FEDERAL COURT OF AUSTRALIA

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 6) [2019] FCA 337

ORDERS

THE COURT ORDERS THAT:

1.    Subject to order 3 below, the Cross-Claimants produce to the Cross-Respondent the following documents forthwith:

(a)    An unredacted copy of the Joint Opinion dated 8 November 2017 referred to in paragraph 20 of the affidavit of Ms Semenova dated 14 February 2019 (“Affidavit”) (annexure G);

(b)    An unredacted copy of the email dated 24 April 2017 from Ms Semenova to Agility Legal Pty Ltd (“Agility Legal”) referred to in paragraph 21(c) of the Affidavit, together with unredacted copies of the emails in that string (annexure H);

(c)    An unredacted copy of the Advice on Prospects dated 11 December 2017 referred to in paragraph 23 of the Affidavit (annexure I);

(d)    An unredacted copy of the letter dated 12 January 2019 from Agility Legal to Ms Semenova referred to in paragraph 24 of the Affidavit (annexure J);

(e)    An unredacted copy of the letter dated 23 March 2018 from Agility Legal to Ms Semenova referred to in paragraph 24 of the Affidavit (“23 March Letter”) (annexure K);

(f)    An unredacted copy of the email dated 20 February 2018 from Agility Legal to Ms Semenova and an unredacted copy of the email dated 13 March 2018 from Federal Treasury Enterprise (FKP) Sojuzplodoimport (“FKP”) to Agility Legal (annexure L);

(g)    Save that the redactions of the heading immediately preceding paragraph 13 and paragraphs 13 to 16 may be retained, an unredacted copy of the email dated 13 July 2018 from Agility Legal to Ms Semenova referred to in paragraph 25 of the Affidavit (annexure M);

(h)    An unredacted copy of the letter dated 27 July 2018 from Agility Legal to Ms Semenova referred to in paragraph 28 of the Affidavit (“27 July Letter”), together with unredacted copies of all attachments (annexure N);

(i)    An unredacted copy of the the email from Mr Sokolov to Agility dated 27 April 2018 produced under the Second Notice to Produce (an email within tab 11);

(j)    An unredacted copy of the email dated 22 November 2018 from Agility Legal to FKP produced under the Second Notice to Produce, together with unredacted copies of emails in that string (tab 12); and

(k)    An unredacted copy of the email dated 26 November 2018 from FKP to Agility Legal under the Second Notice to Produce, together with unredacted copies of emails in that string (tab 21).

2.    Paragraphs 1 and 2 of the interlocutory application filed on 1 March 2019 otherwise be dismissed.

3.    Pursuant to ss 37AF and 37AI of the Federal Court of Australia Act 1976 (Cth), the documents referred to in order 1 shall be kept confidential and shall not be published or disclosed until 7 March 2019 at 4.00 pm or further order on the ground that it is necessary to prevent prejudice to the administration of justice, save that access to the documents be granted forthwith under order 1 to the Cross-Respondent’s Australian solicitors and counsel.

4.    The matter be listed on 7 March 2019 at 2.00 pm to reconsider the interim confidentiality order in order 3 and to hear submissions on costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The interim confidentiality order in order 3 of the orders made on 7 March 2019 at 9.15 am be discharged.

2.    The Cross-Claimants pay the costs of the interlocutory application filed on 1 March 2019.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

STEWART J:

1    At about 9.15 am on 7 March 2019 I made orders in this matter in circumstances of some urgency. These are my reasons.

Background

2    By interlocutory application filed on 1 March 2019, the cross-respondent (Spirits) sought orders that the cross-claimants (FKP/FGUP) produce a number of specifically identified documents as well as a number of documents described by category. The specifically identified documents were sought by a notice to produce under Federal Court Rules 2011 (Cth) (FCR) r 20.31 dated 21 February 2019, and the documents described by category were sought by a notice to produce under FCR 30.28, also dated 21 February 2019. FKP/FGUP claims legal professional privilege over the documents that are sought under both notices to produce. It is common ground that in the ordinary course the documents in dispute would attract legal professional privilege. Spirits however contends that the privilege has been impliedly waived by the conduct of FKP/FGUP in disclosing and relying on legally privileged documents in an affidavit of Ms Natalia Semenova sworn on 14 February 2019 and filed in a different interlocutory application in the principal proceedings.

