FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v FFE Building Services Limited [2003] FCA 1181

PRACTICE AND PROCEDURE – Discovery of documents – Claim of legal professional privilege – Agreement by ACCC to extend leniency to certain respondents in return for co-operation, including by provision of witness statements and affidavits – Whether draft witness statements and draft affidavits privileged – Distinction between documents supplied before and after commencement of legal action – Relevance of communication being to or from a lawyer – Claim of without prejudice privilege in relation to documents concerned with settlement of a procedural dispute – Obligation of ACCC to produce documents pursuant to s 157 of Trade Practices Act 1974 (Cth) – Application of that section to privileged documents – Discretion of Court.

Trade Practices Act 1974 (Cth) s 157

Arnotts Limited v Trade Practices Commission (No 1) (1990) 21 FCR 297 discussed and applied.

Trade Practices Commission v Sterling (1979) FLR 244 applied.

Rush & Tompkins Ltd v Greater London Council [1989] 1 AC 1280 applied.

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v FFE BUILDING SERVICES LIMITED (formerly Chubb Building Services Ltd) (formerly James Hardie Building Services P/L) t/as Fire Fighting Enterprises, TYCO AUSTRALIA PTY LIMITED (formerly Wormald Australia Pty Ltd) t/as Wormald Fire Systems, PREMIER FIRE PROTECTION (NSW) PTY LTD, METROPOLITAN FIRE SYSTEMS PTY LTD, ALLEN EDWARD SMITH, COLIN SIMPSON, VITO FODERA, JAMES BELL, ALLAN CARR, MITCHELL GRICE and BILL LAWSON

N 509 of 2002

WILCOX J

27 OCTOBER 2003

SYDNEY

THE COURT DECLARES THAT:

1.         The documents in the applicant’s List of Documents filed on 4 July 2003, identified by the numbers set out in Schedule A to this order, are not subject to legal professional privilege.

2.         The documents in the said List of Documents, identified by the numbers set out in Schedule B to this order, are subject to legal professional privilege.

3.         The documents in the said List of Documents, identified by the numbers set out in Schedule C to this order, are subject to without prejudice privilege.

AND THE COURT ORDERS THAT:

4.         On or before Tuesday, 28 October 2003, the applicant produce to each respondent for inspection:

(i)                  each of the documents identified in Schedule A to this order; and

(ii)                any draft witness statements or draft affidavits that fall within Schedule B or Schedule C to this order that have been signed, or otherwise acknowledged as correct, by the relevant deponent.

5.         The costs of the motions filed on 12 and 17 September 2003 be costs of the respective parties in the principal proceeding.

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

SCHEDULE A

Category (i) documents

Numbers 10, 11, 14, 16, 18, 19, 21, 22, 24, 25, 31, 32, 33, 36, 37, 38, 39, 40 and 41

Category (ii) documents

Numbers 46, 48, 52, 53, 55, 58, 59, 60, 61, 64, 65, 77, 106, 118, 119, 120, 121, 122 and 123

SCHEDULE B

Category (ii) documents

Numbers 45, 47, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 105, 107, 108, 109 and 116

Category (iii) documents

Numbers 78 to 102 inclusive

SCHEDULE C

Category (iv) documents

Numbers 50, 51, 54, 56, 57, 62 and 63

REASONS FOR JUDGMENT ON MOTIONS

WILCOX J:

1                     There are before the Court two notices of motion whereby respondents to this proceeding seek inspection of documents referred to in the List of Documents filed by Australian Competition and Consumer Commission (‘ACCC’), the applicant in the principal proceeding.

2                     The first motion was filed on 12 September 2003 by FFE Building Services Limited (‘FFE’), the first respondent to the principal proceeding.  That motion seeks the following order:

‘That pursuant to Order 15 rule 11 of the Federal Court Rules or alternatively pursuant to section 157(2) of the Trade Practices Act 1974, the Applicant allow the First Respondent to inspect, or alternatively provide a copy to the First Respondent, of each document in the Applicant’s List of Documents filed on 4 July 2003 which has not been provided to the First Respondent on or before 11 September 2003 within such period as the Court fixes.’

3                     The second motion was filed on 17 September 2003 by Vito Fodera, the seventh respondent.  It seeks an order in similar terms to that sought by FFE, but referring to inspection by Mr Fodera rather than FFE.

