FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE – appeal from decision granting preliminary discovery – whether documents ordered to be produced subject to client legal privilege – whether privilege waived by disclosure to third party – consideration of s 122 of Evidence Act 1995 – consideration of O 34A r 5 of Supreme Court Rules.

Evidence Act 1995 (Cth), ss 117, 118, 119, 120, 122

Supreme Court Rules, O 34A rr 2, 5

Grant v Downs (1976) 135 CLR 674 applied

National Employers’ Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648 applied

Baker v Campbell (1983) 153 CLR 52 applied

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 applied

Brambles Holdings Ltd v TPC (No 3) (1981) 58 FLR 452 referred to

Waterford v The Commonwealth (1987) 163 CLR 54 referred to

Waugh v British Railway Board [1980] AC 521 referred to

Guardian Royal Exchange Assurance v Stuart [1985] 1 NZLR 596 referred to

Carlton Cranes Ltd v Consolidated Hotels Ltd [1988] 2 NZLR 555 referred to

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

Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12 referred to

Adelaide Steamship Co Ltd & Anor v Spalvins & Ors(1998) 152 ALR 418 applied

BT Australasia Pty Ltd v State of New South Wales & Anor (No 8) (1998) 154 ALR 202 referred to

Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 156 ALR 634 applied

Telstra Corporation v Australis Media Holdings [No 1] (1997) 41 NSWLR 277 applied

Esso Australia Resources Ltd v Federal Commissioner of Taxation (1997) 150 ALR 117 referred to

Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538 referred to

Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 referred to

Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 109 ALR 177 referred to

Goldberg v Ng (1995) 185 CLR 83 referred to

Akins v Abigroup Ltd (1998) 43 NSWLR 539 applied

Telstra Corporation v Australis Media Holdings [No 2] (1997) 41 NSWLR 346 applied

Walton v Gardiner (1993) 177 CLR 378 referred to

ANNE KATHERINE CARNELL v ARNOLD MANN

AG 45 OF 1998

HIGGINS, LEHANE & WEINBERG JJ

CANBERRA

4 DECEMBER 1998

On Appeal from a Judge of the Supreme Court of the Australian Capital Territory

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  The order made by the primary judge on 4 June 1998 requiring the appellant to produce to the respondent the following documents relating to proceedings numbered SC 641 and 717 of 1990 and 458 of 1991 brought by Dr Mann as plaintiff.

(i)                  Report from Australian Capital Territory Government Solicitor to Executive Director, Financial Management and Contracting, ACT Department of Health and Community Care, with chronology attached, dated 7 December 1997.

(ii)                Counsel’s opinion dated 20 February 1991.

(iii)               Counsel’s memorandum of advice dated 16 February 1997.

(iv)              Counsel’s joint memorandum of advice dated respectively 9 and 11 September 1997;

be set aside.

3.         The respondent pay the appellant’s costs of this appeal.

On Appeal from a Judge of the Supreme Court of the Australian Capital Territory

REASONS FOR JUDGMENT

THE COURT

This is an appeal from a judgment of a judge of the Supreme Court of the Australian Capital Territory given on 4 June 1998.  The appeal is brought pursuant to leave granted by Finn J on 13 August 1998. The primary judge held that Mrs Carnell, who is the Chief Minister of the Australian Capital Territory, and who was the respondent below, was not entitled to resist an application brought by Dr Mann that she produce certain documents for his inspection. 

The application before his Honour was made pursuant to O 34A r 5 of the Supreme Court Rules.  Order 34A is headed “Preliminary Discovery”.  Rule 5 is in the following terms:

“5.       If –

(a)               it is reasonable to believe that the applicant has, or may have, the right to obtain relief from a person whose description has been ascertained;

(b)               having made reasonable inquiries, the applicant has not gained sufficient information to enable a decision to be made whether to institute a proceeding to obtain the relief;

(c)                it is reasonable to believe that the person –

(i)         has, or is likely to have; or

(ii)               has had, or is likely to have had;

possession of a document relating to the question whether the applicant has the right to obtain the relief; and

(d)               inspection of the document by the applicant would assist in making the decision;

the Court may order the person to produce the document to the applicant.”

It should be noted that O 34A r 2 provides:

“2        An order made under this order does not operate to require the person against whom the order is made to produce any document that, on the ground of privilege, the person could not be required to produce –

(a)               in the case of an order under rule 3 or 5 – if the applicant had commenced a proceeding against the person; or

(b)               in the case of an order under subrule 6(1) or (2) – if the applicant had made the person a party to the proceeding.”

Rules of this type are common throughout Australia, though the language in which they are expressed varies considerably.

The application brought by Dr Mann was drafted in terms which suggested that he might be seeking a voluminous number of documents.  There appears to be no dispute, however, that the only documents in contention are as follows:

(i)                  Report from Australian Capital Territory Government Solicitor to Executive Director – Financial Management and Contracting, ACT Department of Health and Community Care, with chronology attached, dated 7 December 1997.

(ii)                Counsel’s opinion dated 20 February 1991.

