Practice and procedure - Discovery and inspection of documents - Legal professional privilege - Waiver - State of mind

BP Australia Ltd v Stallwood [2000] WASC 75

Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83

Great Atlantic Insurance Co Ltd v Home Insurance Co [1981] 1 WLR 529

John Tanner Holdings Pty Ltd v Mortgage Management Ltd [2001] FCA 194; [2001] 182 ALR 201

Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation [1981] Com LR 138

Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925

Re The Real Estate and Business Agents Supervisory Board; Ex parte Cohen, unreported; SCt of WA; Library No 980688; 17 November 1998

Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 156 ALR 634

Temwood Holdings Pty Ltd v Oliver [1999] WASC 212

Thomason v Campbelltown Municipal Council (1939) SR (NSW) 347

Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54

Western Australia v Watson [1990] WAR 248

1 WHEELER J: This is an application for inspection of certain documents. It is made by the first respondent, and relates to documents which are alleged by the Commonwealth to be the subject of legal professional privilege. It arises in the following way.

2 An application for discovery was heard by Pullin J in October 2001 and on 12 October 2001 he ordered that the Commonwealth (the applicant in the main proceeding) make and serve on the respondents a list of documents relating to documents or information disclosed to the Commonwealth or its officers by one Mr Oliver. The background to that order, set out in detail in the reasons of Pullin J delivered on 12 October 2001 (The Commonwealth of Australia v Temwood Holdings Pty Ltd [2001] WASC 282) was that the Commonwealth brought an application by originating motion seeking either a declaration that the Commonwealth could use certain documents supplied by Mr Oliver for the purpose of investigating alleged breaches of the Foreign Acquisitions and Takeovers Act by, inter alia, the first respondent, or seeking that the Commonwealth be released from any implied undertaking or restraint in relation to the use of those documents. The documents referred to in the Commonwealth application were documents which had apparently become available to Mr Oliver, at least in part, during the process of discovery in proceedings in which he was involved as a litigant against the first respondent.

3 In support of its originating motion, the Commonwealth filed an affidavit of Mr Brosnan sworn 26 March 2001. In it, he sets out his early conversations with Mr Oliver. He refers in par 14 of his affidavit to a meeting between himself, Mr Biggs (who was the Acting Director of the Foreign Investment Policy Division of the Commonwealth Treasury), and Mr Oliver. He and Mr Biggs asked Mr Oliver to provide copies of whatever relevant documents he could provide. He and Mr Biggs told Mr Oliver that they understood that it might not be possible for him to provide copies of all relevant documents; he deposed that his understanding arose because a letter from Mr Oliver, some months prior to that meeting, referred to "privileged" documents.

4 In October 2000 Mr Brosnan and Mr Biggs wrote a letter signed by Mr Biggs to Mr Oliver seeking copies of any additional documents Mr Oliver might be able to release. Mr Brosnan deposes that the Commonwealth did not intend to seek documents which it could not or should not have had access to. The letter actually written is an annexure to Mr Brosnan's affidavit. It sought documents by reference to allegations made by Mr Oliver and concluded with the comment that "We acknowledge that some of these documents may be protected by a 'privileged' status. Nevertheless, we are hopeful that any additional documents you are able to release will assist our legal adviser ... ." It is suggested on behalf of the first respondent that the terms of the letter suggest that the Commonwealth sought to do more than merely obtain documents to which it was entitled; it is suggested that the reference to "any additional documents" might have been intended to solicit documents which included documents subject to the implied undertaking. I do not see how this submission could be sustained. The express acknowledgement in the letter is to the opposite effect, while the reference to "documents you are able to release" implicitly acknowledges that there will be documents which Mr Oliver is unable properly to release.

5 The assertion most relevant to the present proceedings in Mr Brosnan's affidavit is that in par 18, which I set out in full:

"Since receiving legal advice from the Australian Government Solicitor in January 2001 I am aware the Commonwealth may have been subject to an implied undertaking not to use the Temwood/Oliver/AAA documents for an improper, collateral or ulterior purpose since the time when the Commonwealth became aware those documents were obtained by Mr Oliver in the Temwood/Oliver/AAA proceedings. I am not a lawyer. As a lay person, I was unaware that the Temwood/Oliver/AAA documents could be subject to an implied undertaking or that such an implied undertaking could limit the Commonwealth's use of the Temwood/Oliver/AAA documents."

