HRNG ADELAIDE, 3-4 April 1995 #DATE 2:6:1995 #ADD 4:9:1995

Counsel for appellant: Mr R Conti QC with Mr F Kunc

Counsel for respondent: Mr J Wells QC with Mr R Whitington

JUDGE1 KING CJ In the course of proceedings in this Court by the respondent against the appellant, the appellant applied for an order that the respondent produce certain documents to it. The application was heard by Duggan J who dismissed it. This is an appeal against that dismissal.

The documents in question are seven statements of witnesses brought into existence for the purpose of litigation in the Supreme Court of New South Wales in which a subsidiary of the present respondent, SBSA (NZ) Limited sued FAI General Insurance Company Limited which in turn joined the present respondent as Third Party. The respondent has claimed legal professional privilege in respect of the statements and the issue on this appeal is whether the documents are protected from production by legal professional privilege.

The solicitors for SBSA (NZ) Limited took statements from the seven witnesses for the purpose of conducting, and/or advising their client in relation to, the action against FAI. In the course of that action, an order was made in the Supreme Court of New South Wales pursuant to Practice Note No 58. The note relates to proceedings entered in the "Construction List" but the list apparently includes actions in the Commercial Division other than construction cases. The purpose of the practice prescribed by the Note is expressed to be "the just quick and cheap disposal of the proceedings". The Note prescribes a "usual order for hearing" and that was the order made in the FAI proceedings.

The order provides that "if any party intends to rely on the evidence of an expert witness", the party shall deliver a report of the expert to each other party. It also provides that a party "deliver to each other party a statement of the evidence proposed to be led from each witness to be called by that party signed by the proposed witness ...". The order also provides that the Court may direct that the report or statement stand as the evidence in chief. If the expert witness is not tendered or the expert or other witness is not called to give evidence, no other party may put the report or statement in evidence without the leave of the Court.

Following the making of the order, the solicitors for SBSA (NZ) prepared further statements of the seven witnesses and had them signed for the purpose of complying with the order. The seven statements so prepared were then sent to the solicitors for FAI in compliance with the order.

The appellant conceded before Duggan J that the statements when prepared were privileged but contended that the privilege had been waived by their delivery to the solicitors for FAI. The learned judge held that there had been no waiver. The appellant desired to contend before us that the statements prepared for compliance with the order and delivered to FAI had never been the subject of privilege. This point was not raised in the grounds of appeal and Mr Conti QC for the appellant applied for leave to amend the grounds of appeal. This application was opposed by Mr Wells QC for the respondent who contended that the appellant should not be permitted to raise a new point, which might involve questions of fact and degree, at this stage of the proceedings.

The argument sought to be advanced by the appellant is that the statements of which production is sought, as distinct from the original statements taken from the witnesses, were prepared and signed for the purpose of compliance with the order, and were not documents brought into existence for submission to legal representatives for the sole purpose of use in legal proceedings; Grant v Downs [1976] HCA 63; (1976) 135 CLR 674, Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 per Brennan J at p108. I think that the argument is fallacious. The documents in question are in substance merely a reproduction of statements already obtained from witnesses for the sole purpose of use in the proceedings, in a form suitable for compliance with the order. They do not lose their character as statements of witnesses because they are prepared with a view to compliance with the order. It is true that the Court may order their use as evidence in chief at the trial, but I do not think that that prospect affects the essential character of the documents as statements of witnesses.

It is implicit in the argument for the appellant that privilege would not attach to statements of witnesses prepared and signed with a view to compliance with the usual order, notwithstanding that they were never delivered pursuant to the order because a decision was taken not to call the witnesses. They would be discoverable documents in those and any other proceedings. That, as it seems to me, would make a mockery of legal professional privilege and exposes the plainly fallacious nature of the argument.

In my opinion it is plain that legal professional privilege attached to the statements until they were delivered pursuant to the order. The point sought to be raised by amendment is plainly untenable and the proposed amendment should be refused for that reason, quite apart from the question of whether the point should be permitted to be raised at this stage.

