FEDERAL COURT OF AUSTRALIA

DISCOVERY AND INTERROGATORIES - Discovery and inspection of documents - client legal privilege - effect of ss 118 and 119 Evidence Act 1995 (Cth) on pre-trial processes - whether test for privilege in discovery proceedings is “dominant purpose” test or “sole purpose” test - whether Court can refuse to order production of documents on basis that they could not be admitted at trial.

Evidence Act 1995 (Cth) - ss 118 and 119

Federal Court Rules - O 15 r 15

Grant v Downs (1976) 135 CLR 674 - applied

Telstra Corporation v Australis Media Holdings Limited and Ors (1997) 41 NSWLR 277 - not followed

Towney v The Minister for Land and Water Conservation for New South Wales and Ors (1997) 147 ALR 402 - not followed

Abigroup Ltd v Akins and Ors (Bainton J, unreported, Supreme Court of New South Wales, Commercial Division, 2 October 1997) - considered

Zemanek v The Commonwealth Bank of Australia (Hill J, unreported, Federal Court of Australia, 2 October 1997) - considered

Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 - considered

Trade Practices Commission v CC (NSW) Pty Limited (No 4) (1995) 58 FCR 426 - considered

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55 - considered

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

Trade Practices Commission v Port Adelaide Wool Company Pty Limited and Anor (1995) 60 FCR 366 - not followed

BT Australasia Pty Limited v State of New South Wales and Ors (1996) 140 ALR 268 - not followed

Sparnon v Apand Pty Limited (1996) 68 FCR 322 - not followed

Meltend Pty Limited and Anor v Restoration Clinics of Australia Pty Limited and Ors (1997) 145 ALR 391 - considered

ESSO AUSTRALIA RESOURCES LIMITED v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

VG 443-448  of   1996

THE COURT ORDERS AND DECLARES:

1.         That pursuant to Order 29 rule 2 of the Federal Court Rules there be decided separately the following questions of law:-

            (a)        Whether the correct test for claiming legal professional privilege in relation to the production of discovered documents is the “sole purpose” test as formulated by the High Court in Grant v Downs (1976) 135 CLR 674 or the “dominant purpose” test as set out in s 118 and s 119 of the Evidence Act 1996 (Cth)?

            (b)        Whether the Court has power pursuant to Order 15 rule 15 of the Federal Court Rules to make an order excluding from production discovered documents on the basis that such documents meet the “dominant purpose” test as set out in s 118 and s 119 of the Evidence Act 1996 (Cth)?

2.         In respect of question (a), that the correct test for claiming legal professional privilege in relation to the production of discovered documents is the “sole purpose” test as formulated by the High Court in Grant v Downs.

3.         In respect of question (b), that the question be answered in the negative.

4.         That there be leave to appeal from this judgment.

5.         That the applicant pay the respondent’s costs of this application.

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

REASONS FOR JUDGMENT

(Extempore)

By notice of motion dated 22 October 1997 the respondent seeks various orders for discovery of documents by the applicant.  The second order sought is in the following terms:-

“Pursuant to O.15 r.10, that the Applicant produce for inspection each of the documents listed in the revised Part 2 of Schedule 1 of the Applicant's List of Documents provided under cover of [a certain] letter ... excepting those documents constituting or recording confidential communications between:

            (a)        the Applicant and its external legal advisers; and

            (b)        the Applicant and Counsel at the independent bar,

being documents prepared for the sole purpose of giving or receiving legal advice.”

The terms of the order thus sought seek to limit the reliance by the applicant on legal professional privilege.  It has been contended by the applicant that it can exclude from production in discovery proceedings all documents in its possession which it can establish came into existence for the dominant purpose of seeking or receiving legal advice.  It is the contention of the respondent that the applicant is not so entitled.  The respondent asserts that the applicant can, in reliance upon the privilege, exclude only documents brought into existence for the sole purpose of seeking and receiving such advice. 

