FEDERAL COURT OF AUSTRALIA

DSE (Holdings) Pty Ltd v InterTAN Inc [2003] FCA 1191

PRACTICE AND PROCEDURE – legal professional privilege – advice privilege as opposed to litigation privilege – third party communications with solicitor – extent to which privileged

A-G (NT) v Maurice (1986) 161 CLR 435 referred to

ACCC v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 referred to

Anderson v Bank of British Columbia (1876) 2 Ch D 644 referred to

Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253 discussed

Baker v Campbell (1983) 153 CLR 52 referred to

Balabel v Air-India [1988] 1 Ch 317 applied

C-C Bottlers v Lion Nathan Ltd [1993] 2 NZLR 224 discussed

City of Gotha v Sotheby’s [1997] EWCA Civ 1897 referred to

Commissioner of Taxation v Pratt Holdings Pty Ltd [2003] FCA 6 not followed

Committee of Receivers of Galadari v Zealcastle Ltd (unrep) 6 October 1986 referred to

Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 followed

Esso Australia Resources Ltd v Commissioner of Taxation (1992) 201 CLR 49 referred to

Grant v Downs (1976) 135 CLR 674 referred to

Greenough v Gaskell (1833) 1 My & K 98, 39 ER 618 referred to

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

Hamersley Iron Pty Ltd v Metal and Engineering Workers’ Union WASC 21 September 1998 referred to

International Minerals & Chemical Corp (Canada) v Commonwealth Insurance Co (1991) 47 CCLI 196 referred to

Kennedy v Lyell (1883) 23 Ch D 387 referred to

Lakatoi v Walker [1999] NSWSC 156 referred to

Lawrence v Campbell (1859) 54 Drew 485; 62 ER 186 referred to

Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 referred to

Mann v Carnell (1999) 201 CLR 1 referred to

Meadon Pty Ltd & Ors v Nommack (No 247) Pty Ltd (Receiver and Manager Appointed) (In Prov Liq) & Ors Federal Court Davies J 31 January 1994 referred to

Miley v Flood [2001] 1 EHC 9; [2001] 2 IR 50 not followed

Minet v Morgan (1873) 8 Ch App 361 referred to

Mitsubishi Electric Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 referred to

Morlea Professional Services Pty Ltd v South British Insurance Co Ltd, Foster J27 September 1984 referred to

Mudgway v New Zealand Insurance [1988] 2 NZLR 283 discussed

National Crime Authority v S (1991) 29 FCR 203 referred to

Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow (a firm) [1995] 1 All ER 976 referred to and discussed

Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 discussed

Packer v Deputy Commissioner of Taxation (Qld) [1985] 1 Q’d R 275 referred to

Price Waterhouse v BCCI Holdings (Luxembourg) SA [1992] BCLC 583 discussed

Propend Finance Pty Ltd & Ors v The Commissioner, Australian Federal Police & Ors unrep 6 May Davies J referred to

Re Highgrade Traders Ltd [1984] BCLC 151 discussed

R v Bell; Ex parte Lees (1980) 146 CLR 141 referred to

R v Derby Magistrates Court; Ex parte B [1996] 1 AC 487 referred to

R v Manchester Crown Court; Ex parte Rogers [1999] EWHC Adm 94 referred to

Saunders v The Commissioner of the Australian Federal Police (1998)160 ALR 469 referred to

Southwark Water Co v Quick (1878) 3 QBD 315 referred to

Susan Hosiery Ltd v Minister of National Revenue [1969] 2 Ex CR 27 referred to

Tesco Supermarkets Ltd v Nattrass [1972] AC 153 referred to

The Lady Gwendolen [1965] P 294 referred to

The Daniels Corporation International Pty Ltd v ACCC (2002) 192 ALR 561 referred to

The Sagheera [1997] 1 Lloyd’s Rep 160 referred to

Three Rivers Council & Ors v The Governor and Company of the Bank of England [2002] EWHC 2730, [2003] EWCA Civ 474 referred to and discussed

Time Super International Ltd & Ors v Commissioner of the Independent Commission Against Corruption Hong Kong Court of First Instance 17 June 2002 referred to

TPC v Sterling (1979) 36 FLR 244 referred to

Wah v Gold Chief Investment Ltd [2003] HK CFI 468 referred to

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

Wenkart v The Commissioner Federal Police [1996] 967 FCA 1 referred to

Wheeler v Le Marchant (1881) 17 Ch D 635 discussed

DSE (HOLDINGS) PTY LTD (ACN NO 001 456 720) v INTERTAN INC

N 3011 of 2002

ALLSOP J

30 OCTOBER 2003

SYDNEY

THE COURT ORDERS THAT:

1.        Stand the matter over to a date to be fixed for the making of orders in accordance with these reasons and for the hearing of any further argument.

2.        On or before 4 November 2003 the parties deliver to the associate of Allsop J an agreed draft minute of order reflecting these reasons.

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

REASONS FOR JUDGMENT

1                     On 30 April 2003 I made orders disposing of parts of two notices of motion filed by the applicant and the respondents. There remain issues, primarily propounded by the applicant, which raise further difficult questions of legal professional privilege in another context.

2                     The issues before me are whether the respondents’ claims for privilege over certain documents identified in their list of documents are maintainable. By [2] and [3] of the notice of motion of the applicant filed in court on 11 February 2003, the applicant seeks orders that:

2.             …the Respondents forthwith produce for inspection by the Applicant any document in Part 2 of Schedule 1 of the Respondents’ Amended and Supplementary List of Documents filed on 20 January 2003 recording or constituting communications made between Salomon Smith Barney and one or more of the Respondents or the Respondent’s legal advisers (including Allens Arthur Robinson formerly known as Allen Allen & Hemsley) or any other person on behalf of the Respondents.

3.             Further, or in the alternative to paragraph 2 above, the Respondents forthwith produce for inspection by the Applicant any document in Part 2 of Schedule 1 of the Respondents’ Amended and Supplementary List of Documents filed on 20 January 2003 recording or constituting communications made between Salomon Smith Barney and one or more of the Respondents or the Respondents’ legal advisers (including Allens Arthur Robinson formerly known as Allen Allen & Hemsley) or any other person on behalf of the Respondents dated or created prior to 16 October 2001 or recording or evidencing any such communication made prior to 16 October 2001 regardless of the date of the document.

3                     I have emphasised the last part of [3]. It is the only difference between [2] and [3] in the notice of motion. It can be seen from these paragraphs that the challenge to the privilege concerns documents which record or constitute communications between Salomon Smith Barney (SSB) and the respondents or either of them, the respondents’ solicitors (AAR) and any other person on behalf of the respondents.

4                     It is convenient to commence by reference to an affidavit sworn by Mr Patrick Holmes, a solicitor employed by AAR, who “reviewed” each document that apparently fell within [2] and [3] of the applicant’s notice of motion. Pursuant to that review some documents were made available to the applicants. Mr Holmes classified the documents into 6 categories and described them in Exhibit PJHH1 as follows:

5                     The parties agreed that category 6 could be dealt with by an agreed regime. No argument took place thereon.

6                     As to categories 1 and 5, the applicant accepted that, conformably with my reasons of 30 April 2003, no privilege can be said to be waived on such documents, yet. A future attack on those claims later in the proceedings was foreshadowed. On 2 July 2003 at the hearing of this matter, I ordered that [2] and [3] of the applicant’s notice of motion filed in court on 11 February 2003 insofar as they relate to documents within categories 1 and 5 referred to in exhibit PJHH1 to the affidavit of Patrick Jösse Hamilton Holmes affirmed on 25 June 2003 be dismissed, with costs reserved.

7                     That left categories 2, 3, and 4 referred to above. Exhibit PJHH2 to Mr Holmes’ affidavit organised the relevant documents according to categories 1 to 6. I reproduce as a schedule to these reasons that part of Exhibit PJHH2 concerning categories 2, 3 and 4 and that part of exhibit PJHH2 containing the dramatis personae.

8                     It is necessary to be precise about Mr Holmes’ evidence. He gave the following evidence in his affidavit:

1.                  I am a solicitor employed by Allens Arthur Robinson (Allens). Together with two other solicitors employed by Allens, Kim Reid and Sheridan Emerson, I assist Paul Nicols, the solicitor for the Respondents, in the conduct of these proceedings for the Respondents.

2.                  In the course of preparing for the hearing of the Applicant’s Notice of Motion dated 10 February 2003 (the Applicant’s Motion). I have reviewed each document contained in 4 lever arch folders that Ms Emerson has informed me (and I verily believe) constitute all of the documents that fall within the categories of documents set out in paragraphs 2 and 3 of the Applicant’s Motion (the SSB Communications).

3.                  In the course of reviewing the SSB Communications, I identified some documents that will now be made available to the solicitors for the Applicant.

4.                  Based on my familiarity with the subject matter of the proceedings, I have:

(a)               classified the remainder of the documents (for which a claim for privilege is pressed) in accordance with the categories of privilege that are identified in the document that is exhibited to me at the time of swearing this affidavit and marked “PJHH 1” (each of which is referred to in this affidavit as a Privilege Category);

(b)               prepared the schedule that is exhibited to me at the time of swearing this affidavit and marked “PJHH2” (the Schedule); and

(c)                informed myself that parties to the SSB Communications worked for the organisations set out in the dramatis personae that is at page 1 of exhibit PJHH2.

5.                  In respect of each of the SSB Communications over which a claim for privilege is pressed, the Schedule:

(a)               identifies and describes the SSB Communication; and

(b)               identifies the Privilege Category allocated to the SSB Communication.

[emphasis in original]

9                     Objection was initially taken by Mr Smith SC, who, with Mr Whitford, appeared for the applicant, to [4(a)] of Mr Holmes’ affidavit when read with exhibit PJHH1. It was submitted that Mr Holmes was, apparently, purporting to give evidence about the purpose of the creation of the relevant documents; and that he could not do that as someone who had no personal knowledge of those facts and without identifying the source of any information about those facts so as to found appropriately framed evidence on information and belief (which this was not). There was force in these submissions. After some debate, the following exchanges took place:

Mr Parker: The question of whether they were created for a dominant purpose is the conclusion. The conclusion we would ask the court to draw based on the descriptions and the dramatis personae. The list of categories is not put forward as evidence.