4                     The motions for inspection are resisted by ACCC and also by five respondents, Tyco Australia Pty Limited (‘Tyco’, second respondent), Metropolitan Fire Systems Pty Ltd (‘Metropolitan’, fourth respondent), Allan Carr (ninth respondent), Mitchell Grice (tenth respondent) and Bill Lawson (eleventh respondent).  I will refer to these respondents as ‘the Tyco respondents’.  As I understand the position, Tyco and Metropolitan are related companies, each being members of the Tyco Group.  Messrs Carr, Grice and Lawson are apparently all employees, or former employees, of a company in the Tyco Group.

The proceeding

5                     The principal proceeding is a suit brought by ACCC against eleven respondents (four corporations and seven natural persons) in which it alleges that participants in the fire protection industry have contravened the Trade Practices Act 1974 (Cth) (‘the Act’), notably s 45.

6                     According to evidence led in the motions, ACCC was first alerted to possible contraventions of the Act by solicitors acting for the Tyco Group, Phillips Fox.  Prior to the institution of the principal proceeding, Tyco (through Phillips Fox) and ACCC came to an agreement (‘the leniency agreement’), whereby Tyco agreed to provide ACCC with witness statements by relevant officers in return for a promise by ACCC not to seek the imposition of pecuniary penalties on Tyco, Metropolitan or any of their serving employees.

7                     Early this year, I heard argument on the general question whether ACCC was obliged to give discovery of documents relating to the leniency agreement.  I determined that issue adversely to the submissions of ACCC, but subject to any privilege that attached to any particular document.  On 7 March 2003, I directed that ACCC file a List of Documents relating to four categories. 

8                     The List of Documents was filed on 4 July 2003.  However, ACCC objected on specified grounds to production of many of the identified documents.  Discussions between the parties resulted in agreement concerning some documents, but there is continuing dispute about many others.

9                     In an affidavit dated 26 September 2003, Nicholas Steven Ellis, a Director employed in ACCC’s Sydney office with responsibility for managing investigations and litigation undertaken by ACCC, divided the disputed documents into four categories, as follows:

(i)                  documents that predate commencement of the principal proceeding on 31 May 2002, over which there is a claim for legal professional privilege (‘category (i) documents’);

(ii)                documents dated after 31 May 2002, over which legal professional privilege is claimed (‘category (ii) documents’);

(iii)               draft witness statements, over which this privilege is also claimed (‘category (iii) documents’); and

(iv)              documents over which without prejudice privilege is claimed (‘category (iv) documents’).

10                  Copies of all the disputed documents have been made available to me for inspection (if necessary) in determining the privilege claims made.

Background

11                  In order to put the issues into perspective, it is necessary to summarise the history of the matter, as set out in Mr Ellis’ affidavit, the content of which was not challenged at the hearing of the motions.

12                  It appears that on about 26 March 2001, ACCC’s Canberra office received a leniency submission from Phillips Fox.  The submission was made on behalf of all companies in the Tyco Group, including the now second and fourth respondents, and their relevant employees.  Mr Ellis described the submissions, in his affidavit, as concerning ‘the conduct of Tyco and several current and former employees in possible price fixing and market sharing conduct in the fire protection industry in Sydney at various dates between 1988 and 1997’.

13                  ACCC considered the submission and sought further information.  This was supplied by a supplementary submission from Phillips Fox dated 19 June 2001.

14                  On 23 July 2001, David Smith, ACCC’s Executive General Manager of Enforcement/Compliance, wrote to Phillips Fox stating that ACCC had considered the submission and reached a decision that it was ‘not prepared to offer the Tyco Group complete immunity in relation to the [disclosed] conduct’; nonetheless, upon certain specified conditions, including the supply of information and the provision of evidence in any subsequent proceedings, it would refrain from seeking any penalty against members of the Tyco Group or current employees.  However, Mr Smith added:

‘Given the seriousness of the alleged matters and the factors referred to above the Commission believes that it is otherwise appropriate to obtain Court orders in respect of the alleged conduct.’

15                  The letter went on to state that leniency was conditional on the Tyco Group and its employees co-operating in relation to filing agreed statements of fact, the provision of complete and truthful statements and affidavits, and their consent to appropriate Federal Court declarations, injunctions and orders.

16                  Mr Smith had informed Mr Ellis about the matter in early July 2001.  On 23 July, he transferred its carriage to ACCC’s Sydney office, when it came into Mr Ellis’ area of responsibility.  As at that time, it was Mr Ellis’ understanding that ACCC anticipated instituting legal proceedings, at least against members of the Tyco Group and one or more of their employees or ex-employees.  Mr Ellis believed that, having regard to the nature of the alleged conduct, it was likely the proceeding would also involve other respondents, but no decision was made about other respondents until 31 May 2002.

