HIGH COURT OF AUSTRALIA - GENERAL DIVISION
COMMISSIONER, AUSTRALIAN FEDERAL POLICE and ANOTHER v PROPEND FINANCE PTY LTD
Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ
7 February 1997 - Canberra
Toohey J The circumstances giving rise to this appeal are detailed in other judgments. It is necessary to make only brief mention of them in these reasons. I come immediately to the two questions raised for decision by the appeal. In doing so, it is not possible to divorce these questions entirely from the form of the proceedings taken by the respondents in the Federal Court, that is, under the Administrative Decisions (Judicial Review) Act 1977 (Cth) and pursuant to s 39B of the Judiciary Act 1903 (Cth).
The first question is whether, and in what circumstances, legal professional privilege attaches to a communication in a copy document when no privilege attaches to the original. The second question is, in effect, whether hearsay material may be used to displace legal professional privilege where the claim of privilege relates to a document which is said to have come into existence in furtherance of an illegal or improper purpose.
The views of the primary judge and the Full Court of the Federal Court
In allowing in part an appeal by the respondents, [1] all members of the Full Court of the Federal Court (Beaumont, Hill and Lindgren JJ) rejected the view of the primary judge, Davies J, that a copy document could not be the subject of legal professional privilege if the original document was itself not privileged, even though the copy was made for the sole purpose of obtaining legal advice, unless particular legal expertise was used in the selection of the documents. [2] However their Honours were not in entire agreement as to the test to be used to determine when the privilege might operate in respect of a copy of a non-privileged document.
Beaumont J saw the relevant inquiry in these terms: " in the particular circumstances in which the copy document came into existence, should it be treated as, in truth, part of the substantive process of the seeking or the obtaining of legal advice or of preparing for litigation. " [3] Hill J approached the matter on the footing that the privilege attaches to communications, whether they be recorded in documents or are oral. It follows, said his Honour, " that copies of documents otherwise not the subject of legal professional privilege are themselves the subject of such privilege only where the copies are made for the sole purpose of obtaining advice upon matters contained in or concerning the original and in circumstances where to compel production of the copy would or could operate to reveal the subject matter upon which advice was sought " . [4] Lindgren J thought that " the public policy which supports the existence of legal professional privilege is satisfied if copy documents stand in the same position in relation to privilege as the original " . [5] His Honour accepted that in some cases this formulation of the law might seem inadequate. He instanced the situation where inspection may reveal a line of thinking, whether of lawyer or client, which led to the selection of the copies or to the form in which the material had been assembled. Again, a copy document may bear highlighting, underlining or even annotations. Yet again, copied documentation may be so integrated and mixed up with privileged original material that the former cannot be inspected without the latter being seen or its nature revealed. Lindgren J did not see these as exceptions to any principle but rather as falling within the general principle he had enunciated. The examples given applied equally to original documents. [6] Thus, in terms of general principle, Lindgren J ' s approach was close to that of Davies J.
Legal professional privilege
I accept that privilege may attach to a communication in the form of a copy of a non-privileged document, but only in the limited circumstances to which Lindgren J referred. Reference to copy documents tends to obscure the fact that privilege does not attach to a piece of paper. It attaches to a communication, written or oral, and it is the communication that is at issue. While it is natural to speak of legal professional privilege in terms of documents, it is the nature of the communication within the document that determines whether or not the privilege attaches. [7] It is as a consequence of this distinction that a legal adviser may be " required to give evidence of observed fact, notwithstanding that he observed that fact while acting in the course of a retainer and would not have observed the fact had he not been so retained " . [8]
As always, it is helpful to see what the author of the monumental treatise on evidence has to say. Wigmore identifies the general principle of privileged communications in the following way: [9]
[F]our fundamental conditions are recognized as necessary to the establishment of a privilege against the disclosure of communications:
(1) The communications must originate in a confidence that they will not be disclosed.
(2) This element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties.
(3) The relation must be one which in the opinion of the community ought to be sedulously fostered.
(4) The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation.