His Honour: No, no, there is a list of categories and there is a schedule. Reading the two together, there is claim … for privilege in terms of PGHH1 and 2 read together. Where you and Mr Smith differ, I think, is that Mr Smith says, as I understand his submissions, Mr Smith would you correct me if I’m wrong please, … that this paragraph is irrelevant because it doesn’t depose to the facts that these documents were created for the dominant purpose.

Mr Smith: That’s right. Not only for the dominant purpose but also they involved the giving of legal advice…

….

Mr Smith: I’m content to proceed with this on the footing that my learned friend says that in effect, on the issue of whether any particular document was brought into existence to give legal advice as distinct from any other category of advice, and for the purpose with which the document or communication was brought into existence, each of those two matters being facts. To the extent that those facts are sought to be proven nothing is relied upon by the respondents apart from the schedule and the inferences you will be invited to draw from that. If that’s the position then I’m content to proceed on this basis.

Mr Parker: That is the position together with Mr Gingerich’s evidence.

…

Mr Parker: If your Honour does find it necessary to look at all the documents obviously ---

His Honour: I’m not going to look at anything until someone tenders something or asks me to look at it.

Mr Parker: I haven’t done that.

…

His Honour: …At the moment the evidence is Mr Gingerich’s affidavit, Mr Reid’s affidavit, the exhibit is tendered and does not mean in effect you withdraw the objection, Mr Smith, and simply deal with it on the basis that we have identified.

Mr Smith: Yes, your Honour.

His Honour the exhibits PJHH1 and 2 are tendered and will be admitted into evidence and retain the same markings that they bear in the affidavit of Mr Holmes. The objection to paragraph 4 of Mr Holmes is not pressed on the basis that the transcript of the last 10 minutes reveals that it is said that the matter will be dealt with on the basis that the evidence of the dominant purpose and the claims otherwise to privilege will be based on the exhibits PJHH1 and 2 together with the evidence of Mr Gingerich and any other evidence that’s tendered.

10                  Lest there be any doubt as to the consequences of all that, I should say this by way of summary. Mr Parker, who appeared for the respondents, did not seek to rely upon Mr Holmes as deposing to the facts as true in Ex PJHH1. As he said: “The list of categories is not put forward as evidence.” Rather, Exh PJHH1 is a categorisation and PJHH2 describes the contents of, and parties to, the documents and other matters. From the description of the documents contained in Exh PJHH2 and the balance of Mr Holmes’ and Mr Reid’s evidence the categorisation in PJHH1 1 is sought to be supported.

11                  Mr Holmes was cross-examined. Before dealing with that, it is necessary to describe the balance of the evidence relied upon by the respondents in justifying the claims to privilege. An affidavit of Kim Andrew Reid, a senior associate at AAR, sworn 27 May 2003 was read. He exhibited (as KAR1) the minutes of meeting of the board of directors of the first respondents of 14 and 15 August 2000, held in Toronto, Ontario, Canada. The various parts of those minutes contained the following:

Mr Stegall welcomed the Board back and stated that the first action item was a requirement for Board action approving and authorizing the retention of Salomon Smith Barney (“SSB”) to provide investment banker services to the Company. Upon motion duly made and seconded, the retention of SSB was unanimously authorized and approved and management was authorized to do all things necessary and desirable to negotiate and execute the necessary engagement letter and ancillary documents.

…

Mr Stegall advised that representatives of SSB would now be conferenced into the meeting and welcomed Mr Peter Thom who joined the meeting via telephone.

…

Mr Thom also advised that SSB was desirous of setting up a meeting with the Company’s Australian managing director to be able to intelligently ascertain possible synergies occasioned by a merger of the Tandy operation with Dick Smith Electronics.

…

12                  He also exhibited (as part of KAR2) a letter from SSB in New York (Salomon Smith Barney Inc) to the first respondent dated 16 August 2000 which the evidence disclosed was signed by SSB and the first respondent and which, relevantly, was in the following terms:

We are pleased that InterTAN, Inc. (the “Company”) has chosen to engage Salomon Smith Barney Inc. (“SSB”) as its exclusive financial adviser in connection with one or more possible Transactions involving the Company and/or its Australian and Canadian subsidiaries (the “Subsidiaries”). We look forward to working with you on this engagement, and have set forth below the agreed upon terms of our engagement.

Scope of Engagement. As we have discussed, in the course of our engagement as your exclusive financial adviser, we will perform such financial advisory and investment banking services for the Company in connection with the proposed Transactions as are customary and appropriate in transactions of this type and as you reasonably request. For purposes of this agreement, “Transaction” means, whether in one or a series of transactions, the sale, transfer or securities of the Company or one of the Subsidiaries, whether by way of a merger or consolidation, leveraged buyout, minority investment or partnership, collaborative venture or otherwise, or any other extraordinary corporate transaction involving the Company or one of the Subsidiaries; but specifically excludes any transactions(s) under $30 million that directly result from discussions that the Company had with other parties more than 6 months prior to the date hereof. In addition, for a transaction involving Future Shop Ltd. it is agreed that SSB will be retained in a role no less than a co-financial advisor.

…

… The Company acknowledges that SSB has been retained hereunder solely as an adviser to the Company, and not as an adviser to or agent of any other person, and that the Company’s engagement of SSB is as an independent contractor and not in any services hereunder through one or more of its affiliates. Neither this engagement, nor the delivery of any advice in connection with this engagement, is intended to confer rights upon any persons not a party hereto (including security holders, employees or creditors of the Company) as against SSB or our affiliates or their respective directors, officers, agents and employees. SSB may at our own expense, place announcements or advertisements in financial newspapers and journals describing our services hereunder.

13                  Mr Reid also gave the following evidence without objection:

4.        On 27 March 2003 I had a telephone conversation with Mr Jim Gingerich. As a result of that telephone conversation and a subsequent exchange of e-mails with him. I am informed by Mr Gingerich and verily believe the following matters:

(a)     he was the Executive Vice President and Chief Financial Officer of InterTAN Inc (InterTan) in 2001;

(b)     he was present at the 14 and 15 August 2000 Board Meeting;

(c)      following the 26 December 2000 Board Meeting, he was directed to take all steps necessary to effect the sale of InterTAN Australia Limited to DSE (Holdings) Pty Limited (the Sale). This direction was given by both Ron Stegall and Brian Levy of InterTAN Inc in early 2001, after Ron Stegall and Bill Wavish of Woolworths Limited had reached a verbal agreement in relation to the Sale. The direction was in words to the following effect:

“negotiate and execute the best deal that you can for InterTan Inc”.

(d)     in early 2001, Andrew Cox of SSB said to him words to the following effect:

(e)      on SSB's recommendation, he then engaged Allen Allen & Hemsley (which later became Allens Arthur Robinson) (Allens) to assist in relation to the Sale;

(f)       between January and April 2001, he was the only representative of InterTAN in Australia involved in effecting the Sale. From time to time during this period, representatives of SSB in Australia assisted him in the Sale. …

14                  Objection was taken to the balance of par (f) of [3]. I allowed it. That evidence was as follows:

3(f) …Sometimes, this assistance took place in response to a direct request by him to the relevant officer of SSB and sometimes SSB carried out the task without prior instructions. Given the size of the transaction and the volume of work that needed to be done, he welcomed this assistance from representatives of SSB in relation to various aspects of the Sale, including conducting negotiations, liaising with Allens in relation to various matters, passing on his comments/instructions to Allens and passing on Allens’ comments/advice to him;

15                  I also admitted the first part of paragraph (g) which was in the following terms:

3(g) as he, Allens and SSB worked together as a team, they used each other as ‘sounding boards’ with the common aim of effecting the Sale in a manner that best suited the interests of InterTAN. …

16                  I rejected the balance of [3(g)] for reasons which I gave on 2 July 2003.

17                  Mr Holmes was cross-examined. The following relevant matters flowed from that cross-examination. First, most of the people from AAR who could give direct evidence of the purpose of the creation of the documents were available to give evidence, but did not. Secondly, for the purpose of classification into categories 2 and 3, Mr Holmes made no enquiries (save some identification of handwriting) of those at AAR who may have had personal knowledge of the circumstances surrounding the creation of the documents. Mr Holmes drew his descriptions in PJHH2 and his categorisation in PJHH1 from the face of the documents only. Thirdly, it was plain from all of Mr Holmes’ evidence that, notwithstanding his saying on a number of occasions that he based the categorisation on the contents of the documents, he brought a large assumption to bear: that all category 2 documents had underlying them an implied request for legal advice. The following exchange with Mr Smith took place at the end of his cross-examination:

Mr Smith: If the document from Mr Laurence in category 1216 just said enclosed a copy of Mr Doug Sanders draft due diligence index without more you assumed that someone there was a request for legal advice in relation to that particular communication without knowing whether there was or was not in fact such a request. Didn’t you?

Mr Holmes: Yes

Mr Smith: You assumed in relation to all of these items in category 2 that any communication was made in circumstances where there was what you assumed to be an implied request for legal advice without knowing whether or not that was the fact?

Mr Holmes: Yes, within the general context of the retainer.

18                  There was evidence that Mr Lawrance, one of the employees of AAR was not admitted as a solicitor until 16 February 2001.

19                  There was evidence that on 16 October 2001 the firm of Gilbert & Tobin wrote to AAR making a demand on behalf of the applicant for the sum of $3,644,757 plus interest. The letter’s last paragraph was in the following terms:

If this sum is not received by 5.00 pm on 24 October 2001 our client will consider InterTAN Inc and InterTAN Canada Limited to be in breach of the Agreement and our client will thereupon take action to enforce its rights under the Agreement.

20                  No party asked me to look at the documents. I made it clear to the parties that I would not do so unless, at the very least, I was requested to do so. Thus, any inadequacy in evidence has not been cured by my examination of the documents. That was the parties’ choice.

