FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Lifestyle SA Pty Ltd (No 2) [2014] FCA 1152

REASONS FOR RULING

1    These reasons explain why, at the commencement of the hearing of this matter on 26 September 2013, I set aside the Notice to Produce of the Applicant to the Respondent. I indicated that, when judgment was given generally in the matter, I would give reasons for so doing.

2    On 18 September 2013, the Applicant served a Notice to Produce to the Respondent pursuant to r 30.28 of the Federal Court Rules 2011 (Cth).

3    The category of documents pressed in the Notice to Produce included:

All requests for legal advice, and all legal advice received, by or on behalf of the Respondent in the period from April 2011 to September 2012 (inclusive) concerning the extent to which persons employed by the Respondent in the role of pager monitor (howsoever called) were engaged in “work” when performing pager monitor functions.

4    On 23 September 2013, the Respondent filed an interlocutory application seeking orders that the Court set aside that Notice to Produce on the basis that:

(1)    Production of the documents is not necessary for disposing fairly of the proceedings, particularly in the context of the Respondent’s admission of contraventions; and

(2)    That the Notice is being used for the purposes of a fishing exercise and is not issued bona fide for the purposes of obtaining relevant evidence.

5    Further, the Respondent contended that such documents sought were subjected to legal professional privilege which had not been waived. The Respondent sought that the interlocutory application be heard at the listed hearing date.

6    In Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61 (CFMEU), Collier J outlined the principles relevant to setting aside a Notice to Produce at [6]:

1.    The party which has issued a Notice to Produce bears the onus of establishing that the documents the subject of the Notice are sufficiently relevant to justify production (Seven Network Ltd v News Ltd (No 11) [2006] FCA 174 at [6], Cheung Kong Infrastructure Holdings Ltd v BlueScope Steel Ltd [2010] FCA 739 at [55]).

2.    Timing of the issue and service of a Notice to Produce is a relevant factor in respect of any application to set aside the Notice.

3.    A Notice to Produce cannot be used as an alternative to an application for discovery or for further and better discovery.

4.    It is necessary that the material sought has an apparent relevance to the issues in the principal proceedings. The test of apparent relevance in this context is whether the documents are reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case. (Seven Network (No 11) at [6], Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union at [14]).

5.    A Notice to Produce cannot be used for the purposes of “fishing” or for the purpose of determining a preliminary question as to whether a party has a supportable case.

6.    A Notice to Produce may be set aside on the basis that it is unduly burdensome if the width of the categories requested is too broad or the categories are not described with adequate specificity (Tony Azzi Automobiles Pty Ltd v Volvo [2006] NSWSC 283 at [20], Sportsbet Pty Ltd v New South Wales (No 9) [2010] FCA 31).

7    I respectfully adopt that approach.

8    On the issue of timing, Collier J observed in CFMEU at [7]:

As explained by Brereton J in Tony Azzi Automobiles at [8], service of a Notice to Produce shortly before a trial, imposing a considerable obligation and thus disruption on parties and practitioners already deeply immersed in the preparation for and conduct of the trial, may be unreasonable and vexatious. While traditionally the issue of timing was not determinative of the application to set aside the Notice to Produce and would weigh in the balance when one comes to examine the question of relevance (Tony Azzi Automobiles at [8]), in light of the case management principles discussed by the High Court in Aon Risk Services Australia Ltd v ANU (2009) 239 CLR 175 I am of the view that the potential disruption of a trial by unduly proximate service of a Notice to Produce may be a determinative factor in considering an application to set aside the Notice (cf comments by Branson J in John Flower Diddams v Commonwealth Bank of Australia [1998] FCA 9497).