3    By ‘principal proceedings’, I refer to the cross-claim by which FKP/FGUP sue Spirits to rectify the register of trademarks in Australia to record FKP/FGUP as the registered owner of a number of trademarks relating to alcoholic beverages, including vodka. Those proceedings were stayed by Perram J on 20 November 2017 but FKP/FGUP was given leave to apply to lift the stay when they have caused proper discovery to be given by the Russian Federation. Further, Spirits was granted leave to file an interlocutory application seeking the dismissal of the cross-claim if proper discovery had not been given by 30 November 2018: see Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345. I shall refer to those proceedings as the stay application.

4    On 10 December 2018, Spirits filed an interlocutory application pursuant to the leave granted on 30 November 2018 seeking that FKP/FGUP’s proceedings be dismissed. I shall refer to that application as the dismissal application. The dismissal application is listed for hearing before Perram J on 14 March 2019 for which there is a preparatory timetable including orders that Spirits file evidence and submissions by 7 March 2019. Hence the urgency in the resolution of the privilege dispute, lest the hearing date be imperilled.

5    The affidavit of Ms Semenova to which I have referred was filed for the purpose of being relied on at that hearing to oppose the dismissal of the proceedings. The affidavit explains that by exhibiting documents that would ordinarily attract legal professional privilege, Ms Semenova’s intention was to waive that privilege “in those communications to the extent that they concern the steps being undertaken on behalf of FKP in the Australian proceeding in the period from 20 November 2017 to about 30 November 2018” (i.e. between the stay application was heard and judgment was handed down). It further explains that “[s]ome paragraphs of the annexed communications have been redacted on the ground that they do not concern [those] steps undertaken on behalf of FKP”.

6    For the most part, the documents in question concern communications between FKP/FGUP’s former Australian solicitors, Agility Legal Pty Ltd, and FKP/FGUP including memoranda and opinion of counsel.

7    When the present interlocutory application was filed, the parties indicated that it should be heard by a judge other than Perram J – presumably because it was anticipated that the judge hearing the interlocutory application might have to look at the documents over which legal professional privilege was claimed in order to determine that claim for privilege. The interlocutory application was accordingly listed to the duty list, and thence to me.

8    Before the hearing of the interlocutory application I asked whether there was any objection by either party to me considering the redacted parts of the documents over which privilege was claimed. There was no objection and I was accordingly provided with the unredacted documents. As will be seen, I had regard, in unredacted form, to the redacted parts of the documents in order to decide the question of whether privilege had been waived.

9    The documents sought under the first notice to produce are unredacted copies of the relevant documents referred to in and exhibited to Ms Semenova’s affidavit. There are eight such documents which (in redacted form) were labelled as annexures G to N to the affidavit of Ms Nagy read in support of the interlocutory application. I shall refer to the annexures by their designated letters.

10    The documents sought under the second notice to produce included a category which captured communications between FKP/FGUP and Agility.

11    Two volumes of documents were produced by FKP/FGUP in answer to the second notice to produce, but a number of them were partially redacted as with the documents exhibited to Ms Semenova’s affidavit. There were initially 23 such documents, but during the course of the hearing on the interlocutory application counsel for Spirits limited the application to just five documents. I shall refer to them by their tab numbers in the folder of 23 documents in respect of which privilege was claimed. They are tabs 6, 11, 12, 14 and 21.

12    FKP/FGUP asserts that it is not obliged to produce the documents sought under the notices to produce because, as stated by Ms Semenova in her affidavit, she did not intend and did not have the authority of FKP/FGUP to waive FKP/FGUP’s legal professional privilege other than to the limited extent to which she did so by annexing redacted copies of documents to her affidavit.

13    In an affidavit read in the interlocutory application before me, FKP/FGUP’s solicitor, Ms Michelle Fox, explains that there are a number of foreign proceedings currently before the courts in various jurisdictions around the world in relation to substantially the same subject matter that is the subject of the principal proceedings. She says that FKP/FGUP will be unfairly prejudiced if they are required to produce information to Spirits in this proceeding which is relevant to those foreign proceedings. She says that there is a risk that the information produced in this proceeding to Spirits may be used against FKP/FGUP in foreign proceedings.

