FEDERAL COURT OF AUSTRALIA

Media Ocean Limited v Optus Mobile Pty Limited (No 10) [2010] FCA 1348

THE COURT ORDERS THAT:

1.    The applicants make available to the respondents for inspection the following documents in exhibit NTM-1 to the affidavit of Nathan Thomas Mattock sworn 18 June 2010:

(1)    The email from Mike Charlesworth to Robert Sakker dated 8 January 2009 behind tabs 1 and 2.

(2)    The email chains that appear behind tabs 3, 4 and 5.

(3)    The email chain that appears behind tab 7.

(4)    The top email from Mike Charlesworth to Kenneth Ting dated 22 March 2009 behind tab 9 and where it appears in documents 10, 11, 12, 13 and 14.

(5)    The top email from Kenneth Ting to Mike Charlesworth dated 22 March 2009 behind tab 10 and where it appears in documents 11, 12, 13 and 14.

(6)    The top email from Mike Charlesworth to Kenneth Ting dated 27 March 2009 behind tab 18 and where it appears in documents 19 and 20.

2.    Costs are reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

The dispute about discovery

1    The parties have engaged in a protracted dispute over the discovery and inspection of each other’s documents.

2    On 22 October 2009 the then applicants Media Ocean Ltd (“Media Ocean”) and Mediatel Australia Pty Ltd (“Mediatel”) filed a notice of motion seeking an order that the respondent Optus Mobile Pty Ltd (“Optus”), the only respondent until 12 November 2010, permit inspection of 1400 documents over which it had asserted legal professional privilege. Given the size of the claims, Cowdroy J made orders on 29 April 2010 which provided the machinery for the parties to nominate a representative sample of those documents, it being envisaged that, after a ruling on that sample, the parties would be in a position to informally resolve the status of the remaining documents.

3    I first heard argument on the applicants’ motion on 21 June 2010, when I granted Optus’s application for an adjournment. See Media Ocean Ltd v Optus Mobile Pty Ltd (No 7) [2010] FCA 892. Argument resumed on 19 and 20 August, and the matter was then set down for a further day on 29 September. Before the matter returned, however, I handed down a provisional ruling on 17 September on Optus’s privilege claims over twenty documents, subject to determination of the applicants’ challenge to the independence of Optus’s in-house lawyers and, hence, whether any communications with them could attract privilege. When the matter returned on 29 September the parties informed the Court that they had resolved their dispute in relation to the applicants’ motion, save for the question of costs. I will hear argument on that question on 7 December.

4    On 1 October 2009 Optus had also filed a notice of motion seeking orders including an order that the applicants permit inspection of 38 documents over which they had claimed privilege. The other substantive orders sought in the notice were dealt with by Jagot J who is responsible for the principal proceeding. I heard argument on Optus’s motion on 22 June 2010, by which stage the number of documents in dispute had been reduced, as the applicants had withdrawn their claim over seven and Optus no longer sought inspection of a further eight.

5    This judgment deals with the status of the remaining 23 documents. I will deal with the question of the costs of Optus’s motion on 7 December when I hear argument about the costs of the applicants’ motion.

The Media Ocean group’s business

6    In June 2007 Media Ocean, Mediatel and the third applicant, Sound Advertising Ltd (“Sound Advertising”), added as a party on 5 November 2009 (to whom I will refer collectively as “the Media Ocean group”), began to offer a service, which they call a “two-stage dialling service”, aimed at people wishing to make international phone calls.

7    According to the pleading, a person wishing to make an international call using this service dials one of a set of designated Australian mobile digital telephone numbers (“the Media Ocean numbers”) and is then prompted by an “interactive voice response system” to enter the international number to which they want to be connected.

8    On 4 June 2007 Media Ocean entered into an agreement with Pivotel Satellite Pty Ltd (“Pivotel”), then known as Globalstar Australia Pty Ltd, under which Media Ocean obtained the Media Ocean numbers.

9    Without going into too much detail, it appears that the two-stage dialling service works like this. When a person makes a call from a mobile or landline phone to a Media Ocean number, the call starts with the person’s phone company or carrier (relevantly Optus) then goes to Vodafone before going to Pivotel (under an arrangement between Vodafone and Pivotel), and is then delivered either to Mediatel or to other businesses which the Media Ocean group calls resellers (who have arrangements with Mediatel or Sound Advertising). Once delivered to Mediatel or one of the resellers, the call is then rerouted to the international number the caller wants to reach, although this in fact occurs using an “interactive voice response system” which prompts the caller to enter the desired number.

10    The resellers include, relevantly, the companies Hometown Telecom (“Hometown”) and Baycall Pty Ltd (“Baycall”).

11    The Media Ocean group’s revenue is not generated directly from the person who calls one of the Media Ocean numbers. Rather, it is derived – indirectly – from the caller’s carrier (relevantly Optus). What happened in the past is that, when the person made the call to one of the Media Ocean numbers, Vodafone billed Optus at a rate prescribed by regulation known as the mobile termination access service or “MTAS” rate, which was nine cents per minute at the material times.

12    Where Optus paid money to Vodafone, Vodafone took a cut and passed on the balance to Pivotel. Pivotel then took its cut and paid the balance to one of the companies in the Media Ocean group (for present purposes nothing seems to turn on which of the entities in the group receives the money). Where it was one of the resellers, rather than Mediatel, who directed the call overseas, the Media Ocean group paid monies it received to the reseller. In their submissions the Media Ocean group describe this arrangement as payment “down the line”. As I explain below, this business arrangement is critical to the applicants’ claims of privilege over most of the documents in issue.

13    In the principal proceeding it is a disputed question whether calls made to the Media Ocean numbers are mobile calls that should attract the MTAS rate. Optus has withheld payment on an invoice from Vodafone with respect to calls made to the Media Ocean numbers. Vodafone has filed a cross-claim for this money. Optus’s action stopped the flow of money “down the line” to Pivotel, the Media Ocean group and the resellers in respect of those past calls. In their submissions the group asserts that “the majority of [the money claimed by Vodafone], if recovered, would “flow down the line” from Vodafone”. What they are claiming is that, if recovered, then under the arrangements described above a portion of the money (or “the majority” of it) would be paid to Pivotel and then, after it took its share, to the Media Ocean group and then to the resellers.

The principal proceeding

14    In the principal proceeding, commenced on 25 March 2009, the Media Ocean group seeks relief for what it alleges is misleading and deceptive conduct by Optus in contravention of ss 52, 53(e) and 55A of the Trade Practices Act 1974 (Cth).

15    What follows is a summary, so far as it is relevant to the issues before me, of the basic issues in the principal proceeding.

16    The Media Ocean group’s grievance is, at heart, about Optus’s contention that calls made to the Media Ocean numbers, which are Australian mobile phone numbers, are in fact international calls and may be charged as such.

17    Optus’s concern stems from the fact that it offers various contracts to its customers which give them either unlimited calls to Australian mobile numbers (and landlines) for a fixed fee (its “yes Timeless plan”) or plans where - for a fixed fee - the customer gets a certain amount of included Australian mobile (or landline) calls, e.g. for $50 per month you might get $300 worth of calls (its “cap plans”). If calls made via Media Ocean’s two-stage dialling service are properly calls to Australian mobile numbers, then they are included in Optus’s customers plans and this makes the service very attractive because international calls made this way are “free” (once the fixed fee is paid under the plan). It seems obvious that the attractiveness of the two-stage dialling service and, as a result, the success of the Media Ocean group’s business depends on this being the case.

