Federal Court of Australia

Gall v Domino's Pizza Enterprises Limited (No 3) [2022] FCA 1330

ORDERS

THE COURT ORDERS THAT:

1.    The decision of Senior National Judicial Registrar Priestley dated 3 November 2022 as it relates to documents numbered 1 and 3 in the table of disputed documents produced at paragraph 4 of the decision be set aside.

2.    On or before 5.00 pm (AEDT) on 8 November 2022 the respondent do produce to the applicant an unredacted version of the document identified as DPE.200.003.7818 and a version of the document identified as DPE.100.012.3883 redacted only as to the first sentence of paragraph 2.

3.    The respondent do pay the costs of the application dated 4 November 2022 to be assessed by a Registrar if not agreed.

4.    There be liberty to apply on short notice.

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

REASONS FOR JUDGMENT

COLVIN J:

1    Domino's Pizza Enterprises Limited operates a pizza franchise business in and beyond Australia. Mr Gall was employed to work for a Domino's franchisee in Australia. He claims that he and other employees of various Domino's franchisees were underpaid. He says that a reason why they were underpaid was because Domino's told its franchisees that the employees were covered by certain enterprise agreements, in particular an agreement made in 2005 between Domino's, franchisees, and the Shop, Distributive and Allied Employees' Association (SDA) when that was not the case. He says that they were entitled to higher rates of pay based upon the terms of an industrial award that applied to them.

2    Mr Gall has brought representative proceedings against Domino's on behalf of a class of people who were employees of various Domino's franchisees in the period 24 June 2013 to 24 January 2018. In those proceedings, Mr Gall alleges that Domino's engaged in misleading or deceptive conduct by representing to its franchisees, in effect, that the 2005 Agreement applied to their employment. One answer that Domino's advances as part of its defence is a claim to the effect that any representations were statements of opinion for which Domino's had reasonable grounds at the time being a particular view as to the meaning of the 2005 Agreement.

3    The final hearing of the claim has commenced. Amongst other things, Domino's advances the following matters to support its claim that it had reasonable grounds for an opinion which it held to the effect that the 2005 Agreement applied:

(1)    during the negotiation of the 2005 Agreement, SDA advised Domino's that an 'Extended Coverage Clause' to be included in the 2005 Agreement would mean that new franchisees would be covered by the 2005 Agreement and that Domino's agreed to the inclusion of the Extended Coverage Clause in the 2005 Agreement 'on that basis and for that purpose'; and

(2)    since at least May 2009, the Fair Work Ombudsman resolved underpayment claims and conducted audits and investigations of Domino's franchisees on the basis that the entitlements of employees of those franchisees were governed by an agreement and not by any award.

4    In that context, an issue has arisen as to whether two documents are privileged from disclosure by Domino's as the respondent to the representative proceedings.

The first document: an email chain dated 8 and 9 June 2005

5    The first of those documents comprises an email chain of two emails dated 8 and 9 June 2005 respectively. Domino's claims that part of the first email is privileged from production on the basis of legal professional privilege (Email 1). It has produced a redacted version of Email 1 on the basis that only the redacted part is privileged. The part of Email 1 that has not been redacted says:

Dear Eugene,

I refer to our discussion today and confirm my advices that we have had a meeting with the SDA today as a result of the expiration of the current EBA.

It has been agreed that we will enter into a supplementary EBA to cover those franchisees who are not a party to the expired EBA together with all future franchisees of DMP that enter into a binding franchise agreement. The SDA is prepared to support an application for certification before the AIRC on the grounds of public interest in ensuring that all DMP franchisees are bound by the same EBA terms.

6    In Domino's opening submissions for the final hearing, it has indicated that it will rely upon the unredacted part of Email 1 to support the following proposition:

… in 2005, the SDA agreed that it would enter into an agreement that would cover existing franchisees that were not yet a party to an agreement, together with all future franchisees. The 2005 Agreement, as per that agreement, then contained a clause that had that effect. The SDA supported the agreement during the certification process. No issue was raised by the Commission.

7    Email 1 was an email from Mr Ken Lewis, the general counsel and company secretary of Domino's to Mr Eugene Fung a partner of an external firm of solicitors acting for Domino's at the time. Mr Lewis was a legal practitioner and he was responsible for Domino's in-house legal department. The record of the email indicates that it was copied to Mr Don Meij and Mr Adam Pratt, both employees of Domino's. It is common ground that Mr Meij was the chief executive officer of Domino's.

