Rio Tinto Ltd v Commissioner of Taxation

[2005] FCA 1454

FEDERAL COURT OF AUSTRALIA

Rio Tinto Ltd v Commissioner of Taxation [2005] FCA 1454

Federal Court Rules, O 52 r 17, O 37 r 10

Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65, referred to

RIO TINTO LTD and COMMISSIONER OF TAXATION

VID 1205 OF 2005

KENNY J
13 OCTOBER 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1205 OF 2005

BETWEEN:	RIO TINTO LTD & ORS APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	KENNY J
DATE OF ORDER:	13 OCTOBER 2005
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

Upon the respondent agreeing to pursue his application for leave, and any resulting appeal, expeditiously:

1.Paragraph 1 of the order of Sundberg J made 22 September 2005 be stayed until the determination of the Commissioner of Taxation’s application for leave to appeal and any consequent appeal.

2.The Commissioner of Taxation pay the other parties’ costs of this application for a stay.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1205 OF 2005

BETWEEN:	RIO TINTO LTD & ORS APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT

JUDGE:	KENNY J
DATE:	13 OCTOBER 2005
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. The Commissioner of Taxation seeks a stay of part of an order of Sundberg J made 22 September 2005, requiring, amongst other things, that the respondent produce certain documents that are the subject of claims for legal professional privilege.  Relevantly, the issue between the parties, as determined by Sundberg J in favour of Rio Tinto Ltd, was whether the legal professional privilege that subsisted in the documents has been waived, by what has been termed an “issue waiver”.  His Honour held that privilege in these documents had been impliedly waived. 

2. The Commissioner has decided to pursue an application for leave to appeal in respect of this part of his Honour’s order and seeks a stay to preserve the subject matter of the appeal.  The Commissioner relies on the affidavits of his solicitor, Edwina Anne McLachlan, sworn on 29 September 2005 and 12 October 2005.  Rio Tinto Ltd and other parties rely on the affidavit of Rio Tinto Ltd’s solicitor, Michael Schoenberg, affirmed on 10 October 2005.

3. The Court has the power to grant a stay in its discretion pursuant to O 52 r 17 of the Federal Court Rules: see also O 37 r 10.  It is sufficient for the respondent to demonstrate that this is an appropriate case to warrant the exercise of the discretion: see Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66.

4. In this case, there is no doubt that following considerations militate in favour of a grant of a stay:

   (1)   Unless a stay is granted, the subject matter of the litigation, namely the privilege in the relevant documents, will be lost, and the Commissioner’s application for leave, and any subsequent appeal, will be rendered nugatory.  This is a substantial factor in favour of a grant of a stay.  Plainly enough, production of the documents as required by Sundberg J’s orders will destroy their confidentiality and privilege, rendering it pointless for the Commissioner to pursue his leave application and any appeal, regardless of whether, on appeal, his position is vindicated and the decision of Sundberg J reversed.

   (2)   The production of the documents would also render it impossible for the Full Court to frame orders granting effectual relief to the Commissioner if he were to succeed on the appeal (assuming leave were granted). 

   (3)   Although interlocutory, Sundberg J’s judgment is concerned with the existence of substantive rights, rather than merely matters of practice and procedure.

5. The prima facie assumption is, however, that the judgment appealed from is correct and the Court should not deprive a litigant of the benefit of a judgment in its favour.  Further, Rio Tinto Ltd opposes the grant of a stay on a number of bases.  It submits that there is no reasonably arguable case for the leave application.  It also submits that, save for some relatively minor matters, the matter before Sundberg J is ready, or virtually ready, for trial.  Amongst other things, its solicitor, Mr Schoenberg deposed to delays suffered by it allegedly as a result of the Commissioner’s conduct in the proceeding; and counsel referred to alleged delay with respect to the making of the leave application.  Counsel submitted that delay in the hearing and determination of the foreshadowed appeal would be injurious to Rio Tinto Ltd.  Counsel further submitted that, if a stay were granted, then it should be granted subject to conditions. 