9    The Notice to Produce was served eight days prior to the hearing, seeking the contents of that legal advice. The Applicant submitted that the reason for the timing of the Notice to Produce was because the issue only arose when the Respondent filed its written submissions on 11 September 2013. The relevant part of the Respondent’s written submission asserted that only in September 2012, after considering legal advice, it formed the conclusion that it ought to rectify the underpayments. The Respondent contended that such information was already disclosed in Mr Norris’ affidavit and Ms Bolzon’s affidavit each of 16 July 2013. I do not consider that those affidavits made the point as explicitly as the written submissions. I therefore accept, as the Applicant submitted, that it was only on receipt of the Respondent’s written submission that the Respondent indicated its reliance on legal advice to demonstrate the Respondent’s cooperativeness throughout the investigation.

10    Consequently, I do not regard the fact that the Notice to Produce was filed close to the hearing as a sufficient reason to set the Notice to Produce aside. I consider relevance and the waiver of privilege to be more pertinent issues.

11    The core issue is the relevance of the documents sought. The category of documents sought by the Applicant in its Notice to Produce is very wide. It sought all legal advice sought and received within an 18 month period in relation to whether the employees were doing “work” when performing their pager monitor duties. The material shows that it sought advice from April 2011, around the time the Respondent says it received legal advice that it had an arguable case, up to September 2012, when it made its admissions.

12    The Respondents contended that the legal advice referred to in its written submissions provided a very limited explanation for part of the time taken to make the repayments. It was not in dispute that the Respondent obtained and received legal advice. The Respondent’s primary submission was that, throughout the proceedings, it had sought and obtained legal advice from time to time. The content of the legal advice, it said, was that it had an arguable case. Upon consideration of its legal advice, it eventually made admissions as to liability in September 2012.

13    The Applicant contended that the content of the legal advice was relevant because it went to whether the Respondent believed they had an arguable case. The Applicant submitted that the way the Respondent sought to use the legal advice received is relevant to the issue of penalties. The Respondent relied on it as part of its mitigatory submissions. That is, it is being used to explain the delay in rectification of underpayments. The Applicant asserted that it was not clearly shown that the legal advice was given on the basis of full and reliable instructions or in what terms it was given. It was contended that the Respondent’s submission put on the table that, despite receiving legal advice to the effect that it had an arguable case, it eventually formed the conclusion that it had committed the alleged contraventions and commenced steps to rectify the underpayments.

14    The fact of seeking and receiving legal advice is one reason why the Respondent may not have reacted to the Applicant’s claims about the underpayments as promptly as it might otherwise have done. That fact, of itself, does not in the present circumstances require the production of the legal advice even if were marginally relevant. The Respondent’s legal advice is not shown on the Respondent’s written submissions and in particular para 96 of those submissions, as the primary reason or excuse for it failing to make reimbursement in a timely manner. Its advice from Business SA was the more immediate source of its advice. The relevant Business SA records were available. In my view, the fact of seeing and obtaining legal advice is not in a substantial way – so as to warrant discovery and inspection – put forward as an exculpatory element of the Respondent’s submissions on penalty.

15    Even if the documents sought were sufficiently relevant, there is still an issue of whether legal professional privilege was waived. There is an abundance of authorities on implied waiver of legal professional privilege. The legal principles are well established. In College of Law v Australian National University [2013] FCA 492, Griffiths J outlined a summary of those established principles at [24]:

(a)    privilege will be waived where the conduct of the person claiming it is inconsistent with the maintenance of the confidentiality in the relevant communication which the privilege is intended to protect;

(b)    the test for implied waiver is objective, thus where such inconsistency is found, privilege will be waived regardless of the subjective intention of the party claiming the privilege;

(c)    whether there is inconsistency is to be determined in the context and circumstances of the case and in the light of any considerations of fairness arising from that context and those circumstances;

(d)    the question of implied waivers raise matters of fact and degree;

(e)    disclosure of the gist, conclusion, substance or effect of a privileged communication does not necessarily effect a waiver of legal professional privilege in respect of the advice as a whole. Whether it does or not in a particular case depends on whether, in the circumstances of that case, the requisite inconsistency exists between the disclosure on the one hand and the maintenance of confidentiality on the other;

(f)    the context includes such matters as the nature of the matter in respect of which the advice was received, the evident purpose of the person making the disclosure, and the legal and practical consequences of limited, rather than complete, disclosure; and

(g)    where the party claiming privilege has disclosed or deployed the relevant information in order to achieve some forensic or other advantage for itself, or to disadvantage another person in a similar way, this may amount to conduct which is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. Accordingly, the purpose for which the partial disclosure was made is important.

