FEDERAL COURT OF AUSTRALIA

Stewart v Australian Crime Commission [2012] FCAFC 151

THE COURT ORDERS THAT:

1.    Leave to appeal be granted in relation to grounds 1-5 inclusive of the appellants’ draft notice of appeal dated 10 February 2012.

2.    Leave to appeal be refused in relation to ground 6 of the said notice.

3.    The appeal be dismissed.

4.    The appellants pay the respondent’s costs of the application for leave to appeal and the appeal.

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

REASONS FOR JUDGMENT

Besanko J

Introduction

1    The applicants in this application for leave to appeal are Anthony Stewart, John Cornell, Paul Hogan and Rimfire Films Pty Ltd. As I would grant leave to appeal, I will refer to them as the appellants. The respondent is the Australian Crime Commission.

2    The respondent wishes to inspect and use documents which have been either seized or produced or obtained pursuant to s 3E of the Crimes Act 1914 (Cth) (“Crimes Act”) or ss 28 and 29 of the Australian Crime Commission Act 2002 (Cth) (“Australian Crime Commission Act”). The documents relate to the affairs of one or more of the appellants and they were either seized, produced or obtained from various sources as follows (with the primary judge’s description of the documents by reference to their source), the first appellant (Stewart Hardcopy Documents), Ernst & Young, Accountants (EY Hogan Documents), Recall Information Management Pty Ltd (Recall Documents), Mr John Gibb (Gibb Documents comprising Gibb Sealed Documents and Unsealed Gibb Documents) and certain discs containing copies of documents held in computer systems (Disc A, B and C Documents). The documents held on Disc C are not relevant on this application, nor is a sixth category of documents which the primary judge described as the EY Cornell Documents.

3    One or more of the appellants claimed legal professional privilege with respect to the documents.

4    On 13 January 2010 the respondent brought a proceeding in this Court pursuant to s 39B(1A) of the Judiciary Act 1903 (Cth) and ss 21, 22, 23 and 32 of the Federal Court of Australia Act 1976 (Cth) seeking declarations that legal professional privilege did not attach to the documents and that it is entitled to inspect and use the documents.

5    Before the proceeding came on for hearing, each party made a number of concessions as to particular documents. The documents which were not the subject of a concession were copies of what the primary judge described as the disputed documents. Those documents were placed in seven lever-arch files behind individually numbered tabs and marked collectively as MFI 2.

6    At the request of the parties, the primary judge did not determine all the issues which were raised in relation to the appellants’ claim of legal professional privilege. With the consent of the parties, the primary judge made the following order as to the nature of the questions to be determined at a trial before her:

Pursuant to Order 29 rule 2 of the Federal Court Rules the following questions of fact and law be decided separately from any other question and before any trial in the proceedings:

2.1    which law or laws govern the determination of questions concerning the attraction of privilege for the documents identified by the applicant pursuant to direction 3 below (“Disputed Documents”);

2.2    whether the Disputed Documents are capable of attracting privilege, but for, and without any regard to be had to, any questions or issues relating to:

2.2.1    whether Disputed Documents were made or used in furtherance of an improper purpose;

2.2.2    whether privilege has been lost in the Disputed Documents through waiver or for any other reason.

7    The issues referred to in paragraphs 2.2.1 and 2.2.2 above, namely, the issues of improper purpose and waiver, were deferred to a later date to be considered in relation to the disputed documents that were found to be prima facie privileged in whole or part.

8    The appellants called three witnesses at the trial. The first appellant gave evidence. He was a qualified chartered accountant who during the period within which the documents were created, provided business advice to the other appellants. Mr Craig Emanuel gave evidence. He is an attorney-at-law in the United States and during the relevant period provided advice, including legal advice, to the second, third and fourth appellants. Finally, Professor David Alan Sklansky gave evidence. He is a law professor at the University of California, Berkeley, and he specialises in criminal law, criminal procedure and evidence law. He gave evidence about the law of legal professional privilege in the State of California.

9    The relevance of the law in California was that the appellants claimed that the status in terms of legal professional privilege of a number of the disputed documents was governed by the law of California. They claimed that those documents were protected under the law of California because they were:

(1)    prepared in California;

(2)    prepared by an attorney or attorneys admitted to practice in California and owing professional responsibilities to Californian Courts and under Californian law;

(3)    prepared pursuant to a retainer, the proper law in respect of which was Californian law; and

(4)    prepared to advise clients primarily on Californian law.

10    Although the primary judge did not expressly say so, she appears to have proceeded on the assumption that each of the claims in paragraphs (1), (2), (3) and (4) were correct as a matter of fact.

11    The primary judge inspected the disputed documents. The respondent did not have the disputed documents, except for a small number of documents that it had obtained in circumstances which it is not necessary to relate. These documents were the unsealed Gibb Documents.

12    On 30 January 2012 the primary judge delivered her reasons for judgment in relation to the separate questions (Australian Crime Commission v Stewart [2012] FCA 29). Her Honour made the following declarations:

1.    The application of legal professional privilege to the documents contained in the files identified as MFI 2 and listed in the table identified as MFI 6 in this proceeding is to be determined in accordance with the law of Australia.

