Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts

REASONS FOR JUDGMENT 1 By an Amended Application filed 9 August 2007 the applicant ('Telstra') applied for preliminary discovery of certain documents of which the respondent ('The Minister') has or is likely to have possession. 2 By a Notice of Motion filed 21 August 2007, as amended on 22 August 2007, Telstra applied to set aside certain paragraphs of a Notice to Produce dated 22 August 2007 issued by the Minister in the preliminary discovery application ('the Minister's Notice to Produce'). 3 On 5 September I ordered that Telstra's Notice of Motion filed 21 August 2007, as amended on 22 August 2007, be dismissed. At the same time I directed that Telstra produce the documents the subject of the Minister's Notice to Produce before a Registrar on 12 September 2007 at 9.30 am. 4 In respect of documents the production of which was called for by paragraphs 8, 9 and 10 of the Minister's Notice to Produce the solicitors for Telstra wrote to the solicitors for the Minister on 6 September 2007 stating, inter alia: 'We also attach a list of documents falling within the terms of the Notice in respect of which our client claims legal professional privilege. The list sets out the basis of the privilege claim and identifies the paragraph of the Notice to which each document responds.' 5 Relevantly, Telstra, through its solicitors, claimed privilege for an 'Email' dated 18 June 2007, a second 'Email' dated 18 June 2007, a 'Draft memorandum' dated 26 June 2007, a separate 'Draft memorandum' dated 26 June 2007, a 'Draft memorandum (clean and marked-up)' dated 26 June 2007 and an 'Email' dated 27 June 2007. In respect of the first five documents mentioned the solicitors for Telstra indicated that production of the documents was required by paragraph 8 of the Minister's Notice to Produce. That paragraph provided as follows: '8. All documents recording a consideration by any member of the core team and/or Executive Team (or any member of management more senior than members of the core team including the Telstra Board of Directors) of Telstra of the reasons set out in DCITA's letter dated 18 June 2007 to Telstra as to why Telstra was an unsuccessful applicant for funding under the BCIP.' 6 The sixth document referred to above was one the production of which was said to be required by paragraphs 9 and 10 of the Minister's Notice to Produce which provided: '9. All documents recording or referring to any consideration (including any decisions made in relation thereto) by Telstra as to whether to: (a) commence a legal challenge to the: (i) BCIP process; or (ii) the selection of OPEL Networks Pty Limited as the successful applicant for funding under the BCIP; or (b) commence legal proceedings claiming (whether solely or with other claims) that it was denied procedural fairness under the BCIP process. 10. All documents recording or referring to any consideration (including any decisions made in relation thereto) by Telstra as to whether or not it had sufficient information to commence proceedings for relief (other than the present proceedings for preliminary discovery) against the Minister for Communications, Information Technology and The Arts or the Commonwealth in relation to the BCIP.' 7 The solicitors for Telstra have indicated that either the author of the relevant email or draft memorandum or the recipient of the relevant email or draft memorandum was an internal legal adviser to Telstra. There is evidence to establish that the persons referred to as internal legal advisers were legal practitioners. 8 In relation to the claims of privilege, the seventh column of the attached list recorded the 'Basis of privilege claim'. In respect of the first document mentioned the claim was: 'Communication from internal legal adviser to other internal legal advisers and client for the dominant purpose of providing legal advice' 9 In respect of the second document the basis of the claim was expressed as: 'Communication from client to internal legal advisers for the dominant purpose of receiving legal advice' 10 In respect of the third, fourth and fifth documents the claim was the same, namely: 'Document prepared by internal legal adviser for the dominant purpose of providing legal advice' 11 In relation to the final document the basis of the claim was expressed as: 'Communication from internal legal adviser to client for the dominant purpose of providing legal advice in connection with possible legal proceedings' 12 No evidence whatsoever has been led by Telstra to establish the role which the various legal practitioners performed within Telstra. In particular, no evidence has been advanced to disclose the measure of independence of the legal practitioners in question and their ability to provide impartial legal advice, given the roles they have had to perform. 13 On 10 September 2007 the solicitors for the Minister disputed Telstra's entitlement to claim legal professional privilege in respect of the six documents that are presently in question. Under the heading 'Privilege' Clayton Utz, lawyers for the Minister, said, amongst other things: '… We do not accept as necessarily accurate, the cross referencing in the List of particular documents to certain paragraphs of the Notice in respect of which Telstra claims privilege, or the characterisation of the legal advice sought. … … We are not satisfied that Telstra's claim for legal professional privilege has been properly made. In particular, we consider that an issue waiver of privilege has occurred …' 14 The solicitors for Telstra, Freehills, responded on 11 September 2007 in respect of the issue of privilege by stating: 'Telstra's claims of legal professional privilege have been carefully and properly made. It is a serious allegation to suggest otherwise, in particular in the absence of having provided any basis for doing so. …' 15 Clayton Utz, in turn, responded on 11 September 2007, stating: '… your client now has the onus of justifying its claim for legal professional privilege …' 16 Earlier today, Freehills wrote to Clayton Utz, stating: 'The basis of the privilege claims made by our client is set out in the schedule to our letter of 6 September 2007. The only ground on which it has been suggested by your client that privilege might not be available is issue waiver. The onus in relation to that allegation is on your client. Accordingly, we do not propose to file and serve an affidavit in relation to our client's claims of privilege.' 