Diamond Offshore General Company v Woodside Energy Ltd
[2000] WASC 204
•8 SEPTEMBER 2000
DIAMOND OFFSHORE GENERAL COMPANY -v- WOODSIDE ENERGY LTD [2000] WASC 204
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 204 | |
| Case No: | CIV:1840/1999 | 28 AUGUST 2000 | |
| Coram: | MASTER SANDERSON | 8/09/00 | |
| 16 | Judgment Part: | 1 of 1 | |
| Result: | Discovery of further documents ordered Order for inspection of parts of documents over which privilege claimed refused | ||
| PDF Version |
| Parties: | DIAMOND OFFSHORE GENERAL COMPANY (ARBN 050 122 051) WOODSIDE ENERGY LTD (ACN 005 482 986) |
Catchwords: | Practice and procedure Discovery of documents Practice of blacking out part of document said to be privileged when rest of document made available for inspection Severability of parts of documents Principle to be applied |
Legislation: | Trade Practices Act |
Case References: | Ainsworth v Wilding [1900] 2 Ch 315 Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] 1 KB 369 Compagnie Financiere et Commerciale du Pacifiqu v Peruvian Guano Co [1882] 11 QBD 55 CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19 Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335 Edmiston v British Transport Commissioner [1956] 1 QB 191 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 168 ALR 123 GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172 Gleem Pty Ltd v Gas and Fuel Corp of Victoria, unreported; SCt of Vic; No 2011 of 1994; 25 August 1995 Grant v Downs (1976) 135 CLR 674 Grofam Pty Ltd v ANZ Banking Group Ltd (1993) 43 FCR 408 HongKong Bank of Australia Ltd v Murphy [1993] 2 VR 419 Hooker Corp Ltd v Commonwealth (1985) 61 ACTR 37 J Allan Ltd v Keegan [1968] WAR 125 Mulley v Manifold (1959) 103 CLR 341 Optus Communications Pty Ltd v Telstra Corp Ltd, unreported; FCA (Lockhart J); 27 April 1995 Trade Practices Commission v Ampol Petroleum (Victoria) Pty Ltd, unreported; FCA (Olney J); 14 April 1994 Waterford v The Commonwealth (1987) 163 CLR 54 Ampolex v Perpetual Trustee Co (1995) 37 NSWLR 405 Astra- National Productions Ltd v Neo-Art Productions Ltd [1928] WN 218 Attorney-General (Northern Territory) v Maurice (1986) 161 CLR 475 Beecham Group Ltd v Bristol-Myers Co [1979] VR 273 BP Australia Ltd v Stallwood [2000] WASC 75 Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Commonwealth v Northern Land Council (1993) 176 CLR 604 Data Access Corporation v Powerflex Services Pty Ltd (1994) AIPC 91-112 Donaldson v Harris [1973] 4 SASR 299 Ensee Holdings Pty Ltd v BWN Holdings Pty Ltd, unreported; SCt of Vic; 23 June 1994 Farmer v Honan (1919) 26 CLR 183 Format Communications Manufacturing Ltd v ITT (UK) Ltd [1983] FSR 473 Goldberg v Ng (1995) 185 CLR 83 Hutchison v Glover [1875] 1 QBD 138 Kent Coal Concessions Ltd v Duguid [1901] 1 KB 904; [1910] AC 452 Mann v Carnell (1999) 168 ALR 86 Officine Mechanique Toschi Sp A v Cosco Holdings Pty Ltd [1992] 2 Qd R 419 Ormerod Grierson & Co Ltd v St Georges Iron Works Ltd (1906) 95 LT 694 Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925 Prenn v Simmonds [1971] 1 WLR 1381 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Somerville v ASC (1993) 118 ALR 149 Standard Chartered Bank of Australia Ltd v Antico, unreported; SCt of NSW; 29 November 1993 Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 156 ALR 634 Thornett v Barclay's Bank [1939] KB 675 Verdell Pty Ltd v F & G Nominees Pty Ltd, unreported; SCt of WA; Library No 970587; 5 November 1997 Wardrope v Dunne [1996] 1 Qd R 224 Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 White v Spafford & Co [1901] 2 KB 241 Williams v Grainger [2000] WASCA 224 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
WOODSIDE ENERGY LTD (ACN 005 482 986)
Defendant
Catchwords:
Practice and procedure - Discovery of documents - Practice of blacking out part of document said to be privileged when rest of document made available for inspection - Severability of parts of documents - Principle to be applied
Legislation:
Trade Practices Act
Result:
Discovery of further documents ordered
Order for inspection of parts of documents over which privilege claimed refused
(Page 2)
Representation:
Counsel:
Plaintiff : Mr W S Martin QC
Defendant : Mr C L Pannam
Solicitors:
Plaintiff : Clayton Utz
Defendant : Freehills
Case(s) referred to in judgment(s):
Ainsworth v Wilding [1900] 2 Ch 315
Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475
British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] 1 KB 369
Compagnie Financiere et Commerciale du Pacifiqu v Peruvian Guano Co [1882] 11 QBD 55
CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19
Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335
Edmiston v British Transport Commissioner [1956] 1 QB 191
Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 168 ALR 123
GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172
Gleem Pty Ltd v Gas and Fuel Corp of Victoria, unreported; SCt of Vic; No 2011 of 1994; 25 August 1995
Grant v Downs (1976) 135 CLR 674
Grofam Pty Ltd v ANZ Banking Group Ltd (1993) 43 FCR 408
HongKong Bank of Australia Ltd v Murphy [1993] 2 VR 419
Hooker Corp Ltd v Commonwealth (1985) 61 ACTR 37
J Allan Ltd v Keegan [1968] WAR 125
Mulley v Manifold (1959) 103 CLR 341
Optus Communications Pty Ltd v Telstra Corp Ltd, unreported; FCA (Lockhart J); 27 April 1995
Trade Practices Commission v Ampol Petroleum (Victoria) Pty Ltd, unreported; FCA (Olney J); 14 April 1994
Waterford v The Commonwealth (1987) 163 CLR 54
(Page 3)
Case(s) also cited:
Ampolex v Perpetual Trustee Co (1995) 37 NSWLR 405
Astra- National Productions Ltd v Neo-Art Productions Ltd [1928] WN 218
Attorney-General (Northern Territory) v Maurice (1986) 161 CLR 475
Beecham Group Ltd v Bristol-Myers Co [1979] VR 273
BP Australia Ltd v Stallwood [2000] WASC 75
Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Commonwealth v Northern Land Council (1993) 176 CLR 604
Data Access Corporation v Powerflex Services Pty Ltd (1994) AIPC 91-112
Donaldson v Harris [1973] 4 SASR 299
Ensee Holdings Pty Ltd v BWN Holdings Pty Ltd, unreported; SCt of Vic; 23 June 1994
Farmer v Honan (1919) 26 CLR 183
Format Communications Manufacturing Ltd v ITT (UK) Ltd [1983] FSR 473
Goldberg v Ng (1995) 185 CLR 83
Hutchison v Glover [1875] 1 QBD 138
Kent Coal Concessions Ltd v Duguid [1901] 1 KB 904; [1910] AC 452
Mann v Carnell (1999) 168 ALR 86
Officine Mechanique Toschi Sp A v Cosco Holdings Pty Ltd [1992] 2 Qd R 419
Ormerod Grierson & Co Ltd v St Georges Iron Works Ltd (1906) 95 LT 694
Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925
Prenn v Simmonds [1971] 1 WLR 1381
Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Somerville v ASC (1993) 118 ALR 149
Standard Chartered Bank of Australia Ltd v Antico, unreported; SCt of NSW; 29 November 1993
Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 156 ALR 634
Thornett v Barclay's Bank [1939] KB 675
Verdell Pty Ltd v F & G Nominees Pty Ltd, unreported; SCt of WA; Library No 970587; 5 November 1997
Wardrope v Dunne [1996] 1 Qd R 224
Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262
White v Spafford & Co [1901] 2 KB 241
Williams v Grainger [2000] WASCA 224
(Page 4)
1 MASTER SANDERSON: This is the return of two chamber summonses, both dealing with discovery. The defendant had been provided with certain documents by the plaintiff prior to the hearing and as a consequence the defendant did not proceed with its summons. An argument arose as to how the summons should be disposed of and as to costs. I determined the proper course was to adjourn the summons sine die and reserve the costs and that is the order which was made.