18    On or before 23 December 2008, the Media Ocean group alleges that Optus first asserted to Vodafone that it was not under any obligation to pay the MTAS rate to Vodafone for calls made by its customers to the Media Ocean numbers because the two-stage dialling service contravened applicable telecommunications regulations and was not properly a mobile call.

19    At the same time, Optus also communicated directly with the Media Ocean group, asserting that the two-stage dialling service was illegal and that it was misleading consumers by saying that customers could make free telephone calls to the Media Ocean numbers.

20    Further, the Media Ocean group alleges that on 24 or 25 December 2008, Optus sent text messages to its own customers telling them that all calls that “re-route or divert to international numbers” - meaning to refer to the two-stage dialling service - would be charged at the rate for international calls. The same text message was allegedly sent in March, May and June 2009 as well.

21    The Media Ocean group also pleads that, from an unknown date, Optus has displayed a message on its website informing its customers that calls to a number that “re-routes, diverts or switches” to an international number will be charged as an international call under the standard terms of the contracts for yes Timeless and cap plans.

22    The Media Ocean group alleges that Optus’s assertions to Vodafone and its own customers are misleading or deceptive in breach of the Trade Practices Act. As between Optus and Optus’s own customers, it says the assertions were misleading because in fact Optus was not entitled under its contracts with its customers to charge them at international rates or exclude them from its plans.

23    Between 24 December 2008 and late March 2009 the Media Ocean group blocked access for Optus’s mobile customers to the Media Ocean numbers. Michael Charlesworth, the sole director of Media Ocean, a director and major shareholder of Sound Advertising, and a 50% shareholder of Mediatel, said in an affidavit affirmed on 5 June 2009 that this was at his “oral direction” and “a direct result of Optus’s conduct”. In a later affidavit affirmed on 2 November, parts of which were tendered by Optus on this motion, he disavowed any claim that his decision was related to Optus’s first text message to its own customers. In the later affidavit he explained that this action was taken in response to:

    Optus disputing its obligation to pay Vodafone for the Media Ocean group’s for calls by Optus customers to the Media Ocean numbers,

    its allegations that the Group was acting illegally,

    its complaint of misleading conduct on the part of the Media Ocean group, and

    the calls Optus had started to make to customers to inform them that calls to Media Ocean numbers would be charged at international rates and would be excluded from Optus’s cap plans.

24    His stated purpose in taking the action was to protect the reputation of the group and to limit any loss or damage to its business.

25    In the current pleading – the Fourth Further Amended Statement of Claim, filed on 12 November 2010 after this motion was heard – the case is put that the Media Ocean group “blocked or acquiesced in blocking” the access of Optus’s customers to the Media Ocean numbers as a result of the assertions Optus made to Vodafone and the Media Ocean group and “subsequently” the assertions Optus made to its own customers.

26    Then in late March 2009, again on Mr Charlesworth’s instruction, the Media Ocean group reopened their service to Optus customers, instead playing a recorded message to all callers to the Media Ocean numbers, telling them:

For those customers on an Optus Cap or Timeless Plan, Optus has stated that it will charge you for this call as an international call at international rates. Optus has stated that it will not treat this call as being part of your included value on your Optus Cap or Timeless Plan.

27    Its allegation in the current iteration of the pleading appears to be that it has suffered loss from late March 2009, once Optus customers regained access to its service, because some Optus customers stopped using the Media Ocean group’s service and others, who would have done so, have not.

28    From August to December 2009 Optus blocked calls by its customers to particular Media Ocean numbers of which it was aware. There are apparently a large number of them. For a few days up to Christmas 2009 and then from 26 February 2010, Optus completely blocked calls by its customers to the Media Ocean numbers.

29    In the most recent pleading the group also develops a case of misleading and deceptive conduct in relation to Optus’s blocking, but that is not presently relevant.

The disputed documents

30    The Media Ocean group mainly relied on an affidavit sworn on 18 June 2010 by Nathan Thomas Mattock, a partner in Marque Lawyers, its solicitors, and filed in court by leave on 21 June 2010. It also tendered the first of the affidavits of Mr Charlesworth, affirmed in the principal proceeding, and an affidavit of Robert Sakker, the Executive Director and company secretary of Pivotel Group Pty Limited, of which Pivotel is a subsidiary, sworn on 13 July 2009 in the principal proceeding.

31    Exhibited to Mr Mattock’s affidavit was a folder of the emails in the form they were provided to Optus with parts over which privilege was claimed blacked out. Mr Kunc SC, who appeared for the Media Ocean group, also handed up a folder of unredacted copies for the Court to inspect. When I refer to a document by number, I am referring to the tab it sits behind in these folders.

32    All the disputed communications were contained in email chains that had been sent at some point to officers, employees or agents of Pivotel, Hometown or Baycall. To rebut any suggestion that disclosure to third parties involved a waiver of legal professional privilege over the communications, Mr Mattock asserted that, because of the fact that payment was made “down the line” in the way I described above:

Vodafone, Pivotel, the Applicants and the Resellers have all been affected by Optus’s conduct the subject of these proceedings and are all affected if Optus does not make payment to Vodafone for the traffic.

33    Therefore, he said, they all have a “common interest in these proceedings”.

34    There was also a question about whether some of the communications were privileged in the first place. Here the Media Ocean group relied on one of the well established categories of privilege applicable to third party communications.

35    Counsel for Optus, Mr McHugh SC, foreshadowed some objections to Mr Mattock’s evidence. Broadly speaking, he submitted that it was unclear when Mr Mattock was merely paraphrasing the contents of the document, and when he was in fact adding some information that was not obvious from the document itself. He invited me to inspect the documents. Mr Kunc SC, counsel for the Media Ocean group, did not object to this course, although he submitted that there was no need to do so, as Mr Mattock’s affidavit was adequate. That, I regret to say, was not so. In particular, Mr Mattock did not, for the most part, identify the subject matter of the legal advice over which privilege was claimed in the various documents, which, at times made for an arid argument. In all the circumstances I did not think it was possible, particularly in light of the complexity of the question of common interest, to make rulings based on Mr Mattock’s evidence alone and so exercised my discretion to inspect the documents. As a result, Mr McHugh’s foreshadowed objections to Mr Mattock’s evidence fell away.

36    In essence Optus’s objection to the claims for privilege was that any privilege in the documents had been waived because the emails were communications with third parties. In its written outline of submissions, Optus put the point in three ways. First, the Media Ocean group had not established that “the communication was made within a clear regime of confidentiality” and that any individual who obtained the information was under an obligation of confidence to the applicants. Secondly, even if the communications with third parties were privileged, privilege was waived as “it appears from Mr Mattock’s affidavit that in providing the documents to third parties, the applicants have destroyed their capacity to control further dissemination of any advice contained in the documents”, relying on Cadbury Schweppes Pty Ltd v Amcor Ltd [2008] FCA 88, 246 ALR 137 (“Cadbury Schweppes”) at [17]. Thirdly, by providing third parties with the applicants’ legal advice the Media Ocean group had dealt with the advice inconsistently with the maintenance of their privilege, relying on Mann v Carnell (1999) 201 CLR 1 (“Mann v Carnell”) at [28]-[29].

37    Optus also relied on four paragraphs of an affidavit sworn by Lindsay Michael Powers, a partner in Minter Ellison, Optus’s solicitors. His evidence explained that, in his view, the schedule of privileged documents in the applicants’ verified list served on 10 August 2009 did not provide enough information for Optus to properly consider the claims for privilege as the documents “were simply referred to as groups of documents, the dates for which were stated to be ‘various’”. He also went on to explain that an unverified list of documents was provided on 28 September 2009 and commented that, while Optus accepted that documents described as communications with Mr Mattock were “likely” to be privileged, “communications between the Applicants and others (such as the reseller Kenneth Ting) are not”. If relevant, this evidence could go only to the question of costs. It does not bear on the substantive issues on the motion. As I propose to reserve the question of costs, I do not intend to refer to it further in this judgment.

