FEDERAL COURT OF AUSTRALIA

Kennedy v Wallace [2004] FCAFC 337

LEGAL PROFESSIONAL PRIVILEGE – document prepared by the appellant as an aide-memoire before consultation with a person who was a foreign lawyer but who also had other capacities in his relationship with the appellant– whether the appellant proved that the dominant purpose of creating the document or any part thereof was for the obtaining of legal advice – privilege on the facts not made out – place of foreign lawyers in considering legal professional privilege – discussion of the scope of legal professional privilege where a document is created for the dominant purpose of obtaining legal advice but is not itself the communication

AM & S Europe Ltd v Commission of the European Communities [1983] QB 878 cited

Attorney-General (NT) v Kearney (1985) 158 CLR 500 cited

Attorney-General (NT) v Maurice (1986) 161 CLR 475 cited

Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 discussed

Baker v Campbell (1983) 153 CLR 52 discussed

Balabel v Air India [1988] 1 Ch 317 referred to

Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 discussed

Commissioner of Australian Federal Police v Propend (1997) 188 CLR 501 referred to

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 referred to

DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 203 ALR 348 referred to

Esso Australia Resources v Federal Commission of Taxation (1999) 201 CLR 49 referred to

Goldberg v Ng (1995) 185 CLR 83 referred to

Grant v Downs (1976) 135 CLR 674 discussed

Great Atlantic Insurance Co v House Insurance Co [1981] 1 WLR 529 referred to

Grofam Pty Ltd v ANZ Banking Group (1993) 45 FCR 445 followed

Lawrance v Campbell (1859) 4 Drewry 485; 62 ER 186 cited

Macfarlan v Rolt (1872) LR 14 Eq 580 cited

Mitsubishi Electric v Victorian Work Cover Authority [2002] 4 VR 332 discussed

R v Bell; Ex parte Lees (1980) 146 CLR 141 referred to

Ritz Hotel Ltd v Charles of the Ritz Ltd (No 4) (1987) 14 NSWLR 100 referred to

Three Rivers Council v Governor and Co of the Bank of England(No5) [2003] EWCA Civ 474; [2003] QB 1556 discussed

Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48 referred to

Trade Practices Commission v Sterling (1978) 36 FLR 244 discussed

Varawa v Howard Smith & Co Ltd (1910) 10 CLR 607 cited

Waterford v Commonwealth (1987) 163 CLR 54 cited

TREVOR JOHN KENNEDY v ANDREW CHARLES VERSCHUER WALLACE & ORS

N 470/04

BLACK CJ, EMMETT & ALLSOP JJ

23 DECEMBER 2004

SYDNEY

On Appeal from a Single Judge of the Federal Court of Australia

THE COURT ORDERS THAT:

1.                  The respondents by themselves, their servants or agents be restrained, until 5 pm 21 January 2005 or until further order earlier made, from acting as referred to in Order 1 of the Court made on 26 March 2004.

2.                  The parties have leave to move the Court on notice for any variation or discharge of order 1, any notice of motion and supporting affidavits to be filed and served on or before 5 January 2005.

3.                  The appeal otherwise be dismissed

4.                  The appellant pay the respondents’ costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

On Appeal from a Single Judge of the Federal Court of Australia

REASONS FOR JUDGMENT

BLACK CJ AND EMMETT J:

1                     This is an appeal against an order dismissing an application by the appellant, Mr Trevor Kennedy, for a declaration that certain documents seized by officers of the Australian Federal Police in the course of executing a search warrant were the subject of legal professional privilege, and for other relief.

2                     The appeal concerns two documents. One is a sheet of notepaper of the Ritz Hotel, London, with handwriting and the other is a sheet of notepaper of the Florhof Hotel, Zurich, also with handwriting.

3                     The circumstances under which the documents came into existence are described and discussed in detail in the judgment of Allsop J. It is sufficient for us to say that the nature of those circumstances were altogether singular and that they underline the fact that claims for professional privilege can be, and are, made in a wide variety of situations, ranging from the commonplace and uncontroversial to the very unusual, occurring, as here, in a foreign country.

4                     The application in the present case failed (except in respects not presently relevant) essentially on two grounds. The first of these was that the learned trial judge was not satisfied that the notes were brought into existence for the dominant purpose of obtaining legal advice. The judge was satisfied that a significant purpose of Mr Kennedy’s meeting with his Swiss lawyer, Mr Hafner, was to obtain legal advice, but he was not satisfied that this was the dominant purpose and Mr Kennedy’s assertions that it was did not establish that fact. Since the purpose of making the notes was, in his Honour’s view, “inextricably bound-up with the purpose of the meeting”, the facts necessary to support the privilege had not been established. This ground of decision assumed that communications with Mr Hafner could be the subject of legal professional privilege, notwithstanding that Mr Hafner was a foreign lawyer.

5                     The second ground of the trial judge’s decision was, as his Honour acknowledged, controversial. It was based upon his Honour’s conclusion that Mr Kennedy had not established what he concluded was a “necessary connection” between the handwritten notes and the administration of justice and the proper functioning of the legal system in Australia. This conclusion was coupled with a positive finding of fact that the overwhelming inference to be drawn in all the circumstances was that Mr Kennedy had a dominant underlying purpose in meeting with Mr Hafner and that this was to take all available steps to preserve or enhance the secrecy from Australian authorities, including the Australian Securities and Investments Commission (‘ASIC’), of his dealings in or relating to Switzerland. His Honour thus concluded that the purpose of the communications with Mr Hafner, whether or not he was acting in the capacity of a legal advisor, was not a purpose that would entitle the notes prepared before the meeting to the protection of legal professional privilege.

6                     The appellant’s submissions on the appeal challenged the trial judge’s findings of fact in respect of both of the grounds upon which he dismissed the application. To some extent the challenges were interrelated, although the “first” and “second” grounds for the decision were reasoned independently of one another, and may stand separately. ASIC submitted that this appeal can be determined on a consideration of the learned trial judge’s factual findings. As will appear, we consider this to be the preferable course.

The appellant’s principal submission

7                     The core of the appellant’s case was that the trial judge should have accepted Mr Kennedy’s “direct evidence” of his purpose in making the handwritten notes. The evidence was in the form of assertions by Mr Kennedy that he prepared the notes for the purpose of obtaining legal advice from his Swiss attorney, Mr Hafner.

8                     The first such assertion was made in an affidavit sworn by Mr Kennedy, in this proceeding, on 19 November 2003. In that affidavit, he said that he arranged a meeting with Mr Hafner in Zurich for Monday 3 November 2003. He said that, prior to his meeting with Mr Hafner, either while he was in London or while on his way to Zurich, he jotted down on two pages of Ritz Hotel notepaper some points “for the purpose of discussion with my Swiss attorney Benno Hafner and to obtain his advice on”. He said that he took “that note” with him when he met Mr Hafner on 3 November 2003 in Zurich. By a second affidavit, dated 24 November 2003, Mr Kennedy said that, whilst he had expected to meet with Mr Hafner on Monday 3 November 2003 as he had previously arranged, that meeting was changed to Tuesday 4 November 2003.

9                     Mr Kennedy’s assertion was reiterated in his fourth affidavit, dated 1 March 2004, which was filed and served on the first day of the hearing before the trial judge. He said that, prior to his meeting with Mr Hafner, either while he was in London or on his way to Zurich, he jotted down notes in his own handwriting on a page of Ritz Hotel notepaper, which he obtained from the Ritz Hotel during his stay. Mr Kennedy said that the London document was “prepared for the purpose of obtaining legal advice from my Swiss Attorney Benno Hafner”.

10                  In his affidavit of 1 March 2004, Mr Kennedy also said that, while in Zurich and prior to his meeting with Mr Hafner in Zurich, he jotted down notes on both sides of a sheet of notepaper of the Florhof Hotel, Zurich, which he obtained from that hotel during his stay there. He said that, apart from a reference to a name and telephone number on one side of the Zurich document, the handwritten notes on the other side were prepared “for the purpose of obtaining legal advice from Hafner”.

11                  Mr Kennedy said that, from the time he prepared the notes, they remained in his possession until 13 November 2003, when they were seized. He said that all the handwriting on them was made before the time of his meeting with Mr Hafner and nothing was written at or after the meeting.

12                  Mr Kennedy’s claim to legal professional privilege depends upon a positive finding about the purpose for which the two documents were brought into existence. The only evidence consisted of the assertions made by Mr Kennedy in his affidavits. Those assertions are conclusions that are not supported by any revealed reasoning process. Mr Kennedy gave no evidence as to the topics upon which he intended to consult Mr Hafner. He gave no evidence as to what he meant by “obtaining legal advice” in his affidavit of 1 March 2004.

13                  The appellant’s decision to base his claim for privilege in this way was attended with considerable risk since, as Lockhart J observed in National Crime Authority v S (1991) 29 FCR 203 at 211, it is not sufficient for a party merely to assert a claim for privilege nor will an affidavit asserting the purpose for which a document was brought into existence followed by a statement about the category of legal professional privilege to which the document is said to belong necessarily be sufficient. Moreover, in the leading case of Grant v Downes (1976) 135 CLR 674, Stephen, Mason and Murphy JJ warned against the erroneous view that the privilege is “necessarily or conclusively established by resort to any verbal formula or ritual” (at 689). In the same case, their Honours also observed that whatever the facts may be, it is always for the party claiming privilege to show that the documents for which the claim is made are in fact privileged.

14                  In these circumstances the central question is whether it was open to the trial judge, having regard to the way in which the case was conducted before him, to reject Mr Kennedy’s assertions as having virtually no weight. That is in effect what his Honour did, although he did not say that he did not believe Mr Kennedy’s sworn evidence. Indeed, in one area where there was conflict between the evidence of Mr Kennedy and that given by some of the Australian Federal Police officers who executed the search warrant on 13 November 2003, his Honour accepted Mr Kennedy’s evidence, albeit without finding that the police officers had given false evidence.

15                  In assessing Mr Kennedy’s assertions of purpose the trial judge took into consideration the credibility of Mr Kennedy’s evidence about the circumstances in which the notes were prepared. The course and content of Mr Kennedy’s cross-examination before the trial judge is discussed later in these reasons, but for present purposes it is sufficient to note that Mr Kennedy agreed that he had little recollection of the actual circumstances under which the notes were prepared. While Mr Kennedy’s uncertainty about matters such as the precise time of the preparation of the documents is not decisive, when coupled with the failure to explain his thought processes, it could legitimately have been seen by the trial judge as relevant and significant.

16                  In circumstances where the purpose of the creation of the two documents was clearly in issue, and the appellant had provided no direct evidence of his thought processes or the nature of the advice that he was seeking from Mr Hafner, it was open to the trial judge to give virtually no weight to the bald assertions contained in the final form of the affidavit evidence relied on by Mr Kennedy. In effect, the trial judge concluded that he was not satisfied, on the balance of probabilities, that the notes were brought into existence for the dominant purpose of obtaining legal advice, so as to attract legal professional privilege.

17                  It was claimed that Mr Kennedy was forced to rely upon these assertions of purpose because he was precluded from providing any evidence about what was actually discussed during his meeting with Mr Hafner on 4 November 2003, since to do so would have destroyed the very privilege he sought to claim. We do not agree. It was open to Mr Kennedy to seek orders that would have allowed the evidence to be given in confidence under such conditions as to preserve the privilege. Indeed, other confidential evidence was admitted before the trial judge, including of course the handwritten notes themselves. In so far as the appellant may have had concerns about invoking the privilege against self-incrimination, the trial judge gave him the option of answering a particular question with the protection of a certificate under s 128 of the Evidence Act 1995 (Cth), but the appellant chose instead not to answer the question.

18                  The appellant contended that the trial judge’s comment that “[n]o direct evidence has been given of the communication or to explain the notes” (at [66]) was erroneous and demonstrated a failure to consider all the evidence. The context shows however that the judge was referring to the undoubted absence of any direct evidence about what occurred at the meeting for which the notes were prepared.

19                  The appellant also submitted that the trial judge was in error in failing to accept Mr Kennedy’s direct evidence of purpose when that evidence was “unchallenged”, having been admitted – it was said – without objection and not having being challenged in cross-examination. As counsel for ASIC submitted, however, it was clear from ASIC’s particulars and Statement of Issues that it consistently maintained that the onus of proof remained with Mr Kennedy to sustain his claim for privilege and that there was never any concession that Mr Kennedy’s assertions of purpose sufficed to establish it.

20                  Secondly, as counsel for ASIC also pointed out, ASIC did object to the appellant’s “direct evidence” of purpose. An objection, on the ground of form, was taken and maintained to the assertion of purpose in Mr Kennedy’s affidavit of 19 November 2003, but the trial judge admitted the contested sentence into evidence. In doing so, however, the trial judge was not accepting that the assertion of purpose necessarily achieved the object the appellant intended it to achieve. Subsequently, when the trial judge read Mr Kennedy’s affidavit of 1 March 2004, which reiterated the “direct evidence” of purpose (although, as Allsop J points out, with greater “legal precision”), no objection was raised to that second assertion. The appellant relies upon the assertion in this further affidavit but ASIC answers, convincingly, that nothing should turn on this since the earlier objection had been overruled and a further objection would have been pointless.

21                  The result is that Mr Kennedy’s assertions of his purpose in creating the notes simply failed to discharge the onus of proof. No error has been demonstrated in the trial judge’s reasons in this respect.

22                  Numerous challenges were made to the trial judge’s use of circumstantial evidence about the relationship between Mr Kennedy and Mr Hafner. It should be noted, however, that even if those challenges were well-founded, it would not follow that the trial judge would have been bound to accept Mr Kennedy’s assertions of his purpose. Mr Kennedy’s claim for privilege was still liable to fail because he had not persuaded the trial judge of the facts necessary to establish his claim. Nevertheless we will address these findings, and the challenges to them, as it is important to consider the evidence as a whole.

Was the onus of proof reversed?

23                  The appellant argued that although the trial judge noted that it was well established that the onus of proving the facts giving rise to legal professional privilege was upon the party claiming that privilege, his Honour effectively reversed the onus of proof in the course of the reasoning that led to his first ground of decision. The suggested reversal of the onus was said to be demonstrated by the judge’s observations about the assumptions that may be made when an Australian practising lawyer is communicated with on a professional basis. In such a case, the judge noted, it may be appropriate to assume that legitimate legal advice was sought, absent any contrary indications. This is surely uncontroversial, particularly since the judge qualified the observation by referring to the absence of contrary indications. The judge however went on to say:

“Such an assumption rests upon judicial notice of, and judicial authority to enforce, the legal and ethical responsibilities of Australian legal practitioners and upon a common understanding as to the body of Australian law which must be complied with. No corresponding assumption can be made in the case of foreign lawyers without satisfactory evidence.”

24                  The appellant contended that the judge was in error in this respect since his Honour should have presumed that the law of Switzerland about the regulation of the legal profession was not materially different from the law in Australia.

25                  When it came to making findings of fact, however, his Honour made a positive finding that Mr Kennedy “would have sought and received some advice as to the effect of Swiss law from Hafner during the meeting” and a further finding that Mr Kennedy “would have sought advice from Hafner which did not involve seeking or receiving legal advice”. This latter finding seems to us not to have turned upon any assumption about communications with foreign lawyers as such, but upon the view the judge took about Mr Hafner’s role in relation to Mr Kennedy’s affairs in Switzerland; that is to say, it was based upon factual considerations pertaining to this particular lawyer in thisparticular case. Moreover, in relation to the first ground of the judge’s decision, the issue was not the “legitimacy” of any legal advice as such, but whether other advice or information, outside the scope of legal professional privilege, was also the subject of the meeting and of the notes prepared for the purposes of the meeting.

