FEDERAL COURT OF AUSTRALIA

GEC Marconi Systems Pty Ltd

v BHP Information Technology Pty Ltd

[2000] FCA 593

GEC MARCONI SYSTEMS PTY LIMITED trading as EASAMS AUSTRALIA v BHP INFORMATION TECHNOLOGY PTY LIMITED

NG 733 OF 1997

LEHANE J

10 MAY 2000

SYDNEY

THE COURT ORDERS THAT:

1.         The applicant produce for inspection by the respondent, in full:

            (a)        the document numbered 0579;

            (b)        the document numbered 0099;

(c)        the document numbered 0100;

            (d)        the document numbered 0441;

            (e)        the document the first page of which is numbered 0503;

(f)         the document the pages of which are numbered 0527, 0528 and 0390, with the exception of the masked passage on the page numbered 0528 and the second and third of the three masked paragraphs on the page numbered 0390.

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

REASONS FOR JUDGMENT

1                     The respondent (BHP) seeks orders that the applicant (GEC) produce for inspection by BHP, in full, certain documents discovered by GEC but produced for inspection in the form of incomplete copies, with certain portions masked.

2                     GEC claims that it is entitled to legal professional privilege in relation to the masked portions of the documents.  BHP submits that the claims of privilege are, on their face, defective and also that, if GEC were at any time entitled to assert legal professional privilege in relation to the documents, that privilege has been waived.  On the hearing of BHP's motion, I formed the view that the question of privilege might not be easily capable of determination unless I inspected the documents.  BHP encouraged me to do so and, though GEC's acquiescence in that course was somewhat reluctant, I have done so.  The documents in question are memoranda between officers of GEC's parent company, memoranda between officers of GEC and officers of its parent company (all of them, apparently, facsimile transmissions) and briefing papers prepared by officers of GEC and addressed to various persons all of whom except one appear to have been officers of GEC or its parent (the other recipient may have been an officer of another company within the same corporate group; nothing was said to turn on his identity).

3                     I do not think that the motion requires an elaborate discussion of the law as to legal professional privilege.  It is clear that, since the question arises on discovery in the interlocutory course of the proceeding, the applicable law is to be found in the common law, not the Evidence Act 1995 (Cth): Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 168 ALR 123.  Gleeson CJ, Gaudron and Gummow JJ described the scope of the privilege, in Esso at 132, 133, as follows (omitting footnotes):

“Legal professional privilege (or client legal privilege) protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court.  In the ordinary course of events, citizens engage in many confidential communications, including communications with professional advisers, which are not protected from compulsory disclosure.  The rationale of the privilege has been explained in a number of cases, … .  The privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers. …  As Deane J expressed it in Baker v Campbell, a person should be entitled to seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communication.”

4                     None of the documents in question is, of course, a communication between client and legal adviser.  Some, as will be seen, record some of the content of communications between GEC and its legal advisers.  In Optus Communications Pty Ltd v Telstra Corporation Ltd (Lockhart J, 27 April 1995, unreported), his Honourreferred to a category of communications between a party to litigationand a third party (a category which, among others, his Honour had previously discussed in Trade Practices Commission v Sterling (1979) 36 FLR 244).  His Honour cited certain passages in the judgments in Waterford v The Commonwealth (1987) 163 CLR 54 as authority for the proposition that legal professional privilege attaches to confidential professional communications between government departments or agencies and their officers provided that they are undertaken for the sole purpose of seeking or giving legal advice or in connection with anticipated or pending litigation.  His Honour also approved (at par 7) the following passage from Cross on Evidence, 4^th Australian edition at par 25, 235:

“In the case of third party communications, therefore, privilege will not be available unless the claimant can show (i) that the document was brought into existence or the communication was otherwise made at a time when litigation was in existence or reasonably contemplated, and (ii) that the document or communication was brought into existence or made for the sole purpose of obtaining advice for that litigation or otherwise for the sole purpose of the litigation.”