38    After looking at the redacted documents, it was evident that, generally speaking, apart from the question of waiver the masked portions of the documents contain material that is privileged, either because the communications were made for the dominant purpose of obtaining or giving legal advice or because the masked portions would disclose the contents of such a communication.

39    As a result, there were only two real issues:

(1)    In a few cases, whether the masked portion could be privileged at all in circumstances where the answer to that question depended on whether it could be said that the communication was made for the purpose of obtaining information to enable the Media Ocean group’s solicitors to advise them in relation to this litigation, either when it was anticipated or after it had begun.

(2)    In all but one case, whether any privilege had been waived by disclosure of the otherwise privileged portion of the email chain to third parties. This depends on the resolution of the common interest question.

Applicable legal principles

40    There no dispute about the relevant principles and authorities, although their application to the facts of this proceeding was, of course, contested. The only area where it is necessary to do more than advert to statements of basic principle is in the area of common interest privilege.

41    In this Court privilege claims over documents required to be produced for inspection on pre-trial discovery are governed by common law principles, not the Evidence Act 1995 (Cth). See Esso Australia Resources Ltd v Federal Commissioner of Taxation [1999] HCA 67, 201 CLR 49 (“Esso”). Order 33 r 11 of the Federal Court Rules does not alter this position. See Seven Network Ltd v News Ltd [2005] FCAFC 125, 144 FCR 379.

Privileged communications between a party and a third party

42    Where the issue was whether a communication with a third party could be privileged at all (as opposed to the majority of cases, where the issue was whether any privilege had been waived by the third party communication), the Media Ocean group was content to rely solely on one of the categories – category (f) – identified by Lockhart J in his often cited decision in Trade Practices Commission v Sterling (1978) 36 FLR 244 (“Sterling”) at 246, which captures:

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

Waiver and common interest

43    A person entitled to assert legal professional privilege over a communication may waive that privilege, expressly or by implication, by engaging in conduct which is inconsistent with maintaining the confidentiality of the communication. A court’s view about whether there is an inconsistency may “where necessary [be] informed by considerations of fairness”. See Mann v Carnell at [28]-[29] per Gleeson CJ, Gaudron, Gummow and Callinan JJ.

44    Obviously, voluntary disclosure to a third party may, but need not, result in a waiver of privilege. This is implicit in the discussion of disclosure to a third party for a limited and specific purpose in Mann v Carnell at [30]-[32].

45    As I said earlier, broadly speaking, Optus’s contention was that, as these emails had all been sent to third parties, any privilege in them had been waived.

46    Optus also relied on a more specific proposition about when a waiver occurs derived from Gordon J’s decision in Cadbury Schweppes. In that case her Honour held (following the reasoning of the Full Court in Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3, 218 ALR 283) that privilege was waived in the contents of witness statements or affidavits filed and served (though not read). The principle on which her decision was based was that there is a waiver where “the original holder of the privilege cannot control further dissemination of the document”, regardless of whether there was in fact further dissemination of the document.

47    The onus is on the party seeking to establish waiver. See NSW v Betfair Pty Ltd [2009] FCAFC 160, 180 FCR 543 at [54] per curiam.

48    In the end, in oral argument the parties approached the documents on the basis that a waiver would be established unless the Media Ocean group could demonstrate that it had a common interest with the third parties. The group did not rely on any other basis for establishing that the disclosure of the privileged communications to Pivotel or the resellers did not constitute a waiver of privilege.

49    The relevant principle is expressed in the following way in JD Heydon’s Cross on Evidence (8th Australian edition) at [24265] (citing Formica Ltd v Export Credits Guarantee Department [1995] 1 Lloyd’s Rep 692 (“Formica”) in support):

Where, in circumstances of a mutual interest in a particular transaction or transactions the recipient of legal advice relating to such transactions passes documents or information containing that advice to someone who shares that interest, the essential question in each case is whether the nature of their mutual interest in the context of their relationship is such that the party to whom the documents are passed receives them subject to a duty of confidence, which the law will protect in the interests of justice.

50    In Farrow Mortgage Services Pty Ltd (In liq) v Webb (1996) 39 NSWLR 601 (“Farrow Mortgage Services”), Sheller JA (Waddell AJA agreeing) accepted the existence of this principle in Australian common law (though recognising, at 611C, its somewhat shaky foundation in a decision of the Court of Appeal of England and Wales in Buttes Gas & Oil Co v Hammer (No 3) [1981] QB 223 (“Buttes”)).

51    His Honour began his discussion with the short proposition that “common interest is not ... a rigidly defined concept. A mere common interest in the outcome of litigation will be sufficient to enable any party with that interest to rely on it” (at 609B), citing Buttes in support. It was upon this principle that the Media Ocean group’s written submissions were essentially founded. His Honour went on to cite (at 611G-612B) with apparent approval the following statement of principle by Giles J, sitting in the NSW Supreme Court’s Commercial Division, in Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275 at 279G-280B:

If two parties with a common interest exchange information and advice relating to that interest, the documents or copy documents containing that information will be privileged from production in the hands of each; thus, if one of the parties obtains a letter of advice attracting legal professional privilege and provides it to the other, the other can also claim legal professional privilege. Some remarks in the earlier English cases suggested that the parties must have a common solicitor, but I do not think that is necessary (apart from my view expressed in Bulk Materials (Coal Handling) Services Pty Ltd v Coal & Allied Operations Pty Ltd; see also Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (“The Good Luck”) and Rank Film Distributors Ltd v ENT Ltd). ...

Examples of interest sufficient for common interest privilege can be seen in the cases, but the concept is not rigidly defined and it is a question of fact in each case.

52    Sheller JA also approved (at 612D) Giles J’s general statement about the concept of a common interest in his later decision in Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 (“Ampolex”) at 410A:

[T]wo persons interested in a particular question will not have a common interest for the purposes of common interest privilege if their individual interests in the question are selfish and potentially adverse to each other. In such a case there will not be the necessary identity of interest.

53    Thus, Farrow Mortgage Services stands for the proposition that a mere common interest in the outcome of litigation will suffice but there will be no such common interest if the individual interests of the parties concerned are selfish and potentially adverse.

54    In this Court, Tamberlin J has accepted this statement from Ampolex as correct and appears to have generally accepted Sheller JA’s judgment in Farrow Mortgage Services as an accurate statement of the law. See Patrick v Capital Finance Corporation (Australasia) Pty Ltd [2004] FCA 1249, 211 ALR 272 at [18], [22].

55    The principle is simple enough but not always easy to apply.

56    One doctrinal question arises from the way that the Media Ocean group approached the task of establishing a common interest. It appeared at times that they did so on the footing that they needed to establish both a common interest and, as a freestanding requirement, the existence of an obligation of confidence between the Media Ocean group entity and the third party.

57    It is undoubtedly correct that a communication must be confidential to be privileged. But this does not mean that a duty of confidence must be established in addition to the existence of a common interest (although this may, of course, be a separate basis for resisting a conclusion of waiver, in circumstances where there is no common interest): see, e.g. Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529 at 539-40. It may be that the necessary ingredient of confidentiality is established by proving the necessary common interest. Certainly, the cases to which I referred above do not speak of two separate requirements in this area. And there are other formulations which seem to approach the question in this way. In Formica Colman J said that:

[T]he essential question in each case is whether the nature of their mutual interest in the context of their relationship is such that the party to whom the documents are passed receives them subject to a duty of confidence which the law will protect in the interests of justice.