2.    The documents in Annexure A to the reasons for judgment and described in Column 4 under the heading “Conclusion” as being “prima facie privileged” are determined to be capable of attracting legal professional privilege subject to questions or issues relating to:

(a)    whether such documents were made or used in furtherance of an improper purpose; or

(b)    whether privilege in those documents has been lost through waiver or for any other reasons.

3.    The documents listed in Annexure A to the reasons for judgment and described in column 4 as being “not privileged” are not capable of attracting legal professional privilege.

13    The primary judge’s reasons contain three major conclusions. First, her Honour decided that in relation to the “Californian” documents no choice of law issue, or issue as to the possible application of the law of California, arose. The lex causae or law of the cause was Australian law. Secondly, her Honour decided that in the event that she was wrong in reaching her first conclusion, the governing choice of law rule directed attention to the law of the forum, that is, Australian law. Thirdly, having regard to the principles of legal professional privilege in Australian law and having inspected the documents, her Honour set out in Annexure A to her reasons her conclusions with respect to the disputed documents and whether they were capable of attracting legal professional privilege. In addition to her conclusions on that matter (that is, prima facie privileged or not privileged) her Honour included in Annexure A a column entitled “Comment” in which she set out brief comments explaining her ruling. She said that those comments were to be read in conjunction with her reasons. In view of her conclusions with respect to the first two matters, her Honour did not find it necessary to consider Professor Sklansky’s evidence, or to make any findings as to the law of California.

14    The appellants have applied for leave to appeal and they have lodged a draft Notice of Appeal. The grounds of appeal in the draft notice are as follows:

1.    Her Honour erred in finding the documents listed in Annexures A and B to this Notice of Appeal were not capable of attracting legal professional privilege.

2.    Further to Ground 1, her Honour erred in declaring that the application of legal professional privilege to the documents listed in Annexure A to this Notice of Appeal is to be determined in accordance with the law of Australia.

3.    Further to Grounds 1 and 2 above, her Honour erred at J [45] when she held that no choice of law issue arose in relation to the documents listed in Annexure A to this Notice of Appeal in determining the question of legal professional privilege.

4.    Further to Grounds 1 to 3 above, her Honour erred at J [66] when she held that even if a choice of law issue arose in relation to the documents listed in Annexure A to this Notice of Appeal then the relevant law to be applied is the law of the forum.

5.    Further to Grounds 1 to 4 above, her Honour should have held that the choice of law rules for Australia directed that the question of whether the documents listed in Annexure A to this Notice of Appeal were capable of attracting legal professional privilege should be determined in accordance with the laws of California, United States of America for one or more of the following reasons:

a.    The documents were prepared in California;

b.    The documents were prepared by an attorney or attorneys admitted to practise in California and owing professional responsibilities to Californian Courts and under Californian law;

c.    The documents were prepared pursuant to a retainer, the proper law in respect of which was Californian law;

d.    The documents were prepared to advise clients primarily on Californian law.

6.    Further to Ground 1, even if her Honour was right to hold that the application of legal professional privilege to the documents listed in Annexure A to this Notice of Appeal is to be determined in accordance with the laws of Australia her Honour erred in failing properly to consider the type and nature of legal advice provided under Californian law in the context of the communications when her Honour was evaluating the dominant purpose of the communications.

15    These proposed grounds of appeal may be related to the three major conclusions referred to above. Ground 1 is a general ground related to all three conclusions. Ground 2 is a general ground related to the first two conclusions. Ground 3 is related to the first conclusion and grounds 4 and 5 are related to the second conclusion. Ground 6 is related to the third conclusion.

16    Annexure A to the draft Notice of Appeal lists by number 184 documents and Annexure B lists by number 11 documents. With respect to the documents listed in Annexure A to the draft Notice of Appeal, the appellants’ principal contention is that whether they are protected by legal professional privilege is to be determined by reference to the law of California rather than the law of Australia. If that contention succeeds then the matter will have to be remitted to a judge of this Court for findings to be made about the principles of Californian law and the application of those principles to the documents. If the contention is rejected, the appellants nevertheless argue that the primary judge erred in concluding that the documents were not capable of attracting legal professional privilege by reference to Australian law. To that end, the appellants did not put all 184 documents before this Court. They put 32 documents before the Court and submitted that the Court’s rulings as to those documents was likely to provide the necessary guidance with respect to the other documents.

17    With respect to the documents listed in Annexure B to the draft Notice of Appeal, the appellants accept that whether they are protected by legal professional privilege is to be determined by reference to Australian law. They contend that her Honour erred in deciding that those documents were not capable of attracting legal professional privilege.

The Application for Leave to Appeal

18    The principles to be applied in determining whether leave to appeal should be granted are not in dispute. The Court will consider whether the decision in question is attended with sufficient doubt to warrant it being reconsidered by the Full Court and whether substantial injustice would result if leave was refused supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397; Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261; Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156 at [26].