(iii)               Counsel’s memorandum of advice dated 16 February 1997.

(iv)              Counsel’s joint memorandum of advice dated respectively 9 and 11 September 1997.

The documents in question were produced to the primary judge, and were inspected by him.  Notwithstanding the adoption of that course by his Honour, we regard it as being unnecessary to inspect those documents in order to resolve the issues raised in the appeal.

Background

The following summary of the matters leading to the application brought by Dr Mann is taken largely from the judgment of the learned primary judge.  Dr Mann was for many years a surgeon practising in the Australian Capital Territory.  He was the plaintiff in proceedings commenced in 1990 and 1991 against the Australian Capital Territory Board of Health (as it was then known), certain public officials, and various medical practitioners. Interlocutory applications in those proceedings occupied a good deal of time in the Supreme Court of the Australian Capital Territory, and in the Federal Court. 

The causes of action included breach of contract and defamation.  On 3 September 1997, the second day of the final hearing, the litigation was brought to an end when Dr Mann accepted the sum of $400,000 paid into court on behalf of all defendants.  That payment into court was made without any admission of liability, or any apology.  Dr Mann wrote on the following day, 4 September 1997, to the ACT Government Solicitor in the following terms:

“May I suggest that you warn your clients that if they repeat the allegations they have made in the past, or make fresh unsubstantiated allegations in the future, this whole matter will return to the Courts.”

Mr Michael Moore, a member of the Legislative Assembly, and an Independent, subsequently became aware of the “settlement” of the litigation.  On 31 October 1997 he wrote to Mrs Carnell in the following terms:

“I understand settlement has occurred in the order of $400,000 in the above-mentioned case.

It seems to me that this issue has been a monumental waste of public funds.  What measures have you put in place to ensure that this sort of situation does not occur again?  How can I be assured in such a way that I can feel confident that we will not require an official Inquiry into this matter to ascertain how to avoid this situation arising in the future.”

Mrs Carnell replied to Mr Moore on 15 December 1997.  Her letter, omitting formal parts, was as follows:

“I enclose for your information, a letter from the ACT Government Solicitor to the Department of Health and Community Care setting down the particulars of the litigation over the past six years.  I also attach copies of briefs received from senior counsel engaged to represent the Territory in the matter.

The settlement of $400,000 was arranged to protect the Territory’s interest by avoiding the costs of a four week hearing and took into account Dr Mann’s ability to pay costs had the Territory been successful in defending the matter.”

The enclosed letter and attached copies of the “briefs” (sic) to which Mrs Carnell referred in that letter were the subject of Dr Mann’s application pursuant to O 34A r 5.

Mr Moore sent a copy of Mrs Carnell’s letter of 15 December 1997 to Dr Mann.  He did not, however, provide Dr Mann with a copy of the enclosed letter, or with copies of the various advices provided by senior counsel during the course of the earlier litigation.  In fact, before writing to Dr Mann, Mr Moore took the precaution of telephoning Mrs Carnell’s office and enquiring as to the status of those documents.  Mr Moore was specifically requested by a member of Mrs Carnell’s staff to refrain from providing them to Dr Mann.  Mrs Carnell herself confirmed with Mr Moore, a day or two later, that she had provided the documents to him in confidence, and that they should not be provided to Dr Mann.

It appears that Dr Mann considered that the documents which had accompanied Mrs Carnell’s letter of 15 December 1997 may have contained statements defamatory of him, and he decided that he would take the matter further.  He wrote to Mr Moore on 23 January 1998 asking him to forward the documents to him or, alternatively, to assure him that there was nothing defamatory in them. 

On 30 January 1998 Mr Moore returned the documents to Mrs Carnell.  In his letter to her of that date he stated:

“Our understanding has always been that in the interests of openness you would make documents available to me so that I could understand the full ramifications of any particular situation.  After telephone conversations with your office, it is my understanding that you do not wish this material to be used in any broader sense. 

You know I disagree with this approach, in principle, however I respect the agreement that has been reached between you and me.

I am therefore returning these documents to you and I assure you that I have made no copies.”

On the same day, Mr Moore wrote to Dr Mann enclosing a copy of his letter to the Chief Minister, and advising Dr Mann that he was unable to provide him with copies of the information that Dr Mann had requested.  Mr Moore did not respond to Dr Mann’s request that he at least provide an assurance that there was nothing defamatory in those documents.

In an affidavit affirmed in support of his application to inspect the documents, Dr Mann set out his reasons for believing that they contained defamatory material.  He considered it likely that, at the very least, those documents repeated the defamatory statements which had been the subject of the earlier proceedings.  He also stated that it was his belief that the documents contained new allegations against him, including the suggestion that the earlier proceedings instituted by him had been nothing more than an attempt on his part to extort money from the Australian Capital Territory.  That attempt had succeeded in gaining for him the sum of $400,000 to which he had not been entitled. 

Although Dr Mann’s application to inspect the documents was made, not against the Australian Capital Territory, but against Mrs Carnell, the primary judge was prepared to treat her claim that the documents were privileged as one which she could invoke.  His Honour assumed, without deciding, that Mrs Carnell was entitled to rely upon whatever claim of privilege might have been available to the Territory had Dr Mann’s application been brought against it, rather than against its Chief Minister.