17 It is now just after 5.45 pm on 12 September 2007, the day before Telstra's Amended Application for relief under Order 15A rule 6 of the Federal Court Rules ('the Rules') is listed for hearing. 18 In civil litigation there is a general predisposition towards 'all cards being placed on the table'. The public interest in the due administration of justice requires that all relevant material should be available to be taken into account so that an applicant will succeed if he is entitled to do so and will fail if he is not (see Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 ('Three Rivers District Council') at 647). 19 Having said that, it is also in the interests of the whole community that lawyers give their clients sound advice, accurate as to the law and sensible as to their conduct (see Three Rivers District Council at 659). In this regard, a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests (per Lord Taylor of Gosforth CJ in his speech in Regina v Derby Magistrates' Court, Ex parte B [1996] 1 AC 487 at 507). 20 The obvious tension between the policy of encouraging full and frank disclosure by clients to their lawyers without the apprehension of being prejudiced by subsequent disclosure of the relevant communication, and the desirability, in the interests of justice, of obtaining the fullest possible access to the facts relevant to the issues in a case lies at the heart of the problem of the scope of client legal professional privilege. Where the privilege applies, it inhibits or prevents access to potentially relevant information (per Gleeson CJ, Gaudron and Gummow JJ in Esso Australia Resources Limited v Commissioner of Taxation of The Commonwealth of Australia (1999) 201 CLR 49 ('Esso') at [35]). 21 If a communication qualifies for legal professional privilege, the privilege is absolute. It cannot be overridden by some supposedly greater public interest. It can be waived by the person, the client entitled to it, and it can be overridden by statute, but it is otherwise absolute. There is no balancing exercise that has to be carried out (per Lord Scott of Foscote in Three Rivers District Council at 646 [25]; see also per McHugh J in Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 at 552). 22 At common law, what brings about a waiver of privilege 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 (per Gleeson CJ, Gaudron, Gummow and Callinan JJ in Mann v Carnell (1999) 201 CLR 1 at [28] and [29]). 23 The above principle was preceded by the following passage in the decision of the High Court in Mann v Carnell at [29], which was cited with approval by the Full Court of this Court in Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 at [43]. The High Court said: 'Waiver may be express 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.' 24 As the Full Bench observed, where an inconsistency arises, it does not matter that the privilege holder did not subjectively intend to lose the benefit of the privilege (see at [43]). 25 Legal professional privilege may be claimed in respect of confidential communications passing between a legal adviser and a client where those communications were made for the dominant purpose of giving legal advice to the client. A dominant purpose will be that which was the ruling, prevailing or most influential purpose. 26 Now that the test for legal professional privilege is 'dominant purpose' rather than 'sole purpose', there may well be many more cases where, upon the hearing of a disputed claim, there will be occasion for a deponent who has verified a list of documents claiming privilege to be cross-examined. Indeed, it would seem, from a procedural point of view, that if production of a document for which privilege has been claimed is sought, it would be incumbent upon the party claiming the privilege to at least read the affidavit verifying the list and thereby expose the deponent to cross-examination (see National Crime Authority v S (1991) 29 FCR 203 at 211; Hartogen Energy Limited (In liquidation) v The Australian Gas Light Company (1992) 36 FCR 557 at 561 and Re Compass Airlines Pty Ltd (1992) 35 FCR 447 at 462). 27 It is for a party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence, but it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The Court has power to examine the documents for itself, a power which has been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence (per Stephen, Mason (as his Honour then was) and Murphy JJ in Grant v Downs (1976) 135 CLR 674 at 689; see also per Gleeson CJ, Gaudron and Gummow JJ in Esso at [52]). 28 The relevant time at which a claim for privilege is to be determined is the time when the document came into existence. The relevant question is whether the document came into existence for the dominant purpose of seeking legal advice or assistance. If the document satisfies that description, then it is privileged from production (per Tamberlin, Stone and Siopis JJ in Barnes v Commissioner of Taxation [2007] FCAFC 88 ('Barnes') at [5]). 