FEDERAL COURT OF AUSTRALIA

Seven Network Limited v News Limited [2005] FCA 864

CLIENT LEGAL PRIVILEGE – objection taken by a party to production of part of a document covered by a subpoena to produce documents directed to a third person; loss of privilege under the Evidence Act 1995 (Cth); waiver of privilege at common law; operation of Order 33 rule 11 of the Federal Court Rules.

Federal Court of Australia Act 1976 s.59

Federal Court Rules O.15; O.27 r.2; O33 r.11; O33 r.12

Mulley v Manifold (1959) 103 CLR 341

Three Rivers District Council & Ors v Governor and Company of the Bank of England (No. 6) [2005] 1 AC 610

R v Derby Magistrates’ Court; ex parte B [1996] 1 AC 487

Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49

Waterford v The Commonwealth of Australia (1987) 163 CLR 54

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

Carnell v Mann (1998) 159 ALR 647

Mann v Carnell (1999) 201 CLR 1

Arrow Pharmaceuticals Limited v Merck & Co Inc (2004) 210 ALR 593

GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2000] FCA 593

Network Ten Limited v Capital Television Holdings Limited (1995) 36 NSWLR 275

Bennett v Chief Executive Officer, Australian Customs Service (2004) 210 ALR 220

‘Four Questions of Privilege:  the Litigation aspect of Legal Professional Privilege’  Neil J. Williams (1990) 9 Civil Justice Quarterly at p 140

SEVEN NETWORK LIMITED (ACN 052 816 789) & ANOR v NEWS LIMITED (ACN 007 871 178) & ORS

NSD 1223 OF 2002

GRAHAM J

30 JUNE 2005

SYDNEY

THE COURT ORDERS THAT:

1.         The First, Second, Fourth, Ninth, Thirteenth, Fifteenth, Nineteenth and Twentieth Respondents be permitted to inspect and make a copy of the file note dated 13 December 2000 produced by the Australian Competition and Consumer Commission to the Court and marked by the Registry as Packet 120.

2.         The Applicants in the proceedings pay the First, Second, Fourth, Ninth, Thirteenth, Fifteenth, Nineteenth and Twentieth Respondents costs of the Motion.

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

REASONS FOR JUDGMENT

1                     Proceedings NSD 1223 of 2002, known as Seven Network Limited & Anor v News Limited & Ors arise out of bids for television broadcast rights in respect of two codes of football, one administered by the Australian Football League and the other by the National Rugby League.  There are numerous parties to the proceedings and needless to say, the litigation is complex.

2                     On 11 February 2005 the main proceedings were listed for hearing before Justice Sackville commencing on Monday 18 July 2005.

3                     On 31 March 2005 the seventh, eighth and twenty-first respondents (“the Nine Respondents”) caused a subpoena to produce documents to be issued requiring the production of documents by The Proper Officer, Australian Competition and Consumer Commission (“the ACCC”).

4                     It would appear that on 4 May 2005 the ACCC produced a number of documents to the Court (identified as documents Nos 13 – 42) and access was granted to such of those documents as were not marked “privileged”.

5                     In respect of part of document 14 in the ACCC List objection to production was made by the Applicants in the proceedings on the ground of privilege.  Document 14 was identified as a “File note – telecon” made by S. Clancy of the ACCC and dated 12 December 2000.

6                     The file note would appear to have been prepared by Sharon Clancy, Assistant Director, Mergers & Asset Sales in the ACCC on 13 December 2000, not 12 December.  It purported to summarise what had been said during the course of a meeting at the Sydney office of the ACCC at 3.00 pm on Tuesday 12 December 2000.  That part of the file note for which no privilege was claimed provided as follows:

“                                         FILE NOTE

File number:          C2000/1729

Matter:                  AFL broadcasting rights – complaint by the Seven Network about joint bid by News Ltd, the Nine Network, Telstra and the Ten Network

Present:                 Peter Gammell, Director, Seven Network Ltd

Harold Anderson, Head of Sport, Seven Network Ltd

Robin Waters, Director, Australian Capital Equity Pty Ltd

Sheila McGregor, Freehillls

Michael Gray, Freehillls

Ross Jones, Commissioner, ACCC

Sharon Clancy, Asst. Director, Mergers & Asset Sales, ACCC

Venue:                   ACCC Sydney office

Date and time:       12 December 2000, 3.00 pm

[Masked section of file note]

Mr Jones said the Commission thought it unlikely the acquisition of the AFL broadcast rights would result in a substantial lessening of competition in the free to air (“FTA”) television market.