21                  It is necessary to put this direct evidence in a little context. The respondents retained a large and well known international investment banking house (the terms of the arrangement and common sense do not require strict adherence to corporate form here) and a well known and highly experienced firm of solicitors to assist them in the negotiation, documentation and effectuation of a large commercial transaction – the sale of shares in the respondents’ then Australian subsidiary, for over $100m. The subsidiary owned and ran a chain of businesses. I can, and do, readily infer that the sale of such property involved a large and complex negotiation and transaction, requiring the skilled and careful advice of lawyers and experienced commercial people within the investment house. I can also readily infer that implicit (even if, as appears to be the case, no express words of retainer of AAR were uttered or written) in AAR’s retainer (“to assist in relation to the Sale”: [4(e)] of Mr Reid’s affidavit) was a request to provide all relevant legal advice on matters, whether great or small, as they arose in discussion either with the clients or SSB, in connection with the undertaking of the sale, including, but by no means limited to, drafting documents, both to reflect the clients’ instructions and from their experience to best protect and advance their clients’ interests. As Taylor LJ (as his Lordship then was) said in Balabel v Air-India [1988] 1 Ch 317, 330:

…legal advice is not confined to telling the client the law; it must include advice as to what prudently and sensibly should be done in the relevant legal context.

22                  I will return to Balabel in due course. For present purposes its importance lies in the recognition that the nature of provision of legal advice by a firm such as AAR in a context of the kind here was no doubt multi-faceted, complex and not amenable to sharp division between what was advisory and what was merely administrative. In a transaction of this kind, the clients would expect aspects of what was done and not done that might possibly be of significance to be considered by, and discussed between and among, the experienced lawyers and the experienced investment bankers. In reaching these conclusions, I have drawn on the evidence referred to above, and an application of what I hope is common sense in recognising the likely human reality of what was in fact done as set out in Mr Reid’s affidavit. Given the nature of the subject matter, the experience of the advisers involved and the lack of adversion to any formal terms as to how the parties (clients, lawyers and investment bankers) would inter-react and communicate, I have no difficulty in inferring that there was a clear obligation of confidence owed to the respondents upon SSB and AAR, that AAR was authorised (and indeed expected) to communicate material to SSB (including privileged material) if AAR thought that SSB should know of it or asked for it, that SSB was authorised (and indeed expected) by the respondents to receive and pass on any information or document concerning the transaction which either agent thought appropriate so to do and that each of AAR and SSB was the agent of the respondents to request, give and receive views and information to and from each other for the purposes of best effectuating the respondents’ position in the transaction.

23                  The close co-operation of the parties is deposed to by Mr Reid; the lack of specific terms of retainer of AAR I infer from the evidence; the overlapping and complementary roles of SSB and AAR I infer from the nature of the transaction and the nature of their relevant expertise (SSB’s expertise being reflected in the terms of their retainer). It would, in my view, be unrealistic to think that the instructions to each, implicit in the consent to co-operative communication which apparently occurred, did not contain an authorisation to request, give and receive information and views to and from the other in the way I have described.

24                  Before coming to the individual claims for privilege, I will deal with the law in connection with two areas the subject of debate before me:

(a)           the general extent of privilege under “advice privilege”, as opposed to “litigation privilege”; and

(b)          the scope of advice privilege in relation to communications with third parties (relevantly here, SSB).

(a)      the general extent of advice privilege

25                  Legal professional privilege attaches to communications made for the purpose of giving or receiving legal advice or for use in existing or anticipated litigation: Baker v Campbell (1983) 153 CLR 52, 122 (per Dawson J).

26                  Most of the documents in categories 2, 3 and 4 of PJHH1, being the documents the subject of dispute, are communications. One was a handwritten note of someone from AAR. I will deal with that document in due course. By reason of the documents in question being either communications or a note of a lawyer, I need not consider the question of internal client documents prepared in connection with the requesting, giving or receiving of legal advice, though never forming part of such communications: cf Grant v Downs (1976) 135 CLR 674, 677; Esso Australia Resources Ltd v Commissioner of Taxation (1992) 201 CLR 49 at [36]; TPC v Sterling (1979) 36 FLR 244, 245-46; Mitsubishi Electric Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332, 335 [8]; ACCC v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526, 556 – 58; Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325, 333-4; Three Rivers District Council v Governor and Company of the Bank of England [2002] EWHC 2730 (Comm) and[2003] EWCA Civ 474; and see also Parker J Hamersley Iron Pty Ltd v Metal and Engineering Workers’ Union WASC 21 September 1998. See also [68] and [69] below.

27                  The policy behind the privilege is set out in many cases of high authority, in particular see Greenough v Gaskell (1833) 1 My & K 98, 101-102; 39 ER 618, 620-21 per Lord Brougham LC; Anderson v Bank of British Columbia (1876) 2 Ch D 644, 689 (per Jessel MR); Southwark Water Co v Quick (1878) 3 QBD 315, 317-8 (per Cockburn CJ) and 321-22 (per Cotton LJ); Wheeler v Le Marchant (1881) 17 Ch D 635, 681-82 (per Jessel MR); Grant v Downs at 685 (per Stephen, Mason and Murphy JJ); Baker v Campbell at 118 (per Deane J) and 130 (per Dawson J); R v Derby Magistrates Court; Ex parte B [1996] 1 AC 487, 507 (Lord Taylor of Gosforth); and Esso Australia Resources Ltd v Commissioner of Taxation at 64-5 [35] (per Gleeson CJ, Gaudron J and Gummow J). In essence, the underlying policy is to promote the public interest in the encouragement of free and frank expression facilitating the representation of the client in and about the due administration of justice.

28                  The applicant submitted that the claim for privilege having been made and challenged must be substantiated by the party claiming it. This is correct. As Stephen, Mason and Murphy JJ said in Grant v Downs [1976) 135 CLR 674, 689:

…It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought in to existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in may instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence.

29                  Further, mere assertion that disclosure of a document may tend to reveal privileged material is inadequate to enliven the privilege: National Crime Authority v S (1991) 29 FCR 203, 211-12. That does not, of course, impede the drawing of inferences from the available material.

30                  The cases have sometimes appeared to reflect a tension between a wide and narrow conception as to what is comprehended in a practical application of the notion of the (now dominant) purpose of giving or receiving advice. A helpful discussion of this tension and the relevant authorities is found in the judgment of Taylor LJ in Balabel. Before turning to Balabel, it is prudent to recall that the privilege is a fundamental common law right: The Daniels Corporation International Pty Ltd v ACCC (2002) 192 ALR 561 at [9], [11], [44], [85], [86], [132] and the other High Court cases there cited. The status of it as a fundamental right and its role in one of the underpinnings of the administration of justice are related. As Lord Taylor of Gosforth said in R v Derby Magistrates Court; Ex parte B at 507:

It [the privilege] is the fundamental condition on which the administration of justice as a whole rests.

31                  The recognition of the importance of the privilege assists in recognising that it will not be allowed to be undermined by an overly narrow or technical approach to questions involved, such as the identification of the relevant advice in question. It does not, however, provide a foundation for extending the protection beyond its proper bounds.

32                  Balabel concerned a commercial dispute over an alleged agreement for an underlease of business premises. The issues concerned the negotiations between the parties. The plaintiffs sought access to three categories of documents over which privilege had been claimed:

(a)           communications between the defendant and its solicitors other than those seeking or giving legal advice;

(b)          drafts, working papers, attendance notes and memoranda of the solicitors relating to the proposed new underlease; and

(c)           internal communications of the defendant other than those seeking advice from the defendant’s Indian legal advisers.

33                  It should be noted that the issue regarding the claim for privilege for the documents in category (c) (the internal communications) fell away and was not the subject of argument: [1988] 1 Ch 317, 319C.

34                  The primary judge overruled the Master and disallowed the claims to privilege. A unanimous Court of Appeal (Taylor LJ writing the judgment and Parker LJ and Lord Donaldson of Lymington MR agreeing) allowed the appeal and upheld the claims of privilege.

35                  Taylor LJ expressed the issue as follows:

This case raises an important point concerning legal professional privilege. Broadly, the issue is whether such privilege extends only to communications seeking or conveying legal advice, or to all that passes between solicitor and client on matters within the ordinary business of a solicitor.

36                  The primary judge had adopted a test expressed by Scott J (as his Lordship then was) in Committee of Receivers of Galadari v Zealcastle Ltd (unrep) 6 October 1986, as follows:

The [defendant] in my judgment [is] entitled to withhold all communications which seek or convey advice, even though parts of them may contain narratives of facts or other statements which in themselves would not be protected. On the other hand, documents which simply record information or transactions, with or without instructions to carry them into execution, or which record meetings at which the plaintiffs were present, are not privileged.

37                  Taylor LJ recognised a divergence of judicial authority. The wider expressions of the privilege were apt to cover all communications within the scope of the retainer, that is within the professional capacity of the lawyer. This wide view was rejected. Taylor LJ said at 331:

…those dicta in the decided cases which appear to extend privilege without limit to all solicitor and client communication upon matters within the ordinary business of a solicitor and referable to that relationship are too wide. …

38                  However, in his analysis which led to that conclusion Taylor LJ recognised that whilst the purpose and scope of the privilege is to enable legal advice to be sought and given in confidence, that did not mean that one took a strict or narrow view of that purpose. Taylor LJ said at 330:

…[T]he purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly. Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great or small at various stages. There will be a continuum of communication and meetings between the solicitor and client. The negotiations for a lease such as occurred in the present case are only one example. Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as “please advise me what I should do.” But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context.

39                  Taylor LJ also recognised that the difference between the different expressions of view of the privilege were probably more apparent then real. At 331-32 his Lordship said:

…It may be that the broad terms used in the earlier cases reflect the restricted range of solicitors’ activities at the time. Their role then would have been confined for the most part to that of lawyer and would not have extended to business adviser of man of affairs. To speak therefore of matters “within the ordinary business of a solicitor” would in practice usually have meant the giving of advice and assistance of a specifically legal nature. But the range of assistance given by solicitors to their clients and of activities carried out on their behalf has greatly broadened in recent times and is still developing. Hence the need to re-examine the scope of legal professional privilege and keep it within justifiable bounds.