17                  Over the period July to November 2001, there was additional correspondence between ACCC and Phillips Fox, mainly about details of co-operation.  This correspondence culminated in a letter of 20 November 2001, in which Phillips Fox acknowledged ‘there is agreement with the Commission’, as set out in specified earlier letters.

18                  The category (i) documents all bear dates between 20 November 2001 and 31 May 2002.  They are 19 in number.  Four documents (documents 11, 16, 19 and 22) comprise correspondence from Phillips Fox enclosing draft witness statements and other material.  In his affidavit, Mr Ellis said:

‘These statements were prepared by Phillips Fox pursuant to the agreement to provide the ACCC with witness statements.  The draft statements from relevant employees obtained by Phillips Fox and provided to the ACCC were used by the ACCC in order to conduct interviews in order to obtain further drafts which were then briefed to the AGS and Counsel briefed in this matter, for the purpose of the anticipated legal proceeding as described in paragraphs 9, 10, 11, and 13 above.’

19                  Mr Ellis described three other documents (documents 21, 24 and 38) as ‘providing information requested by the ACCC’.  Another nine documents (documents 10, 14, 18, 25, 32, 33, 36, 37 and 39) were said to be ‘communications between Phillips Fox and the ACCC concerning the provision of draft witness statements and other information by Phillips Fox on behalf of Tyco’.  Two documents (documents 31 and 41) were communications to ACCC from a potential witness ‘supplying information concerning the matters which were anticipated to be the subject of litigation’.  The final document (document 40) was a communication to a potential witness enclosing a draft witness statement.

20                  In his written outline of submissions, Mr W G Muddle, counsel for FFE, said:

‘FFE does not presently seek inspection or copies of:

(a)               those parts of the documents over which public interest immunity has been claimed; or

(b)               those documents which were prepared by an officer of the ACCC or a professional advisor of the ACCC (within the meaning of section 157(1) of the Trade Practices Act) after the ACCC retained lawyers and over which legal professional privilege has been claimed.’

21                  However, he said, FFE does seek production, under s 157(2) of the Act, of copies of those category (i) documents ‘which were not prepared by an officer of the ACCC or a professional advisor of the ACCC’.

22                  Section 157 of the Act relevantly provides:

‘(1)      Where:

…

(c)               a proceeding is instituted against a corporation or other person under section 77, 80 or 81; or

            …

the Commission shall, at the request of the corporation or other person and upon payment of the prescribed fee (if any), furnish to the corporation or other person:

(e)               a copy of every document that has been furnished to, or obtained by, the Commission in connexion with the matter to which the application, notice or proceeding relates and tends to establish the case of the corporation or other person; and

(f)                a copy of any other document in the possession of the Commission that comes to the attention of the Commission in connexion with the matter to which the application, notice or proceeding relates and tends to establish the case of the corporation or other person;

not being a document obtained from the corporation or other person or prepared by an officer or professional adviser of the Commission.

(2)       If the Commission does not comply with a request under subsection (1), the Court shall, subject to subsection (3), upon application by the corporation which, or other person who, made the request, make an order directing the Commission to comply with the request.

(3)       The Court may refuse to make an order under subsection (2) in respect of a document or part of a document if the Court considers it inappropriate to make the order by reason that he disclosure of the contents of the document or part of the document would prejudice any person or for any other reason …’

23                  Mr Muddle’s submission seems to raise three possible questions:

(a)                are the subject documents subject to legal professional privilege, so as to be privileged from production at common law?

(b)               if so, do subss 157(1) and (2) apply, in terms, to these documents?; and

(c)                if so, does the fact that the documents are subject to legal professional privilege:

(i)                  require the Court as a matter of law; or

(ii)                entitle the Court as a matter of discretion;

to refuse to make an order under s 157(2)? 

I will deal separately with each of these issues.

Legal professional privilege

(i)   Category (i) documents:  documents predating commencement of legal proceedings

24                  Mr Muddle argued the category (i) documents are not subject to legal professional privilege.  In that respect, he was supported by Mr David Stack, counsel for Mr Fodera.  During the course of discussion, reference was made to the summary of the classes of privileged communications set out by Lockhart J in Trade Practices Commission v Sterling (1979) FLR 244 at 245-246 (‘Sterling’).  Counsel said the only class identified by his Honour that was even arguably relevant to this case was class (f), as follows:

‘Communications passing between the party and a third person (who is not the agent of the solicitor to receive the communication from the party) if they are made with reference to litigation either anticipated or commenced, and at the request or suggestion of the party’s solicitor; or, even without any such request or suggestion, they are made for the purpose of being put before the solicitor with the object of obtaining his advice or enabling him to prosecute or defend an action.’