29 In Barnes their Honours made a series of observations in relation to the sufficiency of the evidence before the trial judge to establish the legal professional privilege claim which was made in that case. Referring to an affidavit claiming privilege, their Honours said: '16. This affidavit falls far short of providing any adequate basis for claiming privilege in respect of any individual document. It consists of assertions, conclusions and generalised comments. The documents referred to are from a number of sources. … the fact that Mr Barnes' affidavit does not clarify the reason why any specific document came into existence means that the Court is left to consider the documents on their face and determine as best it can whether the documents are privileged. This is unsatisfactory. … 18. The authorities emphasise the need for focused and specific evidence in order to ground a claim for legal professional privilege. In Kennedy v Wallis (2004) 142 FCR 185 at 189, Black CJ and Emmett J reiterated the principles that verbal formulae and bare conclusory assertions of purpose are not sufficient to make out a claim for privilege: see also National Crime Authority v S (1991) 29 FCR 203 at 211 (per Lockhart J); Grant v Downs (1976) 135 CLR 674 at 689 (per Stephen, Mason and Murphy JJ). Where possible the Court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document. … Simply to show that one purpose for creation of the document was to obtain legal advice or assistance is not good enough.' 30 In Seven Network Limited v News Limited [2005] FCA 142 at [4] Tamberlin J said in respect of legal professional privilege: '4. The dominant purpose test has particular importance in relation to the position of in-house counsel because they may be in a closer relationship to the management than outside counsel and therefore more exposed to participation in commercial aspects of an enterprise. The courts recognise that being a lawyer employed by an enterprise does not of itself entail a level of independence. Each employment will depend on the way in which the position is structured and executed. For example, some enterprises may treat the in-house adviser as concerned solely in advising and dealing with legal problems. As a matter of commercial reality, however, both internal and external legal advisers will often be involved in expressing views and acting on commercial issues. 5. The authorities recognise that in order to attract privilege the legal adviser should have an appropriate degree of independence so as to ensure that the protection of legal professional privilege is not conferred too widely. …' (See also Waterford v The Commonwealth of Australia (1987) 163 CLR 54 ('Waterford') at 62, 70-71 and 81-82). 31 In respect of the application before his Honour, Tamberlin J said at [38]: '… I am cognisant of the fact that there is no bright line separating the role of an employed legal counsel as a lawyer advising in-house and his participation in commercial decisions. In other words, it is often practically impossible to segregate commercial activities from purely "legal" functions. The two will often be intertwined and privilege should not be denied simply on the basis of some commercial involvement. …' 32 In that case, his Honour proceeded to say in respect of Mr Philip, the chief general counsel for News Limited, at [38]: '… In the present case, however, I am persuaded that Mr Philip was actively engaged in the commercial decisions to such an extent that significant weight must be given to this participation. In many circumstances where in-house counsel are employed there will be considerable overlap between commercial participation and legal functions and opinions. As can be seen from the specific rulings below, I am not persuaded that in this proceeding Mr Philip was acting in a legal context or role in relation to a number of the documents in respect of which privilege was claimed. Nor am I persuaded that the privilege claims were based on an independent and impartial legal appraisal.' 33 In Waterford the court accepted that in some circumstances legal advice may be accompanied by advice of another kind which can be separated from it. In such circumstances, only the legal advice will be privileged. However, if the legal advice contains extraneous matter which cannot be separated from it, the legal advice will not lose its privilege for that reason (per Mason (as his Honour then was) and Wilson JJ at 66 and per Dawson J at 103). 34 Legal professional privilege is not limited to express advice about the law. Too literal a requirement of identifying legal advice as express advice about the law would place undue emphasis on formalism and undermine the privilege (per Allsop J in DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151 at [52]. 35 In my opinion an in-house lawyer will lack the requisite measure of independence if his or her advice is at risk of being compromised by virtue of the nature of his employment relationship with his employer. On the other hand, if the personal loyalties, duties and interests of the in-house lawyer do not influence the professional legal advice which he gives, the requirement for independence will be satisfied. 36 In the case presently before the Court, there is no evidence, as I have earlier remarked, going to the independence of the internal legal advisers involved in the communications said to have been brought into existence for the dominant purpose of providing or receiving legal advice. There is nothing to indicate from the description of the six documents with which the Court is presently concerned that they must be documents for which privilege is properly claimed. Different considerations may apply if, say, the documents in question were opinions expressed by identified senior counsel where one might start off with the premise that by its nature the document would have privilege attaching to it. This is not such a case. 37 In the Notice of Motion presently before the Court, the Minister seeks an order in the following terms: '2. The Applicant produce for the Respondent's inspection by 5pm on 12 September 2007 the documents referred to at page 2 of the list of documents (save as to the last document referred to on the list, being various drafts of the affidavit of Paul Smith), attached to the letter from Freehills to Clayton Utz dated 6 September 2007, which is Annexure "B" to the affidavit of Nicholas Alexander Tyacke sworn 11 September 2007.' 