2 The plaintiff, after amendment to its chamber summons, sought the following orders:
" ...
2. within 7 days from the date of this order, the defendant do make and file an affidavit sworn by its Secretary or other proper officer stating whether the class of documents described in the Schedule hereto are or have at any time been in the defendant's possession, custody or power and if not, then in the defendant's possession, custody or power when the defendant parted with them and what has become of them and that the defendant do within the same period serve a copy thereof on the plaintiff;
3. that the defendant do produce (without obliterating or concealing portions) for inspection those of the documents referred to in the second part of the first schedule of the defendant's supplementary list of documents dated 10 July 2000 annexed to its affidavit of discovery which are mentioned below, to the plaintiff and its solicitor, and permit them to peruse the same and to take copies thereof, at such place and time and in such manner as shall be directed by the order:
(a) ...
(b) 373, 374, 375, 376, 377, 378, 381 (attachment), 382 (attachment), 383, 384 (attachment).
... "
3 The schedule referred to in par 2 of the chamber summons and annexed to it originally referred to 12 classes of documents. At the hearing of the application, counsel for the plaintiff indicated that only two of these categories would be pressed and sought to amend category 2. In
(Page 5)
- the event, the two relevant paragraphs of the schedule were in the following terms:
"...
2. Diary entries (electronic or otherwise) of Bob Gilbert, Agu Kantsler, Doug Hodson and Rick Mills on behalf of the Defendant, recording the time, place or subject matter of any meetings or telephone conversations to which one or more of these persons was party relating to the formation, amendment or termination of the Ocean Epoch Contract (and notes taken during or as a result of any such meetings).
3. All e-mails, memoranda, correspondence and documents of and from the Defendant's legal department in relation to the drafting of and amendments to the Ocean Epoch Contract; and to the termination of the Ocean Epoch Contract (other than advice for the dominant purpose of these proceedings).
... "
5 To background the application, it is necessary to say something of the facts of the case. This can be done by reference to the pleadings. The plaintiff claims that in May 1996 it offered to hire to the defendant a semi-submersible drilling rig known as the "Ocean Epoch" on certain terms and conditions. No agreement was reached. A further offer to hire the Ocean Epoch was made by the plaintiff to the defendant by letter dated 30 August 1996. Once again, certain terms and conditions were contained in the offer. This time, agreement was reached. The terms of that agreement are set out in par 13 of the amended statement of claim. That paragraph pleads, in particular, the agreement between the parties in the event that there was an early termination of the hire agreement. Paragraphs 14 through to 20 of the amended statement of claim deal with
(Page 6)
- the drafting of formal contracts in relation to the hire of the rig. Paragraph 21 pleads the execution of a written agreement in August 1997 and par 22 pleads express terms of that written contract. Paragraphs 24 through to 33 plead that the written agreement was amended in certain specified ways. In particular, an amendment was made to the liability of the defendant in the event of the early termination of the hire agreement. Paragraphs 37 through to 39 plead a further amendment to the agreement in April 1999.