19    On the question of whether substantial injustice would result to the appellants if leave to appeal was refused, supposing the decision to be wrong, the appellants put forward evidence which may be summarised as follows. On 23 November 2010, the respondent wrote to the solicitors acting for the first, second and third appellants stating that it had decided to discontinue its current criminal investigation into the second and third appellants. The respondent said that its related criminal investigation of the first appellant would continue. It also said it may recommence the investigation of the second or third appellant at a time in the future “if it believes that such an investigation is warranted having regard to new information derived from those investigations”. The appellants also relied on statements by counsel for the respondent at directions hearings before the primary judge to the effect that, following determination of the legal professional privilege claims, the next step by the respondent may be the forwarding of briefs to the Commonwealth Director of Public Prosecutions for possible criminal proceedings.

20    As will become clear, her Honour’s first two conclusions relate to important matters in respect of which there is very little authority. Leave to appeal should be granted in relation to those matters (that is, grounds 1-5 inclusive). As to her Honour’s third conclusion, I would refuse leave with respect to that matter (that is, ground 6) because I do not think her Honour’s conclusions are attended with sufficient doubt to warrant them being reconsidered by this Court. For reasons I will give, the appellants’ challenge raises no point of principle and her Honour’s conclusions in relation to individual documents were plainly open to her.

Factual Context

21    Mr Craig Emanuel is an attorney-at-law in the United States who has been involved in advising the appellants for more than 20 years. He commenced working as a paralegal for the law firm, Denton Hall & Burgin (Denton Hall) in Los Angeles, California, in June 1985 and he qualified as an attorney under Californian law in mid 1986.

22    During 1985, Denton Hall was retained by the fourth appellant (Rimfire Films Pty Limited (“Rimfire”)) to provide legal advice in relation to the production of the film, “Crocodile Dundee”. At this time, the directors of Rimfire were the second appellant (Mr John Cornell), the third appellant (Mr Paul Hogan) and a Mr John Gibb.

23    In 1986, Denton Hall was instructed to act for Rimfire and the second and third appellants in relation to film distribution and other agreements. Mr Emanuel was involved in this work and he described the work as advising on agreements for the international sale of film rights, distribution and allocation of revenue arising from the sale of the film and associated agreements and, after the distribution agreements were in place, monitoring compliance with the agreements and advising on various matters pertaining to the agreements, including contract entitlements and studio audits.

24    Mr Gibb was a business advisor to Rimfire and the second and third appellants. From time to time, he gave instructions to, and received advice from, Denton Hall on behalf of his clients. Denton Hall provided copies of their advices to Mr Gibb or Mr Stewart (whose role is referred to below) so that they could deal with Denton Hall on behalf of their clients, although on occasions the clients would provide instructions directly to Denton Hall.

25    Between 1989 and 1998, Mr Emanuel worked in the firm of Sinclair Tenenbaum which later became Tenenbaum Emanuel and Fleer, and he continued to act for the appellants in relation to the distribution agreements and other matters in respect of the Crocodile Dundee films.

26    From 1998 onwards, Mr Emanuel worked in the firm of Loeb & Loeb and he is the principal attorney responsible for the legal affairs of the appellants in relation to their film distribution agreements throughout the world.

27    The primary judge found that Mr Emanuel provided business and commercial advice as well as legal advice to the appellants (for example, facilitating projects by advising on the structure of films) and that he had a broad role in the affairs of the appellants. He was involved in setting up film distribution arrangements for the Crocodile Dundee films. He made recommendations on where tax advice, which was of a legal and accounting nature, might be obtained in relation to the proposed transactions. The primary judge found that many of the documents provided commercial or financial advice rather than legal advice and that although legal expertise may have played a role in preparing that advice, in most cases, the provision of legal advice was not the dominant purpose.

28    The first appellant, Mr Stewart, qualified as a chartered accountant in 1982 and he worked in various chartered accountant practices until 1994. From 1985 to 1994, he assisted Mr Gibb (initially his employer and later his partner) in providing consulting services to the appellants. Since 1994, he has directly provided consulting services to the appellants and in 2004 he was appointed to the board of Rimfire.

29    Mr Stewart provides a broad range of consulting services to the appellants. The primary judge found that those services included “providing financial advice, obtaining taxation and legal advice both in Australia and internationally on their behalf and in relation to their personal affairs and relaying this advice to them”. Mr Stewart also assisted members of the families of the second and third appellants.

30    The primary judge concluded that both Mr Emanuel and Mr Stewart were deeply involved in the various business enterprises of the appellants and had mixed roles, that is to say, roles involving both commercial advice and legal advice. I will return to these matters when considering the third issue.

The Conflict of Laws Issues

The Authorities

31    It is convenient to begin with an examination of the authorities. Both parties referred to authorities on the nature of legal professional privilege, the rationale for the privilege and the interaction between the privilege and statute, the operation of choice of law rules and, in particular, the distinction between matters of substance and matters of procedure, and finally, those authorities which have considered (expressly or by implication) the governing choice of law rule where legal professional privilege is in issue.

32    In Baker v Campbell (1983) 153 CLR 52 Deane J discussed legal professional privilege. He said (at 120):

That general principle represents some protection of the citizen — particularly the weak, the unintelligent and the ill-informed citizen — against the leviathan of the modern state. Without it, there can be no assurance that those in need of independent legal advice to cope with the demands and intricacies of modern law will be able to obtain it without the risk of prejudice and damage by subsequent compulsory disclosure on the demand of any administrative officer with some general statutory authority to obtain information or seize documents.

