Commonwealth of Australia v Shenzhen Energy Transport Co Ltd (No 3)
[2016] FCA 87
•12 February 2016
FEDERAL COURT OF AUSTRALIA
Commonwealth of Australia v Shenzhen Energy Transport Co Ltd (No 3)
[2016] FCA 87
File number(s): QUD 178 of 2013 Judge(s): GREENWOOD J Date of judgment: 12 February 2016 Catchwords: PRIVILEGE – consideration of an application by the Commonwealth of Australia challenging a claim for immunity from production by the respondent of 26 documents on the ground of legal professional privilege Cases cited: Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 - cited
Rio Tinto Ltd v Commissioner of Taxation (2006) 235 ALR 127 - cited
Waugh v British Railways Board [1980] AC 521 - cited
Barnes v Commissioner of Taxation (2007) 242 ALR 601 - cited
Kennedy v Wallace (2004) 142 FCR 185 - cited
Commissioner of Taxation v Donoghue [2015] FCAFC 183 - cited
Date of hearing: 10 February 2016 Date of last submissions: 10 February 2016 Registry: Queensland Division: General Division National Practice Area: Admiralty and Maritime Category: Catchwords Number of paragraphs: 35 Counsel for the Applicant: Mr C Young Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr S Lawrance Solicitor for the Respondent: Thynne & Macartney ORDERS
QUD 178 of 2013 BETWEEN: COMMONWEALTH OF AUSTRALIA
Applicant
AND: SHENZHEN ENERGY TRANSPORT LTD
Respondent
JUDGE:
GREENWOOD J
DATE OF ORDER:
12 FEBRUARY 2016
THE COURT ORDERS THAT:
1.Pursuant to section 23 of the Federal Court of Australia Act 1976 (Cth) and rules 1.32 and 1.36 of the Federal Court Rules 2011, these orders are made from the Chambers of the Honourable Justice Greenwood and published electronically.
2.The application made by the applicant by which it challenges a claim by the respondent to immunity from production of 26 documents set out in a list prepared by the Australian Government Solicitor on behalf of the applicant dated 19 November 2015 and filed on that date, on the ground of legal professional privilege, is dismissed.
3.The applicant pay the respondent’s costs of and incidental to the application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GREENWOOD J:
On Wednesday, 10 February 2016, the principal matter was listed to enable a number of matters to be addressed in the proceeding.
The principal proceeding is set down for trial for three weeks commencing on 4 April 2016.
The matters addressed yesterday included the return of subpoenas directed to three parties, issued on the application of the respondent (“Shenzhen”) and the determination of objections or proposed qualifications upon the right of inspection of aspects of the documents produced in answer to each subpoena; and the determination of applications made by Shenzhen for non‑party discovery against the State of Queensland (in so far as the State comprises Maritime Safety Queensland (“MSQ”), the Queensland Police Service and a Department of Government formerly described as the Queensland Department of Community Safety), the Australian Maritime Safety Authority (“AMSA”) and Svitzer Salvage Australasia Pty Ltd (“Svitzer”).
Those matters were addressed and short ex tempore reasons were given in relation to the determination of those matters.
Apart from those matters, the applicant in the principal proceeding, the Commonwealth, sought the production of 26 documents of Shenzhen over which the respondent has claimed immunity from production on the ground of legal professional privilege. When the challenge to Shenzhen’s claims of legal professional privilege over the documents came on for argument, the Commonwealth abandoned the challenge except for two documents (Numbers 5 and 6 in the list) described in these terms:
Number Original Document Title Revised Title (17 August 2015 schedule) Document Date 5 Polaris Dive and Reef Report Polaris Dive and Reef Report 20 April 2010 6 Polaris Dive Photographs (photographs excluded) List of Polaris Dive Photographs 20 April 2010
The reference to Polaris is a reference to Polaris Applied Sciences. That organisation was retained to provide a report. Photographs were also provided. The circumstances in which the report came to be produced are described later in these reasons.
The Commonwealth also agitated a further privilege related question concerning Document 26 in the list described as “Memory card of Voyage Data Recorder” (“VDR”).