26                  In these circumstances the contention that the learned judge, having correctly stated the onus of proof, proceeded to reverse it when applying it to the facts of this case, must be rejected.

27                  We do not think it necessary to decide whether the judge was correct in asserting that assumptions about communications with Australian lawyers rest upon judicial notice of their legal and ethical responsibilities, although for the sake of addressing all the issues we think it appropriate to express our agreement with Allsop J on this point. More generally, we incline to the view that in the ordinary case of a client consulting a lawyer about a legal problem in uncontroversial circumstances, proof of those facts alone will provide a sufficient basis for a conclusion that legitimate legal advice is being sought and is being given, irrespective of the particular ethical and legal obligations applicable to an Australian lawyer.

Challenges to findings of fact about the role of Mr Hafner

28                  The judge’s findings of fact about the role of Mr Hafner were challenged by the appellant as being unsupported by the evidence. The challenged findings are that Mr Hafner was the repository of information, that he was effectively the custodian of records, that he was de facto trustee or manager of the entity and that he had a role going “far beyond that of an arm’s length professional legal adviser”. It may be accepted that these findings were based upon the transcript of the s 19 examination.

29                  If the finding that Mr Hafner was “de facto trustee and manager” (the expression used by his Honour at [68]) meant in its context that Mr Hafner personally conducted the entity’s trading activities, the appellant’s challenge would be well-founded. The context shows, however, that this was not what the trial judge meant. The judge’s observations at [68] must be read in the context of his earlier findings, especially at [32]. The evidence upon which those earlier findings are based is set out at [16]-[29]. Read in that context, it is clear that what his Honour had in mind was Mr Hafner’s role as the person in whose control Mr Kennedy left such of his affairs as had a connection with certain Swiss entities.

30                  The expression “de facto trustee and manager” is to be assimilated with the conclusion (at [32]) that Mr Hafner was a “true attorney” for Mr Kennedy. The terms “trustee” and “manager” do not, in their context, carry with them the flavour of trading; rather they indicate in their context that Mr Hafner exercised such powers and responsibilities in relation to the entity as Mr Kennedy himself would have exercised had he been in a position to do so and had he wished to do so. The judge had previously referred to Mr Kennedy’s statement in the s 19 examination that Mr Hafner was “the only person that [Mr Kennedy was aware of] who understands the thing” (see at [23]), and his evidence that among Mr Hafner’s functions was the appointment of directors (see at [22], [32]) and managers (see at [21], [22]). Although the trial judge did not refer to those parts of the s 19 transcript in which one of the entity’s first professional managers was identified as “Credit Suisse or UBS”, it is clear from the evidence to which his Honour did refer that he was well aware that the day-to-day management of the entity’s trading activities was, in earlier years, in the hands of professional managers and was not conducted by Mr Hafner personally. There is no reason to suppose that his Honour proceeded upon a misunderstanding that, in later years, Mr Hafner undertook the roles formerly performed by the professional managers.

31                  In support of the challenge to the judge’s finding that Mr Hafner was “the repository of information” and “custodian of records”, counsel for the appellant pointed once more to the evidence that any investment entity over which Mr Kennedy may have had any influence had, quite independently of Mr Hafner, fund managers and directors. Again, the appellant’s criticism of the judge’s findings about information and records seems to be based upon the assumption that his Honour’s findings refer to trading or investment activities. Here too, however, the context shows that the findings were not directed to what might be termed “operational” matters. His Honour referred to the existence of fund managers and directors in his reasons at [21] and [22] in a way that showed that he saw them as having a different role to that of Mr Hafner. His Honour’s reference to information was in the context of information about the structure of the entity and such significance as it had to Mr Kennedy: see [25]-[27].

32                  Once it is understood that his Honour was not referring to information and records about the trading activities of the entity, but was making findings about matters concerning its structure and function, his conclusions can be seen to be supported by the evidence.

Challenges to findings of fact about the 4 November meeting

33                  The appellant challenged findings of fact about the meeting between Mr Kennedy and Mr Hafner on 4 November 2003, principally the conclusions that Mr Kennedy would have sought and received advice of a non-legal nature, and that Mr Kennedy would have given Mr Hafner instructions of an administrative nature in relation to the Swiss entity. But these findings were founded on inferences drawn from permissible findings about the role of Mr Hafner, already discussed, and about the circumstances under which Mr Hafner was being consulted. Such inferences were in accordance with a common sense approach to the 4 November meeting considered against the background of the wider relationship between Mr Kennedy and Mr Hafner. No error has been demonstrated in his Honour’s reasoning in this respect.

34                  The appellant also challenged the trial judge’s observations at [68] that:

[Mr Hafner] would be expected to have contacts with the banks and other institutions used by the relevant entities and with Swiss authorities from which he may have gleaned or may have been perceived as able to glean information as to the likely reaction to existing and further Australian inquiries. It is likely that Kennedy would have sought to have Hafner utilise any contacts which he had in any way that would have assisted Kennedy’s position.

35                  Nothing in his Honour’s reasoning appears to have turned upon these particular observations. They are merely elaboration upon the broader finding that Mr Kennedy would have sought information from Mr Hafner that did not involve seeking or receiving legal advice. But in any event, the evidence about the role of Mr Hafner supports the observations as a matter of common sense. It would indeed be surprising if someone with Mr Hafner’s role did not have, or did not have access to, useful contacts.

36                  The appellant submitted that the trial judge erred in finding that the available evidence did not allow any clear separation between legal advice and other topics, and thus that the “legal” aspects of the handwritten notes (understood as such in light of the “legal” aspects of the 4 November meeting) could not be dealt with separately and severably from the non-legal advice and information. It was also submitted that it necessarily followed from the trial judge’s finding at [70] that at least some of the items in the notes were “squarely in respect of legal advice” and consequently that the notes as a whole should have been held to be privileged.

37                  ASIC’s response to the last point was that the finding at [70] did not go so far as to be a positive conclusion that there were entries in the notes that were plainly in respect of legal advice. The judge’s finding was that some items were “consistent” with a request for legal advice. We agree with ASIC’s submission that this should not be taken as a finding that the items in question were in fact referrable to legal advice. Read as a whole, and in their context, the observations at [70] show that the judge was not persuaded that the notes themselves provided the necessary support for the claim for privilege. Rather, his Honour considered them to be inconclusive on their face. Our examination of the notes for the purposes of the appeal has not persuaded us that the judge was in error.

38                  On the broader question of separation between legal advice and other topics, the position when the evidence was all in was simply that Mr Kennedy had given evidence by affidavit that the notes were prepared for the purpose of obtaining legal advice but had chosen not to go into greater detail, and ASIC had put in evidence some material, including the s 19 transcript, from which inferences might be drawn about the purposes of the meeting for which the notes were prepared. Mr Kennedy had been cross-examined on his affidavits in relation to credibility, but not about what was said during the meeting. When, in these circumstances, the trial judge had to determine the claim for privilege, his conclusions about Mr Hafner’s role as a lawyer did not logically require further conclusions about the relative significance of the different purposes for which the meeting may have been held. It was open to the judge to conclude that whilst the evidence did permit some findings about Mr Hafner’s role as a lawyer, it did not allow any clear separation to be made between legal advice and other topics.

39                  It is also quite apparent that the trial judge was aware of the difficulty of drawing a line between legal advice and other advice and of the problems to which that can give rise. He referred specifically to the decision of Allsop J in DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 203 ALR 348. There is nothing to suggest that the trial judge misunderstood the principles discussed in that case. In any event, we agree with Allsop J that DSE (Holdings) Pty Ltd was quite a different case.

40                  It was argued that the trial judge erred by conflating the purposes of the meeting with the purposes for which the notes were made, thereby diverting his attention from the critical question of the purpose or purposes for which the notes, or any part of them, were created. The passages in his Honour’s reasons relied upon in support of this submission are at [73] and [74]. Particular objection was taken to the conclusion at [73] that the “purpose for making the notes is inextricably bound up with the purpose of the meeting.”

41                  We do not read his Honour’s reasons in the way suggested. It was central to Mr Kennedy’s claim to privilege that the notes were prepared for use at the meeting. It was open to the judge to approach the central question of the purpose or purposes for which the notes were made by having regard to such evidence as there was about the surrounding circumstances, including the meeting. Since the notes were prepared for use at the meeting and there was evidence from which inferences could be drawn about the purposes of the meeting, it was open to the judge to conclude that the two were very closely linked. We do not see the use of the word “inextricably” as suggesting that the trial judge’s reasoning in this respect was flawed.

42                  Objection was also taken to the trial judge’s observations at [71] and [72] that:

There is also force in the argument advanced on behalf of ASIC that if the dominant purpose of meeting Hafner was to obtain legitimate legal advice for Australian purposes then it would be expected that the communication would be through or supervised by the Australian lawyers who had by then been instructed.

There is also force in the point taken by ASIC that if the dominant purpose of making the notes was to obtain legitimate legal advice, it is surprising that Kennedy did not claim legal professional privilege in them at the time of execution of the warrant on 13 November. He saw and recognised the notes which were seized. Hartnell had been instructed since 30 October. Kennedy was anticipating further ASIC inquiries. A solicitor from Atanaskovic Hartnell was present throughout the search and seizure. He must be taken to have been aware, at least, of the general principles as to legal professional privilege. … The most probable inference is that Kennedy did not tell his solicitor that the notes, which were clearly identified by him at the time of seizure, were prepared for the purpose of obtaining legal advice.

43                  It is not clear where these challenges, if successful, would lead. Nothing appears to have turned upon either of these considerations, as the trial judge appears to have used them as confirmatory observations rather than as essential strands of his reasoning. Even if the challenges were made out, they would not affect our conclusions about the outcome of the appeal.

Relevance of the transcript of the s 19 examination

44                  Another challenge to the trial judge’s first ground of decision was that his Honour should have ruled that the transcript of Mr Kennedy’s examination under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) in December 2003was inadmissible on the ground that it was irrelevant. Objection was taken at the trial to the admissibility of the transcript and the judge deferred ruling upon the objection. His Honour’s reasons for judgment did not expressly deal with the objection but it is quite plain that he concluded that the transcript as a whole was relevant to the issue of purpose. His Honour proceeded upon the basis that the transcript cast light upon Mr Hafner’s roles in Mr Kennedy’s affairs, upon the existence and nature of Mr Kennedy’s relationship with the Brampton entity, and upon Mr Kennedy’s state of mind on and shortly after 30 October 2003, and on 13 November 2003 when the warrant was executed. These conclusions were clearly open to the primary judge.

45                  It is true, as the appellant submitted, that the role of Mr Hafner was not the focus of the s 19 examination and that the questions put to Mr Kennedy during his examination, and the answers he gave, were not directed towards the proof or disproof of facts in issue with the precision that might be expected in proceedings before a court of law. The questions and the answers from which the trial judge drew conclusions were however sufficiently clear to support findings about the role of Mr Hafner and thus about the purposes of the relevant meeting and the notes prepared for it.

Role of the appellate court in relation to questions of fact

46                  By way of general support for the appellant’s argument that we should reject the trial judge’s findings about Mr Hafner’s role, counsel argued that in the present circumstances the Full Court was under few of the “natural limitations” of an appellate court proceeding wholly or substantially on the record. Counsel argued that the cross-examination of Mr Kennedy upon the issues that are presently relevant was brief, and that to the extent that there was any factual contest between the witnesses, it was about conversations that took place during the execution of the search warrant, and that contest was resolved by the judge in favour of Mr Kennedy. Thus, it was argued, the Full Court was in as good a position as the trial judge to decide what inferences should be drawn from the evidence, including the transcript of Mr Kennedy’s examination under s 19 of the Australian Securities and Investments Commission Act.

47                  It may be accepted that the cross-examination on the issues that are presently relevant was indeed brief, but the cross-examination generally nevertheless occupied well over an hour and some of it was directed quite specifically to Mr Kennedy’s reliability as a witness. Cross-examination was also directed to the circumstance that, in three separate affidavits, Mr Kennedy sought to correct statements in his first affidavit. Attention was directed to what was said to be an inconsistency between Mr Kennedy’s primary affidavit, in which he swore that he was not aware that the documents seized included “the privileged document” (at that stage mistakenly believed to have been one document, rather than two) and his affidavit of 26 February 2004, in which he swore that the paragraph in his earlier affidavit “did not convey what he intended to convey” and in which he also said that he did understand, generally, the nature of the documents seized in the execution of the search warrant. This later statement was then contrasted, in cross-examination, with more specific evidence in cross-examination before the trial judge, in which Mr Kennedy had agreed that he had seen the handwritten notes on the day that they were seized, at or before the time they were seized, and in which he agreed that it was his evidence that he “knew at the time what those notes comprised”. At another point in the cross-examination, Mr Kennedy accepted that his evidence about the circumstances in which the handwritten notes were prepared was “essentially a reconstruction”. A significant part of the cross-examination was thus conventional cross-examination as to credit. The cross-examination was of quite sufficient length and content to permit the trial judge to form a view about Mr Kennedy as a witness.

48                  There was also evidence that Mr Kennedy had a poor recollection of the circumstances under which the notes were created and that he was unable to recall with any precision when, where or under what circumstances they were prepared. More generally, when in his s 19 examination it was pointed out to Mr Kennedy that he had answered questions with responses to the effect that he could not recall, he replied:

“I have an appalling memory, and always have had. I can’t remember what happened last Wednesday, let alone what happened eighteen months ago.”

49                  The assessment of evidence of this nature, considered in the context of Mr Kennedy’s evidence in his several affidavits and having regard to his cross-examination, was squarely within the field of a trial judge’s special advantage.

50                  The same may be said about the appellant’s complaint that the judge ignored Mr Kennedy’s use of qualified language, such as “I assume” and “I presume” in his answers to questions put to him during his examination under s 19. There is no reason to suppose that the judge failed to take into account the actual language used by Mr Kennedy, and the significance to be attached to qualifications of this nature was essential a matter for the trial judge who had the advantage, not possessed by the appellate court, of observing the witness giving oral evidence during which he also used qualifying expressions.

Were the findings inconsistent with the case as particularised?

51                  The trial judge’s findings about Mr Hafner’s role were attacked on another general ground, namely that they were said to be inconsistent with the case as particularised by ASIC, and run at the trial, concerning Mr Kennedy’s purpose in meeting with Mr Hafner and in creating the handwritten notes. It was argued that ASIC’s central case had been that Mr Kennedy’s aim was to further an illegal or improper purpose and that it had never been suggested to him that, in truth, he was seeing Mr Hafner to obtain financial or other information. Thus it was contended that it would be “almost impossible” for the trial judge to make the findings that he did.