In the next paragraph Mr Brosnan acknowledges that he and other Treasury officers have perused and considered documents received from Mr Oliver, but says that they have not put them to any other use.

6 In its affidavit of discovery, the Commonwealth has claimed legal professional privilege for a number of documents. The first respondent seeks inspection of them on the basis that privilege has been waived. The waiver is put on two possible bases. First, it is said that the disclosure of the substance of the advice received by Mr Brosnan has the result that waiver will be imputed by operation of law. The disclosure of the effect of legal advice, it is asserted, gives rise to such inconsistency between the conduct of the applicant and the maintenance of the confidentiality afforded by legal professional privilege that there must have been a waiver of the privilege (see Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 at [28], [29] and [34]). Alternatively, it is said that the Commonwealth has put its state of mind into issue in this case, so that there must be waiver relating to legal advice which could potentially affect that state of mind.

7 There is no real dispute about the principles which are relevant. It is accepted on both sides that a reference or allusion to privileged material in order to prove or corroborate facts and issues in the principal proceedings, which may be confirmed or refuted by access to the privileged material, will give rise to a waiver: Hoad v Nationwide News Pty Ltd & Ors (1998) 19 WAR 468. Reference to the existence of legal advice will not ordinarily amount to waiver of its contents, but disclosure of an assertion in it or of its effect may mean that fairness requires that the privilege has been waived in relation to the whole of the communication.

8 In relation to the first limb of the first respondent's argument, it seems clear that Mr Brosnan in par 18 of his affidavit has purported to summarise the effect of legal advice which he received. In a subsequent affidavit he clarified the legal advice relied upon, by deposing that he formed the view set out in that paragraph as a result of perusal of the documents numbered 2 and 3 in the list to which I have referred. However, the mere fact that there is a reference to the substance of the advice does not necessarily mean that privilege has been lost. It is necessary to consider whether fairness requires that privilege has been waived in relation to the whole of the communication (Hoad at 475, Attorney-General (NT) v Maurice & Ors [1986] HCA 80; (1986) 161 CLR 475 at 488, 493). In order to determine this question, it is necessary to look at the relevance of the allegation in par 18 of Mr Brosnan's affidavit in the context of these proceedings. It is convenient to consider that first in the context of the "state of mind" question.

9 So far as the "state of mind" question is concerned, there is some reason to doubt whether "state of mind" is a distinct class of waiver, or whether it is a particular example of general principles of fairness which will in some circumstances require that the privilege be considered to be waived. It is not necessary to deal with that issue in these proceedings, since it is again accepted on both sides that if, by its pleading or otherwise, a party puts its state of mind in issue and it can be shown that the legal advice in question was likely to have been relevant in the formation of that state of mind, the privilege will have been waived (Southern Equities v Arthur Andersen [1997] SASC 6712; (1997) 70 SASR 166 at 193, Ampolex v Perpetual Trustee (1995) 37 NSWLR 405 at 411). The significance of the belief to the case as a whole is a relevant consideration: Garratt's Ltd v Thangathurai [2002] NSWSC 39 at [64].

10 It is not unusual for a person, in giving evidence about a series of events, to include information about the person's state of mind at a relevant time as part of the narrative leading up to the relevant events. Often, the state of mind is strictly irrelevant to any question in the proceedings, but no objection is taken to it since it is merely part of the background and causes no prejudice to any party. An assertion of that kind would not, in my view, suffice to put the party's state of mind truly "in issue" in the proceedings so as to make it necessary to consider what legal advice may have contributed to the state of mind. On the other hand, a party may necessarily put its state of mind in issue in the proceedings by, for example, pleading reliance upon some representation or other or by seeking rectification of the contract for mistake; or a state of mind may be put in issue by some evidentiary assertion which is clearly relevant to the issues between the parties. In these latter types of case, fairness clearly requires the waiver of the privilege in relation to legal advice which may have contributed to that state of mind. It is to be noted, however, that it is the conduct of the party who possesses the privilege which is capable of waiving it. It is not apparently open to another party to litigation to force waiver of a party's legal professional privilege by making assertions about, or seeking to put in issue, that party's state of mind.