25                  Both Mr Muddle and Mr Stack contended that the subject documents were not communications made for the purpose of being put before ACCC’s solicitor with the object of obtaining advice or enabling the solicitor to prosecute anticipated litigation.  Although counsel do not dispute that, at the relevant time, ACCC anticipated commencing litigation, they say the communications were made for the purpose of enabling ACCC to conduct interviews of prospective witnesses.

26                  Mr Stack argued the involvement of a lawyer is central to any claim of legal professional privilege.  He referred to a comment of Mason J, whose reasons were accepted by the other members of the High Court, in National Employers’ Mutual General Insurance Association Limited v Waind (1979) 141 CLR 648 at 654, that ‘it is very doubtful whether there is a privilege for documents coming into existence as materials for the purposes of an action to be conducted by a litigant in person’.

27                  There is nothing in the present case to suggest that ACCC ever contemplated conducting the proposed proceeding against members and employees of the Tyco Group (and, in all probability, against others) other than through a lawyer.  On the contrary, Mr Ellis stated in his affidavit that, from the time he received the material from Canberra – that is, from about 23 July 2001 – he had decided ‘that ACCC would engage the Australian Government Solicitor (the AGS) as its solicitor in respect of the anticipated proceedings’.  By mid-April 2002, he said, ‘the information we had required the retention of solicitors and counsel’.

28                  Despite earlier controversy about the subject (see Mann v Carnell [1999] HCA 66; 201 CLR 1 at [25]), it is now clear that the provisions of the Evidence Act 1995 (Cth) concerning client legal privilege (ss 117-126) have no application to pre-trial discovery of documents: see Mann at [27] and Esso Australia Resources v Commissioner of Taxation [1999] HCA 67; 201 CLR 49.  In the latter case, the High Court held that, in determining whether or not legal professional privilege attaches to particular communications, the proper inquiry concerns the dominant purpose for which the communication was brought into existence.  The Court abandoned the ‘sole purpose’ test adopted in Grant v Downs (1976) 135 CLR 674.

29                  I have already referred to Mr Ellis’ evidence about the purposes for which the category (i) documents were prepared.  He said documents 11, 16, 19 and 22 were provided to ACCC ‘in order to conduct interviews in order to obtain further drafts which were then briefed to the AGS and Counsel’.  In other words, these documents were not themselves communications intended to be put before ACCC’s legal advisors, but communications designed to facilitate the creation of documents which would be put before the advisors.  They were one step removed from being privileged documents.

30                  Documents 21, 24 and 38 were described by Mr Ellis as ‘correspondence from Phillips Fox providing information requested by the ACCC’.  I note from the List of Documents that documents 21 and 24 are dated, respectively, 14 March 2002 and 12 April 2002; that is, before ACCC instructed AGS or counsel.  Document 38 is dated 10 May 2002, after solicitors and counsel were retained.  However, Mr Ellis did not claim that any of these documents was obtained for the purpose of being referred to a lawyer.  Accordingly, it seems to me the claim of privilege must fail in respect of all these documents.

31                  The next nine documents (documents 10, 14, 18, 25, 32, 33, 36, 37 and 39) were said to be ‘communications between Phillips Fox and the ACCC concerning the provision of draft witness statements and other information by Phillips Fox’.  The earliest of these documents is dated 20 November 2001, well before ACCC’s retention of lawyers.  The latest is dated 22 May 2002, shortly after that event.  There is no reason to think the early documents were communicated for the purpose of being placed before lawyers and I would not make that assumption about the later ones, Mr Ellis having made no distinction between them.  There is no evidence of such a purpose in relation to any of the documents.

32                  From Mr Ellis’ description, the communications with one or more potential witnesses (documents 31, 41 and 40) could have been concerned with the mechanics of the witness providing information and/or giving evidence or, alternatively, with the content of the witness’ likely evidence.  I have no difficulty in accepting that the communications occurred only because ACCC proposed to institute legal proceedings.  However, none of these communications was to or from a lawyer acting on ACCC’s behalf.  There is no suggestion that any of these communications, itself, was intended to be placed before a lawyer for advice or use in the proposed litigation.

33                  I reject the claim of legal professional privilege in relation to all the category (i) documents.  That being so, it will not be necessary for me to consider s 157 of the Act in relation to those documents.  They are not protected by legal professional privilege and ought to be produced on discovery.