Although this formulation employs the language of " confidence " and " confidentiality " , the author makes it clear in what follows that confidentiality of itself does not create the privilege. Legal professional privilege relates to production, not admissibility. [10] Wigmore ' s formulation is important because of the emphasis it places on the communication rather than the form the communication takes. This distinction is not always maintained in the authorities. As Hill J noted, [11] there are passages in judgments of this court that speak of the privilege in relation to " documents " . [12] But, when such passages are taken in context, it is apparent that it is the information in the document with which the court is concerned. For that reason, the question whether privilege attaches to a communication in a copy document is not answered simply by asking whether the original document is itself privileged.
Before considering further the legal principles involved in this aspect of the appeal, it is as well to recall some of the circumstances which gave rise to the appeal. Documents in the possession of the respondents had been seized by the Australian Federal Police in execution of several search warrants. The validity of the warrants was upheld by the primary judge and by the Full Court. That matter has not been pursued in this court. The relief which was sought by the respondents, and against the granting of which by the Full Court this appeal is brought, was a declaration that certain of the documents seized " are subject to legal professional privilege " and an order for their return. Some of these documents had been seized at the offices of a solicitor who was a director of the first respondent, Propend Finance Pty Ltd (Propend). Included in the material for which privilege was claimed on behalf of Propend was a quantity of documents in the solicitor ' s office which were copies of documents which themselves were not privileged. Davies J held: [13]
There are many bundles of documents in the schedule in respect of which, in my opinion, privilege fails for the reason that the original documents themselves are not shown to be the subject of legal professional privilege. At the present time, the evidence does not show that there was any particular legal expertise used in the selection of the documents.
The present respondents successfully challenged that approach before the Full Court.
The importance of legal professional privilege has been emphasised in many decisions of this Court and of other courts. A recent instance is Carter v Northmore Hale Davy & Leake. [14] At the same time a number of cases have sounded a warning against widening the privilege lest the need for the courts to have access to all relevant documents should be unduly undermined. [15] Wigmore has said of legal professional privilege: [16]
It is worth preserving for the sake of a general policy, but it is nonetheless an obstacle to the investigation of the truth. It ought to be strictly confined within the narrowest possible limits consistent with the logic of its principle.
This view was endorsed by Mason J in O ' Reilly v State Bank of Victoria Comrs. [17] I do not understand his Honour to have retreated from that view in Baker v Campbell. [18] The importance of the disclosure and production of all relevant documents in the possession, custody or power of parties to litigation has been stressed again and again. Legal professional privilege is an exception to that principle and can only be justified as serving the public interest which gives rise to the exception. [19] Not only that but, as Aldous J observed in Lubrizol Corporation v Esso Petroleum Ltd, [20] a judge must be able to explain why the particular exception sought to be maintained is in the public interest. The difficulties of explanation are accentuated when there is a departure from the basic proposition that if an original document is not privileged, nor is a copy of that document. [21]
Legal professional privilege: copy documents
In Buttes Oil Co v Hammer (No 3) Lord Denning MR said: [22]
If the original document is privileged … so also is any copy made by the solicitor. But, if the original is not privileged, a copy of it also is not privileged - even though it was made by a solicitor for the purpose of the litigation.
His Lordship thought that the reason why this was so was because the original, not being privileged, " can be brought into court under a subpoena duces tecum and put in evidence at the trial " . But, with respect, that cannot afford a sufficient reason because it is the communication that is sought to be privileged, not the document. It may be that inspection of the copy document would disclose some confidential privileged communication. Nevertheless Lord Denning ' s basic proposition holds good. [23]
An early case in which the privilege attaching to copy documents was at issue is Lyell v Kennedy. [24] The documents were in the possession of the defendant ' s solicitor but they were copies of public records or other documents which were described as publici juris. The Court of Appeal held that the copies and extracts from the originals were privileged if made or obtained by the professional advisers of a party for his defence to the action and were the result of the professional knowledge, research and skill of those advisers. Bowen LJ said: [25]
A collection of records may be the result of professional knowledge, research, and skill, just as a collection of curiosities is the result of the skill and knowledge of the antiquarian or virtuoso, and even if the solicitor has employed others to obtain them, it is his knowledge and judgment which have probably indicated the source from which they could be obtained.
As to Lyell v Kennedy, I agree with the view expressed by Byrne J in Roux v Australian Broadcasting Commission that: [26]
… the decision in that case to uphold the privilege was in fact based on the premise that to permit inspection of the solicitors ' copies, would show to the plaintiff what was the view of the defendant or its lawyers as to the issues in the plaintiff ' s case.
