FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Lux Pty Ltd [2003] FCA 89

EVIDENCE – expert’s report – objection to admission – whether danger unfairly prejudicial, misleading or confusing or result in waste of time – whether usurps ultimate function of court – whether excluded as a consequence of non-compliance with Practice Note or Guidelines for Expert Witnesses – whether Guidelines abrogate privilege – whether probative value substantially outweighed

EVIDENCE – legal professional privilege – principles applicable to experts’ reports – application to documents – rulings

EVIDENCE – witness statements – objections – whether s 51AB(4) of the Trade Practices Act 1974 (Cth) a barrier to particular evidence – whether unfairness – other objections

Evidence Act 1995 (Cth) ss 63, 64, 80, 118, 122, 135, Pt 3.10

Trade Practices Act 1974 (Cth) ss 51AB, 51AB(4), 155

Federal Court RulesO 27, r 2

Supreme Court Act 1979 (NT) s 72

Supreme Court (Rules of Procedure) Act 1987 (NT) s 9

Civil Procedure Act 1997 (UK) s 74A

Mendelow “Expert Evidence: Legal Professional Privilege and Experts’ Reports”(2001) Australian Law Journal 258

Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79 referred to

Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) FCA 1098 referred to

O’Brien v Gillespie (1997) 41 NSWLR 549 referred to

Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278 considered

Sampi v State of Western Australia [2001] FCA 110 referred to

Daniel v State of Western Australia (2001) 186 ALR 369 referred to

The Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49 referred to

Commissioner of Taxation v Pratt Holdings Pty Ltd [2003] FCA 6 referred to

Hoogwerf v The Queen (1992) 63 A Crim R 302 referred to

National Crime Authority v S (1991) 100 ALR 151 referred to

Grant v Downs (1976) 135 CLR 674 followed

Brambles Holdings Ltd v WMC Engineering Services Pty Ltd (1995) 14 WAR 239 referred to

Trade Practices Commission v Sterling (1979) 36 FLR 244 followed

Interchase Corporation Ltd v Grosvenor Hill (Qld) Pty Ltd [No 1] [1999] 1 Qd R 141 considered

Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (1993) 10 WAR 1 referred to

R v King [1983] 1 All ER 929 referred to

Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 3 All ER 177 referred to

Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd(No 2) (1998) 156 ALR 364 considered

Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 considered

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

Daniel v Western Australia (1999) 94 FCR 537 referred to

Mann v Carnell (1999) 201 CLR 1 referred to

Instant Colour Pty Ltd v Canon Australia Pty Ltd (RD Nicholson J, 30 October 1995, unreported) distinguished

Dingwall v Commonwealth (1992) 39 FCR 521 referred to

BP Australia Pty Limited v Nyran Pty Limited [2002] FCA 1302 referred to

Argyle Brewery Pty Ltd v Darling Harbourside (Sydney) P/L (1993) 48 FCR 1 referred to

MGICA (1992) Limited v Kenny & Good Pty Limited (No 2) (1996) 61 FCR 236 referred to

AUSTRALIAN COMPETITION & CONSUMER COMMISSION v LUX PTY LTD and DENNIS PODGER

W124 of 2000

RD NICHOLSON J

18 FEBRUARY 2003

PERTH

THE COURT ORDERS THAT:

1.                  The respondents’ objection to the admission of the applicant’s expert report by M/s Murphy be dismissed.

2.                  The applicant’s claims to privilege be allowed or not allowed in accordance with the rulings set out in the tabulated list in the following reasons.

3.                  The respondents’ objections to the applicant’s witness statements be dismissed save as to par 5 of the supplementary report of M/s Jeffery and par 9 of the statement of M/s Rudd to each of which the objections are allowed.

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

REASONS FOR JUDGMENT

1                     These reasons address objections made on behalf of the respondents to production of an expert’s report (“the Murphy report”).  In addition the reasons consider claims for client privilege made by the applicant in respect of documents delivered to the Court in response to a subpoena from the respondents.

Nature of the litigation

2                     In reasons delivered on 5 December 2001 I summarised the nature of this litigation in the following terms:

“The application in this matter seeks the following relief.  Firstly, in respect of the first respondent, declarations are sought that, in connection with the supply of a vacuum cleaner to a Mrs Standing on 26 August 1999, the first respondent engaged in unconscionable conduct in contravention of s 51AB of the Trade Practices Act 1974 (Cth) (“the Act”) and used undue harassment or, alternatively, coercion in contravention of s 60 of the Act.  As against the second respondent it is alleged that he directly or indirectly was knowingly concerned in each of the contraventions alleged against the first respondent.  Injunctive relief is also sought against each of the respondents together with an order for implementation of a Trade Practices Corporate Compliance Program.  A declaration is additionally sought that the sale of the vacuum cleaner is void ab initio.

The statement of claim filed on behalf of the applicant alleges that the first respondent carried on business as the supplier of goods, including vacuum cleaners, to consumers.  The second respondent was its duly authorised agent.  Mrs Standing is said to have been a consumer.  She and her husband, it is claimed, were at all material times illiterate to the extent that they were unable to read or write other than simple words in their respective names and intellectually disabled such that they were unable to understand contracts. 

