Korean Air Lines Co Ltd v Australian Competition and Consumer Commission

[2008] FCA 265

FEDERAL COURT OF AUSTRALIA

Korean Air Lines Co Ltd v Australian Competition and Consumer Commission
[2008] FCA 265

PROCEDURE – application to be excused from compliance with notice to produce – notice to produce had a legitimate forensic purpose – claim for legal professional privilege upheld in part – claim for public interest immunity upheld – waiver of legal professional privilege

Trade Practices Act 1974 (Cth) s 155
Federal Court Rules O 33 r 12

Alister v TheQueen (1984) 154 CLR 404 applied
AWB Ltd v Cole (2005) 152 FCR 382 applied
Australian Competition and Consumer Commission vRural Press Limited (2000) 96 FCR 389 referred to
Carltona Ltd vCommissioners of Works [1943] 2 All ER 560 referred to
Commissioner of Taxation v Rio TintoLtd (2006) 151 FCR 341 applied
DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 applied
Hudson vBranir Pty Limited (2005) 148 NTR 1 referred to
Kotan Holdings Pty Limited v Trade Practices Commission (1991) 30 FCR 511 discussed
Mann v Carnell (1999) 201 CLR 1 referred to
O’Reilly v Commissioners of the State Bank of Victoria (1983) 153 CLR 1 referred to
Sankey v Whitlam (1978) 142 CLR 1 applied
Workcover Authority (NSW) v LawSociety of New South Wales (2006) 65 NSWLR 502 applied
Zarro v Australian Securities Commission (1992) 36 FCR 40 applied

KOREAN AIR LINES CO LTD v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
NSD 2371 of 2007

JACOBSON J
7 MARCH 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2371 of 2007

BETWEEN:	KOREAN AIR LINES CO LTD Applicant
AND:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Respondent
JUDGE:	JACOBSON J
DATE OF ORDER:	7 MARCH 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to O 33 r 12 of the Federal Court Rules, the Australian Competition and Consumer Commission be excused from compliance with [5] of the Notice to Produce filed by Korean Air Lines on 26 February 2008.

2. Reserve liberty to apply.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2371 of  2007

BETWEEN:	KOREAN AIR LINES CO LTD Applicant
AND:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Respondent

JUDGE:	JACOBSON J
DATE:	7 MARCH 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Introduction:

1. The Australian Competition and Consumer Commission (“the ACCC”) has been investigating allegations of price fixing by Korean Air Lines (“KAL”) and other international carriers since mid 2006.  The allegations relate to the imposition of fuel and other surcharges on air cargo into and out of Australia.

2. On 12 October 2007, a senior lawyer in the employ of the ACCC telephoned a partner in the firm of Clayton Utz, the solicitors for KAL. The terms of the conversation are disputed. The ACCC contends that the conversation was with “without prejudice” but KAL contends that the ACCC lawyer put a proposal to the Clayton Utz partner of a settlement of proceedings which would be brought against KAL seeking pecuniary penalties under s 76 of the Trade Practices Act 1974 (Cth) (“the TPA”) for price fixing.

3. On or about 31 October 2007, the Clayton Utz partner, Mr Bruce Lloyd, informed the ACCC lawyer, Mr Glenn Owbridge, that KAL had rejected the proposal and did not wish to advance a counter-offer.

4. On 31 October 2007 the ACCC issued a notice under s 155(1)(a) of the TPA requiring KAL to provide information in writing relating inter alia to the tonnage of air cargo carried into Australia between 2001 and 2007, including revenue derived from fuel surcharges.

5. KAL challenges the validity of the s 155 notice. It contends that the notice was issued for the improper purpose of depriving KAL of the protection of the Court’s processes which would otherwise be available to it upon the commencement of proceedings for the recovery of pecuniary penalties.

6. The final hearing of KAL’s application is listed for hearing on 20 March 2008.  However, a dispute has arisen between the parties about the production of documents sought by KAL from the ACCC under a notice to produce.