8    The second email in the chain (Email 2) is a response from Mr Fung to Mr Lewis. It is shown as being copied to Mr Meij and Mr Pratt and also to Mr Richard Moshinsky another partner of the external firm. Domino's claims legal professional privilege in respect of the whole of Email 2.

9    Domino's claims that the redaction of Email 1 was undertaken on the basis that only the redacted part was a privileged communication and, for that reason, it is entitled to segregate the privileged part from the non-privileged part. It refers to cases where such an approach has been countenanced: Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 at [158]-[159] (Allsop J), applied recently in Commissioner of Taxation v PricewaterhouseCoopers [2022] FCA 278 at [174] (Moshinsky J).

10    As explained in Mann v Carnell (1999) 201 CLR 1 at [28] (Gleeson CJ, Gaudron, Gummow and Callinan JJ), inconsistency between the conduct of a client and maintenance of the confidentiality in a privileged communication effects a waiver of legal professional privilege. The waiver may be implied in the sense that the law recognises the inconsistency and determines its consequences even though they may not accord with the subjective intentions of the party who claims the benefit of the privilege: at [29]. Importantly:

What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.

11    Further, in Assistant Treasurer and Minister for Competition Policy and Consumer Affairs v Cathay Pacific Airways Limited [2009] FCAFC 105; (2009) 179 FCR 323 at [79] (Flick J, Spender and Lander JJ agreeing) it was recognised that relevant unfairness may arise if a party gains some forensic advantage in disclosing parts of a document but withholding some other parts. In that case, the recognition of the possibility of redaction was qualified by the condition that 'the deletion of those parts does not create an ambiguity or render the balance of the document misleading'.

12    For Domino's it was said that the redaction did no more than ensure that the legal advice that was sought and given was not disclosed. It was submitted that as the unredacted portion did not disclose the gist or any part of the legal advice, it was permissible because it took the form of preserving that part of the document that was privileged and retained its confidentiality. Reliance was placed upon the approach of Hill J in HongKong Xinhe International Investment Company Ltd v Bullseye Mining Ltd [No 5] [2022] WASC 245 where her Honour said at [14]:

For there to be an implied waiver of legal professional privilege in advice, the gist or substance of the advice must be disclosed; it is insufficient that the existence of advice is disclosed or the fact that advice has been received and considered. If the conclusion of the advice is disclosed together with the effect of it to 'emphasise and promote the strength and substance of the case', there will be an implied waiver of the privilege.

13    However, the terms in which that statement was expressed reflect the nature of the issue before her Honour in that case which concerned the extent to which reference to legal advice may result in waiver. The principle of inconsistency (informed by considerations of fairness) is not confined to inconsistency of that kind. It can also arise where the inconsistency takes the form of seeking to rely upon an unredacted part of a document (even a part that is not privileged) where the consequence is that a case that may be advanced by another party as to the meaning and effect of the part to be relied upon is compromised. So much was recognised by Allsop J (as the Chief Justice then was) in Kennedy v Wallace where his Honour referred to an instance where a body of writing was incapable of being broken up. In such a case, any privilege claim must be made to the whole of the communication and must be adjudged by a consideration as as to whether its dominant purpose was to give or receive or record legal advice.

14    In any case where it is not possible to separate the parts of the document into privileged and non-privileged parts in a manner that enables the unredacted part to be read separately and accurately such that it is not controversial as to whether the meaning conveyed is distorted by breaking apart the whole document then the claim to privilege must be adjudged by reference to the whole document.

15    In the present case, in my view, reliance upon the unredacted portion of Email 1 is apt to cause the reader to form an incorrect or incomplete impression as to what was being described in the first part of the email. That is because there is a respectable argument that the meaning of the part that has been disclosed is informed by the rest of the document to reach a conclusion that may be to the forensic disadvantage of Domino's in respect of a significant aspect of the case. It would be most unfair to allow Domino's to advance a case by reference to the unredacted part of the document without exposing that case to the available contention that the words used have a particular meaning which is different to that for which Domino's contends. Therefore, redaction in that manner so as to allow reference only to the unredacted portion when reaching conclusions concerning the effect of discussions with the SDA as to the manner in which the 2005 Agreement may affect future Domino's franchisees would be relevantly unfair. As has been explained, in those circumstances there is inconsistency between Domino's relying on the unredacted portion of Email 1 and at the same time seeking to maintain the privilege in the balance of Email 1 as well as Email 2. The inconsistency is attributable to the conduct of Domino's.