33    Deane J referred to the High Court’s description of the rationale for the privilege in Grant v Downs (1976) 135 CLR 674. In that case, Stephen, Mason and Murphy JJ said (at 685):

The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision.

(See also Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 at 64-65 [35] per Gleeson CJ, Gaudron and Gummow JJ.)

34    In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543, Gleeson CJ, Gaudron, Gummow and Hayne JJ restated a number of important principles of legal professional privilege which by then were well-established. Their Honours said that the privilege is a rule of substantive law which protects from disclosure, by way of the giving of information or the production of documents, communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. The privilege is not merely a rule of evidence restricted to processes of discovery and inspection and the giving of evidence in judicial proceedings. It may be relied upon to resist other investigatory processes. Their Honours said that the privilege is, in addition to being a rule of substantive law, an important common law immunity and that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect (see also Potter v Minahan (1908) 7 CLR 277 at 304 per O’Connor J; Baker v Campbell (1983) 153 CLR 52 at 116-117 per Deane J).

35    In John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ discussed the distinction between matters of substance and matters of procedure in relation to choice of law rules. Their Honours made the point that it is difficult, if not impossible, to identify a unifying principle in relation to the distinction. Their Honours said that there were two guiding principles. First, a plaintiff must take a Court as he or she finds it. A plaintiff cannot ask the courts of the forum to adopt procedures or give remedies of a kind which their constituting statutes do not contemplate. The second guiding principle was expressed in two different ways, that is to say, first, that matters that affect the existence, extent or enforceability of the rights and duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure or, secondly, adopting the formulation of Mason CJ in McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1, “rules which are directed to governing or regulating the mode or conduct of court proceedings” are procedural and all other provisions or rules are to be classified as substantive.

36    The significance of the distinction between matters of substance and matters of procedure is that the law applied to the latter is the law of the forum: A Dicey, J Morris and L Collins, The Conflict of Laws (15th ed, Sweet & Maxwell, 2012) pg 177; M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (8th ed, LexisNexis Butterworths, 2010) pg 333. Matters of substance are governed or determined by the lex causae, which is often, but not always, a foreign law. The lex causae may be the law of the forum: Dicey, Morris and Collins, The Conflict of Laws pg 33.

37    In Regie Nationale des Usines SA Renault v Zhang (2002) 210 CLR 491, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ referred to cases where the foreign law identified by the forum’s choice of law rules will not be applied because of public policy considerations or the express provisions of a statute of the forum. Their Honours went on to make the point that when an Australian court selects a non-Australian lex causae it does so in the application of Australian, not foreign, law.

38    In Neilson v Overseas Projects Corporation (Vic) Ltd (2005) 223 CLR 331 at 363 [90], Gummow and Hayne JJ said that where an Australian choice of law rule directs attention to a foreign law then basic considerations of justice require that, so far as possible, the rights, duties and obligation of the parties should be the same whether the dispute is litigated in the courts of the foreign jurisdiction or in the Australian forum.

39    In Sweedman v Transport Accident Commission (2006) 226 CLR 362 at 400 [24], Gleeson CJ, Gummow, Kirby and Hayne JJ considered that neither the Transport Accident Act 1986 (Vic) nor the Motor Accidents Act 1988 (NSW) were intended, in relation to the claims before the Court, to displace the operation of the choice of law rules. Their Honours considered the appropriate choice of law rule where the issue in question was an obligation to indemnify (at 401-402 [27]-[32]). They said that the obligation to indemnify was distinct from any underlying claim in tort and therefore the choice of law rule in tort had no role to play. Their Honours favoured as the lex causae the law of the State with which the obligation of the party to indemnify the other had the closest connection. Their Honours noted that in the case before them there was a dispute as to whether New South Wales or Victoria was the place with the closest connection and there was no authority in the Court settling the selection of the governing choice of law rule. Their Honours decided that the identification of the law of Victoria as the source of the obligation to indemnify the injured parties (two Victorian residents) and thus of a restitutionary obligation was a “significant pointer” to the selection of the law of Victoria as the law with the closest connection to the indemnity entitlement of the Fund against the tortfeasor.

40    In Garsec v His Majesty the Sultan of Brunei (2008) 250 ALR 682, the New South Wales Court of Appeal was required to consider whether His Majesty the Sultan of Brunei was entitled to an immunity conferred on the Sultan by Article 84B of the Constitution of Brunei. That question turned on whether the relevant choice of law rule picked up the immunity and that question in turn depended on whether the immunity was substantive or procedural. Campbell JA discussed the purposes which lie behind the distinction between matters of substance and matters of procedure including the following. First, the distinction recognises the need for the Court to conduct proceedings promptly and with the procedures it has available to it and with which it is familiar. Secondly, the distinction recognises that the need to avoid any advantage being obtained by bringing the proceedings in an Australian forum. His Honour said the rules for determining the distinction laid down in John Pfeiffer Pty Ltd v Rogerson promoted certainty which was desirable (at 705-709 [108] – [128]).