Mr Gray said rights holders would face difficulties in the future in respect of obtaining satisfactory prices for their rights should the field of potential bidders be reduced to a monopoly.  Mr Gray commented one way of addressing this issue is to separate FTA and pay TV rights.  Mr Jones commented the structure of the bidding process appeared to achieve this separation.

Mr Gammell said should Seven not acquire the AFL broadcast rights, its pay TV sports channel, C7, will fail, thus resulting in rights holders being confronted with a monopoly buyer when premium sports rights next become available.

Mr Gray said there is no possibility of C7 getting access to the Foxtel cable should a Foxtel consortium acquire the AFL rights.  Mr Gray commented distribution of sports channels is a powerful factor taken into account by rights holders when selecting successful bidders.

Mr Gray advised Seven is engaged in legal arguments with the AFL in respect of the contractual first and last rights agreements.  The AFL has made a first offer to Seven for the FTA rights but Seven considers this offer does not comply with its contractual agreement with the AFL and has not accepted the offer on this basis.

Mr Gammell said Seven has paid, on average, $24 million per year for the AFL FTA rights since 1997.  The offer made by the AFL for the FTA rights for the 2002-2006 seasons averaged $85 million per year.  Seven has advised the AFL it would be prepared to pay an amount substantially above the put value of the rights, but it will not pay the amount offered by the AFL.

Mr Gray said the AFL is of the view the first offer expires tomorrow.  Seven does not know what will happen tomorrow in respect of the bidding process.

Mr Jones advised the issue of the first and last rights dispute is a contractual matter rather than a competition issue.

Mr Jones advised the issue of the first and last rights dispute is a contractual matter rather than a competition issue.

Mr Jones said the Commission had focused its analysis on the downstream pay TV market.  He raised the possibility the AFL may require the successful bidder to make the rights available to all pay TV operators.

Mr Gammell commented a requirement of this nature would encourage Optus to ‘blow-up’ its contract with Seven for the supply of the C7 channel and this would have the effect of putting C7 out of business.  Mr Gemmell advised he has spoken with Mr Chris Anderson, CEO of Optus, and Mr Anderson would not confirm whether Optus would keep C7 in its channel line-up.

Mr Jones said Seven appears to want the ACCC to intervene in a competitive bidding process to ensure Seven is the only bidder for the AFL rights.

Mr Gray said the bidding process for the AFL rights represents a single transaction, not a market.

Mr Jones hypothesised a market for the acquisition of premium sports involving the competing bidders for the AFL rights.  In respect of the analysis of this market, it is critical to reach a view on the likely entry of new bidders to the market, when the rights next become available.  Mr Jones said it is not unreasonable to assume in five years time, a larger number of bidders will compete to acquire the AFL rights.

Mr Gray said the market for the acquisition of premium sports is presently not a monopoly as two bidders are active in this market.  Mr Gray wondered who may be interested in entering this market.

Mr Gammell said the number of entrants into this hypothetical market is limited due to the non-compete arrangements between News Ltd, Telstra and Nine Network.  Mr Gammell considers the Foxtel partnership to be anti-competitive.

Mr Jones advised the ACCC cannot initiate court action to intervene in a competitive bidding process particularly when the AFL is of the view there is going to be a greater number of bidders when the rights next become available.

Mr Gray suggested a market for the acquisition of premium sports programming.

Mr Gammell advised access to premium sports and access to a platform is necessary to create a sports channel.

Mr Jones asked whether Seven had any concerns should News Ltd acquire the AFL rights.

Mr Gray said an acquisition by News Ltd would have competitive implications downstream as it supplied the rights to Foxtel and Foxsports, particularly as News Limited already owns the NRL and ARU rights.  Mr Gray commented significant infrastructure is required to broadcast AFL matches including broadcast facilities, technical staff and talent.  Additionally, access to a platform is critical.  Mr Gammell agreed barriers to entry are high.  He said channel providers generally supply pay TV operators at a price calculated per subscriber.