11 The first respondent points out that the question of whether the Commonwealth should be released from the implied undertaking gives rise to questions of the public interest, which must be weighed in all the circumstances. That much is apparent from the earlier decision of Pullin J in this matter. The first respondent then asserts that to adequately balance all factors "including the Commonwealth's knowledge, conduct after obtaining legal advice, the reason it obtained legal advice and when it sought to obtain that legal advice are all factors of considerable importance in balancing the public interest". It is submitted that, inter alia, whether the Commonwealth made use of the documents before or after it obtained relevant legal advice and the Commonwealth's state of mind at all times is "highly material" to the exercise of balance in public interest. It is my view that these submissions go too far.

12 As I understand the reasons for judgment of Pullin J, and the earlier Queensland decision of Bailey v Australian Broadcasting Corporation [1995] 1 Qd R 476 referred to by his Honour, the public interest which is principally of importance in the Commonwealth's application is the public interest in the use to which the Commonwealth seeks to put the documents. The importance of that use in the public interest, and the significance of the documents to it, are to be weighed against factors such as the circumstances in which the documents became available in the original proceedings and the effect, if any, which permitting such use of the documents might have upon those original proceedings. I accept that it is arguable that the conduct of the party seeking release from the implied undertaking is potentially relevant to questions of public interest; it may well be, for example, that it is not appropriate as a general rule to permit the use of such documents by a party which knowingly came into possession of them in circumstances where it was aware that it should not have done so. However, I would regard the sort of "state of mind" factors referred to by the first respondent as very much secondary considerations. Further, I note that there is in the particular circumstances of this case nothing to suggest any impropriety by the Commonwealth. That is merely an issue which the first respondent seeks to explore.

13 It is my view therefore that merely by the bringing of its originating motion the Commonwealth has not put the state of mind of its officers "in issue". However, in the affidavit of Mr Brosnan there is what may be seen in par 18 as a positive assertion of the propriety of his conduct in relation to the Commonwealth's application. As part of that assertion, he refers to the effect of legal advice which he considered.

14 I should note at this point that it is my view that it is desirable to determine this matter on the present application. It would, I think, be open to leave the question of any waiver of privilege to the Judge hearing the Commonwealth's originating motion, and to deal with it in the context of ruling on the relevance of the "state of mind" issues to the merits of the application. However, neither party urged that course upon me and one can see the potential for inconvenience and delay if that course were taken.

15 It is therefore my view that, determining the matter at present, there is potential relevance of "state of mind" issues to the Commonwealth's application. Mr Brosnan's affidavit puts one aspect of his state of mind (and therefore the Commonwealth's state of mind) in issue by a reference to legal advice received. It is my view that privilege has therefore been waived to that extent in relation to that legal advice; that is, in relation to documents 2 and 3 on the Commonwealth's list.

16 So far as the other documents in issue are concerned, there is nothing which necessarily gives rise to any inference that they are relevant to "state of mind" issues. They may deal with any number of things, including: the merits of the Commonwealth's present application; the means other than its application by which alleged breaches of the law can be investigated; and perhaps legal advice relating to the breaches of the law alleged by Mr Oliver. Even if one could draw the inference that they did potentially have relevance to the state of mind of Commonwealth officers, the state of mind of Commonwealth officers has not been put in issue in these proceedings by the Commonwealth other than by the allegations of Mr Brosnan to which I have referred.

17 I note that it was accepted on both sides that if the documents in respect of which privilege had been waived contained privileged material which related to a subject matter distinct from the topics which I have discussed above, that distinct advice could be excised before copies of the documents could be provided for inspection. Having, myself, inspected a copy of the document numbered 3 on the Commonwealth's list of documents for which privilege is claimed, it is my view that par 9 of that advice falls into the category of distinct and unrelated matters and may be excised.

18 I would therefore order that the Commonwealth produce for inspection copies of documents numbered 2 and 3 contained in Part 2 Division A of the First Schedule to Mr Hagan's affidavit of documents sworn 30 November 2001, but excising if it thinks fit par 9 of document 3.