There are a significantly large number of documents involved.  I am told that it is possible for these documents to be divided by the applicant into two categories: those claimed to be excluded on the basis of the sole purpose test (“the sole purpose documents”) and those claimed to be excluded by virtue of the dominant purpose test (“the dominant purpose documents”).  I am also advised that it would be of great practical assistance to the parties if the question of law as to which test should be applied were decided as a separate preliminary question.  In the circumstances, I am satisfied that this procedure is appropriate.  Accordingly, I shall now decide, as a discrete question, whether in law the applicant can resist production of documents which meet the dominant purpose test or whether it can claim privilege only in respect of documents meeting the sole purpose test.  It is necessary, also, to decide a related question: whether, as a matter of law, the Court can, pursuant to O 15 r 15 of the Federal Court Rules, order that the dominant purpose documents be excluded from production?

The question has arisen in earlier decisions at first instance in this Court and in the Supreme Court of New South Wales, decisions to which I shall make reference as I proceed.  The problem has arisen because of what I might call tension between the decision of the High Court of Australia in the well-known case of Grant v Downs (1976) 135 CLR 674 and the provisions of ss 118 and 119 of the Evidence Act 1995 (Cth) (“the Act”).  These sections were enacted following upon the final report of the Australian Law Reform Commission in its Report No 38, Evidence.  Grant v Downs is the source of the sole purpose test.  The Evidence Act sections introduce into the field to which the Act applies the dominant purpose test.  In Grant v Downs the majority (Stephen, Mason and Murphy JJ), after a review of relevant authority, said (at 688):-

“All that we have said so far indicates that unless the law confines legal professional privilege to those documents which are brought into existence for the sole purpose of submission to legal advisers for advice or for use in legal proceedings the privilege will travel beyond the underlying rationale to which it is intended to give expression and will confer an advantage and immunity on a corporation which is not enjoyed by the ordinary individual.  It is not right that the privilege can attach to documents which, quite apart from the purpose of submission to a solicitor, would have been brought into existence for other purposes in any event, and then without attracting any attendant privilege.  It is true that the requirement that documents be brought into existence in anticipation of litigation diminishes to some extent the risk that documents brought into existence for non-privilege purposes will attract the privilege, but it certainly does not eliminate that risk.  For this and the reasons which we have expressed earlier we consider that the sole purpose test should now be adopted as the criterion of legal professional privilege.”

It is to be observed that in this passage the rule is enunciated and the underlaying basis for it explained.  Quite clearly, this rule remains part of the common law of Australia unless changed by the High Court itself or abrogated or altered expressly or by necessary implication by statute. 

The relevant sections of the Evidence Act provide as follows:-

    “118. 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 made between the client and a lawyer; or

    (b)   a confidential communication made between 2 or more lawyers acting for the client; or

    (c)   the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

    119. 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, or between  a lawyer acting for the client and another person; or

    (b)   the contents of a confidential document (whether delivered or not) that was prepared;

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

These sections introduce the dominant purpose test in their area of application.  That area has been the subject of judicial consideration in earlier cases.  I shall not make reference to them in these short reasons.  It is common ground in these proceedings that the sections only apply directly to the adduction of evidence at trial.  Were it not common ground, I should in any event so hold.  They find their origin in the Law Reform Commission Report which quite specifically applied only to the adduction of evidence in the trial setting.  It might be noted that the learned author of Uniform Evidence Law (Odgers, S, The Federation Press, 1995) says (at 193) in relation to s 118:-

“This provision applies only in court - pre-trial contexts are still governed by the common law.”

[See also Cross on Evidence (Heydon, J D (ed), Australian Edition, Butterworths, loose-leaf, 1996) at 25,154.]

However, the cases to which I have referred and which I shall now consider are at odds with this simple proposition.  These cases follow two paths.  First, it is said that the dominant purpose test should be applied to pre-trial procedures because of the impact of the Evidence Act sections on trial procedures.  Secondly, it is put that in this Court orders can be made pursuant to O 15 r 15 in discovery proceedings which can preclude discovery of documents on the basis that they meet the dominant purpose test.  I shall examine each path of decision separately. 