58    The Media Ocean group did not argue that, even if there were no common interest, privilege had not been waived because the disclosure of the privileged material was not inconsistent with the maintenance of the privilege (Mann v Carnell), in which case it would have been important to consider whether the disclosure was made on a confidential basis.

Ampolex

59    Mr McHugh’s starting point was that whether there is a common interest in legal advice, or whether instead the interests are “selfish and potentially adverse”, was to be answered in the context of the particular question on which advice was sought rather than at some broad level of generality. Obviously, it was difficult for him to go much further without knowledge of the masked parts of the documents. But he submitted that the task of the Court was to first identify the question on which advice was sought “with some particularity” and the time at which it was asked (as the position between the people involved might change).

60    Mr Kunc appeared to argue at times that whether or not there was a common interest was something to be determined at a more abstract or general level. At other times, he seemed to concede that Mr McHugh was correct and that it was necessary to identify the particular question in which the common interest is said to exist.

61    Ampolex appears to support Mr McHugh’s contention that the question must be defined with some particularity. The litigation in Ampolex concerned the number of shares into which notes issued by Ampolex Ltd (“Ampolex”) were convertible. The notes were issued under a deed between Ampolex and the first defendant Perpetual Trustee Co (Canberra) Ltd (“Perpetual”) as trustee. There was an amendment to the deed in 1992 which purported to affect the number of shares into which the notes were convertible. The notes were publicly listed and in April and May 1995 the second and third defendants – Allied Mutual Holdings Pty Ltd (“Allied”) and GPG Nominees Pty Ltd (“GPG Nominees”) – purchased notes and then sought to convert them. They argued that the notes were convertible into shares at a far more favourable rate than the one maintained by Ampolex.

62    Simplifying the facts somewhat, a dispute arose about GPG Nominees and Allied’s claims of legal professional privilege over certain documents containing or relating to legal advice about the noteholders’ rights of conversion. This advice had been sought in February 1995 and obtained from counsel in April 1995, not by GPG Nominees or Allied, but by solicitors for County NatWest Securities Australia Ltd (“County NatWest”) and then provided to GPG Nominees and Allied. County NatWest also asserted privilege over the documents.

63    It should be noted, therefore, that, unlike the case before me where the party who obtained the advice is asserting common interest privilege to resist an argument that its privilege had been waived by disclosure to a third party, here the party to the litigation was the one to whom the advice had been given. This is another aspect of the operation of common interest privilege where the person to whom the disclosure is made may also assert privilege over the advice or communications.

64    Giles J approached the matter on the basis that, unless there was a common interest privilege shared by GPG Nominees, Allied and County NatWest, the documents would not be privileged (at 409D).

65    In argument, the foundation for the common interest was said to be: an agreement dated 25 May 1995 between GPG Nominees and County NatWest, the dates and descriptions of the documents, “evidence on information and belief that Mr Clayhill of County NatWest assumed at the time documents were provided to GPG Nominees and Allied that they had a similar interest to County NatWest and the documents would be kept confidential” and the fact that counsel who provided the advice to County NatWest was briefed on behalf of GPG Nominees and Allied in the proceedings. The common interest was said to have arisen in February 1995 and was described as “a common interest in the rate at which the notes were convertible” (at 410C).

66    Giles J treated the agreement between GPG Nominees and County NatWest as being central to the argument. As he described it, “the agreement recorded an arrangement by which, depending upon future events, notes would end up with one or other of County NatWest and GPG Nominees and one or other of them would gain an economic benefit” (at 410D). Although Ampolex took a point about whether a common interest could be inferred in February 1995 from an agreement made in May, Giles J’s conclusion that there was no common interest privilege was based squarely on his view that “on the evidence as it stands I do not think an identity of interest sufficient for common interest privilege has been shown”. As his Honour explained (at 410E-G):

Let it be inferred that both Country NatWest and GPG Nominees and Allied had an interest in legal advice in relation to conversion of the notes, with a view to a commercial arrangement such as that which was ultimately recorded in the agreement of 25 May 1995. Their individual interests may have been such that County NatWest saw fit to involve GPG Nominees and Allied in the process of getting advice and to disclose the advice to them, but each had its or their individual interest in advice upon the conversion of the notes, advice which might guide it or them in what was done or not done vis-à-vis the others or other. Regard to the dates and descriptions of the documents in question does not lead to a different view, Mr Clayhill’s assumption takes the matter no further, and the fact that junior counsel advising County NatWest now appears for GPG Nominees and Allied is unsurprising given the structure of and nature of practice at the Bar.

67    In short, it seems clear that Giles J accepted that GPG Nominees, Allied and County NatWest had an interest in the legal advice because of their agreement. In fact, it is clear that he accepted that the outcome of the litigation would affect them in the same way in the sense that a favourable decision on the noteholders’ rights of conversion would be to the benefit of all, and an unfavourable one to the detriment of all. When discussing obiter the question of whether one holder of a common interest privilege may, in certain circumstances, waive the privilege for all its beneficiaries, he said that “[County NatWest’s] fortunes are relevantly linked with those of GPG Nominees and Allied…” (at 413F) and there is no indication that he was assuming this only for the sake of considering this question.

68    It thus appears that Giles J acted on the principle that where one company discloses legal advice to two others in which they all have an interest because of a commercial arrangement between them, if each has its own individual interest in the advice given and what it might do with it, there is no common interest privilege in the advice because there is insufficient identity of interest. In my view, it also appears from the way his Honour applied this principle to the facts of that case that it might not always be sufficient to show that the outcome of the litigation would be beneficial (or detrimental) to both the third party and the party resisting inspection. In Ampolex it is clear that if the outcome of the litigation had been, say, that the notes were convertible into a greater number of shares, this was (at least potentially) of financial benefit to both GPG Nominees and County NatWest because of their commercial arrangement and the converse is also true.

Is there a common interest between the Media Ocean group, Pivotel and the resellers?

69    Mr McHugh readily accepted that the Media Ocean group, Pivotel and the resellers all have in interest in the money “flowing down the line”. He maintained, however, that their interests were not common, but potentially adverse, both commercially and legally. He largely focussed on the circumstance where the advice sought, and disclosed, by the Media Ocean group related to whether Optus was entitled to withhold payment from Vodafone for past calls to the Media Ocean numbers. He conceded that if the answer given was that Optus was not entitled to withhold payment, then their interests were the same. But he contrasted this with the position if the advice was that Optus could withhold payment. He then said, adopting Giles J’s words in Ampolex, “each had its or their individual interest in advice…, advice which might guide it or them in what was done or not done vis-à-vis the others or other”. He maintained that there had to be a common interest in the topic of the advice, regardless of its content or direction.

70    Specifically, Mr McHugh’s submission was that Pivotel, the Media Ocean group and the resellers could not have a common interest in advice about Optus’s entitlement to withhold payment because, if the outcome of the advice was that it could, their interests were potentially adverse in that, just like in Ampolex, they all might do different things. As he put it:

[W]hen one looks at the commercial relationships between the parties, it’s easy to see that they were potentially adverse because all these resellers who have been carrying traffic and who haven’t been paid may well put their hand out and say to [the Media Ocean group], “Well, we want money for the traffic that’s already run”.

