FEDERAL COURT OF AUSTRALIA

Visy Industries Holdings Pty Limited v Australian Competition and Consumer Commission [2007] FCAFC 147

PRACTICE AND PROCEDURE – application for leave to appeal from an interlocutory decision of a judge of the Court to the Full Court – discovery – legal professional privilege – whether litigation was reasonably anticipated by the ACCC on 15 December 2004 – whether ACCC could only reasonably anticipate litigation when the Commissioners had resolved to commence legal proceedings – whether the dominant purpose of the creation of the documents was for use in litigation as distinct from investigation – whether documents relating to the grant by the ACCC of immunity and/or leniency to Amcor were discoverable or only relevant as to credit – whether the primary judge erred in refusing the applicants’ request to cross-examine Mr Williams – application for leave to appeal dismissed.

Federal Court of Australia Act 1976 (Cth) ss 24(1A), 25

Judiciary Act 1903 (Cth) s 55ZF

Trade Practices Act 1974 (Cth) Part IV, ss 18, 19, 25, 26

Federal Court of Australia Rules 1979 (Cth) O 13 r 3 and r 4, O 15 r 2(3), O 33 r 12, O 52 r 2AA

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170cited

Adler v Australian Securities and Investment Commission (2003) 179 FLR 1cited

Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1972] 2 QB 102 cited

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

Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794distinguished

Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] FCA 503cited

Australian Securities and Investment Commission v Rich (2005) 53 ACSR 320cited

Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 2) [2007] FCA 444 affirmed

Barnes v Commissioner of Taxation [2007] FCAFC 88 cited

Capar v Commissioner of Police (1994) 34 NSWLR 715 cited

Collins v London General Omnibus Company (1893) 68 LT 831 cited

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55cited

Décor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397cited

Fried v National Australia Bank Ltd (2000) 175 ALR 194 cited

Goldsmith v Sandilands (2002) 190 ALR 370distinguished

Grant v Downs (1976) 135 CLR 674cited

Harrison v Attorney-General (1989) 4 PRNZ 122 cited

In re the Will of F B Gilbert (Deceased) (1946) 46 SR (NSW) 318cited

Jarman v Lambert & Cooke Contractors LD [1951] 2 KB 937 cited

Jones v Dunkel (1959) 101 CLR 298discussed

Laurenson v Wellington City Corporation [1927] NZLR 510 cited

Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority (2002) 4 VR 332considered

Microsoft Corporation v Ben Zhong Fan [2003] FCA 1026cited

Mully v Manifold (1959) 103 CLR 341cited

National Crime Authority v S (1991) 29 FCR 203 cited

Palmer v The Queen (1998) 193 CLR 1distinguished

Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357 cited

Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109followed

Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380cited

United States of America v Philip Morris Inc [2004] EWCA Civ 330 cited

Bray on the Principles and Practice of Discovery (1885)

Hunter, C Cameron and T Henning, Litigation I: Civil Procedure (7^th ed, LexisNexis Butterworths, 2005)

VISY INDUSTRIES HOLDINGS PTY LTD (ACN 005 787 968), VISY INDUSTRIES AUSTRALIA PTY LTD (ACN 004 337 615), VISY BOARD PTY LIMITED (ACN 005 787 913), RICHARD PRATT AND HARRY DEBNEY v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

VID 273 OF 2007

MOORE, WEINBERG AND LANDER JJ

12 SEPTEMBER 2007

MELBOURNE

THE COURT ORDERS THAT:

1.                  The application be dismissed.

2.                  The applicants pay the respondent’s costs.

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

REASONS FOR JUDGMENT

MOORE J

1                     The reasons of Lander J are, in substance, also the reasons why I joined in the orders made on 31 July 2007.

Associate:        

Dated:         12 September 2007

WEINBERG J

2                     At the conclusion of argument on 31 July 2007 the Court, by majority, refused the Visy parties leave to appeal.  I indicated then that I differed from my brethren as to the disposition of this application.  I stated that I had not formed a concluded view as to whether leave to appeal should be granted or refused.  I added, however, that if leave to appeal were to be granted, such leave would be confined to a relatively small aspect of the Visy parties’ case, namely whether a decision on the part of the primary judge to uphold a claim for legal professional privilege made by the Australian Competition and Consumer Commission (“ACCC”) in relation to four documents should be set aside. 

3                     The documents in question were described by Robert Alexander, General Counsel of the ACCC, in his affidavit as “category A” documents.  He said that they had been created between 17 June 2005 and 21 October 2005.  He characterised the basis upon which legal professional privilege was claimed as follows:

The documents in category A contain confidential communications to me from legal representatives of proposed witnesses.  The dominant purpose of my communications with those persons was to obtain information for use in, or in relation to, this proceeding, and to use that information to obtain legal advice in relation to this proceeding.

4                     The individual description provided for each of the four documents was set out in a Schedule to Mr Alexander’s affidavit.  The relevant extracts were as follows:

5                     The primary question that concerned me was whether the ACCC, as the party making a claim of legal professional privilege, had provided the Visy parties with sufficient facts to enable them to determine whether or not to challenge that claim.  It is trite law that the onus of establishing such facts rests upon the party propounding the claim. 

6                     In National Crime Authority v S (1991) 29 FCR 203 Lockhart J, with whom Keely and Heerey JJ generally agreed, set out the relevant principles as follows (at 211):

It is for the party asserting or claiming legal professional privilege to establish the facts giving rise to it: see Grant v Downs, per Stephen, Mason and Murphy JJ (at 689). It was for S to do more than merely assert a claim for privilege which in substance is all that he did. He exposed no facts from which the Authority would have been able to make an informed decision as to whether the claim for privilege was supportable.

Affidavits of documents in the discovery process not infrequently claim legal professional privilege by asserting that the purpose for which a document was brought into being was its sole purpose, followed by a statement as to which particular category of legal professional privilege the document belongs; for example, for use in existing or anticipated litigation. Although an affidavit in this form is usually sufficient and uncontroversial the potential for abuse is obvious. Courts should not be slow to permit cross-examination of the deponent of such an affidavit: see Grant v Downs; Young v Quin (1985) 4 FCR 483 (a case on public interest immunity); National Employers Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648 and Cross on Evidence (4th Aust ed 1991), par 25240.

As Stephen, Mason and Murphy JJ said in Grant v Downs (at 689):

“He may succeed in achieving this objective [successfully claiming legal professional privilege] by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence.”

When questions of legal professional privilege arise in proceedings before courts there are well-established procedures for dealing with them. The claim is asserted on oath and it is open to the court or the person who seeks access to the document or the answer to the question to cross-examine the person who makes the claim. The extent to which the court allows cross-examination or itself asks questions of the deponent is, of course, a matter for the discretion of the judge; but generally it cannot be sufficient for someone merely to assert that the disclosure of the identity of a person or of a document, or of the number of persons who were present at a meeting, or who was present at a meeting, or who on behalf of the client (if the person making the assertion is a solicitor) spoke to him or that he spoke to a particular officer of the client, to enliven a claim of legal professional privilege.

7                     The Full Court of this Court recently emphasised the need for a party making a claim of legal professional privilege to provide sufficient evidence to ground that claim in Barnes v Commissioner of Taxation [2007] FCAFC 88.  The Court stated (at [18]):

The authorities emphasise the need for focused and specific evidence in order to ground a claim for legal professional privilege.  In Kennedy v Wallace (2004) 142 FCR 185 at 189, Black CJ and Emmett J reiterated the principles that verbal formulae and bare conclusory assertions of purpose are not sufficient to make out a claim for privilege: see also National Crime Authority v S (1991) 29 FCR 203 at 211 (per Lockhart J); Grant v Downs (1976) 135 CLR 674 at 689 (per Stephen, Mason and Murphy JJ).  Where possible the Court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document.  The fact that generalised evidence is not challenged in cross-examination does not mean that such evidence must be accepted, particularly when it is as manifestly inadequate as it is in this case.  As in Kennedy v Wallace, mere general assertions of the purpose of creation of the documents are insufficient to discharge this onus.  Even though in that case some evidence as to the purpose of particular records was adduced, Allsop J at 216 considered that the onus had not been discharged because the evidence did not permit a conclusion to be drawn as to the dominant purpose of the creation of any particular document or entry in a document.  Simply to show that one purpose for creation of the document was to obtain legal advice or assistance is not good enough. 