6 Paragraph 40 pleads that on or about 17 June 1999 the defendant terminated the hire agreement. The plaintiff seeks declarations as to the liability of the defendant on termination of the agreement. Paragraphs 43 through to 53 seek rectification of the written agreement, either on the basis of common mistake (par 43 to par 45) or to unilateral mistake (par 46 to par 53), if the court were to find the proper interpretation of the written agreement is not as pleaded by the plaintiff in par 42 of the amended statement of claim. Thereafter, the plaintiff seeks relief under the Trade Practices Act for misleading and deceptive conduct. There is also a plea of estoppel. The plaintiff's claim as set out in the prayer for relief is substantial, amounting with interest to more than $20 million. It is against this background that the plaintiff seeks discovery of the documents set out in parts 2 and 3 of the schedule.
7 It is not necessary for me to go to the defence in any detail. It will suffice, for present purposes, if I say that the defendant takes issue with the plaintiff with respect to the terms of the hire agreement so far as they relate to termination. The defendant also raises a counterclaim which is not presently of concern.
8 The defendant filed an affidavit of discovery sworn by Peter Taranto on 14 January 2000. A supplementary affidavit of discovery was sworn by Taranto on 10 July 2000. That supplementary affidavit makes reference, inter alia, to six documents, Nos 408 - 413, each of which is described as "Diary page of Bob Gilbert". The plaintiff says two things. First, it has pleaded the negotiation of a written contract between the plaintiff and the defendant and that makes any diaries kept by individuals who negotiated the contracts documents related to any matter in issue between the parties. They are therefore discoverable: see Compagnie Financiere et Commerciale du Pacifiqu v Peruvian Guano Co [1882] 11 QBD 55. This was first put by the plaintiff's solicitors to the defendant's solicitors in a letter of 22 May 2000 which is to be found as Annexure "JEA7" to an affidavit of John Edward Atkinson sworn 27 June 2000, filed in support of the application. The plaintiff's solicitors put the position in this way at page 3 of the letter:
(Page 7)
- "In its statement of claim DOGC (the plaintiff) has pleaded the existence of a series of meetings and telephone conversations on or about various dates between John Atkinson on behalf of DOGC and Bob Gilbert, Phil Scott and Rick Mills on behalf of Woodside (see paras 6, 16, 11, 20, 24, 28 and 29 of the amended statement claim). By denying or not admitting these paragraphs, Woodside has put in issue the existence and/or date of meetings of the kind pleaded."
9 The defendant's solicitor's response to this letter is to be found as par 3 of a letter dated 5 July 2000 marked as Annexure "MFG2" to an affidavit of Mark Frank Gerus sworn 3 August 2000, also filed in support of this application:
"We do not admit that any diaries are relevant to the issues. The fact that you have particularised telephone calls or meetings does not make diaries discoverable. Credibility issues do not give rise to an obligation to discover."
10 Filed in opposition to the plaintiff's application is an affidavit of Robert Lloyd Gilbert sworn 12 July 2000. Gilbert says he is a contracts engineer in the employ of the defendant. He goes on (at par 2):
"I was involved in the original negotiation and conclusion of the Contract in this action and have also assisted extensively with the Plaintiff's request for further and better discovery. In particular, I have looked at the documents referred to in the letter from Clayton Utz to Freehill Hollingdale & Page dated 22 May 2000, annexure 'JEA6' to Atkinson's affidavit sworn 27 June 2000 (page 31), and have found no documents that should be produced, other than those referred to in the Defendant's supplementary discovery list sworn on 10 July 2000."
11 This application, properly considered, is an application by the plaintiff for discovery of particular documents. The application is brought under O 26 r 6(1). Under r 6(3) the application must be supported by an affidavit stating the deponent's belief that the respondent has in its possession, custody or power the documents sought. It is not argued by the defendant that the plaintiff has not complied with this provision in the Rules. Rather, it is said that there is no evidence upon which the court could be satisfied that the documents requested by the plaintiff exist. Furthermore, the defendant says that the class of documents sought by the
(Page 8)
- plaintiff, particularly in relation to item 2, is far too wide and such documents do not relate to a matter in issue between the parties.
