FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia S.R.L. (No 2) [2012] FCA 44

THE COURT ORDERS THAT:

1.    Within seven days the second respondent bring in short minutes of order reflecting these reasons.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    This is an application by the second respondent to inspect documents produced by the Australian Competition and Consumer Commission (ACCC) in response to two notices to produce served on the applicant by the second respondent. The application is opposed by the ACCC which claims that the documents sought to be inspected are subject to legal professional privilege.

2    The first notice to produce is entitled “Amended Notice to Produce” and is dated 3 August 2010. It seeks:

1.    All documents to which the deponent had regard for the purposes of affirming paragraphs 24 to 32 of the Jacquier Affidavit, including, without limitation, all documents recording, referring or relating to:

(a)    the identity of “Mr A” referred to at paragraph 25 of the Jacquier Affidavit;

(b)    the “A/R Cartel Agreement” referred to at paragraph 25 of the Jacquier Affidavit;

(c)    the “A/R meetings” referred to at paragraph 25.5 of the Jacquier Affidavit; and

(d)    the “Snowy Hydro Project” referred to at paragraph 26 of the Jacquier Affidavit.

2.    All documents referred to in paragraph 45 of the affidavit of Scott Peter Gregson affirmed 8 July 2010.

3.    An unredacted version of Exhibit SJ-14 referred to at paragraph 25.6.14 of the Jacquier Affidavit.

4.    An unredacted version Exhibit SJ-15 referred to at paragraph 25.6.15 of the Jacquier Affidavit.

5.    An unredacted version of Exhibit SJ-16 referred to at paragraph 25.9 of the Jacquier Affidavit.

3    The “Jacquier Affidavit” referred to in paragraphs 1, 3, 4 and 5 is an affidavit affirmed by Susan Jacquier on 13 November 2009, and filed in support of the ACCC’s application to serve this proceeding upon the first and second respondents in Italy and France. The affidavit affirmed by Mr Gregson on 8 July 2010 referred to in paragraph 2 was filed in support of the ACCC’s earlier claim that certain documents in the possession of the ACCC need not be produced, being the subject of public interest immunity.

4    The second notice to produce is entitled the “Further Notice to Produce” and is also dated 3 August 2011. It seeks:

1.    All documents that record communications, or the substance of communications, between the Australian Competition and Consumer Commission (“ACCC”) and Mr “A”, or between the ACCC and Mr “A”’s legal representatives, and which state or refer to any terms or conditions upon which Mr “A” has provided, or will provide, information to the ACCC relating to the alleged cartel arrangements the subject of these proceedings.

2.    All documents that record communications, or the substance of communications, between the ACCC and J-Power Systems Corporation (“JPS”), or between the ACCC and the legal representatives of JPS, and which state or refer to any terms or conditions upon which JPS has provided, or will provide, information to the ACCC relating to the alleged cartel arrangements the subject of these proceedings.

3.    All documents that record the communications, or the substance of the communications, referred to at each of paragraphs 17, 18, 19, 20, 21, 30, 31, 46, 47, 48 and 49 of the affidavit of Scott Peter Gregson affirmed 8 July 2010 (“the Gregson Affidavit”).

4.    All documents provided to the ACCC by Mr “A” relating to an application for immunity, or derivative immunity, by Mr “A” with respect to the subject matter of this proceeding.

5.    All documents provided to the ACCC by current or former directors, officers and employees (other than Mr “A”) of JPS relating to:

(a)    the application for immunity of JPS referred to at paragraph 11 of the Gregson Affidavit; or

(b)    any application for immunity, or derivative immunity, by any current or former director, officer or employee of JPS,

with respect to the subject matter of this proceeding.

6.    All documents provided to the ACCC by Exsym Corporation (“Exsym”) relating to an application for immunity or leniency by Exsym with respect to the subject matter of this proceeding.

7.    All documents provided to the ACCC by current or former directors, officers and employees of Exsym relating to:

(a)    any application for immunity or leniency by Exsym; or

(b)    any application for immunity, leniency, derivative immunity or derivative leniency by any current or former director, officer or employee of Exsym,

with respect to the subject matter of this proceeding.

BACKGROUND

5    Originally the ACCC claimed public interest immunity in respect of all of the documents identified in the two notices to produce and issued a notice of motion seeking an order setting aside the notices to produce or an order relieving the ACCC from compliance with the notices. That notice of motion was dismissed on 22 August 2011: Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia S.R.L. [2011] FCA 938; (2011) 283 ALR 137. More recently, and after those reasons were published, the claim for public interest immunity was abandoned.

6    On 13 September and 17 October 2011 the ACCC produced to the Court all of the documents in response to the two notices to produce.

7    The documents produced by the ACCC to the Court on 13 September 2011 were contained in a folder entitled “Applicant’s Material Produced in Answer to the Amended and (Further) Notice to Produce Dated 3 August 2010 Subject to Claims of Legal Professional Privilege: Folder 1”. The documents produced by the ACCC to the Court on 17 October 2011 were on a disk and contained scanned documents in electronic form. Legal professional privilege was claimed over 581 documents. In its written submissions the ACCC said that 582 and 592 documents were the subject of legal professional privilege, but I think it to be mistaken in that regard.

8    Unfortunately the parties have described the documents which are the subject of this application in different ways. It will be convenient to adopt the second respondent’s description of the documents.

