BT Australasia Pty Ltd v State of New South Wales

[1996] FCA 903

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 572 of 1995
GENERAL DIVISION                 )

BETWEEN:

BT AUSTRALASIA PTY LIMITED

Applicant

AND:

STATE OF NEW SOUTH WALES
  First Respondent

TELSTRA CORPORATION LIMITED

Second Respondent

BRITISH TELECOMMUNICATIONS plc

Second Respondent to First Cross Claim

CORAM:    SACKVILLE J.
PLACE:    SYDNEY
DATE:     29 AUGUST, 1996

REASONS FOR JUDGMENT

By Notice of Motion the applicant has sought a declaration that

"the test for claiming legal professional privilege in lists of documents filed by way of discovery in these proceedings is the sole purpose test referred to in Grant v Downs (1976) 135 CLR 674".

The declaration is now sought, as I understand it, only against the second respondent ("Telstra"). This is because Telstra, unlike the first respondent ("the State"), has claimed privilege in relation to the production of certain documents on the basis of the dominant purpose test set out in ss. 118 and 119 of the Evidence Act 1995 (Cth) (the "Evidence Act"). These sections provide as follows:

"118.     Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a)a confidential communication made between the client and a lawyer; or

(b)a confidential communication made between 2 or more lawyers acting for the client; or

(c)the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

1. Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in the disclosure of:

(a)a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or

(b)the contents of a confidential document (whether delivered or not) that was prepared;

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party."

The applicant's notice of motion also sought orders that the respondents file verified lists of documents, setting out with greater specificity the documents in respect of which any claim for privilege has been made.  That part of the motion has been resolved by agreement between the parties.  It is therefore not necessary to say anything further about it, except to note that Mr Bathurst QC, on behalf of Telstra, broadly accepted that the description of privileged documents should be sufficient to enable the applicant to assess the validity of the claim for privilege.

Mr Margo submitted, on behalf of the applicant, that ss. 118 and 119 of the Evidence Act have changed the common law test of legal professional privilege only where it is sought to adduce documents in evidence in the course of proceedings. He contended that ss. 118 and 119 have not altered the common law "sole purpose" test, formulated in Grant v Downs, in circumstances where a party resists access to discovered documents on the ground of legal professional privilege. According to Mr Margo, access to discovered documents (where privilege is claimed) falls to be determined in accordance with the common law test. This is so notwithstanding that the admissibility of those documents falls to be determined in accordance with the application of the dominant purpose test adopted by the Evidence Act.

A similar argument was advanced to Branson J. in Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (1995) 132 ALR 645. Her Honour pointed out that a party is required to give discovery in accordance with Order 15 of the Federal Court Rules.  The power of the Court to make an order for the production of documents is regulated by Order 15, rr.11 and 15.  These rules provide as follows:

"11(1)    Where:

(a)it appears from a list of documents filed by a party under this Order that any document is in his possession, custody or power;

...

the Court may, subject to any question of privilege which may arise, order the party -

(d)to produce the document for inspection by any other party at a time and place specified in the order; or

(e)to file and serve on any other party a copy of the whole or any part of the document, with or without an affidavit verifying the copy made by a person who has examined the document and the copy.

...

15.The Court shall not make an order under this Order for the filing or service of any list of documents or affidavit or other document or for the production of any document unless satisfied that the order is necessary at the time when the order is made."

Branson J. cited the observations of the Full Court in Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1, at 24-25, in relation to the criterion of "necessity" used in Order 15, r.15:

"It is a reflection of the policy of judicial case management that underlies the Federal Court Rules generally.  It is a broad criterion which requires consideration of the interests of justice in the particular case as well as its economic and efficient disposition."

Her Honour also referred to the observations of Lindgren J. in Trade Practices Commission v CC (NSW) Pty Ltd (No.4) (1995) 58 FCR 426, at 436-437. His Honour said this:

"In my opinion, O 15 r 15 requires that the court be satisfied that an order of the kind referred to in that rule is, at the time when the order is made, necessary 'in the interests of a fair trial': Percy v General Motors-Holden's Pty Ltd [1975] 1 NSWLR 289
at 292.  Similarly, in the judgment of Cross J. in Boyle v Downs [1979] 1 NSWLR 192, in which his Honour had to construe a similarly expressed constraint in Pt 24, r 5(2) of the Supreme Court Rules 1970 (NSW) relating to interrogatories, the following passage appears (at 205):

Of course, in many cases the evidentiary difficulties of one party only, ie the moving party, may loom large as considerations; but the test is not solely a matter of how much more effectively the moving party can present his case but, I believe, whether, all in all, the order is reasonably necessary for the disposing fairly of the case; and where a plaintiff has evidentiary difficulties, considerations of those difficulties will probably be the most important, but not the only, considerations relevant to determining whether the order is so necessary. I feel that it is for the reason that the rule should take into account the interest of both parties that the rule in other places, eg England and South Australia, is framed to make the relevant test 'necessary for the disposing fairly of the cause or matter'. I am of the opinion that the word 'necessary' in r 5(2) should be interpreted in a somewhat similar manner, namely, 'reasonably necessary for the disposing fairly of the cause or matter'. In considering the meaning of the word 'necessary' in Pt 23, r 14 - a rule relating to discovery and inspection similar to r 5 in Pt 24 relating to interrogatories - Rath J in Percy v General Motors-Holden's Pty Ltd [1975] 1 NSWLR 289 [at 292] interpreted it as 'necessary in the interests of a fair trial'. This definition is similar to the one I have suggested; for in Griebart v Morris [[1920] 1 KB 659 at 666], Scrutton LJ interpreted 'necessary for disposing fairly of the cause or matter' (under the English rules relating to interrogatories) as 'necessary for the fair trial of the action' [Emphasis supplied].