The main examples of the first path are the decision of McLelland CJ in Eq in the Supreme Court of New South Wales in Telstra Corporation v Australis Media Holdings Limited and Ors (1997) 41 NSWLR 277 and in this Court the decision of Sackville J in Towney v The Minister for Land and Water Conservation for New South Wales and Ors (1997) 147 ALR 402.  Each case dealt with legal professional privilege in the context of pre-trial procedures.  In each case it was held that the dominant purpose test could be applied to such procedures.  The reasoning of McLelland CJ in Eq in Telstra appears in the following passages (at 278):-

“An important question of law arises at the outset, namely whether the claims for privilege fall to be determined by the application of the principles expressed in Div 1 of Pt 3.10 of the Evidence Act 1995 (the Evidence Act principles) or by the application of common law principles, or by some combination of both.” 

His Honour went on (at 278):-

“The Evidence Act principles are expressed in the Act to apply to the adducing of evidence, and this expression does not, in its ordinary and natural meaning extend to ancillary processes.  I do not consider that as a matter of construction of the Act the provisions of Div 1 of Pt 3.10 can be held to apply indirectly to ancillary processes.”

His Honour later said (at 279):-

“Although as a matter of construction the Act has no direct application to ancillary processes, nevertheless in my opinion the enactment of the Evidence Act principles in respect of the adducing of evidence at a hearing has resulted, as an indirect or flow-on effect, in the application of equivalent principles to all ancillary processes.  As Dawson J observed in Baker v Campbell (1983) 153 CLR 52 at 126: ‘The common law doctrine of legal professional privilege emerged in the sixteenth century as a natural exception to the then novel right of testimonial compulsion.’

Subsequently, the doctrine established in the context of testimony at a trial was extended to ancillary processes, as those processes themselves emerged and developed.  In this sense the principles of legal professional privilege applicable to testimony at a trial provide the paradigm and the extension of the same principles to ancillary process was derivative in nature.  Accordingly any change to the paradigm should rationally be reflected in the derivatives.”

His Honour then considered a passage from the judgment of Branson J in Trade Practices Commission v Port Adelaide Wool Company Pty Limited and Anor (1995) 60 FCR 366, to which I shall refer later when considering cases of the second path, and continued (at 279):-

“If principles of client legal privilege (as I think it should now be called) applicable to the adducing of evidence were to differ from those applicable to ancillary processes, the consequences would be anomalous, conducive to confusion and disorder in the preparations for and conduct of proceedings, and verging on the absurd.  The adducing of evidence at a hearing and ancillary processes are functionally linked.  Moreover, both may occur at the same time and place.  For example, production of a document during a hearing under a subpoena or notice to produce may be resisted on the ground of client legal privilege - it would be anomalous if different principles of client legal privilege governed the production of the document on the one hand, and the adducing of the document in evidence on the other.” 

His Honour gave an example, and then continued (at 279-280):-

“A claim for client legal privilege in respect of a subpoenaed (or discovered) document might itself be the subject of a pre-trial hearing in which evidence is adduced, as in fact occurred on the present application before me.  If different principles of client legal privilege were applied to the question of the production of the document on the one hand, and the adducing of evidence in the application on the other, in situations of this kind, quite impractical consequences could ensue.

For the above reasons, the Evidence Act principles should be treated as applying, not directly but derivatively, to the claims of privilege presently under consideration.”

In Towney, Sackville J referred to these passages from the judgment of McLelland CJ in Eq in Telstra and said (at 412):

“The decision of McLelland CJ in Eq is not binding on this court.  However, it is a considered decision on an identical point, concerning legislation that has been enacted both by the Commonwealth Parliament and by the Parliament of New South Wales.  Both enactments derive from a common source, namely, the ALRC final report.  Moreover, the reasoning of McLelland CJ in Eq is consistent with the dicta of Branson J in Trade Practices Commission v Port Adelaide Wool.  I think that the appropriate course is to follow the decision when determining whether documents said to be the subject of privilege should be produced to the court or be made available for inspection, unless I consider that the decision is clearly wrong.  Dr Renwick did not put forward any reason to suggest that the decision is clearly wrong and I do not think it is.  On the contrary, with respect, I think that the reasoning of McLelland CJ in Eq is convincing.  Accordingly, I approached the present case on the basis that the question of loss of privilege in relation to the claim documents is to be determined according to the principles expressed in the relevant provisions of the Evidence Act.” 