40                  Taylor LJ described the error of the primary judge in the following terms at 332:

…It suggests that a communication only enjoys privilege if it specifically seeks or conveys advice. If it does so, it is privileged, notwithstanding it may also contain “narratives of facts or other statements which in themselves would not be protected.” However, the second half of the judge’s formulation implies that all documents recording information or transactions with or without instructions or recording meetings lack privilege if they do not specifically contain or seek advice. The passage cited above from the judgment of Scott J in Galadari’s case, 6 October 1986, is to the same effect. In my judgment that formulation is too narrow. As indicated, whether such documents are privileged or not must depend on whether they are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate. Accordingly, I agree with the formulation made by Master Munrow in the present case, subject to the additional words which I have placed in brackets. He said:

“Once solicitors are embarked on a conveyancing transaction they are employed to ensure that the client steers clear of legal difficulties, and communications passing in the handling of that transaction are privileged (if their aim is the obtaining of appropriate legal advice) since the whole handling is experience and legal skill in action and a document uttered during the transaction does not have to incorporate a specific piece of legal advice to obtain that privilege.”

41                  This expression of the practical application of the principle by the Master (as amended by Taylor LJ) with which the other members of the Court of Appeal agreed, is of particular assistance to circumstances such as those before me.

42                  This approach was approved by Colman J (as his Lordship then was) in Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow (a firm) [1995] 1 All ER 976. I refer to my discussion of this case in my reasons published on 20 April at [20].

43                  The facts in Nederlandse were not dissimilar to those here. At 982 Colman J said:

The facts which give rise to this application are by no means unusual in the world of corporate take-overs where both sides rely on a group of advisers, some legal and some non-legal. Communications continuously pass between the members of the group, both at meetings and in telephone conversations and by correspondence. Sometimes the legal advisers communicate only with their clients, sometimes only with the other advisers and sometimes with both. There can be no doubt that that each adviser, legal and non-legal, owes, and in this case owed, a duty of confidence to its client.

44                  Colman J applied Balabel and added at 983:

As Taylor L J observed a solicitor’s professional duty or function is frequently not exclusively related to the giving of advice on matters of law or, in the context of this kind of case, on drafting or construction of documents. It not infrequently relates to the commercial wisdom of entering into a given transaction in relation to which legal advice is also sought.

45                  I do not read the reasons of Taylor LJ as extending the privilege beyond legal advice. The reasoning of Taylor LJ was clearly directed to the privilege being so limited. What legal advice is, however, goes beyond formal advice as to the law. This recognition does not see the privilege extend to pure commercial advice. In any given circumstance, however, it may be impossible to disentangle the lawyer’s views of the legal framework from other reasons that all go to make up the “advice as to what should prudently and sensibly be done in the relevant legal framework” (Taylor LJ in Balabel at 330). That is how I read this last cited paragraph of Colman J: not extending the privilege beyond legal advice to commercial advice, but as recognising the form and nature of advice in a practical day to day context.

46                  Meanwhile, in 1991 in Australia, a similar issue arose in Dalleagles Pty Limited v Australian Securities Commission (1991) 4 WAR 325. There theAustralian Securities Commission (the ASC) required production of a large number of documents which included memoranda and notes, some made by the plaintiffs’ solicitor and some by an agent of the plaintiffs for the purpose of communication between the plaintiffs’ solicitor and the plaintiffs’ agent or as a record of communications between them. The communications and conversations were about proposed transactions and the form and content of proposed agreements and security instruments to which the plaintiff would be a party or by which their interests would be affected. The call also extended to draft agreements, draft instruments of security prepared by the plaintiffs’ solicitor, a draft Companies’ Form and a letter from the plaintiffs’ agent to the plaintiffs’ solicitor. Anderson J granted a declaration that all these documents were privileged except for the last named letter.

47                  The evidentiary foundation of the disposition of the dispute was in the following agreed facts:

(a)      Mr Musca was solicitor for the first and second plaintiff.

(b)      Mr Hare was agent for the first plaintiff and/or the second plaintiff to instruct Mr Musca.

(c)       The draft agreements and instruments were prepared by Mr Musca in the course of carrying out the instructions he had received.

48                  This is an evidential foundation similar, though perhaps more restricted, to that found by me relevant to the present circumstances.

49                  The ASC argued that privilege only extended to what is either literally legal advice or a request for legal advice. Anderson J referred to the reasons for judgment of Murphy J, Wilson J, Deane J and Dawson J in Baker v Campbell (1983) 153 CLR 52, of Stephen J in R v Bell; Ex parte Lees (1980) 146 CLR 141, 152, and of Gibbs CJ, Mason and Brennan JJ, Deane J and Dawson J in A-G (NT) v Maurice (1986) 161 CLR 435. His Honour also said the following in agreeing with the expression of view of McPherson J (as his Honour then was) in Packer v Deputy Commissioner of Taxation (Qld) [1985] 1 Q’d R 275, 284-85:

…I respectfully agree with the observations of McPherson J in Packer v Deputy Commissioner of Taxation (Qld) [1985] 1 Qd R 275 at 284-285 when in reference to the remarks made by the members of the High Court in Baker v Campbell, his Honour said:

“In applying (their remarks) it is no doubt necessary to bear in mind that a communication may be privileged even though it is not intended for use in litigation and not strictly speaking made for the purpose of legal advice but for the purposes of providing legal assistance, eg, draft conveyances and the like: Mostyn v West Mostyn Coal Co [1876] 34 LT 531, although they are not perhaps legal advice in a literal sense.”

Mostyn v West Mostyn Coal Co [1876] 34 LT 531 is long standing authority for the rule that summaries of agreements and draft agreements prepared by legal advisers with hand written observations and cancellations on them are prima facie privileged, as well as instructions given to draw an agreement.

50                  It should be noted that some of the expressions of the justices of the High Court in Baker v Campbell were approving of some of the cases discussed by Taylor LJ in Balabel as the “wider” expression of the privilege: eg Lawrence v Campbell (1859) 54 Drew 485; 62 ER 186; and Minet v Morgan (1873) 8 Ch App 361. In this respect see in particular Deane J and Dawson J in Baker v Campbell at 114-115 and 128, respectively. In this respect, see also Gleeson CJ, Gaudron and Gummow JJ in Esso Australia Resources v FCT at 64 [35]:

Legal professional privilege (or client legal privilege) protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court. …

51                  At 332-334 Anderson J set out his views at some length. His Honour said the following:

I do not think the authorities provide justification for concluding that the doctrine of legal professional privilege as applying to non-curial communications between solicitor and client has been refined to the extent submitted by counsel for the defendants, which would require professional communications to be excluded from the protection of privilege unless expressed as advice simpliciter or as a request for such advice or unless forming part of a communication expressed in that way. But anyway, I think it is the case that whenever a lay client gives instructions to a legal practitioner to perform specialist legal services involving the exercise of professional skill, there is imposed on the solicitor a duty to give any advice reasonably necessary to protect the client’s interests in the transaction whether expressly requested or not. … It is not a large step from that position to say that whenever a client gives instructions to his solicitor there is assumed to be a request for advice. In my opinion, discourse between solicitor and client with reference to the transactions covered by those instructions, that is professional discourse in a professional capacity, should be regarded as prima facie for the purpose of giving and receiving advice. This would apply to any communication that is on this face a communication of a professional nature from the solicitor to the client or his agent touching the subject matter of the solicitor’s engagement and any communication from the client to the solicitor in connection with that engagement. Only if the rule is applied in that way can the policy of it be carried out and its object practically fulfilled.

[emphasis added]

[Anderson J then referred to Mostyn v West Mostyn Coal Co (1876) 34 LT 5351, Minet v Morgan (1873) 8 Ch App 361, Lawrence v Campbell (1859) 4 Drew 45; 62 ER 186, Dawson J in Baker v Campbell, Haydon v McLeod (1900) 26 VLR 452, and Kelly v Commonwealth (1980) 39 FLR 372 and continued.]

…

What is protected, of course, is that which is communicated between solicitor and client. It is the communication that is privileged. But this is not to say that material that is not literally a communication or manifestly the record of a communication is never protected. There are many instances of protection being extended to such material. The examples of the draft letter that never leaves the solicitor’s office. The draft agreement and the draft statement of claim have already been referred to. The reason why such material is protected is often stated to be that disclosure of it will, or will tend to, reveal the privileged communication: see Attorney-General (NT) v Maurice, per Dawson J (at 496). Thus a note made by a solicitor of a conference with his client will be privileged in so far as it is a record of the communication from the client (that communication being privileged) but also in so far as it might contain notes of the solicitor’s own thoughts in regard to the matters communicated to him. Protection is afforded in the latter case on the ground that disclosure of that material might tend to reveal what had been communicated to the solicitor. There is much in the cases to support the view that this is the true basis upon which draft agreements, draft letters, draft pleadings and the like have long been accepted as privileged; that it is not so much because they are themselves “advice” or “communication” but because they will, if disclosed, reveal, or tend to reveal, the content of privileged communications. Material created by the solicitor in fulfilment of his engagement “is the result of the solicitor’s mind working upon and acting as professional adviser with reference to” material communicated to him confidentially in his professional capacity (Kennedy v Lyell (1883) 23 Ch D 387 at 407) and, as such, will by its very nature tend to reveal the content of the communication in response to which it had been prepared.