7. The dispute is limited to [5] of the notice which seeks production of documents created by four very senior officers of the ACCC who have been involved in various aspects of the investigation.

8. There is no formal court process before me in relation to the dispute but the substance of it is:

   ·    An application by the ACCC under O 33 r 12 to be excused from compliance with [5] of the notice.

   ·    An application by KAL under O 15 r 11 to produce, in un-redacted form, two documents which I will describe in more detail later.

9. The s 155 notice was signed by the Chairman of the ACCC. However, it is central to KAL’s attack upon the validity of the s 155 notice that, prior to the date on which it was issued, the ACCC, through various committees or relevant officers or employees, had already decided either formally or informally, that it would commence the penalty proceedings against KAL. I will set out the precise terms of this contention later.

10. In order to explain the documents sought by KAL it will be necessary to refer to the ACCC’s organisational structure in relation to its investigation of air cargo price fixing.  It is sufficient to say, by way of introduction, that the investigation has been carried out by staff within the Enforcement and Compliance Division of the Commission but, in about October 2007, the organisational structure bifurcated into two teams:

• the settlement team

• the investigation/operation team.

1. The bifurcation came about because, commencing in or about August 2007, the ACCC considered the establishment of a settlement regime.  A “settlement strategy” was developed over a period of some weeks by ACCC staff working on the Commission’s investigation, in consultation with Mr Owbridge.

2. The documents which KAL seeks under the Notice to Produce comprise documents created by the four named senior ACCC officers evidencing:

• the possible commencement of proceedings by the ACCC against KAL, including documents relating to the ACCC’s settlement strategy.

• the reasons for recommending that the Chairman of the ACCC issue the s 155 notice.

1. The ACCC contends that there is no legitimate forensic purpose to support the production of these documents. The essential reason for this is that the ACCC submits that the only relevant decision in relation to the attack upon the s 155 notice is the decision of the ACCC itself; decisions of officers or staff cannot be decisions of the ACCC to issue the notice. The ACCC relies upon a decision of a Full Court in Kotan Holdings Pty Limited v Trade Practices Commission (1991) 30 FCR 511.

2. The ACCC also contends that even if there is a legitimate forensic purpose in the production of the documents, certain redacted portions of them are subject to a claim for legal professional privilege.  One portion is also said, in the alternative, to be the subject of a claim for public interest immunity.

3. KAL contends that even if the relevant portions of the document are properly the subject of the claim for legal professional privilege, that privilege has been waived in accordance with the principle stated by the High Court in Mann v Carnell (1999) 201 CLR 1.

4. The evidence before me on the hearing was an affidavit of Mr Scott Gregson, the General Manager of the Enforcement Branch of the ACCC.  His affidavit deals with the claims of legal professional privilege and public interest immunity.

5. The parties agreed that I should follow the course adopted in Hudson vBranir Pty Limited (2005) 148 NTR 1 by having regard to the context of evidence proposed to be adduced at the final hearing so as to be able to determine the context in which the dispute over the Notice to Produce arises. Some of that material, though not yet formally in evidence, was read out and referred to in open Court and I will refer to the salient parts in my reasons for judgment.

The ACCC’s organisational structure in the investigation

1. Mr Mark Pearson is the Executive General Manager of the Enforcement and Compliance Division of the ACCC.  At all times since about July 2006, Mr Pearson has been the most senior staff member of the ACCC with overall responsibility for the investigation of air cargo price fixing.

2. Mr Paul Taylor, Director, Coordination Branch, has been responsible for conducting the investigation on a day-to-day basis since about July 2006.

3. Mr Mark Quinane has been involved in the air cargo investigation since August 2007.  He has led the settlement team since the time of its formation in about October 2007.

4. Mr Lee Hollis is a Senior Branch Manager within the ACCC.  He ranks above Mr Taylor and Mr Quinane and supported their recommendation of a proposed settlement strategy and a suggested penalty matrix, both of which were put before a meeting of the Enforcement Committee of the ACCC on 25 October 2007.