It is further claimed that on 26 August 1999 as a result of a discussion between Mr Standing and the second respondent, the second respondent attended at the Standing’s residence where Mrs Standing was alone.  It is alleged that the second respondent, standing in close physical proximity to Mrs Standing, conversed with her, insisting that her vacuum cleaner was going to blow up and that she should purchase a Lux vacuum cleaner.  The allegations then proceed that at all material times it was evident to the second respondent that Mrs Standing was intellectually disabled such that she was not able to understand contracts and unable to make a voluntary, alternatively worthwhile, judgment as to whether purchasing the Lux vacuum cleaner would be in her or her husband’s best interests and that she was threatened and further and alternatively, intimidated, by his presence.  It claims also that the second respondent gave the clear impression to Mrs Standing, which she gathered, that he would continue to press her unless she agreed to purchase the new vacuum cleaner.  It was for this reason, it is claimed, that Mrs Standing agreed to purchase the vacuum cleaner.

The statement continues by claiming that the second respondent produced a contract to Mrs Standing for signature.  It is said that she then stated to him that she could not read and could only write her name.  In response to that he stated that she did not need to read it and was only required to sign it or words to that effect.  It is alleged that the second respondent did not explain any of the requirements of the contract to Mrs Standing.  It is then alleged that it was also evident to the second respondent that Mrs Standing was not able to understand the contract and was unable to make a voluntary, alternatively a worthwhile, judgment as to whether entering into the contract would be in her or her husband’s best interests.  Additionally it is claimed that the second respondent gave her the impression, which she gathered, that he would not leave the residence and would continue to press her to sign the contract unless and until Mrs Standing agreed to sign it.  She signed it, it is claimed, in order that he would leave the residence. 

The defence of the first and second named respondent generally comprises a denial of the claims made against them.  Additionally, it is further stated that all payments have been made pursuant to the contract since the date of it and that on or about 29 September 1999, Mr Standing, for and on behalf of Mrs Standing, telephoned Lux and requested to increase the amount of the monthly repayments.  Following such increase, the monthly payments have been made as required by the contract.  Additionally it is pleaded that Mr and Mrs Standing purchased a property in Port Pirie, South Australia on 19 September 1994 and in order to do so executed a mortgage dated approximately that date in favour of a mortgagee.”

It is in that context that the objections fall to be resolved.

respondents’ objection to admission of applicant’s expert report

Nature of expert report

3                     M/s Murphy is a clinical psychologist.  Her report is dated 19 December 2000.  She described the instructions given to her in the preparation of the report as follows:

“Thank you for asking me to assess Mr and Mrs Standing with the view to providing information regarding their respective intellectual capacity and a range of matters pertaining to their capacity to understand the Law Contract including:

·      Whether the Standings are able to read and or write.

·      In general do the Standings understand, and if so to what extent, the concept of a simple contract and its associated obligations.

·      Would the Standings have been able to read the Lux Contract (for the purchase of a new vacuum cleaner)?

·      Would the Standings have been able to understand the Lux Contract?

·      To what extend (sic) would the Standings have understood the consequences of failing to comply with the Lux Contract, such as not making instalments.

·      What are the general levels of the Standings interpersonal skills?

·      What effect would a stranger standing in close and prolonged physical proximity have upon the Standings’ emotional state of mind and their decision to leave or decline a sale in circumstances where the sales representative is persistent and/or stands in close physical proximity to them.”

4                     In doing that she said that she had been provided with the following documents:

“Statement of Claim

Media Release

Contract between Janice Standing and Lux Pty Ltd

Affidavit of Janice Standing

Affidavit of Mark Standing

Authority to Release Information Janice Standing

Authority to Release Information Mark Standing”

5                     She described her contact details with the Standings as follows:

“

”

6                     She described the assessment procedures followed by her as follows:

“Interview:  to determine her understanding of the reason for the assessment and to obtain her report of the events of the day the Lux contract was signed.

Testing WAIS R

Neale Analysis of Reading ability.

Writing task.

Structured interview and role-play.”

7                     After recounting Mrs Standing’s report of the events leading to her signing the Lux contract and her general impression of Mrs Standing, M/s Murphy set out her “Assessment findings”.  In the course of those she described how she had set out to determine the effect that a stranger would have standing in close proximity on Mrs Standing’s emotional state and capacity. 

8                     The report then set out M/s Murphy’s conclusions in the following terms:

“Janice impressed as a timid intellectually disabled woman with a friendly disposition.  I found Janice to have a limited capacity to respond and comprehend day to (sic) social situations and with no understanding of the nature of the Lux contract and its obligation.  Her reading ability is limited, and at a level that does not enable her to either read or comprehend the nature of the Lux contract.  She was not able to demonstrate understanding of key terms used in the contract.

She has consistently reported that she made repeated protest to the sales person and had signed the contract, as she believed this was the only way to have him leave.  Her behaviour as I moved closer to her indicated that she was apprehensive about being in close proximity with a person she did not know, and able to signal that she wanted me to stop coming any closer.  She was not able to indicate she was able to take any alternative course of action.”

9                     In relation to Mr Standing the report set out the same assessment procedures as having been followed.  It gave the expert’s general impression and a statement of Mr Standing’s report of events leading to the signing of the Lux contract.  It also set out what were called “assessment Findings” and stated the following conclusion:

“Mark is an outgoing intellectually disable (sic) man with limited capacity to understand the nature and obligations of a contract such as the contract his wife signed with Lux.  His comprehension whilst poor indicated he did have some words associated to some situations, such as mortgage and property, and deposit and some purchases.  He was however unable to show me that he was capable of dealing with a situation where a salesperson was persistent and admitted to feeling frightened by the situation.”