It was common ground before the primary judge, and also before us, that the documents sought by Dr Mann were accurately described by Mr Erskine, counsel for Mrs Carnell, in the following terms:

“(i)      Three are counsel’s opinions provided to the Territory.  All contain legal advice to the Territory, either as to conduct of litigation then under way between the Applicant and the Territory or as to other legal matters involving the Applicant.

(ii)       The fourth is a report by the ACT Government Solicitor to its client, the Department of Health, on the outcome of the litigation between the Applicant and the Territory.  The report canvasses the progress of the litigation with particular reference to the advice given by Counsel.  It refers extensively to privileged information.”

Before the primary judge Mrs Carnell relied upon an affidavit sworn by Ms Lisa Jayne Manzoney, a solicitor employed by the ACT Government Solicitor.  Ms Manzoney deposed that she had read each of the documents sought by Dr Mann.  Those documents included the opinion and legal advices provided to the Australian Capital Territory by senior counsel retained on its behalf in the course of the earlier proceedings brought by Dr Mann.  The report provided by the Australian Capital Territory Government Solicitor to the Department of Health and Community Care on 7 December 1997 contained an outline of the history of that litigation.  It included a consideration by the Australian Capital Territory Government Solicitor of the various possible outcomes of the proceedings.  Annexed to that report were the opinion and advices of senior counsel.

Were the documents the subject of client legal privilege?

There was no dispute as to the nature of the documents sought by Dr Mann.  The principal issue which his Honour had to determine was whether Mrs Carnell could claim privilege in relation to those documents.  A valid claim to privilege would operate to excuse Mrs Carnell from being required to produce the documents: O 34A r 2. 

His Honour dealt initially with the question whether the documents were “on their face the subject of client legal privilege for the purposes of the present application”.  He observed:

 “Privilege from production arises from the occasion of publication, not from the nature of documents.  I have no doubt that the publication of the documents in question by their passing from lawyer to client was a privileged occasion and that Dr Mann could not require production of any of the documents if he sued the ACT Government Solicitor who wrote the letter or if he sued the counsel who furnished the advice and opinions.  But that is not what is in contemplation for the purpose of O.34A r.5.  What Dr Mann wants to do, within the terms of the rule, is to make a decision whether or not to institute proceedings against the respondent for the publication by her to Mr Moore of documents which, when originally published by lawyer to client, were published on a privileged occasion.  The occasion of the publication by the respondent to Mr Moore is a different matter altogether and, in my view, not protected by client legal privilege.”

Though his Honour ultimately concluded that it was not necessary to determine whether the documents were protected by client legal privilege, that matter not having been addressed before him, he clearly considered that they were not so protected because they had not been published on what he described as a “privileged occasion”.  If his Honour’s view be correct, the present appeal would fail even if the attack made upon his treatment of the issue of waiver were to succeed.  It is necessary, therefore, to deal at the outset with the question whether the documents were the subject of client legal privilege.

At common law, the doctrine of legal professional privilege protects from disclosure any oral or written statement, or other material, which has been created solely for the purpose of providing legal advice, or for the purpose of use in existing or anticipated litigation:  Grant v Downs (1976) 135 CLR 674 at 682 and 688-9 per Stephen, Mason and Murphy JJ; National Employers’ Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648 at 654 per Mason J; Baker v Campbell (1983) 153 CLR 52 at 60 per Gibbs CJ, at 112 per Deane J and at 122 per Dawson J; and Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 509 per Brennan CJ, at 515 per Dawson J, and at 550 per McHugh J.  The privilege does not attach to documents which constitute or evidence transactions (for example contracts, or conveyances) even if such documents are delivered to a solicitor or counsel for advice or for use in litigation: Baker v Campbell (supra) at 86 per Murphy J. 

At common law the question which must be asked, in order to determine whether a document is subject to legal professional privilege is, what was the purpose for which the document was created?  If the sole purpose for its creation was to enable legal advice to be given, or for it to be used in existing or anticipated litigation, the document is, prima facie at least, subject to legal professional privilege.  It must be remembered, however, that legal professional privilege is concerned with communications, either oral, or written or recorded, and not with documents per se:  Propend (supra) at 552 per McHugh J and at 585 per Kirby J.

Where a document satisfies the test for legal professional privilege at common law, any copy or copies of that document may also fall within the ambit of the protection afforded by that doctrine.  Indeed, it has been suggested that a copy of a privileged document which is brought into existence for a non-privileged purpose is itself privileged:  Brambles Holdings Ltd v TPC (No 3) (1981) 58 FLR 452 at 458 per Franki J; Cross on Evidence, 5^th Aust ed (1996) at 710.  A copy of a document containing purely legal advice may be regarded, prima facie at least, as privileged, absent evidence to suggest that the copy was brought into existence for a purpose wholly unconnected with the purpose behind the creation of the original.  Indeed, it has now been determined that, at common law, legal professional privilege may attach to copies of non-privileged documents when those copies were brought into existence solely for use in obtaining legal advice, or for use in apprehended litigation: Propend (supra). 