Implied waiver of legal professional privilege: principles

14    Because this interlocutory application concerns the production of documents under notices to produce and does not deal with the question of privilege and waiver of privilege at the point of adducing evidence in the course of a hearing in a court, ss 118 and 121-122 of the Evidence Act 1995 (Cth) do not apply: Esso Australia Resources Limited v Commissioner of Taxation (Cth) [1999] HCA 67; 201 CLR 49. The issues are accordingly to be decided with reference to the common law.

15    Attorney-General (NT) v Maurice [1986] HCA 80; 161 CLR 475 concerned circumstances where there was no express waiver of legal professional privilege, but there was a contention that there had been an implied waiver. Gibbs CJ (at 481) identified that the principle applicable in those circumstances was that stated by Professor Wigmore as follows:

In deciding it, regard must be had to the double elements that are predicated in every waiver, i.e. not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point his election must remain final.

16    Mason and Brennan JJ (at 488) and Dawson J (at 498) adopted the same principle.

17    Gibbs CJ went on (at 481) to explain that in a case where there is no intentional waiver (as here), the question whether a waiver should be implied depends on whether it would be unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with it, is privileged from production. His Honour also said that where a document deals with a “single subject-matter” it would be unfair to allow a party to use part of the document and claim privilege as to the remainder (481-482).

18    Mason and Brennan JJ (at 487-488) explained that an implied waiver occurs when, by reason of some conduct on the privilege holder’s part, it becomes unfair to maintain the privilege. The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication. Further, in order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of a protected communication should result in waiver as to the rest of the communication “on that subject-matter”.

19    Dawson J (at 497-498) reasoned as follows:

… an implied waiver may be required by fairness notwithstanding that it was not intended. It would not be fair to allow privilege to be waived with respect to a portion of a document or a conversation without requiring disclosure of the rest of it, at least if the document or conversation dealt with the one subject-matter. So much may be obvious, but legal professional privilege is concerned with protecting the confidentiality of a relationship and if that confidentiality is abandoned by a particular disclosure it may be necessary in fairness, whether further disclosure was intended or not, to require disclosure extending beyond the particular communication. The cases are not entirely consistent and perhaps what is fair by way of disclosure must ultimately depend upon the relevant circumstances.

(Citations omitted.)

20    It can be seen that all the judgments in Maurice regarded fairness as being at the heart of the test for implied waiver, and that where there has been a partial waiver the question of whether the subject matter of the disclosed and undisclosed parts is the same will be important in assessing whether there is unfairness.

21    The test for implied waiver of privilege was considered again by the High Court in Mann v Carnell [1999] HCA 66; 201 CLR 1. Gleeson CJ and Gaudron, Gummow and Callinan JJ (at [29]) held as follows:

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. When an affirmative answer is given to such a question, it is sometimes said that waiver is “imputed by operation of law”. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. … What brings about the waiver 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; not some overriding principle of fairness operating at large.

22    In Osland v Secretary, Department of Justice [2008] HCA 37; 234 CLR 275, Gleeson CJ and Gummow, Heydon and Kiefel JJ explained (at [45]) that deciding whether or not there has been an implied waiver of privilege “reflects a judgment that the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. Such a judgment is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context or those circumstances.” Their Honours approved a statement that “questions of waiver are matters of fact and degree” (at [49]).

23    In Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; 151 FCR 341 at [44] the Full Court (per Kenny, Stone and Edmonds JJ) stated that there is “a good deal of doubt about whether the language used by the majority in Mann worked any real change in the governing principle” of fairness set out in Maurice. However in British American Tobacco Australia Ltd v Secretary, Department of Health and Ageing [2011] FCAFC 107; 195 FCR 123 at [42] the Full Court (per Keane CJ, Downes and Besanko JJ) said that the statement of the test in Mann is somewhat different from the approach stated in Maurice and that “the focus is now upon inconsistency of conduct, but in determining whether there has been an inconsistency of conduct, considerations of fairness are still relevant”.

24    Inconsistency is accordingly at the heart of the enquiry. Whilst unfairness may inform the consideration of whether or not there is inconsistency, the test is not one of unfairness “operating at large”.

