ESSO AUSTRALIA RESOURCES LTD v FC of T

Judges: Gleeson CJ
Gaudron J
McHugh J
Gummow J

Kirby J
Callinan J

Court:
High Court

MEDIA NEUTRAL CITATION: [1999] HCA 67

Judgment date: 21 December 1999

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Kirby J

85. This appeal ^[93] From the Full Court of the Federal Court of Australia. Esso Australia Resources Ltd v FC of T (1998) 83 FCR 511 affirming the decision of Foster J: (1997) 150 ALR 117 . concerns the scope of the common law rule governing legal professional privilege in Australia (``the privilege''). The arguments of the parties are finely balanced. However, in my view the appeal should be dismissed. The present authority of this Court ^[94] Grant v Downs (1976) 135 CLR 674. should be maintained.

86. In Commissioner of Australian Federal Police v Propend Finance Pty Ltd , ^[95] (1997) 188 CLR 501. after referring to the undesirability of impeding the beneficial operation of pre-trial facilities such as discovery and subpoenas, which had ``contributed to a tendency in Australia to define narrowly the applicability of legal professional privilege'', ^[96] (1997) 188 CLR 501 at 581 citing Ligertwood, Australian Evidence , 2nd ed (1993) at 226-227, 228-229; Cross and Tapper on Evidence , 8th ed (1995) at 472; cf Re United States of America v Mammoth Oil Co [ 1925] 2 DLR 966 . I suggested: ^[97] (1997) 188 CLR 501 at 581.

``... a brake on the application of legal professional privilege is needed to prevent its operation bringing the law into `disrepute' <sup>[98]</sup> Zuckerman, ``Legal Professional Privilege and the Ascertainment of Truth'', (1990) 53 Modern Law Review 381 at 381. , principally because it frustrates access to communications which would otherwise help courts to determine, with accuracy and efficiency, where the truth lies in disputed matters.''

I remain of that view. This appeal is an attempt to change the common law in Australia. It should be rejected.

Facts, issues and common ground

87. The facts and issues in the appeal are stated in the reasons of Gleeson CJ, Gaudron and Gummow JJ. Certain basic matters are not in dispute. They can be stated briefly to provide the setting for the fundamental question which must be answered.

88. First, whilst called ``legal professional privilege'' in common law decisions the description of the privilege in the Evidence Act 1995 (Cth) <sup>[99]</sup> ss 118, 119. See also Evidence Act 1995 (NSW), ss 118, 119. (``the Act'') as ``client legal privilege'' is now more accurate. The privilege belongs to the client not the lawyer. This feature, which involved a ``change of hands'' in the 18th century, ^[100] Desiatnik, Legal Professional Privilege in Australia (1999) at 10. derives from the fundamental contemporary character and purpose of the privilege.

89. Secondly, in practical terms, whether in interlocutory proceedings (such as discovery or the answer to subpoenas) or at a trial (as in the tender of, or attempts to elicit, evidence) claims for the privilege usually concern documents. However, the privilege actually attaches to communications ^[101] Odgers, Uniform Evidence Law , 3rd ed (1998) at 341. - 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'' ^[102] Waugh v British Railways Board [ 1980] AC 521 at 531 per Lord Wilberforce; Anderson v Bank of British Columbia (1876) 2 Ch D 644 at 649 ; cf Baker v Campbell 83 ATC 4606 at 4617; (1983) 153 CLR 52 at 74; Upjohn Co v United States 449 US 383 at 389 (1981) . so as to obtain the

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ATC 4059

full benefit of professional advice and assistance. ^[103] Grant v Downs (1976) 135 CLR 674 at 685. See also Waterford v The Commonwealth (1987) 163 CLR 54 at 62 ; Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 126-128 ; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 551-552, 583-584 .