6. In her affidavit, the Commissioner’s solicitor refuted the alleged delay and other matters, including the propriety of the conditions sought by Rio Tinto Ltd to be placed on a stay, if granted.  Counsel for the Commissioner submitted that all parties had things to do before the matter was ready for hearing; and noted that the motion for leave to appeal was filed within seven days of the judgment of Sundberg J.

7. The prospects of the Commissioner’s leave application were the subject of most of the discussion before me this morning.  Counsel for the Commissioner submitted that it was arguable that the judgment of Sundberg J was attended by sufficient doubt in two respects.  It this were so, then the injustice suffered by the Commissioner if his Honour were wrong is clear enough.  First, counsel submitted that his Honour had mistaken the issue that was said to attract issue waiver; and, secondly, that his Honour had mistaken the test for implied waiver of legal professional privilege.  The law in this regard is clearly in a state of some uncertainty.  Counsel for Rio Tinto Ltd responded, however, that, even if the law with respect to implied waiver was in some doubt, this case was not an appropriate vehicle for the Full Court to consider it, because whatever the law may in fact be, Rio Tinto Ltd necessarily made out its case.  This contention depended, however, on the assumption that his Honour had correctly identified the issue for issue waiver.  Counsel for Rio Tinto Ltd submitted that Sundberg J was correct in this regard; and, even if he was not, his Honour’s approach could not now be challenged because it flowed from his earlier interlocutory decision in the same matter, which had not been the subject of appeal.

8. Whilst I express no concluded view on the merits of the application for leave, the questions that the Commissioner would raise are, it seems to me, at least arguable in the relevant sense.  I am satisfied that the leave application is not so lacking in prospects of success that I should refuse this stay application. 

9. I also reject the submission that the Commissioner’s application for a stay ought be rejected on the basis that the application for leave, and any appeal, will delay the proceeding.  First, it does not seem to me that, in the circumstances of the case, this consideration provides a sufficient basis for refusing a stay.  The application for leave concerns the status of a relatively small number of documents; and other interlocutory steps, and the proceedings generally, might be progressed notwithstanding the leave application and any appeal.  Even if the remaining interlocutory steps are relatively insignificant, it does not seem to me that a stay pending the hearing of the leave application and the appeal (if leave is granted) will affect the trial date.  It seems likely that the leave application and any resulting appeal could be heard in the February sittings of Full Courts and, given the usual exigencies of docket management, including Sundberg J’s own involvement in the February sittings, it seems unlikely that the trial date in this case will be affected by the stay now sought by the Commissioner. 

10. Further, save for one matter, for the reasons outlined by the Commissioner in written submissions and at the hearing, it does not seem to me appropriate to attach the conditions sought by Rio Tinto Ltd to the grant of any stay.

11. I am disposed to grant a stay subject to the condition that the Commissioner agree to pursue his application for leave to appeal and any appeal with due expedition.

12. The Commissioner also seeks an order that a Full Court hear the leave application, concurrently with any resulting appeal.  Having regarding to the introduction of O 52 r 2AA, it is appropriate for me to refer the application for leave to the Chief Justice for consideration by him as to whether the leave application should be referred for hearing by a Full Court.  I shall inform the Chief Justice that the Commissioner also asks that any resulting appeal be heard at the same time; and that, in any case, the Commissioner desires to proceed with his application for leave as efficiently and speedily as practicable in all the circumstances. 

13. Accordingly I would order that paragraph 1 of the order of Sundberg J made on 22 September 2005 be stayed.  I shall hear the parties on the question of costs.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Associate:

Dated:             13 October 2005

Counsel for the Applicant:	Mr JW de Wijn and Mr SW Steward
Solicitor for the Applicant:	Allens Arthur Robinson
Counsel for the Respondent:	Ms M Gordon and Mr D Batt
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	13 October 2005
Date of Judgment:	13 October 2005