10                  An additional joint expert report of M/s Murphy and Mr Wolowski is sought to be tendered.  The latter is the respondents’ expert.  That report disclosed agreement between the experts on the following matters:

“With respect to the assessment conducted by N Murphy and subsequent reporting it was agreed:

·      The level of reading of Janice and Mark Standing is reasonably assessed and reported in the initial report.  Janice and Mark Standing were not able to read and understand the Lux contract.

·      The results on the WAIS-R indicate that both Janice and Mark Standing have an intellectual disability.  The comprehension sub-test of the WAIS-R, and any other sub-test of the WAIS-R is not a test of the Standing’s competence to enter into a contract.  The WAIS-R results indicate the comprehension score is at a level consistent with the overall finding of intellectual functioning.

…

·      Neither Mr Wolowski nor Ms Murphy is aware of any tool available that could measure the level of common sense that Janice and Mark Standing might have.  It was agreed this concept could not be easily assessed.

·      Intellectually disabled people may be acquiescent to a salesperson because of both limited understanding of a contract and because of a desire to terminate the social interaction.

·      The results of the behavioural test can only be taken to suggest a social skill deficit.

·      Detailed briefing discussions are part of normal professional practice and that Ms Murphy had maintained an independent professional stance…”

It was recorded that the question about the veracity of the Standings report meant that conclusions about the Standings comprehension of the cooling off period could not be agreed on.

11                  The report also recorded disagreement on the following issue in the following terms:

“

·      Past history that shows previous contracts have been entered into, in itself does not demonstrate understanding of the contractual obligations.

However Mr Woloski believes that past history of financial transactions is a consideration that needs to be taken into account.

Ms Murphy is of the view that neither of financial transactions in general, nor a psychosocial history per se, is likely to address the questions the assessment focused on.  None the less history confined to contracts undertaken as a result of a door to door sale, that required payments to be made over time, could be relevant additional information.

It was agreed evidence that demonstrated the required payments were made on time, at the initiative of Janice or Mark, may provide some information regarding some level of understanding of the nature of a contract.  Conversely the failure to pay installments (sic) could reflect a lack of understanding of the nature of the contract.”

Respondents’ objection

12                  The respondents seek the exclusion of the Murphy report in application of the provisions of s 135 of the Evidence Act 1995 (Cth), which provides:

“135    The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:

(a)               be unfairly prejudicial to a party; or

(b)               be misleading or confusing; or

(c)                cause or result in undue waste of time.”

Each paragraph of the section is relied upon in the respondents’ submissions.  It is accepted for respondents that s 80 of the Evidence Act 1995 (Cth) provides that evidence of an opinion is not inadmissible only because it is about a fact in issue or an ultimate issue.  Nevertheless, it is submitted the Murphy report even in the context of M/s Murphy’s impending oral evidence in relation to it, is of slight probative value and would be substantially outweighed by danger of one or all of the factors referred to in the paragraphs of s 135. 

13                  The principal limbs of the supporting argument for the respondents are as follows:

(1)        Usurpation of decision of ultimate issue

It is said the evidence in the Murphy report seeks to usurp the function of the Court as it purports to express opinions concerning the ultimate issue in the proceedings.

(2)        Based on inappropriate evidence

Next, it is said the evidence is not based on the actual evidence called in the proceeding but on affidavit evidence which has now been shown in the course of the hearing to be wholly unreliable.  Additionally, account is taken of a media release which is not in evidence. 

(3)        Failure to identify contract

It is submitted the Murphy report does not identify the Lux contract adequately so that the fundamental rules relating to admissibility have not been satisfied in this and other respects.  This submission is made in the context where the cross-examination of Mrs Standing has shown she must have signed many documents on the same day as the Lux contract.

(4)        Non-compliance with Court practice direction

It is submitted that in a large number of respects there has been non-compliance with the Court’s practice direction concerning “Guidelines for Expert Witnesses in Proceedings”.

(5)        Evidence of physical proximity

Additionally, it is submitted the expert’s review of physical proximity can be of no assistance to the Court because the circumstances in which it was conducted were not a proper reflection of the events which occurred on 26 August.  It is said that this is evidence going to the allegations of coercion or undue harassment the report should also be excluded because the actual facts are a matter for the Court to determine. 

14                  In these circumstances it is submitted the assessment referred to in the Murphy report is in all the circumstances unreliable.  It is said that the expert undertook a narrow function where there was no reflection or testing of adaptive behaviour and cognitive skills of Mr and Mrs Standing nor was there any consideration taken by her of their history of prior contractual dealings. 

The ultimate issue argument

15                  In support of the contentions alleging usurpation of the function of the Court, reliance was placed for the objector respondents on what was said by Lindgren J in Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79.  There his Honour pointed out at (at 83) that under the general law a distinction is drawn between the content of foreign law, which is a question of fact on which evidence is receivable, and the application of the foreign law to the facts, which is a matter exclusively for the court, a distinction he considered had been preserved by s 80.  In that case he held that profit evidence was inadmissible not merely because it was about the “ultimate issue” but because it intruded into the “essential curial function of applying the law, whether domestic or foreign, to facts” (at 83):  so cited and referred to by Sackville J in Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) FCA 1098.  Allstate was also considered by Levine J in O’Brien v Gillespie (1997) 41 NSWLR 549 where he concluded that s 80 of the Evidence Act 1995 (Cth) does not and cannot represent a complete codification of the law of evidence concerning the exclusion of the development of the body of principles decided prior to its enactment (at 557).  He usefully reviewed a number of authorities, to which I will return. 