52                  A distinction needs to be drawn, however, between two aspects of ASIC’s case as it appears from its particulars and from the written outline of issues filed prior to trial. ASIC put in issue Mr Kennedy’s contention that any communication with Mr Hafner was necessarily privileged because he was, or was believed to be, a lawyer. This was explicitly challenged and it was explicitly stated in the outline of issues that not every communication with a lawyer, “even an Australian lawyer”, was privileged or capable of supporting a claim for privilege. It was also stated in the outline that it could not be assumed that any communication with Mr Hafner, or any advice given by him, bore a “legal” character sufficient to sustain a claim to privilege. The outline shows that ASIC identified as a separate issue whether, even if the privilege would otherwise attach, it nevertheless did not attach in the circumstances of this case because the communications in question were for an improper purpose (such as the furtherance of illegality or fraud). Although the focus of the case in the documents and at the trial appears to have been upon ASIC’s claim that the communications were for an improper purpose, there was no abandonment of the general, and quite separate proposition that Mr Kennedy bore the onus of establishing his claim for privilege. In respect of this latter point, the first issue identified by ASIC in the outline under the heading “Summary of Issues to be Determined” was:

“WHETHER, apart from the law governing communications for a purpose ulterior to the purpose for which legal professional privilege is recognised, privilege ever attached to the disputed document. This includes the question of WHETHER the document was in fact brought into existence (as Mr Kennedy contends in paragraphs 2 and 8 of his Outline) for ‘the sole purpose of obtaining legal advice’.”

53                  The Summary of Issues to be Determined was said to be subject to the observations made in the preceding paragraph. These included a reference to Mr Hafner appearing to have general business qualifications rather than simply legal ones and the contention that it could not be assumed that any communication with Mr Hafner, or any advice given by him, bore a “legal character” sufficient to sustain a claim for privilege.

54                  The claim that the judge’s findings on the first ground of his decision were inconsistent with ASIC’s case as particularised or as conducted at the trial must therefore be rejected.

The rule in Browne v Dunn

55                  The appellant submitted separately that the trial judge’s findings about the role of Mr Hafner involved a breach of the rule in Browne v Dunn (1893) 6 R 67 or some analogous denial of procedural fairness. This submission was based on the proposition that ASIC was bound to put to Mr Kennedy in cross-examination that his purposes in consulting Mr Hafner included obtaining advice or information that was not legal advice.

56                  Again the answer to the submission is that ASIC’s case in this respect was stated with sufficient clarity in the outline of issues and in its particulars. It is well-accepted that the emergence of issues from such documents can operate to satisfy the rule in Browne v Dunn: see Cross on Evidence (7^th Aust ed, 2004) para [17445] and the authorities there cited. This is so because the “practical rule of fairness enshrined in the Browne v Dunn principle” (Boston Clothing Co v Margaronis (1992) 27 NSWLR 580 at 590 per Kirby P) requires that the opposing party be on notice in order that they may adduce evidence and make submissions to the contrary.

57                  It should also be borne in mind that the trial judge was in a particularly advantageous position to determine what fairness required in all the circumstances, and in a much better position than an appellate court: see Costi v The Queen (1987)48 SASR 269 at 271 per King CJ. The present case had some quite unusual features and the parties were plainly alive to tactical considerations. It was very much a question for the trial judge to determine whether, in all the complex and evolving circumstances of the trial, Mr Kennedy had sufficient notice of the case being made by ASIC.

58                  An additional submission about procedural fairness was made in relation to the trial judge’s observation that:

Some [parts of the handwritten notes] are cryptic. Some are difficult to read. I can see the relevance of some, but not of others. … Many are ambiguous.

59                  The appellant submitted that the trial judge erred in not disclosing this observation to counsel. However, as counsel for ASIC pointed out, the trial judge said, in response to an invitation by counsel for the appellant to inspect the documents:

“[I]t is not easy for a Judge who sees only a little bit of a case, or sees all of the case but the case is only one part of [a] much wider picture, to understand what are essentially cryptic notes and almost always would be. Some of the things here I could probably check by looking at the evidence. For example, there is a name referred to somewhere which means nothing to me but it may if I read the evidence more carefully – but that is the sort of problem one has.”

60                  Although this was said at a very late stage of the proceedings it must nevertheless have alerted the appellant to the judge’s impression that the notes were “cryptic” and it did so when there was still an opportunity for the appellant to comment.

Conclusion

61                  No error has been demonstrated in the trial judge’s reasoning on his first ground of decision. It was open to his Honour to conclude that on the balance of probabilities the appellant had not made out his claim for privilege. This finding may stand regardless of whether privilege was available in relation to a document prepared as an aide-memoire for use in seeking legal advice from a foreign lawyer outside the jurisdiction of Australian courts, and where the client’s ultimate object might also be described as being to preserve the “secrecy” of certain of his affairs from the Australian authorities.

62                  We think that this is a sufficient basis upon which to dispose of the appeal. For the sake of completeness, however, we should express our general agreement with Allsop J in relation to the trial judge’s second ground of decision, the contentions about the availability of privilege in relation to advice sought from foreign lawyers, the connection between the privilege and “the administration of justice”, and the lack of any waiver or estoppel operating in these circumstances.

63                  The appeal should be dismissed with costs. As to the preservation of the position of Mr Kennedy, we agree with the orders proposed by Allsop J restraining the respondents dealing with the notes up to 21 January 2005.

Associate:

Dated: 23 December 2004

On Appeal from a Single Judge of the Federal Court of Australia

REASONS FOR JUDGMENT

ALLSOP J

Introduction

64                  This is an appeal from an order made by a Judge of the Court dismissing the further amended application in which declarations and orders had been sought by the appellant, Mr Trevor Kennedy, to the effect that two documents taken from his home in the execution of a search warrant on 13 November 2003 by officers of the Australian Federal Police and the Australian Securities and Investments Commission (ASIC) were protected by legal professional privilege.

65                  The two documents the subject of the proceedings were handwritten notes made on notepaper of a hotel in London and of a hotel in Zurich in the circumstances recounted below.

66                  The arguments put before the primary judge and before this Court touched upon a number of important issues concerning the extent and operation of the law on legal professional privilege. The arguments put before this Court also involved assertions that the primary judge had made a number of errors in the making of factual findings.

67                  It is necessary to set out what can be said to be the essential facts in which to assess the claims for privilege. The parties disagreed about the extent to which the background facts were relevant to the assessment of the issue of privilege. Indeed, the appellant argued that the primary judge had erred in having regard to, and not rejecting as irrelevant under s 55 of the Evidence Act 1995 (Cth), much of the evidence given by Mr Kennedy in his examination by ASIC in December 2003 after the execution of the search warrant on 13 November 2003. In my view, this transcript was relevant. It assisted in understanding, with some clarity, the position Mr Kennedy found himself in on 30 October 2003. It thereby assisted in understanding the choices before him then and in the days immediately following, and the likely motivations for his conduct. As such, it was relevant material against which to assess and evaluate his express evidence about his purpose in making the notes in question. I will return to this question later, having set out the factual context.

68                  The factual context is wider than merely the events of the period from Thursday, 30 October 2003 (being the day of publication of certain articles in the Australian Financial Review) to Tuesday, 4 November 2003 (being the day on which Mr Kennedy conferred in Zurich with his Swiss lawyer, Mr Benno Hafner). That period is, of course, crucial in the assessment of the purpose of Mr Kennedy in writing the notes in question and in seeing Mr Hafner. The wider context, however, in large part taken from the transcript of the December 2003 examination, places this confined period in its proper perspective and allows an appreciation of what I consider to be the inadequacy of the evidence put forward by the appellant to justify the claim for privilege.

69                  Subject to the submission as to the legal irrelevance of the transcript of the December 2003 examination, the appellant urged this Court, in its review of the factual findings complained of, to have regard to the transcript and evidence. That is what I have done.

70                  A relevant distinction to be recalled at all times is that the relevant purpose for the primary basis of the claim for privilege over the documents is the purpose or purposes for which the documents were created, or as is discussed below, the purpose or purposes for which writing was placed on the paper. This purpose or these purposes is and are to be kept distinct from, though it and they are obviously related to, Mr Kennedy’s purpose or purposes in seeing Mr Hafner in Zurich.

71                  To the extent that there are references in the following factual background to things said by Mr Kennedy, they are taken from or based on his examination in December 2003. To the extent that there is a lack of clarity or precision in what follows that is a reflection of a lack of clarity and precision in the evidence of Mr Kennedy.

Factual background

72                  In the 1980s, Mr Kennedy caused to be created a “structure” or an “entity” in Switzerland. It was created on the basis of legal and accounting advice in London.

73                  Mr Kennedy was apparently assured that he had no ownership whatsoever in, or influence whatsoever over, the structure or entity. Mr Kennedy said:

…the structure before the change was created by some supposedly smart accountants and lawyers in London on the basis that what I was doing was strictly legal and that I had no ownership or – or authority over it. Beyond that, I have no knowledge, and I don’t believe I have ever had, of what it was.

74                  Mr Kennedy said that in either 1997 or 1998 there was “another iteration of this entity” over which he had “more influence.” He did not believe, however, that he had ownership in or of this new iteration. It is clear that the phrase “more influence” used by Mr Kennedy was intended to indicate that though he was responsible for establishing the first entity, he had no “interest or association or influence” in, with or over it until the changes in 1997 or 1998. These changes were apparently brought about by changes to Swiss law and were effected on the advice of Mr Hafner. The influence which Mr Kennedy understood that he (Kennedy) acquired in 1997 or 1998 was to have some influence over the investment policy of the entity or structure.

75                  Mr Kennedy said he could not recall why he established the entity in the first place. Mr Kennedy said that he did not understand the technical nature of the changes which occurred, but he did say that he did not believe that the “second structure” had “anything to do with the first structure”.

76                  Mr Kennedy said the following about his personal interest in investment in Switzerland:

I am advised that I had no interest in the entity that was – that I had caused to be created up until 1997-98. Whether and what the nature of my interest is after ’98 I am unclear, but I certainly had an influence over things like its choice of investment managers, et cetera.

77                  It is to be inferred that the original entity and later entity had funds for investment. The extent and source of these funds were not disclosed in the evidence.

78                  Mr Kennedy said that he had been advised by Mr Hafner that he had no interest in the entity up to 1997 or 1998. (The date of this conversation was not identified. This advice was not asserted to found any argument of waiver in this case.)

79                  Meanwhile, on 3 May 1995, the predecessor of ASIC, the Australian Securities Commission (the “ASC”) commenced proceedings in this Court against a number of corporate respondents including Bank Leumi Le-Israel (“Bank Leumi”), E B Zurich AG (“Zurich”) and a listed company, Offset Alpine Printing Group Ltd (“Offset Alpine”). The other respondents were, by their names, various local nominee companies. The proceedings concerned alleged contraventions by Bank Leumi and Zurich of the provisions of s 722 of the Corporations Law concerning the provision of information as to the shareholding in Offset Alpine.

80                  Two weeks before the commencement of those proceedings, the Australian Stock Exchange had made a market surveillance referral to the ASC drawing attention to the trading in the shares of Offset Alpine between 1 September 1994 and 28 February 1995. The referral stated, amongst other things, that there may have been breaches of the substantial shareholder provisions of the Corporation Law by Zurich and by a company associated with Mr Rene Rivkin. The referral identified, amongst others, Bank Leumi.

81                  Shortly after receiving this referral, the ASC commenced an investigation under s 13(1) of the Australian Securities Commission Law (the “ASC Law”) in relation to possible contraventions of ss 615, 709 and 710 of the Corporations Law in relation to shares and shareholding in Offset Alpine.

82                  On or about 16 May 1995, in furtherance of this investigation, the ASC issued a notice under s 19 of the ASC Law to Mr Kennedy to attend an examination on 18 May 1995. He did so. The primary judge made a finding at [12] of his reasons as to what Mr Kennedy said on that day which was not contested by either party before this Court:

…Kennedy accepts that in it he denied having any beneficial interest in the Offset Alpine shares held by either EBC or Bank Leumi, claiming that his only interest was held through a company related to him which was actually registered as a shareholder.

83                  On 6 June and 6 September 1995, Mr Rivkin was examined under s 19 of the ASC Law in furtherance of the investigation.

84                  On 14 December 1995, Sackville J published his reasons in relation to the disposition of the abovementioned proceedings. (See 134 ALR 101.) His Honour did not make orders on that day, other than for the bringing in of orders. The reasons of Sackville J disclose that there was an evidentiary debate before his Honour about Swiss law concerning disclosure of information. The orders that were subsequently made by Sackville J included declarations that Bank Leumi and Zurich were in contravention of the Corporations Law by their failure to provide information in respect of Offset Alpine; but his Honour refused to make a divestiture order. An appeal and a cross appeal were dismissed. (See 69 FCR 531.) The shares in Offset Alpine were subsequently sold and one can infer, in the ordinary course, that the proceeds were distributed to those who were entitled to the funds.

85                  There is, and was before the primary judge, no evidence as to whether the entity that Mr Kennedy had caused to be established in the 1980s had, or had had at any time in the past, any interest in any shares in Offset Alpine or in any proceeds of sale of such shares. In 1995, Mr Kennedy had denied to the ASC that he had any interest whatsoever in the Offset Alpine shares. The evidence before the primary judge did not disclose with any clarity the basis of that denial – that is, whether it was based on Mr Kennedy having no interest in the structure or entity, or the entity or structure having no interest in Offset Alpine or any proceeds of sale of Offset Alpine shares. Though, in this respect, the following passage in the examination in December 2003 is a basis for inferring the former, rather than the latter:

I’ll ask you more generally: did you have any interest at all in the shares that were the subject of the ASC action?

Privilege. I don’t believe so.

And when I asked that question in terms of any interest that you have, would the question be any different – would the answer be any different if instead of referring to you personally, we referred to some family company or trust or other entity associated with you?

Privilege. Yes, it could well be.

And are you able to explain that for us?

Privilege. Well, in the late 80s, to the best of my recollection, I caused an entity to be established that was off shore.

What was the name of that entity?

It was, I believe, called Brampton.

86                  Slightly later on the same day, however, Mr Kennedy said the following:

What was the connection or possible connection between on the one hand Brampton and on the other had the shares that were the subject of the Federal Court action in 1995?

Privilege. I don’t believe there was any connection.

…

I must say I’m – I’m just trying to ascertain what it is you’re saying.

Privilege. I am – I don’t – as far as I know, Brampton had never held shares in – in –in Offset, if that’s – as far as I’m aware it – it – it wasn’t a – it wasn’t a shareholder in – in Offset Alpine.

87                  On the following day, 2 December 2003, Mr Kennedy denied that he had any belief or suspicion as to who had the interest in Offset Alpine shares and he said that he had never asked Mr Rivkin who had owned the shares.

88                  Mr Kennedy first “encountered” Mr Hafner, his Swiss lawyer, in 1996. It can be inferred that Mr Hafner provided assistance in the unspecified changes in structure of the entity in 1997 or 1998 – the further “iteration”. Mr Hafner was the person with whom Mr Kennedy dealt after 1996 in relation to the entity or entities. Mr Hafner was the only person of whom Mr Kennedy was aware who understood the structure or structures in Switzerland. Mr Hafner had all records of the structures. Mr Kennedy was not aware of the existence of any records. He gave no instructions to Mr Hafner about the records. Mr Hafner had been responsible for the custody of everything relating to the entity or entities. Mr Hafner had access to everything that arose in relation to that entity. As at 30 October 2003 (and there is not evidence to indicate any different position earlier) Mr Kennedy was able to access information from Mr Hafner.

89                  Mr Kennedy said that Mr Rivkin had no knowledge of, and played no part in, the Swiss entities or structures. Whilst Mr Kennedy denied any interest of himself or of his family in the entities or structures, he described the entities or structures as “a very private piece of my own affairs”.