Mr Jones said it would appear Seven is arguing a “tipping effect”, whereby one party would become large enough such that it could acquire all content and essentially become a monopoly.

Ms McGregor asked if the ACCC had spoken with other rights holders?

Mr Jones said the ACCC has examined the European experience in respect of B Sky B and the premium soccer rights.

Mr Gammell said Seven charges Optus a lower price for its C7 channel relative to the Foxsports channels because C7 has rights to one premium sport, while Foxsports has rights to both the NRL and the ARU.  He said while Optus faces incentives to carry C7, it faces greater incentives not to carry C7.

Mr Gray said should a market for the supply of premium sports channels be assumed, it must be ensured consumers have a choice of sports channels.

Ms McGregor commented should a monopoly buyer of premium sports rights emerge, rights holders will receive less while consumers will pay more.

Mr Jones advised the Commission would like to be convinced that blocking a Foxtel consortium from acquiring the AFL rights would be pro-competitive.  He commented it would make commercial sense for Foxtel related parties to acquire the AFL rights given Foxtel’s penetration in the Melbourne area.

Mr Gray referred to today’s press release from the Department of Communications, Information Technology and the Arts in which the Federal Government has announced it has sought public assurances on FTA AFL and NRL broadcasts.

Mr Jones advised the Commission is moving towards a view it should not intervene in the competitive bidding process for the AFL rights.

The meeting concluded at 4.30 pm.

Sharon Clancy

13 December 2000”

7                     The edited copy of the file note for which no claim of privilege was made also reproduced the business card of Mr. Robin Waters, a Director of Australian Capital Equity Pty Limited.

8                     That part of the file note to the production of which objection has been taken comprises the first paragraph thereof comprising, so it would seem, less than ten lines. 

9                     For convenience the whole of the unedited version of the document has been left with the Court and placed in a packet marked as Packet 120.

10                  By a notice of motion filed 27 May 2005 the First, Second, Fourth, Ninth, Thirteenth, Fifteenth, Nineteenth and Twentieth Respondents (“the News Respondents”) have applied for the following orders:-

“1.       The First, Second, Fourth, Ninth, Thirteenth, Fifteenth, Nineteenth and Twentieth Respondents be permitted to inspect and make a copy of the file note dated 12 December 2000 produced by the ACCC to the Court on 23 May 2005 in response to a subpoena issued by the Court on 31 March 2005 and marked by the Registry as Packet 120.

2.         Costs”

11                  On the hearing of the motion Mr N C Hutley SC appeared with Mr C Mantziaris for the News Respondents and Mr S J Gageler SC appeared with Mr S M Nixon for the Applicants.

12                  The News Respondents indicated that they did not object to the Court inspecting the document marked by the registry as Packet 120 for the purpose of this application, without the necessity of it being tendered and I have, at the request of the Applicants in the proceedings (“Seven”), done so.

13                  In an affidavit sworn 17 May 2005 Michael John Gray, a Partner at Freehills, the solicitors for Seven, who participated in the conference at the offices of the ACCC on 12 December 2000 deposed that that part of the file note of 13 December 2000 to the production of which objection had been taken, purported “to summarise legal advice of counsel given to Seven in respect of the bidding process for the AFL broadcast rights”.

14                  Mr Gray said in his affidavit:-

“5.       In late 2000, Freehills received instructions from Seven to raise with the ACCC concerns Seven had about the bidding for the AFL broadcast rights for the period from 2002 onwards. …

6.         I do not now recall whether I (or anyone else present) said at the 12 December 2000 meeting that the information being provided by Seven to the ACCC was confidential.  However, it was my knowledge and belief in late 2000 … based on previous dealings … that the general practice of the ACCC in dealing with confidential and other commercially sensitive information provided to it was to treat such information confidentially, even if it was not expressly stated to be confidential. …”

15                  In an affidavit sworn 20 June 2005 Ross Jones, who in December 2000 had been a Commissioner of the ACCC and a participant in the 12 December 2000 meeting, deposed:-

“5.       I remember attending the meeting recorded in the file note and I generally recall the nature of the matters discussed.