There has not been a total absence of dissenting views at first instance.  Thus Bainton J in Abigroup Ltd v Akins and Ors (unreported, Supreme Court of New South Wales, Commercial Division, 2 October 1997) said of the reasoning in Telstra:-

“The critical steps in that deductive process are

            (a)        that because the principals [sic] governing admissibility at trial (the paradigm) make provision A;

            (b)        therefore provision A should govern pre-trial procedures (the derivative).

That is not a logical deduction.  It may be an available inference, but it is not a necessary consequence.  It is an evaluation based on an assumption of what the legislature would have provided had its attention been drawn to the problem (which it was not).” 

Also in this Court, in Zemanek v The Commonwealth Bank of Australia (unreported, 2 October 1997), Hill J said in relation to the Evidence Act sections:-

“On their face these sections have no direct relevance to the question of discovery and inspection which is before me.  That question would seem still to be governed by the general law.” 

I am not unmindful that as a matter of judicial comity I should follow the earlier decisions unless I am persuaded to the contrary.  However, with all respect to the judges who decided those cases, I am firmly of the opinion that I should not follow the reasoning in Telstra and Towney.  It appears to me to follow a course which, as a matter of basic principle, is not available.  I put my reasons as follows:-

(1)        The common law was authoritatively declared by the High Court in Grant v Downs.  The test to be applied was the sole purpose test in both trial and pre-trial situations.

(2)        The law as so stated can be altered only by the High Court itself or by an Act of the Parliament.

(3)        The Evidence Act has altered the test in relation to trial proceedings only.

(4)        The sole purpose test in relation to pre-trial proceedings remains the test until altered by the High Court or a further Act of Parliament.

It follows that efforts to extend the dominant purpose rule by decisions of this Court and the Supreme Court must, in my respectful view, necessarily fail, being clearly contrary to the rule enunciated by the High Court in Grant v Downs.  It should be noted that in neither Telstra nor Towney is it suggested that the Evidence Act sections can apply as a matter of statutory construction to pre-trial proceedings. 

I turn then to submissions made in respect of O 15 r 15 of the Federal Court Rules.  These submissions are to the effect that the “dominant purpose documents” can be excluded from production by orders made under this rule.  Order 15 deals in general with the topic of discovery and inspection of documents.  Order 15 r 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.”

The word "necessary" in this rule has received judicial consideration.  In Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 at 24-25, a Full Court of this Court said:-

“The same criterion of ‘necessity’ governs orders for the filing or service of lists of documents as governs orders for their production.  It is a reflection of the policy of judicial case management that underlies the Federal Court Rules generally.  It is a broad criterion which requires consideration of the interest of justice in the particular case as well as its economic and efficient disposition.”

It was also said in Trade Practices Commission v CC (NSW) Pty Limited (No 4) (1995) 58 FCR 426 at 436 that the significance of the word "necessary" in the rule “must depend upon the purpose properly served by the procedure of discovery of documents” and was concerned with what was necessary “in the interests of a fair trial and fair disposition of a case”. 

Before considering the cases relied upon by the applicant, it is also convenient that I refer to some general statements of principle in relation to discovery and to legal professional privilege.  The scope of discovery was authoritatively delineated in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55 at 62-3, when it was said by Brett LJ that the obligation to make discovery extends to any document which relates to the matters in question in the action.  His Lordship went on to say that (at 63):-

“It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary.  I have put in the words ‘either directly or indirectly’, because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of inquiry, which may have either of these two consequences.”

It is clear that documents may properly be subject to discovery even though they could not be tendered in evidence at a hearing.  Put succinctly, admissibility is not and never has been the test for discoverability. 