The Evidence Act 1995 (Cth) (“the Evidence Act”) deals with legal professional privilege by renaming it client legal privilege, and then replacing the “sole purpose” test with a “dominant purpose” test – see s 118, s 119 and s 120.  The privilege is available to the “client”, as defined in s 117(1), and prevents evidence from being adduced if, on objection by the client, the Court finds that adducing the evidence would result in disclosure of, inter alia, a confidential communication made between the client and the lawyer, or the contents of a confidential document prepared by the client or the lawyer.  The privilege is also available to an unrepresented “party”, also defined in s 117(1).  The terms “confidential communication” and “confidential document” are defined in s 117(1).

It has been noted in the Commentary to the Evidence Act prepared by the Attorney-General’s Department at para [118.5] that the references in s 118 and s 119 to the “purpose” of a document or communication could, theoretically, have two distinct meanings.  The “purpose” in question could be that which led to the making of the communication or creation of the document.  That approach would accord with the meaning given to the term “purpose” at common law when considering whether or not the communication or document meets the “sole purpose” test – see Waterford v The Commonwealth (1987) 163 CLR 54 at 66 per Mason and Wilson JJ, and 73-74 per Brennan J.  Alternatively, the “purpose” could refer to the purpose or object sought to be achieved in, or by means of, a communication or document.  The purpose which leads to the creation of a document or the making of a communication is not necessarily the same as the purpose sought to be achieved by it.

It is plain, however, that the “purpose” to which s 118 and s 119 refer is the purpose that led to the creation of the document or the making of the communication.  That accords with the approach adopted by the original proponent of the “dominant purpose test”, now adopted in the legislation – see the dissenting judgment of Barwick CJ in Grant v Downs (supra) at 677, and the English authorities to which his Honour referred.  See also Waugh v British Railway Board [1980] AC 521 and, for the position in New Zealand, Guardian Royal Exchange Assurance v Stuart [1985] 1 NZLR 596.

As the primary judge correctly held, the documents sought by Dr Mann were brought into existence in their original form in circumstances which would satisfy the test for legal professional privilege at common law.  That being so, the less onerous test for client legal privilege under the Evidence Act would necessarily also be satisfied. 

The fact that copies of such documents were made available to Mr Moore by Mrs Carnell does not, of itself, lead to the conclusion that the copies so supplied were not themselves the subject of legal professional privilege, at common law.  That is assuming of course, as his Honour did, that the doctrine of legal professional privilege at common law governed this question.  Those copies may have been brought into existence for the sole purpose of facilitating the giving or receiving of legal advice, or for use in contemplated litigation.  The evidence does not permit any firm conclusion to be drawn as to that matter.

In principle, whether copies of original documents are privileged at common law should be determined by asking what was the purpose underlying the creation of those original documents, and not what was the purpose underlying the creation of the copies – see Carlton Cranes Ltd v Consolidated Hotels Ltd [1988] 2 NZLR 555 at 557 per Tompkins J.  It has been suggested that there may be some difficulties in reconciling this approach with the reasoning of the majority of the High Court in Propend (supra) where it was held that a copy of a non-privileged document may itself be the subject of legal professional privilege.  That reasoning suggests that, at common law, a copy of a privileged document is not privileged unless the copy itself was created for a privileged purpose. 

The better view, we think, is that, at common law, the mere act of copying a privileged document does not lead to loss of privilege in the copy simply because it was not created for a privileged purpose.  In an era where so many documents are routinely copied, it would be peculiar to think that the existence of legal professional privilege in any given copy might depend upon the purpose underlying the making of that specific copy. 

To the extent that the primary judge reasoned that privilege did not attach to the documents provided by Mrs Carnell to Mr Moore because they were copied in order to be made available to him, and their publication was not “a privileged occasion”, we would not accept his Honour’s reasoning as correct.

There is a more fundamental reason for rejecting his Honour’s conclusion that the documents sought by Dr Mann were not the subject of client legal privilege.  For reasons which will become apparent when we deal with his Honour’s approach to the issue of waiver, we are of the opinion that he should have approached the question whether or not privilege attached to the communications contained in these documents not, as he appears to have done, in accordance with the common law, but in accordance with the principles laid down in s 118 and s 119 of the Evidence Act. 

Both these provisions prohibit evidence from being adduced by reference to the result that would follow from its being adduced, including, inter alia, that the evidence would result in disclosure of “a confidential communication made … for the dominant purpose …” or “the contents of a confidential document … prepared … for the dominant purpose …”.

Tendering a copy would have that effect just as would tendering the original.  Thus, pursuant to s 118 and s 119, originals and copies seem to us to be equally protected unless the privilege is lost for one of the reasons set out in the succeeding sections of the Act.

It follows that whether at common law, or pursuant to the provisions of the Evidence Act, the copies of the documents containing privileged communications made available by Mrs Carnell to Mr Moore were the subject of privilege, unless that privilege was lost.