16    Further, the necessary premise for the position adopted by Domino's (that redaction of Email 1 should be permitted) is the characterisation of Email 1 as only being partly privileged. I do not accept that characterisation. It is plain from a consideration of the content of Email 1 as a whole, the terms of the response by Email 2 and the responsibility of those between whom the email exchange occurred that the part of Email 1 that has been produced (and upon which Domino's seeks to rely for an important part of its claim) forms a record of instructions given to external solicitors. It is plain that the dominant purpose of that part of the communication contained within Email 1 is for the purpose of obtaining legal advice as to the terms of a document and for the external solicitors to undertake drafting work and provide advice in accordance with those instructions with the subject matter concerning dealings with Domino's franchisees in respect of matters of compliance with the law. Email 2 is a response to that communication which itself places the unredacted part of Email 1 in context.

17    A partial waiver by redacting material that is privileged on the basis of a legal professional privilege cannot occur in that way. The consequence of disclosing and relying upon the redacted part of the Email 1 is a waiver of the whole of the content of Emails 1 and 2.

18    For those reasons, the conduct of Domino's in seeking to rely upon the unredacted portion of Email 1 whilst not producing the balance of that email or Email 2 has resulted in a waiver of privilege. It follows that both those documents should be disclosed to Mr Gall.

19    The circumstances emphasise why it is appropriate for the Court to require a party who seeks to mask parts of documents to justify that course where an objection has been raised by the other party: see the analysis by Martin CJ in Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [No 2] [2009] WASC 67, applied by Corboy J in Minetec Pty Ltd v Frost [2011] WASC 145 at [19]-[20]. It was a concern of a kind to which Murphy J alluded in dealing with the approach to be adopted to the production of documents in the present case: Gall v Domino's Pizza Enterprises Limited [2019] FCA 1799 at [67] where his Honour said;

I am concerned to avoid an overzealous approach to relevance being taken and redactions being made with insufficient regard to the comprehensibility of the document after it is made, including because the redactions for relevance occur in combination with other redactions for confidentiality and privilege.

See also Esso Australia Pty Ltd v Australian Workers Union (No 3) [2020] FCA 316 at [12]-[19] (Wheelahan J).

20    It is important for the Court to be in a position to scrutinise the basis for redaction and to require a party undertaking redaction to be able to justify that redaction if there is real concern. This is not to encourage blanket objections to redactions. Rather, it is to seek to confine them to instances where the party undertaking the redaction is able to conclude that the redaction is an uncontroversial way in which to deal with intermingled material.

21    For completeness, I note that in the context of the present application, I am not the trial judge and both parties approached the present application on the basis that I should read the contentious documents in order to make a determination as to whether the documents should be required to be produced. Therefore, no issue arose as to what evidence may be sufficient to support the redaction in circumstances where the Court was being invited to consider upholding the privilege claim without regard to the contents of the communication claimed to be the subject of the privilege. Also, it was not necessary to consider whether it was appropriate for the Court to exercise its discretion to inspect the documents: as to which, see Hancock v Rinehart (Privilege) [2016] NSWSC 12 at [31] (Brereton J).

The second document: an email between Domino's employees and Mr Muir

22    The second of the two documents is an email from Mr Steve Klaassen, the employee relations manager for Domino's to Mr Meij. It is shown as having been copied to other Domino's employees as well as to Mr Gil Muir an industrial relations expert retained by Domino's. On the evidence, Mr Muir received the email communication in circumstances where he was engaged by Domino's and was under an obligation to keep the information in the email confidential.

23    The email was produced with three redactions. In its redacted form it was as follows:

Private and Confidential

Don,

I wanted to give you a brief on our meeting with James Willard on Monday morning in regards to his correspondence from the workplace ombudsman.

[Redaction 1] We met James here at head office at 1 pm on Monday 16th February. James confirmed the following:

•    He had received correspondence from the Workplace Ombudsman (WO) in regards to an alleged underpayment of a driver named Nicole.

•    The WO had indicated that they intend to investigate all of James' six (6) stores. As yet, there is no underpayment claimed for other stores.

•    The total monies claimed for Nicole is $640 (maximum).

•    The WO believes that drivers should be covered by the Australian Fair Pay and Conditions Standard (AFPCS). This rate is $14.75.

•    He paid and continues to pay his drivers a rate of $12.09. This is the rate specified by the Domino's - SDA Enterprise Agreement 2005.

•    He engaged a solicitor to write to the WO indicating that clause 5.1 in the 2005 agreement should apply to him. This clause binds all franchisees new and existing to this agreement.

•    His solicitor had been pretty aggressive in their correspondence to the WO including claiming he had been victimised by the WO.

•    He indicated he was very confident that this issue will be resolved quickly as he will be covered by the 2005 agreement, leading to no underpayment.