(Original emphasis)

8                     In my view, the description given by Mr Alexander of the basis upon which legal professional privilege was claimed in relation to the category A documents was deficient.  He characterised the communications in question as “confidential communications to me from legal representatives of proposed witnesses”.  He went on to state that the dominant purpose of his own communication with those persons was to obtain information for use in, or in relation to, the proceeding then contemplated, and to use that information to obtain legal advice in relation to that proceeding. 

9                     However, Mr Alexander’s outline of the facts relied upon to support the claim said nothing about why the communications contained in at least the first, second and fourth of the documents that comprised category A were brought into existence.  Assumptions that might readily be made in the case of communications between lawyers and their clients (such as, for example, that such communications made privately are likely to be confidential) cannot be made in this case.  Mr Alexander was not in a lawyer-client relationship with any of the proposed witnesses whose legal representatives contacted the ACCC.  Their communications were classically third party communications. 

10                  In general, legal professional privilege will not apply to third party communications if they have come from the third party, unsolicited.  Any such communication must either have been requested, or alternatively an actual or contemplated relationship between the client, the lawyer, and the third party must be shown to exist: Capar v Commissioner of Police (1994) 34 NSWLR 715.  See generally the discussion of this point in J Hunter, C Cameron and T Henning, Litigation I: Civil Procedure (7^th ed, LexisNexis Butterworths, 2005) at [8.24]. 

11                  Mr Alexander’s description of the circumstances in which the category A documents were brought into existence is, to put it mildly, sparse.  For at least the first, second and fourth of those documents, he does not exclude the very real possibility, given the circumstances of this case, that the communications from those third parties were unsolicited.  Indeed, the very inclusion of the words “in response to request for information made by the ACCC” in only the third document description, tends to suggest that the other three communications may have been unsolicited.  If that were the case, those communications could not satisfy the dominant purpose test. 

12                  A court should approach claims for legal professional privilege over third party communications with a degree of caution.  It must be remembered that the scope of this limb of privilege has widened significantly in recent years.  Not only has there been a shift from a sole purpose to a dominant purpose test, there has also been a broadening of the legal advice limb of privilege to include third party communications even where there is no litigation pending.  See generally Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357.  That makes it all the more important to scrutinise such claims of privilege closely. 

13                  I noted, during the course of argument, that in addition to the affidavit of Mr Alexander, there was also before the primary judge an affidavit of GeoffreyWilliams, a director of compliance in the enforcement division of the ACCC.  Mr Williams was the chief investigator assigned to this matter, and much of Mr Alexander’s affidavit was based upon what he had been told by Mr Williams.  It was Mr Williams who swore the affidavit which verified discovery.  However, Mr Williams did not purport to set out in any detail the basis upon which legal professional privilege was claimed in relation to any of the documents discovered.  Rather, it was Mr Alexander’s affidavit that was directed to that issue. 

14                  Mr Williams was perhaps a little more forthcoming than Mr Alexander in his description of some of the documents in question.  For example, in relation to the email sent on 17 June 2005, he characterised that document as “Response from solicitor for witness to ACCC request for information”.  He then provided the same basis upon which legal professional privilege was said to rest as Mr Alexander later picked up, and included in the Schedule to his affidavit. 

15                  Although the information set out in Mr Williams’ affidavit regarding the nature of the documents in question is fuller than that provided by Mr Alexander, in my view it still falls short of what is required to make good such a claim.  There is nothing said about the nature of the ACCC request for information.  For example, was it a request at large, or was it specifically directed to the proposed witness? 

16                  More fundamentally, the Visy parties made it plain that they challenged the adequacy of the ACCC’s evidence in support of each and every claim for legal professional privilege.  The ACCC relied primarily upon the affidavit of Mr Alexander as the basis for those claims, and he was extensively cross-examined.  When it came to Mr Williams’ affidavit, the ACCC sought to have it both ways.  It sought to rely upon that affidavit to cure any deficiencies that there might have been in Mr Alexander’s affidavit.  However, when the Visy parties indicated that they wished to cross-examine Mr Williams, as the source of Mr Alexander’s descriptions of the documents, the ACCC objected and urged the primary judge not to permit that to happen.  His Honour determined that Mr Alexander had been cross-examined at length and that it was therefore unnecessary to require Mr Williams to be cross-examined as well. 

17                  It was plainly open to his Honour to limit cross-examination in this way.  The proceeding was interlocutory, and hearsay evidence could be led.  Much of Mr Alexander’s evidence took that form. 

18                  However, having rejected the application for leave to cross-examine Mr Williams, it would not have been appropriate, in my view, for his Honour to have used Mr Williams’ affidavit to cure the manifest deficiencies in Mr Alexander’s affidavit.  In any event, I do not discern, in his Honour’s judgment, any reliance upon Mr Williams’ affidavit in relation to the category A documents. 

19                  In my view, it was plainly arguable that there was insufficient evidence to support the primary judge’s finding that the category A documents were brought into existence for the dominant purpose of legal proceedings that were reasonably anticipated.  There was even less evidence to suggest that those documents were created for the dominant purpose of obtaining legal advice. 

20                  It was for these reasons that I indicated, at the conclusion of argument, that there was an arguable case that the material in support of the claim for legal professional privilege in relation to the category A documents was inadequate, and that the first limb in Décor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397was satisfied. 

21                  I also indicated, at that stage, that I had formed no concluded view as to whether any error regarding the category A documents would, or might, amount to substantial injustice and therefore meet the requirements of the second limb in Décor.  On more careful reflection, I consider that the Visy parties would face real difficulties in overcoming that limb.  It is well-established that the wrongful withholding of documents that are otherwise relevant and discoverable does not of itself demonstrate a risk of substantial injustice.  The difficulty, of course, is that one never knows.  It is true that category A consists of only four documents and that the dispute between the ACCC and the Visy parties relating to legal professional privilege involves more than two hundred documents.  Yet it is possible that one or more of those four documents could prove significant in the overall context of this case. 

22                  In the end it is unnecessary for me to come to a firm conclusion regarding the risk of substantial injustice.  My opinion regarding the inadequacy of the evidence to support the claim for privilege over the category A documents is a minority view.  The majority has concluded that leave to appeal should be refused, and so ordered. 

23                  As to the balance of the arguments presented on behalf of the Visy parties in support of the application for leave to appeal, I have had the advantage of reading in draft the reasons for judgment prepared by Lander J.  I agree with all that his Honour has said regarding the documents other than those in category A, that were sought by the Visy parties.  The primary judge correctly upheld the ACCC’s claim for legal professional privilege in relation to those documents. 

24                  There are, however, several observations that I would wish to add.  There is still a live debate surrounding the question of legal professional privilege and third party communications.  I note that the definition of “anticipated litigation” as it relates to the litigation limb of legal professional privilege now incorporates a requirement of “reasonableness”.  That requirement appears to have first emerged in Collins v London General Omnibus Company (1893) 68 LT 831 at 833 per Charles J.  It is now generally accepted as part of the common law in Australia and New Zealand.  Interestingly, it appears to form no part of the common law in Canada. 

25                  Collins also established that there had to be “a high probability, amounting almost to certainty, that an action will ensue” in order to trigger the litigation limb of legal professional privilege.  That requirement was watered down, to some degree, in Jarman v Lambert & Cooke Contractors LD [1951] 2 KB 937 where the Court of Appeal observed that proceedings would be reasonably anticipated if they were “likely” or “reasonably probable”. 

26                  In Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1972] 2 QB 102 Lord Denning MR (at 130) cited Bray on the Principles and Practice of Discovery (1885) at p 408 as supporting the principle that there had to be “some definite prospect of litigation and not a mere vague anticipation of it”.  However, his Lordship went on to observe that it was often very difficult to say when litigation is anticipated particularly when, as in the instant case, a party fulfilled two roles. 

27                  More recently in England, in United States of America v Philip Morris Inc [2004] EWCA Civ 330 Brooke LJ, with whom Chadwick and Baker LJJ agreed, favoured a test of “real likelihood” as a counterpoise to a “mere possibility”.  His Lordship did not regard that expression as requiring a greater than 50 percent chance of litigation. 

28                  The position in Australia remains unresolved.  In Grant v Downs (1976) 135 CLR 674 Stephen, Mason and Murphy JJ said (at 682–683) that the question was whether, viewed objectively, litigation could be reasonably anticipated. 