Waiver

The real basis upon which his Honour determined that Mrs Carnell was not entitled to the protection afforded by O 34A r 2 was that, even assuming that the documents sought by Dr Mann were protected by client legal privilege, that privilege had been waived by the publication of those documents by Mrs Carnell to Mr Moore. 

His Honour dealt with the doctrine of waiver by referring initially to Attorney-General (NT) v Maurice (1986) 161 CLR 475.  He observed that in that case the question had been whether disclosure of some documents which were subject to legal professional privilege implied waiver of the privilege in relation to other associated documents.  In such a situation waiver is to be implied when, by some conduct on the part of the privilege holder, it becomes unfair to maintain the privilege.  His Honour referred in particular to the joint judgment of Mason and Brennan JJ at 487-8.

“The limiting effect of legal professional privilege on the availability of evidence otherwise relevant is confined, inter alia, by the doctrine of waiver.  A litigant can of course waive his privilege directly through intentionally disclosing protected material.  He can also lose that protection through a waiver by implication.  An implied waiver occurs when, by reason of some conduct on the privilege holder’s part, it becomes unfair to maintain the privilege.  The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication.  Professor Wigmore explains:

“[W]hen his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not.  He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder.”  (Wigmore, Evidence in Trials at Common Law (1961), vol. 8, par. 2327, p. 636)

In order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of the protected communication should result in waiver as to the rest of the communication on that subject-matter:  see Great Atlantic Insurance Co. v. Home Insurance Co. [1981] 1 W.L.R. 529; [1981] 2 All E.R. 485.

Hence, the implied waiver inquiry is at bottom focused on the fairness of imputing such a waiver.”

The primary judge proceeded, with reference to Maurice (supra):

“There is nothing in the judgment, however, to support the proposition that disclosure of a privileged document to a communicant does not waive privilege as far as that communicant is concerned.  Notions of fairness and justice are irrelevant, unless it is to be suggested that the waiver goes beyond the particular disclosure.  Nothing of that sort is suggested in the present application.”

A little further on, his Honour continued:

“The confidentiality is between client and lawyer.  That confidentiality is lost if the document is passed on to a third party who has no place in the client-lawyer relationship or the matters in respect of which legal advice or assistance is sought.  It is lost whether the document is passed on by the client or by the lawyer, and whatever be the understanding between the third party and the client or lawyer who passes it on about how the document is to be treated. It is the occasion of publication between lawyer and client which confers the privilege, but the privilege does not extend to republication unless republication occurs on a privileged occasion.”

The difficulty with his Honour’s analysis is that it fails to take into account the effect of the Evidence Act upon the doctrine of waiver.  Though his Honour used the expression “client legal privilege” on several occasions in his reasons for judgment (this being the terminology used in the Act), he did not refer specifically to any of the provisions which deal with that form of privilege or, more importantly, with the loss of that form of privilege. 

The starting point when considering the treatment of “waiver’ under the Evidence Act is the definition of “confidential communication” in s 117(1) of the Act.  That subsection provides in part :

“…a communication made in such circumstances that, when it was made:

(a)               the person who made it; or

(b)               the person to whom it was made;

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law:

…”

The expression “confidential document” is defined in analogous terms. 

Sections 118 and 119 of the Evidence Act create new statutory privileges in relation to the provision of legal advice and the provision of professional legal services.  Section 120 provides a privilege for parties who are unrepresented in litigation.

The most notable feature of the modification to the common law which is brought about by these sections is, as has been noted, the substitution of the “dominant purpose” test for the “sole purpose” test. 

Another important change brought about by the introduction of the Evidence Act is that the common law principles surrounding the doctrine of waiver in its application to legal professional privilege are not replicated.  Section 122 of the Act provides as follows:

 “Loss of client privilege:  consent and related matters

122.(1)   This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.

(2)   Subject to subsection (5), this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made;

(a)               in the course of making a confidential communication or preparing a confidential document; or

(b)               as a result of duress or deception; or

(c)                under compulsion of law; or

(d)               if the client or party is a body established by, or a person holding office under, an Australian law – to the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.

(3)       Subsection (2) does not apply to a disclosure by a person who was, at the time, an employee or agent of a client or party or of a lawyer unless the employee or agent was authorised to make the disclosure.

(4)       Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than:

(a)               a lawyer acting for the client or party; or

(b)               if the client or party is a body established by, or a person holding an office under, an Australian law – the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.

(5)               Subsections (2) and (4) do not apply to:

(a)               a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or

(b)               a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

(6)       This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness’s memory about a fact or opinion or has used as mentioned in section 32 (attempts to revive memory in court) or 33 (evidence given by police officers).”

Subsection 122(1) provides, in terms, that the privileges conferred by s 118, s 119 and s 120 do not prevent the adducing of evidence given with the consent of the client or party concerned.  The logic of this subsection is perhaps open to question since the privileges conferred by those provisions do not arise unless there is an “objection” by a client in the case of s 118 and s 119, or, in the case of s 120, by a party.  In any case in which evidence is given with the “consent” of the client or party there would presumably be no “objection” by that person to its being given, and therefore no need for s 122(1).