71    Fundamentally, Mr Kunc relied on the terms of the agreements between the Media Ocean group entities and Pivotel and the resellers. He argued that two conclusions followed from those terms. First, communications fell within the confidentiality clauses in the agreements. Alternatively, even if they did not, the fact the agreements contained a confidentiality clause was evidence from which the existence of a relationship of confidentiality could be inferred (along with other relevant factors such as the subject matter, e.g. legal advice, the timing, e.g. close to litigation, and the fact that the various entities were working together or “in an alliance” against Optus). As I said earlier, Mr Kunc approached his task as needing to show the existence of a duty of confidentiality. Secondly, he submitted that the terms of the agreements with the resellers clearly showed that the resellers had no right to payment unless the Media Ocean group was paid for traffic. Therefore, there was no potential for conflict arising from non-payment to the resellers.

72    Mr Kunc pointed to the confidentiality clause in clause 6 of the agreement between Pivotel and Media Ocean dated 4 June 2007 and signed by Mr Charlesworth and Mr Sakker, under which Media Ocean obtained the Media Ocean numbers from Pivotel (then Globalstar Australia Pty Ltd). That agreement imposed obligations of confidentiality in relation to “the Confidential Information”, defined as information disclosed or communicated (subject to exceptions not presently relevant) “for or in connection with the performance of this Agreement, and includes the provisions of this Agreement…”

73    Mr Kunc also relied on the “financial settlements” clause, contained in a schedule to the agreement:

1.1 [Pivotel] shall pay to Media Ocean an Interim Payment for each calendar month (or part thereof) of this Agreement equal to 80% of the Media Ocean Share per Measured Minute. The Interim Payment will be paid within 45 days of the end of the calendar month during which the Traffic occurred.

1.2 Upon receiving payment from Interconnect Carriers [in this context, Vodafone] in respect of Paid Minutes, [Pivotel] shall account to Media Ocean for the full Media Ocean Share in respect of those Paid Minutes less the Interim Payment paid in accordance with paragraph 1.1.

74    This demonstrated, he submitted, the common interest Pivotel and the Media Ocean group had in the outcome of the principal proceedings and the fact that “they’re very much all very interested in getting this traffic flowing, and getting the money down the line, which is the subject of the proceedings”. His point, to which he returned when dealing with the relationships with the resellers, was that each person further down the line – here the Media Ocean group itself – did not get paid for traffic unless the person further up the line was paid – in this case Pivotel. Therefore there was no prospect of conflict or litigation between Pivotel, the Media Ocean group and the resellers.

75    He argued that clause 1.1 guaranteed an interim payment (the details of how it is calculated are not presently relevant) within 45 days, but that under clause 1.2 Pivotel had no obligation to make full payment (with credit for the interim payment) unless Optus paid Vodafone, who paid Pivotel.

76    The Media Ocean group also tendered an unsigned agreement naming the parties to it as Sound Advertising and Hometown, dated 10 May 2008. Mr Mattock gave evidence in his affidavit that this was a copy of the agreement between them “which sets out the payment relationship between those entities”, and said that the source of his belief that this was the case was, relevantly, Mr Charlesworth’s affidavit of 5 June 2009. In Mr Charlesworth’s affidavit of 5 June 2009, he gives evidence that Sound Advertising has a written agreement with Hometown. Mr Kunc said from the bar table that, in fact, the agreement was never signed.

77    The agreement that was tendered has a confidentiality clause, which appears on its face to be broadly similar in scope to the one in the agreement with Pivotel, as it obliges the parties to keep “the terms and nature of this Agreement in strictest confidence and … any information relating to this Agreement” (clause 12.1).

78    The payments clause of the agreement provides, in clause 5.3, that:

The Company [Sound Advertising] shall pay to the Contractor [Hometown] its share of revenue as stated in the Schedules herein and subject to the receipt by the Company of payments from the Network Provider in respect of the calls made in such a month.

[Emphasis added.]

79    Mr Kunc submitted that “the Network Provider” was, in context, a reference to Pivotel and Mr McHugh conceded that it would at least include Pivotel. Mr Kunc argued that the effect of the proviso that the obligation to pay was “subject to the receipt by the Company of payments from the Network Provider” was that, on any view, there was no obligation for Sound Advertising to pay the reseller Hometown unless it received payment, and as a result, no sensible possibility of conflict between them over the question of Optus’s entitlement to withhold payment. At least one difficulty about relying on this agreement for any purpose was that it was unsigned and there was other evidence that Hometown was not paid (at least not always) in accordance with its terms.

80    Schedule One to the Hometown agreement provided that:

Payments shall be made by to [scil. the] company to contractor no later than 45 days past the end of the previous month (example: April month is paid by June 15th).

81    Mr Charlesworth said, however:

The arrangements between Sound Advertising and its Resellers are that they do not get paid until payment is received from Pivotel. Although the contract with Hometown Telecom has a term that requires payment at set dates, the practice adopted by Sound Advertising was to make payment when payment was received or when I was aware that payment was imminent. The only time that full payment has been made to Hometown where Sound Advertising or Media Ocean had not received full payment for the traffic was for November 2008 traffic. This was done to keep a good working relationship with Hometown, given that it generates a large amount of traffic.

Since December 2008, Sound Advertising has only to Hometown Telecom paid a proportion of the traffic generated by Hometown. Hometown has never made a demand on Sound Advertising for payment of the unpaid traffic. Given that the other Resellers have generated a very small proportion of traffic, I have arranged for full payment to those Resellers. That amount paid in March 2009 to the Resellers other than Hometown was only $7, 763.

82    Mr McHugh submitted that it could be inferred from this that Mr Charlesworth was “acutely conscious” that Hometown might make a demand for payment, and that there was a potential adverse relationship at the time of the various emails (December 2008 to early 2009) if the advice was that there was no action against Optus – and so, even if this was not in fact the advice, they could not be said to have a common interest in this question. Just like in Ampolex they might have “their individual interest in advice … advice which might guide it or them in what was done or not done vis-à-vis the others or other”.

83    An agreement between Mediatel and the reseller Baycall was also tendered, signed by Kenneth Ting, director of Baycall, and Bill Vickery, director of Mediatel, and dated 17 June 2008. It was in the same terms as the agreement said to govern the relationship between Sound Advertising and Hometown.

84    Mr McHugh submitted that, in fact, the agreements were not so clear about the obligations of Sound Advertising and Mediatel to make payments to the resellers that it could be said there was no potential conflict. He pointed out that clause 5.1 of the two agreements provided that:

The Company [Sound Advertising or Mediatel] will pay to the Contractor [Hometown or Baycall] at the rate per minute of call traffic registered by the Network Provider [relevantly, Pivotel] from call originating countries listed in Schedule 1 to any number assigned to the Contractor by the Company according the payment schedule…

85    Schedule One to the Baycall agreement provided that:

Payments are made 60 days from end of month, after Mediatel has received payment.

86    Mr McHugh submitted that, even though this appeared to make the obligation to pay Baycall contingent on Mediatel being paid, where Optus has stopped making payments, Baycall will still have performed its function of directing calls overseas and there was a potential dispute in those circumstances with respect to calls already made.

87    Mr McHugh also relied on Mr Charlesworth’s later affidavit of 3 November 2009. There Mr Charlesworth explains, as I indicated above, that his initial idea of blocking Optus customers from calling the Media Ocean numbers on 22 December 2008 was not in response to Optus’ first text message to its customers, but rather in response to Optus’s disputing its liability to pay Vodafone. He said:

I was concerned about the exposure to my business if payment was not made on the disputed traffic and immediately thought that the best way to limit any loss or damage to the business was to block the traffic. This is because I understood that Vodafone did not have to pay Pivotel (who in turn paid Media Ocean) unless payment was received from the originating carrier. At that time, I had not made a final decision to block the traffic.