5                     With respect, it seems to me that the phrase “or otherwise for the sole purpose of the litigation” may go too far.  Of course, following Esso, sole purpose is no longer necessary and dominant purpose sufficient.  But in the light of the purpose of the privilege, recently affirmed by the High Court, it is not easy to see why the mere fact that a communication was made “for the [dominant] purpose of litigation”, actual or anticipated, should be sufficient to bring the communication, where it is made between two persons, neither of whom is a legal adviser, within the scope of legal professional privilege.  The passages cited from Waterford do not, I think, support such an extension of the privilege: those passages are concerned, as I read them, with communications the purpose of which is either to seek or to give legal advice or assistance (Waterford at 63, 64 per Mason and Wilson JJ and at 74, 75 per Brennan J).

6                     The affidavit of an officer of GEC read in support of the claims of privilege might be taken as seeking to rely on an expansive view of a privilege attaching to so‑called third party communications.  That, however, was not the way it was approached in submissions on behalf of GEC which, as I understood them, sought to support the claims of privilege on the basis that the masked portions of the documents recorded the substance of communications between GEC and its legal advisers either in relation to this proceeding or for the purpose of obtaining or giving legal advice, those communications being themselves privileged.  That, in my view, is the proper approach to the issue between the parties.  Having regard to the purpose of the privilege, I do not think that the claims could be supported on a broader basis.

7                     In Mann v Carnell (1999) 168 ALR 86, Gleeson CJ, Gaudron, Gummow and Callinan JJ said, at 90, 91:

“The outcome does not turn upon the particular manner in which the content of the privileged communications was disclosed to Mr Moore.  The privilege attached to the communications, not to the pieces of paper on which they were written.  What Mr Moore was shown were copies, but they were relevantly copies of privileged communications.  The question is whether the disclosure to Mr Moore of the communications resulted in the loss of the privilege.”

8                     It follows, in my view, that a document which records the substance of a privileged communication between client and legal adviser is itself protected, by the privilege, from disclosure unless the privilege has been waived.  The privilege may have been waived before the communication recording what had passed between client and adviser was made, or it may be waived by that communication itself.  No separate inquiry is, I think, appropriate for the purpose of determining whether a communication, in which an earlier privileged communication is recorded, was itself made in circumstances attracting a privilege (the view of McHugh J in Mann v Carnell may have been somewhat different: see at 108, 109.)  The question to be answered, I think, in the light of the majority judgment in Mann, is whether the disclosure of a document would involve disclosure of a privileged communication; that inquiry may involve a question whether privilege which may have subsisted has been waived.

9                     Before turning to the documents, it is convenient to consider whether, to the extent that communications recorded in them attracted privilege, the privilege has been waived.  On the material before me, my view is that it has not.  It is evident on the face of the documents that to a large extent they formed part of discussions within GEC’s corporate group about the dealings leading to the present litigation and the contemplated litigation itself.  To some extent – argument concentrated on this aspect – the purpose of the communications between GEC and its parent company may well have been to assist in deliberations about the treatment, in the group accounts, of matters arising from the disputes between the parties.  To the extent that the documents reflect communications between GEC and its legal advisers, however, there is no suggestion that there was any intention to publicise the content of those communications outside the corporate group.  The majority judgment in Mann includes, at 94, the following discussion of waiver at common law (once again, I shall omit the footnotes):

“Waiver may be express or implied.  Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.  When an affirmative answer is given to such a question, it is sometimes said that waiver is ‘imputed by operation of law’.  This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege.  Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister’s version of those instructions.  She did not subjectively intend to abandon the privilege.  She may not even have turned her mind to the question.  However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication.  What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.”

10                  If the present claims are looked at in that light, I do not think there is anything in the circumstances of the corporate deliberations, in the course of which the documents were prepared and sent, which is inconsistent with the maintenance of confidentiality in any privileged aspect of the communications or with GEC continuing to assert the privilege.