9    The documents have been described on this application by the second respondent as primary and secondary records. The primary records are contained in six folders. The ACCC has claimed privilege over all of the documents in one of the six folders containing 64 documents. The claim for privilege over these 64 documents is addressed in paragraphs 16 to 26 of the affidavit of Katrina Close sworn on 17 August 2010 and paragraph 11 of the affidavit of Matthew Garey affirmed on 12 October 2011. The primary records comprise communications between either the ACCC or the ACCC’s solicitors, the Australian Government Solicitor (AGS), and a third party. The secondary records comprise 606 documents. The ACCC has claimed privilege over 581 of the secondary records. The claim for privilege over these documents is addressed in annexure MRG-4 to the affidavit of Mr Garey. The secondary documents record the substance of privileged communications between the ACCC or the AGS and a third party which are contained in the primary records. The distinction that the parties, especially the second respondent, has drawn between the primary documents and the secondary documents is that the primary documents record the actual communications between the ACCC or the AGS and a third party, whilst the secondary documents refer to the substance of the communications in the primary documents.

10    On 14 October 2011 the second respondent advised the ACCC that it challenged a number of the claims for legal professional privilege. The second respondent’s challenge was listed for hearing on 11 November 2011.

11    The second respondent challenges the ACCC’s claim for legal professional privilege in respect of all of the documents produced in the folder, which are the primary records, and 151 or 160 of the 581 documents contained on the disk, which are the secondary records. The second respondent said that it challenges 151 documents, and the ACCC that the challenge was to 160 documents. Whatever the correct number is, the second respondent’s challenge in respect of both the primary and secondary records is confined to documents which comprise or record third party communications: see paragraphs 7 and 9 of the second respondent’s written submissions.

12    The ACCC has prepared a schedule of documents for which it claims legal professional privilege. That document also identifies how the claim for legal professional privilege arises. Pursuant to an order made on 17 October 2011 the second respondent has addressed each particular document for which privilege is claimed, and identified the ground upon which it relies for the contention that the document does not attract legal professional privilege.

13    The ACCC claims legal professional privilege in respect of the particular documents on the ground that the documents, being third party communications, were created for the dominant purpose of anticipated litigation. The ACCC submits that the anticipated date of litigation is no later than 9 June 2011. The ACCC claims that there has been no waiver.

14    For the sake of completeness, at the hearing on 11 November 2011 the ACCC abandoned privilege claims in respect of four documents, while the second respondent abandoned its challenge in relation to two documents.

SUBMISSIONS

15    The second respondent has challenged the ACCC’s claim for legal professional privilege in relation to the third party communications on three grounds:

(1)    in the case of all third party communications because the communications were not created for the dominant purpose of the ACCC obtaining advice as to litigation or evidence to be used in litigation;

(2)    in the case of most third party communications because the ACCC has waived legal professional privilege; and

(3)    in the case of some third party communications because the communications were not created at a time when litigation was reasonably anticipated.

16    The issues which have been raised would logically be addressed in the following order:

(1)    What is the earliest date at which it could be said that litigation was reasonably anticipated?

(2)    Is there evidence that the documents were created for the relevant dominant purpose or do the documents themselves show they were created for the relevant dominant purpose?

(3)    Has there been a waiver in relation to a limited number of documents?

17    Those issues are to be determined in accordance with the common law: Esso Australia Resources Ltd v Federal Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49 at 59 per Gleeson CJ, Gaudron and Gummow JJ; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 2) [2011] FCA 1057 at [9] per Perram J.

18    The evidentiary onus must rest upon the ACCC in relation to the first two issues, and upon the second respondent in relation to the third issue. The second issue need only be addressed with respect to those documents which it has been established were created at a time when litigation was reasonably anticipated. Those documents which were created before litigation was reasonably anticipated will not be subject to legal professional privilege whatever the purpose for which they were created. The third issue assumes that the documents were at one stage prior to the waiver protected by legal professional privilege. For that reason the question of waiver need only be addressed in respect of those documents which the ACCC has succeeded in establishing were created for the dominant purpose of obtaining advice as to litigation or evidence to be used in litigation at a time when litigation was reasonably anticipated.

19    The parties have provided me with copies of all of the documents for which legal professional privilege is claimed. They have agreed that I should, if necessary, read the documents and decide as against each of the claims and challenges whether each document is subject to legal professional privilege. However, having regard to the conclusions at which I have arrived, I do not think it necessary to read the documents before making the orders following publication of these reasons.

WHEN WAS THE LITIGATION REASONABLY ANTICIPATED?

20    The test whether litigation was at the relevant time reasonably anticipated or contemplated is objective: Grant v Downs (1976) 135 CLR 674 at 678 per Barwick CJ. In Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44, Wood J said at 55:

In this regard, it is well-established that the question whether litigation is contemplated at the time the document is prepared, is an objective one. It is necessary that circumstances be shown to exist, at the time, from which, objectively viewed, the court can subsequently conclude that litigation could be reasonably anticipated: Grant v Downs (at 682).

21    The subjective view of the ACCC’s officers is relevant, but not determinative. In this proceeding the ACCC relies on the opinion of Mr Kamencak, a Regional Director of the ACCC who has the management of the South Australian Regional Office, who held the view that at 9 June 2011 legal proceedings were anticipated. However, the question is whether that view is objectively reasonable, which means that all of the surrounding circumstances will be relevant: Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission [2007] FCAFC 147; (2007) 161 FCR 122 at [24] per Weinberg J and [67] per Lander J.

22    The High Court has not been called upon to opine as to what “reasonably anticipated” or “reasonably contemplated” means in the context of the commencement of litigation in a claim for legal professional privilege. In Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 559, Goldberg J stated that anticipated proceedings means:

… the notion that there is a reasonable probability or likelihood that such proceedings will be commenced – not that they will be but rather that more probably than not they will be.

23    In Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59; (2002) 4 VR 332 at 341 Batt JA, after a consideration of the authorities, rejected a submission that a mere possibility would satisfy the requirement of reasonable anticipation and suggested that the test was that “there must be a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not.”