25    Different considerations may arise between circumstances where, for example, an assertion is made in a pleading which is said to have the effect of waiving privilege (sometimes referred to as issue waiver) and where, as another example, privilege is waived over part of a document or communication and not over other parts of it (sometimes referred to as partial disclosure). Those different considerations must, however, inform the assessment of whether there is inconsistency between the maintenance of the privilege and the relevant conduct of the party. One consideration in the case of partial disclosure is whether the disclosed and the undisclosed parts of the communication cover the same or different subject matters. That is because if they cover the same subject matter, disclosure of only part of the communication may lead to the meaning or import of the disclosed part being distorted or inaccurately perceived. Thus in the case of partial disclosure, the assessment of whether or not there is relevant inconsistency is likely to include a consideration of whether or not the disclosed and undisclosed parts cover different subject matter.

26    Spirits relied on the following statement in the judgment of Tobias JA in the NSW Court of Appeal in Bailey v Director-General, Department of Land and Water Conservation [2009] NSWCA 100; 74 NSWLR 333 at [132]:

In my opinion Great Atlantic Insurance Co [v Home Insurance Co [1981] 1 WLR 529] stands only for the proposition that where the whole of a document is a privileged communication between legal adviser and client, the party entitled to claim that privilege cannot waive the privilege as to part of the communication but claim it with respect to the remainder if to do so would result in unfairness. Either privilege is claimed with respect to the whole or waived as to the whole. The only exception to this would be where the communication dealt with two entirely different subject matters in respect of which privilege was claimed for the one that was relevant to the issues at hand and waived for the other which was not.

27    FKP/FGUP submitted that this test does not properly reflect the law, and instead relied on the statement by Tobias JA (at [130]) that “the ultimate test is that of fairness in all the circumstances”, which counsel also characterised as a test for “forensic unfairness” caused by a partial disclosure.

28    Although Allsop P and Hodgson JA agreed with the reasons of Tobias JA, their Honours did so subject to the comments of Allsop P (see [1] and [6]). Those comments make it plain that their Honours did not adopt the test from Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529 (at [3] of Bailey), as set out by Tobias JA, and that the relevant test is inconsistency, not general unfairness (at [4]). It follows that the statements in paragraphs [130] and [132] are not statements of the law by the Court of Appeal in that case. The position is more recently stated by the Court of Appeal in Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305; 339 ALR 635 at [48]-[53].

29    In summary, I do not consider that the test to be applied in circumstances where privilege has been waived over part of a document or communication and not another part is as rigid or absolute as that identified in paragraph [132] of Bailey. The test is rather one of inconsistency of conduct as expounded in Mann and Osland as explained above. The question of different subject matters will however inform the enquiry as to inconsistency, as will any forensic unfairness of allowing a particular assertion as part of a party’s case without disclosure of the communication in question. See DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; 127 FCR 499 at [58] per Allsop J.

Implied waiver of legal professional privilege: application

30    Counsel for FKP/FGUP defended the claim for privilege by categorising the redactions. I will refer to those categories, although it is necessary to deal with the documents individually. The categories are the following:

    A - advice and disclosure regarding the overall merits and conduct of the cross-claim;

    B - disclosure of matters relevant to current foreign proceedings;

    C - disclosure of matters that are commercially confidential to FKP and FGUP;

    D - correspondence regarding past performance of Agility and matters other than discovery, past solicitors’ fees and payment of fees; and

    E - advice and disclosure in relation to the preparation of the evidence upon which FKP and FGUP are relying in answer to the dismissal application, including drafts of that evidence.

31    Annexure G is a joint opinion by barristers M R Pesman SC and J A Arnott on 8 November 2016. Privilege is claimed over paragraphs 11, 12 and 14 of the joint opinion. The redactions are said to fall within the categories A and B. The opinion is dated within a week of the hearing of the stay application before Perram J. Ms Semenova says in her affidavit that when she received the joint opinion she was “deeply concerned that FKP would be unable to fulfil the discovery obligations” and she sets out the reasons for that belief.

32    The joint opinion identifies three possible outcomes of the stay application and briefly discusses the consequences (paragraphs 8-10). The following paragraphs, paragraphs 11 and 12, are redacted. Then in the unredacted paragraph 13 the following is stated by way of introduction: “While we would welcome the opportunity to discuss further how best to achieve this, it appears to us that the following tasks should be conducted…”.

33    In four subparagraphs to paragraph 13 various tasks are then identified including the need to interview various people, locate appropriate officials within Russian Federation ministries, begin a process of seeking to identify where FKP and FGUP obtained documents given in discovery and continue liaising with their American and Dutch legal teams. These appear to be amongst the tasks that Ms Semenova refers to in her affidavit as causing her the identified “deep concern”. Paragraph 13 and the tasks that are identified cannot sensibly be understood in the absence of paragraphs 11 and 12 to which paragraph 13 refers.

