Sparnon & Ors v Apand Pty Ltd & Ors [1996] FCA 684

CATCHWORDS

EVIDENCE - s 119 Evidence Act 1995 (Cth) - claim of client legal privilege - s 119 concerned with evidence which may be adduced at trial - no direct application to pre-trial procedures - privilege from production remains governed by common law.

PRACTICE AND PROCEDURE - discovery and inspection of documents - claims of legal professional privilege - document must have been brought into existence when litigation exists or is reasonably contemplated and for sole purpose of that litigation - onus is on party claiming privilege to establish such privilege.

PRACTICE AND PROCEDURE - O 15 r 15 Federal Court Rules - discovery and inspection of documents - court has wide discretion to decline to order that a discovered document be produced for inspection - discretion includes considering that evidence may not be adduced at trial on objection being taken under s 119 Evidence Act - what is a "dominant purpose"?

Evidence Act 1995 (Cth) s 119 and s 131

Federal Court Rules O 15 r 15

Trade Practices Commission v Port Adelaide Wool Co Pty Ltd & Anor (1995) 132 ALR 645

Trade Practices Commission v International Technology Holdings Pty Ltd (1995) 31 IPR 466

Hardie Finance Corporation Pty Ltd v CCD Australia Pty Ltd & Ors (Federal Court, 14 July 1995, unreported)

Times Properties Pty Ltd v Challenge Bank Limited [1996] ATPR 41,572

Abrook v Paterson (Federal Court, 30 August 1995, unreported)

Grant v Downs (1976) 135 CLR 674

Cameron v Rural Press Ltd (1992) 35 FCR 211

Murex Diagnostics Australia Pty Limited v Chiron Corporation & Anor (1995) 55 FCR 194

Trade Practices Commission v Rank Commercial Ltd (1994) 53 FCR 303

Waterford v The Commonwealth of Australia (1987) 163 CLR 54

Waugh v British Railways Board [1980] AC 521

Guiness Peat Properties Ltd & Anor v Fitzroy Robinson Partnership [1987] 1 WLR 1027

Konia v Morley [1976] 1 NZLR 455

No SG 28 of 1994

SPARNON and OTHERS v APAND PTY LTD (ACN 003 566 870), THE MINISTER FOR PRIMARY INDUSTRIES and THE STATE OF SOUTH AUSTRALIA

Branson J

Adelaide

6 August 1996

IN THE FEDERAL COURT OF AUSTRALIA)

)

SOUTH AUSTRALIA DISTRICT REGISTRY) No SG 28 of 1994

)

GENERAL DIVISION )

BETWEEN:

SPARNON and OTHERS

Applicants

- and -

APAND PTY LTD

(ACN 003 566 870)

First Respondent

- and -

THE MINISTER FOR

PRIMARY INDUSTRIES

Second Respondent

- and -

THE STATE OF

SOUTH AUSTRALIA

Third Respondent

REASONS FOR RULING

CORAM: Branson J

PLACE: Adelaide

DATE: 6 August 1996

THE ISSUE

The issue before me is that of whether two documents are privileged from production on the ground of legal professional privilege. It is agreed that either they both attract the protection of legal professional privilege or neither of them does. One of the documents has been discovered by the second

and third respondents and the other by the first respondent. In each case the claim for legal professional privilege is asserted on behalf of the first respondent and is a claim based on that branch of legal professional privilege that has come to be known as "litigation privilege".

No argument was addressed to me relating to the circumstances in which the second and third respondents came into possession of the first of the documents in respect of which the first respondent claims legal professional privilege. Nor was any argument addressed to me as to the significance of the other document having been exhibited to an affidavit filed and served on behalf of the first respondent. I put those matters to one side.

BACKGROUND

The applicants in this proceeding were, at all times material to the issues for determination in the proceeding, potato growers. The first respondent was at the same time a major producer of potato crisps. It is alleged in the proceeding that the applicants were affected by an outbreak of bacterial wilt identified in South Australia in early April 1992. Bacterial wilt is a highly infectious disease which affects potato plants and tubers. The applicants claim that the first respondent supplied to them potato seed infected with bacterial wilt. They seek to recover losses allegedly suffered by them as a consequence of the bacterial wilt outbreak.