24    In Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission the Full Court did not need to consider which of those tests was appropriate because in the circumstances of that case either test was satisfied.

25    The test propounded by Batt JA has been followed by Jacobson J in Microsoft Corporation v Ben Zhong Fan [2003] FCA 1026 at [73] – [75], Allsop J in Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] FCA 503 at [8], McDougall J in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 at [43] – [49], and more recently by Perram J in Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 2) at [23].

26    I think I should follow the decision of the Victorian Court of Appeal for two reasons. First, it is a decision of a Court of Appeal and deserves the recognition that the comments of the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [135] (citing Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492) demand. Secondly, it has been followed by three judges of this Court and a judge of the Supreme Court of New South Wales at first instance.

27    I shall therefore proceed on the basis that the appropriate test is as stated by Batt JA.

28    Mr Kamencak has deposed that matters were brought to the attention of the ACCC in February 2009 when “a marker” was requested for the alleged cartel conduct. A marker allows the person requesting immunity a limited amount of time to gather the information necessary to satisfy the ACCC’s requirements for conditional immunity.

29    On 28 April 2009, J-Power Systems Corporation (JPS) made a formal application for conditional immunity under the ACCC’s immunity policy for cartel conduct. Immunity was sought in relation to bid rigging and market sharing in the manufacture and supply of high and extra-high voltage underground submarine cables for the period between 1 October 2001 and 11 February 2009. JPS also sought derivative immunity for former and current employees, and for its holding company and joint venture companies, and employees of those companies. An extension of derivative immunity was also sought for Sumitomo Electric Industries Ltd (SEI) and Hitachi Cable Ltd (Hitachi), who were parties to a joint venture with JPS, and for SEI and Hitachi’s current and former corporate directors, officers and employees, including those personnel seconded to JPS to the extent that they were involved in the making or giving effect to the cartel conduct between 1 October 2001 and 11 February 2009.

30    At a meeting held that day Mr Fleming, a Director in the Enforcement and Compliance Division of the ACCC, recorded that JPS said it would “make individuals available” and that the “documents alone may not on the face of them indicate a contract, arrangement or understanding”, and that the ACCC “may need to seek further information”. A representative of Minter Ellison, solicitors for SEI and Hitachi, was present at that meeting.

31    On 28 May 2009 the Enforcement Committee of the ACCC (the EC) met and was advised that the alleged cartel conduct had been brought to the attention of a number of regulators throughout the world. Mr Kamencak identified those regulators:

7.1.    the Directorate-General for Competition within the European Commission had accepted an application for immunity from JPS on 2 February 2009;

7.2.    in Brazil, JPS was co-operating with the Brazilian competition authority in relation to a claim for immunity;

7.3.    in New Zealand, the Commerce Commission had accepted a joint application by JPS and other parties for immunity; and

7.4.    in Canada, JPS and other parties had also filed a joint application with the Canadian Competition Bureau.

32    On that day the EC granted conditional immunity to JPS and granted the derivative immunity which JPS had sought. It also granted conditional immunity to SEI and Hitachi, and the derivative immunity sought in relation to those companies.

33    Mr Kamencak said that he thought it inevitable that a proceeding would follow, so on 3 June 2009 he contacted Glenn Owbridge and Katrina Close of the AGS and informed them of the facts as then known to him.

34    On 4 June 2009 Mr Kamencak recommended that the ACCC’s investigation be expedited. His recommendation was supported by Sarah Court, ACCC Commissioner, as well as other senior staff of the ACCC including Marcus Bezzi, Executive General Manager of the EC, and Scott Gregson, the Group General Manager of Enforcement Operations.

35    On the same day Mr Gregson wrote to Mr Reid, a partner of Blake Dawson, solicitors for JPS, with a copy to Mr Schoff, a partner of Minter Ellison, advising that the ACCC had decided to grant conditional immunity to JPS under the immunity policy, subject to the conditions outlined in the immunity policy. He also advised that derivative conditional immunity was granted to JPS’ current and former corporate directors, officers and employees under paragraph 9 of the immunity policy. Derivative conditional immunity was also granted to SEI and Hitachi, and their employees to the extent they were involved in giving effect to the conduct.

36    Mr Gregson identified some of the conditions upon which the conditional grant of immunity was given, which included JPS making full, frank and accurate disclosure and cooperating fully and expeditiously on a continuing basis throughout the ACCC’s investigation, and during any ensuing proceedings.

37    Mr Gregson informed Mr Reid that JPS was also to use its best efforts to secure the ongoing full and truthful cooperation of current and former corporate directors, officers and employees, which meant that JPS should encourage such persons to provide the ACCC with any information that may be relevant to the cartel; facilitate the ability of such persons to appear for such interviews or give testimony in connection with the cartel as the ACCC may require; and ensure such persons respond completely, candidly and truthfully to all questions asked in interviews. Mr Gregson set out SEI and Hitachi’s obligations for continuing conditional immunity.

38    Mr Gregson concluded his letter by noting that JPS acknowledged that the ACCC’s grant of immunity was conditional, and that the ACCC could in its absolute discretion revoke the conditional grant of immunity if:

18.1    its investigation reveals either that JPS’s participation in the cartel continues, that JPS was the clear leader of the arrangement, or coerced others to participate in the cartel;

18.2    JPS deliberately misleads the ACCC, provides false evidence, deliberately withholds or destroys important evidence or otherwise fails to provide full, frank and accurate disclosure and to cooperate fully and expeditiously on a continuing basis; or

18.3    the ACCC considers JPS’s cooperation is not a genuine corporate act having regard to the extent and significance of the failure of one or more present corporate directors, officers or employees of JPS to give timely, full, frank and accurate disclosure of their involvement in the cartel or of all matters within their knowledge of the involvement of others (whether or not they are corporate directors, officers or employees of JPS).

