Trade Practices Commission v Sterling

Federal Court of Australia|1996-11-11|Before: Branson J

By an amended application filed on 23 March 1995, the applicants claim the following relief: "1. A declaration that each of the documents seized by the Second Respondent in execution of a search warrant on the offices of Greenwood and Freehills at Level 32-35 of the MLC Centre, Martin Place Sydney on 7 and 10 February 1995 and specified in the list which is schedule 'A' to this application ('the privileged documents') is the subject of legal professional privilege. 2. A review pursuant to s.5 of the Administrative Decisions (Judicial Review) Act 1977 that the decision of the Second Respondent to seize and seek to inspect the privileged documents from the said premises was an improper exercise of the power conferred by s.3F of [the] Crimes Act 1914. 3. A declaration that the decision of the Second Respondent to seize and seek to inspect the privileged documents from the said premises was an improper exercise of the power conferred by s.3F of [the] Crimes Act 1914. 4. An order pursuant to s.39B of the Judiciary Act 1903 that the Respondents and the other members of the Australian Federal Police be restrained from seeking or obtaining access to the privileged documents. 5. An order that the privileged documents be returned by the Registrar of this Honourable Court to the Applicants forthwith, or in the alternative to the Third Respondent. 6. Such further or other orders as the Court deems fit." Upon the matter coming on for hearing on 15 October 1996, the Court was advised by Mr Gzell QC, who with Messrs Williams and Wigney appeared for the applicants, that the claim of legal professional privilege was pressed with respect to four documents only. The total number of documents referred to in Schedule A to the amended application is sixteen. The documents with respect to which the claim for legal professional privilege is pressed are those numbered 1, 2, 11 and 12 in Schedule A ("the documents"). BACKGROUND

Geoffrey Albert Holden ("Mr Holden") gave evidence that in 1984 he was the financial controller of all of the entities in the "Wenkart Group" which group included MPS. He stated that in his capacity as a director of MPS, and as its financial controller, he instructed SJSJ to provide legal advice to MPS on the proposed purchase by that company of certain business. I understand that the purchase of such business either was, or was part of, the "restructure of the pathology business". Mr Holden further stated that, in his capacity as a director of MPS, he gave instructions to, and had discussions with, Greenwoods concerning the proposed purchase of the business. In each case, he said, he was seeking and receiving advice for the company, and, "if there was [sic] any questions in regard to [his] personal liabilities as a director [he] always requested that information too". Mr Holden's affidavit evidence asserts that SJSJ was instructed to advise on the duties and liabilities of Dr Wenkart and himself as directors of MPS and the other companies involved in the restructure. In his oral evidence, Dr Holden stated that each of the documents provide advice as to the duties and liabilities of Dr Wenkart and himself as directors. The original file cover opened by SJSJ in relation to the matters of which Mr Holden gave evidence was itself received into evidence. It shows the client as "Doctor T.R. Wenkart" and the subject as "1984 MATTERS". Mr Holden agreed in cross-examination that the documents were provided to Dr Wenkart and to him in their respective capacities as directors, and to him in his capacity as financial controller of the various companies in the "Wenkart Group".