Of course, there are limits and these have often been stated. The material must have been created solely for the purpose of fulfilling the engagement. The material must be confidential. No protection can extend to agreements in their final form intended to constitute the actual transaction between the parties or to records made for the purpose of evidencing an actual transaction, or to letters sent or to forms lodged at public offices or to pleadings filed in courts. This is because legal professional privilege exists to secure confidentiality and such material is no longer confidential. I do not think I need to consider at what precise point such material would lose its confidentiality and cease to be protected. Perhaps an engrossment prepared for the purpose of execution would not be privileged even if it never was executed. In such cases, much might depend upon the precise facts. There are other exceptions. Protection does not extend to all facts learned by the solicitor in the course of his engagement. Objective facts “patent to the sense” (Kennedy v Lyell (supra) ((at 407)) which have an independent existence and may be observed by others and which the solicitor has observed independently of any confidential communication from his client and not protected: see Brown v Foster (1857) 1 H & N 736; National Crime Authority v S (1991) 29 FCR 203. And communications that are in themselves part of a criminal or fraudulent activity are not protected. No doubt there are other exceptions but I do not think any other exceptions arise for consideration in this case.

[emphasis added]

52                  No debate took place before me as to whether any reconciliation between Balabel and Dalleagles was required,or whether Anderson J’s expression of the scope of the privilege is wider than that of Taylor LJ. (Balabel was not referred to by counsel before me, or before Anderson J.) I doubt that there is any difference of substance. What underlies the expression of opinion in both cases is the recognition that the obligation of the lawyer to advise, once retained, is pervasive. It would be rare that one could, with any degree of confidence, say that a communication between client (or agent) and lawyer, in the circumstances of a retainer requiring legal advice and the directing of the client by a legal adviser, was not connected with the provision or requesting of legal advice. For the reasons given by Taylor LJ in Balabel, Colman J in Nederlandse and Anderson J in Dalleagles, too literal a requirement of identifying legal advice as express advice about the law would place undue emphasis on formalism and undermine the privilege.

53                  In The Good Luck [1992] 2 Lloyd’s Rep 540 Saville J (as his Lordship then was) in applying (as he was bound to do) Balabel said the following:

In my view if a lawyer-client communication falls within the principles set out in Lord Justice Taylor’s judgment (that is to say, is covered by legal professional privilege) then internal documents or parts of documents of the client (or indeed the lawyer) reproducing or otherwise revealing those communications are also covered by the same privilege, whatever the purpose or motive (short of fraud) for which the document comes into existence. The principle justifying legal professional privilege is (as Lord Justice Taylor pointed out) that a client should be able to obtain legal advice in confidence. …

54                  In Meadon Pty Ltd & Ors v Nommack (No 247) Pty Ltd (Receiver and Manager Appointed) (In Prov Liq) & Ors 31 January 1994 (unrep), Davies J referred to the apparent difference of opinion as to the scope of the “advice privilege” in some of the authorities. Davies J referred to the examination of Taylor LJ in Balabel of these streams. He cited the passage from Balabel at 330 set out at [38] above. He agreed with and adopted that approach.

55                  In Propend Finance Pty Ltd & Ors v The Commissioner, Australian Federal Police & Ors unrep 6 May 1994 at first instance Davies J in a passage unaffected by reasons of the Full Court (58 FCR 224) or the High Court (188 CLR 501) adopted the exposition principle by Taylor LJ in Balabel.

56                  In Wenkart v The Commissioner Federal Police [1996] 967 FCA 1 (11 November 1986) Branson J expressed various principles said to be established on the authorities, including the following:

1. Legal professional privilege attaches only to communications made for the purpose of giving or receiving advice or for use in existing or anticipated litigation (Baker v Campbell (1983) 153 CLR 52 per Dawson J at 122);

…

4. Legal professional privilege extends to any document prepared either by the client or the legal adviser from which the nature of the advice sought, or given, might be inferred (e.g. a draft pleading, a solicitor's draft letter to the other side, or a bill of costs (N.J. Williams "Four questions of Privilege: The Litigation Aspect of Legal Professional Privilege" (1990) Civil Justice Quarterly 139 - cited in Propend Finance Pty Ltd & Ors v Commissioner of Australian Federal Police & Ors (1995) 58 FCR 224 per Beaumont J at 236-237);

5. A communication for the purpose of providing legal assistance (e.g. draft conveyance and the like) may attract legal professional privilege even though not strictly legal advice (Packer v Deputy Commissioner of Taxation per McPherson J at 284 citing Mostyn v West Mostyn Coal & Iron Co. (1876) 34 LT Rep 531).

6. Similarly, professional discourse in a professional capacity, with reference to transactions covered by a retainer to provide legal advice, will be regarded as prima facie for the purpose of giving and receiving advice (Dalleagles Pty Ltd v Australian Securities Commission & Ors (1991) 6 ACSR 498 at 505).

57                  Her Honour does not appear to have been referred to Balabel or to Davies J in the above cases.

58                  In The Sagheera [1997] 1 Lloyd’s Rep 160 Rix J (as his Lordship then was) applied Balabel and said the following at 168:

…In legal advice privilege, I would suggest, the practical emphasis is upon the purpose of the retainer. If the dominant purpose of the retainer is the obtaining and giving of legal advice, then although it is in theory possible that individual documents may fall outside that purpose, in practice it is unlikely. If, however, the dominant purpose of the retainer is some business purpose, then the documents will not be privileged, unless exceptionally even in that context advice is requested or given, in which case the relevant documents probably are privileged.

59                  In 1997 the English Court of Appeal (Staughton, Aldous and Hutchison LJJ) in City of Gotha v Sotheby’s [1997] EWCA Civ 1897 specifically approved of the following passage of Taylor LJ in Balabel at 330:

In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice ... Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach.

60                  In 1998 in Saunders v The Commissioner of the Australian Federal Police (1998)160 ALR 469 French J approved the expression of principle by Anderson J in Dalleagles.

61                  In 1999 in R v Manchester Crown Court; Ex parte Rogers [1999] EWHC Adm 94 Lord Bingham of Cornhill LCJ said the following (with which Smedley J agreed):

…It is in my judgment important to remind oneself of the well established purpose of legal professional privilege, which is to enable a client to make full disclosure to his legal adviser for the purposes of seeking legal advice without apprehension that anything said by him in seeking advice or to him in giving it may thereafter be subject to disclosure against his will. It is certainly true that in cases such as Balabel v Air India [1988] Ch 317, the court has discountenanced a narrow or nit-picking approach to documents and has ruled out an approach which takes a record of a communication sentence by sentence and extends the cloak of privilege to one and withholds it from another. It is nonetheless true that legal professional privilege applies, and applies only, to communications made for the purpose of seeking and receiving legal advice.

62                  In Lakatoi v Walker [1999] NSWSC 156 Rolfe J applied Dalleagles and said at [15]:

In my opinion Dalleagles confirms the proposition, which is well established, that drafts "with handwritten observations and cancellations on them are prima facie privileged". It is not, as I understand it, authority for the proposition that drafts without such notations attract that privilege. However, a further question is whether a draft, without notations, amendments and corrections, which has not been furnished to another party for comment or otherwise in a non-privileged circumstance, nonetheless attracts client legal privilege on the basis that it reflects, one is entitled to infer, the instructions, or the essential nature of them, furnished to the solicitors by the client. Thus a situation may arise where a draft is prepared, on the existing instructions, which, after consideration by the client and before the draft has been furnished to any other party, is the subject of substantial amendment because of a change in instructions. It seems to me that in principle the production of such a draft, even without notations, amendments and corrections, would properly be held to constitute a disclosure of instructions and, in my opinion, for this reason the draft would attract client legal privilege. The situation, however, becomes very different once the draft goes into the public domain, e.g. by its being sent to the solicitors for the other party for comment in the usual course of drafting and ultimately concluding commercial documentation. Accordingly the statement in sub-paragraph (c) does not necessarily mean that the drafts do or do not attract client legal privilege

63                  In Miley v Flood [2001] 1 EHC 9; [2001] 2 IR 50 Kelly J in the Irish High Court expressed a view at [50] that Balabel and Nederlandse identified the privilege beyond that connected with advice. The conclusion seems to have been based in part on a summary of a textbook as to what Balabel stood for and in part upon extracts of Taylor LJ’s judgment which were less than complete. I do not agree with the conclusion of Kelly J.

64                  Balabel has been applied in Hong Kong. In Time Super International Ltd & Ors v Commissioner of the Independent Commission Against Corruption 17 June 2002 Seagrott J in the Hong Kong Court of First Instance applied Balabel and recognised the limitation inherent in its purpose to enable legal advice to be sought and given in confidence. Seagrott J, said the following, with which I agree, about the decision in Balabel:

The broad extension of privilege without limit to solicitor and client communications on matters within the ordinary business of a solicitor, as illustrated by a number of decided cases, should now be reconsidered in the light of the current business activities of solicitors which in many cases go beyond the role of lawyer which was the narrow confine of earlier decisions.

[citing Taylor LJ in Balabel]

... "The range of assistance given by solicitors to their clients and of activities carried out on their behalf has greatly broadened in recent times and is still developing. Hence the need to re-examine the scope of legal professional practice and keep it within justifiable bounds."

In relation to documents which do not specifically seek or contain advice, the decision as to whether they should be regarded as privileged or not must depend on whether "they are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate."

65                  Ma JA (sitting as an additional Judge of the Court of First Instance in Hong Kong) also applied Balabel in Wah v Gold Chief Investment Ltd [2003] HK CFI 468.

66                  Balabel has been applied in Canada. In International Minerals & Chemical Corp (Canada) v Commonwealth Insurance Co (1991) 47 CCLI 196; 89 Sask R 1 Halvorson J in the Saskatchewan Court of Queen’s Bench said the following:

To engage solicitor-client privilege, it must be shown that the communication or document was made confidentially for the purpose of legal advice. Those objectives must be construed broadly. Where there is a continuum of communications and meetings between the solicitor and client and information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, the privilege will attach to those communications and documents.

67                  This reflected what the Exchequer Court of Canada had said in Susan Hosiery Ltd v Minister of National Revenue [1969] 2 Ex CR 27, 33, 34 and 35:

[T]here are really two quite different principles usually referred to as solicitor and client privilege, viz:

(b)     all communications, verbal or written, of a confidential character, between a client and a legal adviser directly related to the seeking, formulating or giving of legal advice or legal assistance (including the legal adviser’s working papers, directly related thereto) are privileged; and

(c)      all papers and materials created or obtained specially for the lawyer’s “brief” for litigation, whether existing or contemplated, are privileged.