29                  In Australian Competition and Consumer Commission v Australian Safeway Stores (1998) 81 FCR 526 Goldberg J observed (at 559) that anticipated proceedings involve “the notion that there is a reasonable probability or likelihood that such proceedings will be commenced — not that they will be but rather that more probably than not they will be”. 

30                  However, in Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 Batt JA (at 341) expressly disagreed with the requirement that proceedings be “more probable than not”.  His Honour preferred a lower standard, so that in order to attract litigation privilege “there must be a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not”. 

31                  Recent authority in this Court seems to favour the view expressed by Batt JA.  See for example Microsoft Corporation v Ben Zhong Fan [2003] FCA 1026 per Jacobson J; and Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] FCA 503 per Allsop J.  The same is true of recent authority in New South Wales: Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 at [43]–[49] per McDougall J. 

32                  In New Zealand the requirement that there not just be a “mere vague apprehension” of litigation seems to stem from the early and often cited case of Laurenson v Wellington City Corporation [1927] NZLR 510 per Skerrett CJ at 511.  His Honour there spoke of a need to establish a “bona fide belief that litigation will probably ensue”.  See also Harrison v Attorney-General (1989) 4 PRNZ 122. 

33                  Whether litigation is “reasonably anticipated” must be a question of fact.  In that regard, the difference between the test propounded by Goldberg J, and that favoured by Batt JA, may be more illusory than real.  The distinction between these two formulations is unlikely to lead to different results in more than a handful of cases. 

34                  In the present case, irrespective of which approach is taken, the primary judge was perfectly correct in concluding that litigation was reasonably anticipated as at, and from about, 15 December 2004.  That is sufficient to dispose of this point. 

35                  I also agree with Lander J that the Visy parties were not entitled to discovery of documents that relate solely to the immunity granted by the ACCC to Amcor personnel.  That is not to say that such documents may not, ultimately, be obtained by subpoena.  See generally Fried v National Australia Bank Ltd (2000) 175 ALR 194, and the various cases cited therein. 

36                  Finally, I agree with Lander J that the primary judge was correct to refuse the Visy parties leave to amend their pleadings.

Associate:        

Dated:         12 September 2007

REASONS FOR JUDGMENT

LANDER J

THE APPLICATION

37                  The application was brought by the respondents to the proceeding (including Visy Industries Holdings Pty Ltd (Visy)) for leave to appeal against orders made by Heerey J on 29 March 2007 dismissing the applicants’ notices of motion dated 5 December 2006 and 1 February 2007 which sought interlocutory orders relating to discovery and production of documents and an order striking out paras 222 (aa)-(ad) of the first to fifth applicants’ amended defence filed 8 January 2007.

38                  Leave to appeal was required as the impugned orders were interlocutory: s 24(1A) of the Federal Court of Australia Act 1976 (Cth).  Pursuant to s 25 of the Federal Court of Australia Act 1976 and O 52 r 2AA of the Federal Court Rules 1979 (Cth) (the Rules), the leave application was heard as if it were the appeal.  At the conclusion of the hearing the Court announced that leave was refused and that reasons for that refusal would be published at a later date.  These are my reasons for that refusal.

GRANT OF LEAVE

39                  The generally applied test for the grant of leave from an interlocutory order of the Court is well known and not in dispute.  Leave to appeal will be granted if an applicant can establish that the impugned decision is attended with sufficient doubt to warrant it being reconsidered by the Court and whether substantial injustice would result if leave were refused supposing the decision to be wrong: Décor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397.  In particular, in considering an application for leave to appeal concerning a matter of practice and procedure, the Court will proceed cautiously so that the exercise of the managing judge’s discretion is not moved to the Full Court: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177; In re the Will of F B Gilbert (Deceased) (1946) 46 SR (NSW) 318 at 323.

BACKGROUND

40                  The Australian Competition and Consumer Commission (ACCC) alleges by amended application filed on 30 November 2006 that, spanning a period from January 2000 until October 2004, the applicants engaged in price fixing, market sharing and other collusive conduct by making a contract or arrangement or arriving at an understanding with Amcor Limited in relation to the supply of corrugated fibreboard packaging in contravention of Part IV of the Trade Practices Act 1974 (Cth) (the Act).

41                  The applicants’ two notices of motion dated 5 December 2006 and 1 February 2007 sought production of several categories of documents for which the respondent had claimed legal professional privilege in relation to communications contained in those documents on the ground that the communications had been made in reasonable anticipation of legal proceedings.  The applicants also sought discovery of communications relating to the terms of immunity arrangements or agreements between the respondent and Amcor Limited (Amcor).

42                  The respondent also brought a notice of motion dated 21 February 2007 in relation to pleadings and particulars.  The respondent sought orders that the first to third applicants provide better particulars of several items in paras 222 (aa), (ac), (ae) and (af) of the amended defence or alternatively, that paras 222 (ac) and (af) be struck out.  It was partly in response to this motion that Heerey J made the orders in relation to the applicants’ amended defence.

43                  There were three issues for determination before Heerey J.  The first was whether the ACCC’s claim for legal professional privilege was validly made.  This issue required a finding as to the date upon which it could be said that litigation was reasonably anticipated by the ACCC.  The claim for privilege also raised the question whether the dominant purpose of the creation of the documents was for use in litigation as distinct from investigation.  Heerey J found against the applicants and found that the documents were created at a time when litigation was reasonably anticipated and for the purpose of use in that litigation.  The respondent filed a notice of contention claiming that Heerey J’s order in this regard should be affirmed on the further ground that the documents were privileged having been brought into existence for the dominant purpose of obtaining legal advice in relation to the proceeding.  Because leave to appeal was refused, the notice of contention does not need to be considered.  The second issue required consideration as to whether certain documents relating to the grant by the ACCC of immunity and/or leniency to Amcor were discoverable at all or only relevant as to credit.  Justice Heerey found that the documents were not discoverable.  The third issue was in relation to the pleadings and the applicants’ amended defence, in particular, paras 222 (aa)-(ad).  Justice Heerey struck out this part of the applicants’ defence.

44                  A further issue was raised on appeal.  At the hearing before Heerey J the applicants applied to cross-examine Mr Geoffrey Williams, who was a Director of Compliance in the Enforcement Division of the ACCC and who swore the affidavit verifying the ACCC’s list of documents.  No evidence was led from him on the application itself, although his affidavit verifying the list of documents was relied upon.  Justice Heerey refused their request to cross-examine Mr Williams.

FACTS

45                  On 22 November 2004, Mr Graham Samuel, Chairperson of the ACCC was approached by Amcor’s solicitor, Mr Pat Ryan of Allens Arthur Robinson concerning serious cartel misconduct in relation to corrugated fibreboard packaging.  At that time, the ACCC had in place both a leniency policy and a cooperation policy which were published on the ACCC’s website.  The leniency policy, published in June 2003, was solely in relation to cartel conduct and was only available to the party who first applied for leniency.  The ACCC then considered any subsequent application for leniency pursuant to the cooperation policy published in July 2002.  Both policies enabled the ACCC to offer at least partial immunity to those parties who assisted the ACCC in relation to the discovery and investigation of cartel conduct.  Mr Samuel relayed the information Mr Ryan provided him to Mr David Smith, a Commissioner and Chairman of the Enforcement Committee of the ACCC, who organised a video conference between parties in Sydney and Melbourne.  In Sydney were Mr Smith, Mr Brian Cassidy, the Chief Executive Officer of the ACCC, Mr Robert Alexander, General Counsel of the ACCC and Ms Cherie Noy, Assistant Director of the ACCC in the Enforcement Division.  In Melbourne were Mr Samuel, Chris Roberts, the Chairman of Amcor, Russell Jones, the then Managing Director of Amcor and three partners from Allens Arthur Robinson, Mr Ryan, Paul Meadows and Bob Santamaria.

46                  Amcor’s representatives indicated an intention to make a formal application for leniency for cartel conduct in contravention of the Act.  They advised the ACCC that they were in possession of audio recordings, made by a former employee Mr Jim Hodgson, involving Amcor Executives which likely proved that those executives were involved in cartel conduct in breach of the Act (the Hodgson recordings).  The Hodgson recordings included discussions between Mr Hodgson and Mr Peter Brown who, until his retirement in October 2003, was Amcor Australasia’s Managing Director and also between Mr Hodgson and Mr Peter Sutton, who replaced Mr Brown after he retired. Amcor had obtained the Hodgson recordings following a Court order permitting Amcor to obtain and inspect documents in a proceeding that Amcor had commenced against some of its former employees.