In contrast to the broad principles of “fairness” laid down in relation to waiver of legal professional privilege in Maurice (supra), s 122(2) provides that the privileges in s 118 and s 119 are not available if the client or, in the case of s 120, the party, has “knowingly and voluntarily” disclosed the substance of the evidence to another person, subject to certain exceptions contained in s 122(2)(a), (b), (c) and (d), and s 122(5).  Subsection 122(4) provides that the privileges in s 118, s 119 and s 120 are not available if the substance of the evidence has been disclosed with the express or implied consent of the client or, in the case of s 120, the party, to another person, again subject to certain, more limited exceptions contained in s 122(5).

The application of s 122 may well, in any given case, produce an entirely different outcome to that which would follow under the common law doctrine of waiver: Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12 at 18-24 per Rolfe J; Adelaide Steamship Co Ltd & Anor v Spalvins & Ors (1998) 152 ALR 418 at 425-6; BT Australasia Pty Ltd v State of New South Wales & Anor (No 8) (1998) 154 ALR 202 at 207-210 per Sackville J; and Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 156 ALR 634 at 644-9 per Branson and Lehane JJ.  There is a useful discussion of this point in K Smark, “Privilege under the Evidence Acts” (1995) 18 UNSWLJ  95 at 97-101.

When Dr Mann’s application to have Mrs Carnell produce the documents for inspection was dealt with by the primary judge on 2 April 1998, the decision of the Full Court of the Federal Court in Spalvins (supra) had not yet been reported.  Judgment in that case had been delivered on 2 March 1998.  It would appear that the judgment had not come to the attention of counsel.

Prior to the judgment in Spalvins being delivered there had been uncertainty as to whether the provisions of the Evidence Act dealing with privilege were applicable to interlocutory proceedings.  Sections 118, 119 and 120 of the Act provide, in terms, that evidence is “not to be adduced”.  These provisions do not purport to deal with discovery, or with the return of subpoenas, or with any other ancillary processes.  The Full Court in Spalvins resolved that uncertainty when it held that in such interlocutory proceedings it was the common law and not the Evidence Act that determined whether or not documents which were claimed to be privileged were required to be produced for inspection.  The Full Court went on to hold, however, that the common law principles applicable to claims to privilege in jurisdictions in which the Evidence Act applied must be treated as having been modified so as to accord with the requirements of the Act.  The provisions of the Act were said to apply “derivatively” to ancillary processes, modifying the common law in those jurisdictions in which the Act applied so as to accord with it. 

In so holding, the Full Court followed the approach which had commended itself to McLelland CJ in Eq in Telstra Corporation v Australis Media Holdings [No 1] (1997) 41 NSWLR 277, and declined to follow the contrary views expressed by, among others, Foster J in Esso Australia Resources Ltd v Federal Commissioner of Taxation (1997) 150 ALR 117.  Subsequently, the New South Wales Court of Appeal in Akins v Abigroup Ltd (1998) 43 NSWLR 539 followed the decision of the Full Court of the Federal Court in Spalvins.  That decision by the Court of Appeal was handed down on 1 June 1998, just three days before the primary judge delivered his judgment in the present matter.  On 24 July 1998 a Full Court of the Federal Court, by majority rejected a submission that the decision in Spalvins should not be followed: Telstra Corporation Ltd v BT Australasia Pty Ltd (supra) at 644 per Branson and Lehane JJ.  Beaumont J dissented without considering whether Spalvins  should be followed – see 642.

Had the decision of the Full Court in Spalvins been drawn to his Honour’s attention during the course of the proceedings before him, his Honour undoubtedly would have dealt with the question of “waiver” in accordance with the requirements of s 122 of the Evidence Act.  Regrettably, his Honour appears to have proceeded upon the assumption that waiver was governed by the common law, without any regard being given to the operation of the Act upon that doctrine.  That was an error which necessitates setting aside the decision below.  It also results in the rejection of Dr Mann’s application.

The operation of s 122(2)(a) of the Act

It seems clear that the documents sought by Dr Mann were provided by Mrs Carnell to Mr Moore in circumstances where she, as the “client”, “knowingly and voluntarily disclosed to another person the substance of the evidence” within the meaning of s 122(2) of the Act.  Such disclosure to a third party may, on occasion, lead to the loss of legal professional privilege at common law:  Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538; Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027; Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 109 ALR 177 and Goldberg v Ng (1995) 185 CLR 83.  It is not sufficient, however, to result in the loss of client legal privilege pursuant to s 122(2).  That is because the privilege is not lost if “the disclosure was ‘made … in the course of making a confidential communication or preparing a confidential document’”:  see s 122(2)(a). 

There was obviously a relationship of a confidential nature between Mrs Carnell and Mr Moore.  That relationship rendered Mrs Carnell’s actions in providing Mr Moore with the documents in question the making of a “confidential communication” within the meaning of s 122(2)(a) of the Act.  It must be recalled that s 117(1) of the Evidence Act defines “confidential communication” as a communication made in such circumstances that, when it was made, the person who made it, or the person to whom it was made, “was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law”. 