…

What is very important to note about both of these rules is that they do not afford a privilege against the discovery of facts that are or may be relevant to the determination of the facts in issue. What is privileged is the communications or working papers that came into existence by reason of the desire to obtain a legal opinion or legal assistance in the one case and the materials created for the lawyer’s brief in the other case. The facts or documents that happen to be reflected in such communications or materials are not privileged from discovery if, otherwise, the party would be bound to give discovery of them.

See also Canadian Jewish Congress v Minister of Employment and Immigration [1996] 1 FC 268 (Heald DJ); R v Trang [2002] ABQB 390 [30] (Binder J); and British Columbia (Minister of Environment, Lands and Parks) v British Columbia (Information and Privacy Commission) 12 December 1995 British Columbia Supreme Court (Thackray J).

68                  Balabel was recently discussed in England in Three Rivers Council & Ors v The Governor and Company of the Bank of England [2002] EWHC 2730 (Comm.) Tomlinson J and [2003] EWCA Civ 474 (CA – Lord Phillips, and Longmore and Sedley LJJ). Tomlinson J was overruled by the Court of Appeal. The case raises an important issue as to the extent of privilege to internal working papers of the client, that is the third class of documents not dealt with in Balabel, and a class of document not raised in the argument before me. Tomlinson J posed the issue before him as follows ([2002] EWHC 2730 (Comm)) at [3]:

[3] The question which has arisen on this application is whether the subject matter of legal advice privilege is restricted to communications between solicitor and client, including secondary evidence of such communications or whether it embraces also material brought into existence for the dominant purpose of obtaining legal advice, even though that material is not in itself a communication between solicitor and client. The Claimants contend for a narrow ambit restricted to communications properly so called, and assert that decisions of high authority support them. The Defendant contends for a wider ambit, protecting documents or information the dominant purpose of the creation or compilation of which was the seeking of legal advice, and it equally asserts that decisions of high authority support its approach.

69                  Tomlinson J afforded protection to such documents. The Court of Appeal disagreed. This view of the Court of Appeal would seem to be controversial in Australia given the expression of view in TPC v Sterling and Parker J in Hamersley Iron Pty Ltd v Metal and Engineering Workers Union. This is especially so given the Court of Appeal’s view that what was said by Barwick CJ in Grant v Downs at 677, was said to be limited to pending litigation and not directed at all to “advice privilege”, a matter which is by no means clear.

70                  The Court of Appeal noted the lack of issue as to the third category of document in Balabel: see [33] above. It was such internal documents to which the debate in Three Rivers was directed. The Court of appeal then dealt with Balabel as follows at [30]:

[30] Nevertheless Tomlinson J cited two passages from the judgment of Taylor LJ in favour of the appellants first at page 330:-

"Although originally confined to advice regarding litigation, the privilege was extended to non-litigious business. Nevertheless, despite that extension, the purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly."

The judge drew attention to the words "or other document" but the context of that phrase was that privilege was being sought for (2) "draft, working papers and memoranda" which were not, of course, communications. No argument was addressed on class (3) which would be the only relevant class for the purpose of the argument in this case. Then the judge cited the passage at page 332:-

"As indicated, whether such documents are privileged or not must depend on whether they are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate."

That is a perfectly appropriate test to apply to communications between the client and his solicitor but authority does not support its wider application to memoranda supplied by employees for the purpose of being sent to the client's solicitor and it is most unlikely that Taylor LJ intended to deal with that question. Indeed, shortly before the passage quoted, Taylor LJ pointed out that the range of assistance given by solicitors to their clients and of activities carried out on their behalf has been greatly broadened in recent times and is still developing. He added:-

"Hence the need to re-examine the scope of legal professional privilege and keep it within justifiable bounds."

Balabel is thus no authority for extending the privilege.

71                  On the state of current authority in Australia and elsewhere, I propose to follow Dalleagles and Balabel. I see no difference of substance between them.

(b)      the scope of advice privilege in relation to third parties

72                  Whilst the parties appeared to argue the matter before me on the basis of the correctness of the decision of Kenny J in Commissioner of Taxation v Pratt Holdings Pty Ltd [2003] FCA 6, the contest necessarily, in one respect, raised the correctness of Pratt. Put another way, the resistance to the production of some documents by the respondents necessarily puts in contest one aspect of Pratt. This aspect was not the subject of specific debate. A meaning of Pratt conformable with the result sought on behalf of the respondents by Mr Parker assumed a meaning of Pratt which I do not think is justified by the reasons of Kenny J.

73                  The relevant principles are common law principles, the issue not being the admissibility of evidence: Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 and Mann v Carnell (1999) 201 CLR 1. In this context Kenny J said the following in Pratt Holdings at [39] and [40]:

[39] The common law in Australia is, therefore, 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.

[40] Plainly enough, different principles govern the availability of legal advice privilege and litigation privilege: cf Waugh,at 541-2 per Lord Edmund-Davies. One difference, which is relevant in this case, is that, unlike litigation privilege, advice privilege is not available “where one of the parties to the communication is a third party who is not the agent of the client for the purpose of the communication”: see Mitsubishi,at [9] per Batt JA. Where, as in this case, litigation is neither pending nor contemplated, communications between a person or his legal adviser and a third party (who is not the agent of either of them) are not privileged, even though the communications were made for the purpose of giving or obtaining legal advice. The law in England and New Zealand would appear to be the same as that in Australia in this regard: see e.g., Great Atlantic Insurance Co v Home Insurance Co [1981] 2 All ER 485, at 487-9 per Templeman LJ (Dunn LJ agreeing); Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart [1985] 1 NZLR 596 (“Guardian Royal Exchange”), at 602 per Richardson J; and Waugh, at 541-2.

74                  After an examination of authority Kenny J said at [51] and [54]:

[51] The authorities make it clear that, where litigation is not in prospect, a claim for advice privilege in respect of a communication by an agent of the client is sustainable if (and only if) the agent is an agent for the purpose of making (or receiving) a communication to (or from) the client’s legal adviser. …

…

[54] As ARU indicates, advice privilege will not attach to a confidential communication made by a person who, though an agent of the client for some purpose, is not an agent of the client for the purpose of communicating with the solicitor to obtain or receive the advice. This proposition is not only supported by decisions in Australian courts, but also by decisions in England and New Zealand.

75                  The analysis of the authorities conducted by Kenny J reveals that if there be no litigation anticipated or contemplated, the communications between lawyer or client and third party are only privileged if the third party is an agent of the client for communication with the lawyer. That third party may well have other agency duties and responsibilities, but if the third party has, amongst those responsibilities, a duty to receive or send documents to or from the lawyer as agent of the client, that will bring the third party within the purview of the advice privilege. The important question which arises and which was not the subject of direct argument is as to the necessary width of that agency responsibility for advice privilege to be available. A difficulty arises when the third party does more than pass on information from or to the lawyer or client, that is if the third party agent is more than a mere conduit. If a third party is an agent of the client and is authorised to give and receive communications, he, she or it may also be authorised to make independent investigations, assessment and comment in order that legal advice be given.

76                  Kenny J, at [61] ff noted the Canadian and United States positions that as long as the third party was the agent of the client to participate in the consultation process for the obtaining of legal advice, its work and communications are privileged.

77                  Her Honour referred to the following passages from reasons of Jackatt P in Susan Hosiery Ltd v Minister of National Revenue [1969] 2 Ex CR 27, 35-36:

(a)               that no communication, statement or other material made or prepared by an accountant as such for a business man falls within the privilege unless it was prepared by the accountant as a result of a request by the business man’s lawyers to be used in connection with litigation, existing or apprehended; and

(b)               that, where an accountant is used as a representative, or one of a group of representatives, for the purpose of placing a factual situation or a problem before a lawyer to obtain legal advice or legal assistance, the fact that he is an accountant, or that he uses his knowledge and skill as an accountant in carrying out such task, does not make the communications that he makes, or participates in making, as such a representative, any the less communications from the principal, who is the client, to the lawyer; and similarly communications received by such a representative from a lawyer whose advice has been so sought are none the less communications from the lawyer to the client.

…

I think the Court may take judicial knowledge of the fact that corporations of all kinds are continuously faced with problems as to what arrangements are advisable or expedient having regard to the intricacies of the tax laws and that, while huge corporations have staffs of lawyers and accountants of their own through whom they seek advice of counsel learned in such special areas of practice, smaller corporations employ lawyers and accountants in general practice to act for them in obtaining special advice in connection with such matters.

78                  Kenny J commented on these passages as follows at [65]:

It is implicit in these observations that Jackett P considered that it would be illogical to allow the distinction between agents and third parties to result in large corporations benefiting from the privilege whilst smaller corporations could not, simply because the latter had to retain external financial advisers in order to obtain legal advice from their lawyers. At the same time, however, Jackett P highlighted the distinction between an accountant acting as an accountant in giving accounting advice and an accountant using his financial skill and knowledge to put the client’s position before the lawyers. Only in the latter case might the communication be privileged: cf earlier Re Sokolov (1968) 70 D.L.R. (2d) 324, at 331 per Matas J (Manitoba Queen’s Bench), holding memoranda prepared by the client’s auditors and submitted to the client’s solicitors for the purpose of obtaining legal advice to be privileged.

79                  To be contrasted with this is the position in New Zealand, discussed by Kenny J at [58] to [60]. The cases there discussed show that the authorised expression of view by the agent third party for the purposes of on-going legal advice is not enough to attract privilege.

80                  The same appears to obtain in England: see [55] to [57] of Kenny J’s reasons. The passage from the reasons of Millett J (as his Lordship then was) in Price Waterhouse v BCCI Holdings (Luxembourg) SA [1992] BCLC 583, 589 extracted in [56] of Kenny J’s reasons demonstrates the narrowness his Lordship saw as the necessary content of being an “agent for communication”. Nothing prepared or brought into existence by the third party (who, one recalls, is a confidential agent authorised to prepare such a document and provide it as the agent of the client to the lawyer for the purpose of advice) is privileged. Anything more than acting as a conduit for communication, any preparation or bringing into existence of documents will not attract privilege.