16                  In submissions for the applicant senior counsel contended that the ultimate issue in this case is whether or not the first respondent, through the second respondent, acted unconscionably and whether they acted with undue coercion.  This, therefore, is not a situation where the expert witness is making comments on the ultimate issue.  I agree with this submission.  In my opinion this is not a case, such as O’Brien where the “proposed testimony of this witness is on the essential matters of fact and law to be decided by the application of legal standards upon the evidence of the actual transactions which the Court will hear” so that it intrudes upon the exercise of the essential (and ultimate) judicial function.  Rather it is an instance where on the way to the ultimate issue the Court must consider the alleged fact of the intellectual disability of Mr and Mrs Standing.  On that issue I consider that, subject to the application of the rigors of cross-examination and other matters yet to be decided in these reasons, this matter is more akin to that addressed by Street J in Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278 at 286.  That is, that the Court would be assisted by examination of the issue not as determining the ultimate issue but as a significant fact on the way to the exercise of the judicial function to determine the ultimate issue.  I therefore do not accept the first submission for the respondents. 

Non-compliance with practice direction

Contents of guidelines

17                  The Guidelines address the general duty of expert witnesses to the courts, the form of the expert evidence and principles applicable to a conference of experts.  It is on the requirements of the second area that the contentions for the respondents rely. 

18                  In the provisions of the Guidelines relating to the form of expert evidence there are eleven statements.  (Although they appear in dot form, I will treat them as having been numbered 1 to 11 for ease of reference).

19                  Guidelines relating to the form of the expert evidence which particularly go to the content of the report and its foundations are as follows:

20                  Importantly for present purposes there then appears the next requirement:

Background and legal effect of guidelines

21                  The practice direction took effect on 15 September 1998.  The Guidelines were preceded by a statement that they were “not intended to address exhaustively all aspects of an expert’s duties”.

22                  The matters cited in the immediately above numbered paragraphs were subject to a footnote referring to Draft Civil Proceeding Rules issued by Lord Woolf, Master of the Rolls in connection with his Access to Justice report.  In that Draft at par 28 it was stated:

“Once an expert has been instructed to prepare a report for use of the courts, any communications between the expert and the client or his advisers should no longer be privileged.  The instructions given to an expert for the purpose of preparing a report for the court would refer to the statement of issues and, by reference to the statement, identify the issues to which the report is to relate.”

It was recommended that “once an expert has been instructed to prepare a report for the use of a court, any communication between the expert and the client or his advisers should no longer be the subject of legal privilege”.  In the final report by Lord Woolf at par 32 it was accepted, in the light of submissions, that it would not be realistic to make draft experts’ reports disclosable.  However, he stated he did not consider that privilege should apply to the instructions given to experts referring to the possibility of joint or agreed instructions when there are opposing experts and stating “but even a single expert’s report may be unclear or open to misinterpretation unless the instructions on which it is based are known”.  At par 33 the report stated that under the new system transparency of instructions to experts would be particularly important.  The recommendation made by Lord Woolf was therefore that expert evidence should not be admissible unless all written instructions (including letters subsequent upon the original instructions) and a note of any oral instructions are included as an annex to the expert’s report.  The footnote reference to the Federal Court guidelines for expert witnesses suggests that, while not going so far as to address either admissibility or waiver of privilege, the Guidelines were significantly influenced by the thinking of the access to justice inquiry by Lord Woolf. 

23                  The power of the Federal Court to make practice directions is not the subject of express legislative provision.  Halsbury Laws of Australia, par 325 – 30 suggests that such power is part of the regulatory power of the court to control its own process.  (In the Northern Territory specific power is conferred as it is in the United Kingdom:  Supreme Court Act 1979 (NT) s 72; Supreme Court (Rules of Procedure) Act 1987 (NT) s 9; Civil Procedure Act 1997 (UK) s 74A (in respect of the County Court)). 

The Guidelines have been the subject of dicta, but not precisely on the present issue.

In Sampi v State of Western Australia [2001] FCA 110 Beaumont J stated that:

“when the guidelines mandate disclosure of the material upon which the report precedes, its aim is wider than revelation of information that supports the opinion.  It requires disclosure of material which the expert considered but decided, for good reason, not to rely upon it, or considered that it was not necessary to refer to it, because it did no more than reinforce the conclusion reached”. 

In Daniel v State of Western Australia (2001) 186 ALR 369 I stated “that view is consistent with the rules that the foundations of an expert’s report should be examined not only in relation to matters on which the opinion is based but on matters which might detract from it”. 

These statements leave undecided whether the Guidelines preclude as a matter of law a claim of privilege in respect of matters the Guidelines otherwise address.

Respondents’ contentions

24                  The submissions for the respondents allege the following non-compliances:

(1)        Absence of any reference to instructions given as a consequence of the interview with Messrs Ross and Cromwell and the further interview with Mr Cromwell.