(ii)        Category (ii) documents:  documents after commencement of legal proceedings

34                  The documents falling within this category were described by Mr Ellis, in his affidavit, in this way:

‘23.      Document 60 is a communication to a potential witness from the ACCC enclosing a draft witness statement concerning the matters which are the subject of this litigation.  Document 46 is correspondence from Phillips Fox providing information from Tyco requested by the ACCC.  Documents 48, 52, 53, 55 and 122 and the material attached thereto, is correspondence from Phillips Fox to the ACCC, providing information obtained from witnesses.  Document 58 is a communication to potential witnesses, through Phillips Fox, from the ACCC, enclosing a draft witness statement concerning the matters which are the subject of this litigation.  Documents 59, 64 and 65 are communications between the ACCC and Phillips Fox concerning use that the ACCC was proposing to make of information supplied by Phillips Fox on behalf of Tyco.  Documents 118 and 119 are communications between the AGS and Phillips Fox concerning use that was being considered for information supplied by Phillips Fox on behalf of Tyco.  Document 61 is a communication from the ACCC to a witness in which the witness is advised of use that the ACCC was proposing to make of information supplied by them.

24.       Documents 66, 67 and 109 are communications between the AGS and Phillips Fox about the evidence of a witness.  Documents 68, 105, 107, 108 and 116 are communications between the AGS and Phillips Fox enclosing draft witness statements.  Document 106 is a communication by the AGS to Phillips Fox concerning use that the ACCC was proposing to make of information supplied by Phillips Fox on behalf of Tyco Australia Pty Ltd.  Document 47 is a communication by the ACCC to Phillips Fox seeking further information from a witness.  Documents 69, 72, 73, 74, 75 and 76 are communications from the ACCC to a witness enclosing a draft affidavit (76 enclosed the affirmed affidavit).

25.       Documents 45, 70 and 71 are communications from a witness to the ACCC supplying information to the ACCC.  Document 121 is a communication from Phillips Fox to the AGS providing information about the conduct of this litigation.  Documents 120 and 123 are communications by the AGS to Phillips Fox about the conduct of this litigation.

26.       Document 77 is a communication from Phillips Fox to the ACCC concerning the use to which the ACCC could make in these proceedings of material provided by Tyco.  The dominant purpose of the communications described in paragraphs 23 (other than documents 59, 64 and 65), 24, 25, and this paragraph was to obtain further information for use in these proceedings.  The dominant purpose of documents 59, 64 and 65 was to obtain information for use in the Supreme Court proceedings to reinstate the third respondent.’

35                  The third respondent, Premier Fire Protection (NSW) Pty Ltd, had apparently been deregistered.

36                  The documents identified in the filed List of Documents are listed in chronological order.  Document 42 is dated 31 May 2002, the date of institution of the proceeding.  All documents having a higher number came into existence after that date.  Accordingly, it is apparent that all the documents in category (ii) were communications that occurred after legal proceedings had commenced.  Decisions having been made as to the persons against whom proceedings should be instituted, it may be taken that the focus of ACCC’s activity had moved by then from investigation, in order to determine what persons (other than members or employees of the Tyco Group) were involved in the allegedly unlawful conduct, to the assembly of evidence against those persons.

37                  It appears from Mr Ellis’ descriptions that some, but not all, of these documents were communications from or to AGS.  However, I do not think this is decisive.  Not all communications to or from a lawyer are the subject of legal professional privilege; not even if they relate to current litigation.  The critical issue is the nature of the communication; there must be a purpose of obtaining legal advice or providing evidence to be used in the litigation: see paras (a), (b) and (e) in Lockhart J’s summary in Sterling at 245-246.

38                  To the extent that communications to or from AGS constituted draft witness statements, I think they are privileged.  To use Lockhart J’s words at 246, they were:

‘[c]ommunications passing between the party’s solicitors and a third party … made when litigation is … commenced, for the purposes of the litigation, with a view to obtaining … evidence to be used in it or information which may result in the obtaining of such evidence’. 

Privilege might also extend to communications other than draft statements, to or from AGS, if they were for the purpose of obtaining such information.

39                  Turning to the description in para 23 of Mr Ellis’ affidavit, it appears that none of the first eleven documents mentioned by him was a communication to or from AGS.  No doubt they were related to the then-pending litigation and were concerned with the provision of information.  However, they were not communications to or from a party’s lawyer.  Documents 118 and 119 were communications between AGS and Phillips Fox, but they are described by Mr Ellis as ‘concerning use that was being considered for information supplied by Phillips Fox on behalf of Tyco’.  They do not appear to be communications for the purpose of obtaining evidence for use in the pending proceeding.  Document 61 is a communication between ACCC and a witness.