•    The WO had received his correspondence putting forward the position that the 2005 agreement applies and he is now waiting for their response.

In response Rian and I put to James:

•    We believe the best approach with the WO is to work amicably with them and to resolve issues as quickly and quietly as possible. We used the words 'fly under the radar' with WO. Aggression towards a government department rarely results in a favourable outcome.

•    In his own interests, James should look to resolve this issue quickly as it has the potential to affect all of his businesses as well as other franchisees.

•    We are very happy if the WO says that the 2005 agreement applies to him as this will resolve the issue for him and all other franchisees. We are hoping for this outcome.

•    It may be prudent to put a contingency in place in case the WO says the agreement does not apply, and he is therefore covered by the rates set in the AFPCS.

[Redaction 2]

James spoke to Rian on Wednesday and also in a follow up discussion today. James has agreed to our proposal to rely on Gil to correspond with the WO. I will confirm by mal to James our position and his position now he has agreed to our proposal.

[Redaction 3]

24    Domino's relies upon both the privilege that protects without prejudice communications and legal professional privilege to support the redactions. In its written submissions, it put the two claims in the following way:

The main redaction [redaction 2] in the email contains the terms of a without prejudice offer made by Domino's to James Willard, a former Domino's franchisee. Domino's and Mr Willard were in a dispute concerning the application of the 2005 Agreement. The offer was aimed at settling the dispute to avoid any litigation or continuation of the dispute and contained an admission on the part of Domino's.

The main redaction [redaction 2] and the bottom redaction [redaction 3] also contain details of legal advice to be sought by Domino's and, as part of Domino's without prejudice offer, to be shared with Mr Willard. To the extent Mr Willard was informed of those details as part of Domino's without prejudice offer, there was a common interest between Domino's and Mr Willard in those details because they concerned legal advice relevant to the Ombudsman's investigation of an underpayment allegation against Mr Willard (as a franchisee of Domino's).

25    As to without prejudice privilege, the law has been helpfully summarised by Wigney J in Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232 at [51]-[54] and in Commonwealth Director of Public Prosecutions v Citigroup Global Markets Australia Pty Limited (No 3 - privilege claims) [2021] FCA 1208 at [152]-[160].

26    As his Honour observed, the privilege is not confined to proceedings in respect of the dispute the subject of the negotiations. It extends to disclosure in the context of a subsequent dispute where there is a sufficient connection between the subject matter of the two disputes. The authorities pose different formulations of the test to be applied when considering whether the precise circumstances are such that the privilege may be relied upon to cover disclosure in the context of a subsequent dispute of communications that were made for the purpose of attempting to settle an earlier dispute. However, the authorities make clear that it is the policy underlying the privilege, namely the damage to the encouragement of the conduct of settlement discussions in respect of claims that would otherwise be required to be adjudicated by the courts, to which there is to be regard in considering whether the privilege applies.

27    However, the first issue here is whether redaction 2 records any without prejudice proposal of the kind to which the privilege may apply.

28    The claim is supported by an affidavit made by a partner of the law firm with conduct of Domino's defence of the representative proceedings. The deponent says that he has acted on behalf of Domino's in various matters since late 2014 (noting that the email in question is dated 19 February 2009). He also says that he has relied upon 'information and instructions' provided by Mr Craig Ryan and Mr Tim Van Schyndel of Domino's. He says that Mr Ryan was Domino's general counsel and company secretary at the relevant times (which I take to be at the time of the email and the events to which it refers). Mr Van Schyndel was not an employee of Domino's at that time.

29    The affidavit deposes to statements as to the subject matter of the redactions in precisely the same terms as are stated in the written submissions (quoted above). In particular, the solicitor deponent states 'Domino's and Mr Willard were in a dispute concerning the application of the 2005 Agreement. The offer was aimed at settling the dispute to avoid any litigation or continuation of the dispute and contained an admission on the part of Domino's'.

30    Therefore, the original dispute for the purposes of the claim to privilege was said to be a dispute between Domino's and Mr Willard. However, as the unredacted portion of the email shows, it records what happened at a meeting between employees of Domino's and Mr Willard (who is described as having six Domino's stores). The email records that Mr Willard confirmed details of correspondence that he had received from the Workplace Ombudsman concerning alleged underpayment of an employee at one of Mr Willard's stores. It referred to aggressive correspondence between Mr Willard's lawyers and the Ombudsman. It attributed to Mr Willard a confident view that the 2005 Agreement covered the employee and that this position had been put by him in correspondence to the Ombudsman. All these matters indicate that the dispute which the parties had in mind at the time was a dispute between Mr Willard and the Ombudsman, there being no indication of a dispute of a kind that might lead to court proceedings as between Domino's and Mr Willard's businesses.