(2)        No provision of a copy of the applicant’s letter of instruction to the expert or any correspondence relating to her engagement as such.

(3)        Failure to specify the facts, matters and assumptions upon which her report was premised.  This is said in the context of the media release referred to not being in evidence and the affidavits of Mr and Mrs Standing now said to be wholly unreliable in the light of testimony at trial. 

(4)        Failure to produce documents pertaining to the expert’s notes of interview and assessment (these were subsequently made available).

(5)        Failure by the expert to state whether she asked Mr and Mrs Standing about their prior contractual dealings.

(6)        Failure to set out the particulars of the questions put to Mr and Mrs Standing.

(7)        Non-provision of the respondents’ defence and response to allegations.

25                  There are other aspects of the Murphy report which are said to demonstrate its deficiency and unreliability.  However, those are not matters which the Guidelines would have required to have been addressed because they are in the nature of omissions.  These include the alleged failure to take a history of Mr and Mrs Standing or to test the veracity of their verbal reports.  In the same category is the failure by the expert to take into account the evidence emerging at trial.  Similarly, the evidence of prolonged physical proximity is said for reasons previously mentioned not to be of assistance to the Court or to add to the probative value of the Murphy report. 

Applicant’s contentions

26                  For the applicant it is submitted that the application based on non-compliance with the practice direction and related matters is “a thinly veiled attempt to make an application to waive privilege because most of the complaints are about the fact that the respondent has not been provided with a number of documents that are clearly on their face privileged”  It is said that some of the submissions made would be appropriate to a privilege issue but not to the present issue. 

27                  The case for the applicant points to the list of instructions set out in the report and the list of documents that were provided to the expert.  As has been stated, the notes of interview are now available to the respondents. 

28                  However, it was accepted by counsel for the applicant there are certain additional documents which were requested and the request declined on the basis that an appropriate application for an order of discovery could be made and a claim of privilege would there upon be made and adjudicated.  The respondents then elected to issue a subpoena to access the documents through the experts or at least the ones which were of particular interest namely, the notes of meeting with Mr Ross and Mr Cromwell.  That subpoena was returnable on the first day of trial and was not called upon.  Counsel for the applicant advised that had it been called on then there would have been a claim of privilege argued.  It is said that failure of action on the part of the respondents cannot entitle it to object to the admissibility of the Murphy report on that basis. 

29                  In relation to compliance with item 7(ii) of the Guidelines as identified above it is submitted that it is not enough for the respondents’ case to rely on absence of prima face privilege documents as establishing a non-compliance.  Rather, it is said that reference to the Murphy report as a whole shows there has been compliance.  Taking this into account, it is said that the matters referred to for the respondents of non-compliances either are not made out or would not justify exclusion of the Murphy report. 

Guidelines and privilege

30                  The Guidelines do not contain in them any reference to the application of the Guidelines when privilege is claimed or to be claimed.  Unlike the proposals before Lord Woolf, the Guidelines are not embodied in rules of court.  I approach the Guidelines on the understanding that they are, as described, guidelines and not requirements of law in the sense that non-compliance may give rise to legal rights or consequences.  The purpose of the Guidelines, as stated in respect of them is that practitioners should give a copy to any expert witness they propose to retain.  The Guidelines will influence judicial assessment of an expert report but not compel its resolution in any particular way.  It follows that the Guidelines cannot and do not have any effect in abrogating legal professional privilege.

31                  Since this issue was argued, the High Court has published its reasons for judgment in The Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49.  There it was held that the provisions for issue of a statutory notice to produce documents contained in s 155 of the Trade Practices Act 1974 (Cth) did not abrogate legal professional privilege.  When the terms of that section are compared to the terms of the Practice Note and the absence of any legal effect given to it in rules, the conclusion previously reached is reinforced.  That this is so is supported by the statement by Kenny J in Commissioner of Taxation v Pratt Holdings Pty Ltd [2003] FCA 6 where she stated at par 37:

“In Australia, as in some other jurisdictions, legal professional privilege (or client-solicitor privilege as it is sometimes called elsewhere) is regarded as a rule of substantive law:  see The Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49 (“Daniels”), at [9] per Gleeson CJ, Gaudron, Gummow and Hayne JJ (setting aside the decision of a Full Court of this Court, (2001) 108 FCR 123); Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 (“Esso”), at 55 per Gleeson CJ, Gaudron and Gummow JJ; and Baker v Campbell (1983) 153 CLR 52 (“Baker v Campbell”), at 88 per Murphy J, 116 – 117 per Deane J and 127 – 8 per Dawson J; and of R v Special Commissioner, Ex parte Morgan Grenfell & Co Ltd [2002] 3 All ER 1, at [7] per Lord Hoffmann.  Accordingly, as Deane J said in Baker v Campbell, at 117:

            It is to be presumed that if the Parliament intended to authorize the impairment or destruction of that confidentiality by administrative action it would frame the relevant statutory mandate in express and unambiguous terms.”

Whether probative value substantially outweighed

32                  I accept the submission for the applicant that it cannot count against the probative value of the Murphy report that it was not based on the actual evidence called in the proceeding.  I agree that no expert report would fall into that category and every expert report would be inadmissible if the proposition were valid. 

33                  I also agree with the applicant that any inadequacy in the identification of the Lux contract can be remedied in cross-examination.