THE DOCUMENTS

Shortly after officers of the first respondent learnt of the South Australian outbreak of bacterial wilt, Jeffrey Ronald Peterson ("Mr Peterson"), the Crop Research Manager of the first respondent, instructed Dr Michael Gillings ("Dr Gillings") of the New South Wales Department of Agriculture to analyse certain samples. Pursuant to such instructions a report, apparently prepared by Dr Gillings and Ms Joanne Luck, was brought into existence. This report has come to be called the "Gillings Report" and I shall so refer to it. The Gillings Report is the first of the documents for which legal professional privilege is claimed.

At some time before the completion of the Gillings Report, Mr Peterson was given access to a print of certain computer records by Dr Gillings. Mr Peterson prepared from such print a transparency for the purpose of briefing certain senior officers of the first respondent. A copy of the transparency is the second of the documents for which legal professional privilege is claimed. From an examination of the documents provided to me for inspection, it appears that this document is in identical form to the table annexed to the Gillings Report discovered by the second and third respondents. The two documents will together be referred to as "the documents".

THE LAW

The Evidence Act 1995 (Cth) ("the Act") contains provisions with respect to client legal privilege. In these reasons, in the interests of clarity, I propose to use the expression "client legal privilege" when referring to the statutory privilege deriving from the Act, and to use the expression "legal professional privilege" when referring to the common law privilege.

Section 119 of the Act is concerned with the "litigation privilege" aspect of client legal privilege. So far as is here relevant, s119 is in the following terms:-

"Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a) a confidential communication between the client and another person ... that was made;

. . . . . . .

for the dominant purpose of the client being provided with professional legal services relating to an Australian ... proceeding (including the proceeding before the court), or an anticipated ... Australian ... proceeding, in which the client is or may be ... a party."

By its terms s119 is limited in its operation to the question of whether certain evidence may be adduced on objection by a client. I do not regard it as having any direct application to a claim that a discovered document is privileged from production. I note that the same view of the section is taken by the learned authors of the Australian edition of Cross on Evidence. At page 25,152 of that work it is stated:-

"The Evidence Act does not deal with the application of the privilege [i.e. client legal privilege] outside litigation. The general law will continue to apply there. In particular, privilege on discovery is governed by the common law, with its sole purpose test as distinct from the statutory dominant purpose test."

See also Stephen Odgers: Uniform Evidence Law at p193 (Federation Press 1995).

In Trade Practices Commission v Port Adelaide Wool Co Pty Ltd & Anor (1995) 132 ALR 645 I expressed the view that it was arguable that s119 of the Act has indirectly widened the right of a party to litigation to claim that a document is privileged from production. I note that in a number of cases such widening of the right to claim privilege from production has been assumed to flow from the coming into operation of the Evidence Act (Trade Practices Commission v International Technology Holdings Pty Ltd (1995) 31 IPR 466; Hardie Finance Corporation Pty Ltd v CCD Australia Pty Ltd & Ors (Federal Court, 14 July 1995, unreported); Times Properties Pty Ltd v Challenge Bank Limited [1996] ATPR 41,572).

In Abrook v Paterson (Federal Court, 30 August 1995, unreported) I concluded that, in respect of a privilege from production which is governed by rules as to the admissibility of evidence - such as the privilege from production which attaches to without prejudice negotiations, the ambit of the privilege in this Court is now to be determined by reference to the Act. I so concluded on the basis that a privilege based on a rule of evidence is dependent upon the existence
and the ambit of the relevant rule of evidence. The relevant rule of evidence in this Court concerning confidential settlement negotiations is now contained in s131 of the Act. The common law rule of evidence on this topic is now superseded in this Court. It can no longer support any privilege from production in this Court.

The circumstances of this application do not make it necessary for me to express a concluded view on the issue of whether s119 of the Act has indirectly widened the right of a party to litigation in this Court to claim that a document is privileged from production on the ground of legal professional privilege. It is an important issue and its determination should await a case in which it is fully argued.

At common law in Australia since the decision of the High Court in Grant v Downs (1976) 135 CLR 674, a document passing between a party to the litigation and a third party will be privileged from production on the ground of legal professional privilege only if the party claiming privilege can show:-

(a) that the document was brought into existence at a time when litigation was in existence or reasonably contemplated; and

(b) that the document was brought into existence for the sole purpose of obtaining advice for that litigation or otherwise for the sole purpose of that litigation.

As I sought to express in the Port Adelaide Wool Co Case, it is one thing to say that a document which is privileged from production, whether on the ground of legal professional privilege or otherwise, is not to be made the subject of an order for production. It is another to say that every discovered document in respect of which a claim for privilege cannot be maintained must be produced for the inspection of opposing parties. The processes of discovery and production for inspection are part of the practices and procedures of the Court and subject to its control.