41    In Kennedy v Wallace (2004) 142 FCR 185, the appellant sought a declaration that two handwritten documents seized by the Australian Federal Police in the course of executing a search warrant were the subject of legal professional privilege. The documents were handwritten notes of the appellant which he had made overseas in preparation for a meeting with his Swiss lawyer. The appellant failed at first instance before Gyles J: Kennedy v Wallace (2004) 208 ALR 424. The appellant failed on the ground that he had not established the notes were brought into existence for the dominant purpose of obtaining legal advice. That conclusion of the trial judge was upheld on appeal. The significance of the case for present purposes is that Allsop J made some obiter observations on whether Australian law of legal professional privilege extended to legal advice by a foreign lawyer. His Honour’s remarks suggest that for the purposes of the Australian law as to legal professional privilege a foreign lawyer is to be treated no differently from an Australian lawyer (at 230-232 [198]-[204]). That view was subject to possible qualifications which his Honour identified in the following passage (at 222 [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.

Black CJ and Emmett J expressed their general agreement with Allsop J’s observations (at 199 [62]). (See also Arrow Pharmaceuticals Ltd v Merck and Co Inc (2004) 210 ALR 593 at 597 per Gyles J.)

42    In Lawrence v Campbell (1859) 4 Drew 485; 62 ER 186, Vice Chancellor Kindersley upheld a claim for legal professional privilege by reference to the English law of privilege in the case of a Scotchman consulting a Scotch solicitor. The Vice Chancellor said:

A question has been raised as to whether the privilege in the present case is an English or a Scotch privilege; but sitting in an English Court, I can only apply the English rule as to privilege.

43    The Vice Chancellor made other observations in the case which are perhaps not so clear (see the discussion in J. McComish: Foreign Legal Professional Privilege: A New Problem for Australian Private International Law (2006) Vol 28 Sydney Law Review pg 297).

44    In In re Duncan, Decd [1968] P 306 Ormrod LJ rejected a submission that where foreign lawyers are involved no privilege is recognised by an English Court if privilege is not recognised by the municipal law of the forum of the foreign lawyer. Ormrod J said (at 311):

The basis of the privilege is just as apt to cover foreign legal advisers as English lawyers, provided only that the relationship of lawyer and client subsists between them. Any other conclusion would lead to an impossible position for if this court were required to investigate the position of such communications in foreign law it must first determine the foreign law, but what law governs the relationship of English client and foreign lawyer, at any rate, when no proceedings are in contemplation? There is no forum and therefore no lex fori. The nationality of the foreign lawyer is as irrelevant as his address for this purpose.

It only remains to consider the position where proceedings are already on foot in a foreign court. If disclosure is required by the law of such a court the other side will see the documents in dispute and so gain an advantage. Is that a reason for making an exception to our lex fori? In my judgment it is not. These matters are matters to be decided according to the practice of this court. I, therefore, hold that all the documents which are communications passing between the plaintiff and his foreign legal advisers are privileged, whether or not proceedings in this or any other court were contemplated when they came into existence.

45    In Bourns Inc v Raychem Corporation and Anor [1999] 3 All ER 154, the issue was the use of documents disclosed for the purpose of a taxation of costs in England. The documents were prima facie privileged and one of the arguments advanced in the English Court of Appeal was that privilege had been waived under United States law and it followed (so the argument went) under English law. Aldous LJ (with whom Swinton Thomas LJ and Sir Stephen Brown P agreed) rejected the argument saying (at 167j):

The fact that under foreign law the document is not privileged or that the privilege that existed is deemed to be waived is irrelevant.

(See also 169 a.)

46    The authors of the 17th edition of Phipson on Evidence (Sweet & Maxwell, 2010) at paras 23-27 and 23-28 suggest that the authorities on the point are to the effect that the governing choice of law rule is the lex fori. However, they also make the comment that those cases were decided at a time when legal professional privilege was considered to be a rule of evidence. Now that it is established to be a substantive right, the authors consider the arguments in favour of the governing law being the lex fori to be “limited”.

A Choice of Law Issue?

47    The primary judge said that the Crimes Act and the Australian Crime Commission Act operated according to their respective terms unless “qualified” by a relevant common law principle. For the purposes of this case the relevant common law principle was that identified in Potter v Minahan (1908) 7 CLR 277 at 304 per O’Connor J; Baker v Campbell (1983) 153 CLR 52 at 117 per Deane J; Daniels v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. Her Honour said that it was only the common law of legal professional privilege which could operate to prevent the apparently unqualified words of the statute being given full effect. She said that while it was true that the choice of law rules were part of the common law, they did not operate – even if they directed attention to a foreign law – by incorporating that foreign law into the common law. In essence, her Honour said that the relevant statutes were to be construed in accordance with a well-established principle that made reference to an important common law immunity which was and could only be legal professional privilege determined according to Australian law. For those reasons no choice of law issue arose.