39    On 9 June 2009 Mr Kamencak instructed the AGS by email:

… I confirm our instructions are that this matter be prepared in anticipation of legal proceedings being commenced.

40    In that same email he asked the AGS to review “the various materials being provided to you ahead of the meeting on Thursday”, and informed the AGS that “[f]urther detailed instructions will be provided following the meeting, after which we would appreciate receipt of a cost estimate based on our instructions.”

41    At the time he gave that instruction he said that JPS had admitted that it was a member of a cartel and admitted conduct which contravened the Trade Practices Act 1974 (Cth) (TPA). JPS had provided information to the ACCC in relation to the cartel conduct and was continuing to provide information in accordance with the immunity policy. The cartel conduct was known to other regulators in other countries.

42    On the same day JPS supplied documents to the ACCC. The documents identified Mr Takeo Osada (previously referred to in these proceedings as Mr A) as the employee within JPS who had been involved in the cartel conduct. The documents provided evidence in support of JPS’ claim of the existence of a cartel between 1 October 2001 and some time before 11 February 2009.

43    For the purpose of this application the ACCC claims that the Court should find that as at that date, 9 June 2009, it was reasonably anticipated or reasonably contemplated that litigation would ensue.

44    On 19 June 2009 the AGS retained counsel to advise and represent the ACCC. On that day Mr Bezzi wrote to Mr Reid and Mr Schoff referring to Mr Gregson’s letter of 4 June 2009 in which Mr Gregson advised that the ACCC had agreed to grant JPS conditional immunity, and SEI derivative immunity. He wrote:

I understand that on 18 June 2009 Paul Schoff raised with ACCC officers a possibility that SEI and JPS employees Mr Takeo Osada and Mr Jojo Yamaguchi may not be prepared to attend interviews with the ACCC to give information as to the cartel conduct, and that those individuals have retained separate counsel.

I wish to remind you of the obligations on SEI and JPS and their current and former directors, officers and employees to cooperate with the ACCC’s investigation, as set out in the Immunity Policy and ACCC Immunity Policy Interpretation Guidelines and described in Mr Gregson’s previous letter, including the obligation to give full, frank and accurate disclosure of relevant matters.

I also wish to draw to your attention the circumstances in which a lack of cooperation by individuals may adversely impact on the immunity granted to a corporation. In particular, Mr Gregson’s letter noted that the ACCC’s grant of immunity is conditional, and that the ACCC may, in its absolute discretion, revoke the conditional grant of immunity if, inter alia:

18.3    the ACCC considers JPS’s cooperation is not a genuine corporate act having regard to the extent and significance of the failure of one or more present corporate directors, officers or employees of JPS to give timely, full, frank and accurate disclosure of their involvement in the cartel or of all matters within their knowledge of the involvement of others (whether or not they are corporate directors, officers or employees of JPS).

At this stage the ACCC anticipates that Mr Osada and Mr Yamaguchi will cooperate with the ACCC’s investigation by making themselves available for interview in early July as requested, and that JPS and SEI will use their best efforts to secure ongoing and full cooperation.

Would you please inform us promptly if that is not the case, or otherwise provide confirmation of their availability for interview to Sue Jacquier on 08 8213 3447 by 5pm on 22 June 2009, so that the necessary arrangements can be made.

If you are no longer in a position to advise as to the availability or position of Mr Osada or Mr Yamaguchi, would you please provide contact details of their current representatives.

45    On 25 June 2009 the ACCC wrote to Mr Reid referring to Mr Bezzi’s letter of 19 June advising Mr Reid that Blake Dawson’s failure to reply was an issue of “considerable concern”, and a substantive response to Mr Bezzi’s earlier letter was required by 12.00 noon on Friday, 26 June 2009.

46    On 26 June 2009, in response to Mr Kamencak’s email of 9 June, the AGS provided the ACCC with a detailed cost estimate, part of the scope of which included tasks “in anticipation of instructions to institute Federal Court proceedings within a short time frame”. On 27 June 2009 Ms Jacquier, an Assistant Director of the South Australian office of the ACCC, circulated to relevant officers a task list, which included the task of instituting proceedings.

47    Some time shortly prior to 13 July 2009 Mr Osada retained Australian counsel, Mr Christopher of Baker McKenzie in Sydney, to advise him in relation to his obligations with respect to the ACCC.

48    On 8 July 2009 Ms Jacquier wrote to Mr Reid requesting an update in relation to his client’s position. On 13 July 2009 Mr Reid emailed Ms Jacquier saying that JPS had made progress in discussions with counsel and Mr Osada in relation to the requests made by the ACCC to interview Mr Osada. He said that JPS was actively encouraging Mr Osada to cooperate with the ACCC. He also said that discussions with Mr Yamaguchi were advancing.

49    On 11 August 2009 Baker McKenzie, Mr Osada’s solicitors, wrote to the AGS relating to Mr Osada’s evidence.

50    On 18 August 2009 Mr Reid wrote to Ms Jacquier enclosing documents in relation to the immunity application by JPS, SEI and Hitachi. The documents were provided on a “strictly confidential basis” and the ACCC was requested not to provide copies of the documents or disclose their contents to any person outside of the ACCC or its legal advisers without the parties’ prior written consent. On 24 August 2009 Mr Reid provided further documents to the ACCC on the same basis.

51    On 25 August 2009 the AGS wrote to Baker McKenzie to obtain evidence from Mr Osada. Legal professional privilege has been claimed over that document.