47                  Mr Alexander was directed by Mr Samuel to prepare s 155 notices to obtain the Hodgson recordings from Amcor.  Mr Samuel, Mr Smith, Mr Cassidy, Mr Roberts and Mr Jones then left the meeting, however, certain others including Mr Geoffrey Williams, a Director in the Enforcement Division and Mr Andrew Riordan, an Assistant Director in the ACCC’s Sydney office joined.  Mr Ryan advised that he would provide details of the Amcor companies to Mr Alexander so that the proposed s 155 notices could be sent.

48                  Something needs to be said of Mr Alexander’s position with the ACCC.  Since 1972 he has been employed in various positions by the Commonwealth Government on trade practices enforcement matters and between 1972 and 2000 he worked exclusively on trade practices matters for the Commonwealth Crown Solicitor’s Office, the Australian Government Solicitor, the Commissioner of Trade Practices, the Trade Practices Commission and the ACCC.  Since 1 January 2001 he has been employed by the ACCC as its General Counsel.

49                  The ACCC is subject to Legal Services Directions (LSDs) issued by the Attorney-General of the Commonwealth pursuant to s 55ZF of the Judiciary Act 1903 (Cth).  The LSDs apply generally to Commonwealth legal work.

50                  Paragraph 4.7 of the relevant LSDs in force as at late 2004 states:

An FMA agency is not to start court proceedings unless the agency has received legal advice from lawyers whom the agency is allowed to use in the proceedings that there are reasonable grounds for starting the proceedings.

51                  Paragraph 5 of the LSDs states:

5.         Use of in-house lawyers for court litigation

5.1       An FMA agency may only use an in-house lawyer to conduct court litigation as solicitor on the record or as counsel with the express approval of the Attorney-General.

52                  The effect of the LSDs and, in particular, the paragraphs mentioned above is that, generally, the ACCC is required to obtain advice from lawyers external to the ACCC that there are reasonable grounds for starting a proceeding before a proceeding is commenced.  However, on 18 May 2001 an Assistant Secretary of the Attorney-General’s Department, on behalf of the Attorney-General, provided the ACCC with a limited exemption from that requirement.  Pursuant to that exemption, the ACCC is able to commence legal proceedings when it has advice from Mr Alexander that there are reasonable grounds for starting those proceedings.  It was Mr Alexander’s evidence before the primary judge that he, as a member of the Enforcement Committee, has made numerous decisions to recommend to the Commissioners of the ACCC that proceedings be commenced.

53                  Shortly after the meeting, Mr Alexander, was told to report to the Chairperson of the ACCC, Mr Samuel, regarding progress in this matter rather than, as he usually would, to the Enforcement Committee or the Commissioners.  Mr Alexander was paired to work with Mr Williams who was assigned as case officer.  This was the first time that Mr Alexander had been asked to head up a joint team with a Director of the Enforcement Committee and to bypass reporting to the Enforcement Committee and report directly to the Chairperson of the ACCC.  Mr Williams and his team of investigators were to determine the scope and activities to be undertaken in the investigation.  Mr Alexander was to be responsible for legal issues through the ACCC’s solicitors, the Australian Government Solicitor (AGS).

54                  On 22 November 2004, Mr Alexander served a s 155 notice on Amcor to produce the Hodgson recordings.  They were produced on 23 November 2004 by Allens Arthur Robinson.  On that day also, Amcor published a news release detailing its possible involvement in conduct which may have been in breach of competition laws.  Again on the same day, the ACCC received a letter from AJ Macken & Co, solicitors for three former Amcor employees, Mr Hodgson, Mr Sangster and Mr Barnes.  The letter stated that those three men were willing to “cooperate fully with the ACCC in relation to any investigation which the ACCC might wish to undertake in relation to this matter”.

55                  On 24 November 2004, Mr Alexander wrote to Mr Ryan at Allens Arthur Robinson requesting that Mr Jones and Mr Sutton make themselves available for interview by the ACCC.  On 26 November 2004, Mr Ryan and Mr Meadows sent the ACCC a letter which incorporated an application for leniency on behalf of Amcor and which mentioned “an understanding” that “may have been reached between at least Amcor and Visy Board concerning the supply of corrugated fibre containers.”

56                  On 25 November 2004, following a phone call from Mr Meadows, Mr Alexander realised that the Hodgson recordings were subject to confidentiality restrictions in the proceeding in the Federal Court.  He engaged Slater & Gordon to act for the ACCC to obtain access to those recordings and, on 2 December 2004, Goldberg J made an order allowing Amcor to provide materials, including the Hodgson recordings, to the ACCC.

57                  On 7 December 2004, Mr Tom Jarvis of Deacons, solicitors, telephoned Mr Alexander to advise that he was acting for Mr Sutton and that Mr Sutton was very keen to cooperate with the ACCC.  On that same day, Mr Williams e-mailed Mr Alexander transcripts of excerpts of the Hodgson recordings.  On that day, Mr Alexander also received an e-mail from Mr Meadows attaching an Amcor press release stating that the Board had accepted the resignations of Mr Jones and Mr Sutton, and had terminated the consultancy of Mr Brown following its solicitor’s investigation into Amcor’s involvement in an alleged cartel.  That press release stated:

On November 22, 2004, the board of Amcor Limited became aware of information that led it to believe that its Australian business may have been involved in conduct which breaches competition laws.  On receipt of that information, the Board immediately:

•     Notified the Australian Competition and Consumer Commission (ACCC) of the information and advised the ACCC that it would cooperate fully with any investigation by the ACCC.

•     Notified the ASX of possible breaches of competition laws; and

•     Instructed its legal advisers to review the available information and to conduct interviews with relevant members of management who may be able to assist in the investigation.

Last night the Board met to receive and consider an interim report in the matter from its legal advisors.  The Board also resolved to accept offers of resignation given by each of Mr. Russell Jones (Managing Director of the Company) and Mr Peter Sutton (Managing Director, Amcor Australasia) from their employment (and any directorships and other positions) with the Amcor Group.  Mr. Peter Brown retired as Managing Director of Amcor Australasia in October 2003 and became a consultant to the Group.  That consultancy has also been terminated.

It is intended by the Board that Messrs. Jones and Sutton will receive their minimum legal entitlements only on termination.  It is not intended that any additional contractual payments (whether by way of accrued performance payments or payments in lieu of notice or otherwise) will be made to them.

…

Background

On 28 September 2004 four senior executives who had worked in the corrugated box business of the Amcor Group in Australia resigned.  On 10 November 2004, Amcor sought orders in the Federal Court relating to the return of confidential information belonging to the Amcor Group and injunctions to prevent use of that information by those former executives.  Subsequently, the Company joined Mr. Jim Hodgson (former head of its Australasian corrugated box business) to the proceeding.  The Federal Court granted orders providing for the delivery up of any such confidential information.

On the afternoon of Friday, 19 November 2004, the solicitors for those former executives delivered material to the Company’s solicitors which suggested that the Company may have been involved in breaches of competition laws.  As noted above, on 22 November 2004, the Company’s Board met to discuss the matter and resolved to refer the material which it had to the ACCC and to fully cooperate with any investigation which the ACCC may undertake.

The Board also resolved that the Company would urgently undertake its own investigation of the matter.

The Company’s investigation is at an early stage.  To date, its investigation has revealed that certain of its officers and employees appear to have entered into and given effect to arrangements which constituted cartel conduct in the corrugated box business.  The full nature and extent of the arrangements has not yet been ascertained by the Company.

Continuing Investigations

The Board is continuing to investigate the full nature and extent of the arrangements in the Australasian corrugated box business.  At this stage, the Board is not aware of any anti-competitive arrangements affecting any other part of the Company’s operations.  The Australasian corrugated box business represented approximately 9% of Group revenue and 8% of Group EBITA in the year ended 30 June 2004.

The Company will continue to provide full cooperation to the ACCC in its investigation.

58                  On 8 December 2004, Mr Alexander replied to Mr Jarvis’ letter advising that any immunity granted to Amcor would extend to Mr Sutton provided he cooperated fully.  On the same day, Allens Arthur Robinson sent Mr Alexander extensive transcripts of the Hodgson recordings which included a discussion between Mr Hodgson and Visy Chief Executive Officer, Mr Harry Debney, the fifth respondent.