90. Thirdly, other criteria potentially exist for defining the ambit of a communication protected by the privilege. However, ordinarily that ambit is expressed in terms of the purpose which the maker of the communication had in making the communication in question. In earlier times the common law recognised a communication as within the privilege if a purpose of its being made, not necessarily its sole or primary purpose, ^[104] Birmingham and Midland Motor Omnibus Co Ltd v London and North Western Railway [ 1913] 3 KB 850 at 856 . The relevant passage is cited by McHugh J at [ 66]. See also Ogden v London Electric Rail Co [ 1933] All ER 896 at 899 . was to seek or to receive legal advice. However, in recent times, this ambit has been reduced by the courts. They have successively insisted that the giving or receiving of legal advice should be an appreciable purpose, ^[105] Guardian Royal Exchange Assurance of NZ Ltd v Stuart (1985) 3 ANZ Insurance Cases ¶ 60-671 at 79,190; [ 1985] 1 NZLR 596 at 605; Longthorn v British Transport Commission [ 1959] 1 WLR 530 ; [ 1959] 2 All ER 32 ; Konia v Morley [ 1976] 1 NZLR 455 . the dominant purpose ^[106] Grant v Downs (1976) 135 CLR 674 at 677 per Barwick CJ; cf note (1977) 51 Australian Law Journal 212 at 213-214. See also Guardian Royal Exchange Assurance of NZ Ltd v Stuart (1985) 3 ANZ Insurance Cases ¶ 60-671 at 79,190; [ 1985] 1 NZLR 596 at 605. or the sole purpose. Whereas in Grant v Downs ^[107] Grant v Downs (1976) 135 CLR 674 at 688 per Stephen, Mason and Murphy JJ. this Court, by majority, opted for the sole purpose, most other common law jurisdictions have elected for a less restrictive criterion, usually the dominant purpose. ^[108] Waugh v British Railways Board [ 1980] AC 521; Silver Hill Duckling Ltd v Minister for Agriculture [ 1987] IR 289 ; Doiron v Embree (1987) 16 CPC (2d) 70 . In the United States the issue is affected by the Fifth Amendment: Fisher v United States 425 US 391 (1976) .

91. Fourthly, the appellant sought to propound an evolution of the common law away from the sole purpose test as stated in Grant v Downs . However, I agree for the reasons which the majority give, that in the circumstances of this case those arguments do not avail the appellant. I am foremost in accepting the view that the common law operates in a world of statute law. ^[109] Osmond v Public Service Board of New South Wales [ 1984] 3 NSWLR 447 at 464- 465; Cotogno v Lamb (No 3) (1986) Aust Torts Reports ¶ 80-039 at 67,842-67,844; (1986) 5 NSWLR 559 at 570-572 ; cf Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 668-670 ; Lamb v Cotogno (1987) Aust Torts Reports ¶ 80-124 at 68,961-68,962; (1987) 164 CLR 1 at 10-12 . See now Gray v Motor Accident Commission (1999) Aust Torts Reports ¶ 81-494 at 65,514; (1998) 73 ALJR 45 at 59; 158 ALR 485 at 504 ; cf Calabresi, A Common Law for the Age of Statutes (1982) at 101-109; Cross, Precedent in English Law , 3rd ed (1977) at 169-171. I do not doubt that, the elements of law being interactive, the content of statute law can, and in many circumstances does, influence the content of the common law, and has long done so. ^[110] See eg Traynor, ``Statutes Revolving in Common-Law Orbits'', (1968) 17 Catholic University Law Review 401; Kelly, ``The Osmond Case: Common Law and Statute Law'' (1986) 60 Australian Law Journal 513; Gummow, Change and Continuity: Statute, Equity and Federalism (1999) at 1. As the influence of the Evidence Act s which operate in federal courts and courts of the Australian Capital Territory and New South Wales spreads, they may come to have an effect on the development of the common law in Australia. ^[111] cf R v Swaffield (1998) 192 CLR 159 at 208 . However, the Act presently extends to these three Australian jurisdictions alone. The milieu of statute law in the other jurisdictions is quite different. By reason of the limited terms of reference given to the Australian Law Reform Commission ^[112] Australian Law Reform Commission, Evidence , Report No 38, 1987 at 1. from whose report ^[113] Australian Law Reform Commission, Evidence , Report No 26 (Interim), 1985; Australian Law Reform Commission, Evidence , Report No 38, 1987. the Act derives, many applications of the privilege fall outside its scope. It would therefore be premature to draw inferences from the Act as to the content of the uniform doctrine of the common law of privilege applicable throughout Australia. ^[114] Contrast R v L (1991) FLC ¶ 92-266 at 78,786; (1991) 174 CLR 379 at 390 where a uniform pattern of legislation in five States of Australia was noted; cf Gummow, Change and Continuity: Statute, Equity and Federalism (1999) at 15. In other respects, I agree for the reasons given by Gleeson CJ, Gaudron and Gummow JJ that the only issue for decision is whether this Court should now embrace the dominant purpose test (as the appellant asked) or adhere to the sole purpose test established by the Court's authority (as the respondent argued).