Legal professional privilege is concerned with protecting the confidence of communications between lawyer and client. If therefore an original document is not privileged, a copy of that document is not privileged merely because the lawyer receives it from his or her client, even if it is to assist in the conduct of litigation. Where privilege is claimed for the contents of a document, it is necessary to look at the purpose for which the document recording the information came into existence, not the purpose for which the information was obtained. [27] If the document was not brought into existence for the purpose of litigation, its contents are not privileged even if the information which it contains was obtained for that purpose. " Therefore, if a solicitor gets from a third person for use in conducting the client ' s case a document that was not created in circumstances that attract privilege, on discovery the client must produce the document to the other side. " [28] There must be something in the circumstances in which a copy of a non-privileged document came into existence in order to attach privilege to the copy. An illustration is where a lawyer makes annotations on a copy document, for the purposes of the conduct of litigation. On the other hand, it might be said that once annotated the copy document is different from the original. In that event only the annotation may be privileged. Selective copying is unlikely to attract the privilege, particularly at the present time " where indiscriminate photocopying is the norm " . [29] If the position of the copy in a collection of documents or something else about the copy tends to indicate the manner in which the litigation is to be conducted, privilege may attach. That is a limited situation indeed and, in the ordinary course, there is no reason why the document in question should not be removed from the collection so that it may be inspected. [30] It must be accepted that the exercise of professional skill in the assembly of material does not offer a very certain test but it is, I think, a necessary qualification to the general proposition that a copy document does not attract privilege if the original is not privileged.
It is argued that to refuse privilege to a copy document because the original is not privileged will encourage resort by investigators to the documents in a solicitor ' s office rather than carrying out ordinary investigative procedures. This is an argument based on inconvenience rather than on principle. This is not to underestimate the inconvenience that may sometimes be involved though, in the case of warrants executed on the premises of lawyers, the problems have to some extent been alleviated by the General Guidelines between the Australian Federal Police and the Law Council of Australia, dated 7 June 1990. [31] And the argument tends to overlook the fact that in civil proceedings an affidavit of documents must disclose the existence of all documents that are or have been in the possession or power of the deponent, including documents for which privilege is claimed.
If a third party shows to the solicitor for a party to litigation a non-privileged document and the solicitor takes the document into his or her custody for the sole purpose of claiming the privilege, it is clear that the document is not protected by privilege. [32] As Byrne J observed in Roux: [33]
It seems to me to be absurd in these circumstances to say that where the solicitor does not retain the original, but makes a verbatim transcript or a photocopy of the document for the relevant sole purpose, that copy document acquires immunity which the original does not have.
To take as a basic proposition that a copy of a non-privileged document does not attract privilege does not in any way undermine the importance of the privilege. Rather it sets logical bounds to the privilege. [34]
Although, on the question of legal professional privilege and copy documents, the Full Court allowed the appeal from Davies J, it should not be thought that all members of the Full Court took an entirely different view of the matter from the primary Judge. All their Honours were of the view that the submission to a legal adviser of a copy of a non-privileged document does not of itself attract legal professional privilege. There has to be something more. The difference between the primary Judge and the members of the Full Court, as I read their judgments, is this. Davies J confined what I have referred to as the " something more " to situations in which the legal practitioner brings to bear his or her particular legal expertise in the selection of the copy documents for which privilege is claimed. Beaumont J asked whether, in the particular circumstances in which the copy document came into existence, it should be treated as part of the substantive process of the seeking or the obtaining of legal advice or preparing for litigation. Hill J ' s reasons led him to the conclusion that copies of documents not otherwise the subject of privilege are themselves the subject of such privilege only where the copies are made for the sole purpose of obtaining advice upon matters contained in or concerning the original and in circumstances where to compel production of the copy would or could reveal the subject matter upon which advice was sought. Lindgren J put the matter in terms not all that dissimilar to the approach of Davies J, by asking whether the original is privileged. If the original is non-privileged, so is a copy of it even though the copy was made for a privileged purpose. The qualifications accepted by Lindgren J are somewhat wider than those recognised by Davies J. I agree with the approach taken by Lindgren J. [35]
I also agree with Lindgren J that para 6 of the orders made by Davies J declaring that " copies of documents made for the purpose of obtaining legal advice, the originals of which are not subject to legal professional privilege are not privileged " needs modification to account for these qualifications. [36] Lindgren J would have allowed the appeal to the Full Court in respect of para 6, by substituting a declaration that (Propend (1995) 58 FCR 224 at 270; 30 ATR 311 at 352-3) " copies of documents made solely for the purpose of obtaining legal advice, the originals of which are not subject to legal professional privilege, are not, by that reason alone, privileged " . I agree with that course. Because the orders made by the Full Court simply set aside a number of orders made by Davies J including para 6, I would allow the appeal to the extent envisaged by Lindgren J. It follows that I would refuse the cross-appeal in so far as the respondents rely upon the " sole purpose " test for the privilege.