81                  It is not clear to me that for the communication to be privileged the proposition that the third party must be the agent of the client for the purpose of communication (see Mitsubishi at [9] per Batt JA and Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253) carries with it the limitation referred to by Millett J and in the New Zealand cases or that such a narrow conclusion is mandated by Wheeler v Le Marchant.

82                  The decision of Sackville J in Australian Rugby Union v Hospitality Group is conformable with the communications of the third party being privileged if the third party is the agent of the client to make that communication (whether as a mere conduit or to prepare to bring into existence or to make some communication of its own), if the communication is confidential and if the communication is for the dominant purpose of the lawyer providing legal advice. In this case the client (the ARU) met with its solicitors and representatives of two parties, IMG and SAM. IMG was an agent of the client to provide commercial services. SAM operated a stadium for the ARU. The meeting was for the purpose of information being provided by the two parties to the solicitors for advice. The notes of the meeting were held to be privileged. What occurred was that the third parties provided information to the solicitors. They were not just passing on information from the client. The client was present. They were providing information of their own. This communication was privileged because they were agents of the client to make the communications and the communication was made for the purpose of providing legal advice and in circumstances which were confidential. Importantly, Sackville J (at 258 [27]) approved the following passage of Lockhart J’s reasons in TPC v Sterling at 245:

(a)      Any communication between a party and his professional legal adviser if it is confidential and made to or by the professional adviser in his professional capacity and with a view to obtaining or giving legal advice or assistance; notwithstanding that the communication is made through agents of the party and the solicitor or the agent of either of them. See Wheeler v Le Marchant (1881) 17 Ch D 675; Smith v Daniell (1874) LR 18 EQ 649; Bullivant v Attorney-General for Victoria [1901] AC 196; Jones v Great Central Railway Co [1910] AC 4; and O’Rourke v Darbishire [1920] AC 581.

[emphasis in reasons of Sackville J]

83                  Sackville J then at 259 [29] went on to express the principle as follow:

The limitation on the scope of legal professional privilege does not mean that a communication between a party’s solicitor and a third party (a non-client), made before proceedings are instituted or contemplated, cannot be protected by legal professional privilege. The communication will be privileged if the third party is an agent of the client and if the communication is both confidential and made to the solicitor in his or her professional capacity with a view to providing legal advice to the client. In Nickmar, Wood J held that reports obtained by a solicitor from investigators or experts, on the explicit instructions of the client, should be regarded as having been supplied by the investigators or experts as agents of the client. His Honour said this (at 56):

“Any other view seems to place undue emphasis on form, and to ignore the substance of the engagement of the expert as an agent by direction. In such circumstances I believe the information could properly be regarded as collected and communicated confidentially on behalf of the client to its legal adviser, in the character, and for the purpose of obtaining legal advice.”

[emphasis added]

84                  In Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44, 52-55 Wood J discussed Wheeler v Le Marchant. It is plain from his Honour’s discussion and analysis (as it was from that of Foster J in Morlea Professional Services Pty Ltd v South British Insurance Co Ltd, 27 September 1984, discussed by Wood J at 54 -5) that an essential factor in according privilege to a third party’s communication was whether it was by an agent of the client (and so as to be equated with an act of the client), not whether the third party was merely passing on information as a conduit rather than creating some independent body of information. Wood J made this clear at 53-54:

Each of Jessel MR and Cotton LJ recognized that there was a distinction between communications from third parties acting as agents of a client seeking advice, and from third parties not acting as agents. Communications by the former could perhaps be regarded as communications of the client itself, and on that account attract privilege, where made for the purpose of obtaining advice. Communications by the latter however stand in a different position. Although they may become employed on behalf of the client to do certain work, that work is not the communicating with the solicitor to obtain legal advice (at 684). It is only when their communications are in contemplation of litigation, or for the purpose of giving advice or obtaining evidence with reference to it, that privilege attaches.

The last quoted sentence plainly referred to communications by a non-agent third party.

85                  In Morlea the communications were experts reports. Wood J said of Morlea:

…I do not read his Honour as having decided that Wheeler v Le Marchant was wrongly decided and that privilege should be extended to documents provided by a third party, not acting as agent of the client, to a legal adviser for the sole purpose of assisting him to advise that client in the absence of litigation actual or contemplated.

86                  Cooke J (as his Lordship then was) in Guardian Royal Exchange Assurance v Stuart [1985] 1 NZLR 596 at 602 said the following:

When litigation is not in prospect the traditional view is that communications between a party or his solicitor and a third party are not privileged, even although they may have been for the purpose of giving or obtaining of legal advice: see, in addition to Waugh’s case, Great Atlantic Insurance Co v Home Insurance Co [1981] 2 All ER 485. In this context an employee or agent is treated as a third party.

[emphasis added]

With the greatest respect, I do not see the basis for the rider to the passage which I have emphasised. In Wheeler v Le Marchant a clear distinction was made by Jessel MR, Brett LJ and Cotton LJ between third parties who were agents of the client and those who were not.

87                  Thus, when Chilwell J in Mudgway v New Zealand Insurance [1988] 2 NZLR 283 came to deal with Guardian Royal Exchange in the light of Wheeler v Le Marchant, Nickmar and Re Highgrade Traders Ltd [1984] BCLC 151 a distinction was made between an “independent contractor” who was “procured” by the client and someone truly “acting on his behalf”. In similar vein, Henry J in C-C Bottlers v Lion Nathan Ltd [1993] 2 NZLR 224, 447-8 identified the relevant agent that would suffice as the “alter ego” as distinct from the “independent contractor procured to perform a task” for the client. This distinction raises the difficult and elusive notions of fault or privity, and true corporate identity, found in cases such as Tesco Supermarkets Ltd v Nattrass [1972] AC 153, Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705; and The Lady Gwendolen [1965] P 294 and like cases. It would exclude employees of a client – as indeed Cooke J did in Guardian Royal Exchange Assurance.

88                  Chilwell J relied on Re Highgrade Traders Ltd [1984] BCLC 151. In that case at 164-65 Oliver LJ (as his Lordship then was) dealt with a submission on its face plainly too broad, that:

…[I]t is sufficient to support a claim to privilege merely to show that the documents were prepared at the behest of the insurers for the purpose of obtaining legal advice to be given to them by their solicitors.

89                  Oliver LJ then, referring to Wheeler v Le Marchant drew the distinction between advice and litigation privilege, a distinction referred to by Lord Edmund Davies in Waugh v British Railways Board [1980] AC 521, 541, 542. It was sufficient for Oliver LJ to make this point and to quote Jessel MR in Anderson v Bank of British Columbia, (1876) 2 Ch D 644, 649. There was apparently no call from the argument before Oliver LJ for his Lordship to deal with the distinction between third parties who are agents and those who are not, which underpins Wheeler v Le Marchant.

90                  Some basis for the limitation of the relevant agency principle to the third party as messenger can be divined from Jessel MR in Anderson v Bank of British Columbia where Jessel MR said the following at 649:

Now, as to the extent of the rule. It goes not merely to a communication made to the professional agent himself by the client directly, it goes to all communications made by the client to the solicitor through intermediate agents, and he is not bound to write letters through the post, or to go himself personally to see the solicitor; he may employ a third person to write the letter, or he may send the letters through a messenger, or he may give a verbal message to a messenger, and ask him to deliver it to the solicitor, with a view to his prosecuting his claim, or of substantiating his defence.

91                  Of course, it would go without saying that the use of the third party as a messenger and in that sense as an agent for communication would be privileged. However, that more can be embodied in the notion of an agent to communicate is seen in the following passage from the judgment of Cotton LJ in Wheeler v Le Marchant at 684:

…It is said that as communications between a client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communication between the representatives of the client and the solicitor must be also privileged. That is a fallacious use of the word “representatives.” If the representative is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position as the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor. But these person were not representatives in that sense. They were representatives in this sense, that they were employed on behalf of the clients, the Defendants, to do certain work, but that work was not the communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his representatives and the solicitor. In fact, the contention of the Respondents comes to this, that all communications between a solicitor and a third person in the course of his advising his client are to be protected.

[emphasis added]

92                  Hence, the retention of a loss adjuster or expert to prepare a report about an event or state of affairs which it is contemplated will be submitted to lawyers for advice, may well not be the retaining of a third party to act as an agent to communicate. It may well only be retaining an agent to prepare information. That is sufficient it seems to me to explain Re Highgrade Traders. However, the appointment of someone to liaise with a lawyer and to include in that person’s retainer (as here) a standing brief to communicate such matters about the client’s affairs and its views on the client’s affairs as is thought appropriate, can, it seems to me, be seen as the appointment of an agent to communicate. Though such a role goes beyond being a messenger to communicate, it involves, nevertheless, the retention of an agent to communicate.

93                  The rejection by Millett J in Price Waterhouse v BCCI of the claim for privilege did not rest upon any notion of the producer of the report being an internal organ of BCCI: cf Henry J in C-C Bottlers. Millett J equated the position of Price Waterhouse with the surveyors in Wheeler v Le Marchant: as producers of material, not as agents for communication. His Lordship’s expression of the matter was, as Henry J identified, with a narrow focus:

Price Waterhouse (or the investigating committee) was not merely the appointed channel of communications. It was not merely an agent for communicating material from BCCI to Allen & Overy; it was charged with the duty of bring the material into existence. In so far as it reported to Allen & Overy (if indeed it did), it was not passing on a communication from BCCI; it was producing material for BCCI and, at BCCI’s direction, forwarding it to Allen & Overy direct instead of to BCCI with a view of its being sent on to Allen & Overy. In my judgment, its position was not essentially different from that of the surveyors in Wheeler v Le Marchant (1881) 17 Ch D 675 or the loss-adjusters and other experts in Re Highgrade Traders Ltd. I should add that the investigating committee did not become an internal organ of BCCI, though in my view it would not matter if it did. The report in question in Waugh v British Railways Board [1979] 2 All ER 1169, [1980] AC 521 was prepared by employees of the board, inter alia, for transmission to the board’s legal advisers for the purpose of obtaining legal advice; yet the present head of privilege was neither invoked nor referred to in the speeches of any of their Lordships.