Reasons for changing to a dominant purpose test

92. I have indicated my opinion that the arguments of the parties were finely balanced. Let me state the principal considerations which suggest to me the need for a change in this Court's authority. By doing so, I will acknowledge that I am alive to the issues of principle and policy which support a change and that I have not simply based my decision on authority, which in common law exposition is but one of the considerations to which a Court like this must give weight. ^[115] Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 252-254 per Deane J.

93. First, it is useful to have an appreciation of the complexity of human motivation. When the ambit of a privilege is determined by reference to somebody's ``purpose'', it necessarily postulates, to some extent, the exploration of the mind of another human being. Ordinarily, this will be the person making the communication in question. Such purpose will usually be inferred from the terms of the communication itself, commonly a document. It is difficult at the best of times to ascertain the purpose which someone else had for particular conduct. Indeed, it is sometimes difficult to analyse one's own purposes, although these should be the best known and understood. Human motivation is rarely linear. It is usually complex, derived as it is from multiple stimuli. In a case where the communicator is a single individual, the ascertainment of a purpose or purposes may be simpler than where the communicator (on behalf of a public or private corporation, of an association or of a branch of public administration) is acting on behalf of others. Because corporations, associations and administration must necessarily act through human agents, the agent must be ascertained as must his or her authority to act. Then it is necessary to classify that person's purpose on the occasion in question. Whilst the search may not be for something which is wholly subjective, there are often unacknowledged difficulties in insisting upon a prerequisite of a sole purpose. Whichever criterion is chosen, there is an inescapable requirement of characterisation of the purpose, given the

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ATC 4060

propensity of all human conduct potentially to have more than one motivation.

94. Take the circumstances of a breakdown of a relationship. A person might approach a legal practitioner for advice with a view to receiving counsel about a separation but also for a purpose of putting pressure on a spouse or partner, warning that person's family, taking a semi-public stand or just protecting and recording the communicator's version of events. A rigid insistence on there being a sole purpose for communications would often be difficult to reconcile with the complexities of human conduct. That this has been appreciated in this Court may be seen in decisions since Grant v Downs . ^[116] eg Waterford v The Commonwealth (1987) 163 CLR 54 at 85 per Deane J, outlining certain difficulties in applying the sole purpose test. This consideration also explains some criticisms of that decision in terms of the ``unnecessary refinements in the concept of `purpose''' to which any test gives rise, but especially one confined in terms of the communicator's sole purpose. ^[117] eg Cross on Evidence , 2nd Aust ed (1979), par 11.27 cited in reasons of McHugh J at [ 68]; cf Cross on Evidence , 5th Aust ed (1996), par 25220.

95. Secondly, there is no doubt that the sole purpose test introduced by Grant v Downs represented at the time that it was propounded a significant shift from what had previously been understood as the common law. All members of this Court were in favour of narrowing the ambit of the privilege. The competition within the Court was between the majority who adopted the sole purpose test, Barwick CJ ^[118] Grant v Downs (1976) 135 CLR 674 at 677. who propounded the dominant purpose test and Jacobs J ^[119] Grant v Downs (1976) 135 CLR 674 at 692: ``does the purpose of supplying the material to the legal adviser account for the existence of the material?'' whose approach lay somewhere in between. In the interval since Grant v Downs was decided approaches similar to that of Barwick CJ have been adopted by courts in other jurisdictions whose adversary trial, judiciary and legal profession are most similar to those of Australia. None of these jurisdictions has adopted the test accepted by the majority in this Court.