34    Paragraphs 11 and 12 do not deal with a clearly identifiable different subject matter to the rest of the joint opinion, and there is a risk that the joint opinion with these paragraphs redacted can give rise to an inaccurate perception of its meaning and import. It is in my view inconsistent to rely on the unredacted parts of the joint opinion whilst at the same time seeking to maintain privilege over paragraphs 11 and 12.

35    Paragraph 14 of the joint opinion refers to the work identified in paragraph 13, particularly with regard to identifying witnesses to the existence or otherwise of relevant documents. This too concerns the broader subject matter of documentary disclosure, and cannot be categorised as a discrete or different subject matter. Thus, maintaining the redaction of paragraph 14 can lead to an inaccurate perception of the meaning and import of the joint opinion. There is therefore an inconsistency between waiving privilege over paragraph 13 and maintaining it in respect of paragraph 14.

36    In the circumstances, in my view FKP/FGUP has impliedly waived the privilege that otherwise attached to the joint opinion (annexure G) and must therefore produce an unredacted version of annexure G.

37    Annexure H is a chain of emails in April 2017 between Agility and Ms Semenova. The redactions are said to fall within categories A and B. In her affidavit Ms Semenova refers to the series of emails in the context of her saying that she was “deeply concerned” about the advice she had received and raised the concern with Agility.

38    The chain of emails deals with, amongst other things, FKP’s efforts to obtain documents. Each of the redacted portions also deal with that matter. Further, the redactions in the email from Ms Semenova to Agility of 24 April 2017 are directly responsive to portions of the joint opinion that I have found must be produced. There is therefore inconsistency between the waiver of the privilege of parts of the email chain and the maintenance of it over other parts. That inconsistency arises from the fact that the meaning and import of the disclosed parts may be distorted or inaccurately perceived unless they can be read in the context of the chain as a whole. There is therefore no justification to continuing to claim privilege in respect of these portions.

39    An unredacted version of annexure H must accordingly be produced.

40    Annexure I is an advice on prospects by M R Pesman SC dated 11 December 2017. That is to say, it is dated some weeks after the judgment of Perram J and advises on the prospects of obtaining leave to appeal from the judgment and, if leave to appeal was granted, the appeal succeeding. The redacted portions are said to fall in category A. In her affidavit, Ms Semenova refers to the advice on prospects and in particular its treatment of FKP/FGUP’s Australian discovery obligations.

41    The advice on prospects illustrates the difficulty of separating, as distinct subject matters, the overall merits of the proceedings, on the one hand, and the discovery obligations on the other. Indeed, that is apparent from the judgment of Perram J, as acknowledged in the advice on prospects.

42    In my view the redacted portions of the advice on prospects are not amenable to excision as constituting different subject matter, and that such excision will lead to the risk of an inaccurate perception of the meaning and import of the disclosed parts of the document. There is in that sense an inconsistency in partially maintaining the privilege.

43    An unredacted version of annexure I must accordingly be produced.

44    Annexure J is a letter from Agility to FKP representatives dated 12 January 2018. The only redaction in annexure J is the reproduction of part of paragraph 14 of the joint opinion which is annexure G and which I have already concluded must be produced. In the circumstances, an unredacted version of annexure J must also be produced.

45    Annexure K is a letter from Agility to Ms Semenova dated 23 March 2018. That is to say, it is part way through the relevant period between Perram J’s orders and the deadline of 30 November 2018 for proper discovery to be achieved. The redactions in annexure K are said to fall into category B. Ms Semenova refers to annexure K in her affidavit as being an instance of Agility repeating advice already given including in annexure J.

46    The redacted portions of annexure K are paragraphs 8, 9 and 10. They concern discovery in the US proceedings. That issue is intimately bound up with discovery in Australia, as recognised by Ms Semenova in her affidavit where she refers to advice that resources directed to the US discovery exercise would allow the reproduction of that discovery in Australia. Moreover, similar matters of US discovery were canvassed in unredacted portions of the advice on prospects dated 11 December 2017.

47    In my view, the matters dealt with in the redacted paragraphs cannot sensibly be excised from the letter without affecting its meaning or import; there is inconsistency in maintaining the privilege.