Mr Moore’s evidence was that he regarded himself as being under an obligation not to disclose the contents of the documents in question once he had ascertained that Mrs Carnell had provided them to him upon a confidential basis.  There was also a body of other evidence to suggest that the particular relationship between Mrs Carnell and Mr Moore was by no means unusual in this regard.  It was asserted, for example, that Mrs Carnell’s predecessors as Chief Minister had made various documents available to Mr Moore, and to other members of the Legislative Assembly upon a confidential basis.  Indeed, the evidence went so far as to make it clear that the practice of a minister briefing, or providing background documentation to, backbench members of Parliament, upon a confidential basis, was one which is common throughout Australia.

Dr Mann submitted that the term “obligation” in s 117(1) should be read narrowly.  He contended that it should be confined to the type of obligation which arises in the course of a solicitor/client relationship, and did not therefore apply to the relationship between Mrs Carnell and Mr Moore.  That submission cannot be accepted.  The expression “whether or not the obligation arises under law” in s 117(1) would be otiose if the term “obligation” were to be read as narrowly as this.  The obligation of confidentiality owed by a solicitor to his client undoubtedly “arises under law”, though it may also be based in part upon ethics or morality.  Parliament must have had in mind relationships broader than those of solicitor/client when it enacted the definitions of “confidential communication”, and “confidential document” in s 117(1).

It is clear that s 122(2)(a) of the Act provides that client legal privilege is not lost by reason of the voluntary disclosure to another of a privileged communication if that disclosure was made in the course of a “confidential communication”, as defined in s 117(1).  The provision by Mrs Carnell to Mr Moore of the documents sought by Dr Mann was a “confidential communication” in this sense.  It follows that the client legal privilege which attached to the contents of those documents when they were brought into existence was not lost merely because they were made available to Mr Moore.

The operation of s 122(4) of the Act

It is necessary to deal with a submission advanced by Dr Mann to the effect that, notwithstanding s 122(2) of the Act, the effect of s 122(4) resulted in the present case in the loss of client legal privilege.  Subsection 122(4) provides, inter alia, that once the substance of the evidence otherwise subject to client legal privilege has been disclosed by the client or party to another person, other than a lawyer acting for the client or party, client legal privilege is lost.  It is qualified, however, by the exceptions contained in s 122(5).  None of those exceptions are applicable in the present circumstances.

The interrelationship between s 122(2) and s 122(4) raises some difficulties.  Paragraph 122(2)(a) provides that client legal privilege is not lost merely because a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence which is otherwise privileged, provided that disclosure was not made in the course of making a confidential communication or preparing a confidential document.  Subsection 122(4), however, provides that evidence which would otherwise be the subject of a valid claim for client legal privilege is no longer to be so regarded if the substance of that evidence has been disclosed with the express or implied consent of the client or party to another person, other than a lawyer acting for the client or party. 

These two provisions cannot stand together unless s 122(4)(a) is construed as being applicable only in circumstances where s 122(2)(a) does not itself operate. 

In Telstra Corporation v Australis Media Holdings [No 2] (1997) 41 NSWLR 346McLelland CJ in Eq resolved the apparent conflict between s 122(2) and s 122(4) of the Act.  His Honour held that these provisions are not mutually inconsistent for they can be given discrete fields of operation.  A disclosure by the client or party, or by an employee or agent of the client or party (or by any other person within the definition of “client” or “party” contained in s 117(1) of the Act) is governed by s 122(2) and not s 122(4).  A disclosure by any other person or entity is governed by s 122(4) and not by s 122(2).  His Honour observed at 350:

“In order to determine whether there has been a disclosure of the kind to which subs (2) or subs (4) of s 122 apply, it is necessary to construe those subsections.  This is by no means a simple matter, because subs (2) and subs (4), taken literally, seem to be mutually inconsistent in the sense that both seem to cover virtually the same field, but in different and contradictory ways.  The expressed field of operation or subs (2) is “if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence”, and that of subs (4) is “if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person”.  Yet subs (2) excludes four categories of disclosure from its operation and subs (4) excludes two categories.  The last category is substantially identical in each case and does not give rise to any conflict, notwithstanding the apparent duplication.  But the first three categories of exclusion in subs (2) have no counterpart in subs (4) except to the extent that disclosure to a lawyer referred to in par (a) of subs (4) may overlap with the making of a confidential communication referred to in par (a) of subs (2).

If the two subsections had appeared in different Acts, it would be difficult to resist the conclusion that the latter impliedly repealed the former.  But their appearance together not only in the same Act, but in the same section, precludes this approach.