94                  Ultimately, it is a question of fact whether the third party can be said to have been appointed by the client as an agent to communicate with the lawyer. In ARU the third parties were. The client authorised and requested them to communicate to the lawyers matters known to them. With respect, I do not see the basis in principle, or in the authorities, for the conclusion that the agent so appointed to communicate with the lawyer is limited to one who does no more than pass on knowledge or information received from the client. It seems to me that the question is whether the communication between the third party and the solicitor is to be taken to be the same as a communication between the client and the solicitor. It will be, if the client appoints the third party to communicate with the lawyer on its (the client’s) behalf – whether in place of, or in addition to, it. I do not see how this is satisfactorily answered by limiting the role to being a messenger of information provided by the client to the lawyer. If the appointment of agency is, or is to include, the duty to give information and instructions to the lawyer in discussion with the lawyer and receive the lawyers views, it is difficult to understand why the agency is not characterised as one to communicate with the lawyer for the purposes of giving and receiving legal advice.

95                  With the utmost respect, I have difficulty accepting that principle requires a confining of the notion of agent to communicate in the way found in the judgments of Millett J in Price Waterhouse v BCCI, and Cooke J in Guardian Royal Exchange Assurance v Stuart. If the notion is limited to the agent being a medium for communication, then ARU was wrongly decided by Sackville J.

96                  What is necessary is that the third party be the client’s deputed agent to communicate with the lawyer in connection with the provision of legal advice.

97                  It was not put to me that I should not follow Kenny J in Pratt in any respect. The parties have not had an opportunity to deal with that question. Thus, I propose to deal with the documents from the perspective of my preferred view and from the view expressed by Kenny J. This will reveal the context of my views.

The documents

98                  Documents 1192, 1193, 1195, 1203, 1263, 1271, 1273, 1277, 1288, 1333, 1375, 1467, 1493, 1573, 1777, 1778, 1782, 1813, 1816, 1843, 1856, 1858, 1859, 1906, 1910, 1917 are documents from SSB to AAR. They are not communications to the client “cc’d” to AAR. They are memoranda from SSB to people who were, or included, those acting at AAR.

99                  If I follow Kenny J, in Pratt, I would order the production of the documents. There is no evidence that these documents were merely passing on information.

100               If I do not follow Kenny J, I would not order production. On the findings that I have made the communication is by an agent for communication (on this hypothesis) and taking into account the descriptions of the documents in PJHH2, I am prepared to conclude that the communications fall within the width of the approach in Dalleagles and Balabel. To paraphrase the words of Taylor LJ from Balabel: in a detailed and protracted matter in a continuum of communications between lawyer and the agent of the client to communicate on behalf of the client where information is passed by lawyer to the client’s agent or vice versa as part of the continuum to keep the lawyer informed so that advice may be given as required, privilege will attach. (Cf. Taylor LJ in Balabel at 330.) Discourse between the lawyer and the client’s agent for communication with reference to the lawyer’s retainer, on its face a communication of a professional nature, is prima facie privileged. (Cf Anderson J in Dalleagles at 332-34.)

101               This approach treats the SSB communications with AAR as if they were client communications with AAR. Applying Balabel and Dalleagles, on the descriptions of the documents in PJHH2, and on the basis of how the matter was approached contemporaneously by the parties, I am prepared to conclude that the documents are able to be described as they are in categories 2 and 3.

102               Document 1198 is a communication from SSB to the client with copies provided to AAR, commenting on a request from Deloittes. Given the paucity of evidence as to the content of the document, a distinction should be made between a document sent by SSB to AAR and one only “cc’d” to AAR. In the latter case, I treat the document primarily as a communication between agent and principal in connection with its (the agent’s) retainer. I do not have an evidential basis to conclude that communications concerning legal advice will tend to be disclosed by its production or that it was so communicated for the dominant purpose of obtaining legal advice. It was communicated to AAR but it is, of its nature, a communication from SSB to the client. I do not think that I can infer that it was sent for the dominant purpose of obtaining legal advice. It is in a different position to SSB communications direct to AAR, which can be seen (unless I follow Kenny J) as the same as communications from client to lawyer and, I would infer, for the dominant purpose of legal advice in respect of the transaction, relying on Dalleagles and Balabel. However, an SSB to client communication, which happens to be copied to the lawyers requires an additional evidential basis before a conclusion can be drawn that the document falls into category 2 and 3. That further link is absent. I would order production of the document.

103               Document 1999 is in a different category. There is no basis made out for the unannotated Deloitte document to be privileged. The fact that SSB has annotated it takes the matter no further. On the basis that Mr Holmes’ evidence went forward, I have no evidential basis to conclude that production will tend to disclose communications concerning legal advice. This is not a communication with AAR. I would order production of document 1199.

104               Document 1200 is in a somewhat different class to document 1198. Though only a “cc” to AAR the subject matter is legal issues. I would infer that the document was sent to AAR by an agent for communication (SSB) for the dominant purpose of AAR providing advice in accordance with its retainer.

105               Documents, 1212, 1216, 1218, 1220, 1239, 1253, 1254, 1261, 1274, 1276, 1420, 1464, 1494, 1571, 1838 are communications from AAR to SSB and/or the client. On any view SSB was authorised to receive on behalf of the client communications from AAR. On the basis of Dalleagles and Balabel and taking into account the descriptions of the documents in PJHH2, I would not order production. The fact that Mr Lawrance was not admitted as a solicitor until 16 February 2001 is not fatal to the claim. No doubt he was working with and under the supervision of admitted practitioners. No question of waiver was argued.

106               Document 1270, is a communication from a senior officer of the client to SSB, AAR and other persons in the client. In the light of the description of the document in PJHH2 and on the basis of Dalleagles and Balabel I would not order production. In any event, the document is in category 1 also.

107               Document 1343 is a note which does not appear to have a basis for any claim for privilege. I would order its production.

108               Documents 1712, 1717, 1724 and 1734 are claimed under category 4, that is communications for the dominant purpose of enabling the client to obtain legal services concerning existing, anticipated or pending legal proceedings. The descriptions of the documents in PJHH2 and the dates of the documents, save for the date of document 1724, do not enable me to conclude that there is any evidence that litigation was existing, anticipated or pending. As I said earlier, I do not take the terms of the categories in PJHH1 as evidence. In any event, I would deal with documents 1712 and 1734 as I have dealt above with other communications from AAR to SSB or the client and so not order their production. Documents 1717 and 1724 are communications from SSB to AAR. I would treat those documents as I have treated documents 1192 and following, depending upon whether I follow Kenny J.

109               Document 1789 (like document 1270) is a communication from the client to SSB and AAR. On the findings I have made as to the relationships between the parties and the relevant obligations of the parties and the duties of confidence of the parties, and taking into account the description of the document and Dalleagles and Balabel I would not order production.

110               Document 1853 is in a different category. This, like document 1198, is a communication from SSB to the client with “cc’d” to, amongst others, AAR. The subject description in PJHH2 does not enable me to conclude that production of the documents would tend to disclose communications which were protected. The mere fact that the document was copied to AAR does not provide a basis for concluding that it was provided to AAR for the dominant purpose of obtaining legal advice. I would order production of document 1853.

111               Document 1854 is simply a list entitled preliminary final due diligence check list in respect of project Nissan. I there is no evidential basis upon which I can conclude that that list is privileged. I would order its production.

112               Similarly as to document 1860. This document was copied to Allens but it was a communication from SSB to the client. Given that it was not a communication from SSB to AAR in the sense I have earlier described and on the basis of the evidence including the description of the document I am not prepared to conclude on the basis Dalleagles and Balabel that the document was concerned with the dominant purpose of obtaining legal advice or that production would tend to disclose protected communications.

113               Document 1861 is a list, the title of which, on the evidence on the motion, is not sufficient for me to conclude that its production would tend to disclose any protected communication. I do not know who created the document. I have no evidential basis for concluding that it is privileged.

114               Document 1907 is a facsimile with some handwritten notes of a solicitor at AAR. This is not a communication. This is a note of a solicitor. I referred earlier to a question, with which I need not deal, concerning internal client documents which might be seen to have a connection with the provision of legal advice. This document (1907), however, is the subject of a claim for privilege because it contains the annotations of a solicitor from AAR (the unannotated document having been produced). To paraphrase Anderson J in Dalleagles and Cotton LJ in Kennedy v Lyell (1883) 23 Ch D 387, 407, the note is created by the solicitor in the fulfilment of his engagement (I so infer) and as such is the result of his mind working upon and acting as a professional adviser with reference to material communicated to him confidentially in his professional capacity. I do not propose to order production of this document.

115               The above deals with each of the documents in categories 2, 3 and 4 contained within the index PJHH2 which is attached to these reasons.

116               The parties have not had an opportunity to deal with the views on Pratt which I have expressed. It should be noted that until I have heard counsel these views should be taken as preliminary only. I will stand the matter over and require the parties to bring in short minutes reflecting my views in these reasons, to the extent that they do not depend upon a final view being taken as to Pratt.

117               As to Pratt, I will hear the parties on the issues that I have identified in these reasons, including the issue as to whether I should follow Pratt notwithstanding my own views which I have reached, at the present time, without the benefit argument from counsel. After I have heard what the parties wish to do in relation to these documents covered by Pratt I will either hear further argument or take some step to finalise the motion.

118               The orders I make at the present time are as follows:

1. Stand the motion over to a date to be fixed for the making of orders in accordance with these reasons and for the hearing of any further argument.

2. On or before 4 November 2003 the parties deliver to my associate an agreed draft minute of order reflecting these reasons.

Associate:

Dated: 30 October 2003

Attachment 1

Categories of Privileged SSB Communications

Schedule of SSB Communications

NOTE: Italics denote that document is an attachment to the preceding document in the schedule.

DRAMATIS PERSONAE