90                  On 29 October 2003, based on his own evidence, Mr Kennedy’s position was as follows:

(a)                He had caused to be created an entity or entities in or connected with Switzerland.

(b)               The entity had investment advisers or fund managers, which had included at some time Swiss banks. Presumably, therefore, the entity had investments and funds.

(c)                It was set up with the assistance of professional advice, which was to the effect that it was legal and that Mr Kennedy had no interest in the entity.

(d)               It was regarded by Mr Kennedy as a very private piece of his own affairs.

(e)                In 1995 Mr Kennedy had given sworn evidence to the ASC of his lack of interest in the any Offset Alpine shares.

(f)                 Mr Hafner was, and had been since 1996, his legal adviser in Switzerland; and Mr Hafner was also the person to whom Mr Kennedy went for understanding any aspect of the entity and its affairs. Mr Hafner had relevant records. Mr Hafner understood and had access to all aspects of the structure. Thus, Mr Hafner had a legal role, both advisory and executory, vide the 1997 or 1998 changes, and a factual, clerical or secretarial role – he was the sole fount of knowledge and documents for Mr Kennedy about the entity or entities and its or their activity.

(g)                Mr Hafner had advised Mr Kennedy to amend the structure in 1997 or 1998. These amendments gave Mr Kennedy some influence over the investment policy of the entity.

(h)                Mr Hafner had advised Mr Kennedy in the past that he, Mr Kennedy, had no interest whatsoever in the entity before 1997 or 1998, in particular in 1995 when Mr Kennedy had given evidence on oath to the ASC about Offset Alpine.

91                  It was in this context that Mr Kennedy opened his Australian Financial Review on the morning of 30 October 2003. On that day the Australian Financial Review published a number of articles. The first three took up the whole of the front page, together with a picture of Mr Rivkin, with the caption:

Exposed… Rene Rivkin admitted Swiss bank accounts were used to house Offset Alpine shares.

92                  The articles continued on page 10, taking up the whole of that page together with a picture of Mr Rivkin and a chronology under the heading “The Life and Times of Rene Rivkin” which included the following:

1993: (Dec 24) Offset Silverwater printing plant burns down

1994: Insurance payout of $53.2m to Offset.

1995: ASIC attempts to identify who is behind Leumi and EBC’s 38% holding in Offset.

1996: Australian Tax Office freezes proceeds of sale of the holding.

1997: Funds released $1.442m deposited into Graham Richardson’s Cheshire sub-account in Laira.

93                  Page 10 also contained a flow chart entitled: “Bank Leumi: Secret Accounts ASIC Couldn’t Find” which included the following captions and content:

WORLD INTERNATIONAL

Set up January 1998. Scottish partnership (a legal entity which can be used as an intermediary by people investing in Switzerland) hides Rivkin and Richardson beneficial ownership.

…

LAIRA INVESTMENT COMPANY

Set up October 1997 for Offset Alpine funds transfer. Scottish partnership hides Rivkin and Richardson.

94                  The articles continued on page 13, taking up the whole of that page, together with a photograph of Mr Kennedy, and on pages 14, 16 and 17, taking up the whole of those pages.

95                  Before making any further reference to those articles, it should be noted that the articles were admitted into evidence, but with a restriction that they were not evidence of the truth of the assertions therein, just that articles in those terms were published on 30 October 2003.

96                  The first article on page 1 commenced with the following paragraphs:

Swiss prosecutors have unmasked the figures behind one of the great corporate mysteries of the 1990s and revealed a network of Swiss bank accounts used to secretly trade the Australian sharemarket.

Stockbroker Rene Rivkin, former cabinet minister Graham Richardson and Qantas director Trevor Kennedy have been identified as the owners of a 38 percent controlling stake in controversial printing group Offset Alpine.

Rivkin also told the Zurich District Attorney that he had traded Australian shares through Swiss accounts on behalf of Richardson and Kennedy, according to information sighted by the Australian Financial Review.

“These Offset Alpine shares, which this (account) was originally all about, were held, for the most part let’s say 81 per cent, by me, and about 7 percent by Richardson and 12 per cent by Kennedy,” Rivkin said, while identifying a $1.4 million deposit in a sub-account operated by Richardson.

“These figures may not be exact.”

Offset Alpine shareholders enjoyed a $53 million windfall after fire destroyed its printing plant on Christmas Day 1993. The old plant, valued at just $3 million, was insured at replacement cost of $42 million and the total insurance payout amounted to $53 million.

The Australian Securities and Investments Commission spent years trying to find the ultimate owners of the Offset Alpine state, held in the name of two Swiss banks, but they were thwarted by the impenetrable Swiss banking laws.

…

The three men were revealed as the ultimate owners of the shares because they have been unwittingly caught up in a Swiss criminal investigation into the fate of $300 million in missing funds and embezzlement charges against the former head of private banking at Bank Leumi (Switzerland), Ernst Imfeld.

97                  The second article on page 1 was entitled “No records, says Trevor Kennedy”. The article commenced as follows:

Trevor Kennedy, a Qantas director and former media executive, was scrupulously careful in his dealings with his five Swiss bank accounts.

“I deliberately keep no records of my affairs in Switzerland. I visit the country only on an annual basis, Kennedy wrote in March last year in a letter to his Swiss lawyer that is in the hands of Swiss authorities.

“I am very circumspect about using the telephone between Switzerland and Australia. I have transferred significant funds between the banks there, and have changed banks from time to time.

Kennedy is very keen that his Swiss dealings not be revealed in Australia. He wrote to his Swiss lawyer: “During the examination, the examiner … suggested that he might take this matter up with the Australian authorities. This would be catastrophic for me and totally unjust.”

Kennedy gave evidence in a Zurich District Attorney’s investigation into bank fraud in March 2002 and was concerned that his failure to account for the reasons behind a $US500,000 transfer to him had been viewed with suspicion.

98                  The third article on page 1 was about Mr Graham Richardson and bore the title:

Richardson: where he hid his millions.

99                  The first article that focussed on Mr Rivkin continued on page 10 where the following appeared which concerned Mr Kennedy:

Rivkin revealed the Offset Alpine shareholdings during a formal examination by Zurich District Attorney Nathan Landshut on December 10 last year. Rivkin made the admission in the presence of his Swiss lawyer, who also acts for Richardson and Kennedy, and after being cautioned that his answers could be used in legal proceedings.

Under Swiss Law, Rivkin faces the threat of a prison sentence if he makes false accusations to Swiss investigating authorities.

The Australian Financial Review has seen a copy of the transcript of Rivkin’s examination, which he initialled on each of its 39 pages and signed at the end, as well as internal documents from Bank Leumi that confirm a transfer of funds from the sale of Offset Alpine shares.

…

Rivkin’s Zurich lawyer confirmed the money trail that diverted part of the $26.3 million freed by ASIC after the sale of the mystery Offset Alpine shares into Richardson’s account.

…

Richardson, Rivkin and Kennedy have been close friends since the 1980s. Richardson and Kennedy have appeared as character witnesses in Rivkin’s defamation hearings. At Rivkin’s sentencing hearing in May, after his conviction for insider trading, Kennedy told the court that Rivkin’s “respect for both law and moral code is flawless”.

…

The links were far beyond the public demonstrations. In the interview at Lanshut’s office Rivkin revealed a network of secret bank accounts used by himself, Richardson, Kennedy and a string of other Australian business figures whom he named, to move tens of millions of dollars anonymously in and out of the Australian stockmarket. He referred to holding at least seven Swiss bank accounts himself, while other documentation sighted by the AFR refers to more accounts at other banks.

…

Kennedy, who was also interviewed by Landshut’s office, on March 11, 2002, said he had operated accounts at Bank August Roth, Bank Maerki Baumann and Bank Leumi.

“I have transferred significant funds between the banks [in Switzerland], and have changed banks from time to time,” Kennedy

“Graham Richardson did not want an official account in his name.”

wrote to the Swiss lawyer he shares with Rivkin and Richardson on March 27 last year in a letter passed to Landshut.

For more than a decade, Rivkin used the Swiss accounts to trade in Australian shares for himself, and sometimes Kennedy, Richardson and others, with trading records showing only that Bank Leumi and other Swiss banks held the shares.

…

In their statements, Rivkin and Kennedy outline the elaborate precautions observed to keep details of their Swiss accounts secret.

“I deliberately keep no records of my affairs in Switzerland,” Kennedy wrote in his March 27 letter to his Swiss lawyer, according to documents sighted by the AFR.

“I visit the country only on an annual basis. I am very circumspect about using the telephone between Switzerland and Australia.”

…

The Offset Alpine funds had been split between EBC Zurich (an arm of Bank August Roth) and Bank Leumi.

“I was a client of Bank August Roth when Alexander Fundulus defrauded my account about three years ago, a substantial amount of which I was unable to recover”, Kennedy wrote to his Swiss lawyer last year.

After the embezzlement, all the funds were shifted to Bank Leumi under the supervision of Imfeld.

100               The articles contained a number of express or implied assertions about Mr Kennedy. One of the most important was that it was stated that Mr Rivkin had given evidence to the Zurich District Attorney “in the presence of his Swiss lawyer”, who was identified as the lawyer “who also acts for Richardson and Kennedy”, that Messrs Rivkin, Richardson and Kennedy were the ultimate owners of the Offset Alpine shares and funds produced from the sale thereof. Indeed the person identified as “Rivkin’s Zurich lawyer” was stated to have confirmed the movement of proceeds of Offset Alpine into Mr Richardson’s account.

101               These assertions, if accurate, could be seen as fundamentally contradictory to Mr Kennedy’s sworn evidence in 1995. If the newspaper story were correct and if Mr Rivkin had indeed said these things, they appeared (if the article were true) to have been said with Mr Hafner present (although Mr Hafner was not mentioned by name).

102               On 30 October 2003, Mr Kennedy read at least some of the Australian Financial Review articles of that day. Mr Kennedy said that on that day he had a “rough idea” that he had given sworn evidence in the 1995 investigation to the contrary of what Mr Rivkin was reported as having said in the article. He came to that view before seeing Mr Rivkin later that day.

103               On the morning of 30 October 2003, Mr Kennedy, after reading the articles, sought advice from, and engaged the services of, Mr Tony Hartnell, a solicitor, and a principal of the firm Atanaskovic Hartnell.

104               Also on the morning of 30 October 2003, Mr Kennedy called Mr Rivkin who resided in Sydney, as did Mr Kennedy. The telephone conversation was short, and only to arrange a meeting later in the day.

105               Mr Kennedy met Mr Rivkin on the afternoon of 30 October 2003 for about one hour. Mr Richardson was present. Mr Richardson’s presence does not appear to have been by arrangement of Mr Kennedy. The three men discussed the articles. The substance of what Mr Kennedy put to Mr Rivkin was said by Mr Kennedy to be:

What the hell was he talking about because the disclosures in the Financial Review that morning had come as a shock to me.

106               Mr Kennedy said that Mr Rivkin’s response was unsatisfactory to him:

in the sense that he claimed not to have recalled making those statements or on what basis he made the statements. He claimed to have been under the effects of a …medical problem at the time and didn’t … have any particular recollection of any of this news.

107               Mr Kennedy also said that Mr Rivkin was “seriously stressed” and was “generally unhelpful”.

108               Mr Kennedy’s sole or principal concern in meeting Mr Rivkin on 30 October 2003 was the assertions in the articles that Mr Rivkin had told the Swiss authorities that Mr Kennedy was involved in owning shares in Offset Alpine in 1995, which assertion, Mr Kennedy said, was incorrect.

109               On 30 October 2003, Mr Kennedy was deeply concerned about the articles. He regarded the “whole thing as a disaster”; he saw the articles as accusing him of unlawful conduct.

110               On 30 October 2003, Mr Kennedy appreciated the possibility of ASIC being interested in the apparent inconsistency between what Mr Rivkin was reported as saying and Mr Kennedy’s evidence of 1995; and that he would be the subject of further examination. Mr Kennedy could not recall but supposed that he would have realised that he would be called upon at any such further examination to produce records.

111               It is not difficult to appreciate the effect that the events of 30 October 2003 must have had on Mr Kennedy. Indeed, Mr Kennedy said the following in his examination in the face of implied criticism of the quality of his recollection about the events of 30 October 2003 and the days thereafter:

I would ask you to also understand that this was – this was an absolutely chaotic day and the – from the moment that I first learnt about this thing to the next two or three days are just a blur in my mind. There is recollections of weeping wives, of dozens of people ringing up, of all of that sort of stuff, and I think it’s totally unreasonable to expect me to remember the details of conversations that occurred on that day.

[emphasis added]

112               Mr Kennedy graphically described the tensions and pressures of 30 October 2003:

…From the moment it appeared there were television cameras, photographers, journalists stalking my house, my office, my family. If you haven’t been through one of these things, I wouldn’t expect you to understand, but let me tell you, it’s a hell of an experience.

113               He said that this was a “traumatic time”.

114               Speaking of 30 October 2003 Mr Kennedy said:

I’m not looking for sympathy, but this was probably the worst day of my life and the notion of sort of sitting there and thinking about what people said or didn’t say, or whatever, was not – not what I had on my mind. I wasn’t thinking of anything about – except about what my world was crashing down around me, frankly.

115               Mr Kennedy regarded the Australian Financial Review articles as a “disaster” because they had alleged unlawful conduct; he also described them as a “massive disaster that had befallen” him.

116               On 30 October 2003, probably in the morning, Mr Kennedy caused a flight to be booked to Zurich, via London, departing from Sydney on the following day. His purpose in going to Zurich was to see Mr Hafner. He was due, at some stage, to go to Toulouse on business for Qantas, of which he was a director. There can be little doubt that the immediacy of the booking was in order that he might visit and speak with Mr Hafner as soon as possible. Arrangements were made to see Mr Hafner on Monday, 3 November 2003, in Zurich. The meeting was later put back to Tuesday, 4 November 2003. It can be inferred from the evidence that Mr Kennedy did not discuss any aspect of the matter with Mr Hafner on the telephone before leaving Australia.

117               Mr Kennedy arrived in London on Saturday morning, 1 November 2003. He checked in at the Ritz Hotel. That evening, or on his way to Zurich on Monday, he wrote the entries in the first of the two notes under consideration on notepaper from the Ritz Hotel.

118               Upon arrival in Zurich on Monday, 3 November, Mr Kennedy checked in at the Florhof Hotel. Before speaking to Mr Hafner on 4 November, and after arriving at the Florhof Hotel, Mr Kennedy made the entries in the second of the two notes on the back of notepaper from that hotel. (The name, numbers and marks on the front of the Florhof Hotel notepaper are not claimed to be privileged.)

119               Before examining the direct evidence of Mr Kennedy as to his purpose in making the notes, a number of things can be said about inferences which can be comfortably drawn from the circumstances, assuming (as I do) it to be the case the Mr Kennedy had acted up to this point in a manner that he considered, on the basis of advice tendered to him in the past, to have been lawful and honest.

120               Mr Kennedy’s purposes in speaking with Mr Hafner must have included the following:

(a)               finding out whether Mr Rivkin had said what the articles asserted Mr Rivkin to have said;

(b)               finding out whether Mr Hafner had been present with Mr Rivkin at such interview;

(c)               finding out whether there was any explanation as to what had happened, and if so, what it was;

(d)               finding out generally what was happening in Switzerland in relation to his affairs, in particular in the light of what was asserted in the articles;

(e)               finding out what was his legal position in relation to the structure, at least in 1995, and in all likelihood thereafter;

(f)                 finding out what steps now could or should be taken in his best interests.