48    An unredacted version of annexure K must therefore be disclosed.

49    Annexure L is a chain of emails between February and April 2018. It is said that the redacted portions of annexure L fall within category C.

50    Within annexure L, there is an email of 20 February 2018 from Agility to Ms Semenova which deals with, amongst other things, the fact that FKP is separate from the Russian Federation and its ministries, and the relevance of that to its ability to compel, or obtain, discovery from those ministries. In that context, Agility says in the email that it foresees that the question will arise as to where FKP obtains its funds for the litigation, and it asks for confirmation that FKP is self-funded. The paragraph containing this question is one of two redactions. The other redaction is the answer to the question. As demonstrated by the fact that the question of FKP’s funding was foreseen, it is not possible to separate the funding issue out from the issue of the separation between FKP and the Russian Federation. It is therefore inconsistent to maintain the privilege over the funding question but to waive it over the rest of the document which deals with the funding issue.

51    In the circumstances, annexure L must be disclosed.

52    Annexure M is an email dated 13 July 2018 from Agility to Ms Semenova. It refers to a teleconference during which two identified matters were discussed, namely what to do in respect of the current discovery orders and, secondly, payment of Agility’s outstanding fee claims. The redacted matters concern issues raised with regard to Agility’s performance in the litigation and its claim to outstanding fees. The redactions are said to fall within category D.

53    Notionally the question of Agility’s performance could constitute a distinct subject matter from what was to be done to fulfil the discovery orders. However, paragraph 8 of the email is not redacted and it expressly acknowledges “that there is a view held by FKP that FKP’s situation arises because of Agility’s failure in the Australian Proceedings”. The email then says that Agility rejects “any criticism whatsoever for reasons set out below”. Those are the reasons that are redacted in paragraphs 10, 11 and 12. In those circumstances, it is inconsistent to seek to maintain the privilege over the reasons but not over parts of the email that refer to the reasons and which acknowledge that Agility’s performance is an issue potentially relevant to FKP’s “situation” – that clearly being a reference to the difficult situation that it was in following the orders of Perram J.

54    Paragraphs 13 to 16 deal with the late payment of Agility’s fees. Nothing said in those paragraphs indicates that the late payment is linked to questions of Agility’s performance. In those circumstances, I am satisfied that those paragraphs cover distinct subject matter and no inconsistency or unfairness flows from the maintenance of the privilege in respect of those paragraphs but not the rest of the document; the meaning and import of the rest of the document is not affected by paragraphs 13 to 16 and the heading immediately preceding paragraph 13 and there is thus no inconsistency in partially maintaining the privilege.

55    Spirits submitted that if I was to conclude in any particular case that there was no waiver on account of partial disclosure, as I have concluded in this instance, then there is in any event implied waiver as an instance of issue waiver. The submission was that by the case asserted in the affidavit of Ms Semenova particular matters were put in issue with the result that it would be inconsistent to assert that case and maintain privilege over documents relevant to those matters.

56    I do not consider Ms Semenova to have put the late payment of Agility’s fees in issue. In my view there is no inconsistency between the case asserted by Ms Semenova and maintenance of the privilege over communications between FKP and Agility with regard to the payment of the latter’s fees.

57    In the circumstances, an unredacted version of annexure M must be produced save that the redaction of paragraphs 13 to 16 and the heading immediately preceding paragraph 13 can be retained.

58    Annexure N is a letter from Agility to Ms Semenova dated 27 July 2018. It attaches a copy of the joint opinion (annexure G) that retains the same redactions as dealt with above, and a memorandum of a barrister, Bret Walker SC, dated 23 July 2018. The only redaction in that memorandum is one sentence which refers to paragraph 12 of the joint opinion. Since I have already concluded that the joint opinion must be produced, including paragraph 12, there is no basis to maintain the privilege in respect of that sentence.

59    In the circumstances, an unredacted version of annexure N must be produced.

60    I now turn to deal with the documents in issue that were produced in answer to the second notice to produce.

61    Tab 6 is an email chain between Agility and Ms Semenova in November and December 2017. The redactions in it are said to fall within category A. More particularly, they concern the meaning and effect of the costs order made by Perram J in the stay application. I am satisfied that that is a discrete subject matter and that maintenance of the privilege in the redactions will not cause any unfairness to Spirits and it will not cause there to be a risk that the unredacted parts of the email chain are inaccurately perceived. There is therefore no inconsistency in maintaining the privilege. Further, there is nothing in the case asserted by Ms Semenova in her affidavit that is inconsistent with maintaining the privilege; the costs order in the stay application is simply extraneous to the position asserted in the dismissal application.