Kenneth Raphael ("Mr Raphael") and Kevin James Burges ("Mr Burges"), each legal practitioners, also gave evidence. The significance of their evidence has been minimised by the invitation, eventually issued by consent, for me to inspect the documents. I have inspected the documents. Mr Burges also gave evidence on the issue of the identity of the parties to the retainer formed with SJSJ pursuant to which the documents came into existence. Mr Burges was not able to say whether the relevant file opened by SJSJ was opened pursuant to a fresh retainer or pursuant to an existing on-going retainer. He agreed that if a fresh retainer were involved, he could not give evidence of any communication, whether oral or written, pursuant to which such retainer came into existence. I have not found his evidence helpful as to the details of the relevant retainer. FINDINGS AS TO RETAINER In my view, little weight can be given to the details entered on the file cover opened by SJSJ in relation to the "1984 MATTERS". No evidence was called as to the general practice of SJSJ in 1984 with respect to entries on file covers, or as to its particular practice in this regard so far as Dr Wenkart and the "Wenkart Group" was concerned. In my view, Mr Holden's evidence supports a finding, which I make, that a contract of retainer was entered into between MPS on the one hand and SJSJ on the other in 1984 pursuant to which SJSJ was to provide legal advice with respect to the proposed purchase by MPS of certain business ("the 1984 retainer"). Nothing in the evidence of Mr Holden, or Mr Burges, supports a finding that SJSJ was entitled to look to any party other than MPS for payment of its fees with respect to the provision of such advice. I find, however, that included in the advice which SJSJ was retained to provide by the 1984 retainer was advice concerning any potential personal liabilities of Dr Wenkart and Mr Holden arising out of the proposed purchase or the manner of its execution. It was Mr Holden who instructed SJSJ and he was thus aware of the extent of the firm's instructions. Dr Wenkart, I find, would have assumed from the past practice of MPS, and other members of the "Wenkart Group", that legal advice sought by a member of the "Wenkart Group" would include advice as to the personal liabilities, if any, of directors. I find that it was understood by SJSJ and by Dr Wenkart and Mr Holden that each of Dr Wenkart and Mr Holden would receive the advice of SJSJ for the purpose of his relying upon it. The communications made by Mr Holden to SJSJ were made, I conclude, on his own behalf and as agent for MPS and Dr Wenkart. As Lockhart J pointed out in Trade Practices Commission v Sterling (1979) 36 FLR 244 at 245, legal professional privilege extends to: "Any communication between a party and his professional legal adviser if it is confidential and made to or by the professional adviser in his professional capacity and with a view to obtaining or giving legal advice or assistance; notwithstanding that the communication is made through the agents of the party and the solicitor or the agent of either of them." I note that the learned authors of Phipson on Evidence (14th Ed. Sweet & Maxwell, London, 1990) express the view at par 20-16 that: "Neither a formal retainer, nor the payment of fees, is necessary to constitute the relationship of solicitor and client; it is enough if the adviser is in any way consulted in his professional character." It seems to me that, having regard to the policy behind legal professional privilege, the above view must be correct. I find that Dr Wenkart, through the agency of Mr Holden, and Mr Holden, were persons who joined with MPS in communicating with SJSJ for the purpose of obtaining the advice of that firm. I find that, for the purposes of the principles of legal professional privilege, the relationship of solicitor and client existed between each of Dr Wenkart and Mr Holden and SJSJ with respect to the "1984 retainer". WAIVER OF PRIVILEGE ON BEHALF OF THE THIRD RESPONDENT The liquidator of the third respondent, by letter dated 15 May 1995 addressed to the Australian Government Solicitor, waived legal professional privilege in respect of the documents to the extent that the third respondent was entitled to such privilege. In view of my above findings, I conclude that such waiver has no impact on the rights of Dr Wenkart and Mr Holden to claim legal professional privilege in respect of the documents so far as the disclosure of the documents would disclose confidential communications made for the purpose of their receiving, or SJSJ providing to them, legal advice. The evidence in this case discloses that there were not separate communications to and from SJSJ dealing on the one hand with advice to MPS and on the other with advice to Dr Wenkart and Mr Holden. Rather the relevant communications related to both heads of advice. The privilege which protects such communications is therefore a joint privilege which belongs to MPS, Dr Wenkart and Mr Holden. The joint nature of the privilege means that all to whom it belongs must join in waiving it (Farrow Mortgage Services Pty Ltd v Webb & Ors (1996) 14 ACLC 1,240 per Sheller JA, with whom Waddell AJA agreed, at 1,245). The purported waiver by the third respondent of legal professional privilege in respect of the documents was thus ineffective as neither Dr Wenkart nor Mr Holden joined in such waiver. APPLICABLE LAW The documents were seized in February 1995. The Evidence Act 1995 (Cth) ("the Evidence Act") came into operation on 18 April 1995. The law in operation at the time of the seizure thus did not include the Evidence Act. The issue of whether the documents were privileged documents at the time of their seizure is thus to be determined by reference to common law principles of legal professional privilege.