Illegal or improper purpose
This aspect of the appeal has a somewhat artificial character. The review sought by the respondents was with respect to the issue of the search warrants. The warrants did not authorise the seizure of documents to which legal professional privilege attached. Davies J did not determine that privilege attached to particular documents. In para 4 of his order, his Honour directed that, subject to declaration 5, issues as to privilege should be determined after the documents had been examined. Paragraph 5 declares that, " by reason of the allegation of offences under s 86(1)(e) and s 86A of the Crimes Act 1914 (Cth) and of the proof given in support thereof, the following documents are not subject to legal professional privilege " . The documents are then identified. Paragraph 6 of the order declares that " copies of documents made for the purpose of obtaining legal advice, the originals of which are not subject to legal professional privilege are not privileged " . Paragraph 6 then gives examples of such documents. His Honour ordered that documents to which privilege did not attach " be released to the Australian Federal Police " . [37]
The Full Court held that the privilege is not displaced by making a mere charge of crime or fraud; there must be some prima facie evidence that the charge has some foundation in fact. The allegation that offences had been committed was made in a sworn information containing more than 40 pages and with annexures presented to this court in three lever arch files. The informant was the second respondent, Detective Sergeant Taciak who, in the information, spoke of his belief as to various matters " on the basis of the facts stated below " . The information was exhibited to an affidavit sworn by Assistant Commissioner Baer who did not depose to the truth of any of the contents of the information. Because the affidavit of Assistant Commissioner Baer merely exhibited the information and did not speak to its contents, the Full Court held that the information was hearsay as to anything it contained. In the view of the Full Court, once the material in the information was rejected, as it should have been, all that remained was a bare assertion of improper or illegal purpose. It ordered that (Propend (1995) 58 FCR 224 at 239; 30 ATR 311 at 325) " there be a fresh hearing on the [respondents ' ] claims for privilege " .
I have great difficulty in understanding why it was said that the information was hearsay as to anything it contained. It is no doubt true that Detective Sergeant Taciak had no personal knowledge of much of what appears in the information. But some of the material was a matter of public record, and if admissibility is the relevant test (as to which see below) some was admissible as to the existence of the material, if not as to the truth of the contents.
The respondents also complained that Detective Sergeant Taciak was not available for cross-examination. Before this court, counsel for the appellants said that, if the respondents had wished to cross-examine the police officer, they had only to ask and " we would have brought him forward " . In all the circumstances I would not attach any importance to this aspect.
Again it is necessary to bear in mind the nature of the proceedings before Davies J. His Honour was entertaining applications for declaratory relief. His declaration that (Propend [No 2] (1994) 35 ALD 25 at 45-6; 29 ATR 87 at 109), " by reason of the allegation of offences " and " of the proof given in support thereof " , some of the documents seized were not subject to the privilege was not based on the information document alone. Indeed he said expressly: [38]
It is clear from Baker v Campbell that the mere fact that a Justice of the Peace has accepted a sworn information and has issued a warrant under s 10 of the Crimes Act 1914 (Cth) will not, of itself, be sufficient to overcome legal professional privilege. The proof must be sufficient to justify the court in holding that the privilege does not apply.
And his Honour had earlier said: [39]
I have read the sworn information of Detective Sergeant Taciak but cannot see in it sufficient material to overcome the privilege.