5. Mr Pearson explains the establishment of the settlement team in [8] of his affidavit of 14 February 2008 as follows:

   The settlement team was and is led by Mr Quinane.  The settlement team was established to develop a proposed settlement regime for consideration by the Enforcement Committee (EC).  I envisaged that the proposed settlement regime, where agreement was reached, would involve the Commission and cartel members making joint submissions to the Court in relation to appropriate orders including penalty following the institution of proceedings by the Commission.  Any possible settlement with any suspected cartel participant was, to my mind, at all times predicated on that participant making admissions with respect to various matters which would otherwise require further investigation by the Commission.

6. Mr Pearson goes on to explain that although the operation/investigation team led by Mr Taylor and the settlement team led by Mr Quinane have different functions, team members have interacted and worked together on an “as needed” basis.

7. Four reasons for the establishment of the settlement team and the division of the investigation into separate teams are set out in Mr Pearson’s affidavit.  There is no need to repeat them.

8. Mr Pearson states in [14] that the “settlement strategy” was developed over several weeks by ACCC staff working on the investigation, in consultation with Mr Owbridge.  He says that a proposed settlement framework was largely completed by early October.  He refers to this framework as “the Settlement Strategy”, although, as at early October 2007 it had not been considered by the Commission or its Enforcement Committee.

9. According to Mr Pearson’s affidavit, in August 2007, KAL was considered by staff of the ACCC to be a candidate for inclusion in the proposed settlement framework.  As I said above, the initial telephone conversation between Mr Owbridge and Mr Lloyd took place on 12 October 2007.  This was a week prior to the date of the paper of 19 October 2007 from Mr Taylor and Mr Quinane to the Enforcement Committee, attaching the Settlement Strategy and the suggested penalty matrix.

The Enforcement Committee Paper

1. The Enforcement Committee paper of 19 October 2007 contains four recommendations to the Committee.  In particular, it endorses the Settlement Strategy, which is attachment 1 to the paper.  It also endorses the proposal for settlement discussions with airlines willing to settle, based on the proposed penalty matrix contained in attachment 2.  In addition it recommends:

   “ongoing investigation with a view to litigation against those airlines not willing to settle.”

2. Under the heading “Update on General Progress”, the paper states that the investigation stage is nearing completion. It states that a further round of s 155 notices is soon to be prepared directed at identifying affected revenues and cargo tonnage of relevant carriers.

3. The following appears under the heading “Risk Assessment”:

   [7.1]  This section (in conjunction with the Attachments) focuses on the issues arising in pursuing a proposed settlement strategy while maintaining and not compromising litigation options. The strategy involves a settlement proposal as outlined in Attachment 1 (privileged advice from AGS), which describes:

   ·    the form of the settlement proposed;

   ·    strategic advantages to the Commission and respondents in settling;

   ·    operational advantages in settling soon;

   ·    potential risks in settling in the way proposed;

   ·    strategic impacts of not settling;

   ·    operational impacts of not settling.

   Attachment 2 comprises a suggested matrix of penalties to be put to carriers for settlement on that basis.

4. Attachment 1 to the paper is headed “PRIVILEGED AND CONFIDENTIAL”, “AGS Outline of considerations relating to the Proposed settlement strategy.”  Mr Pearson’s affidavit contains a redacted version of the document.  The various subheadings or topics dealt with in the attachment are not redacted but the content of the material under those subheadings has been redacted.  The subheadings include “Form of settlement proposed” and “Strategic advantages to the Commission or the respondents in settling in this way.”

5. Attachment 2 is a table which contains headings recording particular items against named airlines.  The names of the airlines, other than KAL, are redacted but the headings are shown in the version attached to the affidavit of Mr Pearson.  The headings include “Market Share (%); See Note (1)” and “Headline penalties (Before Discount); See Note (8).”  There are nine notes referred to in the headings.  The notes are redacted.