So far as these proceedings seek declarations as to the present status of the documents, it is necessary to make reference to the Evidence Act. The Evidence Act contains provisions with respect to client legal privilege in Part 3.10 of the Act. Part 3.10 of the Evidence Act is explicitly concerned with whether certain evidence may be adduced over objection. As I pointed out in Sparnon & Ors v Apand Pty Ltd & Ors (1996) 138 ALR 735, I do not regard Part 3.10 of the Evidence Act as having any direct application to matters arising outside of a courtroom. I have previously expressed the view that it is arguable that the Evidence Act may have indirectly widened the right of a party to litigation to claim that a document is privileged from production, and noted that in a number of cases such widening of the right has been assumed to flow from the coming into operation of the Evidence Act (see Trade Practices Commission v Port Adelaide Pty Ltd & Ors (1995) 132 ALR 645; Sparnon & Ors v Apand Pty Ltd & Ors). That is not an issue which falls for determination in this case: the applicants are not suggested to be parties to any relevant litigation. Moreover, for present purposes, the only material difference between the statutory test for client legal privilege and the common law test for legal professional privilege concerns the purpose for which the document was brought into existence. The Evidence Act adopts a "dominant purpose" test (Evidence Act s118), whereas in Australia the common law adopts a "sole purpose test" (Grant v Downs (1976) 135 CLR 674). The applicants in this case are content to stand or fall on the "sole purpose" test. Consequently, in view of my above conclusions on the issue of waiver, a determination as to whether each of the documents was privileged as at the time of its seizure will determine its present status. THE COMMON LAW TEST The following common law principles seem to me to be established on the authorities:

"Legal professional privilege attaches only to communications made for the purpose of giving or receiving advice or for use in existing or anticipated litigation" (Baker v Campbell (1983) 153 CLR 52 per Dawson J at 122);
It is the communication itself which is privileged: disclosure of the nature of a transaction or matter in respect of which the legal advice is sought is not privileged unless its disclosure would reveal the communication itself (Packer v Deputy Commissioner of Taxation [1985] 1 Qd R 275 per Andrews SPJ at 276-277 and McPherson J at 285);
"There is no privilege for physical objects other than documents and there is no privilege for documents which are the means of carrying out, or are evidence of, transactions which are not themselves the giving or receiving of advice or part of the conduct of actual or anticipated litigation" (Baker v Campbell per Dawson J at 122-123);

Legal professional privilege extends to any document prepared either by the client or the legal adviser from which the nature of the advice sought, or given, might be inferred (e.g. a draft pleading, a solicitor's draft letter to the other side, or a bill of costs (N.J. Williams "Four questions of Privilege: The Litigation Aspect of Legal Professional Privilege" (1990) Civil Justice Quarterly 139 - cited in Propend Finance Pty Ltd & Ors v Commissioner of Australian Federal Police & Ors (1995) 58 FCR 224 per Beaumont J at 236-237);
A communication for the purpose of providing legal assistance (e.g. draft conveyance and the like) may attract legal professional privilege even though not strictly legal advice (Packer v Deputy Commissioner of Taxation per McPherson J at 284 citing Mostyn v West Mostyn Coal & Iron Co. (1876) 34 LT Rep 531).
Similarly, professional discourse in a professional capacity, with reference to transactions covered by a retainer to provide legal advice, will be regarded as prima facie for the purpose of giving and receiving advice (Dalleagles Pty Ltd v Australian Securities Commission & Ors (1991) 6 ACSR 498 at 505).