40                  It seems to me that none of the documents mentioned in para 23 is privileged.

41                  Many of the documents mentioned in para 24 of Mr Ellis’ affidavit are communications between AGS and Phillips Fox.  It seems to be clear that documents 68, 105, 107, 108 and 116 (all ‘communications between the AGS and Phillips Fox enclosing draft witness statements’) should be regarded as communications with a view to ACCC’s solicitor obtaining evidence.  Document 47 also seems to be clearly in this category, as are documents 69, 72, 73, 74, 75 and 76.

42                  It was not clear to me, from Mr Ellis’ description, whether documents 66, 67 and 109 were communications about the content of a witness’ evidence or merely communications about whether a person would be available as a witness.  I decided to resolve the matter by looking at the documents.  Having done so, I find they were all in the former category and, therefore, subject to legal professional privilege.

43                  Document 106 does not appear to fall within any recognised category of legal professional privilege.

44                  Turning to para 25 of Mr Ellis’ affidavit, it seems to me clear that documents 45, 70 and 71 are subject to legal professional privilege and equally clear that documents 121, 120 and 123 are not.  I make the latter comment also about document 77.

45                  In reaching the conclusion that some of the communications mentioned in Mr Ellis’ affidavit are not subject to legal professional privilege, I do not overlook his general statement, in para 26, that the dominant purpose of the communications described in paras 23 to 26 ‘was to obtain further information for use in these proceedings’ or the Supreme Court proceedings.  But the claim for privilege cannot be evaluated by reference to a sweeping statement of that kind.  It is necessary to consider the purpose of each particular communication.  That is why I have based my rulings upon Mr Ellis’ more specific evidence rather than his general statement.

46                  As I have reached the view that some of the category (ii) documents are the subject of legal professional privilege, it will be necessary for me later to consider the position of those documents under s 157 of the Act.

(iii)       Category (iii) documents:  draft witness statements and affidavits

47                  All the category (iii) documents are drafts of witness statements or affidavits.  Mr Ellis described them in this way at para 27 of his affidavit:

‘Documents 78 to 102 are drafts of witness statements and affidavits prepared for use in these proceedings at a time when legal proceedings were anticipated or these proceedings were commenced.  Documents 78, 79, 80, 83, 84, 85, 86, 93, 94, 95, 96, 97, 99 were prepared when legal proceedings were anticipated.  Documents 81, 82, 87, 88, 89, 90, 91, 92, 98, 100, 101, 102 were prepared after the commencement of these proceedings.  Documents 78 (see document 11), 79 (see document 16), 80 (see document 19), 83 (see document 11), 84 (see document 16), 85 (see document 19), 96 (see document 22), 99 (see document 22), 101 were prepared by Phillips Fox, and supplied to the ACCC or the AGS, at the request of the ACCC, as described in paragraph 15 above.  Documents, 81, 82, 86-89 and 97, 98, 100 and 102 were prepared by the ACCC and/or the AGS, and based on the drafts prepared and supplied by Phillips Fox.  Documents 90-94 were prepared by the ACCC and/or the AGS, 95 contains comments of a witness on a draft statement prepared by the ACCC and/or the AGS.’

48                  It seems the draft witness statements and affidavits, prepared after institution of the principal proceeding, were all communications brought into existence for the purpose of conducting that proceeding.  Accordingly, all these documents fall within para (e) of the summary offered by Lockhart J in Sterling.  See also Dingle v Commonwealth Development Bank of Australia (1989) 23 FCR 63 at 66 (Pincus J), J-Corp Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (1992) 38 FCR 452 at 457 (French J); Australian Competition and Consumer Commission v Rural Press Ltd [1999] FCA 1847; 96 FCR 141 (‘Rural Press’) at [26] (Mansfield J) and the comment by Gibbs CJ about any drafts of the claim book in Attorney-General (Northern Territory) v Maurice (1986) 161 CLR 475 at 480.  Documents 78 to 102 inclusive are all subject to legal professional privilege.  I will later consider their position under s 157 of the Act.

(iv)       Category (iv) documents:  documents relating to dispute

49                  At para 28 of his affidavit, Mr Ellis identified seven documents (documents 50, 51, 54, 56, 57, 62 and 63) as being ‘communications between the ACCC and Phillips Fox negotiating the resolution of a dispute between the ACCC and [the Tyco respondents] as to a procedural aspect of these proceedings’.