48    With respect, I do not agree with the primary judge’s conclusion that no choice of law issue arose. A number of matters her Honour identifies are relevant to the second issue (that is, what is the governing choice of law rule) rather than the first issue. When legal professional privilege is raised in answer to a demand to inspect and use documents, the first question is whether the privilege exists. That question leads to a consideration of the common law including the common law choice of law rule. If, and this is where the first and second issues intersect, the choice of law rule directs attention to foreign law then I cannot see any reason why legal professional privilege determined by reference to a foreign law would not be recognised for the purposes of Australian law including Australian Statutes. I am inclined to think that the first two issues are not separate issues, but two different ways of approaching the same problem. In any event, I respectfully disagree with her Honour’s conclusion that no choice of law issue arose.

The Choice of Law Rule

49    Her Honour went on to consider the governing choice of law rule in the event that her conclusion that there was no choice of law issue was wrong. She decided that the governing choice of law rule directed attention to the lex fori. Her reasoning was as follows.

50    Her Honour said that the matter could not be resolved by reference to the distinction between matters of substance and matters of procedure. The High Court had authoritatively declared that the immunity conferred by legal professional privilege is substantive not procedural. However, she said that that was not conclusive in favour of the view that the lex causae was the law of California. The primary judge referred to the English cases of Lawrence v Campbell, In re Duncan Dec.d and Bourns Inc v Raychem. She also referred to English and Australian cases where legal professional privilege involving foreign lawyers or attorneys had been determined by reference to the law of the forum often without comment, and certainly without analysis of foreign law: Kennedy v Wallace; Grofam Pty Ltd v Australian and New Zealand Banking Group Limited (1993) 45 FCR 445; Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529.

51    The primary judge formulated the governing choice of law rule as the lex fori by having regard to what she identified as the “connecting factors”. Her Honour said (at [63]):

In this case the question involves the right of the ACC to inspect documents that have been produced in Australia in response to the exercise, by an Australian law enforcement agency, of Australian statutory powers directed to the investigation of conduct that is illegal under the laws of Australia. The connection with Australian law is self-evident and provides powerful support for the governing law to be the law of the forum. The fact that the Australian law of legal professional privilege may extend to advice given by foreign lawyers is additional support for the proposition.

52    The appellants submit that this Court should decide that the governing choice of law rule for legal professional privilege is the law governing the retainer between the client and the lawyer, or the law of the jurisdiction in which the lawyer was admitted to practice. In argument they tended to favour the former rule. There is undoubted force in the appellants’ submission. The High Court has declared that legal professional privilege is a rule of substantive law and an important common law immunity. Substantive doctrines are ordinarily governed by the laws of the jurisdiction with which the issues in dispute have the closest connection rather than the law of the forum. It might be said that at the point at which the legal advice is communicated, the “parties” (that is, the client and the lawyer) would expect that the confidentiality of their communications would be governed by the law relevant to the lawyer’s retainer or the place where the advice is tendered. Furthermore, a disadvantage of a governing choice of law rule of the lex fori is that, subject to public policy exceptions, the scope of the privilege and possibly whether or not it exists, depends on where the privilege is claimed and the dispute determined.

53    Despite the force of these matters, in my respectful opinion, the better argument is that the governing choice of law rule for legal professional privilege is the lex fori. My reasons are as follows. First, Australian law of legal professional privilege incorporates within it a foreign element as cases such as Kennedy v Wallace make clear. Secondly, as has been seen, the English and Australian cases, so far as they go, suggest that the law to be applied is the lex fori. I accept that some of those cases were decided at a time when legal professional privilege was considered to be a rule of evidence or at least there was uncertainty as to whether it was a rule of evidence or a substantive doctrine. Thirdly, although legal professional privilege is linked to the contract of retainer between the client and his or her lawyer, it is not a “transaction” in the same sense as the formation of a contract or the commission of a tort. It is an immunity from what would otherwise be a coercive process dictated or mandated by, in the majority of cases, a statute or piece of delegated legislation of the forum where, to the extent that Parliament has not by express words or necessary intendment made its intention clear, the policy in the statute or piece of delegated legislation gives way to an important common law immunity based on considerations relevant to the administration of justice. Put another way, in the case of legal professional privilege, there are important connecting factors with the forum, namely, the production of documents or a request for their production and a claim or assertion of privilege. These matters considered together lead me to the conclusion that the governing choice of law rule in the case of legal professional privilege is the lex fori.

54    The primary judge was correct in deciding that the lex causae before her was Australian law.

The Primary Judge’s Rulings as to the Documents

55    The appellants conceded that if this Court decided that the lex causae was Australian law then they could not challenge the primary judge’s conclusion that documents 7, 64, 75, 76, 82, 108, 133, 195, 234, 287, 288, 378, 401 and 439 were not capable of attracting legal professional privilege. Other than those documents, they maintained their challenge to her Honour’s rulings with respect to the individual documents identified in Annexure A and Annexure B to the draft Notice of Appeal. As I have said, as to Annexure A, the appellants sought to make good their challenge by reference to a selection of 32 documents put before this Court.

56    The primary judge set out the relevant principles of legal professional privilege in Australian law. Her Honour’s treatment of that issue was not challenged on appeal and may be summarised in the following propositions:

(1)    The privilege attaches to the communication, not to a physical document, or indeed, to an electronic form.