It was argued by Mr Conti that even if the statements were privileged when brought into existence, they ceased to be privileged documents when delivered to the other parties, quite apart from any question of waiver, because they were no longer confidential documents. He relied upon a passage in the judgment of Dawson J in Attorney-General (NT) v Maurice and Others [1986] HCA 80; (1986) 161 CLR 475 at pp495-6. There is, however, a marked difference between the purpose and function of the Claim Book in that case and of statements of witnesses. The Claim Books's very purpose was to communicate the particulars of the claim to the Aboriginal Lands Commissioner and the other parties. Once communicated, there could be no element of confidentiality. Statements of witnesses are by their nature confidential documents. Their communication to another party for a limited purpose pursuant to a court order does not appear to me to deprive them necessarily of every element of their confidential character. They retain the character, except as to use by the other party for the limited purpose, "until either the witness makes the statement public by verifying it on oath in the witness box or the party who served the statement waives the privilege", Fairfield-Mabey Ltd v Shell UK Ltd (1989) l All ER 576 at p577, or a party puts the statement in evidence pursuant to leave granted under par3(e) of the Practice Note. Olney J explained the distinction between the Claim Book in Maurice's case and statements of witnesses, in Nilsen Industrial Electronics Pty Ltd v National Semiconductor Corporation and Others (1994) 48 FCR 337 at pp339-41, and I adopt that explanation.

The real question on this appeal is whether the delivery of the statements to the other parties amounted to a waiver of the privilege. The mere fact that a document is in the hands of a person other than the parties to the litigation in which its production is required, does not of itself deprive the document of its privileged character; Hartogen Energy Limited (In Liquidation) v Australian Gas Light Company and Others [1992] FCA 322; (1992) 36 FCR 557 at p571. There must be some intentional communication amounting to waiver or circumstances in which the law imputes or implies waiver.

It is obvious, of course, that in delivering the statements to the other parties, the respondent waived privilege at least to the extent necessary to permit the use of the statements by those parties for the purposes of the obligation; Black and Decker Inc v Flymo Ltd (1991) l WLR 753. Mr Conti argued that waiver for any purpose was waiver for all purposes and that waiver in respect of one person was waiver in respect of all. He maintained that the notion of partial waiver is not part of the law of this country.

The general principle is that once privilege is waived it is waived for all purposes. There is, however, very persuasive English authority for the proposition that there may be waiver which is partial or limited only.

In British Coal Corporation v Dennis Rye Limited (No 2) (1988) 3 All ER 816, the English Court of Appeal had to consider whether privilege was still available to protect from disclosure by a plaintiff in civil proceedings of documents which he had brought into existence for the purpose of the civil proceedings but which he had furnished to the police for use in the investigation of suspected criminal conduct by the defendant, and of other documents which the plaintiff had been compelled to produce at the criminal trial of the defendant. The Court held that the privilege still attached to the documents. Neill LJ (with whom the other Lord Justices agreed) said at pp821-22: "Nevertheless, it is clear that the plaintiff made the documents available for a limited purpose only, namely to assist in the conduct first of a criminal investigation and

then of a criminal trial. This action by the plaintiff, looked at objectively as it must be, cannot be construed as a waiver of any rights available to it in the present civil action for the purpose of which the privilege exists."

The English Court of Appeal in Goldman v Hesper (1988) 3 All ER 97 applied the same principle to documents which were disclosed on a taxation of costs. It held, applying the British Coal Corporation case "that it is possible to waive privilege for a specific purpose and in a specific context", and that the documents disclosed on the taxation remained privileged for other purposes.

A Divisional Court in Northern Ireland held in Downey v Murray (1988) NI 600, that the effect of the plaintiff's solicitor sending a copy of a statement of the plaintiff in civil proceedings to the police for the purpose of a police investigation, was not a general waiver of the privilege attaching to the statement and that it remained privileged for the purpose of the civil proceedings.

In Goldberg and Others v Ng and Others (1993-1994) 33 NSWLR 639, the issue related to alleged waiver by communication to the Law Society. A client instituted proceedings against a solicitor and also complained to the Law Society. The solicitor forwarded certain documents to the Law Society stipulating that his legal professional privilege in relation to them be maintained. The client issued a subpoena in the civil proceedings to the Society to produce the documents. The solicitor asserted privilege. The New South Wales Court of Appeal, by a majority, held that it would be unfair in the circumstances to allow the solicitor to claim privilege and that there had therefore been an implied waiver with respect to the client and the civil proceedings. All three judges, however, accepted the principal of partial waiver differing only as to whether a more general waiver should be imputed in the circumstances of the case. Clarke JA referred in addition to the United Kingdom cases to the following dictum of Jordon CJ in Thomason v The Council of the Municipality of Campbelltown [1939] NSWStRp 10; 39 SR(NSW) 347 at p355 as follows: "... I must say that in the absence of authority I should have thought the point hardly capable of argument. The mere fact that a person on some one occasion chooses to impart to another or others advice which he has received from his solicitor indicates no intention on his part to waive his right to refuse on other occasions to disclose in evidence what that advice was, and supplies no sufficient reason for depriving him of a form of protection which the law has deemed it specially necessary to throw around communications between solicitor and client."