12 For its part, the plaintiff relies on three facts, or combination of facts, to support its claim. First, it says that given the nature of the contractual relationship between the plaintiff and the defendant, it is inconceivable that there would not be extensive documentation relating to the drafting and amendment of the contract as set out in items 2 and 3. Secondly, it says that in the correspondence the defendant's solicitors have not denied the existence of the documents sought and that is tantamount to an admission that such documents exist. Finally, it says that the affidavit of Gilbert is equivocal or, as senior counsel for the plaintiff said, "coy" and on that basis it can be assumed that the documents exist.
13 It was the defendant's position first that, as the application was based on a contentious affidavit, there was no grounds for ordering further discovery. The defendant relied upon the decision of Menzies J in Mulley v Manifold (1959) 103 CLR 341. Secondly, and as a subsidiary submission, it was said that any documents which might exist and which were as described in items 2 and 3 of the schedule were not relevant to matters in issue between the parties. In John Allan Ltd v Keegan [1968] WAR 125, Wolff CJ stated the test to be adopted on an application for further and better discovery in the following terms (at 127):
"My understanding is that once the plaintiff has made an affidavit swearing to the particulars required by the rules, no further discovery should be ordered unless it is patently clear that some particular document which might be material to the issues is in the hands of the party ordered to give discovery and has not been disclosed."
14 This formulation of the test is consistent with what was said by Menzies J in Mulley v Manifold (supra), although oddly enough Mulley v Manifold is not referred to by Wolff CJ or any other members of the Full Court in the Keegan decision. However, what his Honour had to say is consistent with the English authorities, including Edmiston v British Transport Commissioner [1956] 1 QB 191 and British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] 1 KB 369. Seaman, Civil Procedure Western Australia, suggests that relevance may be determined on a contentious affidavit, but refers to Hooker Corp Ltd v Commonwealth (1985) 61 ACTR 37 at 45 as a decision to the contrary.
(Page 9)
15 Applying the Peruvian Guano test, I am satisfied that the documents referred to in items 2 and 3 of the plaintiff's schedule relate to a matter in issue between the parties. The plaintiffs have pleaded the course of negotiation of the written contract and they have done so no doubt because they seek as an alternative remedy rectification. If they are to pursue that remedy they need to show a common agreement between the parties and the documents referred to in items 2 and 3 relate to those issues. Furthermore, it seems to me that it is highly likely that such documents exist. The direct evidence to support this proposition is thin, although not without substance. However, leaving such evidence to one side, it is inconceivable that when a contract of this magnitude was being negotiated the defendant's servants or agents would not have produced documents such as those mentioned in items 2 and 3 of the schedule. The position might be different if a client walked in off the street and asked a solicitor to prepare an agreement which amounted to no more than a simple acknowledgment of debt. Even then, it would not be unreasonable to expect the solicitor might have retained notes of the interview. But this was a contractual arrangement which involved many millions of dollars over a two year period and even for companies as substantial as the parties to this action the contract was a matter of some consequence. I do not understand the statement of principle contained in Mulley v Manifold (supra) to require a court to operate in a vacuum. To hold, in the circumstances of this case, that no such documents exist would be to ignore the commercial realities of corporate life.
16 There should be an order in the plaintiff's favour in relation to items 2 and 3 of the schedule.
17 That then leaves the plaintiff's attack on the defendant's claim for privilege in relation to parts of the documents mentioned in par 3(b) of the chamber summons. This raises directly the question of whether parts of a document discovered by a party and available for inspection can be severed from other parts of the document said to be privileged.
18 The plaintiff's position can be simply stated. It submits that the test as to whether a document attracts privilege is the dominant purpose test as set out by the High Court in Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 168 ALR 123. It was submitted that once it was established that a particular document did not meet the dominant purpose test then no part of the document was privileged. That was so, it was said, even if the document itself contained material which, if it were not in the document, would itself attract privilege. For instance, if a party obtained legal advice in relation to litigation pending or on foot,
(Page 10)
- that advice would, prima facie, be privileged. However, the plaintiff submitted if that advice was summarised in a document which was not in itself produced for the dominant purpose of use in litigation then the whole of the document, including the summary of the otherwise privileged advice would be available.