62    In the circumstances, there is no obligation on FKP/FGUP to produce an unredacted copy of tab 6.

63    Tab 11 is an email chain between Agility, on the one hand, and Ms Semenova and/or Ivan Sokolov, on the other, in April and May 2018. The redactions are said to fall in category D. With one exception, all the redactions concern the payment of Agility’s fees. I am satisfied that that is a discrete subject matter and that maintenance of the privilege over those redactions and waiver of the privilege in relation to the rest of the chain will not cause any unfairness to Spirits; there is no inconsistency in maintaining the privilege over those parts of the chain. The exception is in the email from Mr Sokolov to Agility dated 27 April 2018. Two words in a sentence are redacted. To maintain the redaction will leave the risk that the meaning of the sentence, and hence the document, will be inaccurate or distorted. It is thus inconsistent to maintain the privilege over that small redaction.

64    I have already explained above why there is no issue waiver in respect of the payment of Agility’s fees.

65    In the circumstances, an unredacted copy of the email from Mr Sokolov to Agility dated 27 April 2018 within tab 11 must be produced, but the other redactions in tab 11 can be maintained.

66    Tab 12 is a chain of two emails between Agility and representatives of FKP in November 2018. The redactions are said to fall within category E. More specifically, the redactions concern matters in relation to the preparation and content of an expert report. They deal with methods of compelling discovery of documents from state officials of the Russian Federation and/or its ministries. That is not a discrete subject matter from what the rest of the chain deals with, and it is not possible to maintain the redactions and not cause unfairness to Spirits, in particular because the overall import and meaning of the emails in the chain may be distorted or inaccurate. It is thus inconsistent to maintain the privilege over parts of the document and not others.

67    In the circumstances, tab 12 must be produced.

68    Tab 14 is a draft affidavit of Mr Pilsneniks, a solicitor at Agility. It is said to fall within category E. Only the title portion of the affidavit showing the proceedings for which it was prepared and the intended deponent’s name and address is revealed. The rest of the draft, which runs to 16 pages, is redacted.

69    It seems to me that the heading of the affidavit is quite discrete from its contents and that no unfairness arises from maintaining the redactions. There is no inconsistency in producing the document in response to a notice to produce by waiving privilege to the title of the document but not to its contents. It is similar to a response to a notice to produce which sets out a schedule of documents over which privilege is maintained by identifying the documents with reference to their nature, date, etc. The production of a schedule which discloses the existence of those documents would not amount to an implied waiver of privilege over the documents. There is also no issue waiver in respect of the affidavit.

70    In the circumstances, tab 14 does not need to be produced.

71    Tab 21 is an email chain between FKP representatives and Agility in November 2018. The redactions are said to fall within category E. In each case they deal with searches for documents. That is not a separate subject matter from what the rest of the chain deals with. Indeed, the subject of the chain is FKP/FGUP’s discovery obligations and the steps taken to fulfil them, including searches for documents. To maintain the redactions at the same time as waiving the privilege in relation to the rest of the chain would cause unfairness to Spirits and it would leave an inaccurate perception of the meaning and import of the chain of emails. It is thus inconsistent to maintain the privilege over only part of the document.

72    In the circumstances, tab 21 must be disclosed.

Suppression order

73    At the conclusion of the hearing, counsel for FKP/FGUP submitted that in the event that I ordered the production of any documents pursuant to the interlocutory application then I should restrict that disclosure to “the external Australian lawyers” of Spirits because of the harm that would be caused to FKP/FGUP in the event that the previously redacted parts were obtained by FKP/FGUP themselves, or other third parties. Reliance was placed on the affidavit of Ms Fox referred to at [13] above.

74    A suppression order of the nature adverted to by counsel can be made under ss 37AF and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) if, relevantly, “the order is necessary to prevent prejudice to the proper administration of justice”. That is a high bar, “necessary” being a “strong word”: Hogan v Australian Crime Commission [2010] HCA 21; 240 CLR 651 at [30]. In the time available at the end of the hearing I was not able to hear submissions on this issue. Also, at that time it would have had to have been considered in a vacuum because it was not known what production, if any, I would order.