(2)    The onus to establish that a document is privileged is on the party claiming the privilege.

(3)    There is a need to consider what constitutes legal advice. There is a distinction (although sometimes difficult to draw) between a lawyer, in the performance of his or her professional duty as legal adviser, giving advice as to what may prudently and sensibly be done in the relevant legal framework and giving advice as to the commercial wisdom of entering into a particular transaction.

(4)    In order to attract privilege the dominant purpose must be the seeking or obtaining of legal advice. Whether there is such a dominant purpose is a question of fact to be determined as a matter of judgment.

(5)    Providing the requisite dominant purpose can be established, communications with third parties may also be protected.

(6)    The purpose is to be determined objectively and evidence of the intention of the maker of the document is not necessarily conclusive.

57    The proposition in paragraph (3) requires further elaboration in light of the issues in this case. Her Honour accepted that the provision of legal advice was not only telling a client what the law was, but included advice as to what might, as a matter of prudence and good sense, be done in the relevant legal context: Balabel v Air India [1988] Ch 317; Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610. At the same time she said that it was necessary to be careful of applying too rigidly a test which provided that privilege extended to all solicitor and client communications on matters within the ordinary business of a solicitor and referable to that relationship because the role of a solicitor had expanded in modern times.

58    Her Honour referred to the fact that the distinction between giving advice as to what might, as a matter of prudence and good sense, be done in the relevant legal context and advice as to the commercial wisdom of entering into a particular transaction (which is not the subject of legal professional privilege) may be difficult to draw (DSE Holdings Pty Ltd v InterTan Inc (2003) 135 FCR 151 at 165 [45]). She made the point that the difficulty of making the distinction had been “especially significant” in relation to the claims made in the proceeding before her.

59    The appellants divided their complaints about her Honour’s rulings into three categories and gave examples of documents which fell into each category. First, they contended that there were documents where the evidence of Mr Emanuel was applied inconsistently. They contrasted her Honour’s ruling that documents 44 and 224 were capable of attracting legal professional privilege with her ruling that documents 49, 50, 51, 52, 53, 57, 62, 65, 289, 327, 387, 388, 393, 394, 397 and 441 were not capable of attracting legal professional privilege.

60    With respect to the documents in the appellants’ first category, her Honour’s comments in Annexure A to her reasons were as follows:

(1)    As to documents 49, 50, 51, 52, 53, 57, 62, 65 (Stewart Hardcopy): evidence not sufficient to show requisite dominant purposes.

(2)    As to documents 289, 327, 387, 388, 393, 394, 397, 441 (Gibb Sealed): a short explanation (in the main, a reference to the fact that the document provides or primarily provides financial information or is a copy and circumstances concerning the creation of the copy not established) and then the conclusion that requisite dominant purpose not established.

61    Secondly, the appellants contended that there were documents held to be not capable of attracting legal professional privilege which were part of a larger privileged communication and documents where the primary judge failed to give proper weight to Mr Emanuel’s evidence in respect of Californian communications. There are two limbs to her Honour’s second category.

62    As to the first limb, the appellants referred to documents attached to a brief to Mr Hill QC (which was accepted as being privileged) being documents 384, 385 and 386. In each case her Honour’s comment in Annexure A to her reasons was as follows:

Respondents claim document copied and collated for the purpose of legal advice but evidence does not substantiate this. Requisite dominant purpose not established.

63    These three documents were part of the Gibb Sealed documents.

64    As to the second limb, the appellants contended that there were inconsistent rulings on documents 428-437 and 259 (inclusive). The primary judge held that documents 428, 429, 430, 431, 432, 435, 436, 437, 438 and 259 were not capable of attracting legal professional privilege whereas documents 433 and 434 were so capable. Her Honour’s comment in relation to document 433 suggests that she meant to conclude that the document was not capable of attracting legal professional privilege. All the documents, apart from document 259 which was part of Disc F Unsealed Gibb documents, were part of the Gibb Sealed documents. Apart from the inconsistency point, the appellants’ principal contention was that the primary judge overlooked evidence from Mr Emanuel about the extensive role undertaken by entertainment lawyers in “Hollywood” matters in California.

65    Thirdly, the appellants contended that there is a category of documents (405, 406 and 407) where it is “self-evident on the face of the document” that legal professional privilege applied. Her Honour’s comment in Annexure A to her reasons in the case of each document (all of which were part of the Gibb Sealed documents) was as follows:

Emanuel deposes that document prepared on his instructions to assist Denton Hall in providing legal advice. No evidence as to how Gibb acquired the document or that its provision to him was for dominant purpose of giving or receiving legal advice.

66    The appellants submit that the primary judge overlooked the fact that Mr Gibb was in the respondent’s camp and the fact that he was a director of Rimfire. They contended that the latter circumstance supported the claim for privilege because I should infer that as a director he received the documents as part of the provision of legal advice to the company.