88    He went on:

In addition to my concerns regarding the payment dispute I was also very concerned about my reputation being disparaged and I was particularly concerned that Pivotel might cut Media Ocean off because of pressure from Vodafone. Because of this I wanted to assure Mr Sakker [a director of Pivotel] that I did not have any previous dealings with Vodafone.

89    Mr McHugh submitted that all this went to show that Mr Charlesworth first blocked calls by Optus mobile customers because of a concern about his reputation and about his relationships with Pivotel and the resellers.

90    Mr McHugh also tendered two emails from the Media Ocean group’s discovery which, he said, provided additional support for his argument about the potentially adverse interests – although they related only to the resellers, not Pivotel. The emails were admitted provisionally over objection.

91    The first was an email from Richard Burns, Mediatel’s financial officer, to Mr Vickery and Geoff Maidens, director of Mediatel, and copied to a Gareth Robson, whose identity was not explained, dated 5 December 2008, a little less than three weeks before Optus’s first text message to its customers.

92    In the email Mr Burns says that an inquiry from a prospective client – perhaps a reseller – which appears to have referred, broadly speaking, to an issue in the UK similar to the blocking of the Media Ocean numbers by Optus in Australia, has led him to look at the contract with Baycall. He says:

I think we need to tidy up a couple for [scil. of] clauses to make it crystal clear.

93    He then proposes amendments to clauses dealing with “suspension of service” and “termination” and, most importantly, to clause 5.3:

The Company shall become liable for payment under Clause 5.1 upon receipt of payment from the Network Provider. In the event that the Network Provider does not make payment for the traffic, the Company will not be liable to the Contractor for that traffic.

94    He then says:

I believe that these conditions are already understood by our clients – so there should be no issue in getting acceptance. I think the current contract does address the position, but it is not clear. We don’t want to be in a position where the client demands payment for traffic for which we have not been paid.

[Emphasis added.]

95    In line with his submissions about the other evidence, Mr McHugh said this email again shows, following Ampolex, that once advice was received, depending on its content, the parties may find themselves in a position of conflict, that is to say, in an adverse relationship. He said the email indicated that within Mediatel there was a concern about facing a client demanding payment for traffic which had already flowed, so their interests are diverse.

96    Mr Kunc argued that the email was irrelevant since there was no disputed document where the question on which advice had been sought and in which there was said to be a common interest had anything to do with the mutual contractual obligations of the Media Ocean group and the resellers. I agree that the email is probably irrelevant.

97    Broadly speaking, the disputed communications are concerned with two subjects. One is Optus’s decision to charge its customers at international (and not MTAS) rates for calls to the Media Ocean numbers. The question for consideration here is whether the Media Ocean group and Pivotel have a common interest in this subject. The other is the Media Ocean group’s decision to block access to Optus customers where the question is whether the group has a common interest with the resellers.

98    The proper way to approach these questions, in my view, is by focussing on the objective nature of the legal and commercial relationship between the parties. This seems to accord with the approach Giles J took in Ampolex. For this reason I think that the evidence about the attitudes of the players is of doubtful relevance.

99    Turning first to the contract with Pivotel, the “financial settlements clause” does not seem to me to bar a demand by Media Ocean on Pivotel in the event of non-payment by Optus. Clause 1.1 is not expressly conditional on Pivotel receiving payment from Interconnect Carriers (read Vodafone). Whether the qualification that appears in clause 1.2 applies equally to clause 1.1 is, at best, moot. For this reason it seems to me there is a potential for conflict between Pivotel and the Media Ocean group in the subject question. Their interest in the outcome of the litigation is only common in the event that the Media Ocean group is successful and that is not enough.

100    The issue of common interest with the resellers largely arises in the context of advice on the subject of Media Ocean’s blocking. The advice appears to have been of a strategic nature arising in the context of the litigation which, at the time of the relevant communications is either on foot or in contemplation. Mr McHugh submitted that the interests of the parties on this question were also potentially adverse:

It s not hard to see how the parties might be in dispute about that, because one person might take the view that they would prefer to have the traffic run - and take the chance that they won’t get paid, because they take the view that Optus is liable and ultimately they’ll have to pay, and they’d rather have the minutes run. Whereas somebody being more conservative might take the view: I don’t want the traffic to run at all, because I don’t want to be exposed downstream. Someone with a greater appetite for risk might say, I want the minutes to run so that I can then, you know, I can say to you that you say to Pivotel and Pivotel says to Vodafone and Vodafone says to Optus, these minutes ran. Because at this stage, the one thing that Optus wasn’t doing was actually blocking the calls. They were refusing to pay, but the traffic was still running.

101     I do not think that this is the correct way to approach the question of common interest. I think Mr Kunc is right and the issue should be considered in the light of the legal relationships.

102    But in my opinion the position with respect to the two resellers is not the same. In the case of Hometown Mr Charlesworth referred in his affidavit to Sound Advertising having a written agreement a copy of which, he said, was exhibited to his affidavit but I simply do not know whether what was tendered was a copy of what appeared in the exhibit, as exhibits to his affidavit did not come before me. As I mentioned earlier, there was in any case no signed agreement. Mr Charlesworth also gave evidence that payments were not in all cases made in accordance with the terms of the agreement. In any event, assuming the unsigned contract that was tendered was the agreement to which Mr Charlesworth was referring in his affidavit, there is some room for ambiguity raised, at least, by the terms of the schedule under which payments are to be made by a certain time each month and there is no express qualification (such as appears in the Baycall agreement) that payments are subject to Sound Advertising being paid.

103    In the circumstances there is clearly a potential for conflict between Hometown and Sound Advertising.

104    In the case of Baycall a signed copy of the agreement with Mediatel was in evidence. I must say (despite Mr Burns’s concern to make the position even clearer) that in this case I can see no potential for conflict in the case of non-payment by Optus. Clause 5.3 makes payments to Baycall subject to the receipt by Mediatel of payments from Pivotel and the ambiguity which arises from the payment schedule in the unsigned Hometown contract is missing here. Unlike the schedule in the Hometown contract the schedule to the Baycall contract provides that payments are made 60 days from the end of the month “after Mediatel has received payment”.

105    This means that Baycall’s fortunes are inextricably tied to Mediatel’s. For this reason I am of the opinion that there is a common interest between them in the outcome of the litigation (no matter which way it goes) and also in the specific question of advice about Media Ocean blocking. As the advice is given in the context of the litigation then in contemplation, it seems to me to be quite artificial to separate it from the subject matter of the litigation.

The documents

Documents 1 and 2

106    These documents are, in substance, the same email chain consisting of an exchange of emails between Mr Sakker (director of Pivotel) and Mr Charlesworth (Media Ocean group) between 5 January and 8 January 2009.

107    The subject matter of the advice here is Optus’s entitlement to charge its customers at international (and not MTAS) rates for calls to the Media Ocean numbers.

108    One sentence in an email sent on 8 January from Mr Charlesworth to Mr Sakker has been masked. Mr Mattock’s evidence was that the sentence “repeats legal advice given to Mr Charlesworth by me in connection with anticipated legal proceedings (being these proceedings)”.

109    In context it is clear that the masked sentence is concerned with legal advice and in all likelihood discloses the contents of that advice (although on its face it does not disclose that Mr Mattock himself was the source, as he deposes). It would thus be privileged, unless the privilege has been waived by disclosure of the advice to Mr Sakker of Pivotel. Mr Kunc conceded that there was a waiver unless there was a common interest.