96. In a matter that is so connected with the operation of the type of legal system which we follow and is not likely to be affected by varying social conditions, there are sound reasons for paying attention to expressions of the common law in courts of high authority in countries such as England, New Zealand, Canada and Ireland. When the Judicial Committee of the Privy Council was part of the judicial hierarchy of Australia, it was usual for this Court (and other Australian courts) to follow in most matters the statements of common law principle made in the highest courts of England. That time has passed. But it has not been replaced by a parochial or chauvinistic satisfaction with purely Australian legal thinking. Instead, there has been a growing willingness to consider expositions of basic doctrine in other like common law countries. ^[120] The decisions in England, Ireland, Canada and New Zealand are referred to above and in the reasons of Gleeson CJ, Gaudron and Gummow JJ. A glance at the recent English and other overseas casebooks will show a reciprocal trend there. Given that many common law courts of high authority embrace an identical or similar rule to that propounded for the appellant, this Court should certainly pause and reconsider its own contrary authority. ^[121] eg the use of English, Canadian, New Zealand, United States and other authority throughout Perre & Ors v Apand Pty Ltd (1999) Aust Torts Reports ¶ 81-516; (1999) 73 ALJR 1190; 164 ALR 606 concerning liability for ``pure'' economic loss. This is not done in a quest to restore a single legal rule for the entire common law world. From time to time, this Court rejects or declines to follow authority which is settled in other countries. ^[122] eg Breen v Williams (1996) 186 CLR 71 where this Court refused to follow Canadian authority holding that a fiduciary relationship could exist between a medical practitioner and a patient: McInerney v MacDonald [ 1992] 2 SCR 138 at 152 ; cf Breen v Williams (1994) 35 NSWLR 522 at 542-549. However, where it is shown that this Court's authority is out of step with that of many other like jurisdictions, that demonstration concentrates attention on the justification for the disparity. It poses the issue of principle and policy as to whether previous legal authority was erroneous and should be changed.

97. Thirdly, although argument for the development of the common law by analogy to statute may not be available, as such, in this case it is not irrelevant that, in a significant proportion of the courts of this country, an Act ^[123] The Act, ss 118, 119; Evidence Act 1995 (NSW) ss 118, 119. The Evidence Bill 1993 (Cth), cll 118 and 119, as originally introduced, did not adopt the Australian Law Reform Commission's proposed dominant purpose test. It substituted the sole purpose test. The latter was altered following reconsideration by the Senate: Australia, Senate Standing Committee on Legal and Constitutional Affairs, Evidence Bill 1993 (Interim Report), June 1994 at 37-40. See also Australia, Senate Legal and Constitutional Legislation Committee, Evidence Bill 1993 (Final Report), December 1994 at 11-13. is now in force which is harmonious with the principle that has been adopted in other common law jurisdictions. There would obviously be convenience where the Act applies in adopting a single, uniform test, namely that of a dominant purpose. Doing so would avoid requiring in those law areas the application in preliminary decisions (discovery and the answer to subpoenas) of a narrower criterion (sole purpose) than at the hearing itself where, by the Act, a different (dominant purpose) test would be observed. ^[124] Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (1995) 60 FCR 366 at 369 ; Telstra Corporation v Australis Media Holdings [ No 1] (1997) 41 NSWLR 277 at 279; cf Sackville, ``Lawyer/Client Privilege'', (1999) 18 Australian Bar Review 104 at 110; Austin, ``Commentary'', (1999) 18 Australian Bar Review 115 at 118. Such an obligation is at best inconvenient and at worst anomalous.

98. Fourthly, no reports on the operation of the different tests suggest the unworkability or serious inconvenience of the dominant purpose test in those jurisdictions in which it is now applied. On the contrary, in areas of the law such as insolvency and bankruptcy, such a test has long been familiar to legal practitioners and judicial officers. ^[125] Guardian Royal Exchange Assurance of NZ Ltd v Stuart (1985) 3 ANZ Insurance Cases ¶ 60-671 at 79,190; [ 1985] 1 NZLR 596 at 605. If it had presented severe practical problems, it might have been expected that they would have come to light in the form of judicial comment.

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ATC 4061

The Court should adhere to the sole purpose test

99. The majority have been persuaded to change the authority of this Court on this issue. I am not. My reasons are as follows.