On this footing his Honour rejected a submission that a substantial number of documents were " exempt from privilege by reason of the allegation of offences under the Crimes (Taxation Offences) Act 1980 (Cth) " . But his Honour also held that a substantial number of documents (Propend [No 2] (1994) 35 ALD 25 at 44; 29 ATR 87 at 107) " should … be exempt from the privilege " . He reached this conclusion on the footing that there was (Propend [No 2] (1994) 35 ALD 25 at 44; 29 ATR 87 at 107) " sufficient prima facie evidence in the material before the Justice of the Peace to overcome, in the public interest, the claim of legal professional privilege " . This conclusion followed a review of the material before him. With respect, I do not think that the judgments of the Full Court had sufficient regard to all the material Davies J took into account in reaching his conclusion that certain documents were exempt from legal professional privilege.
There is perhaps an ambiguity in the sentence: [40]
But it seems to me that there is sufficient prima facie evidence in the material before the Justice of the Peace to overcome, in the public interest, the claim of legal professional privilege.
Was Davies J then reviewing a " decision " of the Justice or simply alluding to the material before him? It must have been the latter because the Justice made no decision as to exemption from privilege. He did accept, by issuing the warrant, that there were " reasonable grounds for believing " that the material " will afford evidence of the following offences " . He then referred to s 86(1)(e) and 86A of the Crimes Act 1914 (Cth) and ss 5 and 13 of the Crimes (Taxation Offences) Act 1980 (Cth). [41] I do not think this matters in the end because it is clear that Davies J reached his own finding of (Propend [No 2] (1994) 35 ALD 25 at 44; 29 ATR 87 at 107) " sufficient prima facie evidence " . The view of the Full Court that there was no admissible evidence before Davies J is therefore not warranted.
The respondents take their stand on the judgment of Gibbs CJ in Attorney-General (NT) v Kearney (a judgment with which Mason and Brennan JJ agreed), in which his Honour said: [42]
[Legal professional] privilege is of course not displaced by making a mere charge of crime or fraud.
Gibbs CJ then adopted the language of Viscount Finlay in O ' Rourke v Darbishire [43] that:
there must be something to give colour to the charge … there must further be some prima facie evidence that it has some foundation in fact.
Goff J put the test somewhat higher when, in Butler v Board of Trade, he said: [44]
If one rejects the bare relevance test, as I have done, then what has to be shown prima facie is not merely that there is a bona fide and reasonably tenable charge of crime or fraud but a prima facie case that the communications in question were made in preparation for or in furtherance or as part of it.
I am not persuaded that the material before Davies J could not establish to the reasonable satisfaction of his Honour prima facie evidence of illegal or improper purpose. [45] There is no reason why hearsay material should be excluded. Indeed, the very nature of the exercise involved will often necessitate some hearsay evidence. If there is nothing more than hearsay the court is unlikely to be persuaded to the required standard. But that is not to say that hearsay material must be disregarded.
The relevant English authorities are canvassed by Vinelott J in Derby & Co Ltd v Weldon (No 7). [46] It is unnecessary to refer to those authorities but his Lordship ' s conclusion may be noted that:
… it is, I think, too restrictive to say that the plaintiff ' s case must always be founded on an admission or supported by affidavit evidence or that the court must carry out the preliminary exercise of deciding on the material before it whether the plaintiff ' s case will probably succeed, a task which may well present insurmountable difficulties in a case where fraud is alleged and the court has no more than affidavit evidence. [47]
A decision directly in point is that of Dohm J in Re Milner [48] where a claim of solicitor-client privilege was met by an allegation of fraud. Dohm J asked whether there was a prima facie case of fraud on the material before the court and held that there was, by reason of an affidavit sworn by a taxation officer setting out particulars which indicated fraudulent preferences. His Lordship concluded: [49]
These sworn facts and the inferences go beyond mere conjecture and give credence to the sworn allegation of fraudulent misconduct.
Orders proposed
Because of the view I have taken of the question of legal professional privilege and copy documents I would allow the appeal to the extent that the order made by the Full Court directs that (Propend (1995) 58 FCR 224 at 239; 30 ATR 311 at 325 ) " there be a fresh hearing on the appellants ' claims for privilege " . I would confine the claims of privilege for copy documents in the manner suggested by Lindgren J I would dismiss the respondents ' cross-appeal.
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