16    His Honour declined to find waiver in that case and went on to say at [35]:

[T]he disclosures reveal very little about the actual content of the legal advices apart from stating that :

(a)    the legal officer provided detailed advice to the Vice-Chancellor. The existence of the College of Law did not prevent the ANU from using the name “ANU College of Law”;

…

17    In this case, the Respondent’s written submissions and Mr Norris’ affidavit of 16 July 2013 referred to the receiving of the legal advice and considering it. Particularly, Mr Norris stated in his affidavit of 16 July 2013:

On the advice of our solicitors, whilst I also sought advice from interstate senior counsel, and then as a consequence of that advice, Lifestyle’s solicitors informed me that Lifestyle had an arguable defence.

18    Ms Bolzon’s affidavit of 16 July 2013 merely outlined the number of times legal advice was sought and received, without disclosing the content of such advice.

19    The Respondent contended that if there had been a waiver, it is confined to a waiver of the oral advice given to Mr Norris by the Respondent’s legal representatives, Lynch Meyer lawyers. It is that advice that the Respondent may have relied on in its written submissions. The rest of the affidavit referred to the Respondent intermittently asking for and receiving legal advice.

20    In my view, the Respondent only referred to the content of the legal advice given by the solicitors, apparently in an oral conversation. The content of the earlier advice, and of counsel, is not referred to or relied on.

21    During the hearing, senior counsel for the Respondent said that the gist of the legal advice received by the Respondent as disclosed in the submissions and affidavits was that the Respondent was likely to have committed the contraventions but there was an arguable case. That foundation for the references in the written submissions and in the affidavits supports the conclusion I have reached that all legal advice sought and received within the 18 month period was not sufficiently relevant to the issue as why the reimbursement payments were delayed as to warrant an order for their discovery (assuming privilege were waived).

22    In British American Tobacco Australia Limited v Secretary, Department of Health and Ageing [2011] FCAFC 107, the Full Federal Court observed at [44]:

It is now clear that disclosure of the gist of a privileged communication does not necessarily effect a waiver of legal professional privilege.

23    In my view, the disclosure was limited to the overall effect of the advice from the solicitors specifically referred. The Applicant contended that the Respondent deployed the legal advice in a manner that helped justify their delay in rectifying the underpayments. That is, the Respondent had legal advice that it had an arguable case, and it was over a year later that it, after full consideration of the legal advice, finally made the admissions. Indeed, there seems to be some ambiguity in those written submissions as to the effect of the Respondent’s legal advice on that issue.

24    In respect of that disclosure, I would also conclude – if it were necessary – that the purpose and effect of the disclosure in that way was not so significant that justice requires the inspection of that record of the discussion between the solicitors and Mr Norris. It is a matter of assessing the circumstances of the very general disclosure and the apparent purpose of it against the privilege which vested in the Respondent. It cannot have the best of non-disclosure but the benefits as if disclosure had been given.

25    However, I do not think the reference to that advice, in context, could or would have any real weight in fixing the pecuniary penalties in this matter. It is simply too vague and imprecise to give it any real weight. In the light of that assessment, I would also conclude that there had been no implied waiver of the privilege against production which the Respondent enjoyed in respect of the record of that advice. That is fortified by the acknowledgment by senior counsel for the respondent about how that reference to that advice should be recorded, as noted above.

26    Accordingly, I set aside the Notice to Produce.

Associate:

Dated:    31 October 2014