I think that these authorities clearly establish that waiver of privilege may be limited to a specific situation or purpose.

Mr Conti relied on Giannarelli and Others v Wraith and Others (No2) [1991] HCA 2; (1991) 171 CLR 592 in support of his proposition that the notion of limited waiver does not form part of the law of this country. In that case, however, McHugh J was concerned only with the question whether waiver of privilege to the extent of permitting inspection of a document by a Taxing Officer amounted to waiver to the extent of permitting inspection by the opposing party. I agree with the comment of Kirby P in Goldberg v NG supra at p654 that the case properly understood "does not preclude the concept of 'limited waiver' as expressed in British Coal, Goldman and Downey cases being applied by this Court".

There is a general waiver of privilege if the party expressly waives privilege for all purposes or intentionally uses the documents in a manner which is incompatible with the retention of confidentiality. These witness statements, however, were never used in the public arena as they would have been if introduced into evidence; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd [1992] FCA 472; (1992) 110 ALR 685 at 681. The delivery of statements pursuant to the order of the Court is for the limited purpose contemplated by the Practice Note namely "the just, quick and cheap disposal of the proceedings". The object is to provide advance notice to the other parties of the evidence which the witnesses are expected to give and thereby to facilitate the hearing perhaps even to the point of the use of the statements as evidence in chief.

There is an obligation on the recipients of documents pursuant to the discovery process not to disclose those documents or their contents for a collateral purpose; Harman v Secretary of State for the Home Department (1983) l AC 280, Crest Homes PLC v Marks (1987) AC 829 at 853, Holpitt Pty Ltd v Varimu Pty Ltd and Others [1991] FCA 269; (1991) 29 FCR 576. That obligation extends to the recipient of documents pursuant to an order of the Court of the present kind; Springfield Nominees Pty Ltd v Bridgeland Securities Limited, supra, esp at p691. The documents therefore could not be disclosed for a collateral purpose and could not be put in evidence by the other parties without leave of the Court.

I can find nothing in the circumstances to indicate a use of the statements which is incompatible with the retention of confidentiality except to the extent that confidentiality must be modified to achieve the purpose of the Court Order namely to acquaint the other parties in advance with the evidence which the witnesses were expected to give. There was therefore no intentional waiver of privilege except to the extent of permitting use of the documents by the other parties for the purpose of preparing the case.

It remains to consider whether in the case of delivery of witness statements pursuant to an order of the kind under consideration the law imputes or implies waiver of the privilege. There is a conflict in the decided cases.

In Nilsen Industrial Electronics Pty Ltd v National Semiconductor Corporation and Others supra, a defendant in proceedings in the Federal Court applied for discovery by the plaintiff of statements of witnesses delivered by the plaintiff to other parties in certain proceedings in the Supreme Court of Victoria pursuant to an exchange of statements under the prevailing practice of the Commercial Division of that Court. Olney J held that the statements remained the subject of legal professional privilege which had not been waived. He cited Prudential Assurance Co Ltd v Fountain Page Ltd and Another (1991) l WLR 756. The question in that case was whether a party to certain American proceedings should be released by the English Court from its implied undertaking not to use for a collateral purpose witness statements supplied pursuant to the English rule equivalent of the New South Wales Practice Note. In deciding that use of the documents should not be permitted Hobhouse J said at p774: "In my judgment when a statement is served pursuant to a direction given under Ord. 38, r.2A and the witness to whose evidence that statement relates is never called by that party to give evidence (whether it be because the trial never takes place or for any other reason) that statement remains a privileged document in the same way as a without prejudice communication remains privileged. The party serving the statement may not be compelled to disclose the statement to any other person and is entitled to prevent any other person using that statement without his consent and, in particular, using it in evidence against the person who originally served the statement. This was what was decided by the House of Lords in Rush and Tompkins Ltd v Greater London Council [1988] UKHL 7; (1989) AC 1280 in relation to without prejudice communications and I consider that the same applies to witness statements served under rule 2A.