52    On 27 August 2009 Mr Reid provided Ms Jacquier with further documents on the same basis as those previously provided. On the same day Mr Bezzi of the ACCC wrote to Mr Reid of Blake Dawson and Mr Miller of Minter Ellison. He referred to Mr Gregson’s letter of 4 June 2009 in which Mr Gregson advised that the ACCC had decided to grant conditional immunity to JPS and derivative conditional immunity to SEI and to current and former corporate directors, officers and employees of JPS and SEI. He referred to his own letter of 19 June in which he had reminded Mr Reid and Mr Miller of the obligations that JPS and SEI, and their current and former corporate directors, officers and employees, had to cooperate with the ACCC’s investigation. He wrote that he understood that arrangements had been made to interview Mr Osada and Mr Yamaguchi, and he said he understood that JPS and SEI had provided further documents to the ACCC. In those circumstances, he wrote that he considered that JPS and SEI were at present complying with their obligations to provide ongoing cooperation to the ACCC.

53    On 31 August 2009 the ACCC wrote to Mr Reid, and Blake Dawson replied regarding the terms on which JPS would provide information to the ACCC. Legal professional privilege has been claimed in respect of those documents.

54    On 3 September 2009 the AGS wrote to Baker McKenzie for the purpose of obtaining evidence from Mr Osada in anticipation of the proceeding. Legal professional privilege has been claimed in respect of that document. There were two further communications on 3 September and 8 September 2009 from the AGS to Baker McKenzie for the purpose of obtaining evidence from Mr Osada in anticipation of the proceeding. Legal professional privilege has been claimed in respect of those documents.

55    On 9 September 2009 Blake Dawson provided further documents to the ACCC on the same basis as previously provided.

56    Some time in September the ACCC interviewed Mr Osada in relation to the issues raised in this proceeding. There is a dispute about the precise date in September when Mr Osada was interviewed. The second respondent submitted that it was likely to be 11 September. Mr Duggan, counsel for the ACCC, said at the hearing on 11 November 2011 that it was not that date but did not offer any other date. However, I do not think it is disputed that it was some time in the first half of September.

57    On 11 September 2009 the AGS wrote to Baker McKenzie for the purpose of obtaining evidence from Mr Osada in anticipation of the proceedings. Legal professional privilege is claimed in respect of that document. The subject matter of that letter suggests the interview was after that date.

58    On 17 September 2009 the EC accepted a recommendation from ACCC staff that proceedings be commenced. That decision suggests that Mr Osada’s interview had taken place. It is likely therefore that Mr Osada was interviewed some time between 11 and 17 September.

59    On 23 September 2009 the Commission itself determined that civil proceedings should be instituted against the first, second and third respondents. This proceeding was commenced on the same day, which was the last day before time expired for bringing proceedings under s 77 of the TPA.

60    Mr Gregson has deposed in his affidavit affirmed on 8 July 2010 that information provided to the ACCC by Mr Osada was provided voluntarily and in accordance with the cooperation required of Mr Osada under the immunity policy. He says in paragraph 15 of his affidavit:

Had [Mr Osada] not provided that information, it is unlikely the ACCC would have been able to institute this proceeding. [Mr Osada] has not provided a signed statement or affidavit in this proceeding.

61    According to Mr Gregson, Mr Osada indicated to the ACCC after he was interviewed that he would in due course sign a statement in a form approved by him, but “because of the risk of overseas prosecution … he was not prepared to sign a statement at that particular stage.”

62    The ACCC contends that litigation was reasonably anticipated as at 9 June 2009. It argued:

50.1.    the ACCC had obtained significant information from immunity applicants in relation to an alleged cartel which was known to other international enforcement agencies. In particular the ACCC was provided with exhibits SJ-14 to 16 of the Jacquier affidavit;

50.2.    the information obtained by the ACCC indicated that the alleged cartel operated in relation to projects in Australia;

50.3.    the ACCC was aware of the other parties to the alleged cartel; and

50.4.    the ACCC had retained lawyers and had specifically instructed those lawyers that they were to prepare the matter on the basis that proceedings were reasonably anticipated.

63    The second respondent argued that litigation was not reasonably anticipated as at 9 June 2009, and was not reasonably anticipated until some time very close to when the proceeding itself was issued. It argued that a proceeding could not issue without the cooperation of Mr Osada because only he could provide the information necessary to make out a case. The second respondent contended that Mr Osada did not cooperate with the ACCC in June or July 2009, and was not interviewed by the ACCC until some time in September 2009. It argued that until Mr Osada was interviewed it could not be said that litigation was reasonably anticipated.

64    Although lawyers were retained as early as 9 June and were instructed that the matter should be prepared in anticipation of legal proceedings, I think that step was taken because the ACCC recognised that the time for bringing a proceeding would expire some time in September, and so therefore the legal team had to be ready in case a decision to bring a proceeding was made nearer to the date when the time for bringing proceedings expired.

65    The ACCC was concerned about the level of cooperation that it was likely to receive from JPS and Mr Osada, which is evidenced in the letter written on 19 June 2009 by the ACCC to Mr Reid in which the ACCC indicated that if Mr Osada and Mr Yamaguchi did not attend interviews with the ACCC to give information in relation to the alleged cartel it might impact on the immunity granted to JPS. The ACCC had not heard anything further regarding Mr Osada’s cooperation, which it described as an issue of considerable concern. The ACCC noted that as at 13 July 2009 JPS was still not able to communicate a clear position in response to the ACCC’s request for an interview with Mr Osada. It is clear that the ACCC thought Mr Osada’s cooperation was essential and that without that cooperation its case would be much weaker.