The ACCC’s minute recording request to issue s 155 notice

1. On 31 October 2007, officers of the ACCC’s Enforcement and Coordination Branch sent a minute to the Chairman of the ACCC, Mr Graeme Samuel.  The persons who are recorded as providers or senders of the minute include Mr Taylor and Mr Quinane.

2. The purposes of the minute are said to be to provide Mr Samuel with sufficient information to consider whether he had the requisite reason to believe, in order to issue the s 155 notice to KAL and to ask him to issue the notice.

3. The following appears under the heading “Relevance of Information and Documents Sought”:

   The proposed s 155(1)(a) Notice is required to obtain further information in relation to:

   ·    the tonnages,

   ·    total revenues, and

   ·    revenues attributed to fuel surcharges

   that Korean Air derived from air cargo that was destined to Australia and originated from Australia.

   Specifically, staff consider that it is necessary to obtain the information in order to assist in determining Korean Air’s liability if a court finds it contravened the Act.

4. As I have said, the s 155 notice was dated 31 October 2007 and it as signed by the Chairman. The s 155 notice was sent to KAL under cover of a letter from the ACCC dated 1 November 2007. The letter was signed by Mr Quinane, “Director, Enforcement and Coordination Branch”.

KAL’s statement of legal and factual issues

1. The following paragraphs of KAL’s statement of issues are relevant to the question of whether the Notice to Produce has a legitimate forensic purpose:

   [8]  At a time presently unknown to KAL, but on or prior to 31 October 2007, the ACCC, whether through its members, its Enforcement Committee, any other committee of the ACCC, or relevant officers or employees of its Enforcement and Compliance Division, decided (formally or informally), envisaged or reasonably anticipated that it would commence the penalty proceedings against KAL.

   …

   [10]    If the relief sought in the Amended Application is not granted, the Notice will have one or more of the following effects:

   (a)requiring KAL to furnish the ACCC information relating to the subject matter of the penalty proceedings after the ACCC has decided to commence those proceedings;

   (b)requiring KAL to furnish to the ACCC the information specified in the Notice for the purposes of the penalty proceedings in circumstances in which KAL would not or might not be required to furnish that information to the ACCC by operation of the processes of the court in which the penalty proceedings are commenced;

   (c)depriving KAL and/or its officers and/or employees of any relevant benefit of protection provided by the operation of the processes of the court in which the penalty proceedings are commenced;

   (d)relieving the ACCC of any relevant restraint or limitation imposed by the operation of the processes of the court in which the penalty proceedings are commenced; and/or

   (e)removing from the jurisdiction of the court in which the penalty proceedings are commenced the power to control by its own processes, the information KAL is required to furnish to the ACCC for the purpose of those proceedings.

   [11]The ACCC decided to serve the Notice on KAL for the purpose of achieving one or more of the effects described in the preceding paragraph (Purpose).

   [12]The Purpose is not a purpose for which the power under s 155 of the TP Act is conferred and/or the service of a notice for the Purpose is not authorised by s 155 of the TP Act.

   [13]Further or in the alternative, service of a notice requiring a person to furnish information to the ACCC relating to the subject matter of proceedings which the ACCC has decided to commence is beyond the power conferred by s 155 of the TP Act.

   [14]By reason of the matters set out above:

   (a)       the decision to serve the Notice on KAL was:

   (i)        not authorised by s 155 of the TP Act;

   (ii)       involved one or more errors of law; and/or

   (iii)was an improper exercise of the power confirmed by s 155 of the TP Act; and/or

   (b)       the Notice is ultra vires and invalid.