100. First, the principle established in Grant v Downs is now a settled statement of the common law in Australia. It has been accepted and applied not only in the numerous cases where an issue has arisen in this Court ^[126] National Employers' Mutual General Insurance Association Ltd v Waind (1979) 1 ANZ Insurance Cases ¶ 60-010 at 75,132-75,133; (1979) 141 CLR 648 at 655-657 ; O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 at 34-35 ; Baker v Campbell 83 ATC 4606 at 4612, 4617; (1983) 153 CLR 52 at 66, 74; Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 487 ; Waterford v The Commonwealth (1987) 163 CLR 54 at 62; Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 126-127, 133; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501. but also in countless appeals and trials and even more numerous pre-trial and pre-litigation decisions made in every jurisdiction of Australia since 1976. This is not an obscure rule of the substantive law visited only occasionally by the courts. It is part of the woven texture of the law, except in those jurisdictions where legislators have chosen to change it, and then only in defined circumstances. While the common law can and should be changed when it is out of harmony with altered social conditions, ^[127] eg Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 . or contemporary understandings of fundamental rights ^[128] Mabo v Queensland [ No 2] (1992) 175 CLR 1 at 42 ; Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 657-658 ; Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 422-424 ; Kartinyeri v The Commonwealth (1998) 72 ALJR 722 at 765-766; 152 ALR 540 at 598-600 . this was not a reason propounded for change in the present circumstances which arise at the behest of the appellant, a large corporation. When, as recently as 1997, the Court revisited the scope of the privilege, ^[129] Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501. the state of the law in other jurisdictions was known. Yet no party asked the Court to reconsider its holding in Grant v Downs . This is not a case where change is necessary to secure a reconceptualisation of the common law or to simplify multiple categories by reference to unifying concepts. ^[130] eg Papatonakis v Australian Telecommunications Commission (1985) Aust Torts Reports ¶ 80-316; (1985) 156 CLR 7 (occupier's liability); Burnie Port Authority v General Jones Pty Ltd (1994) Aust Torts Reports ¶ 81-264 ; (1992-1994) 179 CLR 520 (escape of fire from premises). Although it is true that human motivation is complex and a measure of characterisation is required by the sole purpose test (as for any other test adopted) there are advantages in the signal which the present test sends to the mind of the decision- maker. That is all that the different verbal formulae can do - their nuances will invite different responses in different cases. ^[131] cf R v Olbrich (1999) 166 ALR 330 at 337 citing R v Storey [ 1998] 1 VR 359 at 380, fn 87 per Callaway JA. It is simpler and easier to apply the sole purpose test than any of the alternatives. In the case of communications in the form of documents, subjective questions can generally be avoided. The test may be applied in most cases simply by examination of the face of the document. This is not necessarily so where issues such as ``substantial'' or ``appreciable'' or ``dominant'' purposes are introduced, must be applied and, in the case of contest, must be evaluated and decided.

101. Secondly, the tendency of the common law has been to confine, not to expand, the ambit of the privilege. Thus the common law has moved in relatively recent times in all jurisdictions studied from a test which denied the necessity of a sole or even primary purpose ^[132] Birmingham and Midland Motor Omnibus Co Ltd v London and North Western Railway [ 1913] 3 KB 850 at 856 . (and where it was enough that one purpose was that of obtaining or imparting legal advice) to a more stringent requirement variously described as necessitating an appreciable purpose, dominant purpose or sole purpose. The tendency to narrow the scope of the privilege reflects various social phenomena. They include increasing recognition of the importance to persons affected of access to all relevant information ^[133] eg Freedom of Information Act 1982 (Cth), ss 3(1), 11(1); Administrative Decisions (Judicial Review) Act 1977 (Cth), s 13; Privacy Act 1988 (Cth), ss 14 (Principle 6), 18H. There are similar statutory provisions in all Australian jurisdictions. and the special importance of such access in the case of courts. ^[134] John Fairfax & Sons Limited & Anor v Cojuangco (1988) Aust Torts Reports ¶ 80-218 at 68,176; (1988) 165 CLR 346 at 354-355 ; cf British Steel Corporation v Granada Television Ltd [ 1981] AC 1096. Because courts are engaged in a formal procedure and are armed with compulsive powers to fulfil their functions, it is potentially destructive of respect for their decisions if they are obliged to arrive at them, deprived of access to potentially relevant and important communications. There are also important changes such as the explosion of the technology of communications ^[135] Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 585; Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (1996) 69 FCR 149 at 161 (email); cf Nelson, ``Legal Ethics and the Internet: Ethical Considerations in Electronic Communications Between Attorneys and Clients'', (1999) 33 Family Law Quarterly 419. and the altered features of professional legal practice in Australia. The latter is increasingly integrated in many business decisions and the proposed establishment of multidisciplinary practices ^[136] Desiatnik, Legal Professional Privilege in Australia (1999) at 16. will only accelerate this process.