6.         The masked portion of that document records a statement by Michael Gray (a Freehills partner) summarising legal advice of counsel which he said was given to Seven in respect of the bidding process for the AFL broadcast rights (“the Gray Statement”). …

7.         At the time it was made, I considered that the information conveyed by the Gray Statement was confidential in that it should not be disclosed to persons outside the ACCC.  I do not recall Michael Gray making any specific request that the information be kept confidential. …

8.         As an ACCC Commissioner, from time to time people would inform me of legal advice they had obtained.  When I received such information, I considered it to be appropriate for the ACCC to keep such information confidential even in the absence of an express request to do so. 

9.         The ACCC’s practice in relation to such disclosures of legal advice was to keep the information confidential. …”

16                  Volume 26 of the ACCC Journal of April 2000 included the following:-

“Preserving the confidentiality of information provided to the ACCC

The Commission relies heavily on information provided by those who know of conduct that may contravene the Trade Practices Act. …

In most cases the person providing the information may want it to remain confidential, either fearing repercussions or because it may reveal sensitive details relating to the provider’s own commercial activities.

The Commission has a long-standing policy of not disclosing sensitive information provided in confidence, except with the permission of the provider or where required to do so by law. …

While the Commission will do all it can to preserve the confidentiality of sensitive commercial information, third parties can still seek access to such information against the wishes of the provider through several avenues, including Freedom of Information. …

Information can … be sought … by subpoena or discovery.  While the Commissioner’s ability to resist the production of documents in these cases is more limited, courts can take steps to preserve, as far as possible, the confidentiality of such information.  The Commission will continue to seek to preserve the confidentiality of such information when the provider requests it.

…”

17                  In an October 2000 publication entitled “Collection and use of information” and described as “A guide to the Australian Competition and Consumer Commission’s policies on collecting and using information in the course of its regulatory and enforcement activities” a “Summary” included the following:-

“Summary

Receiving information is crucial to the Australian Competition and Consumer Commission’s ability to carry out its enforcement and regulatory functions.  Most of the information received by the Commission is provided voluntarily. …

The Commission conducts itself transparently to facilitate and promote open scrutiny of its actions, decisions and reasons – while balancing the need for disclosure with respect for the confidentiality of information …”

18                  At page 15 of the same guide the following appears under the heading “Use of information”:

“Use of information

The Commission recognises that it is critical to maintain the confidence of voluntary information providers in the way that information is obtained and handled.  The Commission and its staff are subject to a number of limitations on use of collected information.

·        The Commission cannot disclose or use information other than for the performance of its statutory duties

·        Where information provided under a statutory power is confidential, the Commission must comply with any specific statutory restrictions on disclosure.  In any event it has a broad duty to consider whether to consult with the provider of that information before deciding to disclose it

However, as a general rule the Commission takes the view that if it has legitimately obtained information for one purpose and that material discloses information relevant to another of its statutory functions, it is under no general duty to disregard the information in the context of that other function. 

Given that it could lead to inappropriate results if the Commission were to ignore relevant information in its possession, it will generally consider itself free to use that information for its other functions or in other contexts.

…”

19                  On the hearing of the motion Seven acknowledged that on 12 December 2000 it participated in the meeting at the Sydney office of the ACCC with a view to advancing its own commercial interests.  It is not suggested that it was acting altruistically in the public interest and it does not seek to argue that some new category of privilege should be recognised protecting communications by “whistle blowers” providing information to bodies such as the ACCC.

20                  I was taken to a number of documents demonstrating Seven’s commercial objective in respect of its bid for broadcast rights in relation to the Australian Football League.  An email dated Sunday 12 November 2000 refers to Terry Cassells, an officer of the ACCC, known as Director, Broadcasting, having received a telephone call from Chris North who was “acting for Seven/Stokes”.  Mr North would appear to have made a number of points including “Seven has got Freehills’ burning the midnight oil on a submission to the ACCC”. 

21                  Later in the same email the following appears:-

“Chris summarised by saying it was a collusive bid (referring to a ‘Nine/Foxtel bid’ which ‘also includes Telstra’) with the purpose of the partners becoming dominant players in their respective markets.”

