FEDERAL COURT OF AUSTRALIA

Korea Midland Power Co Ltd v ACIRL Quality Testing Services Pty Ltd (No 3) [2026] FCA 1019

ORDERS

THE COURT ORDERS THAT:

1.    ALS Limited produce for inspection by the applicant the report prepared by McGrathNichol dated 1 April 2020 with only the parts of the report identified in the Schedule to these Orders redacted.

2.    ALS Limited and the first respondent pay the applicant’s costs of and incidental to its claim of privilege with respect to the McGrathNichol report, as agreed or assessed.

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

SCHEDULE

1.    Paragraphs [1.2.31] to [1.2.35].

2.    Part 8 in its entirety.

3.    Appendices LL to NN.

REASONS FOR JUDGMENT

GOODMAN J:

A.    INTRODUCTION

1    In Korea Midland Power Co Ltd v ACIRL Quality Testing Services Pty Ltd (No 2) [2025] FCA 987 (Korea Midland (No 2)), I held that ALS Limited had waived legal professional privilege over at least some of the information in a report prepared by McGrathNicol and dated 1 April 2020 (McGrathNichol report). In particular, I held that there had been a waiver of information that identified that:

(1)    there was evidence that approximately 45 to 50 per cent of the certificates of analysis were manually amended without justification in ALS’s laboratories in Newcastle, Mackay, Gladstone and Emerald since 2007; or

(2)    no evidence of bribery or other third-party payments involving ALS staff had been found or indicated: see Korea Midland (No 2) at [71].

2    These reasons for judgment, which assume some familiarity with Korea Midland (No 2), address the extent to which legal professional privilege in the McGrathNicol report has been waived.

3    For the purpose of determining that question, ALS provided:

(1)    the Court with a copy of the McGrathNicol report, marked with proposed redactions to demonstrate the extent to which ALS contended waiver had occurred; and

(2)    counsel for the applicant with a copy of that document, but with the proposed redactions implemented.

4    The McGrathNicol report commences with a Table of Contents. That table identifies eight numbered parts of that report (albeit the Table of Contents labels both the seventh and eighth parts as Part 7). ALS has not redacted the headings and subheadings for Parts 1 and 2; and has redacted the headings and subheadings for Parts 3 to 8.

5    There follows a Glossary in which two of the 24 defined terms have been redacted.

6    Part 1, titled “Executive Summary” follows. It comprises:

(1)    a heading “1 – Executive Summary”, which has not been redacted;

(2)    a subheading “Introduction”, together with paragraphs [1.1.1] to [1.1.6], of which paragraphs [1.1.1] to [1.1.3] have not been redacted, with the remainder redacted;

(3)    a subheading “1.2 – Key findings”, together with paragraphs [1.2.1] to [1.2.35], which paragraphs appear under various sub-subheadings. Within this subheading ALS has:

(a)    not redacted:

(i)    paragraph [1.2.10] under a sub-subheading that has been redacted;

(ii)    a sub-subheading “Altered Certificates identified”, together with paragraphs [1.2.11] to [1.2.12] (but not paragraphs [1.2.13] to [1.2.15] which have been redacted);

(iii)    a sub-subheading “TerraCom”, together with paragraphs [1.2.21] to [1.2.23] and [1.2.27] (but not paragraphs [1.2.24] to [1.2.26] and [1.2.28] to [1.2.30] which have been redacted); and

(b)    otherwise redacted the contents of Part 1.2 of the report.

7    Part 2 comprises:

(1)    a heading “2 – Terms of Reference” which has not been redacted;

(2)    a subheading “2.1 – Introduction”, together with paragraph [2.1.1], which have not been redacted;

(3)    a subheading “2.2 – Objectives”, together with paragraph [2.2.1], which have not been redacted;

(4)    a subheading 2.3 which has been redacted, together with paragraphs [2.3.1] to [2.3.13], which have been redacted in full;

(5)    a subheading 2.4 which has been redacted, together with paragraphs [2.4.1] to [2.4.4], which have been redacted in full; and

(6)    a subheading 2.5 which has been redacted, together with paragraphs [2.5.1] to [2.5.5], which have been redacted in full.

8    Part 3 comprises:

(1)    a heading 3 which has been redacted;

(2)    a subheading 3.1 which has been redacted, together with paragraphs [3.1.1] to [3.1.5] which have been redacted in full; and

(3)    a subheading 3.2 which has been redacted, together with paragraphs [3.2.1] to [3.2.3] which have been redacted in full.