59                  On 9 December 2004, Mr Alexander, Mr Williams and Mr Riordan interviewed Mr Sutton, the recently resigned Managing Director of Amcor Australasia, who told them, amongst other things, that sometime around July 2003 he became aware that an arrangement existed between Amcor and Visy in relation to corrugated fibreboard packaging.  On 14 December 2004, Mr Alexander, Mr Williams and Mr Riordan interviewed Mr Jones, the recently resigned Managing Director and Chief Executive Officer of Amcor, regarding meetings held with Visy.  On 15 December 2004 the three men interviewed Mr Brown, the former Managing Director of Amcor Australasia until his retirement in October 2003, who provided further information regarding the conduct being investigated.  Also on 15 December 2004, the ACCC received a letter from the solicitors acting for Mr Hodgson and Mr Barnes stating that they intended to provide the ACCC with further information, including detailed particulars of who was involved and how the collusive behaviour worked.

60                  On 13 December 2004, Mr Williams had two conversations with a solicitor at AGS, Mr Marcus Bezzi and discussed matters such as a case management plan and a document handling system for litigation.  On that same day, Mr Bezzi called another solicitor at the AGS, Jackie Gleeson, to discuss the new matter the ACCC had commencing in Melbourne.

61                  Mr Alexander deposed in an affidavit that shortly after the interview with Mr Brown concluded on 15 December 2004 he formed the opinion that the ACCC would commence proceedings against Visy in relation to the allegations made by Amcor.  He stated that he would recommend to the ACCC that such a proceeding be commenced and that Mr Williams was of the same view.  He formed the view that in light of the material he had obtained in relation to this matter, the ACCC had a case against Visy.  He was aware, however, that further work would be required to prepare a statement of claim and that a formal decision by the Commissioners to commence legal proceedings would not be taken for some time.

62                  On 20 or 21 December 2004, Mr Williams briefed ACCC and AGS staff, and informed them of the outcome of the three interviews held on 14 and 15 December 2004.

63                  During 2005, the ACCC issued s 155 notices to a number of parties.  On 14 November 2005, the ACCC, through Mr Alexander, briefed counsel to settle the application and statement of claim.  On 22 November 2005 Mr Williams and Mr Alexander prepared a staff paper for the Commissioners seeking an in-principle decision to commence proceedings against Visy.  At a meeting of the Commissioners on 28 November 2005, the Commissioners made an in-principle decision to institute proceedings as recommended.  At that meeting Mr Alexander orally recommended proceedings be commenced against Visy.  On 9 December 2005 an additional staff paper was prepared by Mr Williams and Mr Alexander for the Commissioners seeking a final decision to commence proceedings against Visy.  On 16 December 2005, the Commissioners made a decision to institute proceedings against Visy.  The ACCC filed its original application and statement of claim on 21 December 2005.

64                  The ACCC contended that litigation was reasonably anticipated by 15 December 2004, even though the Commissioners did not reach an in-principle decision to commence proceedings until 28 November 2005.  The applicants claimed that the relevant date in order to determine when litigation was reasonably anticipated by the ACCC was 28 November 2005.

65                  It is useful to discuss each of the three issues arising on the application in turn; the legal professional privilege issue, the immunity arrangements issue and the pleadings issue.  Heerey J’s refusal to allow the cross-examination of Mr Williams will be addressed as part of the first issue.

Issue 1 – Legal Professional Privilege

66                  A list of documents setting out the categories of documents that were in dispute was agreed to by the parties and formed Schedule 1 to the applicants’ notice of motion dated 1 February 2007.  In his affidavit, sworn on 15 February 2007, Mr Alexander described the nature of those documents.  Justice Heerey helpfully summarised the categories of documents in tabular form which is reproduced:

Justice Heerey’s Decision

67                  It was not in dispute that a document which was brought into existence for the dominant purpose of use in reasonably anticipated legal proceedings could be the subject of a claim of legal professional privilege.  The privilege attaches to the communication contained in the document.  It was also not in dispute that the subjective intention of the person who caused the document to be created, either by creating the document themselves or requesting its creation, was not determinative of that question.  It must also be established that it was objectively reasonable that the proceedings were anticipated at the time the document evidencing the communication was created: Grant v Downs (1976) 135 CLR 674.

68                  However, the parties were not agreed as to the appropriate test for ‘reasonable anticipation of litigation’.  In Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 559, Goldberg J held that the concept of anticipated proceedings involved “the notion that there is a reasonable probability or likelihood that such proceedings will be commenced – not that they will be but rather that more probably than not they will be.”

69                  On the other hand, in Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority (2002) 4 VR 332 at [19], Batt JA (with whom Charles and Callaway JJA agreed) held that there must be a “real prospect of litigation, as distinct from a mere possibility”, but it need not be more likely than not.  The latter test was preferred by Jacobson J in Microsoft Corporation v Ben Zhong Fan [2003] FCA 1026 at [73]-[75], Allsop J in Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] FCA 503 at [8] and McDougall J in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 at [43]-[49].

70                  Justice Heerey held that the weight of authority favoured the lesser standard test of “real prospect” in Mitsubishi 4 VR 332 which he also preferred to the Safeway 81 FCR 526 “more likely than not” test.  In any event, he concluded that on the facts the higher standard imposed by the Safeway 81 FCR 526 test had been met by the ACCC.

71                  Visy argued that only the members of the ACCC had the power to authorise the institution of legal proceedings in respect of contraventions of Part IV of the Act and therefore the ACCC could not reasonably anticipate legal proceedings until the ACCC Commissioners had so resolved.

72                  Justice Heerey analysed ss 18, 19, 25 and 26 of the Act.  He held that, although these sections indicate that the ACCC cannot delegate the power to decide whether to institute legal proceedings under Part IV to one or more members of its staff, that did not lead to the conclusion that litigation cannot be reasonably anticipated for the purpose of a claim of legal professional privilege unless and until the ACCC has formally resolved by its Commissioners to commence proceedings or that only the Commissioners themselves, or Divisions or formally appointed delegates of the ACCC, can have the necessary reasonable anticipation.

73                  He said that the law of legal professional privilege and the phrase “reasonable anticipation” necessarily means that the privilege usually will arise before the commencement of litigation.  It would therefore, he held, be misleading to focus on the state of mind only of those in the ACCC who have the power to commence litigation on the ACCC’s behalf.  He concluded that as Mr Williams and Mr Alexander were senior and experienced officers, and because Mr Alexander held a specific exemption from the Attorney-General and was to report directly to the Chairman, his advice would be sufficient for the ACCC to commence proceedings.  He held that the state of mind of Mr Alexander and of Mr Williams could be attributed for present purposes to the ACCC.  He held, however, that state of mind had to be objectively reasonable.

74                  Justice Heerey was satisfied that Mr Alexander and Mr Williams, as at 15 December 2004, were of the view that litigation over the Amcor-Visy cartel was reasonably anticipated even though there was no contemporaneous record that they in fact held this view.  He further concluded that this view was objectively reasonable.  It was not important that the ACCC’s evidence as of that date was unsworn.  He held that while an investigation into and discovery of cartel behaviour would usually be difficult, that was not the case in this investigation because of information available to the ACCC and the persons who were willing to supply that information.  He said that it could be inferred that there would be no motive for the Amcor personnel to have invented an Amcor-Visy cartel that had never existed.  Justice Heerey said that “the prospect of litigation was certainly more likely than not and verged on the inevitable.”

75                  Because in his view there was a high degree of likelihood that litigation would be instituted, Heerey J said there was an irresistible inference that the production of the documents was for the dominant purpose of contemplated judicial proceedings.  The descriptions of the nature of the documents (see above schedule) showed that they were “virtually all concerned with the laborious process of preparing witness statements, the very stuff of litigation preparation.”  As mentioned above, Heerey J refused the applicants’ application to cross-examine Mr Williams.