50                  The nature of without prejudice privilege was discussed by the House of Lords in Rush & Tompkins Ltd v Greater London County Council [1989] 1 AC 1280.  That decision stands as authority for two propositions relevant to this case.  First, the privilege avails against third parties in litigation concerned with the same subject matter, not just against the opposing party in the litigation under negotiation (see 1300-1301).  Second, the privilege applies to pre-trial discovery as well as at trial (see 1303).

51                  In Australian Competition and Consumer Commission v ABB Power Transmission Pty Ltd [2003] FCA 626 at 25-26, Emmett J summed up the situation in this way:

‘Public policy requires that there be a privilege that prevents tender against a party of an admission made by that party in the course of or for the purposes of negotiating a compromise of a dispute.  The privilege would extend to preventing any person from tendering such material against the admitting party, including in circumstances where the party seeking to tender the material as an admission is not the party to whom the admission was made.

As a general rule, without prejudice privilege renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement.  Further, admissions made to reach settlement with a different party within the same litigation are also inadmissible, whether or not settlement was reached with that party.’

52                  I respectfully agree with this summary.  As the category (iv) documents are all communications brought into existence for the purpose of an attempted settlement of an issue arising in the same litigation, it follows they are all subject to without prejudice privilege.

Section 157 of the Act

53                  At para 22 above, I set out the relevant parts of s 157 of the Act.  The relationship between that section and the doctrine of legal professional privilege was considered by a Full Court of this Court (Bowen CJ, Beaumont and Gummow JJ) in Arnotts Limited v Trade Practices Commission (No 1) (1990) 21 FCR 297 (‘Arnotts’).  The Court had before it a case stated by a single Judge.  It is instructive to set out the questions in the case stated and the Court’s response:

‘Q:1.    Is the Court empowered to refuse to make an order under sub-section (2) of s 157 of the Trade Practices Act (the Act) in respect of a document, or part of a document, if it is considered that the conditions giving rise to legal professional privilege are satisfied in respect of the document or part of it, and that the privilege is not waived?

A:        Yes

Q:2.     If so, is the Court’s power to refuse to order disclosure of the document, or part of it, derived from:

(a)               the common law privilege; or

(b)               the exercise by the Court of the statutory discretion conferred by sub-section (3) of s 157; or

(c)                some other, and if so, what, source?

A:        The Court’s power to refuse to order disclosure is an exercise by the Court of the statutory discretion conferred by subs (3) of s 157 of the Act.’

54                  At 302, the Full Court made two preliminary disclaimers, both of which have some relevance to the present case.  First, no question had arisen in that case about the operation of s 157 in a context where documents held by the Commission are subject to the legal professional privilege of a third party.  In the present case, the Tyco respondents have claimed that they also have legal professional privilege in each of the communications which I have held to be subject to ACCC’s legal professional privilege.  Second, in Arnotts the Full Court did not address public interest immunity privilege, no such claim having been argued.  In the present case there is such a claim in relation to some of the subject documents, but resolution of that claim has been deferred.

55                  After noting that s 157 does not apply only to Court proceedings, the Arnotts Full Court held that Trade Practices Commission v TNT Management Pty Ltd (No 3) (1981) 55 FLR 219 was authority for the following four propositions:

‘(a)      In relation to curial proceedings such as the present proceedings, the intention disclosed by s 157 is that a corporation is to be given fair treatment in the sense that it is to be given documents which the Commission has and which would support the corporation’s case, in the sense of tending to establish that case.

(b)       A document will be “prepared by an officer … of the Commission” if it has been drawn up by an officer, whether or not any particular contribution of ideas is evident in its contents.

(c)        If a document tends to impeach the Commission’s case, it tends to establish the case of the corporation or other person within the meaning of s 157.

(d)       A document which might suggest some line of inquiry which could be of assistance to the corporation in conducting its case does not answer the description of a document which tends to establish that case; the contrast with the ambit of the obligation on discovery will be apparent.’

56                  At 303, the Full Court considered competing submissions put to it concerning the effect of s 157 upon legal professional privilege.  Apparently, the applicants had submitted that the legal professional privilege of the Commission was abrogated in respect of documents that fell within s 157(1); accordingly, the Court had no power to refuse to make an order under s 157(2), even though it considered the conditions giving rise to legal professional privilege were satisfied.  The Commission had argued that its legal professional privilege was untouched by s 157; so the Court should refuse to order disclosure.