Also it is appropriate to bear in mind the status of legal professional privilege.  Deane J said of it in Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 490:-

“It is a substantive general principle of the common law and not a mere rule of evidence that, subject to defined qualifications and exceptions, a person is entitled to preserve the confidentiality of confidential statements and other materials which have been made or brought into existence for the sole purpose of his or her seeking, or being furnished with legal advice by a practising lawyer or for the sole purpose of preparing for existing or contemplated judicial or quasi-judicial proceedings...”

Also in Grant v Downs (at 685) it was said of the rationale of the privilege:-

“The rationale ... 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, 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.”

Against this background I turn to the decision of Branson J in Trade Practices Commission v Port Adelaide Wool Company Pty Limited & Anor (1995) 60 FCR 366 which is relied upon by the applicants as authority for the exclusion from production in this case of the dominant purpose documents.  Her Honour's reasoning has been followed by Sackville J in BT Australasia Pty Limited v State of New South Wales & Ors (1996) 140 ALR 268 and is expanded on by her Honour in Sparnon v Apand Pty Limited (1996) 68 FCR 322. 

In Port Adelaide Wool, her Honour was dealing with claims for privilege in respect of discovered documents.  After considering earlier rules in O 15 and ss 118 and 119 of the Act, her Honour said (at 370):-

“The documents required to be discovered by O 15 of the Federal Court Rules are not limited to documents which would be admissible in evidence: ...  However, the fact that evidence will not be able to be adduced, over objection, if it would result in disclosure of the contents of a confidential document will, in my view, ordinarily be telling as to whether the production of that document can be said to be necessary for the fair disposal of the proceedings. 

It would be a curious result, in my view, if a party to proceedings in this Court could be required to produce for inspection by the other party or parties during pre-trial procedures, or indeed in court, a confidential document prepared, for example, for the dominant, but not the sole, purpose of a lawyer providing legal advice to that party, notwithstanding that at trial that party could successfully object on the ground of client legal privilege to any evidence being adduced which would result in disclosure of the contents of a document.  That is, logic at least would seem to suggest that the ambit of client legal privilege should be constant throughout the litigation process. 

That logic is reflected in the fact that historically legal professional privilege with respect to the contents of documents has had the same ambit whether invoked as a privilege against production of documents outside of the courtroom as part of the discovery process, or as a privilege against disclosing of the contents of such documents within the courtroom either by their physical production or by disclosure of their contents in response to questions asked in cross-examination. 

As the High Court pointed out in Grant v Downs, the public interest that trials should be conducted in circumstances in which all relevant documents are available to the parties has always given way to the paramount public interest reflected in what has historically been known as legal professional privilege.  Now that this paramount public interest has by the Act been extended in this Court, so far as the laws of evidence are concerned by the statutory adoption of a dominant purpose test (as opposed to the common law sole purpose test), the same test, in my view, will ordinarily be adopted for the purposes of O 15 of the Federal Court Rules.  That is, the Court will not, in my view, ordinarily be satisfied that an order for production of a document is necessary if evidence of the contents of such document could not be adduced at trial over the objection of the party discovering the document on the ground of client legal privilege.”

It will be seen that in this passage her Honour has expressed the view that O 15 r 15 can empower this Court to exclude from production documents which do not answer the sole purpose test laid down by the High Court in Grant v Downs but which meet the test of dominant purpose.  In Sparnon her Honour expanded her reasons.  Her Honour said (at 325-6):-

“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 (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 commonplace for the Court to direct that discovery in a particular proceeding is to be limited to certain categories of document. 

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 O 15, r 15 of the Federal Court Rules 1979 (Cth).”

Her Honour set out the rule and then proceeded (at 326):-

“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.”