66    However, I do not think it can be said that objectively litigation was reasonably anticipated prior to the ACCC being assured of Mr Osada’s cooperation and obtaining information from him. The ACCC, through Mr Gregson, has admitted that it would not have brought this proceeding without the cooperation of Mr Osada and without the information provided by him, such information not being provided until “early September”. The ACCC was not sure that it would have Mr Osada’s cooperation until shortly before that time. Indeed up until 27 August when Mr Gregson wrote saying that he thought arrangements had been made to interview Mr Osada and Mr Yamaguchi, the ACCC was unsure whether it was likely to secure their cooperation.

67    Paragraph 4.7 of the Commonwealth’s Legal Services Directions, which was in force in 2009, provided that the ACCC was not to start a proceeding in court unless it had received “written legal advice from lawyers whom the agency is allowed to use in the proceedings indicating that there are reasonable grounds for starting the proceedings.” There is no evidence before the Court that any advice of that kind was received.

68    Mr Gregson’s candid admission that without the information provided by Mr Osada “it is unlikely that the ACCC would have been able to institute this proceeding” is consistent with what Mr Kamencak said in his affidavit, namely that by the end of May 2009 he had formed the view that “subject to further evidence being obtained, a proceeding for a contravention of the [TPA] was likely to follow.”

69    I think both Mr Kamencak and Mr Gregson recognised at or about the same time that any proceeding which was to issue depended upon the availability and the cooperation of Mr Osada and Mr Yamaguchi.

70    In those circumstances, I reject the ACCC’s claim that litigation was reasonably anticipated as at 9 June 2009. Although it would appear that the ACCC could have thought that it was likely to have Mr Osada’s cooperation as at 27 August, it could not have known what information he would provide until he was interviewed. His cooperation and his information was necessary to decide to commence this proceeding. I hold that litigation was not reasonably anticipated until the date when Mr Osada was interviewed.

71    It is unfortunate that the Court has not been given the date upon which Mr Osada was interviewed in case there is an argument between the parties as to when the interview occurred. However, the absence of the specific date is not fatal to the second respondent’s argument. Insofar as the ACCC relies upon a claim of legal professional privilege because a document was created in anticipation of legal proceedings, that claim fails in relation to any documents created prior to the date Mr Osada was interviewed.

WERE THE DOCUMENTS CREATED FOR THE DOMINANT PURPOSE?

72    The second issue which is raised is whether the documents that contain the communications were created for the dominant purpose of the ACCC obtaining advice as to litigation or evidence to be used in litigation. If I am right about my conclusion that litigation was not reasonably anticipated until Mr Osada was interviewed, this argument need only be addressed in relation to documents created after that time.

73    The purpose of legal professional privilege is to protect the confidentiality of communications between a party and the party’s lawyers, and the party’s lawyers and third parties, where those communications have been made for the dominant purpose of legal advice, or for litigation reasonably contemplated or anticipated, or in the case of existing litigation.

74    The second respondent has argued that the ACCC has failed to provide sufficient evidence to support a finding that the documents contained in the secondary records were created for the required dominant purpose. It was contended that the ACCC has only asserted that there were communications passing between the ACCC and a third party, or between the AGS and a third party, made with reference to litigation either anticipated or commenced. It was contended that that was an insufficient basis upon which a claim for legal professional privilege could be maintained because neither statement is to the effect that the document records a communication that was created for the dominant purpose of litigation, either anticipated or started.

75    In my opinion it would have been better if the ACCC had made a claim expressed in that formulaic way. However, the claim for privilege should not be dismissed because of the absence of such a claim. It must be remembered that I am considering only those documents that have been created after it could be reasonably anticipated that the proceeding would be started, or after the proceeding had been started.

76    I think it may be inferred if the ACCC claims privilege in respect of those documents it does so because it claims they were prepared for the dominant purpose. I am prepared to infer on an application of this kind that it is implicit in the claim for legal professional privilege that the documents were created for that dominant purpose, and I would not dismiss the claim for legal professional privilege because of the absence of those words in the asserted claim. After litigation was reasonably contemplated or started there would be no other reason for any communications between the ACCC or the AGS and a third party, other than for the purpose of the litigation. I reject the claim that the ACCC has not established a dominant purpose in respect of those secondary documents.

77    The second respondent’s claim that the primary records are not subject to legal professional privilege because there is no evidence that they were created for the dominant purpose has a different basis to the claim in relation to the secondary documents. But again it is based upon expressions used in the affidavits upon which the ACCC relied for its claim of legal professional privilege.

78    The four separate claims made by the ACCC are:

(a)    “Communications passing between AGS and a third person, in the course of and for the purpose of the ACCC obtaining potential evidence in anticipation of these proceedings”;

(b)    “Communications passing between AGS, the ACCC and a third person, for the purpose of the ACCC obtaining potential evidence in anticipation of these proceedings”;

(c)    “Communications between the ACCC (and AGS) and a third person, which occurred after the date on which the proceedings were anticipated”; and

(d)    “Communications passing between AGS and a third person for the purpose of these proceedings”.

79    The second respondent contended that:

51.    The bases articulated in paragraphs (c) and (d) above are inadequate to establish a valid claim for privilege. A communication with a third party does not become privileged merely because it is made “after the date on which proceedings were anticipated”. That is merely a temporal matter, which says nothing at all about the purpose of the communication. Nor is it enough to say that a communication was made generally “for the purpose of” the proceedings, without providing evidence that the communication was specifically for the purpose of the ACCC obtaining legal advice or evidence for the litigation. Consequently, in respect of those third party communications to which paragraphs (c) and (d) above apply, there is no sufficient basis for the privilege claim, and that claim must fail.

52.    As for paragraphs (a) and (b) above, Nexans acknowledges that the purpose expressed in those paragraphs may provide a basis for a privilege claim. However, in order to make and maintain a valid privilege claim, it is necessary for the purpose there stated to have been the dominant purpose of the communication. The claim will not be established where the purpose stated in paragraphs (a) and (b) above was merely a purpose of the communication.