9    Part 4 comprises:

(1)    a heading 4 which has been redacted;

(2)    a subheading 4.1which has been redacted, together with paragraphs [4.1.1] to [4.1.3] which have been redacted in full;

(3)    a subheading 4.2 which has been redacted, together with paragraphs [4.2.1] to [4.2.11] which have been redacted, save for paragraphs [4.2.4e], [4.2.7m], [4.2.8g], [4.2.9h], [4.2.9k] and [4.2.10f] which have not been redacted and paragraph [4.2.8e] which is partially redacted;

(4)    a subheading 4.3 which has been redacted, together with paragraphs [4.3.1] to [4.3.24] which have been redacted in full;

(5)    a subheading 4.4 which has been redacted, together with paragraphs [4.4.1] to [4.4.2], which have been redacted in full;

(6)    a subheading 4.5 which has been redacted, together with paragraphs [4.5.1] to [4.5.9] which have been redacted in full; and

(7)    a subheading 4.6 which has been redacted in full, together with paragraphs [4.6.1] to [4.6.10], which have been redacted in full, save for paragraph [4.6.10].

10    Part 5 comprises:

(1)    a heading 5 which has been redacted;

(2)    a subheading 5.1 which has been redacted, together with paragraphs [5.1.1] to [5.1.4] which have been redacted in full;

(3)    a subheading 5.2 which has been redacted, together with paragraphs [5.2.1] to [5.2.5] which have been redacted in full, save for paragraph [5.2.3n] which has not been redacted;

(4)    a subheading 5.3 which has been redacted, together with paragraphs [5.3.1] to [5.3.4] which have been redacted in full;

(5)    a subheading 5.4 which has been redacted, together with paragraphs [5.4.1] to [5.4.3] which have been redacted in full;

(6)    a subheading 5.5 which has been redacted, together with paragraphs [5.5.1] to [5.5.3] which have been redacted in full;

(7)    a subheading 5.6 which has been redacted, together with paragraphs [5.6.1] to [5.6.7] which have been redacted in full;

(8)    a subheading 5.7 which has been redacted, together with paragraphs [5.7.1] to [5.7.4] which have been redacted in full; and

(9)    a subheading 5.8 which has been redacted, together with paragraphs [5.8.1] to [5.8.10] which have been redacted in full, save for paragraph [5.8.7] which has not been redacted.

11    Part 6 comprises:

(1)    a heading 6 which has been redacted;

(2)    a subheading 6.1 which has been redacted, together with paragraphs [6.1.1] to [6.1.4] which have been redacted in full; and

(3)    a subheading 6.2 which has been redacted, together with paragraphs [6.2.1] to [6.2.2] which have been redacted in full.

12    Part 7 comprises:

(1)    a heading 7 which has been redacted;

(2)    a subheading 7.1 which has been redacted, together with paragraph [7.1.1] which has been redacted in full;

(3)    a subheading 7.2 which has been redacted, together with paragraphs [7.2.1] to [7.2.9] which have been redacted in full;

(4)    a subheading 7.3 which has been redacted, together with paragraphs [7.3.1] to [7.3.1.1] which have been redacted in full;

(5)    a subheading 7.4 which has been redacted, together with paragraphs [7.4.1] to [7.4.5] which have been redacted in full;

(6)    a subheading 7.5 which has been redacted, together with paragraphs [7.5.1] to [7.5.3] which have been redacted in full;

(7)    a subheading 7.6 which has been redacted, together with paragraphs [7.6.1] to [7.6.3] which have been redacted in full; and

(8)    a subheading 7.7 which has been redacted, together with paragraphs [7.7.1] to [7.7.5] which have been redacted in full.

13    Part 8 comprises:

(1)    a heading 8 which has been redacted;

(2)    a subheading 8.1 which has been redacted, together with paragraphs [8.1.1] to [8.1.11] which have been redacted in full; and

(3)    a subheading 8.2 which has been redacted, together with paragraphs [8.2.1] to [8.2.5] which have been redacted in full.

14    There follows some appendices, which have been redacted in their entirety.

15    Waiver as to one part of a protected communication will usually result in waiver as to the rest of the communication on the same subject matter: see Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 481 to 482 (Gibbs CJ) 488 (Mason and Brennan JJ) and 497 to 498 (Dawson J); Bristol-Myers Squibb Co v Apotex Pty Ltd (ACN 096 916 148) (No 3) [2012] FCA 1310; (2012) 298 ALR 137 at 142 [29] (Yates J); Schütz Australia Pty Ltd v VIP Plastic Packaging Pty Ltd (No 18) [2013] FCA 407 at 29 to 30 [30] (McKerracher J); Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV (No 6) [2019] FCA 337; (2019) 369 ALR 267 at 272 to 273 ([15] to [19] and 274 [25]) (Stewart J); TerraCom Ltd v Australian Securities and Investments Commission [2022] FCA 208; (2022) 401 ALR 143 at 157 ([68] to [69]) (Stewart J) (affirmed on appeal in TerraCom Ltd v Australian Securities and Investments Commission [2022] FCAFC 151 (O’Callaghan, Jackson and Halley JJ)).