As to Documents 5 and 6, the evidence is this. Mr Michael Fisher is a principal of the firm of solicitors, Thynne & Macartney, the solicitors for Shenzhen. In his affidavit affirmed on 7 December 2015, he explains that on the evening of the grounding of the vessel “Shen Neng 1” on the Douglas Shoal of the Great Barrier Reef on 3 April 2010, Thynne & Macartney was retained as solicitors for the London P & I Club (the liability insurer of the respondent), the respondent and Tosco Keymax International Ship Management Co. Ltd (“Tosco”), described by Mr Fisher as the manager of the Shen Neng 1 at the time of the grounding and the employer of the vessel’s crew.
Mr Fisher says that since that time he has been the principal of Thynne & Macartney primarily responsible for providing legal advice to the London P & I Club, the respondent and Tosco in connection with events arising from the grounding and subsequently the conduct of the proceedings commenced by the Commonwealth. Another principal of Thynne & Macartney, Mr Hockaday, also provided legal advice to those entities shortly after the grounding. Since the conclusion of matters concerning the criminal charges against the Master and Chief Officer of the vessel in January 2013, Thynne & Macartney has had no contact with, nor instructions from, Tosco.
Mr Fisher says that the Hong Kong solicitors for the respondent are Holman Fenwick Willan. The solicitors for the salvors, Svitzer, are a firm called Winter Scott.
In his affidavit of 7 December 2015, Mr Fisher says that Document 5 is a report dated 20 April 2010 produced by Polaris Applied Sciences. He says that “Polaris are marine consultants”. At para 11, Mr Fisher says this:
I am informed by Mr George Lamplough, solicitor of Holman, Fenwick, Willan, the respondent’s Hong Kong lawyers, that he retained Polaris jointly with Winter Scott (the lawyers for Svitzer the salvors of the vessel), on or around 8 April 2010. I am informed by Mr Lamplough that he retained Polaris on behalf of the respondent to gather information:
(a)that might be relevant to providing legal advice concerning any action brought by the applicant for damage caused to the shoal by the grounding; and
(b)relevant to providing legal advice to the respondent concerning any salvage claim.
[emphasis added]
At para 12, Mr Fisher says that the report is marked “PRIVILEGED AND CONFIDENTIAL” on every page.
As to Document 6, Mr Fisher says at para 13 that he is informed by Mr Lamplough and believes that this document is a “list and collection of photographs taken by Polaris and provided by Polaris with their report” described as Document 5.
The Commonwealth contends that the facts set out at para 11 of Mr Fisher’s affidavit concerning the purpose for bringing into existence the Polaris documents are limited and insufficient. The applicant says that despite Mr Fisher giving evidence on information and belief from one of the commissioning parties (the owner) nothing is said about the purpose of the other commissioning party, the salvors, in retaining Polaris Applied Sciences. The applicant says that the owner and the salvors have separate and potentially adverse interests and on that basis alone there is insufficient evidence to find that the two documents are privileged. That follows, it is said, because there were two “minds” that commissioned the Polaris documents but evidence (hearsay evidence) is given by only one of the commissioning parties. It also follows, it is said, that the required dominant purpose has not been proved.
The applicant also says that Mr Fisher’s evidence is that Polaris was jointly commissioned by the owner and salvors for purposes including the purpose of gathering information relevant to any salvage claim, that is to say, a claim which might be made by the salvors against the owner. The applicant says that a reasonable inference is that both owner and salvors were provided with a copy of the documents produced by Polaris and in those circumstances there is either no basis for privilege to arise at all (on the footing that the documents were intended to be and were made available to both sides of any salvage claim) or, alternatively, the disclosure of the documents to both sides of any potential salvage claim amounted to a waiver of the privilege.
The applicant says that there is no suggestion, nor could there be, having regard to the adverse interests of the owner and the salvors of any “common interest privilege” or “joint privilege” and certainly, it is said, there is no evidence to that effect.
However, Shenzhen says as to Documents 5 and 6 that Polaris was “jointly retained” by the Hong Kong lawyers for Shenzhen and the lawyers for the salvors, Winter Scott, for the purpose of obtaining information in order for those lawyers to provide advice about “anticipated legal proceedings, namely, these proceedings and any salvage claim”. Shenzhen says that the Polaris report and the photographs taken by Polaris are “documents passing between a third party (Polaris) and the Respondent’s solicitor and made with a view to obtaining advice as to contemplated litigation and are, consequently, privileged”.