121               Some of those purposes plainly would have involved at some level, and to some degree, legal advice – in particular (e) and (f) above. Some of those purposes plainly would not have involved legal advice.

122               It is perhaps unlikely that Mr Kennedy, even though he said in his examination that he had a poor memory, would have needed notes to remind him to ask about some matters: for example, some aspects of (a), (b) and (c) above.

123               It is in this context that one comes to Mr Kennedy’s evidence.

Mr Kennedy’s evidence as to his purpose and as to the meeting

124               In [9] of his first affidavit, sworn in some circumstances of urgency for an interlocutory application, but sworn only little over two weeks after making the notes, Mr Kennedy said the following:

…Prior to my meeting with Mr Hafner, either while I was in London or on my way to Zurich, I jotted down on two pages of Ritz Hotel note paper which I had obtained from the Hotel during my stay some points for the purpose of discussion with my Swiss attorney Benno Hafner and to obtain his advice on.

… I took that note with me when I met with Mr Hafner on 3 November 2003 in Zurich and discussed the points recorded on the note with Mr Hafner.

(The mistake as to there being two pages of Ritz Hotel note paper was subsequently corrected.)

125               The primary judge rejected the words scored through in the quotation set out above. His Honour gave leave to adduce oral evidence as to the conversation with Mr Hafner. This leave was not taken up.

126               Objection was also taken to the form of the above evidence as to purpose. The primary judge allowed it.

127               In [5] and [6] of a later affidavit sworn on the first day of the final hearing before the primary judge, Mr Kennedy said the following:

I refer to paragraph 9 of my first affidavit. The London Note was prepared in the circumstances described in that paragraph. While I was in London or on my way to Zurich I jotted down notes on one page of the Ritz Hotel notepaper which I had obtained from the Ritz Hotel during my stay. The note was prepared for the purpose of obtaining legal advice from my Swiss Attorney Benno Hafner (“Hafner”). …

…

The Zurich Note was prepared by me prior to my meeting with Hafner. While I was in Zurich I jotted down notes on both sides of one page of the Florhof Hotel notepaper which I had obtained from the hotel during my stay. Apart from a reference to a name and telephone number which appears on one side of the Zurich Note, the other side of the Zurich Note was prepared for the purpose of obtaining legal advice from Hafner. …

128               No objection was taken to the form of this affidavit. Mr Lindsay SC, senior counsel for ASIC, said that the primary judge had ruled on the earlier paragraph and he took that ruling as covering the issue.

129               There was no cross-examination of Mr Kennedy on what might be said to be the greater legal precision in these later paragraphs sworn over two months after the first affidavit.

130               During his cross-examination before the primary judge Mr Kennedy was asked about the quality of his recollection of the events in question. He conceded that his recollection as to when he wrote them was uncertain. He also agreed that his recollection of the events in which he prepared the notes was uncertain. It will be recalled that Mr Kennedy said at his December 2003 examination that the days following 30 October 2003 were “just a blur” in his mind.

131               Mr Kennedy did say in relation to this Zurich note that he prepared “what essentially were questions for my Swiss legal adviser”.

132               During his examination in December 2003, he said that his purpose in going to Switzerland was “to get legal advice from my Swiss attorney” and was “to get advice”.

133               After the two documents had been removed from Mr Kennedy’s home on 13 November 2003, he obtained copies of them from ASIC. Promptly thereafter, through his then solicitors, Mr Kennedy made the claim for privilege.

The approach of the primary judge, the attack on that approach and the resolution of the appeal.

the primary judge’s approach – introduction

134               The primary judge, as this Court did, examined the two notes in question.

135               The primary judge approached the question of privilege in the notes in two ways. The first way involved findings of fact and a conclusion that as a matter of fact Mr Kennedy had not made out that his dominant purpose in seeing Mr Hafner and in making the notes was the seeking of legal advice.

136               The second approach was based on the conclusion that:

The overwhelming inference to be drawn in all of the circumstances is that Kennedy’s dominant underlying purpose in meeting with Hafner on 4 November was to take all available steps to preserve or enhance the secrecy from Australian authorities, including ASIC, of his dealings in or relating to Switzerland including all facts and circumstances in relation to the Brampton entities and any dealings he may have had in Switzerland directly or indirectly with Rivkin generally and in relation to proceeds of the Offset Alpine shares in particular.

This was not a purpose, the primary judge said, which legal professional privilege would protect. It was a purpose inimical to the administration of justice, the foundation, his Honour said, of the privilege.

137               The correctness of each of these conclusions was attacked on the appeal. In my view, the primary judge was correct in his first conclusion that, as a matter of fact, privilege had not been made out; though I reach that conclusion for slightly different reasons than his Honour.

138               It should be noted that the primary judge discussed the question of how legal advice from a foreign lawyer fits within the existing framework of legal professional privilege. His Honour discussed this issue and expressed some views which he recognised to be controversial. His Honour then explained how he would approach the matter:

I prefer therefore to assume for the purposes of this case that advice privilege may be accorded to some foreign communications and examine whether the applicant has established that what occurred here is entitled to the benefit of such privilege.

the primary judge’s first approach – whether as a matter of fact the privilege is made out

139               The primary judge’s first way of approaching the matter assumed the availability of the privilege in relation to a foreign lawyer.

140               The primary judge recognised, as the parties did in their submissions before him, the difference between the purpose of making the note and the purpose of the meeting. ASIC argued that privilege did not attach to the notes at all unless they were proved to be part of a communication. Mr Kennedy argued that privilege attached to the notes on the basis that they were made for the purpose of obtaining legal advice, that is here as an aide-memoire and also on the basis that to disclose them would tend to disclose privileged communications.

141               His Honour accepted, notwithstanding his rejection of the part of [9] of Mr Kennedy’s first affidavit identified earlier, that the notes were used by Mr Kennedy in his meeting with Hafner. ASIC submitted that this finding should not have been made. I disagree. The finding was open and in my view reflective of common sense in the light of the background circumstances.

142               The primary judge refused to make any assumption in Mr Hafner’s case of the kind that might be made where an Australian lawyer was communicated with on a professional basis:

that legitimate legal advice was sought absent any contrary indications. …

His Honour said:

…No corresponding assumption can be made in the case of foreign lawyers without satisfactory evidence.

143               It is not clear what part that conclusion played in the primary judge’s reasoning. It was up to Mr Kennedy to prove facts giving rise to the entitlement to claim the privilege. Mr Hafner undoubtedly fulfilled roles for Mr Kennedy which were part of his professional duties, but which had nothing to do with the provision of legal advice. Mr Kennedy could plainly be taken to be interested in obtaining information from Mr Hafner having no connection with legal advice. To the extent that the primary judge meant, by using the phrase “legitimate legal advice”, to convey that he would not assume that legal advice given by Mr Hafner would be legal advice covered by the privilege such would be a controversial conclusion, of the kind that his Honour said earlier he would put aside. It seems to me that in the circumstances all his Honour was doing at this point was saying, perfectly legitimately given the roles of Mr Hafner, that no assumptions would be made that Mr Hafner was only dispensing or likely to dispense legal advice when Mr Kennedy met him. This conclusion was plainly open, and in my view correct. I approach the matter in the same way, not because of any assumptions or lack of assumptions about Swiss or other foreign lawyers, but because of what the facts disclose here about Mr Hafner’s roles.

144               The primary judge refused to draw a Jones v Dunkel inference against Mr Kennedy for not calling any direct evidence to explain the communications with Mr Hafner or to explain the notes. ASIC complains about that finding. It goes without saying that great care needed to be taken in what was said about the note and the meeting; but I think more could, and should, have been stated about the purpose of the creation of the notes or parts thereof than is found in the conclusory assertions of purpose in the affidavits. This could have been done confidentially by reference to the parts of the note. The general subject matter of the various parts could have been identified without loss of privilege: “I wrote [lines X and Y] as an aide-memoire to remind me to raise the matter there referred to as part of obtaining advice about Swiss law that related to it.” In these circumstances one would know the primary thought processes of Mr Kennedy as to why he made the note or that part of the note, without disclosing the note. From that one could be clear as to what his sole or dominant purpose was. That said, however, the forensic judgment about these matters is not easy (in particular given the consequences of miscalculation in judgment), and on balance I think it appropriate not to employ Jones v Dunkel by reason of the failure to elaborate on the conversation by Mr Kennedy or to call Mr Hafner.

145               Nevertheless, that does not overcome the consequences of the unsatisfactory nature of the conclusory assertions of purpose which leave unclear what advice was really being sought that is, what Mr Kennedy meant by legal advice, and whether it was just “advice” from someone who was a legal adviser, but who was also able to advise, in the sense of provide information, about matters and in circumstances that would not be privileged. I will return to this in due course.

146               The primary judge was satisfied that Mr Kennedy sought and received some legal advice from Mr Hafner during the meeting: see [67] of his Honour’s reasons. ASIC says that this conclusion should not be drawn. In my view it is plainly open and likely to be correct. The background circumstances that led Mr Kennedy to this point compel that conclusion.

147               The primary judge then found that Kennedy would have sought other information from Mr Hafner. In [68] of his reasons the primary judge stated:

I am also satisfied that Kennedy would have sought information from Hafner which did not involve seeking or receiving legal advice. Hafner was the repository of information as to the relevant Swiss entities set up on Kennedy’s instructions. He was effectively the custodian of records and directly or indirectly was de facto trustee or manager of the entity. He was also a repository of information about the structures which had existed before the 1996 or 1997 reorganisation. Hafner was alleged to have been present at Rivkin’s interview. He would be expected to have contacts with the banks and other institutions used by the relevant entities and with Swiss authorities from which he may have gleaned or may have been perceived as able to glean information as to the likely reaction to existing and further Australian inquiries. It is likely that Kennedy would have sought to have Hafner utilise any contacts which he had in any way that would have assisted Kennedy’s position. It is also likely that Kennedy would have given Hafner instructions of an administrative nature in relation to the relevant entity

148               An attack was made on these findings on behalf of Mr Kennedy. It was said that the role of Mr Hafner was mis-characterised. He was not the de-facto trustee or manager. There was evidence that the structures had directors and investment managers. That may be so, but the balance of [68] is in my view not only open and available, but correct (though “1996 to 1997” should be “1997 or 1998”). These findings accord with my views as to what one can infer from the December 2003 transcript and what one can infer someone in Mr Kennedy’s position would have wanted to speak to Mr Hafner about. The fact that he was a lawyer would not, on ordinary principles, necessarily make the whole of the conversation with him one to which privilege applied.

149               The primary judge then dealt with the question of the inter-relationship between any legal and non-legal advice in [69] where he said the following:

It is possible that the legal questions could have been dealt with separately and severably from the other issues. However, it is unlikely that there was or could easily have been, a neat compartmentalisation of communications made in the course of this meeting between legal advice and other communications. Hafner had more than one role. Kennedy’s concern was such that he would wish to pull all levers available to him without discrimination. What is more, there is not always a bright line between legal advice and services and administrative or commercial advice and services. This gives rise to the problem discussed in a local setting in DSE (Holdings) Pty Ltd v InterTAN Inc at [25]–[71] and dealt with in the landmark decision of the England and Wales Court of Appeal in Three Rivers Council v The Governor & Company of the Bank of England [2003] EWCA Civ 474.

150               It is unnecessary for the resolution of this appeal to restate anything that I said in DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 203 ALR 348 at [25] to [71] as to the extent of advice privilege. I do not read anything said by the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48 as contrary to what I said in DSE.I do not agree that the approach of the primary judge failed to recognise any aspect of the privilege described in DSE. The circumstances here clearly involved a lawyer who had non-legal roles – as a source of knowledge as to the entities and their affairs and a secretarial role. The circumstances were such as to raise the likelihood of both legal and non-legal advice being sought and given. This duality of role would create the same difficulty if the lawyer were Australian. The facts here do not raise the difficulty that I discussed in DSE of a lawyer giving advice both specifically about the law and about matters connected therewith which amount to the necessary human exchange for the provision of legal advice, including advice about what should or should not be done in a particular legal context: see Balabel v Air India [1988] 1 Ch 317 at 330-2; Nederlandse Reassurantie Groep Holdings NV v Bacon & Woodrow (a firm) [1995] 1 All ER 976, 982-84; Three Rivers [2004] UKHL 48 and see DSE at [25]-[45]. Rather, the facts here reveal a lawyer who also had other non-legal roles and the likelihood that advice would be sought from and given by the person in both capacities. The question is whether, in those circumstances, the evidence sufficed to demonstrate that the dominant purpose of making the notes or any part thereof was for, or in connection with, obtaining legal advice.

151               His Honour then, in [70], made some comments upon his examination of the notes:

My inspection of the notes in issue indicates no clear separation between legal advice and other topics. Each was a list of brief items. Some are cryptic. Some are difficult to read. I can see the relevance of some, but not of others. That is not surprising. I do not have an intimate knowledge of the surrounding facts. Some are consistent with a request for legal advice, but the precise context of that advice and, more importantly, the object of it is not always obvious on the face of the document. Some are fairly clearly seeking information rather than legal advice as such. Some appear to be giving instructions for action which may or may not be action as a lawyer. Many are ambiguous.

152               I have looked at the notes. I agree with his Honour’s conclusions, except that I do not have the same difficulty as his Honour in reading Mr Kennedy’s handwriting. From his inspection of the notes the primary judge was unable to draw the conclusion that the notes or particular entries on them were made for the dominant purpose of obtaining legal advice. Likewise, I am not able to draw such a conclusion.

153               After referring to the fact that the claim for privilege was made after the notes had been seized the primary judge said at [72]:

The most probable inference is that Kennedy did not tell his solicitor that the notes, which were clearly identified by him at the time of seizure, were prepared for the purpose of obtaining legal advice.

154               That conclusion was plainly open.

155               The primary judge set out at [73] and [74] his conclusions on the first basis of refusing the claim for privilege:

Although I am satisfied that a significant purpose of Kennedy in meeting with Hafner was to obtain legal advice, I am not satisfied that that was his dominant purpose. His assertion of that conclusion does not establish the fact. The other purposes of the meeting to which I have referred were also significant, and I cannot attribute dominance to one purpose in this case (Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49). The purpose for making the notes is inextricably bound up with the purpose of the meeting.

I have found that Hafner’s role went far beyond that of an arm’s length professional legal adviser bound by the legal and ethical constraints upon an Australian lawyer retained in a legal advisory capacity. Compartmentalisation of what was communicated at the meeting is not practical or realistic. If the roles cannot be separated then it would go beyond any binding authority to accord legal professional privilege to communications with Hafner that have not been clearly and unequivocally identified as seeking or obtaining legal advice as such in the evidence before the Court. No such identification has been undertaken here. That is sufficient to deny legal professional privilege in all of the notes.

156               The primary judge dealt with the notes by reference to the purpose of the meeting. With respect, that conflates two things which are separate, though related.