102. It is true that there is an inescapable tension between the interests of justice in the free communication of an individual with a legal adviser and in the making of decisions (especially judicial decisions) based on all relevant and reasonably available evidence. However, the integrity of the judicial branch of government and its ability to perform its constitutional functions requires the imposition of necessary limitations on the excessive expansion of the privilege. To the extent that it expands, it has the potential to undermine the discharge by the independent courts of their vital role. This is why informed writers suggest the need for brakes on the ambit of the privilege. ^[137] Zuckerman, ``Legal Professional Privilege and the Ascertainment of Truth'', (1990) 53 Modern Law Review 381. See also R v Uljee [ 1982] 1 NZLR 561 at 576-577 ; Stone and Wells, Evidence: Its History and Policies (1991) at 573; McNicol, Law of Privilege (1992) at 74-75; Desiatnik, Legal Professional Privilege in Australia (1999) at 11.

103. The ability of the independent courts to secure the evidence essential to provide justice according to law is a vital prerequisite to redressing the power imbalances that sometimes exist in society between poor, modestly represented or unrepresented litigants (on the one hand) and powerful, well advised

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ATC 4062

corporations and administration (on the other). In the present proceedings, the parties are equally matched and equally well advised. However, the proposition advanced for the appellant must be tested for its application in the ordinary case where it is often the fact that an individual will be unable to come at justice in proceedings against a well advised corporation or administration unless he or she can secure by discovery or subpoenas (a significant invention of the English law), ^[138] Carter, Subpoena Law and Practice in Australia , (1996) at 10-12 citing Ditfort v Calcraft (1989) 98 FLR 158 . See also Northern Territory of Australia v GPAO (1999) FLC ¶ 92-838 at 85,801; (1999) 73 ALJR 470 at 519; 161 ALR 318 at 385. original documentation critical to the matter in dispute. To the extent that communications in the form of documents can hide under the protection of the privilege, equal justice under law may be denied. ^[139] cf Osman v United Kingdom unreported, European Court of Human Rights, 28 October 1998, pars 150-154.

104. Thirdly, the enactment of the Act, and its adoption in three jurisdictions of Australia, whilst significant, cannot deny certain facts. For the alteration of the established Australian common law on this subject, enactments of the Federal and New South Wales Parliaments were deemed necessary. So far, other legislatures have not followed suit. Whilst the desirability of a uniform national evidence law cannot be doubted, the embrace of the present model has been slow in coming. By inference, therefore, in the recalcitrant jurisdictions, it is considered preferable, at this stage, not to alter the law about the privilege. Saying this is not to fall into the error of drawing inferences about parliamentary ``intention'' from a failure to enact or amend legislation. ^[140] cf R v Reynhoudt (1962) 107 CLR 381 at 388 per Dixon CJ; Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 351 . It is simply to make the point that this Court is here considering an area of the law which Parliaments, advised by law reform bodies, ^[141] Australian Law Reform Commission, Evidence , Report No 38, 1987; New South Wales Law Reform Commission, Evidence , Report No 56, 1988. parliamentary committees ^[142] Australia, Senate Standing Committee on Legal and Constitutional Affairs, Evidence Bill 1993 (Interim Report), June 1994; Australia, Senate Legal and Constitutional Legislation Committee, Evidence Bill 1993 (Final Report), December 1994. and otherwise, have not wholly neglected or ignored.

105. It is one thing for a court to act to repair defects in the common law where legislators have failed to act. It is quite another for courts to intrude and change the established common law when relevant legislative change has been proposed and, in part, has already been adopted. ^[143] Lipohar v R [ 1999] HCA 65 at [ 193]; cf Waldron, The Dignity of Legislation (1999) at 4-5, 165-166. In such circumstances, there are reasons for a measure of caution on the part of courts in the performance of their functions of law-making in societies such as ours where that function is primarily the responsibility of elected parliaments. This is especially so where what is proposed is not the invention of a new rule adopted in other jurisdictions but the abandonment of an established rule which for some time has been accepted as the common law in Australia.

