AWB Ltd v Cole (No 5)

Case [2006] FCA 1234


FEDERAL COURT OF AUSTRALIA

AWB Limited v Honourable Terence Rhoderic Hudson Cole (No 5)
[2006] FCA 1234

EXPLANATORY STATEMENT

It is the practice of this Court in matters which are of significant public interest to make a brief explanatory statement when delivering judgment.

The statement I now make describes the main issues in the proceedings and the conclusions I have reached.  As it is a summary statement only, it is necessarily incomplete.  The only authoritative pronouncement of the Court’s reasons and conclusions is that contained in the published reasons for judgment.

This case arises from notices to produce documents under s 2(3A) of the Royal Commissions Act 1902 (‘RCA’) that Commissioner Cole directed to AWB and its employees between 23 November 2005 and 20 March 2006. AWB seeks a declaration that the documents specified in revised lists of documents that AWB has filed with the Court are, or record, confidential communications that are protected from production to the Commissioner by legal professional privilege.

Although the Commissioner is named as the first respondent, he advised the Court that he would take no part in the proceedings and will abide any order made by the Court.  The second respondent, the Commonwealth, has acted as AWB’s contradictor.

At the commencement of the hearing, some 1,450 original documents were in issue.  During the course of the hearing, AWB withdrew its claim for a declaration that various documents were privileged and the Commonwealth accepted that other documents were the subject of legal professional privilege.  As a result, the number of contested original documents was reduced by some 550 to approximately 900 documents occupying 28 lever arch folders.

The documents at issue span a period of years from about 2002 to 2006.  Over that period, AWB was involved in a number of investigations concerning its sales of wheat to Iraq under the United Nations’ Oil-For-Food Programme (‘OFF Programme’).  AWB conducted two internal investigations, known as Project Rose and Project Water.  In addition, AWB was exposed to investigations by the Permanent Investigations Committee of United States Senate (‘PSI’), the Independent Inquiry Committee of the United Nations (‘IIC’) and ultimately the Commission.

So far as AWB is concerned, these investigations focused on AWB’s payment of inland transportation fees, totalling approximately US$222 million, to a Jordanian company called Alia for Transportation and General Trade Co (‘Alia’).  In its final report, the IIC concluded that Alia was a front company for the Iraqi regime headed by Saddam Hussein and that Alia channelled these payments to Iraq in contravention of the United Nations’ sanctions.  A key issue in the investigations was whether AWB or any of its employees knew or suspected that this was the case.

AWB’s internal investigations also involved a review of matters concerning The Tigris Petroleum Corporation Limited (‘Tigris’).  The Commonwealth contends that AWB and Tigris entered into a transaction whereby AWB agreed to inflate the prices in two contracts (A1670 and A1680) for the supply of 1,000,000 mt of wheat to the Grain Board of Iraq (‘GBI’)…

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Details
AGLC
AWB Ltd v Cole (No 5) [2006] FCA 1234
Case
[2006] FCA 1234
Decision Date

CaseChat Overview and Summary

In the case of AWB Ltd v Cole (No 5), the court was tasked with determining the admissibility of certain documents in the context of an investigation involving AWB, its legal counsel, and several governmental bodies. The primary issue was whether certain communications between AWB and its lawyers were protected by legal professional privilege. The court had to assess whether these communications met the criteria for legal advice privilege, which includes advice on prudent and sensible actions in relation to the investigations.

The court examined the evidence provided by AWB, which included affidavits from in-house and external lawyers. AWB argued that the term 'legal' used by their lawyers to describe certain communications should be admissible as it was based on the lawyers' specialised knowledge. The Commonwealth, however, objected to the use of the term 'legal' in affidavits by non-lawyers, arguing it was merely a lay opinion not supported by disclosed facts. The court ruled that the term 'legal' used by qualified lawyers could be admissible as it was based on their specialised knowledge. Conversely, the term 'legal' used by non-lawyers was excluded as it did not meet the evidentiary standards.

The court concluded that AWB had not sufficiently proven that the dominant purpose of the communications was to obtain legal advice, particularly for several specific documents. The court found that some documents did not meet the dominant purpose test, while others were not confidential communications as they had been shared with third parties. Furthermore, the court determined that privilege had been waived for many of the documents, either through their use in furtherance of a fraud or through other actions by AWB. The court ordered that AWB and the Commonwealth prepare a minute of orders reflecting the court's findings and scheduled a hearing for any further arguments on the orders.

Orders

Orders of the court

1. Within 3 business days AWB and the Commonwealth file an agreed minute of orders that give effect to these reasons for judgment. If AWB and the Commonwealth are unable to agree upon appropriate orders, within 3 business days AWB and the Commonwealth shall each file and serve a minute of the orders that it contends are necessary and appropriate to give effect to these reasons for judgment.