In this Court it is no longer appropriate to refer to a party as having a "right" to discovery (Cameron v Rural Press Ltd (1992) 35 FCR 211, discussed in Murex Diagnostics Australia Pty Limited v Chiron Corporation & Anor (1995) 55 FCR 194). The Court may dispense with the process of discovery entirely (Trade Practices Commission v Rank Commercial Ltd (1994) 53 FCR 303). It is now common-place for the Court to direct that discovery in a particular proceeding is to be limited to certain categories of documents.

In my view, the Court also has a wide discretion in any proceeding to decline to order that a discovered document be produced for inspection. Such discretion is reflected in Order 15 r15 of the Federal Court Rules. Order 15 rule 15 provides as follows:-

"The Court shall not make an order under this Order for the filing or service of any list of documents or affidavit or other document or for the production of any document unless satisfied that the order is necessary at the time when the order is made."

In my view, the fact that evidence disclosing the content of a document not privileged from production at the pre-trial stage, may not be adduced at trial on objection being taken, is a matter to be taken into account in the exercise of the Court's discretion to order, or not to order, that such document be produced for inspection.

THE EVIDENCE

Two officers of the first respondent gave evidence as to the circumstances in which the Gillings Report was brought into existence. Laughton Boyd Hegarty ("Mr Hegarty") was at the relevant time the corporate solicitor for the group of companies of which the first respondent was part. He gave evidence that the Gillings Report was required so that he could provide legal advice to the first respondent, and that, at the relevant time, he believed that there was a strong likelihood that compensation claims would be brought against the first respondent. He instructed independent solicitors, presumably concerning such potential claims, in June 1992. I note that in cross-examination Mr Hegarty agreed that he had not asked to see the Gillings Report, had never seen it, and did not cause a copy of it to be provided to the independent solicitors that he instructed in June 1992. Mr Hegarty conceded that if the Gillings Report had been sought for purposes additional to legal purposes he would not necessarily know of such purposes.

More significant, in my view, was the evidence of Mr Peterson who gave the instructions to Dr Gillings which resulted in the Gillings Report being brought into existence. His evidence may be summarised as follows:-

(a) his duties with the first respondent at the relevant time related to research and development in respect of primary products including potatoes;

(b) his duties extended to improving the quality of raw materials, and an awareness of diseases that might affect potatoes was fundamental to his role;

(d) a threat to the supply of healthy potatoes to the first respondent was of crucial concern to the first respondent;

(e) when the first respondent learnt of the suspected outbreak of bacterial wilt, it was fundamental to its operations to confirm the outbreak so that control measures could be put in place;

(f) up until about 1 May 1992 he had not heard anything about growers threatening legal action against the first respondent; and

(g) when he asked Dr Gillings to prepare the Gillings Report, which he did between 15-20 April 1992, he did so in order to obtain information in reliance on which the first respondent could put in place a management programme for controlling and preventing the further spread of the disease, if it were confirmed, and also to obtain information so as to be able to brief his superiors as to the nature of the problem which they were facing.

LEGAL PROFESSIONAL PRIVILEGE

Having regard to the evidence of Mr Peterson, it is not open to me to find that the Gillings Report was brought into existence for the sole purpose of obtaining legal advice with respect to litigation then reasonably contemplated. Similarly it is not open to me to find that the copy of the transparency created by Mr Peterson from a print of certain computer records of Dr Gillings was brought into existence for the sole purpose of obtaining such legal advice. The transparency was brought into existence to facilitate the passing of information from Mr Peterson to other officers of the first respondent.

The claim for legal professional privilege made in respect of the two documents must fail.

SHOULD THE DOCUMENTS BE PRODUCED?

It was contended on behalf of the first respondent that, even if its claim of legal professional privilege were to fail, no order for the production of the documents ought to be made. Reliance was placed on O15 r15 of the Federal Court Rules which is set out above. The basis upon which it was contended that no order should be made for the production of the documents was that evidence would not be able to be adduced at trial which would disclose the contents of the documents. Reliance was placed on s119 of the Evidence Act.

The trial of this matter has commenced before another judge of the Court. Because of the asserted sensitivity of the documents, his Honour agreed to a request from the parties that this application be heard and determined by another judge so that such judge could inspect the documents without any risk of prejudice to the first respondent. Having become involved in the matter in such circumstances, I am naturally loath to express views as to the evidence which it will be open to the respondents to adduce at trial.