19 In support of this proposition, the plaintiff relied directly on two Victorian cases. The first is the decision in HongKong Bank of Australia Ltd v Murphy [1993] 2 VR 419. The headnote summarises the relevant aspect of the decision of Smith J in the following terms:
"Legal professional privilege cannot attach to part of the document. It is not possible to sever a distinct part of a document containing privileged material if the document as a whole does not satisfy the 'sole purpose' test."
- His Honour discusses at some length the High Court decision in Waterford v The Commonwealth (1987) 163 CLR 54 and distinguishes that case on certain grounds. I will deal with his Honour's treatment of that decision below. However, his Honour's statement of principle as to the severability question is in the following terms (at 430):
"In any event, the better view is, in light of High Court discussion of the principle in Grant v Downs, and the well-known subsequent cases, that the High Court has stated that the sole purpose test should be applied to determine all claims of legal professional privilege. Further, High Court authority does not in my view support the proposition relied upon by Hongkong Bank that privilege can attach to part of a document. The propositions advanced by the High Court advert to the whole document in question and the purpose of its creation. Severance was considered in the Waterford's Case by Mason and Wilson JJ, at p 66, and Dawson J, at p 103, but this occurred in the context of the Freedom of Information Act 1982(Cth) which expressly provided for severance of passages that gave rise to claims of privilege for a document. Deane J asserted that the common law permitted severance of a distinct part of a document that contained otherwise privileged material, at p 85, but this was not consistent, in my view, with the views expressed by other members of the court or earlier High Court decisions."
(Page 11)
- and Wilson JJ, at 66 in the Waterford case, were made in relation to the particular provisions of the Freedom of Information Act. However, the comments by Dawson J at 103 do not seem to be so limited. His Honour said:
"It was submitted that if a document containing or recording legal advice also included policy advice it could not survive the sole purpose test laid down in Grant v Downs and should have been produced. But Grant v Downs was a decision in which this Court refused to extend legal professional privilege to material obtained by a corporation from its agents for more than one purpose, only one of which was the purpose of submission to its legal advisers in order to obtain legal advice. Documents of that kind are not privileged because the communications or intended communications which they contain belong in a category which does not attract privilege, albeit they also belong in a category which does. Legal advice given by a qualified legal adviser in his professional capacity to his client falls only within the category of a communication which is privileged. Legal advice serves no other function than legal advice. No doubt if the legal advice is accompanied by advice of another kind which can be separated from it, e.g. by blanking out parts of a document, then only the legal advice will be privileged. But if the legal advice contains extraneous matter which cannot be separated from it, the legal advice will not lose its privilege for that reason. There is only one purpose in legal advice and the privilege which it attracts cannot be lost by the application of the principle which applies when a document containing information of a factual nature is brought into existence for more than one purpose."
(Page 12)
22 In Gleem Pty Ltd v Gas and Fuel Corp of Victoria, unreported; SCt of Vic; No 2011 of 1994; 25 August 1995, Mandie J followed the decision of Smith J in the HongKong Bank case. In doing so, his Honour referred to the decision of the Full Court of the Supreme Court of Queensland in Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335, the decision of Heery J in Grofam Pty Ltd v ANZ Banking Group Ltd (1993) 43 FCR 408; Trade Practices Commission v Ampol Petroleum (Victoria) Pty Ltd, unreported; FCA (Olney J); 14 April 1994 and Optus Communications Pty Ltd v Telstra Corp Ltd, unreported; FCA (Lockhart J); 27 April 1995. Each of these decisions was squarely at odds with the conclusion reached by Smith J in the HongKong Bank case. His Honour did not attempt any independent reasoning to support the conclusion reached by Smith J in the HongKong Bank decision. Rather, his Honour followed that decision out of respect for precedent and because he was "not persuaded that HongKong Bank is wrong or should not generally be followed".