34                  I do not consider that the absence of qualification of her report by M/s Murphy in respect of the prior contractual dealings of Mr and Mrs Standing results in the inadmissibility of the report or contributes to it.  If it diminishes the probative value of the Murphy report in the light of the evidentiary ruling made to date that will be taken into account in due course but it does not have such an effect on the probative value as to result in the report being inadmissible for unfairness.

35                  I also agree with the submission for the applicant that there is no obligation under the Guidelines or otherwise for the expert to be provided with the respondents’ case through its defence and response to allegations.

36                  I further agree with the submissions for the applicant that alleged failures by the expert to follow particular courses of enquiry may be addressed in cross-examination. 

37                  At the hearing it was agreed I should to determine the claims for privilege before finally ruling on the application of s 135.  The arguments to which I refer are that the evidence ought not to be allowed where the applicant wishes to maintain the privilege because the maintenance of that privilege would produce a high prejudice in terms of the consideration of the report having regard to the contents of the practice direction.  The submission is that unfair prejudice will be manifest where waiver of privilege has not accompanied the production of the expert report.  I proceeded to do that and my reasons for the conclusions reached follow shortly.

Having those reasons and conclusions in mind I do not consider that to admit the expert’s report subject to such of the claims for privilege as have been allowed would be productive of relevant unfairness so as to make appropriate the exclusion of the report pursuant to s 135 of the Evidence Act on that ground or either of the other grounds referred to in that section.  That is because I do not consider that the probative value of the Murphy Report is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party or be misleading or confusing or cause or result in undue waste of time.  The report is potentially of assistance to the Court – cf Hoogwerf v The Queen (1992) 63 A Crim R 302 and it can be properly understood in the context of the cross-examination which would occur in relation to it and the joint report.  I therefore do not allow the objection made for the respondents to the admission of the Murphy report.

APPLICANT’S PRIVILEGE CLAIMS

Principles governing the claims

38                  The claims for privilege made on behalf of the applicant arise in response to the issue of a subpoena on behalf of the respondents calling for the production of certain documents and, additionally, for the attendance of the expert to whom the subpoena is addressed (M/s Murphy) for the purpose of giving evidence.  The subpoena was issued in reliance on O 27, r 2 of the Federal Court Rules.

39                  The subpoena is supported by three affidavits of the Acting Regional Director of the applicant, the latest of which was sworn on 15 May 2002.  Although expressed in the form of a “wish”, I consider it is beyond doubt that the affidavit asserts the claims:  National Crime Authority v S (1991) 100 ALR 151 at 159 per Lockhart J.

40                  It is common ground that the privilege claims fall to be decided according to the common law.  This is because the provisions relating to privilege in Pt 3.10 of the Evidence Act 1995 (Cth) apply only to the adducing of evidence and hence only during a hearing.  Although the hearing in this proceeding is in the course of progress, there must first be a determined response to the subpoena before the issue of adduction of evidence can arise in the course of that hearing.

41                  In Pratt, Kenny J reviewed the principles governing legal professional privilege.  Her Honour summarised the common law in Australia in that respect as follows, in terms with which I agree:

“The common law in Australia is, …that legal professional privilege attaches to:

(1)       confidential communications passing between a client and the client’s legal adviser, for the dominant purpose of obtaining or giving legal advice (“legal advice privilege”); and

(2)       confidential communications passing between a client, the client’s legal adviser and third parties, for the dominant purpose of use in or in relation to litigation, which is either pending or in contemplation (“litigation privilege”).

See Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 (“Mitsubishi”), at [8] per Batt JA, with whom Charles and Callaway JJA agreed, and Grant v Downs, at 677 per Barwick CJ.  As the majority observed in Esso, at 64:

            The privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers.”

The claims for the applicant are for litigation privilege.  The claim of the privilege is a claim at law and nothing can be said adversely of the making of fact of the claim having been made.

42                  The onus of establishing the claims falls on to the party asserting or claiming the privilege and is met by establishing the facts giving rise to it:  Grant v Downs (1976) 135 CLR 674 per Stephen, Mason and Murphy JJ at 689.  Mere assertion of the claims is not enough: what is required is exposure of facts from which an informed decision can be made as to whether the claim for privilege is supportable: National Crime Authority at 159-160.  The respondents challenge the claims and in doing so contend on the evidence that they are unfounded or mistaken:  cf Brambles Holdings Ltd v WMC Engineering Services Pty Ltd (1995) 14 WAR 239 at 247 per Owen J.

43                  It is not in dispute that the Court has power to examine the documents held by it in response to the subpoena and subject to the claim.  However, that is a power to be exercised on a discretionary basis with regard to the necessity to do so and the risks of disqualification: Trade Practices Commission v Sterling (1979) 36 FLR 244 at 246-8; Grant v Downs at 689.