THE DISPUTED DOCUMENTS Mr Raphael deposed to certain descriptions prepared by him of the documents being true descriptions of the documents. Document 1 Mr Raphael described Document 1 as a copy letter of advice dated 13 May 1985 prepared by Mr Lang in relation to transactions between Morlea Partnership and MPS. He referred also to a short note, with handwritten notations, which is attached to the letter of advice. My examination of Document 1 discloses that it is comprised of four bundles of documents. The first bundle does not include a covering memo or note. It is not in the form of a letter. Although it bears the name Steven Lang, and the date 13 May 1985 at its foot, it is not in form addressed to anyone. This document ("copy one") appears to be someone's working copy of an original document. It includes coloured high-lighting and notations in blue ink. It has one handwritten notation on it which is not original: that is, it is photocopied. There is a second copy of the final page of this document stapled with it. This copy page appears to have been made by facsimile transmission. It does not have the high-lighting or ink notations of the first copy of the page. A second copy of the note described above ("copy two") has a covering copy memo attached to it. This memo is in part handwritten and is signed "Steve Lang". There are some original pencil markings on the copy memo. The document to which the memo is attached (i.e. copy two) appears to have been copied from the same document as that from which copy one was made. They have some copy handwritten notations in common. However, copy two does not include the coloured high-lighting or blue ink notations of copy one. Copy two is missing its final page. It may be that this page has accidentally been stapled to copy one. Each page of copy two bears the same markings indicative of facsimile transmission as the second copy of the final page forming part of copy one. The other two bundles of documents comprising Document 1 are each marked in pencil "Copy 7/2/95". Each of them appears to be a copy of both copy one and copy two, together with a copy of the covering memo attached to copy two. It may be that these two bundles were brought into existence following the seizure of copy one and copy two. I am satisfied that the more substantial of the documents falling within the bundles described as Document 1 is a document brought into existence for the sole purpose of enabling SJSJ to give and MPS, Dr Wenkart and Mr Holden to receive legal advice. The claim of legal professional privilege in this document must be upheld. I have been more troubled by the covering memo forming part of Document 1. On consideration, however, I have formed the view that it is a document from which the nature of advice sought and given might be inferred. The claim of legal professional privilege in respect of this memo will also be upheld. Document 2 Document 2 is described by Mr Raphael as a copy letter from Mr Lang to Michael Wiley ("Mr Wiley"), solicitor of SJSJ, Sydney, with handwritten notes, plus a draft memorandum prepared by Mr Lang. My examination of Document 2 discloses, first, a copy memorandum on the letterhead of SJSJ addressed to Mr Wiley from Mr Lang. It is dated 27 June 1985 ("the first memorandum"). I am not satisfied that disclosure of the first memorandum would tend to reveal any privileged communication. The claim of legal professional privilege in respect of it is not upheld. The second document, which together with the first memorandum, comprises Document 2, is a copy draft memorandum, also dated 27 June 1985, from Mr Lang ("the second memorandum"). It is addressed to Dr Wenkart, members of Greenwoods, Mr Wiley, Loek van Kalmthout of Loyens and Volkmaars of Rotterdam and Tien De Bruin of Equity Trust, Rotterdam. The first memorandum suggests that the second memorandum was provided to Mr Wiley. A handwritten note on the first memorandum requests Mr Wiley to arrange for copies of the second memorandum to be provided to Dr Wenkart and to the members of Greenwoods to whom the draft is addressed. I am prepared to assume that this was done. There is no evidence before me as to whether the other parties to whom the draft is addressed, that is, the two parties in Rotterdam, ever saw this document. I am satisfied that the second memorandum was brought into existence for the purpose of enabling SJSJ to give and MPS, Dr Wenkart and Mr Holden to receive legal advice. So far as the memorandum is addressed to Mr Wiley, a member of the same legal firm as Mr Long, it is a document of a class to which legal professional privilege has traditionally applied (Trade Practices Commissioner v Sterling at 245-246). As to the involvement of Greenwoods in the matters in respect of which Mr Lang was advising, Mr Holden's evidence was that, as a director of MPS, he sought advice on the legal, the technical and the accounting "side", and that Greenwoods was involved "in all the components of the transaction". The documents themselves support the tenor of Mr Holden's evidence in that they show members of the legal firm SJSJ apparently consulting with members of the accounting firm Greenwoods with respect to the formulation of legal advice and legal assistance to MPS, Dr Wenkart and Mr Holden. In my view, Greenwoods was acting in this regard as agents for their clients: in this case MPS, Dr Wenkart and Mr Holden. Even if I am wrong in this, I conclude that the provision of the draft document to Greenwoods was part of the substantive process of the seeking or the obtaining of legal advice (cf. Propend Finance Pty Ltd & Ors v Commissioner of Australian Police & Ors per Beaumont J at 238). I do not regard the fact that this document was prepared with the apparent purpose of its being provided to Greenwoods, or the fact that it was apparently provided to Greenwoods, as detracting from the rights of the applicants to claim that it is a privileged document. Even if this draft document were provided to the other parties to whom it is addressed, I consider that the appropriate inference is that it was so provided on the same basis as that upon which it was provided to Greenwoods, that is, as agents for MPS, Dr Wenkart and Mr Holden (or possibly as agents of SJSJ or Greenwoods) and as part of the substantive process of the giving of legal advice to MPS, Dr Wenkart and Mr Holden, I am satisfied that the second memorandum is to be regarded as a document brought into existence for the sole purpose of enabling SJSJ to give and MPS, Dr Wenkart and Mr Holden to receive legal advice. The claim of legal professional privilege in respect of the second memorandum will be upheld. Document 11 Document 11 is described by Mr Raphael as a copy facsimile, dated 17 June 1985 from Mr Lang to Jeff Sharp ("Mr Sharp") of Greenwoods and Mr Holden. My inspection of the document confirms this description. The document bears some coloured high-lighting. Disclosure of the document would, in my view, reveal confidential communications passing between Mr Holden, as a director and the financial controller of MPS, and Mr Lang for the sole purpose of MPS, Dr Wenkart and Mr Holden receiving legal advice. For the reasons set out above, I conclude that Mr Sharp received this document as agent of MPS, Dr Wenkart and Mr Holden, and as part of the substantive process of their seeking and obtaining legal advice. The claim of legal professional privilege in respect of the document will be upheld. Document 12 is described by Mr Raphael as a facsimile from Mr Lang to a member of Greenwoods. It refers to "a copy of a fax" which is said to be attached. The document so referred to is not part of Document 12. I am not satisfied that Document 12 was brought into existence for the sole purpose of its being used in connection with the provision of legal advice to the respondents. Nor am I satisfied that disclosure of Document 12 will reveal confidential communications attracting legal professional privilege. It appears to me, on reading Document 12, that a purpose for which it was brought into existence was to convey information to Greenwoods as to transactions which had actually occurred and to request alterations to certain financial records maintained by them to ensure that such records reflected such transactions. I observe that the document appears to evidence transactions and anticipate consequences arising therefrom, rather than to evidence or provide legal advice. It is not, in my view, properly to be characterized even as "professional discourse in a professional capacity' for the purpose of giving and receiving legal advice (Dalleagles Pty Ltd v Australian Securities Commission & Ors). PRODUCTION OF PART ONLY OF A DOCUMENT

In Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 116 ALR 535 at 541-544, Heerey J of this Court reviewed the authorities on whether objection can be taken to production of part of a document on the ground of legal professional privilege. His Honour concluded that such an objection could be taken, and part of a document withheld from production, even though the whole document contained relevant but not privileged material. In this case the respondents have sought access to edited copies of the documents if the applicants' claims of legal professional privilege is good with respect to some parts of the documents but not others. Having regard to the view which I have taken of the documents, it is not necessary for me to form a concluded view on whether severance of the documents, or any of them, would be legally permissible. Those documents which I have held to be privileged do not, in my view, contain in a distinct part non-privileged material. The issue of severance does not arise.

There will be a declaration that the following documents seized by the second respondent in execution of a search warrant on the offices of Greenwood and Freehills at Level 32-35 of the MLC Centre, Martin Place, Sydney and specified in the list which is Schedule A to the application herein are the subject of legal professional privilege: (a) Document 1 (b) Document 2 - but not including a copy memorandum on the letterhead of Stephen Jaques Stone James dated 27 June 1985 addressed to Mike Wiley from Steve Lang (c) Document 11. I will hear counsel as to what, if any, further orders should be made. I certify that this and the preceding nineteen (19) pages are a true copy of the reasons for judgment of the Honourable Justice Branson. Associate: Date: 11 November 1996.

Counsel for the applicants: Mr I. Gzell QC appearing with Mr N. Williams and Mr M. Wigney Solicitors for the applicants: Rosenblum & Partners Counsel for the first and Mr B. Walker appearing second respondents: with Mr G. Johnson Solicitors for the first and Australian Government second respondents: Solicitor Solicitors for the third respondent: Kemp Strang & Chippindall Hearing date: 15 October 1996

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