110    Mr McHugh made two submissions. First, it needs to be considered whether the disclosure took place in circumstances of confidentiality, emphasising that the subject matter of the advice, especially if it related to Optus’s conduct, may not fall within the terms of the confidentiality clause in the Pivotel agreement, which were limited to information “for or in connection with” the agreement. Secondly, he reiterated his general position that - even if in one sense Pivotel and the Media Ocean group both had an interest in Optus’s conduct and its legality – the evidence showed in relation to the question of Optus’s entitlement to withhold payment that the interests of the Media Ocean group and Pivotel were potentially adverse (and that Mr Charlesworth was worried about the relationship).

111    Mr Kunc defined the question to which the advice was directed and in which there had to be a common interest as:

[T]he entitlement or otherwise of Optus not to pay down the line…the entitlement to charge their customers higher on international rates, and the nature of the text messages that have gone out, as to whether they’re misleading and deceptive. Those are all issues that are in play at this date.

112    For the reasons I gave earlier I think the confidentiality question is a red herring.

113    As I am not satisfied that Pivotel and the Media Ocean group have a common interest in the question with which the advice is concerned or, indeed, the outcome of the litigation, I hold that privilege has been waived.

Documents 3, 4, 5

114    These documents are, in substance, the same email chain masked in the same two places. Whatever the niceties, in practice the three documents stand or fall together.

115    The email chain begins with an exchange between Mr Charlesworth and a Mediatel staff member, which is then forwarded by Mr Charlesworth on 12 March 2009 to Mr Stone (and copied to another Hometown employee). A further email on 13 March 2009 from Mr Stone to Mr Charlesworth follows, which is then forwarded internally within Mediatel.

116    There are two masked portions. The first is in one of the emails on 13 March 2009 and Mr Mattock says that it has been masked “because it passes onto [sic] Mr Stone the legal advice obtained by Mr Charlesworth from his barrister”. This is undoubtedly an accurate description of the content. The basis for the privilege claim in the second redacted email is said to be that “it discusses and responds to the advice disclosed in [the other masked portion]”. This is also an accurate description of the content of the email and it is certainly correct to say that disclosing this sentence would, in effect, disclose the substance of the advice reported in the other masked portion.

117    In short, but for the question of waiver these portions of the documents would be privileged and it all comes down again to the question of common interest.

118    Here, the relevant interests are that of Hometown, a reseller, and the Media Ocean group. The subject matter of the advice is the group’s decision to block access to its numbers for Optus customers.

119    Mr McHugh sought to illustrate the potential for conflict here through a chain of emails sent between 25 and 28 November 2008, about a month before Optus sent its first text message. The first was a request by Mr Charlesworth from Mr Burns for the “last payment statement from Pivotel”, and then a reply from Mr Burns indicating that Pivotel doesn’t send a payment statement, but paid invoices sent by Media Ocean. The second, also from Mr Charlesworth, refers to a “pending problem in london [sic] in that we are struggling to pay for traffic in advance” and then discusses ways to raise the necessary funds. There is a response from Mr Burns, before Mr Charlesworth writes back saying (without alteration) “putting it bluntly richard doesnt trust the situation in sydney unfortunately”, referring in context to Richard Stone, Hometown’s agent.

120    The final email refers to paying Hometown in advance, which appears contrary to the unsigned written agreement. But it is difficult to infer much from it, as Mr McHugh frankly conceded that the email may not have been sent (its subject is “Draft response to Mike re Hometown”) and he also acknowledged it might be a proposal rather than a statement of fact. But his main point again was that, consistently with Mr Charlesworth’s evidence, there was a concern about the Hometown relationship and managing it since it refers to Mr Stone not trusting them (in context, apparently about payment and Mr Stone seeking security of payment in advance).

121    It is difficult to know what to make of this evidence. Mr Kunc argued, with some justification, in isolation, that it was impossible to tell exactly what the email was about and whether Mr McHugh’s interpretation was correct, particularly as it was unclear whether it was talking about a proposal or the actual situation. He also submitted that it was not probative on the question of whether under the agreement there was a potential for conflict. In addition, I would point out that the evidence relates to a period some three and a half months earlier.

122    As I have already said, evidence of this kind, in my opinion, is of doubtful relevance to the question of whether the parties have a common interest.

123    Nevertheless, because of the ambiguity in the terms of the contractual arrangements, there is a real potential for conflict between the parties. Consequently, I hold that privilege over the masked portions of these emails has been waived.

Documents 6, 7, 8, 9, 10, 11, 12, 13 and 14

124    Documents 6 and 7 are email chains consisting of two emails.

125    Both start with the same email, the contents of which are completely masked. The email is dated 16 March 2009. It is from Kenneth Ting, a director of the reseller, Baycall, and also a witness in the proceeding, to Mr Charlesworth, copied to Mr Vickery and Mr Mattock.

126    Mr Mattock’s evidence was that this email was a reply to his request that Mr Charlesworth obtain from Mr Ting “the exact wording of the text message he had received from Optus (and which forms the basis of this dispute) so that I could provide further advice to Mr Charlesworth”. There is no mention of Mr Charlesworth’s request in the email, so Mr Mattock’s statement is the only evidence bearing on this, apart from what support can be gleaned from the fact that he is copied into the email.

127    Mr Kunc’s submission was that this email was privileged as it fell within Sterling category (f). Mr McHugh conceded that, for the purpose of determining whether the email fell within this category, litigation could be said to be anticipated at this date.

128    In all the circumstances I am satisfied that the communication falls within category (f) and is privileged.

129    The top email in document 6 is an email from Mr Charlesworth to Mr Ting, copied to Mr Vickery. At the hearing, Mr Kunc withdrew the claim for privilege over the salutation “Hi Kenneth” which begins the email, and the final paragraph beginning “FYI…”. It discloses the content of advice given by Mr Kunc to the Media Ocean group and is privileged, subject to the question of waiver.

130    The top email in document 7 is from Mr Charlesworth to David Schofield, an employee of Hometown, David Glickman (described by Mr Mattock as “owner” of Hometown), Mr Stone and copied to Mr Vickery (director of Mediatel) conveying legal advice and detailing a course of action consequent upon it. It also forwards to them the information Mr Mattock said he sought from Mr Ting. It is plainly privileged, again, subject to the question of waiver.

131    Documents 8, 9, 10, 11, 12, 13 and 14 are email chains, involving correspondence following on from the two emails in document 6 between Mr Charlesworth, Mr Ting and Mr Vickery on 22 and 23 March 2009.

132    Although privilege was not pressed in relation to one email that appears in documents 11, 12, 13 and 14 (the top email in document 11), privilege was maintained in the remaining emails on the basis, essentially, that they would disclose the contents of otherwise privileged communications of legal advice obtained by the Media Ocean group.

133    For the most part I am satisfied that the redacted emails are privileged or contain privileged material either because they fall within Sterling category (f) or because they disclose the substance of legal advice obtained by Media Ocean group.

134    The communications that I do not consider privileged are the email to Mr Charlesworth from Mr Ting copied to Mr Vickery which is the top email in document 9 (and also appears in documents 10 through 14) and Mr Ting’s reply which is the top email in document 10 (and also appears in documents 11 through 14). Mr Mattock described these emails as ones which ‘discuss’ and ‘seek’ “further comment on the legal advice received from the Applicant’s counsel”. In my view that description is unwarranted.

135    As I am satisfied that Baycall and the Media Ocean group have a common interest in advice relating to this litigation, there has been no waiver of the privilege that exists in documents 6, 8, 9, 10, 11, 12, 13 and 14. Conversely, privilege has been waived in the contents of document 7, as the material was forwarded to Hometown with whom I am not satisfied that the group has a common interest.