The notion of the 'interests of a fair trial' and of the 'fair disposition of a case' encompasses, in my view, the opening up of a train of inquiry of the kind referred to above which is part of the proper function of discovery.

In a case such as this, where one party and not the other is likely to have documents relating to a matter in question, it seems to me to be prima facie 'necessary' in the sense referred to that discovery be ordered.  But this general position is subject to the well established exception that discovery should not be ordered to enable a mere 'fishing expedition'."

Branson J. in Trade Practices Commission v Port Adelaide Wool
recognised (at 649) that the documents required to be discovered by Federal Court Rules, Order 15, are not limited to documents that would be admissible in evidence: Commonwealth v Northern Land Council, at 23.  Her Honour also recognised (at 648) that it is not clear whether legal professional privilege is governed in its entirety by the rules of evidence.  In other words, she accepted that the test for legal professional privilege at the discovery stage might be the "sole purpose" test of Grant v Downs, rather than the "dominant purpose" test formulated in the Evidence Act.

Nonetheless, her Honour said (at 649) that

"the fact that evidence will not be able to be adduced, over objection, if it would result in disclosure of the contents of a confidential document will, in my view, ordinarily be telling as to whether the production of that document can be said to be necessary for the fair disposal of the proceedings.

It would be a curious result, in my view, if a party to proceedings in this court could be required to produce for inspection by the other party or parties during pre-trial procedures, or indeed in court, a confidential document prepared, for example, for the dominant, but not the sole, purpose of a lawyer providing legal advice to that party, notwithstanding that at trial that party could successfully object on the ground of client legal privilege to any evidence being adduced which would result in disclosure of the contents of the document.  That is, logic at least would seem to suggest that the ambit of client legal privilege should be constant throughout the litigation process.  That logic is reflected in the fact that historically legal professional privilege with respect to the contents of documents has had the same ambit whether invoked as a privilege against production of documents outside of the courtroom as part of the discovery process, or as a privilege against disclosing the contents of such documents within the courtroom either by their physical production or by disclosure of their contents in
response to questions asked in cross-examination."

Her Honour went on to hold that she was not satisfied that an order for production or inspection of documents was necessary as part of the pre-trial management of the matter in circumstances where the contents of the documents could not be adduced as evidence at trial by reason of client legal privilege.  I have reached the same conclusion in the present case.

Mr Margo was unable to point to any document or class of documents, in respect of which privilege had been claimed by reference to the dominant purpose test, that would or might assist his client's case. I appreciate that it will not be easy for someone in the position of the applicant to demonstrate that a particular document or class of documents, in respect of which privilege has been claimed, would or might assist the applicant's case if access were to be granted to the applicant. Nonetheless, there may be circumstances where a party in the position of the present applicant is able to demonstrate that it is necessary for a fair trial that a document or class of documents be produced. This may occur, for example, if there is a gap in the applicant's evidentiary case and there is reason to think that access to documents prepared principally but not solely for the purpose of legal advice would lead to a chain of inquiry that might address the gap. In such a case, the terms of Order 15, r.15 might be satisfied. (Of course, the issue will only arise if the dominant purpose test, as stated in ss. 118 and 119 of the Evidence Act does not apply at the discovery stage.)

As I have said, Mr Margo could not suggest any ways in which the documents, in respect of which privilege had been claimed by reference to the dominant purpose test, might assist in a chain of inquiry.  He was therefore forced to submit that all such documents should be disclosed by Telstra and access to all of them should be granted.  I am prepared to accept that there may be cases in which, assuming the correct test for legal professional privilege in relation to discovery is the sole purpose test of Grant v Downs, it is necessary for the fair disposition of the case that access should be granted to all documents privileged only by reason of the dominant purpose test.  However, I do not think that this is such a case.

Very extensive (although not unlimited) discovery has been required of Telstra.  While the bulk of the documents relating to the so-called market issues are within Telstra's possession or control, this is not a case where privilege has been claimed in respect of a significant proportion of the many thousands of documents discovered by Telstra.  It has not been shown that the documents that have been produced are insufficient to enable the applicant to make out the case it wishes to put on market issues.  In the circumstances, I do not think that the applicant has established that access to the privileged documents is necessary for the fair disposal of the proceedings.

I appreciate that the applicant's motion seeks a declaration, and not an order under Order 15, r.15.  However, I think that the issue should be addressed having regard to Order 15, r.15, which is intended to govern the Court's power to order production of documents.

It follows from what I have said that the motion for a declaration should be dismissed.

I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville.

Associate:

Dated:29 August, 1996

Heard:28 August, 1996

Place:            Sydney

Decision:29 August, 1996

Appearances:      Mr R.F. Margo, instructed by Middletons Moore & Bevins, Solicitors, appeared for the applicant.

Mr W.G. Muddle for the Crown Solicitor of New South Wales appeared for the first respondent.

Mr T.F. Bathurst QC, instructed by Blake Dawson & Waldron, Solicitors, appeared for the second respondent.