157               There were, no doubt, a number of reasons why Mr Kennedy wanted to speak with Mr Hafner. As the primary judge found, and as is likely, Mr Kennedy wanted some legal advice from him. As the primary judge found, and as is likely, Mr Kennedy wanted to discuss some matters with Mr Hafner that would not be protected by legal professional privilege. From the background circumstances each was likely to be viewed by Mr Kennedy as pressing; neither was likely to be dominant. That does not mean there can be no privilege in respect of any communication at the meeting. A person can see a legal adviser and receive legal advice and commercial or other non-legal advice. The former will be privileged, the latter not. Difficulties of course can arise in demarcation. Difficulties can arise if the advice is intermingled. The resolution of the issue will generally be a question of fact.

158               If there is one conversation or one body of writing incapable of being broken up into which there is intermingled privileged material and non-privileged material the communication as one or as a whole will only be protected if the dominant purpose of the communication or the creation of the writing was to give or receive or record legal advice.

159               If a conversation or a note can be divided up such that privileged and non-privileged material can be segregated, the communications or writing made for the dominant purpose of obtaining legal advice will be privileged, even if the balance of the communications, perhaps even if most of the communications go to other matters. One does not lose privilege on a note made as an aide-memoire for the asking of legal advice by putting ten other notes on the same page to remind one to ask about ten other topics. It depends on the nature of the communication or writing and the circumstances of the creation of the document.

160               The subject here is not the assessment of a communication or the purpose of a communication. It is the purpose or purposes of making some notes.

161               Here there are two notes. Each contains a list of brief items. The first issue is the purpose for which the entries were made. The documents do not contain an undifferentiated whole of writing such as a paragraph. If they did, it may be that one would be required to look at the purpose of the creation of the document as a whole. A list of items separately made (even if at one sitting) may, as here, require individual attention.

162               With respect to the primary judge, the mixed purposes of the meeting with Mr Hafner, as was in my view undoubtedly the case, does not finally answer the question as to the purpose or purposes of making the various entries, though it can be seen as relevant. Thus, in my view, the primary judge erred in his undifferentiated approach to the conversation at the meeting as the determining consideration in respect of the making of the notes.

163               At this point, I should say that I am prepared to proceed on the assumption that ASIC is incorrect in its submission that it is only the actual communications between Mr Hafner and Mr Kennedy that can be privileged. I deal with this assumption later in dealing with the notice of contention.

164               In any event, if it were proved that the notes were written in whole or in identifiable part for the dominant purpose of acting as an aide-memoire in the obtaining of legal advice and if it were found that the notes were used by Mr Kennedy in the sense that the topics were discussed, to disclose the notes or the relevant identifiable parts would tend to disclose the privileged communication. That latter conclusion rests, however, on being able to identify the relevant dominant purpose of making the note or some identifiable part of it.

my views as to whether the privilege was made out as a matter of fact

165               Given that I disagree with the way his Honour reached his conclusion as to the lack of satisfaction as to the dominant purpose underlying privilege in the notes, I must, to the extent that the material makes it possible, reach my own conclusions, the appeal being by way of rehearing.

166               Whilst I do not think it appropriate to draw a Jones v Dunkel inference against Mr Kennedy, it is nevertheless appropriate to recognise that Mr Kennedy had ample opportunity to put all such evidence forward as he wished. To the extent that the evidence may be deficient that is not a consequence of haste or the absence of available advice or opportunity.

167               The first affidavit in [9] dealt with the notes and the individual entries in the active voice. What was said, however, was inadequate to found a conclusion that the notes or any part of them were or was written for the dominant purpose of obtaining legal advice: Mr Hafner was a lawyer. In the circumstances here, however, for the reasons I have given, it cannot be concluded that the anticipated discussion with or advice from Mr Hafner was only legal advice. It was just as likely to be non-legal advice or information. This affidavit does not support the conclusion that the notes or any part of them were made for the dominant purpose of obtaining legal advice and so are protected by legal professional privilege.

168               The second affidavit in [5] and [6] is more specific about legal advice. However, the individual entries are not the subject of the evidence. The London note on Ritz Hotel paper as a whole (in [5]) and the two sides of the Zurich note on Florhof Hotel paper (in [6]) are the subject of evidence. Thus the notes are dealt with in an undifferentiated manner. The passive voice is used. This, as a matter of form, could have been objected to, not out of pedantry, but because it tends to disguise the necessary matter for consideration – the purpose of Mr Kennedy. Further, it is unclear what was meant by “legal advice”. Was it just advice from someone who was in fact a lawyer, as [9] of the first affidavit, restated by [5] of the second affidavit, tended to suggest? The bald conclusory assertion about the note in the passive makes it difficult to tell. The quality of Mr Kennedy’s recollection about the events of the days immediately following 30 October 2003 (“just a blur in my mind”) is to be recalled. These paragraphs can be accepted at face value as stating that apurpose of the creation of the notes was the obtaining of some legal advice, depending upon what was meant by that phrase. The language used in the affidavits set in the context of the multi-faceted role of Mr Hafner does not enable one to conclude, however, that the dominant purpose of the creation of the notes as a whole or any particular part of them was the obtaining of legal advice as understood in the principles governing the privilege. These paragraphs do not state that there was no other purpose in making the notes; these paragraphs do not seek to give information about the weight or preponderance of the stated purpose. That is partly a function of the use of the passive voice. As I have said, there were no doubt multiple purposes in seeing Mr Hafner. Some purposes, perhaps, did not require an aide-memoire. Nevertheless, in circumstances where there could be a number of reasons to speak with Mr Hafner some precision is required before one can conclude that a note as a whole or any particular part of it was made for the dominant purpose of obtaining legal advice from Mr Hafner. These paragraphs, [9] in the first affidavit and [5] and [6] in the second, do not allow one so to conclude. One then must turn to the notes.

169               Even with such assistance as is given by the affidavit material as to the purpose of particular entries, I am unable to conclude that any one entry was written for the dominant purpose of obtaining legal advice. Some look more like the subject of likely legal advice than others. In particular, the Ritz Hotel note has a greater legal flavour than the Florhof Hotel note. Indeed, the latter is far more consistent with ascertaining information from Mr Hafner of a non-legal kind.

170               Whilst some entries in the Ritz Hotel note are consistent with their being made to obtain legal advice on those subject matters, they do not, without more, allow one to conclude that they were written for the dominant purpose of obtaining legal advice. For instance, the second and third lines of the Ritz Hotel could be a note for a request as to that subject matter, or it could be a note to remind Mr Kennedy to ask for a document of that character which already existed. The last three lines might be the subject of desired legal advice, or they might be a request for information as to who was within the purview of the understood relationship. The evidence simply does not permit a conclusion to be drawn as to the dominant purpose of making any particular entry.

171               I would conclude therefore that the appellant simply has not proved that the dominant purpose of the creation of the notes as a whole or any particular entry in them was to obtain legal advice and that the primary judge was correct to draw that conclusion.

172               That was the basis upon which the privilege was claimed. Privilege was not claimed on the notes as a record of a privileged communication. To the extent that it can be concluded that the notes were used as a prompt for discussion or as a basis for discussion, the conclusion that I have reached about the purpose of making the notes and the reasons therefor also lead me to conclude that it cannot be concluded that disclosure of the notes will disclose the content of legal advice given at the meeting. If any part of the notes would disclose legal advice actually given at the meeting, Mr Kennedy could have given evidence about this without disclosing the content of what was said.

173               In my view, the evidence led does not support the conclusion that these notes or any particular part of them are or is privileged.

the relevance of the s 19 transcript

174               The above demonstrates the admissibility of the November 2003 s 19 transcripts on the question of the assessment of the privilege. I see no error in the primary judge in failing to reject them other than as relevant to the issue of his purpose of seeing Mr Hafner. The appellant said that to have probative value the evidence must raise a more probable rational inference in favour of ASIC’s contentions as to purpose. Reliance was placed on Chamberlain v The Queen (No 2) (1984) 153 CLR 521, 536 and Barca v The Queen (1975) 133 CLR 82, 104. Much of the evidence did not go directly to purpose, but it did go to the background relationship of Mr Kennedy and Mr Hafner. It was entirely legitimate for the primary judge to admit it in order to understand the effect and context of such evidence as was chosen to be given by the appellant in order that it might be assessed. Neither Chamberlain nor Barca gainsays this approach.

The balance of the appeal

175               The above is sufficient to dispose of the appeal. However, a large number of attacks were made not only on the factual findings of the primary judge, but also on the approach to the law taken by the primary judge in the second of the two ways that he approached the matter. (See [135] and [136] above.) Some of the asserted factual errors are inter-related with the primary judge’s approach to the law which was impugned. They will be dealt with in that context. Some complaints about the facts as found can be dealt with separately at this point.

176               Complaint was made about the following particular findings of the primary judge about Mr Kennedy:

a reading of the section 19 transcript as a whole reveals many unsatisfactory answers to relatively straightforward questions about Kennedy’s affairs which a business person with the experience of Kennedy would be expected to know;

…

[Kennedy’s answers in his section 19 examination were] “far from a full and frank account of the dealings which he had in Switzerland and his participation in them” and “of his dealings with Hafner”.

… it is not credible that any person, let alone an experienced business person, would set up a series of entities to manage investments overseas without having any idea as to the ultimate fate of the investments or their proceeds which is the picture that Kennedy sought to convey

177               It is not clear to me how, even if error were shown in these findings, such error would lead to any interference in the result. Nevertheless, putting that to one side, I have read the s 19 transcripts and the material before the primary judge with care. Minds may perhaps differ about these things, but I agree with the primary judge’s comments.

178               Numerous other errors in fact finding were asserted by the appellant in Ground A2 of the Notice of Appeal. It is convenient if they are set out as they are stated in the Notice of Appeal and my views are expressed shortly as to each. I will not repeat what I have set out above as to the factual background taken largely from the appellant’s own (admissible) s 19 transcript.

179               (a) Hafner was the repository of information as to the relevant Swiss entities set upon Kennedy’s instructions (at [8] and [32]).

There is no error; see [90] above

180               (b) Hafner was the repository of information about the structures which had existed before the 1996 or 1997 reorganisation (at [68])

There is no error; see [90] above

181               (c) Hafner was effectively the custodian of records (at [68] and [32]).

This may have been less than accurate. The actual custodianship of some records may have lain with others, such as professional managers. Mr Hafner did, however, have records; and he had access to all the records. The thrust, of his Honour’s comments was the duality of roles. That was plainly the case. Any error does not in any way vitiate the judgment.

182               (d) Hafner was directly or indirectly the de facto trustee or manager of the entity (at [68]);

The same comments apply here. The finding may have not been apt to encompass the role of professional fund managers, but directed as it was to the secretarial and information providing role of Mr Hafner, any inaccuracy of expression is of no consequence.

183               (e) Hafner had more than one role (at [69]);

This was plainly correct.

184               (f) Hafner’s role went far beyond that of an arms’ length professional legal adviser bound by the legal and ethical constraints upon an Australian lawyer retained in a legal advisory capacity (at [74])

As another expression of Mr Hafner's duality of role the finding was plainly correct.

185               (g) Hafner would be expected to have contacts with the banks and other institutions used by the relevant entities (at [68])

This was a common sense finding given the position and role of Mr Hafner.

186               (h) Hafner would be expected to have contacts with Swiss authorities (at [68])

Again, given Mr Hafner’s role this is hardly more than an inference based on common sense.

187               (i) It is likely that Kennedy would have sought to have Hafner utilise any contacts which he had in any way that would have assisted Kennedy’s position (at [68]);

Given the role of Mr Hafner I have difficulty seeing how this finding is other than one based on common sense. I would not conclude that the primary judge was contemplating or referring to anything other than lawful conduct.

188               (j) It was also likely that Kennedy would have given Hafner instructions of an administrative nature in relation to the relevant entity (at [68])

This was plainly open.

189               (k) Kennedy “would have sought information from Hafner which did not involve seeking or receiving legal advice”.

Given Mr Hafner’s position, this was plainly correct.

190               Section A3 of the Notice of Appeal asserts numerous errors in fact finding as to whether Mr Kennedy’s dominant purpose was made out. See [10] to [22] of the Notice of Appeal. I have, indirectly, dealt with all these grounds in coming to my own views on the material that the appellant had not established the privilege. Once again what follows is to be read in the light of my earlier reasons.

191               The primary judge was not in error in concluding or inferring that Mr Kennedy sought information from Mr Hafner other than legal advice or that there could not easily have been a neat compartmentalisation of communications made in their meeting of 4 November.

192               Various criticisms are made as to the primary judge’s findings about the handwritten notes. For the reasons I have given, I do not think that the content of those notes supports a conclusion that they, or parts of them, must have been written for the dominant purpose of seeking legal advice.

193               A criticism was made by the appellant of the primary judge that he failed to afford the appellant procedural fairness in failing to identify to his counsel that he (the judge) found the notes were difficult to read, cryptic or ambiguous. It was asserted that the appellant had thus been denied a proper opportunity to rectify any difficulty in that regard by way of evidence or submission. The notes are on their face difficult to read. That was apparent to counsel. His Honour was given the evidence he was. He denied no one procedural fairness. The appellant was able to lead such evidence as he was advised. If there was any doubt about the legibility of the note, it was plain to those involved in the case. They could have handed up a typed version to assist his Honour. This was not done. This criticism of the primary judge is without foundation.

194               There was a criticism of a finding made by the primary judge that if the meeting with Mr Hafner was to obtain “legitimate legal advice for Australian purposes” then it would be expected that Mr Kennedy’s communications with Mr Hafner would be through or supervised by Australian lawyers who had by then been instructed. I leave to one side the question the notions of “legitimacy”, to which I will come. I think there is some validity in the criticism of this finding in this respect. Mr Hafner was a Swiss lawyer. I do not think it necessarily odd or curious that Mr Kennedy wished to speak to his Swiss attorney directly, rather than incurring the expense or trouble of going through Australian lawyers. However, any error in that factual finding does not vitiate the judgment.

195               For the reasons I have given, the unvarnished evidence relied upon by the appellant both before the primary judge and on appeal does not, in my view, in the all circumstances, make out the claim. It was strongly asserted that there had been a failure to cross-examine Mr Kennedy on his affidavits and that his affidavit evidence was admitted without objection. Those matters can be readily accepted. They do not, however, convert the evidence into something more than it is. In my view, against the background set out earlier in these reasons and in the circumstances that brought Mr Kennedy to seek to consult Mr Hafner in 2003, the evidence adduced by the appellant does not satisfactorily demonstrate that the notes or any part of them were made with the dominant purpose of obtaining legal advice.

the primary judge’s second approach – the legal and factual issues raised thereby

196               All the above conclusions and views have been reached on what might be said to be an orthodox view as to the nature of the privilege and Mr Hafner being a legal adviser. It is now necessary to turn to the primary judge’s second way of dealing with the matter. Though it is not necessary for the disposition of the appeal on the view that I take of the facts, given the importance of some of the issues raised by the primary judge and the strength and clarity of his Honour’s views it is appropriate to deal with a number of legal issues that were argued. Thus what follows is predicated upon my being in error in the factual conclusions that I have reached as to the privilege not being made out.

197               The issues raised by this second approach of the primary judge as thrown up by the Notice of Appeal and the Notice of Contention are:

(a)           Whether the primary judge erred in concluding in the case of foreign lawyers that it was necessary in order to support the privilege to adduce evidence as to the legal and ethical responsibilities of the lawyers in that legal system and the judicial or curial supervision of such matters. (See [53], [65], [80] of the primary judge’s reasons and Ground of Appeal A1)

(b)          Whether the primary judge erred in denying the claim for privilege by reason of the lack of connection between the advice and the administration of justice in Australia as expressed in [75], [80] to [83] of the primary judge’s reasons. (See Grounds B [29], [33] to [36] and [39]).