16    In Great Atlantic Insurance Co v Home Insurance Co [1981] 1 W.L.R. 529; [1981] 2 All ER 485 at 492 – which was referred to with approval by Gibbs CJ, Mason and Brennan JJ, and Dawson J, in Maurice – Templeman LJ explained that:

... the rule that privilege relating to a document which deals with one subject matter cannot be waived as to part and asserted as to the remainder is based on the possibility that any use of part of a document may be unfair or misleading, that the party who possesses the document is clearly not the person who can decide whether a partial disclosure is misleading or not, nor can the judge decide without hearing argument, nor can he hear argument unless the document is disclosed as a whole to the other side. Once disclosure has taken place by introducing part of the document into evidence or using it in court it cannot be erased.

17    Mason and Brennan JJ explained in Maurice at 488, by reference to Great Atlantic Insurance, that:

In order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of a protected communication should result in waiver as to the rest of the communication on that subject-matter.

18    Although the test for waiver has subsequently been expressed as one of inconsistency (see Korea Midland (No 2) at [68] to [78]), considerations of fairness inform the application of that test: see Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at 13 [29] (Gleeson CJ, Gaudron, Gummow and Callinan JJ).

19    Relatedly, where one part of a protected communication is waived, the waiver extends to other parts of the advice necessary to a proper understanding of the first part: British American Tobacco Australia Services Ltd v Cowell (Representing the Estate of McCabe (deceased)) [2002] VSCA 197; (2002) 7 VR 524 at 563 to 564 ([121]) (Phillips, Batt and Buchanan JJA).

20    As noted above, the waived subject matter is information that identified that:

(1)    there was evidence that approximately 45 to 50 per cent of the certificates of analysis were manually amended without justification in ALS’s laboratories in Newcastle, Mackay, Gladstone and Emerald since 2007; or

(2)    no evidence of bribery or other third-party payments involving ALS staff had been found or indicated.

21    Thus, it is necessary to consider the extent to which the McGrathNicol report addresses the waived subject matter.

22    Having done so, I have reached the view that, subject to an exception discussed below, the whole of the McGrathNichol report addresses the waived subject matter such that disclosure of that report is necessary to avoid the applicant being misled by an inaccurate perception of what has been disclosed and so that the applicant can properly understand what has been disclosed. This is evident from both the structure of the McGrathNichol report and its contents.

23    In this regard, I have taken into account the various elements of the waived subject matter, including the disclosed conclusion as to the percentage of certificates amended (which involves findings relevant to the numerator as well as findings relevant to the denominator in the calculation of the fraction which is the basis of the percentage); the disclosed conclusion that the amendment occurred without justification; the disclosed conclusion that the amendments occurred in ALS’s laboratories in Newcastle, Mackay, Gladstone and Emerald; the disclosed conclusion that the amendments occurred since ALS’s acquisition of the ACIRL business in 2007; and the disclosed conclusion that no evidence of bribery or other third-party payments involving ALS staff had been found or indicated. Disclosure only of the parts of the McGrathNichol report that ALS has not redacted has the real potential to create an inaccurate perception of that which has been waived, particularly in circumstances where the remaining parts of the report are necessary to a proper understanding of the waived subject matter.

24    The exception foreshadowed above concerns paragraphs [1.2.31] to [1.2.35] and Part 8 (in its entirety) of the McGrathNicol report, together with the appendices referred to in Part 8. I am satisfied that the subject matter of these parts of the report differs from the waived subject matter sufficiently to have the result that there has been no waiver.

25    The conclusions that I have expressed are necessarily cryptic and circumspect. They have been expressed in this way in light of the extensive redactions made by ALS and because I am cognisant that ALS may wish to seek leave to appeal and of the need to preserve the subject matter of any such appeal.

26    For the foregoing reasons, ALS must produce the McGrathNicol report to the applicant with only the parts referred to at [24] redacted. There appears to be no reason why costs should not follow the event. I will make orders accordingly.

27    By reason of an order previously made by consent, the orders that I will make will be stayed so as to preserve ALS’s rights of appeal.

Associate:

Dated:    30 July 2026

SCHEDULE OF PARTIES