44                  The application of the law relating to privilege in relation to the bases upon which an expert’s report has been grounded has been considered in a number of cases.  They have been usefully collected and considered by Paul Mendelow, “Expert Evidence: Legal Professional Privilege and Experts’ Reports”(2001) Australian Law Journal 258.  The scope of the privilege was considered in Interchase Corporation Ltd v Grosvenor Hill (Qld) Pty Ltd [No 1] [1999] 1 Qd R 141.  The Queensland Court of Appeal held (at 148) that documents used by an expert to form an opinion are not the subject of legal professional privilege, whether or not they emanate from the party claiming the privilege.  Thomas J (at 162) acknowledged that privilege could be claimed in relation to communications between the expert and the solicitor when within the requisite confidential purpose.  See also Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (1993) 10 WAR 1 in relation to briefs to lawyers.  This accords with the common law position recognized R v King [1983] 1 All ER 929 and Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 3 All ER 177 at 181, each referred to and relied upon in Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd(No 2) (1998) 156 ALR 364 at 365 by Mansfield J.  There it was accepted that the effect of those decisions was that, at common law, the privilege does not attach to the chattels or documents on which the expert based the opinion or to the independent opinion itself of the expert.  In Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 at 552 McHugh J stated that “legal professional privilege turns on purpose” so that, if the purpose is established, the privilege attaches without any balancing of considerations of public interest.

45                  It follows from the decided cases and the nature of the privilege as enunciated above that the claims for litigation privilege in this matter require the Court to consider the following matters in relation to each of the claims:

(1)        was the communication between the requisite parties?

(2)        was it made in circumstances showing it to be confidential?

(3)        was it made for the dominant purpose of use in or in relation to litigation pending or contemplated?

(4)        has any privilege, if established, been waived?  [For that purpose it may be necessary to consider whether the communication was one on which the expert based the opinion]

46                  Waiver may be express or implied.  It will be express when there is intentional disclosure of protected materials.  It will be implied when, by reason of some conduct on the privilege holder’s part, it becomes unfair to maintain the privilege: Attorney-General  (NT) v Maurice (1986) 161 CLR 475 at 487-488 per Mason and Brennan JJ.  Such conduct may include some disclosure or use of the privileged material where that is inconsistent with the maintenance of the confidentiality: at 482-483; 488 and 493; relied upon in Daniel v Western Australia (1999) 94 FCR 537 at 546.  The same approach governs the application of sections 118 and 122 of the Evidence Act:  Mann v Carnell (1999) 201 CLR 1.  In Instant Colour Pty Ltd v Canon Australia Pty Ltd (RD Nicholson J, 30 October 1995, unreported) I ruled, after consideration of matters of fairness in the circumstances of the case, that implied waiver of privilege had occurred in relation to a letter of instruction from instructing solicitors to an accounting expert in circumstances where the expert had said the letter of instruction was a source of his knowledge.  The respondents’ contentions place weight on this ruling as supporting their contentions in the circumstances of the present case.  In Dingwall v Commonwealth (1992) 39 FCR 521 Foster J said that for the principles of waiver to apply there is certainly required that there be an indication that the documents were used in the preparation of the evidentiary document in a way that could be said to influence the content of the document.  The absence of this in the circumstances in Tirango was the basis upon which Mansfield J found the privilege had not been impliedly waived.

Reasoning

47                  There are a number of issues which can be dealt with generically because they have been raised in submissions as affecting more than one of the documents to which the claims relate.

Affidavit evidence

48                  The first is the limited nature of the affidavit evidence brought on behalf of the applicant.  It is submitted for the respondent that the affidavit evidence relied upon for the applicant, being three affidavits of Mr Di Scerni, do not make any reference to him having considered the documents or having been involved in the circumstances of their production.  The consequence, it is said, is that there is no direct evidence before the Court going to the relevant issues.  It is also submitted there is no affidavit evidence from the expert concerning the circumstances that could create confidentiality.

49                  There is affidavit evidence of Mr Di Scerni that the solicitors for the applicant identified in the description of the documents (Ms Robertson, Ms Newton and Mr Pratt) have since the commencement of the action been employees of the solicitors for the applicant.  It is the case that the Court may have been assisted by affidavit evidence from them.  The presence of such evidence may assist a claimant for the privilege to discharge the applicable onus: cf BP Australia Pty Limited v Nyran Pty Limited [2002] FCA 1302 at par 6. .  However, the absence of such evidence does not necessarily mean that the applicant’s claims must fail.    It is a question in each case of considering what evidence is available either as direct evidence and/or by way of inference and, where appropriate, taking into account the results of an inspection made appropriate by the circumstances.

Litigation

50                  I infer (as submissions for the applicant contend I should) that it follows from the affidavit evidence and the descriptions of the documents to which the claims for privilege relate, that all the documents in issue fall within the time frame of the litigation.

Confidentiality

51                  I accept the submission for the applicant and draw the inference that any communications between the solicitors for the applicant and the expert was for the purpose of the litigation and so confidential unless circumstances establish otherwise.

Waiver

52                  Counsel for the respondents contends that actual waiver occurred as a consequence of the position of the applicant expressed through its solicitor being that at no time was privilege raised as an issue in relation to the material used by the expert to form the views in the report.  Rather, the applicant through its solicitor was apparently seeking to comply with the Practice Note.  These submissions also extend to the case of the applicant declining to provide a document without then asserting privilege.

53                  To support this contention counsel for the respondents produced to the Court a folder of non-privileged correspondence contemporaneous with the documents the subject of the claims.  This was marked for identification.  Counsel for the applicant responded to the submissions based on that folder and did not object that the folder and its contents were not in evidence.  However, the fact is that the folder is not in evidence and I cannot see how it can assist the respondents in having the Court make findings of fact based on documentation which it contains.