With very great respect to her Honour, I have difficulty in accepting her views as expressed in these passages.  Goldberg J considered them in Meltend Pty Limited and Anor v Restoration Clinics of Australia Pty Limited and Ors (1997) 145 ALR 391 at 404-405:- 

“Mr Waller also submitted that O 15, r 15 of the Federal Court Rules provided that the court should not make an order for the production of a document for inspection unless the court was satisfied that the order was necessary at the time the order was made.  He submitted that as the letter had not been knowingly and voluntarily disclosed within the terms of s 122 of the Evidence Act 1995 (Cth) there was no point in ordering production or inspection of the document as it could not be adduced at trial on the ground of client legal privilege.  He relied on the observations of Branson J in Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (1995) 60 FCR 366; 132 ALR 645 and Sackville J in BT Australasia Pty Ltd v New South Wales (1996) 140 ALR 268.  In Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) (1995) 58 FCR 426 at 436-7; 131 ALR 581 Lindgren J concluded that ‘necessary’ in this context implied necessary in the ‘interests of a fair trial’ and for the ‘fair disposition of a case’.  It is well established that the scope of discovery is not limited to documents which would be admissible in evidence: Mulley v Manifold (1959) 103 CLR 341 at 345.  In Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (supra) Branson J thought that the fact that evidence could not be adduced over objection at trial if it would result in disclosure of the contents of a confidential information would ordinarily ‘be telling as to whether the production of that document can be said to be necessary for the fair disposal of the proceedings’ (at FCR 649).  Her Honour thought it would be a curious result if a party could be required to produce for inspection a document which was subject to legal professional privilege notwithstanding that at trial the producing party could object to it being adduced in evidence.  However, I can conceive of situations where a document might not be able to be adduced in evidence at trial but which nevertheless puts a party on a train of enquiry which will assist it in the manner in which it presents its case or cross-examines the other party's witnesses.  As Lindgren J pointed out in Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) (1995) 58 FCR 426 at 437; 131 ALR 581 at 591:

            ‘The notion of “the interests of a fair trial” and of the “fair disposition of a case” encompasses, in my view, an opening up of a train of enquiry of the kind referred to above which is part of the proper function of discovery.’

Having regard to the issues raised on the pleadings which make relevant what was said to the appellants and given to them by the respondents in relation to turnover and profitability I consider that in the interests of a fair trial and the fair disposition of the case it is necessary that inspection be given of the letter.”

Whilst it is true that this Court has wide powers, in pursuance of its philosophy and practice of case management, to control discovery processes in the interests of efficiency and fairness in the disposition of cases, it must be remembered that the moulding of procedures takes place within the framework of the general law binding upon the Court.  By taking procedural steps in the interests of progressing the litigation before it, the Court, in my opinion, must be wary of trespassing into the area of litigants' established legal rights.  If the position is that a party can call for discovery and production of documents which are available to it under the law because they are not withheld from it as being privileged through having been brought into existence for the sole purpose of seeking legal advice, there must be a very real question whether the Court, by taking a merely procedural step, can withhold from that party those documents on the basis that they fall within a wider but legally unavailable category of privilege, namely that of documents brought into existence for the dominant purpose of seeking such advice.

This Court, by s 5(2) of the Federal Court of Australia Act 1976 (Cth), is a superior Court of record and is a Court of law and equity.  As such it takes its place in the hierarchy of courts in Australia and is bound by the decisions of the High Court.  So far as this case is concerned, it is bound by the decision of the High Court in Grant v Downs.  I see the question before me as being this: can the Court take power under one of its procedural rules to produce a result which runs contrary to that decision?  Grant v Downs establishes that in pre-trial discovery procedures a party can rely upon legal professional privilege only if the documents the production of which is sought are sole purpose documents.  I am satisfied that the Court by taking a procedural step under a rule of Court cannot widen the privilege.  To do so would be to accord a privilege expressly denied by the High Court.  Clearly this Court in a substantive judgment in a case before it would have no power to overrule Grant v Downs.  I am satisfied that a fortiori it has no power to do so by taking a step under its rules as part of its case management procedures.  This would be to overrule that decision, as it were, by a side wind.  With very great respect to those who have cogently and lucidly expressed a different view, I have clearly come to the opinion that this Court has no power under O 15 r 15 to exclude from production the documents in this case described as the dominant purpose documents.  Accordingly, I hold that as a matter of law the dominant purpose documents, if not otherwise excluded from production, must be produced to the respondent.

The applicant must pay the respondent’s costs.  I grant leave to appeal against this judgment.

Associate:

Dated:              21 November 1997