22                  In a letter dated 22 November 2000 from Mr Gray of Freehills to Mr Cassells at the ACCC he said, inter alia:-

“In our view, therefore, the actions of the consortium involved the very misuse of market power which your 1998 media release indicates you were concerned about, and which is contrary to section 46 of the Trade Practices Act 1974 (Cth). …

It is … significant that the consortium consists of the very group of companies who are currently denying the Seven Network’s pay channel, C7, access to the Foxtel carriage services, in spite of the recent Federal Court decisions in favour of Seven in this regard.  We therefore urge the Commission to make the necessary enquiries and take appropriate steps to ensure this misuse of market power is not permitted.”

23                  On 24 November 2000 Mr Gray of Freehills submitted a very detailed submission on the “multimedia/communications market and the effects of the PBL/News/Telstra consortium’s conduct in that market” to the ACCC for its consideration together with a separate paper on the “Premium Sports/Pay Television” market.

24                  On 1 December 2000 Mr Gray of Freehills wrote a letter to Mr Cassells at the ACCC in which he said, inter alia:-

“We therefore submit that the ACCC should take urgent action to prevent the Fox Sport/Foxtel interests from bidding to acquire the Pay TV rights to the AFL.”

25                  A strategy document dated 4 December 2000 which would appear to have emanated from Seven entitled “Decision Tree” included a series of options headed “Full blooded strike”, “Threatening stance to the end”, “Threatening stance with premature withdrawal”, “Premature withdrawal” and “Expiry of Last Offer”.

26                  Under “Full blooded strike” the following, inter alia, appeared:-

“Alternatively, get ACCC involved in action to prevent sale to Foxtel of AFL rights.”

27                  Under the heading “Threatening stance to the end” the following, inter alia appeared:-

“Never get as far as going to Court but leave AFL in no doubt that it is within our contemplation starting with sending letter on defects to preserve rights.  Our history will help here and their fear must be that it could be tied up by lawyers for ages.  At the same time encourage the ACCC to make their presence felt asking questions etc….”

28                  Another strategy document dated 7 December 2000 entitled “AFL Current Status” included, inter alia:-

“ · Keep ACCC stirred up”

29                  This document referred to “another meeting with ACCC early next week” which presumably ended up being the 12 December 2000 meeting.

30                  In my opinion it could not be concluded that when, at the meeting on 12 December 2000, Mr Gray revealed the contents of legal advice of counsel, given to Seven in respect of the bidding process for the AFL broadcast rights, to the ACCC, the ACCC was under any express or implied obligation to treat that disclosure confidentially.  It certainly could not be found that Seven sought any undertaking as to confidentiality nor, indeed, did the Commission proffer one.

31                  As the abovementioned ACCC publications make clear, information provided to it can be sought by third parties by, inter alia, “subpoena or discovery”.  Furthermore, the ACCC considered itself free to use information in its possession “for its other functions and in other contexts”.

COMPETING POLICY ISSUES

32                  In civil litigation there is a general predisposition towards “all cards being placed on the table”.

33                  This is why discovery generally obliges a party giving discovery in proceedings before the Court to disclose, subject to restrictions arising under Order 15 of the Rules, all documents which are or have been in the possession, custody or power of the party that relate to matters in question in the proceedings.  For a document to relate to a matter in question it is sufficient if it would, or would lead to a train of enquiry which would, either advance a party’s own case or damage that of his adversary (per Menzies J in Mulley v Manifold (1959) 103 CLR 341 at 345).

34                  Where a document is no longer in the possession, custody or power of the party giving discovery, that party must disclose when it was last in that party’s possession, custody or power, what has become of it, and, to the best of that party’s knowledge, information and belief, the identity of the person in whose possession, custody or power it is and where it is.

35                  The public interest in the due administration of justice requires that all relevant material should be available to be taken into account so that an applicant will succeed if he is entitled to do so and will fail if he is not (see Three Rivers District Council & Ors v Governor and Company of the Bank of England (No. 6) [2005] 1 AC 610 at 647).