It is clear that a party asserting legal professional privilege carries the onus of establishing such privilege (Grant v Downs; Waterford v The Commonwealth of Australia (1987) 163 CLR 54). A number of affidavits was read before me and two persons who were deponents to affidavits were cross-examined before me. The evidence before me was thus confined. The learned trial judge is in a different position. The affidavits read before me are not presently in evidence before him. I am not aware of whether the witnesses who were cross-examined before me will be called before him, or whether the records of their respective cross-examinations will be sought to be placed in evidence before him.

It seems that the dominant purpose test adopted in s119 of the Act in respect of client legal privilege is intended to reflect the test proposed by Barwick CJ in Grant v Downs (ALRC Evidence Reference RP 16 para 14; ALRC Report 26, Vol 1 para 881). In Grant v Downs at 678 his Honour said:-

"It seems to me to be preferable to test the status of each document according to the purpose of its production ... For my part, I prefer the word "dominant" to describe the relevant purpose. Neither "primary" nor "substantial", in my opinion, satisfies the true basis of the privilege."

Although the view of Barwick CJ in Grant v Downs reflects more closely than the views of the majority in that case the approach adopted in common law countries other than Australia, I have been able to find little help from such jurisdiction on the true import in this context of the word "dominant" (see, for example, Waugh v British Railways Board [1980] AC 521; Guiness Peat Properties Ltd & Anor v Fitzroy Robinson Partnership [1987] 1 WLR 1027; Konia v Morley [1976] 1 NZLR 455). I note, however, that Barwick CJ did not consider that either "primary" or "substantial" satisfied the true basis of the test which he proposed.

It will be a question of objective fact whether in any case any one purpose "dominated" the decision to bring the document into existence. Such objective fact is not necessarily to be ascertained by reference solely to the intention of the author of the document, or solely to the intention of the individual upon whose instructions the document was brought into existence. (Guiness Peat Properties Ltd & Anor v Fitzroy Robinson Partnership at 1036). No doubt the intentions of Mr Peterson's superiors, upon whose instructions he was acting at the relevant time, could be of relevance in this regard. However, no evidence was placed before me from any of Mr Peterson's superiors.

Plainly if two purposes were of equal weight, one would not dominate the other. If the decision to bring the document into existence would have been made irrespective of any intention to obtain professional legal services, I am inclined to doubt that the purpose of obtaining professional legal services could be regarded as the dominant purpose for the making of the document. It seems to me that, seen in the light of the reasons for judgment of Barwick CJ in Grant v Downs, the choice of the expression "dominant purpose" rather than "sole purpose" in s119 of the Act is intended to bring within the scope of client legal privilege a document brought into existence for the purpose of a client being provided with professional legal services notwithstanding that some ancillary use of the document was contemplated at that time.

On the basis of the evidence before me I am satisfied not only that the documents would have been brought into existence irrespective of Mr Hegarty's desire to ascertain the facts upon which legal advice to the first respondent could be based, but that the primary motivation behind the bringing of the Gillings Report into existence was to enable the first respondent to confirm the outbreak of bacterial wilt so as to be able to proceed promptly, if necessary, with containment measures. I am not satisfied that the documents were made for the dominant purpose of the first respondent being provided with professional legal services within the meaning of s119 of the Act.

It follows that I am not satisfied, on the evidence before me, that the first respondent will be able to establish for the purposes of the trial that the documents attract the client legal privilege created by s119 of the Act. It may be that a different conclusion will be open on the evidence before the learned trial judge. It is for him, not me, to determine what evidence may in fact be adduced at trial. My concern is only with the present application.

No basis other than s119 of the Act was put forward upon which I could find that it is not now necessary for an order to be made that the documents be produced (O15 r15 Federal Court Rules). The contention made on behalf of the first respondent that the documents should not be produced for inspection even if not protected by legal professional privilege must fail.

I will hear counsel as to the orders, if any, which should be made in the light of these reasons.

I certify that this and the preceding pages are a true copy of the Reasons for Ruling of the Honourable Justice Branson.

Associate:

Dated:

Counsel for the Applicants : Mr N Morcombe QC

with him

Mr J Morcombe

Solicitors for the Applicants : Townsends

Counsel for the First Respondent : Mr M Frayne

with him

Mr A Harris

Solicitors for the First Respondent : Phillips Fox

Counsel for the Second and : Ms K Schulz

Third Respondents

Solicitors for the Second and : Mr M D Walter

Third Respondents : Crown Solicitor

for the State of

South Australia

Hearing Date : 2 August 1996

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