Applicants’ submissions

76                  In support of their application for leave to appeal the applicants put the following propositions.  First, that they ought to have been given permission to cross-examine Mr Williams as Heerey J relied upon Mr Alexander’s evidence that he and Mr Williams had formed the opinion as at 15 December 2004 that litigation was reasonably anticipated and that Heerey J’s refusal to allow that cross-examination involved a wrongful exercise of discretion.  The applicants submitted that a Jones v Dunkel (1959) 101 CLR 298 inference arose by reason of the ACCC opposing the application to cross-examine Mr Williams.  Secondly, it was argued that Mr Alexander’s and Mr Williams’ subjective view that litigation was anticipated as at 15 December 2004 could not be attributed to the ACCC.  The ACCC could only commence litigation by resolution of its Commissioners and no such resolution was made until the in-principle resolution was made on 28 November 2005.  Thirdly, if in fact Mr Alexander’s and Mr Williams’ view could be attributed to the ACCC, the view that they formed as at 15 December 2004 was not objectively reasonable.  In putting that submission the applicants contended that the test for “reasonable anticipation of litigation” should be that it is more likely than not, rather than there being a real prospect of litigation.  They contended that the “real prospect” test sets an unduly low threshold which would give rise to considerable uncertainty in application because a real prospect simply means that the prospect is not remote.  Fourthly, if in fact their view could be attributed to the ACCC and it was objectively reasonable, the documents were not brought into existence for the dominant purpose of use in legal proceedings but, rather, were brought into existence as part of the investigation into whether there had been a contravention of the Act.

Respondent’s submissions

77                  In response to the complaint that Heerey J should not have refused to allow the applicants to cross-examine Mr Williams, the ACCC contended that the primary judge’s decision was an exercise of discretion which had not miscarried.  The respondents argued that Jones v Dunkel 101 CLR 298 has no application in a case such as this.

78                  Otherwise, the ACCC relied upon Heerey J’s reasons and the contentions put to Heerey J at first instance.

Conclusion

79                  I should deal with the evidentiary matter first.  Mr Williams did not swear an affidavit for use in the applications before Heerey J.  The ACCC relied upon an affidavit sworn by Mr Alexander and produced Mr Alexander for cross-examination.  He was cross-examined for approximately one and a half days.  Mr Williams had, as earlier mentioned, sworn an affidavit on 27 November 2006 verifying the ACCC’s revised list of documents which was relied upon during the application.

80                  These were interlocutory applications in a matter of considerable complexity.  The hearing of these applications occupied four days.  Justice Heerey was not told in any detail why it was necessary for the applicants to cross-examine Mr Williams, which is not all that surprising having regard to the fact that his evidence could, at best, be described as marginal.  It was not suggested that the applicants wished to cross-examine him on his affidavit verifying the list of documents.  In those circumstances, Heerey J was entitled, in my opinion, to exercise his discretion to refuse to allow the applicants to cross-examine Mr Williams.  Nothing is indicated to suggest that Heerey J’s discretion miscarried.  I reject the proposition that because the ACCC opposed the applicants’ application to cross-examine Mr Williams a Jones v Dunkel 101 CLR 298 inference could arise.  It would be stretching Jones v Dunkel 101 CLR 298 beyond any understanding of its limits to say that because a party successfully opposed their opponent’s application to cross-examine a witness it may be inferred that that witness’ evidence, which is unknown to the Court, is unlikely to assist the party’s case.

81                  Mr Alexander’s evidence was that as at 15 December 2004 he formed the view that the ACCC would commence legal proceedings against the parties who were alleged by Amcor and its employees to have been parties to the cartel conduct.  At that date, he had formed the view that he would recommend that course to the Commissioners.  That evidence was accepted by Heerey J and, in my respectful opinion, rightly so.  There was abundant evidence available to the ACCC as at 15 December 2004 from apparently reliable sources that the now respondents, or at least some of them, had been involved in cartel conduct.  The ACCC had available to it Mr Brown, who had been a party to the initiating conduct and the senior executives of Amcor, who had continued the conduct until November 2004.  The ACCC had further available to it the two Managing Directors, Mr Jones and Mr Sutton, to whom reference has been made, who had recently resigned as a result of this alleged cartel conduct.  Between 22 November 2004 (when Mr Samuel was first approached) and 15 December 2004, a number of parties in addition to Amcor had approached the ACCC acknowledging their involvement in cartel conduct.  They included former employees of Amcor, Messrs Hodgson, Barnes and Sangster and later, Messrs Mihelic and Bayley.

82                  On two separate occasions Amcor had published press releases acknowledging its involvement in possible contraventions of the Act.  In the second press release published on 7 December 2004 Amcor acknowledged that it had accepted the resignations of Messrs Jones and Sutton and terminated the consultancy of Mr Brown.  The ACCC was in possession of a transcript of a conversation between Mr Hodgson and the fifth respondent, Mr Debney.  Between 9 and 15 December 2004, Messrs Alexander and Williams interviewed Mr Sutton, Mr Jones and Mr Brown.  Moreover, on 13 December 2004, Mr Williams had made contact with the AGS.

83                  The allegations were so serious and the evidence for it so available that one can readily understand that Mr Alexander would have formed the opinion that he did.  There was a considerable body of evidence before Heerey J to support his finding that Mr Alexander and Mr Williams held the view that Mr Alexander expressed in his written and oral evidence.

84                  I agree with Heerey J that it was appropriate to attribute to the ACCC Mr Alexander’s opinion as at 15 December 2004.  I reject the applicants’ submission that Mr Alexander’s opinion could not be attributed to the ACCC but that ACCC could only form a view as to the potential for litigation through either a decision of the Commissioners or the knowledge of a Commissioner.  It is true, as the applicants have contended, that it is only the Commissioners who can resolve to commence legal proceedings but that does not mean that those who were charged with bringing together the evidence for use in legal proceedings could not reasonably anticipate that those proceedings would be commenced.  As Heerey J pointed out, because the law recognises that the privilege commences when there is a reasonable anticipation of legal proceedings, as a matter of logic, that must be a point in time prior to the issue of those proceedings.  Therefore, one must look to a point of time anterior to the Commissioners’ determination on 28 November 2005 and must look to the minds of others, other than the Commissioners themselves.  In circumstances such as the present case, because the ACCC cannot have a mind of its own, minds which can reasonably anticipate the commencement of legal proceedings must necessarily be of those who are charged with the responsibility of gathering the evidence for those proceedings.

85                  I agree with Heerey J that it was necessary to consider whether Mr Alexander’s opinion was objectively reasonable and, in doing so, to consider all of the available evidence at the time that the opinion was formed.  There is nothing to suggest that Mr Alexander did not reach the right conclusion when he found that the evidence available as at 15 December 2004 made it objectively likely that litigation verged on the inevitable.  Mr Alexander’s evidence was that this case was not only unusual, it was unique.  Never in his experience had the ACCC been provided with the quantity and quality of the evidence which was delivered to it before 15 December 2004.

86                  I agree that as at 15 December 2004 it was objectively reasonable, in fact, it verged on the inevitable, that legal proceedings would be brought.  Therefore, I do not need to determine the interesting question as to which of the separate tests for reasonable anticipation of litigation identified in the authorities stated above is to be preferred.

87                  It follows that I am of the opinion that Heerey J was right to conclude that as from 15 December 2004 the ACCC had a reasonable anticipation of legal proceedings in which the ACCC would be applicant and the present respondents (the applicants in this matter), or at least some of them, would be respondents to that proceeding.

88                  I further agree with Heerey J that the evidence which was available to him supports the conclusion that the documents, which are identified by Mr Williams in his affidavit verifying the list of documents and by Mr Alexander in his affidavit which was relied upon by the ACCC before Heerey J, were created for the dominant purpose of those legal proceedings.

89                  In my opinion, the ACCC’s contention that any investigation which was carried out after 15 December 2004 was for the purpose of those legal proceedings and the documents were thereby protected should be accepted.  The documents which are referred to in Schedule 1 (summarised in the table reproduced above) are the very type of documents which a regulatory authority, such as the ACCC, which has the statutory assistance given by s 155 of the Act, would bring into existence for the purpose of legal proceedings.  In particular, the documents in Categories B through to I relate to communications with witnesses and are drafts of those witnesses’ statements, all of which ordinarily would be expected to be created if legal proceedings were anticipated.

90                  For all of those reasons, I am of the opinion that the applicants have not satisfied the first of the cumulative limbs in Décor 33 FCR 397 and established that Heerey J’s decision was attended with sufficient doubt to warrant it being reconsidered by the Full Court.

91                  It was contended by the applicants that the Category A documents, as they are described in Heerey J’s reasons and in the table above, were created by third parties who could not have shared the ACCC’s purpose of creating documents for the purpose of legal proceedings.

92                  I am not satisfied that that was a live issue before Heerey J.  In any event, I reject that contention.  There is evidence in the Schedule to the list of documents which Mr Williams verified that at least three of the four documents described in Schedule A were prepared at the request of ACCC.  If that be so, that would be enough to impute to the creator of those documents the same purpose as held by the ACCC.  It may be inferred that the fourth document was in the same category.