In the course of argument on the question, Mr Lawrance, counsel for Shenzhen, abandoned the contention that legal professional privilege arises on the footing of communications in anticipation of legal proceedings and contended that legal professional privilege arises in respect of both documents on the ground of “legal advice privilege”. In that regard, Mr Lawrance expressly abandoned the ground of legal professional privilege reflected at [17] of these reasons set out at paras 15 and 16 of his written submissions.
The evidence of Mr Fisher at para 11 of his affidavit seems to fairly reflect this construction: Shenzhen and Svitzer (through their lawyers, Holman Fenwick Willan and Winter Scott, respectively) jointly agreed that Mr Lamplough jointly retain marine consultants called Polaris to undertake enquiries and gather information directed to two objectives. First, gathering information that might be relevant in enabling Holman Fenwick Willan to provide legal advice to Shenzhen concerning any action that might be brought by the Commonwealth of Australia against Shenzhen for damage caused to the Douglas Shoal by the grounding of the vessel. Second, gathering information that might be relevant in enabling Holman Fenwick Willan to provide legal advice to Shenzhen concerning any claim that might be made by the salvors, Svitzer. A fair inference arises that because Shenzhen and Svitzer had jointly agreed, through their lawyers, that Shenzhen’s lawyer, Mr Lamplough, would jointly retain Polaris, the report of Polaris emerging from the joint appointment would be made available to the joint appointors.
It follows from this evidence that one purpose for bringing into existence the Polaris document was enabling Holman Fenwick Willan to provide legal advice to Shenzhen on two separate topics. Nevertheless, the provision of legal advice was central to each topic. It also follows, inferentially, that another purpose was enabling Winter Scott (the joint appointor for Svitzer) to see the Polaris report and, I infer, to consider the gathered information, relevant conclusions and recommendations and to provide legal advice to Svitzer about matters of interest relevant to it, namely, any salvage claim Svitzer might make (presumably against Shenzhen). Each purpose involved causing the Polaris report to be brought into existence for the dominant purpose of the provision of legal advice by each legal adviser to their respective joint appointor clients.
The authorities suggest that a third party communication, having as its dominant purpose the obtaining (and provision) of legal advice not related to litigation is privileged, relevantly, in these circumstances: first, where a client (either by itself or by its lawyers) directs or authorises a third party (a consultant such as Polaris) to prepare and make a report on the client’s behalf for submission to a legal adviser; second, where the document is prepared for passing between the third party and the legal adviser. In both cases, the dominant purpose for the third party communication must be the provision of legal advice: Cross on Evidence, 10th Edition, J D Heydon, LexisNexis, para [25235].
The document must be brought into existence for a specified dominant purpose.
There may be multiple purposes but the dominant purpose must be one of bringing the document into existence for the purpose of providing legal advice. The subsistence of the relevant dominant purpose is a question of fact and when the communication is one between the lawyer and a third party, the relevant mind is that of the lawyer. A dominant purpose is one which was the “ruling, prevailing or most influential purpose”: Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at 416. It must be a purpose of greater importance than any other: Rio Tinto Ltd v Commissioner of Taxation (2006) 235 ALR 127 at [38]. As Lord Edmund‑Davies observed in: Waugh v British Railways Board [1980] AC 521 at 543, “it is surely right to insist that, before the claim is conceded or upheld, such a purpose must be shown to have played a paramount part”. A focused and proper explanation of the purpose for which the document has been produced is required: Barnes v Commissioner of Taxation (2007) 242 ALR 601 at 605 [18]; Kennedy v Wallace (2004) 142 FCR 185 at 189 [13].
See also Commissioner of Taxation v Donoghue [2015] FCAFC 183 (17 December 2015) at [102].
In this case although the explanation provided by Mr Fisher for the production of the document in question is relatively brief, I am satisfied that the document was brought into existence for the two purposes both of which involved the enabling of the provision of legal advice to be given to Shenzhen on two topics and the likelihood of the provision of legal advice to Svitzer through Winter Scott on the topic of a possible salvage claim. Although the proper construction of para 11 of Mr Fisher’s affidavit reflects multiple purposes, those purposes all reflect the dominant purpose of the provision of legal advice.