53.    The dominant purpose for which a document is brought into existence is to be determined objectively, having regard to the evidence, the nature of the document and the parties’ submissions.

80    Again it must be understood that the documents which are considered for the purpose of this argument are only those documents which were created after it was reasonably anticipated that this proceeding would be started or after the proceeding had started. In those circumstances it is difficult to think that the documents could have been created for any reason other than because of this proceeding.

81    It was contended that the documents might have been created for the purpose of considering JPS’ claim for immunity or JPS’ ongoing immunity. However, I do not think such documents would fall within the class of documents I am considering, which are documents created after Mr Osada was interviewed. There is no evidence to suggest that JPS’ immunity was a live issue after Mr Osada was interviewed.

82    In my opinion the ACCC has made out its claim that those documents which were created after it was reasonably anticipated that this proceeding would be commenced (i.e. when Mr Osada was interviewed) and the start of this proceeding were created for the dominant purpose of this proceeding.

83    The second respondent’s contentions are dismissed.

HAS LEGAL PROFESSIONAL PRIVILEGE BEEN WAIVED?

84    The third issue to be addressed is the question of waiver. The second respondent claimed that the applicant waived any privilege that existed in 29 of the primary records, and in respect of the third party communications in the secondary records. The second respondent says that whilst it claims the privilege in the secondary records has been waived it is unable to put its argument precisely, because it says the ACCC will not tell it which of the communications in the secondary records record the substance of that which is disclosed in the affidavit of Mr Gregson.

85    The issue of waiver is only relevant in relation to those documents created after Mr Osada was interviewed for the dominant purpose of the ACCC obtaining advice as to litigation or evidence to be used in litigation. I think that the documents can be treated generically.

86    The second respondent submits that the ACCC has waived privilege in a confidential document prepared by the AGS in September 2009, which document contains information arising from discussions with Mr Osada in early September 2009. This document was produced in response to the “Amended Notice to Produce.” The second respondent contends that the substance of this document is referred to by Ms Jacquier in various paragraphs of her affidavit.

87    The second respondent also contends that the ACCC has waived privilege in respect of all documents falling within paragraph 3 of the “Further Notice to Produce”, which calls for the production of documents referred to in certain paragraphs of the affidavit of Mr Gregson. It has made a blanket claim of waiver in relation to the secondary records on the basis that the substance of some of the documents, although it is presently unable to identify which ones, has been disclosed in Mr Gregson’s affidavit.

88    In Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 the majority (Gleeson CJ, Gaudron, Gummow and Callinan JJ) said at [28] – [29] that a waiver of privilege will be imputed where a party acts inconsistently with the maintenance of the confidentiality of the communications between the party and the party’s lawyer which the privilege is designed to protect.

89    In Osland v Secretary, Department of Justice [2008] HCA 37; (2008) 234 CLR 275 the majority (Gleeson CJ, Gummow, Heydon and Kiefel JJ), in addressing an inconsistency between the conduct of the person claiming the privilege and the confidentiality which the privilege is intended to protect, said at [45] that the judgment “is to be made in the context and circumstances of the case, and in the light of any considerations of fairness arising from that context or those circumstances.”

90    Thus the test for whether a party has waived legal professional privilege requires an examination of all of the surrounding circumstances in order to determine whether the parties’ conduct is inconsistent with the maintenance of the confidentiality in the communications for which legal professional privilege is claimed.

91    Usually the question is determined by deciding whether a party who would otherwise be entitled to the privilege has in the course of prosecuting or defending a proceeding expressly or by necessary implication divulged the contents of a communication between the party and the party’s legal adviser. If the party has made such a disclosure, then the fact of that disclosure may be inconsistent with maintaining the confidentiality of that communication because it would be unfair to the other party to maintain that confidentiality.

92    The conduct which is said in this case to constitute the waiver is the filing and service and reading in this proceeding of “the Jacquier affidavit” and “the Gregson affidavit”.

93    Legal professional privilege in a communication contained in a document is lost when it is filed. For example, when a party files a proof of evidence ordinarily any privilege in the communication between the party and the party’s lawyer which is contained in the document is lost: Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd [2009] FCAFC 32; (2009) 174 FCR 547 at [97] – [103]; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2008] FCA 678 at [124] per Finn J; Australian Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Ltd (No 3) [2008] FCA 976 at [13] – [15] per Lander J. This is because the filing and service of a document is inconsistent with the maintenance of the confidentiality which the privilege is designed to protect. In the present case, the documents the subject of the second respondent’s waiver argument have not been filed, served or read into evidence. The affidavits of Mr Gregson and Ms Jacquier refer to the documents in a broad way. But the documents themselves have not been filed, served or read into evidence.

94    Accordingly, the question is whether the ACCC has acted in a way that is inconsistent with the maintenance of the confidentiality that the privilege seeks to protect by disclosing in the affidavits the substance of the communications in the documents, such that the ACCC has acted in a way that is inconsistent with the maintenance of the confidentiality in the documents. However, it does not necessarily follow that a reference to the contents of documents in an affidavit leads to a waiver of privilege over those documents. Determining whether a party has waived privilege in a document is always a question of fact and degree to be assessed in the particular circumstances of the case. Considerations of fairness are relevant: Osland v Secretary, Department of Justice.

95    I will deal first with the documents sought in paragraph 3 of the “Further Notice to Produce”, namely the documents the second respondent alleges have been disclosed in Mr Gregson’s affidavit. I will then deal with the single document containing the information arising from discussions with Mr Osada in early September 2009 which was produced in response to the “Amended Notice to Produce”.