57                  The Full Court noted that many documents that will ordinarily be covered by legal professional privilege, will be ‘exempt documents’, excluded from production by the concluding words of s 157(1); however, not all privileged documents will be exempt.  At 304, the Full Court pointed out that a court may require the documents to be produced to it for inspection and may make an order subject to conditions.  The Full Court went on:

‘However, the Court may refuse to make any order in respect of a document or part of a document if it considers it inappropriate to do so, because such disclosure would “prejudice any person” (a phrase which includes but is not confined to the Commission) or “for any other reason”.  One such reason, in our view, would be the legal professional privilege which the Commission otherwise would enjoy against disclosure.  In this way, the doctrine of legal professional privilege is accommodated rather than abrogated by the scheme of s 157.  If, in a given case, the Court orders disclosure (without or subject to conditions) despite what otherwise would be the operation of the privilege, then to that extent and in that particular situation the common law privilege of the Commission has been qualified or diminished by the order of the Court in exercise of its statutory powers.

By qualifying or diminishing the scope of the Commission’s common law privilege on the one hand and by affording the Commission an opportunity to demonstrate prejudice or other reason in a particular case, on the other hand, the legislative scheme contained in s 157 achieves an appropriate balance of the respective interests involved.

What is done by the Court will depend upon the exercise of its discretion on a case-by-case basis.  Nothing said here is intended to control the manner in which the discretion is exercised.  But we would refer again to the general intention disclosed by s 157 in relation to curial proceedings.’

58                  So far as I am aware, nothing has been said judicially since 1989 to cast doubt upon the continuing authority of Arnotts.  It has been referred to in a number of first instance decisions in this Court.  It was applied by Mansfield J in Rural Press.  The recent decision of the High Court of Australia in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; 192 ALR 561, although made in relation to s 155 of the Act, reinforces the importance of the legal professional privilege rule and the necessity for clear words to effect any statutory abrogation of it.  There is no reason to believe that the High Court today would take a more restrictive view of the role of legal professional privilege under s 157 than that adopted in Arnotts.  Accordingly, there is no reason for me to decline to follow and apply the Full Court decision.

59                  It follows that I should be guided by the following principles:

(a)                the Court has a discretionary power, under s 157(2) of the Act, to order production of documents notwithstanding that they ordinarily would be protected by legal professional privilege;

(b)               nonetheless, legal professional privilege is not abrogated by s 157; the existence of the privilege is a factor to be taken into account in considering the proper exercise of the Court’s discretion;

(c)                in exercising its discretion, the Court should take into account the ‘general intention disclosed by s 157’; that is, ‘that a corporation is to be given fair treatment in the sense that it is to be given documents which the Commission has and which would support the corporation’s case’, including by tending to impeach ACCC’s case.

60                  In considering whether a draft witness statement or draft affidavit is a document that might support the case made by any of the present respondents, or tend to impeach ACCC’s case against them, it is relevant to distinguish between documents that are signed, or otherwise acknowledged as correct, by a proposed or possible witness and documents that are not.  A document that has been acknowledged as correct may be capable of use by a respondent at trial as a means of extracting from an ACCC witness a concession of fact or an acknowledgement of error.  If the acknowledger is not called by ACCC, the document may furnish a basis for a decision to call that witness in the respondent’s own case.  However, an unacknowledged document has no such utility.  It is an unverified assertion.  No legitimate forensic purpose would be fulfilled by putting that version to the witness in cross-examination.  It would not even go to credit.  And it would not provide a basis for a responsible decision to call a witness.

61                  It seems to me the rule of fairness which is embedded in Arnotts would be satisfied if I required production to the respondents of any draft witness statements or draft affidavits, even if otherwise subject to legal professional privilege, that have been signed or otherwise acknowledged as correct by the relevant deponent.  Privileged draft witness statements and draft affidavits which do not fall into that category should not be required to be disclosed.

62                  My intuitive feeling was that fairness would be unlikely to require production of the category (iv) documents to FFE or Mr Fodera.  However, I realised this reaction might be wrong, if the resolution of the procedural dispute involved terms of agreement or promises that might affect the honesty or reliability of any of the Tyco witnesses.  Accordingly, I inspected the documents.  They contain no indication of such a situation.  Fairness does not require their production to FFE and Mr Fodera.

Disposition

63                  I propose to make declarations reflecting my conclusions as to the existence or otherwise of legal professional privilege in relation to the category (i), (ii) and (iii) documents and the existence of without prejudice privilege over the category (iv) documents.  I will order production of the documents that are not subject to legal professional privilege and also any privileged draft witness statements or draft affidavits that are signed, or otherwise acknowledged as correct, by the relevant deponent.

64                  As the parties have had mixed fortunes on the motions, it would be inappropriate to make an absolute order for the payment of costs by either side.  The better course is for me to order that the costs of the motions be costs in the principal proceeding.  I will so order.

Associate:

Dated:              27 October 2003