106. Fourthly, the practical significance of the decision which this Court is invited to make cannot be overlooked. It is illustrated by the facts of this case. The dispute between the parties concerns the assessment of income tax payable by a very large corporation. The significant number of documents (originally 577) in respect of which a disputed claim for privilege is made gives some clue as to the ambit of exemptions from disclosure to a court which, if upheld, the dominant purpose test could produce.

107. The importance of discovery and of subpoenas for ensuring that parties, and thereby eventually courts, can gain access to relevant documents cannot be overstated. Quite apart from the documents themselves, and the matters which they reveal on their face, the lines of inquiry which they open up can often be crucial. The information secured in this way frequently means the difference between success and failure in litigation. ^[144] cf Reece v Trye (1846) 9 Beav 316 at 319 [ 50 ER 365 at 366] referring to the concealment of a matter ``without the discovery of which the truth of the case cannot be ascertained''. A recent example of the importance of documents discovered in commercial litigation may be seen in State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 ; 160 ALR 588 . See also Effem Foods Pty Limited v Lake Cumbeline Pty Limited (1999) ATPR ¶ 41-686 ; (1999) 161 ALR 599 . This is why the imposition of a more limited scope for the ambit of the privilege at the stage of discovery and answer to subpoenas from that applicable at the hearing may be justified in principle and is far from irrational.

108. The fundamental danger of any erosion of the sole purpose test is that, to the extent that it occurs, communications, contemporaneous with the matter in dispute, will potentially be excluded from the materials upon which the parties to litigation will be advised on their cases, plead their claims, pursue their evidentiary inquiries, negotiate settlement or seek to establish their assertions at a hearing. To the extent that a dominant purpose test is substituted for the present sole purpose test, variables of other debatable objectives will inevitably be introduced. As a matter of practicality these are bound to increase the scope for cross-examination of a deponent answering to an order for discovery or to a subpoena on behalf of the person receiving them. The explosion of pre-trial hearings of this kind is a blight on civil litigation in the United States. It is one that would be undesirable for courts in Australia to follow, more than they already have. Such developments tend to enhance the power of corporate and administrative litigants which already have the means to outlast most ordinary individuals. ^[145] Galanter, ``Why the `Haves' Come Out Ahead: Speculations on the Limits of Legal Change'', (1974) Law and Society 95 at 117, 121-125. It

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ATC 4063

would need very strong reasons indeed to convince me that this Court should change the established law from a simpler principle, easier to apply, to one susceptible to more protracted pre-trial disputation and contentious evaluation with interlocutory applications and the appeals to which they may give rise. If there is any doubt about this, consider how long it would take to sort out, in the case of almost 600 documents, the disputed question whether the dominant purpose of each communication was to seek or receive legal advice. The sole purpose test narrows the room for such disputes.

109. Fifthly, the dominant purpose test is, of its nature, more likely to advantage corporations and administration at the cost of ordinary individuals. The latter, when engaged or potentially engaged in a legal dispute will either speak personally with a lawyer or engage in correspondence seeking and receiving legal advice, the sole character and purpose of which is easily ascertained. On the other hand, corporations and administration, already subject to many legal requirements can, with minimal imagination, readily present documents as being for a dual purpose - to receive legal advice (perhaps in house) and also to effect a corporate or administrative purpose. Any slippage from the sole purpose test potentially allows a very large amount of such material to be the subject of a claim for the privilege so as to exclude it from the purview of the opposite party and the ultimate decision-maker. In this way, as a matter of practicality, a larger privilege will typically be accorded to the corporation or administration than would ordinarily be accorded to the individual. ^[146] This consideration was certainly in the minds of the majority in Grant v Downs (1976) 135 CLR 674 at 686-688. This is a further reason for adhering to the sole purpose test. It lays emphasis upon the fact that the privilege attaches to communications and not, as such, to documents.

110. To the extent that the corporation or administration specifically seeks and receives legal advice, classified as being solely addressed to and received from a legal practitioner, seems appropriate, as a matter of principle, that it should be in the same position as the individual. ^[147] Chud, ``Note: In Defense of the Government Attorney-Client Privilege'', (1999) 84 Cornell Law Review 1682 at 1702, 1727. But to the extent that people within the corporation or administration communicate with others within or outside that organisation, and direct those communications for other or additional or alternative corporate and administrative purposes, what they are doing is merely engaging in the ordinary operations of the organisation. They are not, as such, only seeking and receiving legal advice. Attention to the purpose of the privilege and to the interchange to which alone it attaches, is another reason for adhering to the sole purpose test. Corporations and administrations are governed, for the most part, by documentary communications. That is how they ordinarily operate. Diminishing access to such documentation will, to that extent, diminish the capacity of courts to enter the mind of the corporation or administration viewed through the contemporaneous means by which its actions, omissions and motives may ordinarily be understood. <sup>[148]</sup> Giles, ``Dispensing with the Rules of Evidence'', (1990) 7 Australian Bar Review 233.