96    Mr Gregson’s affidavit was prepared and filed in support of the ACCC’s notice of motion filed on 2 July 2010 in which the ACCC sought confidentiality orders in respect of part of the contents of an affidavit and exhibits to the affidavit affirmed by Ms Jacquier on 15 June 2010. The ACCC claimed that the identity of Mr Osada and the documents annexed to Mr Jacquier’s affidavit of 15 June were subject to public interest immunity.

97    In order for the ACCC to establish public interest immunity it was necessary for it to establish the reasons why the documents should not be disclosed. The paragraphs of Mr Gregson’s affidavit identified by the second respondent in paragraph 3 of the “Further Notice to Produce” go to this issue. Those paragraphs set out in broad terms the factual basis supporting the ACCC’s claim of public interest immunity. In particular, they describe how the information sought to be protected was obtained. They do not refer to specific documents, although they do refer to some communications in a very broad sense.

98    The ACCC’s application to keep confidential the identity of Mr Osada and certain documents on the ground of public interest immunity failed. However, at no stage on or during the application did the ACCC concede that the information was not confidential. Indeed the ACCC’s application to have the notices to produce set aside showed that it wished the information to be treated as confidential.

99    In these circumstances it is difficult to see how the ACCC has acted in a way that is inconsistent with the confidentiality that legal professional privilege is designed to protect. If there has been a disclosure of information contained in the documents it was made in circumstances where the ACCC was not only asserting confidentiality but seeking to reinforce the confidentiality of those documents by claiming public interest immunity over them. It seems to me that it would be unfair to find that by broadly describing the factual basis of a claim for public interest immunity, albeit one that was ultimately unsuccessful, the ACCC has waived legal professional privilege in the very documents it was seeking to protect.

100    It follows that in my view the ACCC has not waived the legal professional privilege subsisting in documents sought in paragraph 3 of the “Further Notice to Produce”, whether they be primary or secondary documents. However, as I have said, this finding only affects documents created after Mr Osada was interviewed; documents created before that date were not created when proceedings were reasonably anticipated, and are not protected by legal professional privilege.

101    I should add that if I am wrong about the conclusion that the ACCC has not waived privilege in the documents sought in paragraph 3 of the “Further Notice to Produce”, I find that, because of the nature and purpose of Mr Gregson’s affidavit, the ACCC only waived privilege in the documents for the limited and specific purpose of the application for the confidentiality orders sought in the notice of motion filed on 2 July 2010.

102    That leaves the question of the confidential document prepared by the AGS in September 2009 and referred to by Ms Jacquier in her affidavit of 13 November 2009. Mr Garey describes this document in his affidavit as “a confidential document prepared by [the] AGS in early September 2009 containing information arising from discussions with Mr Osada in early September 2009.” In its written submissions, the ACCC has referred to this document as being Mr Osada’s draft statement.

103    Once again, this document has not been filed, served or read into evidence. According to the ACCC, it is nothing more than a draft document that has not been signed by Mr Osada. The second respondent argued that Ms Jacquier revealed the substance of this document in paragraphs [24] to [32] of her affidavit, and that accordingly privilege in this document has been waived.

104    Ms Jacquier’s affidavit of 13 November 2009 was prepared for the purpose of supporting the ACCC’s application for leave to serve the respondents in Italy and France. In order for the ACCC to be successful in its application for leave to serve, which ultimately it was, it needed to demonstrate, among other things, that it had a prima facie case: O 8 r 3(2)(c) of the Federal Court Rules 1979 (Cth). It was required to satisfy the Court that on a broad examination of the material before the Court there were inferences open which, if translated into findings of fact, would support the relief claimed: see Australian Competition and Consumer Commission v April International Marketing Services Australia Pty Ltd (No 6) [2010] FCA 704; (2010) 270 ALR 504 at [8] per Bennett J and the authorities cited therein.

105    Paragraphs [24] to [32] of Mr Jacquier’s affidavit refer extensively to information provided by “Mr A” (Mr Osada) which was said to support the ACCC’s application for leave because it established that the ACCC had a prima facie case. It is fair to say that the evidence of Ms Jacquier was based almost exclusively on information provided to her by Mr Osada, and that her evidence was vital to the ACCC’s application for leave to serve the proceedings outside Australia.

106    In these circumstances the contents of Mr Osada’s draft statement have been substantially disclosed in Ms Jacquier’s affidavit. His draft statement might contain information that has not been disclosed by Ms Jacquier. However, it would be unfair to the second respondent and it would not assist the Court if the ACCC could disclose some of the information contained in the draft statement, while claiming privilege over other parts of the document. It is also inconsistent for the ACCC to disclose the substance of the information provided by Mr Osada on the one hand, but claim that the document said to contain this information is privileged on the other.

107    Accordingly, I find that the ACCC has waived the privilege in Mr Osada’s draft statement.

Conclusion

108    In my view the ACCC could not have known what information Mr Osada was going to provide until he was interviewed in September 2009. In light of the fact that without the availability and cooperation of Mr Osada it is unlikely that the ACCC would have been able to institute these proceedings, I find that litigation was not reasonably anticipated by the ACCC until on or about the day on which Mr Osada was interviewed.

109    Therefore, I find that all documents created before that date in respect of which the ACCC seeks to claim legal professional privilege are not protected by “litigation privilege.”

110    I reject the second respondent’s contention that the documents created after that date were not created for the dominant purpose of this proceeding.

111    I find that the ACCC has not waived legal professional privilege subsisting in those documents sought in paragraph 3 of the “Further Notice to Produce” that were created after Mr Osada was interviewed. However, I find that the ACCC has waived privilege in respect of Mr Osada’s draft statement.

112    The second respondent which has been partly successful on this application should bring in short minutes of orders reflecting these reasons within seven days. I will hear the parties as to costs.

Associate:

Dated:    3 February 2012