23 It is important to note that the reasoning of Smith J in the HongKong Bank case focused on the whole document. If the document as a whole was not brought into existence for the sole purpose of use in litigation then the whole of the document was not privileged. His Honour was of the view that it was not possible to break a document down into various parts. So far as I am aware, prior to the HongKong Bank decision, no court had adopted a holistic approach. In my view, there is nothing in the decision of Grant v Downs (1976) 135 CLR 674 which requires such a conclusion. Grant v Downs was concerned with what test was appropriate when a claim for privilege was made - the sole purpose test or the dominant purpose test. The adoption of either one of these tests says nothing about whether or not parts of a document are severable as being privileged, while other parts of a document are not so privileged.
24 Counsel for the plaintiffs sought to rely on what was said by two dissenting members of the High Court in the Esso case, as supporting the plaintiff's position. Referring to the judgment of McHugh J, counsel pointed to he following passages (at 144 - 145):
"This contention and much of the criticism of the sole purpose test seem to spring from two errors: first, failing to keep in mind that the privilege attaches to communications and not documents; secondly, failing to keep in mind that the privilege belongs to the client, not the legal adviser. In some circumstances, the legal adviser may waive privilege because of ostensible authority even when he or she has been expressly
(Page 13)
- told not to waive the privilege. But subject to instructions to the contrary, the legal adviser has no actual authority to waive privilege or to act in a way that is inconsistent with privilege ...
If there was some other purpose for the communication, privilege does not exist. But it is the purpose of the communication that is decisive, not the purpose in making the document (for example, to have a record) or any copies of the document. If six copies of a communication are made because they may later be useful, they are all privileged if the communication was privileged. That is because they evidence a privileged communication. Thus, even an entry in a bill of costs may be privileged because it records a communication."
25 In referring to the decision of Kirby J, counsel relied upon the following passage (at 147):
"However, the privilege actually attaches to communications - oral, written, electronic or by signs. This is also a feature of the privilege that derives from the purpose which it upholds to permit a person, with an actual or potential legal problem, to communicate with a legal practitioner with complete candour, being able to 'bare his breast' so as to obtain the full benefit of professional advice and assistance."
26 It is important to note that both McHugh and Kirby JJ were articulating reasons why they were not satisfied that the dominant purpose test should replace the sole purpose test when assessing whether or not a document was privileged. It is true that both Justices were concerned that the dominant purpose test may mean that material in a document, not otherwise privileged, could attract privilege because a court was satisfied that the dominant purpose in preparation of the document was for the purposes of legal advice. In other words, the scope of privilege would be extended. But, as I read both decisions, neither of their Honours was concerned with the situation where a document contained material which was undoubtedly privileged from production. In my view, it is simply not open to read into their Honours' decisions a conclusion that it is not possible to sever parts of a document.