36                  Having said that, it is also in the interests of the whole community that lawyers give their clients sound advice, accurate as to the law and sensible as to their conduct (see Three Rivers District Council at 659).  In this regard a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth.  The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent.  Legal professional privilege is more than an ordinary rule of evidence, limited in its application to the facts of a particular case.  It is a fundamental condition on which the administration of justice as a whole rests.  (Per Lord Taylor of Gosforth CJ in his speech in R v Derby Magistrates’ Court; ex parte B (1996) 1 AC 487 at 507)

37                  Client legal privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers.  (Per Gleeson CJ, Gaudron and Gummow JJ in Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 at 64 [35].

38                  The obvious tension between the policy of encouraging full and frank disclosure by clients to their lawyers without the apprehension of being prejudiced by subsequent disclosure of the relevant communication and the desirability, in the interests of justice, of obtaining the fullest possible access to the facts relevant to the issues in a case lies at the heart of the problem of the scope of client legal privilege.  Where the privilege applies, it inhibits or prevents access to potentially relevant information (per Gleeson CJ, Gaudron and Gummow JJ in Esso Australia Resources Limited at page 65 (paragraph 35)).

39                  In Waterford v The Commonwealth of Australia (1987) 163 CLR 54 at 64-5 Mason and Wilson JJ explained that legal professional privilege is itself the product of a balancing exercise between competing public interests and that, given the application of the privilege, no further balancing exercise is required (Esso Australia Resources Limited at 64-5 [35]).

40                  In Three Rivers District Council Lord Carswell said at 667 –8 [86]:-

“Determining the bounds of privilege involves finding the proper point of balance between two opposing imperatives, making the maximum relevant material available to the court of trial and avoiding unfairness to individuals by revealing confidential communications between their lawyers and themselves.  … There is a considerable public interest in each of these.  The importance of keeping to a minimum the withholding of relevant material from the Court ... is self-evident”.

41                  If a communication qualifies for legal professional privilege, the privilege is absolute.  It cannot be overridden by some supposedly greater public interest.  It can be waived by the person, the client, entitled to it and it can be overridden by statute, but it is otherwise absolute.  There is no balancing exercise that has to be carried out (per Lord Scott of Foscote in Three Rivers District Council at 646 [25]; see also per McHugh J in Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 at 552).

42                  The circumstances in which legal professional privilege may apply are not limited to the adducing of evidence in the course of a hearing in a Court.  The privilege may be invoked, and its application may be of importance in pre-trial proceedings such as the discovery and inspection of documents.  Documents may be discoverable even though they may not be admissible in evidence.  Their importance may be, for example, that they indicate a useful line of investigation, or that they contain information which could affect the manner in which a party may decide to conduct proceedings (per Gleeson CJ, Gaudron, Gummow and Callinan JJ in Mann v Carnell (1999) 201 CLR 1 at 10 [19]). 

43                  In ‘Four Questions of Privilege:  the Litigation aspect of Legal Professional Privilege’ by Neil J. Williams, (1990) 9 Civil Justice Quarterly at 140 the learned author said:-

“When facts are in dispute discovery allows one party to get information about the facts from the other party. Discovery of documents is one form of discovery and interrogatories another.  Discovery of documents will reach documents in the possession of the other party that relate to the facts, and what the party knows or believes as to the facts can be ascertained through interrogatories.  Discovery is a two-way process: each party can get access to the information of the other.  The process advances the public interest in the due administration of justice.  Uncovering all the available evidence before trial helps eliminate false issues and thus narrows the scope of the dispute.  This should facilitate settlement, and if there is a trial, the parties will need to spend less time in preparation, and the trial will be shorter.  At a trial, discovery will help avoid prejudice to a party due to surprise and lead to greater accuracy in fact-finding by the court.  However, the public interest in relation to litigation has several dimensions.  Making all the material evidence available to the other side is one aspect of the public interest, and the various heads of privilege, legal professional privilege among them, reflect another.  Privilege operates to conceal material relating to the facts from the other side and ultimately from the court that must decide the facts.  Upholding a claim of privilege is a judgment that the public interest which the particular privilege represents outweighs the public interest in comprehensive mutual disclosure.  The various privileges subordinate the policy of open disclosure to other policy concerns. …”

CLIENT LEGAL PRIVILEGE IN the PRESENT CASE

44                  Turning now to the application presently before the Court three questions arise namely:

(a)        Should the question of client legal privilege in respect of the advice received by Seven from counsel in respect of the bidding process for the AFL broadcast rights, a summary of which was provided by Seven to the ACCC on 12 December 2000, be decided by reference to the provisions of Part 3.10 of the Evidence Act 1995 (Cth) or the common law?