11                  There is another matter which must be briefly mentioned before dealing with the individual documents.  It was suggested that it was impermissible to separate out from a communication recorded in a document a part of the whole communication, on the footing that the part attracts privilege though the balance does not, unless the part claimed to attract privilege is clearly severable, in the sense that it may be regarded, in substance, as a separate communication.  That submission is, no doubt, readily reconciled with the actual decision in Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 43 FCR 408.  But, in my view, it is inconsistent both with the principles applied by Heerey J in that case and with the decision of the Full Court of the Supreme Court of Queensland in Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335, which his Honour followed.  In the light of those authorities, in my view there is no difficulty, in this case, about claims for privilege, if otherwise maintainable, as to parts only of the documents.

12                  The documents may now be dealt with briefly:

·        The first document is numbered 0579.  It is an internal memorandum between officers of GEC’s parent company.  The masked passage refers to terminating a contractual relationship with BHP and the possibility of giving BHP a “warning” letter; it refers (but without disclosing the content) to advice received from solicitors and a proposal to obtain advice from senior counsel.  In the light of the principles discussed above, in my view the masked passage is not privileged.  Though it is probably unnecessary to add this, there is no reason to doubt that communications between GEC and legal advisers following the communication were and remain privileged (unless, of course, privilege has been separately waived).

·         The next document, number 0099, is a fax from GEC’s parent company to GEC.  The sender asks the recipient, among other things, to obtain advice from leading counsel and to send counsel a technical paper.  In my view, however, disclosure of the masked portion would not result in disclosure of a privileged communication.  The claim of privilege in this document is not maintainable.

·         Document 0100 is a reply from GEC to its parent.  The masked portion reports, in very brief terms and without disclosing the substance of any communication between GEC and its legal advisers, action taken by GEC in response to the previous document.  Equally, in my view, the claim for privilege is not maintainable.

·         Document 0113 appears to be an internal facsimile transmission between officers of GEC’s parent company.  The masked portion, clearly enough, does disclose advice received from GEC’s solicitors.  The claim for privilege, in my view, is properly made.

·         Document 0441 is a communication from GEC to its parent with a handwritten reply endorsed on the document.  The masked portion refers to the briefing of a Mr Beerworth but not for the purpose of obtaining legal advice or assistance.  In my view that portion is not privileged.

·         The masked portion of document 0503, a “management brief” from GEC to officers of its parent company and of GEC itself (and one other recipient who appears to have been an officer of another company in the GEC group), reports upon the preparation of the statement of claim and seeks approval to lodge it.  It sets out in brief and bald terms the claims made in the draft statement of claim.  In some circumstances, a communication of that general kind might well be privileged; but the document gives no clue as to the substance of any legal advice concerning the draft statement of claim or any of the claims made in it.  It concludes with a comment about the need to make a decision as to which of the possible claims are to be pursued.  In my view, that communication is not privileged.  In order to avoid any doubt, I should make it clear that that conclusion applies not only to the first page of the document, numbered 0503, but also to the later pages numbered 0506 and 0507.

·         The next, and final, document is a memorandum sent by GEC to its parent “as a briefing of our thoughts.”  It is numbered on the first page 0527 and on the succeeding pages 0528 and 0390.  There are two masked passages.  The former of them reports the substance of certain legal advice received and in my view is clearly privileged.  The other is, I think, rather close to the borderline.  It does, however, in my view, at least in part, record the substance of a request to GEC’s solicitors for advice.  That part of the masked portion is, I think, privileged.  Of the three paragraphs masked, that privilege attaches to the second paragraph and, I think, extends to the succeeding paragraph.  I see nothing, however, in the first paragraph that attracts privilege.  In my view, accordingly, the claim of privilege is properly made in relation to the second and third of the masked paragraphs but not the first.

Conclusion

13                  It follows that orders will be made for the production for inspection of those presently masked portions of the documents in which I have held there to be no privilege.  The portions which I have held to be privileged need not, of course, be disclosed.

Associate:

Dated:              10 May 2000