27 Against that, there is clear authority in support of the proposition that part of a document can be blacked out when privilege is claimed in relation to that part. In the Curlex decision (supra), McPherson J traces the history of such a practice. It is the case that his Honour was not there
(Page 14)
- dealing with an application which was put on the same basis as this one is put. Rather, it was argued that disclosure of a part of a document amounted to an implied waiver of the rest of the document. But I do not think that the difference in the way the application was put makes any difference to the outcome. His Honour makes it plain that the practice is one of longstanding and is consistent with precedent. The Curlex decision was followed by the English Court of Appeal in GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172. Lord Justice Hoffman specifically approved of the practice of discovering a document and blacking out part of the document which is either privileged or irrelevant. His Honour went on to consider the practical problems raised by such a practice (at 176):
"In the case of documents partly privileged the dicta in the Great Atlantic case have caused some practical difficulty in the preparation of lists. Parties have been reluctant to disclose part of a document in part 1 of schedule 1 and claim privilege for the rest in part 2 in case it should be said that because they relate to the same subject matter, privilege has been waived as to the whole. And, of course, in many cases they do not relate to the same subject matter. A solicitor may have a composite attendance note on which he records conversations with his client which are privileged and conversations with third parties on the same subject matter which, in the absence of pending litigation, are not. Or a client's internal document may record advice from his solicitor which is privileged and internal commercial discussions on the same subject matter which are not. In Frogmore Estates Plc v Berger (unreported), 20 July 1992 Chadwick J devised a strategy for parties in this position which involves putting the whole document into part 2 and objecting to disclosure of the whole on the ground that part was privileged. The court can then order production of the document with the privileged part covered up, or the party, under threat of application for such an order, can, with suitable show of reluctance, agree to it. This would not amount to a waiver because the rest of the document had been produced under compulsion.
I admire the ingenuity but games like this should not be necessary. I think that Saville J was right in Bank of Nova Scotia v Helenic Mutual War Risks Association (Bermuda) Ltd(No 2) [1992] 2 Lloyd's Rep 540 when he held that disclosure of the unprivileged part of a document was not a waiver of
(Page 15)
- privilege for the rest, even though both dealt with the same subject matter; likewise Gatehouse J in British and Commonwealth Holdings v Quadrex (unreported), 4 July 1990. I should also express my respectful agreement with, and indebtedness to, the masterly judgment of McPherson J in the Supreme Court of Queensland in Curlex Manaufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335, which is required reading on this subject."
28 There appears to be no case in this jurisdiction directly on point. CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19 was a case where the defendant blacked out certain parts of discovered documents on the grounds that the parts obliterated were protected by a public interest immunity. The Full Court, Owen and Steytler JJ, dismissed an appeal by the plaintiff but did not directly deal with the question of whether the blacking out of certain parts of a discovered document on the basis of a claim for privilege was proper. By implication, their Honours approved of the practice. It is also to be noted that their Honours cited the judgment of Hoffman LG in GE Capital Finance (supra), but they did so only to distinguish it from the case then under consideration.
29 Given that questions of privilege involve policy considerations, it is perhaps worth considering what would be the position if the plaintiff's submissions were to be accepted. It is possible to imagine three different scenarios. First, a situation where a corporation takes legal advice and that advice is submitted in writing. If the advice was simply passed on to the board of the corporation, without addition or comment by management, then the advice would remain privileged and production could not be required. Suppose, in the second scenario, the chief executive wrote a memorandum to the board which was concerned with what course should be followed and stapled to or annexed to that report was a copy of the legal advice. It could not be said that the dominant purpose of the communication rendered the memo and its attachments privileged. On the plaintiff's argument, the memo and the legal advice would have to be produced. Privilege, in relation to the legal advice, would be lost. And then the third scenario: The same chief executive writes a memo to the board which does not satisfy the dominant purpose test, in which he summarises the written legal advice received from the corporation's solicitors, perhaps even quoting sections of that advice. Once again, the memo, in its entirety, on the plaintiff's argument would be available for inspection. Once again, the privilege would be lost.
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30 Viewed in this way, a corporation would need to be extremely cautious about the way in which it handled legal advice. Doing business in this day and age is difficult enough without highly technical and artificial constraints imposed by courts without rhyme or reason, making the internal treatment of legal advice obtained in relation to litigation a minefield.
31 Furthermore, it is difficult to see what forensic purpose would be served by requiring the defendant to disclose the legal advice it had received in relation to this action. There is no question of any unfairness to the plaintiff, such as was the case in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475. The plaintiff did not, either by way of evidence or in counsel's submission, articulate any practical reason why the documents should be available for inspection. The application smacks of opportunism.
32 In my view, the plaintiff's application should be dismissed. I will hear the parties as to the precise form of orders and as to costs.
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