The Notice to Produce          

1. Paragraph 5 of the Notice to Produce (as amended and filed on 26 February 2008) is as follows:

   5.        All documents created by Paul Taylor, Mark Quinane, Mark Pearson or Lee Hollis, or recording communications between two or more of them, from 1 September to 31 October 2007 evidencing, comprising, recording or referring to:

   (a) the possible commencement of proceedings by the Respondent against the Applicant (including documents relating to the Settlement Strategy);

   (b)the reasons for recommending that the Chairman of the Respondent issue the Notice to the Applicant.

Whether the Notice to Produce has a legitimate forensic purpose

1. Kotan, on which counsel for the ACCC relied, was an appeal from an order of a single judge striking out a statement of claim seeking relief against s 155 notices issued by the Chairman of the Trade Practices Commission.

2. Crucial to the decision of the Court, and to the ACCC’s argument in the present case, were the terms of [16] of the statement of claim.  It pleaded that on a date unknown to the applicants: (i) the Commission; (ii) the officers of the Commission having the conduct of the matter; (iii) the solicitor acting for the Commission; had decided that proceedings should be instituted.

3. Davies and Foster JJ said at 516 that they accepted that it may be arguable that the power to issue a s 155 Notice ceases when the Commission has formally resolved that legal proceedings be instituted. However, they said that this was not pleaded in [16] of the statement of claim. Lockhart J observed at 522 that the only relevant decision could be that of the Commission itself, so that the allegations that officers of the Commission and the solicitor had decided to institute proceedings could not stand.

4. These were statements of a Full Court and, of course, I accept them as binding, authoritative and correct.  But they were made in relation to the pleading that was in issue before their Honours.  In my view, their Honours’ remarks on this topic, though no doubt central to the question at the final hearing, do not assist the ACCC on the question of the Notice to Produce.

5. What [8] of KAL’s statement of issues leaves open for determination on the final hearing, is who, in the present case, comprised the Commission.  In this respect, [8] of the statement is in different terms from [16] of the statement of claim in Kotan where the pleading specifically referred to persons who could not have constituted the Commission for the purpose of the decision to issue the s 155 notice.

1. Mr Gageler SC referred me to the line of authorities commencing with Carltona Ltd vCommissioners of Works [1943] 2 All ER 560, referred to by Gibbs CJ in O’Reilly v Commissioners of the State Bank of Victoria (1983) 153 CLR 1 at 11. Gibbs CJ there said that the authorities establish that when a Minister is entrusted with administrative functions he or she may in general act through a duly authorised officer of the department.

2. Whether these authorities are applicable to the present proceeding is a matter to be determined at the final hearing.

3. This approach is consistent with that which was adopted by Mansfield J in Australian Competition and Consumer Commission vRural Press Limited (2000) 96 FCR 389 at [37] – [38]. His Honour accepted that the effect of the decision by the judges in Kotan is that the question of whether the exercise of the power is for an improper purpose is to be determined by a consideration of all the circumstances.

4. The precise limits of the power to issue a s 155 notice were left open in Kotan. Davies and Foster JJ accepted that it was arguable that the power ceases when the Commission has formally resolved that legal proceedings be instituted (at 516). Lockhart J at 521 was of the view that the Commission’s power to issue a s 155 notice does not cease and is not abused merely because the Commission has made a decision to commence proceedings.

5. The documents required by [5] of the Notice to Produce are documents created by senior officers of the ACCC.  They go to the questions raised in [8] of the Statement of Issues and to the questions of purpose raised by the other paragraphs set out above.

6. I reject the submission that they lack a legitimate forensic purpose.

Legal Professional Privilege

1. The dispute before me relates primarily to exhibit (annexure?) MP4 of Mr Pearson’s affidavit and, in particular to certain redacted parts of attachments 1 and 2.  I have referred to them above.