(b)        Did Seven by its conduct on 12 December 2000 waive its right to claim client legal privilege in respect of that advice?

(c)        Was the disclosure by Seven to the ACCC at the meeting on 12 December 2000 of a summary of the advice it had received from counsel in respect of the bidding process for the AFL broadcast rights itself a privileged communication?

45                  Plainly, the advice received by Seven from counsel was privileged and the News Respondents do not contend otherwise.  It clearly satisfied the dominant purpose test.

46                  Seven contends that the communication by it of a summary of that advice to the ACCC on 20 December 2000 and Sharon Clancy’s file note of that meeting are affected by client legal privilege because of Order 33 Rule 11 of the Federal Court Rules and Part 3.10 of the Evidence Act 1995 (Cth).

47                  Order 33 Rule 11(1), expanded to incorporate the definition of “ground of privilege” contained in Order 33 Rule 11(5), which was inserted with effect from 14 June 2002, provided as follows:-

“O33r11(1)     Where the Court, by subpoena …, orders any person to produce any document … and any person makes and substantiates sufficient lawful objection to production on grounds of privilege [grounds on which a person may rely to make an objection under Part 3.10 of the Evidence Act 1995], the Court shall not compel production of that document …except production to the Court for the purpose of ruling on the objection.”

48                  Seven seeks to substantiate lawful objection to production by the ACCC of that part of document 14 in the ACCC list of documents which has been edited out of the file note dated 13 December 2000 referred to above.

49                  Seven contends that the advice given to it in respect of the bidding process for the AFL broadcast rights was protected by client legal privilege arising under s 118 of the Evidence Act and that such privilege extended to the communication by Seven to the ACCC of a summary of that advice on 20 December 2000 and also the embodiment of Sharon Clancy’s record of that summary in her memorandum of 13 December 2000.  Seven submits that the relevant client legal privilege was not lost by the disclosure of the substance of counsel’s advice to the ACCC given the terms of s 122(2)(a) of the Evidence Act which provided:-

“122(2)           … this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made:

(a)        in the course of making a confidential communication …;

…”

50                  Seven contends that that part of the meeting on 12 December 2000 when Seven disclosed the summary of counsel’s advice to the ACCC amounted to a “confidential communication”.

51                  For the purposes of section 122(2)(a), “confidential communication” was defined in section 117(1) as follows:-

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

(a)        the person who made it; or

(b)        the person to whom it was made;

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

52                  In the circumstances of this case there was no express obligation upon the ACCC not to disclose the contents of the summary of counsel’s advice as disclosed to it by Seven.

53                  If it was under any obligation not to disclose the contents of the summary of counsel’s legal advice as provided to it that obligation did not arise under law.  However, as can be seen from the terms of the definition of confidential communication that is not a relevant consideration (see Carnell v Mann (1998) 159 ALR 647 at 659).

54                  Seven contends that the ACCC was under an implied obligation not to disclose the contents of the summary of the legal advice.

55                  It is clear that the interests of the ACCC will be best served if third parties volunteer information for its consideration with an expectation that what is disclosed to the ACCC will not be made available to others.  However, it is clear that the ACCC considers itself free to use information in its possession “for its other functions or in other contexts”.  This publicly declared statement of the ACCC’s position as at October 2000 seems to me to be inconsistent with a finding that the ACCC was under an implied obligation not to disclose the summary of counsel’s advice which Seven voluntarily imparted to it at the meeting on 12 December 2000.

56                  Where a corporate client has received legal advice, any disclosure of the terms of that advice or the substance thereof from one officer to another within the corporation will not constitute a “disclosure to another person” and thereby result in a loss by the client of the relevant privilege (see Arrow Pharmaceuticals Limited v Merck & Co Inc (2004) 210 ALR 593 at 597 [11] and [12].)  In GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited & Ors [2000] FCA 593 Lehane J, applying Mann v Carnell [1999] 201 CLR 1, held that disclosures of such advice or the substance thereof by officers of one corporation within a group to officers of other corporations within that group or between different officers of another corporation within the group did not result in a waiver of the relevant client legal privilege (see judgment [6] – [9] and [12] (especially in respect of documents 0113 and 0527)).  This is consistent with the general principle of common interest privilege (see the judgment of Giles J in Network Ten Limited v Capital Television Holdings Limited (1995) 36 NSWLR 275 at 279-283; see also Evidence Act s 122(5)(b)).  However, a disclosure to a third party such as the ACCC could not be seen to be protected as such an internal communication or a case of common interest privilege.