31    Nothing in that record suggests that there was any dispute between Domino's and Mr Willard. Rather, the email records that at the meeting described in the email, the parties went on to consider the way in which Mr Willard might work with the Ombudsman to resolve the dispute 'as quickly and quietly as possible'. Significantly, it attributed to the Domino's employees the following statement of its position:

We are very happy if the [Ombudsman] says that the 2005 agreement applies to him as this will resolve the issue for him and all other franchisees. We are hoping for this outcome.

32    This indicates that far from being in dispute, Domino's and Mr Willard were on the same page.

33    Submissions were advanced to the effect that there was a dispute between Domino's and Mr Willard as to how the dealings with the Ombudsman should be handled. Even accepting for the purposes of the submission that this was the case, a disagreement of that kind would not amount to a dispute of a kind where the discussions concerning its resolution might give rise to without prejudice privilege. There could be no concern that such a disagreement as to the steps that might be taken in their mutual commercial interest could give rise to the prospect of a dispute in respect of which there was the possibility of resort to the courts for curial relief. The public interest that supports the privilege requires the contemplation of possible action of that kind.

34    In my view, there was no basis in the material to conclude that the meeting the subject of the record in document 2 had been convened by reason of a claim or complaint or demand of some kind made against Domino's by Mr Willard. Indeed, I would suggest that there are aspects of the redacted parts that are inconsistent with that position, particularly the material the subject of redaction 1.

35    In my assessment, there is nothing in the redactions, and in particular nothing in redaction 2, that indicates a different position. On the contrary, as might be expected from the unredacted part of the document, it concerns the basis upon which a collaborative approach might be adopted for communicating with the Ombudsman and, as the unredacted part indicates, what their contingency plan may be. The proposal that it records concerns the way in which and basis upon which they may deal with the Ombudsman and obtain legal advice. The conclusionary statements in the affidavit about a dispute between Mr Willard and Domino's do not attribute those statements to information provided by Mr Ryan or to anything outside the contents of the document. They are no more than an assertion as what may be concluded from the document. For reasons I have given, I do not accept the assertion as being correct.

36    There was reference in the course of oral submissions by senior counsel for Domino's to the use of the words 'without prejudice'. There is no magic in the use of the words 'without prejudice'. In this case they were not deployed to describe a proposal to resolve a dispute of the kind alleged by Domino's as the basis for its claim to privilege.

37    There is a separate claim that redactions 2 and 3 contain details of legal advice to be sought and shared with Mr Willard. However, there is no evidence to support any claim that the dominant purpose (that is the ruling, prevailing or most influential purpose) of the email at the time the communication was made was to obtain legal advice. Certainly there is reference to discussions between the parties about obtaining legal advice and steps being taken to find out what was needed for that to occur. However, regard to the document as a whole and the record that it provides of the meeting does not indicate that the purpose of the email was to obtain that advice or to collect the material that would be provided for the purpose of obtaining that advice. On the contrary, it indicates that there was a separate communication in that regard. The main element to what is recorded in redaction 2 and the object under discussion concerns the role to be performed by Mr Muir. He is not a lawyer and his involvement has nothing to do with obtaining legal advice.

38    I am not satisfied that redactions 2 and 3 are justified on the basis of legal professional privilege.

39    There was no challenge to the justification for redaction 1.

40    Therefore, the second document should be disclosed, save as to redaction 1.

41    Finally, I note that the present application took the form of an appeal in respect of part of the decision of a senior national judicial registrar by which it had been determined that the claims to privilege in respect of the redacted parts of the two documents had been substantiated. The appeal has a particular character. It is, in effect, a demand that the claim for relief be heard de novo by a judge: Bechara v Bates [2021] FCAFC 34; (2021) 286 FCR 166 at [27]. Demonstration of error is not a necessary part of the review. In cases where a decision is made to 'allow' the appeal, it is appropriate for orders to be made setting aside the order made by the registrar and pronouncing orders to be made in lieu of those orders: Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 [2021] FCAFC 143; (2021) 286 FCR 494 at [27]-[28] (Allsop CJ, Markovic and Derrington JJ agreeing).

42    For the above reasons, at the conclusion of argument I pronounced orders setting aside the relevant aspect of the registrar's decision and requiring production of unredacted versions of the two documents (save for redaction 1 to the second document). The order as to costs was not opposed. I indicated that I would publish my reasons for doing so. These are those reasons.

Associate:

Dated:    8 November 2022