2. The redacted material in attachment 1 is described by Mr Gregson in the following terms:

   Actual legal advice, given by the Commissioner’s solicitor, the Australian Government Solicitor (AGS), to the Commission, concerning (i) the form of a settlement strategy as referred to in paragraphs 10-15 of the Pearson Affidavit) proposed by staff for approval by the Enforcement Committee of the Commission; (ii) strategic advantages to the Commission and respondents in settling in accordance with the settlement strategy; (iii) operational advantages in settling soon; (iv) potential risks in settling in the way proposed; (v) strategic impacts of not settling; (vi) operational impacts of not settling

1. Mr Gregson goes on to say that the legal advice given in attachment 1 was given to staff of the ACCC, for submission to the Enforcement Committee, in circumstances where those staff contemplated the possibility of legal proceedings being commenced in the foreseeable future against one or more of the airlines under investigation.

2. The redacted material in attachment 2 is described by Mr Gregson as follows:

   Information collated and submitted to the Enforcement Committee for the dominant purpose of obtaining the Committee’s approval of a recommended settlement strategy which, if ultimately approved by the Commission, involved
   suggested outcomes in penalty proceedings which would be instituted by the Commission (ie all of the information was intended to be used for the purpose of contemplated legal proceedings.

1. Mr Gregson says that the information in attachment 2 was given by staff of the ACCC to the Enforcement Committee in circumstances where those staff contemplated the possibility of legal proceedings being commenced in the foreseeable future against one or more of the airlines under investigation.

2. The principles applicable to legal professional privilege as a rule of substantive law were comprehensively reviewed by McColl JA in Workcover Authority (NSW) v LawSociety of New South Wales (2006) 65 NSWLR 502 at [72]ff.

3. The following relevant propositions emerge from her Honour’s review of English and Australian authority:

   ·    Once it is established that a legal practitioner was acting in the requisite capacity, a confidential communication will attract privilege even if it contains extraneous matter, as long as it was prepared for the dominant purpose of giving legal advice.

   ·    Legal advice is not confined to telling the client the law; it may include advice as to what should prudently and sensibly be done in the relevant legal context.

   ·    What matters is whether the lawyers are being asked qua lawyers to provide legal advice.

   ·    The presence of other matter may raise a question of the purpose for which the document was brought into existence but this will be a question of fact.

   ·    The privilege should not be undermined by an overly narrow or technical approach to the identification of the relevant advice.

4. Her Honour said at [94]:

   While…it might be accepted that legal professional privilege can attach to communications made on the operation and application of laws, proposed laws and their drafting, it is essential to ensure, particularly in the government context, that the purpose for which a document was brought into existence was one which related to legal advice as opposed to operational, administrative or policy matters. As Lord Scott emphasised in Three Rivers District Council v Governor and Company of the Bank of England (No 6) (at 651 [38]) in order for privilege to apply advice must be given in “the relevant legal context.

5. Applying these principles, I am satisfied that the redacted portion of attachment 1 is properly the subject of a claim for legal professional privilege.

6. It is well-established that the Court may inspect the documents in question to ascertain whether any doubts about the validity of the claim are made good by an inspection of the documents: see eg Zarro v Australian Securities Commission (1992) 36 FCR 40 at 61.

7. The parties agreed that I may inspect the documents.  I have done so and am satisfied that the claim for the redacted portion of attachment 1 is supported.

8. In my view, the claim for legal professional privilege for attachment 2 is not supported, either by the principles to which I have referred or by an inspection of the document.

9. In short, attachment 2 was not prepared by a legal practitioner and there is no relevant legal context.  Accordingly, it does not attract client legal privilege or litigation privilege: see AWB Ltd v Cole (2005) 152 FCR 382 at [144]-[145].

Public Interest Immunity

1. The principles of public interest immunity to be gleaned from the decisions of the High Court in Sankey v Whitlam (1978) 142 CLR 1 and Alister v TheQueen (1984) 154 CLR 404, were set out by Lockhart J in Zarro at 44-46.

2. The existence of public interest immunity is to be determined by balancing two competing aspects of the public interest.  First, whether harm would be done to the public interest by production of the document; second, whether the administration of justice would be impaired if the document were withheld.  The balancing exercise can only be undertaken when both aspects of the public interest require consideration.  Inspection may be permitted by the Court, though there may be cases where this is not appropriate.