38 I do not think that Telstra takes any issue with the fact that it is now 6.15 pm on 12 September. 39 In my opinion no sufficient claim for legal professional privilege has been made by Telstra in respect of the six documents in question which Telstra concedes are covered by the Minister's Notice to Produce. 40 I have been invited by Telstra to inspect the documents to see whether or not an inspection of them would assist in determining whether or not they are privileged. Senior counsel for the Minister urges me to refrain from inspecting the documents, lest I be compromised in my ability to deal with the substantive application under Order 15A rule 6 of the Rules which is listed for hearing at 10.15 am tomorrow. 41 It seems to me that there would be no real utility in inspecting the documents at this stage as the question of whether or not they were brought into existence for the dominant purpose of providing or receiving legal advice is unlikely to be apparent from the terms of the documents themselves. Much more would be required to establish that the communications were privileged as documents brought into existence for the dominant purpose of providing or receiving legal advice. Furthermore, there would be no opportunity afforded to the Minister to test the claims that may be made in that regard. 42 Had I been of the opinion that the documents in question attracted legal professional privilege, the question would then arise as to whether or not that privilege had been waived. I do not find it necessary to reach a conclusion on that issue. It is perhaps, however, appropriate to refer to Order 15A rule 6 of the Rules, which sets out a number of pre-conditions to the making of an order for discovery, to be given by a prospective respondent. One of those is expressed in paragraph (b) as follows: '(b) after making all reasonable inquiries, the applicant [in this case Telstra] has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court [against the Minister] to obtain that relief;…' 43 In Alphapharm Pty Limited v Eli Lilly Australia Pty Limited [1996] FCA 391 ('Alphapharm'), Lindgren J made certain observations at [41] concerning Order 15A rule 6. These included: '1. Paragraphs 6 (a) and 6 (c) pose an objective test, the opening words "there is" in each paragraph signifying "there exists"; but the "insufficiency test" of para 6 (b) has both subjective and objective aspects. 2. Although I need not explore the subjective aspect fully, it seems clear that if the evidence went so far as to show that a particular applicant was already able to decide to commence a proceeding by, for example, showing that the applicant had in fact decided to do so, para 6 (b) would not be satisfied even though the information available satisfied the objective aspect of the insufficiency test referred to below. 3. The fact that a particular applicant genuinely feels unable, because of a lack of information, to decide to commence a proceeding does not, without more, satisfy para 6 (b); the objective aspect of the paragraph requires it to be shown as an objective fact that the applicant lacks "sufficient information to enable a decision to be made whether to commence a proceeding". 4. In my view, the objective aspect of para 6 (b) invokes a notion of "reasonable sufficiency", the question raised being whether it is reasonable that the applicant for an order be required to take its decision without having the information to become available from inspection of the document or documents of which discovery is sought.' Much the same was said in respect of paragraph (b) of rule 6 by Emmett J in Leighton Contractors Pty Limited v Page Kirkland Management Pty Limited [2006] FCA 288 at [6]. 44 In his reasons for judgment at [46] in Alphapharm, Lindgren J said: '… I do not imply that an applicant for an order under the rule must lead evidence that without the documents sought, it will not sue. The rule is, however, directed to aiding an applicant who is having real difficulty, and reasonably so, in deciding whether to litigate because of a lack of key information, whether relating to its own case or to that of the proposed respondent, which is in the possession of the respondent. …' 45 It would seem to me unjust to allow relief to be granted against a stranger, albeit a prospective respondent, under Order 15A rule 6 if the applicant failed to place before the Court the information which it did have, to enable a decision to be made whether to commence a proceeding in the Court to obtain the relevant relief. One of the issues will be, whether viewed objectively or subjectively, the applicant had sufficient information. 46 If information going to the ability of a person in the position of Telstra to make a decision whether to commence a proceeding in the Court against the Minister as a prospective respondent included information contained in documents which may otherwise enjoy legal professional privilege, it would seem surprising if the applicant could advance its claim for relief under Order 15A rule 6 without laying bare all of the information which it had, whether privileged or not. 47 As I have said, it is unnecessary for me to reach any concluded view in relation to this aspect of the matter. It is not inappropriate, however, to refer to the observations of Gleeson CJ, then sitting as the Chief Justice of New South Wales, in Benecke v National Australia Bank (1993) 35 NSWLR 110 at 111; see also Commissioner of Taxation v Rio Tinto Ltd at [49] and [61]. 48 In my opinion an order should be made requiring Telstra to produce for inspection the six documents referred to above. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.