Mr Lawrance for Shenzhen says that, on the evidence, the Polaris report was brought into existence as a consequence of a joint appointment and thus “joint privilege” arises in the same way in which privilege can be asserted by, for example, the partners in a law firm in circumstances where communications take place between a partner for the firm and a legal adviser to the firm. The disclosure of written advice or other communications by the partner to “other partners” would not result in a waiver of the privilege. That principle, of course, applies in circumstances where there is a formal legal relationship between the joint persons such as partners in a law firm or trustee and beneficiary or company director and shareholder or joint venturers: Cross on Evidence, 10th Edition, J D Heydon, LexisNexis, para [25265]. That is not the situation as between Shenzhen and Svitzer. They are not in a formal legal relationship. Nevertheless, at the moment in time when the Polaris report was jointly commissioned, Svitzer and Shenzhen were not adversaries. Plainly enough, the joint appointors contemplated that there may be (and the report would be relevant to) a claim by the salvors against the owner but those parties were not in litigation and the report was not commissioned expressly for the purposes of settlement of existing litigation. At the moment in time when the report was commissioned, Svitzer and the owner may well have anticipated that no controversy would arise as between them on that issue.
I am satisfied that a joint privilege subsists because the dominant purpose for bringing the report of the third party into existence was for submission to the two law firms for the provision of legal advice.
The Commonwealth says that Shenzhen ought not to be allowed to now abandon the foundation for its claim of legal professional privilege of the document being brought into existence for the dominant purpose of use in litigation and adopt an entirely different ground of privilege. There is some force in the Commonwealth’s contention in this regard. However, the question of fact, of the dominant purpose, is recited in para 11 of Mr Fisher’s affidavit and it seems to me that although Mr Fisher has characterised the purpose, in part, as one related to any action that might be brought by the Commonwealth, the factual assertion is that the information from Polaris will be used, as might be relevant, “to providing legal advice concerning” the identified topic and as to the salvage claim, relevant to “providing legal advice” concerning that matter. In other words, the essence of the production of the document is the dominant purpose of enabling the provision of legal advice on either topic to Shenzhen and, inferentially, a dominant purpose of enabling legal advice to be provided by Winter Scott to Svitzer.
Accordingly, Documents 5 and 6 retain immunity from production on the ground of legal professional privilege.
The final question concerns Document 26 in the list which concerns the “Voyage Data Recorder” as earlier described.
The criticism of the applicant is this. A communication taking place on the open navigational bridge of a vessel which is recorded by reason of an obligation to make a continuous sound recording of events on the bridge cannot be a “confidential” communication and absent confidentiality, it cannot be privileged. The Commonwealth says that Mr Fisher, at [46] of his affidavit, asserts that he believes that the memory card contains recordings of privileged conversations. Mr Fisher says that as a result of s 53 of the Transport Safety Investigation Act 2003 (Cth) (the “TSI”) neither he nor anyone else from his office has been able to access the data on the memory card in order to verify whether the recordings reflect privileged conversations. The Commonwealth says that Shenzhen has taken no steps to determine whether or not the VDR contains privileged communications. Mr Young, for the Commonwealth, says that, at a minimum, steps Shenzhen might have taken include seeking a declaration under s 49 of the TSI or seeking access to the VDR under s 52 of the TSI. The Commonwealth says that Shenzhen’s failure to take these steps has now been superseded by a declaration made by the Australian Transport Safety Bureau on 16 December 2015 under s 49 of the TSI.
The Commonwealth’s point is that any claims to privilege ought to be specifically identified and “focussed and specific” evidence should be provided by Shenzhen to support any claims to privilege concerning the relevant communications. The declaration made on 16 December 2015 is exhibited to the affidavit of Lindsay Cooper an AGS lawyer, for the Commonwealth. Shenzhen says that a process of examining the material is now underway having regard to the declaration and Shenzhen will determine whether any of the conversations reflect privileged communications and material will be put on to deal with that matter. For present purposes, that matter is continuing.
The application by the Commonwealth in relation to the 26 documents was addressed on Wednesday, 10 February 2016, with the Commonwealth orally moving on the challenge to the privileged claims.
The challenge is dismissed.
Shenzhen ought to have its costs of that matter.
I certify that the preceding thirty‑five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 12 February 2016
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