75    Section 37AI provides that a court may, without determining the merits of an application for such an order, make the order as an interim order to have effect, subject to revocation by the court, until the application is determined. Therefore, in order to allow the application for a suppression order to be more fully argued I was prepared to make an interim order until 4pm that day, or further order, and I listed the matter for argument on this issue at 2pm.

76    Counsel for FKP/FGUP submitted that the interim confidentiality regime should be extended until the hearing before Perram J where it can be revisited. The submission was put on the basis that it is only then that the significance of the disclosed documents (by which I mean the previously redacted portions of the documents), if any, in the Court’s reasoning process will be able to be assessed. It was said that it is only then that considerations of open justice with regard to the Court’s reasoning being transparent might override commercial and competitive considerations attaching to the nature of the information sought to be suppressed. In that regard reliance was placed on Guy v Crown Melbourne Ltd (No 2) [2018] FCA 36; 355 ALR 420 at [269] per Mortimer J.

77    I have already identified that the requirement of “necessity” for a suppression order is a high bar. Moreover, it is insufficient that the making or continuation of an order appears to the Court to be convenient, or reasonable or sensible, or to serve some notion of the public interest, still less that, as the result of some “balancing exercise”, the order appears to have one or more of those characteristics: Hogan at [31]. See, for example, Australian Competition and Consumer Commission v Cascade Coal Pty Ltd (No 1) [2015] FCA 607; 331 ALR 68 at [28]-[30] for the applicability of what was said in Hogan to Part VAA of the FCA Act.

78    Section 37AE of the FCA Act enjoins me to take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice in deciding whether to make a suppression order. That does not mean that I should make a suppression order unless to do so is counterbalanced by considerations of open justice, which is the effect of what FKP/FGUP submits. That is to say, they submit that I should maintain the interim suppression order so that it can be reconsidered in the dismissal hearing and discharged only to the extent necessary to satisfy open justice. The proper approach is to ask whether the suppression order is “necessary to prevent prejudice to the proper administration of justice”, as required by s 37AG, and in doing so to take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

79    The principal difficulty I have with the necessity of the suppression order in this case is that the prejudice that is identified is avoided by the Harman principle. In that regard, Ms Fox in her affidavit identifies that prejudice as being principally the use to which the disclosed documents, and the information in them, might be put in the principal proceedings and in various foreign proceedings. However, where one party to litigation is compelled, including by an order of court such as I have made, to disclose documents or information, the party obtaining the disclosure cannot, without leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence: Hearne v Street [2008] HCA 36; 235 CLR 125 at [96] per Hayne, Heydon and Crennan JJ. The redacted portions that I have ordered be disclosed have not yet been received into evidence and they are therefore protected by the Harman principle.

80    Moreover, I am not satisfied that the level of prejudice that might be suffered makes suppression necessary. Ms Fox essentially states conclusions with regard to the prejudice that will be suffered, but that prejudice is not established on analysis of the redactions and consideration of what effect disclosure of them might have.

81    I therefore discharged the interim suppression order that I had made earlier in the day.

Costs

82    Finally, there is the question of costs. I consider that although I did not order disclosure of all the documents that were sought in the interlocutory application, Spirits was substantially successful. FKP/FGUP submitted that I should not order costs against them, but that I should order that the costs be costs in the cause of the dismissal application to be heard by Perram J. I accept that it was not unreasonable for FKP/FGUP to resist the interlocutory application, and that the dispute required to be decided, but that is not the test in relation to an ordinary award for costs. Spirits did not seek a punitive award.

83    The principal submission was that it remains to be seen whether any of the documents that I ordered be disclosed will be material in the dismissal application.

84    However, I accept the submission by Spirits that the relevant fulcrum on which the costs question rests is not whether the disclosed documents will be used, or material, in the dismissal application, but rather whether Spirits by being substantially successful got the opportunity to scrutinise the documents to decide whether or not to use them in the dismissal application. It did, and it should therefore get its costs.

85    Further, the interlocutory application before me is relatively discrete from the dismissal application.

86    I therefore concluded that FKP/FGUP should pay Spirits’ costs of the interlocutory application.

Associate:

Dated:    12 March 2019