54                  In any event, I do not consider the correspondence can properly lead to the drawing of the inference of waiver.  The correspondence commences in July 2001 and continues until 25 October 2001.  It relates to preparation for the joint experts report.  In the course of that the applicant declined to provide to the respondents copies of correspondence, letters or documents provided by it to the expert for the preparation of her initial and subsequent reports.  In doing so it stated that the basis of the refusal was that the instructions had been adequately summarised in the expert’s report and there had been compliance with the Practice Note.  The non-assertion of privilege on that occasion was not in my view a waiver of the right to assert a claim for the privilege so as to preclude such claims when the occasion arose for doing so on the issue of a subpoena.  Nor is there any basis for inferring from the course of the correspondence that the applicant’s solicitors sought to influence or interfere with the exercise by the expert of her function.

55                  On the issue of waiver and the reliance which the case for the respondents puts on the ruling in Instant Colour, I consider there is an important distinction between most of the documents at issue here and the document the subject of the ruling relied upon.  That lies in the use made of the document in the expert’s report and whether there was any stated reliance upon it.

Approach to list

In approaching the list of documents I have done so on the basis that no assumptions should be made concerning the content of the documents save as in each case the description may properly support by way of inference.  I place reliance only upon the list annexed to Mr Di Scerni’s affidavit of 15 May and not to descriptions in any prior list.

56                  Inspection has occurred only to the extent noted against a particular document.

57                  I rule on the claims for privilege in accordance with the rulings against each of the documents in the list which now follows.  The deleted items are no longer the subject of any claims but are preserved as part of the working document on which submissions were made.

List of Documents

Nada Murphy

RESPONDENT’S OBJECTIONS TO THE APPLICANT’S WITNESS STATEMENTS

Objections to statement and supplementary statement of M/s Jeffery

58                  M/s Jeffery describes herself as the Local Area Coordinator for the Disability Services Commission, holding an Advanced Certificate in Human Service Disability obtained in 1991.  Her statement describes assistance she states she gave to Mr and Mrs Standing on 7 June 2000 with applications to receive services from the Commission.  She also describes how she sees them about once every 3 weeks and has assisted them to read, understand and complete documents.  She states she has assisted them in relation to applications for housing and parking stickers as well as reading letters and documents and responding to them.  In her supplementary statement she refers to records of the Commission and what they state in relation to the assessment of Mrs Standing.

59                  The objections for the respondents are firstly that her observations of the Mr and Mrs Standing are not in the nature of expert evidence.  Secondly, her observations are irrelevant to what occurred on 26 August 1999 because they were not reasonably foreseeable: s 51AB(4) of the Trade Practices Act.  Thirdly, portions of the evidence are hearsay.  Fourthly, some of the evidence fails for being too vague and general.  Finally, the supplementary statement refers to records of the Commission indicating an assessment regarding Mrs Standing of unknown authorship preceding the events of the date in issue by around 20 years which is said to be evidence which she is not entitled to give.

60                  For the applicant reliance is placed on s 64 of the Evidence Act where it is provided that the hearsay rule does not apply to a document so far as it contains a previous representation if it would cause undue expense or undue delay, or would not be reasonably practicable, to call the person who made the representation to give evidence.  It is accepted that would only apply where the person was available to give evidence.  However, since the author cannot be identified, the precondition for the application of that section cannot be satisfied.  Alternatively the applicant’s case relies upon s 63, applicable where the maker of the representation is not available to give evidence.  Again there is not evidence upon which to satisfy that precondition.  Then it is submitted that the witness can simply give direct evidence of her knowledge of the records of the Commission.  In response it is said for the respondents that the witness was not even qualified at the date of the report and so could not be cross-examined upon it.  I accept the accompanying submission that to admit the evidence in paragraph 5 of the supplementary report (relating to the unexplained level 3 services) through the evidence of this witness would be unfair and justify exclusion in the application of s 135 because she cannot be cross-examined about that.  In my view the balance of the supplementary statement is admissible.

61                  In relation to the evidence going to capacity addressed in the first statement of the witness, it is submitted for the applicant that this is prompted by the contents of the respondents’ experts’ report which raises the issue of general life functioning.  Additionally it is directed to establishing the Standings do require assistance, relevantly to determining their capacity.  This it is submitted cannot qualify for exclusion pursuant to s 135 of the Evidence Act.  I agree and do not consider the evidence is in the nature of expert evidence.  Nor do I consider s 51AB operates as a barrier to the proposed evidence.

Objections to statement of M/s Rudd

62                  The witness is a financial counsellor at the Armadale Information & Referral Service (Inc).  She first met the Standings on 10 May 2000.  The purpose of the meeting was to assist them with their debt position.  She states her observations of their capacities at that time.

63                  The principal objection is that the debt position has not been the subject matter of any evidence nor will it be relevant to the issues.  Reliance is again placed on application of s 51AB.

64                  For the applicant the application of s 51AB is contested.  It is pointed out that the proposed evidence ties in with some evidence given by Mrs Standing’s mother.

65                  I allow a hearsay objection to par 9 but otherwise do not allow the objections.  The evidence in par 11 will be received like the evidence from Mrs Connelly as non-expert evidence of observations of behaviour.  The debt position is relevant to the issues raised by the expert report for the objector and s 51AB is no barrier to hearing it.

Associate:

Dated:              18 February 2003