93                  In any event, if the matter was a live issue before Heerey J and if, contrary to my view, the documents are not adequately described so as to allow it to be said that they were prepared for the purpose of legal proceedings, leave should be refused because I am not satisfied there is any evidence to suggest that the applicants have suffered any substantial injustice: Décor 33 FCR 397.

Issue 2 – Immunity

94                  By their notice of motion dated 21 February 2007, the applicants sought production of (1) documents relating to the terms of any leniency and/or immunity arrangements between the ACCC on the one hand and certain companies, and past or present employees of the Amcor group on the other; (2) documents relating to the ACCC’s decision to grant leniency and/or immunity to any of those persons; and (3) documents provided by Amcor entities and past or present Amcor employees in support of any application to the ACCC for leniency and/or immunity.

95                  The applicants argued before Heerey J that the documents were relevant to central issues in the case; that the conduct of Amcor in seeking and procuring immunity was relevant to para 222 of Visy’s amended defence; that the material went to the credit of ACCC’s witnesses; and that the ACCC, as prosecutor and model litigant, was duty bound to disclose the documents.

Justice Heerey’s decision

96                  Justice Heerey rejected all of those grounds.  In relation to the first three, he held that documents relating purely to credit are not discoverable.  He said he was bound by the decision of the Full Court in Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109.  He rejected the applicants’ contentions that the ACCC had a prosecutorial obligation to provide the documents to the applicants on the ground that this proceeding was a civil proceeding and the documents were either discoverable or not according to the civil rules of discovery and the law of legal professional privilege.

Applicants’ submissions

97                  The applicants relied on a decision of Gray J in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794 and argued that the relevance of the terms of an immunity or leniency agreement entered into by the ACCC and witnesses in a proceeding are important in evaluating the evidence of those witnesses.  They argued that the documents are relevant to determine the particular conduct for which the Amcor representatives sought immunity.  They argued that at trial, the credibility of the witnesses will be of crucial importance such that credibility might be decisive of the facts in issue.  In doing so, they relied upon Palmer v The Queen (1998) 193 CLR 1 at 22 per McHugh J and Goldsmith v Sandilands (2002) 190 ALR 370 at [3] per Gleeson CJ and at [83] per Hayne J.

98                  They further submitted that as these proceedings are quasi-criminal, the rules of prosecutorial fairness should apply and that the ACCC should be required to produce the arrangements pursuant to which immunity or leniency has been granted.

99                  Finally, the applicants contended that as these documents would be required to be produced, in any event, under O 33 r 12 of the Rules, that they should be available now so any prejudice to the applicants in preparing for trial would be avoided.

Respondent’s submissions

100               The ACCC argued that these documents are only relevant as to credit and are therefore not discoverable before trial.

101               They submitted that as these proceedings are civil penalty proceedings, principles of prosecutorial fairness do not apply.  They contended that O 33 r 12 is irrelevant as this order does not govern pre-trial processes.

Conclusion

102               It is the pleadings which inform the parties as to the discovery which must be made: Mully v Manifold (1959) 103 CLR 341.  A document which relates to an issue raised on the pleadings is discoverable.  When that case was decided a document that would lead to a train of inquiry needed to be discovered: Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55.  However, that is no longer the case.  Under the Rules a party must make discovery of any document directly relevant to any issue raised on the pleadings: O 15 r 2(3).  In my opinion, there is nothing raised on the pleadings which would allow it to be said that these documents relate to a fact in issue.  Mr Beach QC, who appeared for the applicants, argued that the ACCC’s plea in relation to conversations between employees of Amcor and of Visy raised their credit as an issue.  I reject that contention.  The documents, contrary to the applicants’ submission, which the applicants sought to have discovered and produced, relate only to the question of some unknown witnesses’ credit (at least unknown at the time the application was heard and determined by Heerey J).  No order would be made for their discovery or production because no order is necessary: O 15 r 15.

103               In Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 at [70], Beaumont J said:

Documents which relate only to credit do not relate to a matter in question within the meaning of the traditional formulation.  (This may be seen as an example of the general principle, still valid, that the Court must always be satisfied that any order for discovery (including, as here, a specific order) must be “reasonably” necessary for the fair disposing of the case ...)

(Original emphasis.)

104               Justice Heerey said that he was bound by the decision of the Full Court and therefore had to refuse to make an order for discovery or production of these documents.

105               In my opinion, he was right to proceed upon the basis that he was bound.  I am of the view that the decision of the Full Court was manifestly correct because issues as to credit are matters which are not raised upon the pleadings and do not oblige the parties to make discovery or produce documents.  The decision in ACCC v Leahy Petroleum Pty Ltd [2007] FCA 794 is of no assistance to the applicants, as that case was not concerned with any question of discovery or production.  Instead, his Honour’s comments were directed to the evaluation of the respondent’s evidence.

106               In Palmer v The Queen 193 CLR 1 at 22, McHugh J said:

The line between evidence relevant to credit and evidence relevant to a fact-in-issue is often indistinct and unhelpful.  The probability of testimonial evidence being true cannot be isolated from the credibility of the witness who gives that evidence except in those cases where other evidence confirms its truth either wholly or partly.  Furthermore, the conclusions drawn from that evidence are necessarily dependent on the credibility of the deponent.  Zuckerman has correctly described the distinction between evidence as to the credibility of witnesses and evidence as to facts-in-issue as productive of absurdity.  Indeed, in some cases the credibility of a witness may be of such crucial importance that it is decisive of the facts-in-issue, particularly where, as in the present case, the witness is a participant in the very facts-in-issue or the only eyewitness to them.

(Footnotes omitted)

107               The question for determination in Palmer v The Queen 193 CLR 1 was whether a question asked of an accused person as to why the victim might have made an allegation was so prejudicial to warrant the setting aside of a verdict.  McHugh J’s dicta needs to be understood in that light.  It is not possible to argue that McHugh J’s dicta has the effect of making a document relating only as to credit discoverable in a civil case.

108               Goldsmith v Sandilands 190 ALR 370 is also not relevant in considering this issue.  That case was concerned with the reception of evidence as to collateral facts.  Nothing said in that case would support the applicants’ contentions in the present case.  Indeed, in that case, members of the High Court made it clear that the admissibility of evidence in a civil case was determined by the pleadings: Goldsmith v Sandilands 190 ALR 370 at [2] per Gleeson CJ; at [31] per McHugh J; and at [83] per Hayne J.

109               It is well recognised that the present discovery obligations put parties to great cost and expense.  This case is an example of that.  It would be inappropriate for the Court to widen a party’s obligations to make discovery in relation to matters outside the pleadings.  The pleadings must inform the parties as to their obligations in relation to discovery, otherwise there can be no certainty about the documents which must be discovered and the parties will be put to unnecessary increased cost and expense.

110               The credit of witnesses who were unknown at the time the application was heard and determined by Heerey J who may or may not be called in the trial is not a matter raised on the pleadings and, for that reason, none of the documents which are sought to be discovered were discoverable.

111               I agree with Heerey J’s reasons in that regard.

112               I also agree with Heerey J that there was no obligation resting upon the ACCC of the kind that rests upon a prosecutor in a criminal trial.  These proceedings are civil proceedings.  The principles of prosecutorial fairness do not apply in civil penalty proceedings: Adler v Australian Securities and Investment Commission (2003) 179 FLR 1 at [678] per Giles JA (Mason P and Beazley JA agreeing); Australian Securities and Investment Commission v Rich (2005) 53 ACSR 320 at [358].  Whether the ACCC had an obligation to discover and produce these documents falls to be considered under the ordinary rules relating to discovery.

113               Justice Heerey’s decision in relation to this issue, in my opinion, is not attended with any doubt.

Issue 3 – Pleadings

114               The amended defence filed by the applicants on 8 January 2007 introduced some new subparagraphs to para 222.  The applicants were not entitled to amend without leave of the Court which was not obtained.

115               The relevant subparagraphs read as follows:

(aa)      that in or about late January or February 1998 the Amcor Group formed the belief that it had a higher cost structure than Visy Board in its corrugated fibreboard packaging division and was significantly uncompetitive with the corrugated fibreboard packaging business conducted by Visy Board.