(c)           Associated with the issues in (b) are a number of further complaints about factual findings related thereto. (See Ground B [30] to [32], [37] and [38].)

(d)          Related to (b) and (c), but arising on the Notice of Contention, whether the result can be supported otherwise than by reference to the reasons of the primary judge:

(i) because as a matter of law no advice privilege can attach to any communication with a foreign lawyer;

(ii)           because privilege does not attach to uncommunicated personal notes in the context of a claim for advice privilege;

(iii)          because the appellant’s dominant purpose was improper within the “fraud or crime” exception to the privilege; and

(iv)         because privilege was waived by the appellant or the appellant is estopped from raising it.

(a) the place of foreign lawyers

198               The primary judge noted that, as a number of High Court cases have stated, the rationale of the privilege is to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers; see, for example, Esso Australia Resources v Federal Commission of Taxation (1999) 201 CLR 49, 64-5; Attorney-General (NT) v Kearney (1985) 158 CLR 500, 511; Attorney-General (NT) v Maurice (1986) 161 CLR 475, 487.

199               I do not read any of these cases as limiting the notion of the “administration of justice” strictly by a territorial or geographic nexus. The fundamental substantive nature of the right (see Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [9], [11], [44], [85], [86] and [132]) would tend against it being measured by reference to an almost procedural concept of the carrying on (administration) of justice or the court system in Australia. The High Court in Baker v Campbell (1983) 153 CLR 52 rejected the procedural or evidential nature of the privilege as connected only with court hearings. Also, the notion of the administration of justice seems to me to be wider than the carrying on of the court system in Australia and the vindication and protection of rights in Australia. I would not read the passages from the reasons of Wilson J in Baker v Campbell, cited by the primary judge at [55] of his Honour’s reasons, as limiting the scope of the privilege.

200               Members of the community may well need to seek the assistance of foreign lawyers. The considerations of the kind that Wilson J spoke of in Baker v Campbell: the multiplicity and complexity of the demands of the modern state on its citizens, the complexity of modern commercial life and the increasing global inter-relationships of legal systems, commerce and human intercourse, make treatment of the privilege as a jurisdictionally specific right, in my view, both impractical and contrary to the underlying purpose of the intended protection in a modern society.

201               One important issue in any consideration of the proper scope for advice privilege whether in relation to foreign lawyers or generally is the identification of the underlying rationale for the privilege: see for example the discussion by Lord Carswell in Three Rivers [2004] UKHL 48 at [76] to [117]. As I would understand the law in Australia, the privilege is to be seen as a fundamental common law right in relation to legal advice and litigation. The purpose and rationale of the privilege is to enable persons in a civilised complex modern society to be able to conduct their affairs with the assistance of legal advice. Expressed thus, it is a fundamental right conforming to and underpinning the rule of law: see Baker v Campbell at 89 (per Murphy J), 93-96 (per Wilson J), 112-116 (per Deane J) and 125-131 (per Dawson J); Maurice at 487 (per Mason and Brennan JJ) 490 (per Deane J); Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 132-33, 166; Goldberg v Ng (1995) 185 CLR 83, 121; and AM & S Europe Ltd v Commission of the European Communities [1983] QB 878, 913, 941.

202               A refusal to recognise foreign lawyer’s advice privilege or narrowly to constrict advice privilege to the precise communication requesting or imparting the advice (as ASIC does on the Notice of Contention, to which I will come) would undermine the rationale of the privilege. It would also undermine the administration of justice by enlivening a threat in this jurisdiction to the confidentiality of communications which would otherwise be protected in other places.

203               If an adviser is a lawyer admitted to practice in the foreign country, as was agreed here, it seems to me unnecessary to require evidence about legal and ethical practices and controls by foreign courts. Is it to be necessary to prove the legal training and ethical control of a Queen’s Counsel from Essex Court in connection with advice as to a marine insurance policy? If not, is that because of cultural conclusions one might be tempted to draw about the English legal system? If a person is a lawyer in country X and legal advice is sought from that person, one can conclude that the client needs or desires such advice in the facilitation of the orderly and lawful arrangement of his or her affairs as a member of our “community”, not using the word community in any narrow sense.

204               The position may be different if the circumstances otherwise raise questions as to the position of the lawyer. There may be a question whether the adviser is a lawyer at all, properly understood. There may be a question whether, by the proper law of the country in which the lawyer is admitted to practice or in which the advice is given, there is any privilege recognised. Difficult questions may arise in any given case. This is not intended to be an exhaustive list.

205               Without evidence of foreign law, it can be assumed that Switzerland protects legally privileged communications. Mr Hafner was a qualified lawyer in a European democratic state. No suggestion was made that Mr Hafner was not in fact a lawyer.

206               I see no basis in the authorities or in the nature of the underlying rationale for the privilege to support the approach of the primary judge at [65] and [66].

207               The view expressed by McHugh J in Carter v Northmore Hale Davy & Leake at160-61 as to the “artificiality” of justifying advice privilege by the necessity for the “proper functioning of the legal system” or the “perfect administration of justice”, may be seen to undermine the availability of advice privilege per se. It does not, however, reflect the law as otherwise expressed by the High Court on advice privilege, and it gives no basis for viewing foreign lawyers and foreign legal advisers differently to Australian lawyers and legal advice.

208               Part of the practical guarantee of the fundamental, constitutional or human right and part of the practical worth of the fundamental common law privilege is to seek advice from a lawyer as to one’s rights and obligations in a complex human, commercial and governmental environment which may be, for any particular person, multi-jurisdictional. A principle which differentiates between foreign and domestic lawyers in terms of approach based on training, ethics and curial control is not warranted, in my view, by reference to the underlying rationale of the privilege, at least in circumstances where the person opposing the privilege claim does not raise issues of the kind referred to earlier.

209               The proper scope of the presumption that the law in the foreign country is the same as that of the forum (relevantly here, that Swiss law in relation to the legal profession and its regulation was not materially different from Australian law) is not without its difficulties: see Damberg v Damberg (2001) 52 NSWLR 492, 505-518 at [119] to [147] per Heydon JA (as his Honour then was). It may be open to doubt that its application in this respect is as simple as was asserted by the appellant. I would prefer to rest my conclusion on the underlying rationale of the privilege being satisfied by the recognition of the availability of legal privilege in relation to foreign lawyers in a substantially similar fashion to the recognition of the privilege in relation to Australian lawyers, absent an issue being raised of the kind to which I have referred.

210               The above approach is in conformity with the authorities: Grofam Pty Ltd v ANZ Banking Group (1993) 45 FCR 445, 455; Ritz Hotel Ltd v Charles of the Ritz Ltd (No 4) (1987) 14 NSWLR 100, 101-102; Great Atlantic Insurance Co v House Insurance Co [1981] 1 WLR 529, 532-3, 535-6; Macfarlan v Rolt (1872) LR 14 Eq 580; and Lawrance v Campbell (1859) 4 Drewry 485; 62 ER 186. With respect, I am unpersuaded by the primary judge’s views that those cases should not be followed, in particular the expression of view of McLelland J (as his Honour then was) in Ritz Hotel and of the Full Court in Grofam.

211               It may be, as the primary judge said at [50], that:

… in most of the cases there was a deal of evidence about the circumstances under which the advice was given and the general substance of it. When that evidence is considered, there was nothing in any of the cases to suggest that the foreign lawyer was acting otherwise than as a professional lawyer giving professional legal advice appropriate to the resolution of the case or issue in hand. Even the in-house lawyer in the Ritz Hotel case was acting only or the purpose of giving precise legal advice on an appropriate topic. It is not necessary to consider in this case whether the extension of the principle to foreign in-house lawyers was appropriate.

The state of the evidence about the capacity in which the lawyer in these cases acted is, with respect, another distinction entirely. I accept without hesitation (indeed it forms the foundation of my views as to why privilege has not been demonstrated in this case) the proposition that if a lawyer, including a foreign lawyer, is also an adviser as to other subjects a professional consultation, or part thereof, may not be privileged. That is a question of fact. That does not, however, detract from the force of what was stated by McLelland J in Ritz, by the Full Court in Grofam and by Templeman LJ in Great Atlantic as to the principle that privilege extends to foreign lawyers.

212               Nothing I have said is intended to limit or constrict any proper factual enquiry. The lack of any information about the lawyer, his or her area of practice, or about the nature of the profession in any particular country may, in any given body of circumstances, be relevant to the evaluation as to whether the relevant dominant purpose has been made out. But one does not start from the position that to make out the privilege the training, ethics and control of the foreign lawyer must be proved.

213               Here, there was evidence of the duality of role and function of Mr Hafner. It is unknown what difference calling evidence from Mr Hafner as to the nature of his training and practice would have made.

214               Also, nothing I have said should be taken as expressing a view on the existence of privilege in Australia where, under the legal system governing the foreign lawyer, or under the legal system of the state where the advice was given, no privilege would attach.

215               It follows from these views that, in my view, the primary judge erred in concluding that in the case of foreign lawyers it was necessary for the party supporting the privilege to call evidence as to legal and ethical standards of lawyers and curial supervision.

(b) the need for the connection with the administration of justice in Australia

216               The above conclusion as to the place of foreign lawyers undermines, from a legal perspective, any view which may be taken to have been expressed by the primary judge that the claim for privilege must fail for lack of connection between the advice and the administration of justice in Australia because it was advice of a foreign lawyer.

(c) the complaints as to factual findings underpinning an asserted lack of connection with proper functioning of the Australian legal system

217               The appellant makes a number of complaints as to the findings of fact made by the primary judge in connection with the conclusions drawn by the primary judge in [80] - [82] which were in the following terms:

It is not conducive to the public interest in the administration of Australian justice that the enforcement of Australian laws including laws with respect to taxation should be hindered or obstructed by the use of devices constructed by reference to rules of foreign jurisdictions with the advice and assistance of overseas lawyers who may be acting properly in accordance with the laws of the country in which they practise. It may not be unlawful for an Australian to seek advice for such a purpose or to act upon it, but there is no reason in principle why communications made for that purpose should receive the benefit of the cloak of legal professional privilege so as to prevent their disclosure to Australian authorities.

The purpose of the communications to Hafner that are in issue here, whether Hafner was acting in the capacity of legal adviser or not, is not such a purpose as would entitle those communications to legal professional privilege. Assisting an Australian to take advantage of foreign secrecy laws to evade scrutiny of assets and transactions by Australian authorities including taxation authorities has no conceivable connection with the administration of justice or the proper functioning of the legal system in Australia which is the sole rationale for legal professional privilege. Such communications may breach no Australian law or any other law, and the legal entities and structures which are designed in pursuance of them may be effective. That is not the point. Those seeking or taking legal advice for such purposes are not entitled to resist an otherwise lawful demand for disclosure of such communications on the grounds of legal professional privilege.

It is not necessary to analyse the situation by referring to the so-called crime or fraud exception to legal professional privilege. The principle that I have applied depends upon a lack of association between the purpose to be served by a communication and the public interest in the administration of justice or the functioning of the legal system in Australia. The exception is applicable to cases where the purpose to be served by a communication is contrary either to law or the public interest in Australia. The exception proceeds from the assumption that all confidential professional communications involving legal advice from an Australian legal practitioner are at least presumptively privileged. It is now entrenched that the onus of proving the relevant improper purpose lies on the party seeking to impeach the privilege on that basis, although there is debate as to the evidence to be acted upon and the standard of proof to be applied (see generally, Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501). This is explicable in a domestic setting where favourable assumptions about the confidential professional relationship are applicable even though there is some question as to whether in truth it is an exception or rather a situation in which the privilege never attaches (eg per McHugh J in Carter v North Moore Hale Davy & Leake (1995) 183 CLR 121 at 163). A reading of the various judgments in Regina v Bell; Ex parte Lees (1980) 146 CLR 141, Attorney-General (NT) v Kearney (1985) 158 CLR 500, and Commissioner of Federal Police v Propend Finance Pty Ltd indicates support for the proposition that the conduct here would be caught by the exception as it would be contrary to the better administration of justice, the public interest in which the privilege is designed to secure, to allow the privilege to be used to protect communications made to frustrate the processes of the law itself by frustrating the enforcement of Australian statutes (eg, per Gibbs CJ in Kearney at 515, Brennan CJ at 514, Gaudron J at 545 and Gummow J at 564 in Propend). On the view I have taken concerning the extension of legal professional privilege to communications with a foreign lawyer in the circumstances of this case, there is no need to come to a final view about that.

218               The factual conclusions reached by the primary judge underpinning these conclusions can be found in [75] to [79] of his Honour’s reasons which were in the following terms:

In any event, a dissection would only be necessary if those parts of the notes which do or may relate to communications seeking legal advice were made for a purpose that attracts legal professional privilege. In my opinion the applicant has not established the necessary connection between the notes and the administration of justice or the proper functioning of the legal system in Australia. The overwhelming inference to be drawn in all of the circumstances is that Kennedy’s dominant underlying purpose in meeting with Hafner on 4 November was to take all available steps to preserve or enhance the secrecy from Australian authorities, including ASIC, of his dealings in or relating to Switzerland including all facts and circumstances in relation to the Brampton entities and any dealings he may have had in Switzerland directly or indirectly with Rivkin generally and in relation to proceeds of the Offset Alpine shares in particular.

The s 19 transcript of the interview with Kennedy in 2003 and also the judgment of Sackville J in the Bank Leumi case refer or allude to various Swiss laws relating to secrecy of transactions which, particularly with the use of appropriate legal structures, can be utilised to enable Australians (amongst others) to secrete assets and information from the reach of Australian law enforcement and taxation authorities including ASIC. Indeed, whilst the judgment of Sackville J is not evidence before me of the truth of the facts asserted, the result of the Bank Leumi case was that the identity of the beneficial owners of the Offset Alpine shares was not disclosed owing to the operation of those very laws. The general nature and operation of the Swiss laws in this respect have been a matter of public notoriety for decades.

It is obvious that the successive Swiss Brampton entities were established in order to take advantage of Swiss secrecy laws and thereby hide assets and transactions with which Kennedy had a connection from the Australian authorities including the Australian Taxation Office. It is also obvious that the entities were structured by Hafner and administered by him in such a fashion as to minimise the risk of any disclosure of any association with Kennedy. The fact that Kennedy has kept no records in Australia relating to any Swiss transactions with which he was directly or indirectly connected over nearly 15 years underlines the difficulty of any effective scrutiny of those transactions by Australian authorities.

On his own account of it, the effect of the AFR articles upon Kennedy can only be described as dramatic. Whether or not he had been involved directly or indirectly with Rivkin in dealings with Offset Alpine shares, the published allegation concerned him greatly and it was vital for him to control the supply of information about it to the Australian authorities if possible. In any event, there would be serious implications for him if the hitherto undisclosed dealings of about 15 years involving the Brampton entities could be scrutinised by the Australian authorities. After 30 October it was vital to Kennedy to know how effective the structure had been and would be to ensure secrecy, and what, if anything, could be done to improve its effectiveness. I have no doubt he was prepared to take any step open to him to secure that end.