The policy reflected in the rule is simply procedural. Its purpose is stated in sub-rule (2) to be 'disposing fairly and expeditiously of the cause or matter and saving costs.' It is related to the instant litigation alone. Later paragraphs of the rule cover matters of obvious relevance to the trial, and its preparation, in that action. A secondary purpose must also be to encourage and facilitate the making of admissions and settlements. If one party can see the evidence that the other party has and has also to disclose its own, this exchange of information may enable disputes to be resolved in a manner that is exactly parallel to that which often occurs in without prejudice negotiations. Costs are saved if trials are rendered unnecessary or appropriate admissions are made. The policy of the law which protects without prejudice communications should apply to protect the confidentiality of statements that are exchanged but not used under rule 2 A Similarly, the example of Riddick v. Thames Board Mills Ltd. (1977) QB 881 illustrates another danger of not recognising a restriction. A statement may contain possibly defamatory statements; if an unused statement is not to be treated as privileged from disclosure to third parties or being used in evidence, obvious difficulties can arise. Accordingly there are good reasons of policy arising from the rule that reinforce the analogy

with the treatment of documents obtained on discovery and communications without prejudice. Likewise, there are good policy reasons for imposing similar restrictions. There is therefore no basis for declining to give effect to the inference to be drawn from the rule itself."

A contrary view was taken by Hill J Complete Technology Pty Ltd v Toshiba (Australia) Pty Ltd [1994] FCA 1314; (1994) 124 ALR 493. In that cae the applicant sought to restrain the respondent from retaining experts and counsel used by parties to other proceedings in which the applicant had sued those other parties. The grounds of the application were that witness statements of those experts had been furnished to those other parties pursuant to directions of the Court and that counsel became aware of them in consequence of compliance with the court order. In refusing to make the orders sought, Hill J expressly disagreed with the views of Olney J and held that privilege had been waived by the delivery of the statements pursuant to the Court order.

This conflict of authority must be resolved by resort to the basic principles governing legal professional privilege. In Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 490 Deane J said: "It is a substantive general principle of the common law and not a mere rule of evidence that, subject to defined qualifications and exceptions, a person is entitled to preserve the confidentiality of confidential statements and other materials which have been made or brought into existence for the sole purpose of his or her seeking or being furnished with legal advice by a practising lawyer or for the sole purpose of preparing for existing or contemplated judicial or quasi-judicial proceedings"

In the same case Mason J and Brennan J, reiterating what was said in Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 685, made the point at p487 that "because there is a conflict between this right and the public interest in ensuring the availability of all relevant evidence in a particular case the privilege is, however, confined within strict limits.". Within those limits, however, adherence to principle requires that full effort be given to the privilege. In Maurice's case at p490 Deane J said: "That general principle is of great importance to the protection and preservation of the rights, dignity and freedom of the ordinary citizen under the law and to the administration of justice and law in that it advances and safeguards the availability of full and unreserved communication between the citizen and his or her lawyer and in that it is a precondition of the informed and competent representation of the interests of the ordinary person before the courts and tribunals of the land. Its efficacy as a bulwark against tyranny and oppression depends upon the confidence of the community that it will in fact be enforced. That being so, it is not to be sacrificed even to promote the search for justice or truth in the individual case or matter and extends to protect the citizen from compulsory disclosure of protected communications or materials to any court or to any tribunal or person with authority to require the giving of information or the production of documents or other materials: see Pearse v Pearse (1846) 1 DeG and Sm 12, at pp. 28-29 [1846] EngR 1195; (63 ER 950, at p.957); Baker v Campbell (1983) 153 CLR, at pp.115-116."

The above principles, when applied to the present case, indicate, in my opinion, that waiver should not be imputed in consequence of compliance with the order, to any greater extent than is necessary to accomplish the purposes of the order and the Practice Note pursuant to which it was made.

I have reached the clear conclusion that the delivery of the statements pursuant to the order did not place the statements in the public domain and did not amount to a use of them in a manner incompatible with the retention of confidentiality and privilege except so far as waiver was necessary to permit their use for the purposes of the case in which they were delivered in accordance with the Practice Note and ordering the Court.

There being no express waiver or intentional use of the statements in a manner incompatible with the retention of privilege, the law will impute waiver only if the maintenance of privilege would, in the circumstances, be unfair to the party seeking discovery. Attorney-General for the Northern Territory v Maurice (1986) l61 CLR 475.

I can see no unfairness to the appellant in the maintenance by the respondent of its privilege in the statements. Their disclosure to other parties in other proceedings is quite fortuitous as regards the appellant. If there is a question of fairness, it might be thought that the forced disclosure of the respondent's statements while the appellant retains privilege with respect to its statements would not be without some element of unfairness to respondent.

In my opinion there was no express waiver, nor intentional act amounting to waiver, nor any basis for implying or imputing waiver, of the legal professional privilege attaching to the statements.

JUDGE2 MULLIGHAN J I agree that the appeal should be dismissed for the reasons given by the Chief Justice.

JUDGE3 NYLAND J In my opinion this appeal should be dismissed for the reasons given by King CJ.