Documents 15, 16, 17, 18, 19, 20

136    Document 15 is a chain of four emails sent between 24 and 26 March 2009. The first three emails involve Mr Charlesworth, Mr Mattock and Mr Vickery and are plainly privileged communications as they give or request legal advice.

137    In the final email Mr Vickery forwards the earlier emails to Mr Ting (copying Mr Charlesworth).

138    Mr Mattock’s evidence about this email (and the previous one) was:

I prepared and sent this email [the second last email] for the purpose of providing further confidential legal advice to the Applicants and to request further information to enable me to provide further advice.

…

[T]his email [the final one] relates to a request I made for further information from third parties, including Mr Ting, referred to in the previous email. I required this information from the third parties in order for me to provide further legal advice.

139    Mr Kunc’s submission was that this email was privileged as it fell within Sterling category (f). This was, in his words, “information gathering from the third parties for the purposes of litigation”. The proceeding commenced on 25 March 2009, so there is no doubt that in relation to this email litigation was either anticipated or had in fact begun.

140    There is a problem here, in that despite Mr Mattock’s characterisation, there is no explicit request by Mr Mattock in the second last email for the further information provided in the final email. I accept, however, that such a request is implicit, that the email sent to Mr Ting by Mr Vickery was made pursuant to this implicit request and that therefore the email is privileged because it falls within Sterling category (f).

141    Documents 16 and 17 are further emails between Mr Ting and Mr Vickery (copying Mr Charlesworth on one of them). In court Mr Kunc waived privilege on behalf of his client in these words in the new email in document 16: “Is Mike still in Australia? I called his Australian mobile a few times today and it was offline”. But he pressed the claim for privilege in relation to the remainder and I am satisfied that it falls within Sterling category (f).

142    In document 18 Mr Charlesworth joins in the correspondence. In court Mr Kunc waived privilege in the first sentence of the email: “Hi Kenneth I left Australia a week ago now, heading back to UK”. But he maintained privilege in the remaining sentence on the basis that it was a “privileged communication in relation to advice that’s been given”. In my view, this communication is not privileged. The substance of the legal advice is not disclosed.

143    Document 19 is a further email from Mr Ting replying to Mr Charlesworth’s email. Mr Mattock’s evidence was that “this email discusses the advice I gave to Mr Ting and the implementation of that advice”. Of course, Mr Mattock could not properly advise Mr Ting, as there is no evidence that Mr Ting was his client. I am content, however, to accept that Mr Ting is talking about legal advice Mr Mattock gave to the Media Ocean group and passed on to him and that the email is privileged, leaving aside any question of waiver, as it plainly discloses the substance of that advice.

144    Document 20 is the same email chain as document 19, with a further email from Mr Charlesworth to Mr Ting, copied to Mr Vickery and “Naren”, whose last name was not provided by Mr Mattock but who he described as “Mediatel UK technical staff”. Mr Mattock said of this document that the additional email “provides further information for the purpose of obtaining further legal advice as requested by me”, referring to the (implicit) request made earlier in the chain.

145     I am satisfied that the communication in the top email falls within Sterling category (f).

146    The outstanding issue is whether privilege in the various emails in these six documents has been waived by disclosure to Mr Ting as document 15 forwards all the earlier emails to him. Again, this is a matter of whether there is a common interest in the advice shared by the Media Ocean group and Baycall.

147    As I have already indicated, I am persuaded that Baycall and the Media Ocean group have a common interest in the subject matter of the litigation and I also consider it extends to the particular question with which these emails are concerned Accordingly, I consider these documents are privileged from production and the privilege has not been waived.

Document 21

148    This document is irrelevant and was apparently included in the list of documents by accident.

Documents 22, 23

149    These two documents are email chains from 18 May 2009, after this proceeding commenced, and are completely masked (aside from two words “Optus behaviour”). It consists of correspondence between Mr Vickery, Xuefeng Zhang, who, Mr Mattock explained, was one of Pivotel’s technical staff members, and Mr Sakker.

150    Mr Mattock’s evidence about this chain was:

This email chain relates to a request for information I made for call data records relevant to these proceedings. This email chain relates to the initial request, further refinement of the information needed and the results from that request. The information in this email has been used in these proceedings.

151    The emails themselves do not show that the communication with Pivotel was made at his request, nor its purpose, but I accept Mr Mattock’s evidence.

152    Mr McHugh conceded that if Mr Mattock’s evidence was accepted, it fell prima facie into Sterling category (f). The concession was properly made. But he also pointed out that Mr Mattock said the information had been used in the proceedings (and didn’t say anything about preserving its confidentiality), in which case this raises the question of waiver even on the Media Ocean group’s own evidence.

153    The vagueness of Mr Mattock’s description was unhelpful, something accepted by Mr Kunc. Mr McHugh was particularly concerned that the information may have been sent to Mr Sakker who had filed an “independent” expert’s report in the proceedings, and who may have relied on that information although it had not been provided to Optus.

154    Mr Kunc observed that the onus was on Optus to prove waiver (acknowledging their difficulty without knowing the substance of the emails) and relied on the failure to cross-examine Mr Mattock.

155    I put little weight on the failure of Optus to cross-examine. Cross-examination of lawyers on questions of privilege is unusual. Both the parties and the courts should be able to rely on a solicitor’s word. I accept that the onus of establishing waiver is on Optus but, in circumstances where it cannot know the content of the communication, there is an element of unfairness in so vague a description of the documents. Evidence of this kind is unsatisfactory. There is nothing in the emails or elsewhere to indicate how the information was (or would be) used in the proceedings. What we do know is that Mr Sakker is an expert witness, that by June 2009 he had provided a report, and that he was copied into these emails at a time when he could have been preparing the report. Nevertheless, any unfairness can be cured by Optus requiring the Media Ocean group to produce all the documents supplied to Mr Sakker for the purpose of his report. If it transpires that they were provided to him, regardless of any question of common interest, it may well be inconsistent to maintain the confidentiality of the communication on fairness grounds (Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 488, Mann v Carnell at [28]-[29]). For the moment, however, on the material before I am not satisfied that privilege has been waived.

Conclusion

156    The masked passages in documents 1 and 2 and 3 to 5 are privileged but privilege has been waived. I am not satisfied that either the top email between Mr Charlesworth and Mr Ting in document 9 (which also appears in documents 10 through 14) or Mr Ting’s reply, being the top email in document 10 (which also appears in documents 11 through 14), is privileged but I am otherwise satisfied that the communications in documents 6 to 14 inclusive are. I am also satisfied that, with the exception of document 7, there has been no waiver over them With the exception of the top email in document 18 (which also appears in documents 19 and 20), documents 15 to 20, 22 and 23 are privileged as well and there has been no waiver. Document number 21 is irrelevant.

Orders

157    I therefore order that the applicants make available to the respondents for inspection the following documents in exhibit NTM-1 to the affidavit of Nathan Thomas Mattock sworn 18 June 2010:

(1)    The email from Mike Charlesworth to Robert Sakker dated 8 January 2009 behind tabs 1 and 2;

(2)    The email chains that appears behind tabs 3, 4 and 5.

(3)    The email from Mike Charlesworth to David Schofield, David Glickman and Richard Stone dated 22 March 2009 behind tab 7.

(4)    The top email from Mike Charlesworth to Kenneth Ting dated 22 March 2009 behind tab 9.

(5)    The top email from Kenneth Ting to Mike Charlesworth dated 22 March 2009 behind tab 10.

(6)    The top email from Mike Charlesworth to Kenneth Ting dated 27 March 2009 behind tab 18 and where it appears in documents 19 and 20.

158    I reserve the question of costs.

Associate:

Dated:    3 December 2010