111. Sixthly, it is necessary to return to the fundamental purpose of the privilege. It arises out of ``a substantive general principle of the common law and not a mere rule of evidence''. <sup>[149]</sup> Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 490 per Deane J; cf Goldberg v Ng (1994) 33 NSWLR 639 at 654-655 . Its objective is ``of great importance to the protection and preservation of the rights, dignity and freedom of the ordinary citizen under the law and to the administration of justice and law''. ^[150] (1986) 161 CLR 475 at 490. It defends the right to consult a lawyer and to have a completely candid exchange with him or her. It is in this sense alone that the facility is described as ``a bulwark against tyranny and oppression'' which is ``not to be sacrificed even to promote the search for justice or truth in the individual case''. ^[151] (1986) 161 CLR 475 at 490. None of these considerations is apt to protecting the great bulk of the internal documentation of corporations or administration. Once the privilege is seen as founded upon a notion of fundamental human rights, the idea of expanding the ambit of the privilege for the documents of corporations and administration recedes in urgency. Corporations and administration are not, as such, entitled to fundamental human rights. If anything, the human right of equal access to the courts argues against an expansion of a privilege which, as a matter of practicality, will diminish such right or at least its utility. ^[152] Osman v United Kingdom unreported, European Court of Human Rights, 28 October 1998, pars 150-154.

112. Seventhly, I reach the ultimate reason which persuades me to my conclusion in this appeal. Some of the foregoing considerations might seem to argue against the wisdom of the dominant purpose test which the Federal and New South Wales Parliaments have adopted in their respective Evidence Acts . Of course, that is not a question before this Court. In proceedings to which those Acts apply, courts

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ATC 4064

must give effect to the provisions enacted. However, where this Court is asked to change its mind, to overrule a principle propounded earlier as a general rule and to substitute a new one, the burden of persuasion rests on those who seek the change. That burden is not an inordinate one. ^[153] Attorney-General for NSW v Perpetual Trustee Co (Ltd) (1952) 85 CLR 237 at 243-244 ; John v FC of T 89 ATC 4101 at 4112; (1989) 166 CLR 417 at 438. With fast changing times and circumstances, it is by no means impossible to demonstrate the need for change in the expression of the common law. In matters of evidence and procedure, which have been developed by the judges, change may more readily be accepted than in the re-expression of substantive legal rights. ^[154] Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 at 36-38 .

113. However, one does not arrive at the problem presented by this appeal to find a blank page. On the page of the law are written the holdings of this Court in Grant v Downs , ^[155] (1976) 135 CLR 674. Waind , ^[156] (1979) 1 ANZ Insurance Cases ¶ 60-010; (1979) 141 CLR 648. Waterford , ^[157] (1987) 163 CLR 54. Propend Finance ^[158] (1997) 188 CLR 501. and many other cases. It is therefore for the appellant to establish a real case for the alteration of a principle settled for this country by a decision which has been followed in countless instances. Whilst the decisions of the courts of other countries are entitled to respect, the tendency of the technology of information and of the principles of corporate and administrative transparency since Grant v Downs point to the correctness of the sole purpose test. It is enough to say that none of the reasons advanced, nor all of them in combination, are enough to outweigh the reasons for adhering to the principle established in this country by authority. Whilst I accept that minds may differ on the point, as indeed they have, I am unpersuaded that this Court should overrule its holding in Grant v Downs . The tide of the privilege is ebbing ^[159] Desiatnik, Legal Professional Privilege in Australia (1999) at 7. doubtless out of a recognition that `` [ j]ustice is better served by candour than by suppression''. ^[160] Waugh v British Railways Board [ 1980] AC 521 at 543. We should not now attempt to turn back the tide. Technology, changing professional practice, history and principle urge it on.

Order

114. The appeal should be dismissed with costs.