3. As I have said, a claim for public interest immunity was made for the redacted portion of attachment 2.  Mr Gageler seeks the redacted material against the line referring to KAL.  He argues that the claim for public interest immunity over the material cannot be supported.

4. The redacted material in attachment 2 is described, for the purposes of the public interest immunity claim, in [11.2] of Mr Gregson’s affidavit as follows:

   Detailed information (the headings on page 8 refer) concerning the settlement regime proposed by staff for approval by the Enforcement Committee of the Commission which staff proposed would be raised with suspected cartel participants (including the applicant).  The disclosure of this information may compromise the Commissioner’s ability to properly conduct the investigation.

5. Mr Gregson goes on to make a claim for public interest immunity in the following terms:

   [12] In my opinion, disclosure of the abovementioned information would be contrary to the public interest.  Such disclosure entails a serious risk of adversely affecting the Commission’s ongoing investigation into conduct suspected to have been carried out by the applicant and other carriers, and thereby impeding the Commission’s fulfilment of its statutory functions in the public interest.  Where the information in question has been supplied to the Commission on a confidential basis, such disclosure may also adversely affect the Commission’s ability to investigate other past and future suspected cartel activity (ie unrelated to air cargo).

6. I accept Mr Gageler’s submission that this opinion is expressed at a high level of generality.  However, it seems to me that the opinion must be considered in the context of other matters referred to in the affidavit.

7. Mr Gregson refers elsewhere in his affidavit to the difficulties of cartel investigation, the possibility of other suspected participants drawing inferences from the material and the willingness of other parties to supply material voluntarily to the ACCC.

8. I have come to the view that the claim for public interest immunity in respect of the redacted portion of attachment 2 is made out.

Waiver

1. The principle of implied waiver, under which a party who would otherwise be entitled to the benefit of legal professional privilege was stated by the High Court in Mann v Carnell at [29].

2. In Commissioner of Taxation v Rio TintoLtd (2006) 151 FCR 341, a Full Court, after referring to Mann v Carnell and other authorities said at [52]:

   [52] These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication.

3. Their Honours referred with approval to the statement of Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 at [58]. His Honour there referred to waiver coming about when a party entitled to the privilege makes an assertion which is either about the contents of the confidential communication or which necessarily lays it open to scrutiny. Privilege is lost because an inconsistency arises between the act and the maintenance of the confidence, informed partly by forensic unfairness.

4. It is true that Mr Pearson has deployed the existence of the separate settlement team and the fact that the team developed a proposed settlement regime for consideration by the Enforcement Committee.  However, I do not consider that the assertions in Mr Pearson’s affidavit at [8] and [10] – [15] fall within the principles referred to above.

5. In particular, I do not consider that the assertions in the affidavit are about the contents of the redacted portions of attachment 1.

6. Nor do I consider that Mr Pearson’s affidavit, necessarily lays open the contents of the redacted material to scrutiny.

7. In short, any waiver is limited to documents going to the existence of the settlement strategy, not to every detail of the content of that strategy.  Indeed, in my view, those details are irrelevant to the issues raised in these proceedings.

8. Nor do I consider that privilege in attachment 1 is waived by anything in Mr Owbridge’s version of his conversation with Mr Lloyd.

Other matters

1. I have dealt with the subject of the argument before me on 3 March 2008.  I was provided with a bundle of un-redacted confidential exhibits.  I do not understand that I have been asked to rule on each of those documents.  My reasons set out above may enable the parties to resolve any differences about those documents.  If not, I will reserve liberty to apply on short notice.

I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate:

Dated:             7 March 2008

Counsel for the Applicant:	S Gageler SC with M Darke
Solicitor for the Applicant:	Clayton Utz
Counsel for the Respondent:	T Howe QC with R A Dick
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	3 March 2008
Date of Judgment:	7 March 2008