Particulars

The Amcor Group’s belief arose by reason of the fact that a former employee of Visy Board, John Alan Morriss (“Morriss”), provided the Amcor Group with, and the Amcor Group received, confidential information of Visy Board concerning Visy Board’s CFP business, including a copy Visy Board’s Managing Director’s Report for the CFP Division dated June 1995 (“the 1995 Report”).  The 1995 Report covered Visy Board’s  sales and included a detailed analysis of all major costs areas by month, year to date performance against budget, and the previous year.  It included statistics on volumes, credit notes, employee numbers and conversion cost per unit of volume and per employee.  Morriss provided extracts of the 1995 Report and other Visy Board confidential information relating to Visy Board’s costs and sales figures in respect of its CFP business to Peter Brown of the Amcor Group.

(ab)      that in or about November 1999, Morriss obtained a copy of the Visy Board Managing Director’s Report – CFP Division for October 1999 (“1999 Report”),showed Brown, then the Managing Director of Amcor Australasia, the summary of the key financial data contained in the 1999 Report, and discussed the data with Brown.

Particulars

The 1999 Report covered an analysis of volumes, employee numbers, costs and production statistics and profitability of each Visy Board manufacturing plant for Visy Board’s CFP business.

(ac)      that during the period of his employment with the Amcor Group (approximately January 1998 until January 2000), Morriss disclosed to Amcor Group personnel, including Brown and Hodgson, confidential information of Visy Board concerning customers, volumes of CFP products sold, and Visy Board’s costs of producing CFP products.

(ad)      that the Visy Board confidential information referred to in the particulars to paragraph 222(aa) and in paragraphs 222(ab) and (ac) above (“the Visy Confidential Information”) was used by the Amcor Group:

(i)         to evaluate the relative efficiency of the Amcor Group’s processes and costs in comparison with the corresponding processes and costs of Visy Board;

(ii)        in the development of the Amcor Group’s business strategies and plans to compete with Visy Board’s CFP business, including as the basis of capital expenditure requests to the Board of Amcor Limited; and

(iii)        to target Visy Board’s customers.

Particulars

(A)       Morriss provided information in the 1995 Report to members of the Executive Management Team of Amcor’s CFP business including Brown, Peter Reichler, David Ley, Tony Myles, Max Fitzgibbons, John Crawford, Hodgson and Laidlaw at an Amcor strategy meeting in March 1998 at which the relative CFP cost structures of Visy and Amcor were discussed.  Jones, then the Managing Director of Amcor Limited, visited during the meeting and was briefed on strategy developments, including the significance of the information in the 1995 Report.

(B)        Brown and Morriss from time to time during the Period of Service attended the Amcor Group’s Camberwell offices to discuss issues about the CFP business with Jones.  During these meetings, Morriss, Brown and Jones discussed the competitive position of the Amcor Group’s CFP business and discussed information derived from the 1995 Report.

(C)       Information derived from the 1995 Report was used by Morriss at Board meetings of Amcor Limited that occurred in 1998 during the course of which Morriss made presentations to the Board of Amcor Limited in the context of making capital expenditure requests to upgrade facilities at the Amcor Group’s corrugated factory at Brooklyn.

(D)       The Visy Confidential Information, or parts of it, were cited in presentations made to Jones, as Managing Director of Amcor Limited, to verify submissions as to the true competitive position of the Amcor Group and Visy Board, and in presentations made to Jones in support of additional injections of capital to fund a restructure of the corrugated fibreboard packaging division of the Amcor Group.  These presentations were made by Brown, Morriss and others in or about the first half of 1998 and later by Hodgson to Brown and Jones at the Amcor Group’s Rocklea offices in or about mid to late 1998.  The presentation by Hodgson was made to support his request for a new corrugator and supporting infrastructure modernisation in order for the Amcor Group to compete more effectively with Visy Board’s CFP business.

(E)        The Amcor Group restructured its CFP business to reduce costs and pursued increased market share by a “breadth” strategy, including bundling CFP products with other primary packaging which Visy Board did not offer at the time.  This was agreed at the March 1998 strategy planning meeting referred to in sub-paragraph (a) above and ultimately approved by the Board on Amcor Limited and implemented.

(ae)      that despite incurring and continuing to incur significant expenditure aimed at regaining competitiveness in its CFP business, in or about late 1999 or early 2000 senior management of the Amcor Group, including Jones, Brown, and Hodgson, devised an alternative strategy, (described by the Amcor Group as “price recovery”), namely attempt to pursue collusive arrangements with Visy Board concerning prices and competition in respect of the supply of CFP;

(af)       that the Amcor Group’s attempts to pursue the collusive arrangements referred to in paragraph 222(ae) were unsuccessful.

Justice Heerey’s decision

116               Justice Heerey found that the pleas raised allegations far removed from the serious issues of fact and law already raised.  He said that to allow the plea to stand had the potential of raising countless side issues as to the conduct of a former employee of Amcor.  He said the evidence was likely to be excluded as resulting in an undue waste of time: Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 2) [2007] FCA 444 at [110].

Applicants’ submissions

117               The applicants argued that the allegations in the relevant paragraphs are not far removed from the issues of fact and law raised in the proceeding.  They stated that subparas (aa)-(ad) are required to provide the context for and support the allegations in subparas (ae)-(af).

Respondent’s submissions

118               The respondent argued that the applicants should have sought leave before these amendments to the defence were made in the first place.  The respondent argued that the order made by the primary judge was an exercise of discretion and that the primary judge did not err in the exercise of that discretion.  The respondent submitted that the applicants had not identified any prejudice that may be caused if leave to appeal was not granted.

Conclusion

119               The applicants complained about the manner in which Heerey J addressed this issue.  They said that their defence had been amended upon leave being granted to the applicants to amend their statement of claim.  They said that the ACCC had not applied at any time to strike out all of the paragraphs, the subject of the order.  They said that the procedure adopted was done so on Heerey J’s own motion.

120               I do not understand the point of those criticisms.  The applicants did not contend that they had a right to amend their defence under either O 13 r 3 or r 4.  In those circumstances, the applicants needed leave to amend.  The issue in this case is whether the applicants should be entitled to maintain a pleading which raises an issue which is itself not a defence to ACCC’s proceeding.  Having regard to the complexity of the case and the time which it would occupy in the trial process, his Honour was clearly entitled to consider whether the plea should be allowed to stand or whether it should be struck out at the interlocutory stage.  Indeed, I say his Honour was bound to proceed on that basis.  His Honour accorded the parties procedural fairness in relation to the issue.   The applicants were given notice of the procedure to be adopted and were given an opportunity to be heard on the pleadings.

121               The real question in this case is whether Heerey J was right to reach the conclusion that he did.  In my opinion, he was.  The issue which is raised in the paragraphs which are the subject of the order was not relevant in any way to the applicants’ defence.  The plea was to the effect that at some time Amcor had attempted to involve the applicants in cartel conduct but had been unsuccessful.  That would not be a defence to the proceeding if ACCC established, as it has claimed, that there were facts and circumstances giving rise to an agreement or understanding of the kind pleaded in the statement of claim.

122               I agree, therefore, that his Honour was right to strike the plea from the defence.

Other Matters

123               Since preparing these reasons I have had an opportunity of reading the reasons for decision of Weinberg J.  The adequacy of the description of the documents contained in the list of documents and, in particular, the documents identified as Category A documents was not an issue before Heerey J or on this appeal.  The issue at first instance and on appeal was whether at the time that the particular documents came into existence legal proceedings were reasonably anticipated.

124               In those circumstances, the adequacy of the description of the documents was not explored with Mr Alexander in cross-examination or in re-examination.  No argument was put to the primary judge nor was one put on appeal.

125               The applicants did not seek to cross-examine Mr Williams for the purpose of exploring the adequacy of the description of the documents contained in the list of documents.  Rather, they sought to cross-examine Mr Williams, as they had Mr Alexander, as to whether at the relevant date legal proceedings were reasonably anticipated.

126               In those circumstances, the applicants should not have been given leave to appeal to raise an issue not addressed either by way of evidence or submission in the Court below or by way of submission in this Court.

127               In those circumstances, there was, in my opinion, no need to explore the obligations which might repose upon a party who has raised a claim of legal professional privilege in respect of the description of the documents for which privilege is claimed.

CONCLUSION

128               For those reasons, I concluded that this application was not a fit one to give leave to appeal even though the appeal was heard, as it were, instanter.  Hearing the application as if it were the appeal assisted me in reaching the conclusion that the application for leave to appeal should be refused.

Associate:        

Dated:         12 September 2007