Little assistance is to be gained from an examination of the ALRC Reports which preceded the enactment of the legislation … Not only do these reports provide no explanation of why there are two subsections covering the same field instead of one, but there are significant differences between the draft bills appended to those reports and the legislation as enacted, apparently reflecting policy changes in this area subsequent to the reports.  …

In my opinion it would be wrong to construe each of subs (2) and subs (4) as if the other did not exist, and equally wrong to suppose a legislative intention that in circumstances falling within the fields of operation of both, as I have described them, the qualifications considered to be appropriate as expressed in par (a), (b) and (c) of subs (2) were to be rendered nugatory by virtue of subs (4) except to the limited extent provided for in par (a).  It is of course possible to take the view that the legislature has by accident produced such a capricious result without intending it.  But I consider that a reconciliation between the two subsections can be provided in a manner more in accord with accepted principles of statutory interpretation …”

McLelland CJ in Eq then proceeded to outline the different fields of operation of s 122(4) and s 122(2), as discussed above.

In our opinion, his Honour’s reconciliation of s 122(2) and s 122(4) is both cogent and persuasive.  His Honour’s analysis of the operation of Division 1 of the Evidence Act which deals with “client legal privilege” was cited with apparent approval by the Full Court in Spalvins (supra), at 424.  That analysis should be followed also by this Court insofar as it deals with the point at issue.  In accordance with his Honour’s reasoning, s 122(4) of the Act is not applicable to the disclosure by Mrs Carnell, through her employee or agent, to Mr Moore, of the documents sought by Dr Mann.

Order 34A r 5- The other grounds of appeal

Our conclusion that the primary judge erred in holding that client legal privilege had been lost by reason of the production by Mrs Carnell to Mr Moore of the documents sought by Dr Mann is sufficient to dispose of this appeal.  It is not strictly necessary, therefore, to deal with an alternative submission which was advanced on behalf of the appellant to the effect that his Honour erred by holding that it was reasonable for Dr Mann to believe that he had, or may have had, the right to obtain the relief sought from Mrs Carnell, within the meaning of O 34A r 5(a) and (c).  

We should say, however, that we believe that there is no substance in the appellant’s contention in this regard.  Dr Mann was entitled to believe that the documents which he sought would, at the very least, have contained a restatement of some of the imputations which had been the subject of his original action for defamation.  It was also reasonable for Dr Mann to believe that these documents might have gone further in elaborating upon those imputations.  The language of O 34A r 5 is couched in wide terms.  It should not be construed in a restrictive manner. 

Counsel for the appellant submitted that the fact that Mr Moore did nothing to dispel Dr Mann’s concerns when Dr Mann wrote to him seeking to have the contents of the documents clarified was of little weight in determining whether Dr Mann had reasonable grounds for believing that these documents contained material which was defamatory.  That may be so.  Even without any inferences being drawn from Mr Moore’s silence, however, there was ample evidence to support the primary judge’s conclusion that Dr Mann had met the threshold requirements imposed upon him under O 34A r 5.

It should also be noted that counsel for the appellant sought to attack the primary judge’s conclusion that Dr Mann had satisfied these threshold requirements by submitting that the documents which he was seeking were published in circumstances which would necessarily attract, at the very least, qualified privilege.  It was said that Dr Mann had not produced any evidence of malice which could conceivably override any such claim of qualified privilege.  It followed, therefore, the appellant submitted, that Dr Mann’s claim was “clearly foredoomed to fail”, to use the language of the High Court in Walton v Gardiner (1993) 177 CLR 378.  The application under O 34A r 5 amounted to an abuse of process, and should be dismissed as such. 

We think that this contention must also be rejected.  It was not incumbent upon Dr Mann to provide evidence of malice in support of his application for preliminary discovery merely because counsel for Mrs Carnell had foreshadowed that the defence of qualified privilege would be raised if the documents were found to contain defamatory material.  Of course the question of malice might have become relevant at a later stage in the proceedings.  Equally, however, the documents themselves might have provided evidence of such malice.  Or they might have led to the discovery of such evidence.  Dr Mann was not required to negate all possible defences before he obtained the material necessary to ground his action in defamation.

Conclusion

The appellant has succeeded in making good her contention that she should not have been required by the primary judge to produce the documents sought by Dr Mann.  Those documents are properly the subject of a claim for client legal privilege.   It follows that she is entitled to invoke  O 34A r 2 of the Supreme Court Rules in answer to Dr Mann’s application for preliminary discovery.

We would not wish to conclude our remarks in relation to this matter without observing that, in our view, the affidavit material relied on by Mrs Carnell in support of her contention that she had not waived client legal privilege raised for consideration the question whether, pursuant to s 130(4)(f) of the Evidence Act, it would be contrary to the public interest to require her to make the documents sought by Dr Mann available to him.  As this matter was not fully argued before us, it is unnecessary to consider it further.

We would allow the appeal and set aside the orders made by the primary judge requiring Mrs Carnell to produce to Dr Mann the documents sought by him.  His Honour ordered that the costs of the application before him should abide any order made in any subsequent proceedings on any cause of action alleged to have arisen out of the publication of the documents, or any of them, by Mrs Carnell to Mr Moore.  The parties should have liberty to apply to the primary judge in respect of the costs of that application.  The respondent should pay the appellant’s costs of and incidental to this appeal.

Associate:

Dated:              4 December 1998