It is not necessary to find that Kennedy would have knowingly been party to breaching Swiss law to achieve his purpose, but he would have been quite prepared to leave matters in the hands of Hafner to do as he saw fit to achieve it. None of the evidence before me enables me to assume that it would be unprofessional for a Swiss lawyer to assist an Australian citizen by advice or otherwise to best utilise Swiss laws to hide assets and transactions from the Australian law enforcement and taxation authorities. That may not involve any breach of Swiss law. Indeed, in his s 19 examination, Kennedy was at pains to say that at all times his instructions were to ensure that whatever was done was legal, presumably according to the law of Switzerland and any other tax haven which might have been employed.

219               Involved in those findings of fact are conclusions with which I have difficulty. First, it is not clear as to the evidentiary basis for the conclusion, or the legitimacy of judicial notice of the proposition, that “the general nature and operation of the Swiss laws in this respect have been a matter of public notoriety for decades”.

220               Secondly, the entities were not entirely structured by Mr Hafner.

221               Thirdly, to the extent that the first sentence of [79] may go as far as saying that Mr Kennedy would countenance Mr Hafner breaching Swiss law, it is not clear to me the basis for that conclusion. I do not, however, read his Honour’s finding as going that far.

222               The balance of the findings are expressed in language that is not entirely flattering to Mr Kennedy. That is not a ground of error. The findings might have been expressed in another way which would have the same content. For instance, complaint is made about the third and last sentence in [75]. To say Mr Kennedy’s dominant purpose in meeting with Mr Hafner was as the primary judge stated does not exclude obtaining legal advice as a relevant part of that. Recognising this, there is nothing surprising in the primary judge’s views, given the material before his Honour. As the material adequately displays, Mr Kennedy caused structures to be set up in Switzerland, as a very private piece of his own affairs, which managed assets in which he was advised that he had no interest. The disclosure in 2003 about these matters in the way it appeared was a matter of apparent acute embarrassment to him. It is not an unreasonable conclusion to draw that Mr Kennedy, in setting up the structures in the past, intended to keep them separate from his affairs and to keep them private from others, including Australian governmental authorities. That is not to say that that privacy (in that sense “secrecy”) was unlawful. Certainly, the disclosure of the matters in 2003 had a dramatic and traumatic effect on Mr Kennedy. On one view, it is only the common sense application of an understanding of human nature, in particular when one reads the answers Mr Kennedy gave to the s 19 examination, to conclude that Mr Kennedy went to Switzerland with an underlying purpose (involving the obtaining of legal advice, on this hypothesis) of taking all available steps to preserve or enhance the hitherto secret (that is, undisclosed) nature of the details of the structures. By this time in 2003, preserving or enhancing the privacy of the structure would involve keeping such information from relevant Australian authorities (ASIC) both generally and in relation to the Offset Alpine issue to the extent that Offset Alpine might have borne upon the affairs of the various structures. In so expressing the matter I assume that Mr Kennedy’s purpose only involved conduct which was lawful by Swiss and Australian law. This is how I read the primary judge’s findings.

223               Complaint was made about the finding in the first sentence of [77]. Once again, in the light of s 19 transcript, the fact that these matters had been deliberately set up as structures beyond Mr Kennedy, but as a “very private piece of [his] own affairs”, entitles one to conclude that it was intended that the structures and such assets as they contained would remain private. It may be that in all the circumstances the conclusion that the structures were established in order to defeat Australian authorities including the Australian Tax Office went beyond what was put to Mr Kennedy. The Australian Tax Office was not mentioned in the course of the s 19 examination nor in cross-examination. However, it was open to his Honour to conclude that the structures had been set up and operated with a view to removing them from association with Mr Kennedy and with a view to maintaining privacy, while at the same time being “a very private piece of [his] own affairs”.

224               The findings in [78] with the exception of the last sentence are no more than I have otherwise referred to earlier, though expressed in different language. Looking at the s 19 transcript and the evidence I see no error in the last sentence of [78] on the assumption that what is being stated is limited to lawful steps.

225               The findings of the primary judge, on one view go no further than stating that Mr Kennedy’s purpose involved taking all available steps through Mr Hafner and seeking all available advice in respect thereof to maintain the integrity of the structures set up in Switzerland, their separation from him and, as far as was lawful, limiting the amount of information that was open and available to anyone enquiring about his affairs. To the extent that the findings of fact go beyond this, I have difficulty with seeing the basis for them on the material that was before the primary judge. Expressed in the way I have described, I have difficulty in seeing how the facts provide a foundation for a public policy exception to legal professional privilege. I have already indicated my view that it was an error to conclude that some particular connection needed to be shown or demonstrated between the advice and the administration of the Australian court system. Also, I do not see that Mr Kennedy’s purpose, as I have just identified it in paraphrase of what I think is the limit of the legitimate findings by the primary judge in [75]-[82], can found a conclusion that any privilege that might otherwise attach under orthodox principles does not attach or is lost because of some public policy, or fraud or crime exception.

226               Thus, with respect to the primary judge, I do not see the foundation for the conclusion that legal professional privilege would not attach as described in [80] to [82] on the hypothesis that the appellant otherwise shows (contrary to my earlier expressed view) that he has made out the relevant dominant purpose.

(d) residual matters on the notice of contention

227               I have already expressed my views that advice privilege is available in the circumstances of a foreign lawyer as it is available in the circumstance of a domestic lawyer.

228               ASIC also argued that privilege does not attach to an uncommunicated personal note in the context of a claim for advice privilege. It is to be recalled that the privilege claimed was one based on the asserted dominant purpose of the creation of the note as an aide-memoire. The submission was to the effect that the privilege does not extend to an uncommunicated note in connection with advice privilege as opposed to litigation privilege. ASIC relied upon Commissioner of Australian Federal Police v Propend (1997) 188 CLR 501, 515, 525 and 543 for this proposition. It also relied upon the views expressed by the English Court of Appeal in Three Rivers Council v Governor and Co of the Bank of England (No 5)[2003] EWCA Civ 474; [2003] QB 1556. The issue does not arise, not only because of my views on the appeal, but also because I would reject ASIC’s appeal against the primary judge’s finding that Mr Kennedy used the notes as an aide-memoire in his discussion with Mr Hafner. Nevertheless, it is appropriate to say the following about this argument.

229               Whilst other views of the Court of Appeal in Three Rivers (No 6) have been rejected by the House of Lords in [2004] UKHL 48, leave to appeal from the Court of Appeal in Three Rivers (No 5) had previously been refused by a differently constituted bench of the House of Lords. I do not think that Three Rivers (No 5) in the Court of Appeal, to the extent it refused to recognise legal professional advice privilege on documents prepared with the dominant purpose of obtaining legal advice, but not constituting the communication, reflects the law in Australia. For the reasons expressed below, I do not understand the law in Australia to deny privilege to a document made with the dominant purpose of obtaining legal advice on the basis that the document does not amount to the communication.

230               The circumstances of Propend did not require the Court to examine the above distinction between such a document and the communication. I referred to a number of the relevant cases in DSE at [26], [51], [68] and [69]. It is sufficient here to refer to the fact that Barwick CJ in Grant v Downs (1976) 135 CLR 674 said the following at 677 not apparently restricted to litigation privilege as Lord Phillips appeared to say in the Court of Appeal in Three Rivers (No5):

[A] document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection.

[emphasis added]

231               Also, Lockhart J in Trade Practices Commission v Sterling (1978) 36 FLR 244, 245-6 in his succinct and oft-cited (see in particular Waterford v Commonwealth (1987) 163 CLR 54, 87 and Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557, 561) summary of the law said the following at 245 as to the circumstance of the existence of the privilege:

Any document prepared with a view to its being used as a communication of this class, although not in fact so used. See Southwark Water Co v Quick (1878) 3 QBD 315.

232               To the extent that it may be said that the discussion by Goldberg J in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 556-8 (referred to with approval by the Court of Appeal in Victoria in Mitsubishi Electric v Victorian Work Cover Authority [2002] 4 VR 332 at 335 [8]) supports the proposition contended for by ASIC, I cannot agree. It is doubtful that Goldberg J and the Court of Appeal can be taken so far. If I am wrong about that and if they can be taken so far, I must respectfully disagree. To allow privilege to attach to a note which was said to be an aide-memoire for the obtaining of advice does not in any way detract from the importance of the communication as the focus of the privilege that has been made clear in the authorities. Advice cannot be given without communication. But that does not mean that no privilege attaches to any document created for the purpose of obtaining the advice (engaging in the communication) until and unless the document is used as part of a communication. That appears to me to undermine the privilege and detract from the protection of the communication itself. No High Court authority stands for that proposition. The Full Court decision in Carmody v MacKellar (1987) 76 FCR 115 was not concerned with the issue. Statements made in that case, and others, about the privilege attaching to or arising upon the communication, in circumstances not throwing up for consideration the question here, are not authority beyond what was decided in those cases.

233               In one sense, it is axiomatic that the purpose must have a connection with the communication, because it must have a connection with the advice that is sought. The protection of the communication protects a document created for the dominant purpose of using it or its contents in order to obtain legal advice: Grants v Downs at p 677. This provides the necessary connection with the communication.

234               It would not matter whether the document was or was not later used in the actual physical communication. The purpose of protecting the advice which is intended to be sought or given requires, in my view, that such distinctions not be made. Otherwise, there will be artificial constraints on the task of getting advice. The process of enquiring of the lawyer will be limited and endangered. This approach buttresses the protection of the communication by permitting proper contemplation of, and preparation for, the occasion of such advice. This approach conforms with the privacy of the communication as the focus of the privilege. It accords with the views of Barwick CJ in Grant v Downs and Deane J in Maurice at 490 which have not been rejected in the High Court. It accords with the extent of protection given by the privilege in the litigation context: see the cases cited in Cross on Evidence (7^th Aust Edn) pp 802-03. It accords with the view of learned commentators: Cross op cit pp 802-03. It is not contradicted by any binding authority. It accords with the rationale for the privilege earlier discussed.

235               ASIC also contended that the findings of his Honour amounted to impropriety sufficient to fall within the fraud or crime exception to legal professional privilege. I have earlier set out my view as to the limit of the legitimate findings by the primary judge. I do not read in his Honour’s judgment, strongly expressed though it was, any finding that Mr Kennedy acted with a purpose which was unlawful or which he intended in any relevant sense to be unlawful, either by Swiss or Australian law or with a purpose to have others act in such a fashion. To the extent that there were findings made by the primary judge that he wished to keep information away from Australian tax authorities, as I have said, that can be seen to have gone beyond the material in the s 19 investigation, given that the Australian Tax Office was not mentioned in his examination. However, it is important to understand that even if one takes the primary judge’s finding that Mr Kennedy’s purpose was to keep information, lawfully by Swiss and Australian law, away from Australian governmental authorities such is not, in my view, without more, a matter within what is referred to as the fraud or crime exception.

236               It is unnecessary, and inappropriate, to express exhaustively the limits of that exception. Without question, it extends to advice for the purpose of fraud or crime. The illegality may also be wider in some circumstances. For instance, if the advice was sought with a view to committing a contempt of court it would be doubtful whether notions of whether the contempt was criminal or not would determine the answer to a claim for privilege. Similarly, if the purpose was to obtain advice for the purpose of undertaking a course of action which was an abuse of process it would be doubtful whether the answer to the question as to whether the privilege prevailed would depend on whether the conduct was unlawful in the sense of criminal or fraudulent. More difficult questions arise when the posited conduct is lawful, but is conduct which denies to the executive arm of government information which it desires in what it sees to be the proper discharge of its duties of investigation. The answer to the question is not to be provided by the choice of language in describing the conduct, in particular the choice of verbs. A course of conduct designed to “frustrate” an investigation may, when examined, be conduct, undertaken lawfully, which amounts to no more than the insistence on rights provided by the positive law of this country. At one level of discourse, it might be accurate to say that an accused “frustrates” a criminal investigation by refusing to volunteer information about his affairs to the police. However, in a legal context as to the existence of privilege the employment of language such as “frustrate” would not advance any relevant legal analysis. I see no basis to extend the public policy exception to encompass failure to co-operate with governmental authorities in their investigations by lawfully insisting on a privilege which denies information in accordance with legal principle, or the seeking of legal advice about the person’s rights and obligations in the face of such an investigation.

237               The extent of the exception has been discussed in a number of High Court authorities: Varawa v Howard Smith & Co Ltd (1910) 10 CLR 607; R v Bell; Ex parte Lees (1980) 146 CLR 141; Attorney-General (NT) v Kearney; Carter v Northmore, Hale, Davy & Leake; and Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission. In Carter Brennan J said at 130:

The exception for which counsel contended in favour of a person charged with a criminal offence was suggested to be merely an addition to the recognised categories of exceptions. Those exceptions – communications in furtherance of crime, fraud [R v Cox and Railton (1884) 14 QBD 153 at 165] or abuse of power, [Attorney-General (NT) v Kearney (1958) CLR 500], to conceal the whereabouts of a ward of court [R v Bell; Ex parte Lees (1980) 146 CLR 141 at 146] or to frustrate the execution of a court order [Bell (180) 146 CLR 141 at 151, 162] – show that the privilege cannot be invoked to effect an illegal purpose. The exceptions preclude the possibility of the privilege being used contrary to the public interest. But those exceptions offer no analogy to the present case.

238               On a proper understanding of the extent of the primary judge’s findings, I reject the argument of ASIC that the recognised fraud or crime exception to use the shorthand of the cases is applicable here. I will not repeat what I take to be his Honour’s findings which are, in my view, the limit of the legitimate use of the material in respect to Mr Kennedy’s purposes.

239               Finally, it was said in the Notice of Contention that his Honour should have found that the privilege was waived or Mr Kennedy is estopped from relying on it. His Honour made no such findings. The findings that his Honour did make were sufficient to deny the application of these arguments. In the circumstances of the execution of the warrant and the facts found by his Honour there was no express waiver of privilege. Nor has there been such conduct from which one could infer or imply an intention to give up the privilege. In my view waiver is clearly not made out.

240               As to estoppel there was simply no relevant change of position. There is no injustice in permitting Mr Kennedy to maintain a claim for privilege in the circumstances of this case. There was a general reservation. There was no particular claim over these documents. However, within a reasonably short period strenuous efforts were made to maintain the privilege. In my view neither waiver or estoppel is arguable.

241               Thus, if I am wrong in my view that the appellant did not establish the privilege as a matter of fact, I would uphold the claim to privilege.

Orders

242               For the above reasons the orders that I would make are:

1.             The appeal be dismissed.

2.             The appellant pay the respondents’ costs.

243               The primary judge made orders on 26 March 2004 that included the order against which the appeal was made that the further amended application be otherwise dismissed. Another order made by the primary judge on 26 March 2004 was that the respondents be restrained until 5.00 pm 13 April 2004 or until further order from making use of the two notes. Given that the orders that I would make are to the effect that the notes are not privileged and given that the Chief Justice and Emmett J are of like view, some protection should be given to the appellant in order that he may consider his position in relation to any further application. The notes are presently in the possession of ASIC. Therefore, the orders that I would make would also be to restrain the respondents from dealing with or making use of the two notes in the terms made by the primary judge in order 1 of his orders of 26 March 2004 up to and including 21 January 2005. Should any party wish to vary or discharge that order he or it should bring an application before the Court on notice, any such application to be filed with supporting evidence by 5 January 2005.

Associate:

Dated: 23 December 2004