2. The proceeding be adjourned to Monday 25 September 2006 at 10.15am for any argument as to the orders.

Background

Background to the litigation

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Evidence

Evidence Before The Court

I do not see any reason why professional communications between AWB and its lawyers concerning the investigations by the IIC, the PSI, and the Commission should be incapable of attracting legal advice privilege. In these contexts, the concept of legal advice includes advice as to what AWB should prudently and sensibly do in connection with the relevant investigation. Advice of this kind is capable of attracting legal advice privilege, notwithstanding that a particular communication is part of a continuum and does itself contain any specific advice on matters of law or any specific request for such advice.AWB’S AFFIDAVIT EVIDENCE The Commonwealth contended that AWB had failed in its attempt to prove legal professional privilege because it had not adduced any proof as to AWB’s dominant purpose in seeking or obtaining legal advice. AWB largely relied upon evidence given by in-house and external lawyers involved in the particular communications at issue. The Commonwealth submitted that evidence proving the lawyer’s understanding of the purpose of the particular communication and that he or she was giving legal advice affords no evidence of the client’s dominant purpose. There is no real substance in this criticism. Dominant purpose must be determined objectively, but it is not uncommon for the relevant purpose to be established by evidence given by the maker of the statement or another person responsible for commissioning the relevant document or bringing it into existence, such as a solicitor: see MitsubishiElectric Australia Pty Ltd v Victoria WorkCover Authority (2002) 4 VR 332 at [14]; Grant v Downs at 677 and AWB v Cole at [110]. The Commonwealth objected to the admissibility of statements in AWB’s affidavits where the deponent asserted that particular documents recorded ‘legal’ advice or were brought into existence for the purpose of obtaining, or giving, ‘legal’ advice. It submitted that the description ‘legal’ was a conclusionary assertion or opinion based on other facts and circumstances that were not disclosed by the deponent. AWB argued that the word ‘legal’ ought to be received on the ground that it was an opinion or description about the relevant facts and circumstances as perceived by the deponent. Alternatively, where the deponent was legally qualified, AWB argued that the description represented an opinion that was based on the deponent’s specialised knowledge, training and experience within the meaning of s 79 of the Evidence Act 1995 (Cth). After hearing submissions from counsel, I ruled that I would not exclude the word ‘legal’ where it was used by a lawyer to characterise the relevant advice or communication. In those circumstances, the presumption referred to in Kennedy v Wallace would be available: see [44] (4) above. In addition, the description would, I think, be admissible as an opinion, based on specialised knowledge, within the meaning of s 79 of the Evidence Act. On the other hand, I rejected the term ‘legal’ in affidavits where the deponent was not legally qualified. In those affidavits, the use of the term amounted simply to a conclusion or opinion by a lay person that was based, in most instances, on facts which were not fully disclosed in the affidavit. Further, I held that the evidence was not admissible under s 78 of the Evidence Act; that provision is concerned with lay perceptions of things or events, such as a person’s apparent age or state of intoxication: see S Odgers, Uniform Evidence Law, 7th edn, Lawbook, 2006, pp 281-282.

Decision

Reasons for decision

YOUNG J
Despite these matters, I have concluded that the Court cannot ignore the effect of the evidence before it, especially as AWB is seeking a declaration that the 10 documents are privileged.CONCLUSIONS It is not feasible in these reasons for judgment, when so many documents are at issue, to set out separate reasons for the decision I have reached on each particular document. I have reached the conclusions set forth hereunder after inspecting all of the documents in AWB’s revised list of privileged documents and by applying the legal principles and factual findings identified above. AWB has not made out its claim for privilege in respect of the following documents: 229, 245-247, 279, 280, 362B, 469A, 495, 542, 565, 586, 675, 784, 867, 872, 890AN, 1090, 1091, 1095, 1096, 1098, 1099, 1118 and 1262.These documents fall into the following categories:(a)documents for which there is no evidence of purpose to satisfy the dominant purpose test (documents 229, 469A, 542 and 565);(b)documents where the evidence does not satisfy the dominant purpose test, having regard to the nature and content of the document and the vague and formulaic evidence contained in the relevant segments of the affidavit evidence (documents 279, 280, 495, 675, 784, 867, 872, 890AN, 1095, 1096, 1098, 1099, 1118 and 1262);(c)a document that was provided to a third party and therefore was not a confidential communication for the dominant purpose of obtaining or giving legal advice (document 362B);(d)documents which are partly not proven and partly waived (documents 245-247, 586, 1090, 1091 which are discussed further below).If, contrary to my view, privilege does attach to any of these documents, there has been a waiver of privilege in respect of all of them, other than documents 362B, 784, 872 and 1118. The waived documents are included in the list at [237] below. In addition, there are 10 documents relating to the iron filings claims. They are as follows: 30, 31, 32, 32A, 33, 41, 594, 595, 595A and 596.Privilege does not attach to these documents as they were brought into existence in furtherance of a fraud or other impropriety. Alternatively, any privilege has been waived by AWB. These documents are included in the list at [237] below. AWB has waived any legal professional privilege that subsisted in the following documents: 12, 301-33, 41, 56, 77-79, 81-85, 100-106, 110-117, 120-124, 126, 127, 129-132, 136, 137, 139, 140, 161, 213, 229, 235, 240, 241, 245-247, 250, 252, 253, 257-259, 263, 265-268, 271, 279, 280, 283, 284, 290, 292, 294-301, 308-310, 313, 326, 327, 330-333, 335A-342, 344, 348, 353A, 355-357, 359, 361, 362A, 365, 375, 377-380, 385, 386, 394, 422, 423, 424, 425, 432, 443, 445-449, 455, 461, 463, 465, 469A, 486, 487, 495, 507, 508, 513, 523, 524, 533, 534, 541-544, 547, 548, 553-555, 557, 563, 565, 568-579, 582-590, 592, 594-596, 599, 601-603, 675, 681, 681A, 689A, 689B, 699-704D, 704J-704P, 704T, 704X, 704AA, 704FF, 704KK, 711-715, 721, 722, 725, 729-733, 736-739, 749, 753, 755-757, 762, 771, 788, 794, 798, 815, 817, 820, 823, 824, 837, 840, 847, 867, 890AA, 890AD, 890AE, 890AH, 890AI, 890AJ, 890AK, 890AM, 890AN, 890AP, 890AQ, 1005, 1006, 1009, 1011-1013, 1025, 1026, 1028-1030, 1032, 1033, 1051, 1056, 1059, 1070, 1088-1096, 1098, 1099, 1119- 1121, 1123, 1124, 1144-1152, 1161-1163, 1183-1187, 1221, 1222, 1262 and 1297.

Ratio Decidendi

Legal Principle Established

Established by: YOUNG J

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