67    In considering the challenge to her Honour’s rulings it is important to bear in mind the context in which she made them and the approach that she adopted. The chief difficulty facing the primary judge was in applying the distinction between, putting it broadly, legal advice on the one hand, and commercial advice on the other. It is important to recognise that her Honour did not accept Mr Emanual’s evidence in relation to a number of documents. For example, she said (at [104]):

Despite Mr Emanuel painting a picture of only limited involvement in the business the documents that I have inspected are not consistent with that picture.

68    Another example is set out in paragraph 62 above.

69    Furthermore, there were other findings of the primary judge which were relevant to context. I have already referred to some of those findings (at [27]) and [30]). Her Honour referred to examples of activities undertaken by Mr Emanuel which he accepted were matters of general business or commercial advice rather than legal advice (at [96] of her reasons). In addition, her Honour noted that with respect to some of the documents containing business or financial information, Mr Emanuel conceded that anyone who could read and count was capable of coming to a conclusion as to when distribution statements under the distribution agreements were due (at [97] of her reasons). There is no challenge to the proposition that purpose is to be determined objectively and that the purpose of the creator or provider of the document is not decisive. In the context as I have just outlined it her Honour was not prepared to accept statements by Mr Emanuel as to the purpose for the creation or provision of a document. That was an approach she was entitled to take.

70    One of the principal arguments advanced by the appellants was that the primary judge had overlooked evidence by Mr Emanuel about the extensive role played by entertainment lawyers in a mature entertainment industry. The exact purport of the argument was not clear to me although in the end the suggestion seemed to be that her Honour disregarded the nature of the attorney-client relationship and practice in California. I reject this submission. Her Honour did not approach the matter by reference to any notion of what was a standard client and lawyer relationship. She approached the matter by reference to what was legal advice and what was commercial advice and in a number of cases reached the conclusion that the requisite dominant purpose had not been established. There was no error in such an approach.

71    In my opinion, her Honour was entitled to reach the conclusions she did in relation to the documents identified by the appellants in category one and the second limb of category two.

72    The appellants’ challenge to the documents identified by them in the first limb of category two and in category three raise a different issue. Those categories include documents that, in the ordinary course, may be considered to be the subject of legal professional privilege. The documents were produced by Mr Gibb pursuant to a summons issued under s 28 of the Australian Crime Commission Act. Her Honour appears to have concluded that the documents were not capable of attracting legal professional privilege because the circumstances in which the copies were created were unknown or the circumstances in which they were provided to Mr Gibb were unknown. The appellants submitted that the primary judge ought to have inferred, having regard to Mr Gibb’s position as a director of Rimfire, he is likely to have received the documents in the course of legal advice being provided to the company. That is an available inference, but I do not think that it is more likely than other inferences which would not give rise to privilege. In those circumstances, the challenge to her Honour’s rulings must be rejected.

73    The documents identified by the appellants were examples of their complaints. It was not suggested that there were any better examples. In those circumstances, it is appropriate to conclude that the challenges to the primary judge’s rulings as to the documents identified in Annexures A and B to the draft Notice of Appeal must fail.

ConclusionS

74    I would grant leave to appeal in relation to grounds 1-5 of the draft Notice of Appeal. I would refuse leave to appeal in relation to ground 6. I would dismiss the appeal. The appellants must pay the respondent’s costs of the application for leave to appeal and the appeal.

Associate:

Dated:    29 October 2012

REASONS FOR JUDGMENT

Jagot J and Bromberg J

75    We agree with the orders which Besanko J proposes. Subject to one issue, we agree also with his Honour’s reasons for the making of those orders. We do not agree that the primary judge erred in her conclusion that no choice of law issue arose in this case.

76    Section 29 of the Australian Crime Commission Act 2002 (Cth) imposed the obligation to produce documents. Although that obligation is absolute on its face, the principle of statutory construction that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or necessary implication is engaged (Potter v Minahan (1908) 7 CLR 277 at 304 per O’Connor J; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [11] per Gleeson CJ, Gaudron, Gummow and Hayne JJ).

77    As the respondent submitted, in the context of s 29 of the Australian Crime Commission Act, the question which arises is what legal professional privilege, as a matter of interpretation of the statute, is to be taken as not qualified and not abrogated by the general words in the statute. The answer is the Australian law of privilege which, as the respondent also said, affords privilege to communications with lawyers for the purposes of obtaining legal advice whether those lawyers be local or foreign, whether the law as to which they are advising be local or foreign, and whether the communication occurs here or somewhere else. Once this is recognised it is apparent that no choice of law rule can arise for the reasons the primary judge gave.

78    The reason is that, as the respondent also submitted, the issue is first and last a matter of statutory construction of the particular statute; and the only qualification on the otherwise absolute obligations imposed by the statute in this case is the Potter v Minahan principle which protects those rights, privileges and immunities which the common law of Australia recognises as important. The principle does not protect against qualification or abrogation of other rights, privileges and immunities which may be part of the same general field of discourse but which the common law of Australia does not recognise as within the Potter v Minahan principle. To put it another way, it is the common law of Australia that identifies not only the kind of right which is fundamental in the Potter v Minahan sense but also the scope of that fundamental right.

79    This is consistent with the reasoning of the primary judge, being reasoning with which we agree.

Associate:

Dated:    29 October 2012