonable' grounds that could have been used to support the representation as to a future matter. The corporation must adduce evidence that it had reasonable grounds for making the representation.
19 The authorities on waiver of legal professional privilege do not speak with one voice. In Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152, the majority (Branson and Lehane JJ) analysed the operation of s 122 of the Evidence Act 1995 (Cth), which provides that what the Act calls client legal privilege does not prevent the adducing of evidence 'with the consent of the client'. At the time Telstra v BT was decided, s 122 was thought, in effect, to govern loss of legal professional privilege in ancillary processes, such as the production of discovered documents or the grant of access to subpoenaed documents (see now Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49). What is significant for present purposes is that their Honours approached the construction of s 122 by reference to the common law principles of waiver which, in their view, s 122 was intended to incorporate.
20 Branson and Lehane JJ held (at 168) that where:
'a party relies on a cause of action, an element of which is the party's state of mind (including the quality of the party's assent to a transaction) the party is taken to have waived privilege in respect of legal advice which the party had, before or at the time of the relevant events, material to the formation of that state of mind.
Accordingly, their Honours considered (at 166-167) that where:
'a party pleads that he or she undertook certain action "in reliance on" a particular representation made by another, he or she opens up as a element of his or her cause of action, the issue of his or her state of mind at the time that he or she undertook such action. The court will be required to determine what was the factor, or what were factors, which influenced the mind of the party so as to induce him or her to act in that way. That is, the party puts in issue in the proceeding a matter which can not fairly be assessed without examination of relevant legal advice, if any, received by that party. In such circumstances, the party, by putting in contest the issue of his or her reliance, is to be taken … to have waived reliance on the privilege which such material would otherwise attract'. (Emphasis added.)
21 This analysis of common law principles (which now govern claims made in ancillary processes that privilege has been waived or lost) has been followed in some cases and doubted in others. In a comprehensive review of the authorities, Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499, expressed the view that, if it were open to him to do so, he would hold that the reasoning of the High Court in Mann v Carnell (1999) 201 CLR 1, had undercut the approach taken in Telstra v BT. In particular, Allsop J pointed to the emphasis placed by the majority in Mann v Carnell, at [29], on conduct inconsistent with the maintenance of confidentiality when determining whether a party has waived legal professional privilege, rather than on general considerations of fairness. Allsop J thought that in the light of these observations, the better view was that a mere pleading by an applicant that he or she relied on a representation does not amount to an assertion that the applicant did or did not rely on privileged information.
22 Allsop J noted, however, that a Full Court in Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925, had endorsed the reasoning in BT v Telstra, albeit before Mann v Carnell had been decided. Several single judge decisions had also followed BT v Telstra after Mann v Carnell had been decided: see, for example, Fort Dodge Australia v Nature Vet Pty Ltd [2002] FCA 501 (Hely J); BT Australian Pty Ltd v Nyran Pty Ltd [2002] FCA 1302 (RD Nicholson J). Allsop J concluded [at 112] that:
'the law on implied waiver may be seen as expressed by the majority of the Full Court in Telstra. So to conclude flows from an obligation to apply the Full Court's decision in Perpetual Trustee (albeit decided before Mann v Carnell) and from comity with Hely and Nicholson JJ. My own view is that Mann v Carnell and the earlier seminal decisions point to a more restricted principle, which, though not easy to apply in any given circumstance, is not sufficiently expressed by the views of the majority in Telstra …'
23 Consistently with the reasoning in BT v Telstra, Allsop J considered that where a party makes allegations raising the issue of its state of mind to which legal advice is likely to have contributed, that party cannot continue to claim legal professional privilege for the advice. However, his Honour added (at [113]) a qualification that the principle should be applied:
'with the necessary recognition from Mann v Carnell that inconsistency is the key to understanding the application of the principle'.
In the result, Allsop J held (at [115]) that the mere denial by respondents of an allegation as to their state of mind does not waive privilege in respect of any advice that may have materially contributed to the alleged state of mind.
24 I think that there is much force in the view that the reasoning in Mann v Carnell requires Telstra v BT to be reconsidered. As the Full Court observed recently (Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3, at [22]), the effect of Mann v Carnell is that:
'the essence of waiver is not general fairness - it is the inconsistency of the posited act with the confidentiality protected by the privilege (in which analysis fairness may play a part)'.
25 It is not, however, necessary in the present case to explore the question further. Even if the reasoning in Telstra v BT applies (with or without the qualification relating to inconsistency suggested by Allsop J), I do not think that Seven Network can be taken to have waived privilege in respect of the legal advice it apparently received concerning the date on which it was to lose the AFL rights.
26 Seven Network has gone to considerable lengths to avoid an affirmative plea that it or its officers had a specific state of mind, or relied on particular matters, in making the statements in the Letter concerning the date on which it would lose the AFL television rights. The ratio of Telstra v BT does not support Optus' claim that legal professional privilege has been waived. This is not a case where the party claiming privilege has pleaded that he or she had a particular state of mind or relied on particular representations. In my view, there is no unfairness in allowing Seven Network to maintain its claim to legal professional privilege, having regard to the limited scope of the plea in par 28A of its defence.
27 The rub in this conclusion is that, if what I have said is correct, par 28A(b) of the defence may not advance Seven Network's case very far at all. For the reasons I have given, par 28A(b) does not seem to plead matters sufficient to enable Seven Network to avoid the effect of s 51A(1) of the TP Act. If Seven Network seeks to amend its pleading, or to adduce evidence that goes beyond the narrowly circumscribed scope of its present pleading, other issues doubtless will arise.