57                  It is submitted by the News Respondents that Order 33 rule 11 and Part 3.10 of the Evidence Act 1995 (Cth) have no application in the current circumstances and that any questions of client legal privilege should be determined by reference to the common law.  In this regard they rely upon the judgment of Gyles J in Arrow Pharmaceuticals Limited and in particular paragraph [10] of His Honour’s reasons for judgment at 597 where he said:-

“[10]  The initial submission for Arrow was that the respondent’s claim for privilege is governed by Pt 3.10 of the Evidence Act 1995 (Cth) in combination with O33 r 11(5) of the Federal Court Rules.  This would depend upon production of a document pursuant to notice to produce being regarded as the adducing of evidence.  That is a difficult argument in view of the decision of the High Court in Esso Australia Resources Ltd v FCT (1999) 201 CLR 49; 168 ALR 123.  The applicant now accepts that, at least for present purposes, I would be bound to reject that submission.  The question is thus governed by the common law.  In my opinion, O33 cannot alter the substantive rights involved.”

58                  Arrow Pharmaceuticals Limited concerned the production of documents under a Notice to Produce.  Unlike the subpoena in the present case, the Notice to Produce did not strictly involve an “order” by the Court that a person produce any documents (see Order 33 rule 12).

59                  With great respect to His Honour, I cannot see that it would be necessary to regard production of a document pursuant to a notice as the “adducing of evidence” for Order 33 rule 11 to apply.  It seems to me that the rule is one “in relation to the practice and procedure to be followed in the Court” within the meaning of s59(1) of the Federal Court of Australia Act 1976 (Cth).  In my opinion the object of the rule was, inter alia, to limit the obligation of a party in the position of the ACCC to produce documents to the Court where a person such as Seven was able to say that the adducing of evidence of the documents or part thereof would result in disclosure of a confidential communication made between a client and his lawyer for the dominant purpose of the lawyer providing legal advice to his client contrary to the provisions of Part 3.10 of the Evidence Act 1995 (Cth).

60                  In my opinion a rule such as Order 33 rule 1 can properly limit the circumstances in which the Court may compel the production of documents covered by a subpoena issued by it in accordance with Order 27 rule 2.

61                  However, whether the issue is addressed under section 122(2)(a) of the Evidence Act 1995 (Cth) or under the common law there would appear to me to have been a clear loss or waiver of the relevant client legal privilege in the circumstances of this case. 

62                  At common law, what brings about a waiver of privilege is the inconsistency which the Courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality (per Gleeson CJ, Gaudron, Gummow and Callinan in Mann v Carnell at p 13 [18] and [19]).

63                  As to the scope of any such waiver Gyles J, with whose reasons for judgment Tamberlin J agreed, said in Bennett v Chief Executive Officer, Australian Customs Service (2004) 210 ALR 220 at 237 [65]:

“The voluntary disclosure of the gist or conclusion of … legal advice amounts to waiver in respect of the whole of the advice to which reference is made including the reasons for the conclusion.”

64                  In my opinion the disclosure by Seven to the ACCC of a summary of the advice it had received from counsel in respect of the bidding process for the AFL broadcast rights cannot itself be seen as a privileged communication.  The communications at the meeting on 12 December 2000 were not made for the dominant purpose of any lawyer providing legal advice to any client.  They were made to advance Seven’s commercial interests in the fiercely contested bidding process in which Seven was then engaged.

65                  I am of the opinion that the relevant part of the file note prepared by Sharon Clancy on 13 December 2000 and contained within Packet 120 should be formally produced to the Court by the ACCC and made available for inspection by all of the parties in the proceedings.

66                  In relation to the costs of the motion both Seven and the News Respondents have agreed that they should follow the event.

Associate:

Dated:              30 June 2005