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
McHugh J This appeal from a decision of the Full Court of the Federal Court of Australia raises two questions of law:
(1) whether legal professional privilege can apply to a copy document where no privilege attaches to the original; and
(2) whether hearsay material may be relied upon to displace legal professional privilege where the privilege is claimed for a document alleged to have been made in furtherance of an illegal or improper purpose.
I would answer the first question: yes, and the second question: no.
Nine search warrants were issued
Suspecting that the respondents were guilty of tax evasion, the Australian Federal Police (the AFP) applied to a justice of the peace for the issue of warrants to search residential and office premises connected with the respondents. Among those premises was the office of the ninth respondent, a solicitor. Pursuant to s 10 of the Crimes Act 1914 (Cth) (the Crimes Act), [1] the justice issued nine warrants. They were identical in terms, apart from the warrant that authorised the search of the solicitor ' s office. The justice directed that that warrant be executed in accordance with the " General Guidelines between the Australian Federal Police and the Law Council of Australia as to the execution of search warrants on lawyers ' premises " , a copy of which was attached to the warrant. [2]
In issuing the warrants, the justice acted on an information sworn by a member of the AFP. In the information, the officer alleged that there were reasonable grounds for suspecting that upon the various premises were documents that would provide evidence of offences against the Crimes Act 1914 (Cth) and the Crimes (Taxation Offences) Act 1980 (Cth). He swore that companies in a partnership known as the Best & Less group had claimed inflated income tax deductions for the expense of garment testing; the testing had been performed for the group by an overseas organisation for fees substantially less than the deductions claimed. The officer alleged that only part of the moneys " paid " to this organisation for garment testing went to the organisation. The rest of the money remitted went to other corporations which lent the money to Australian entities which included Propend Finance Pty Ltd (Propend), the first respondent. In addition, the informant alleged that the ninth respondent, Mr Dunkel, a solicitor, was suspected of being involved in this scheme.
When Mr Dunkel ' s premises were searched, he claimed legal professional privilege for some documents seized by the AFP. As a result, the AFP officers who executed the warrants lodged those documents with the issuing justice and, upon commencement of proceedings in the Federal Court, with the Registry of that court. The AFP officers also gave undertakings not to inspect the seized documents until the courts resolved the privilege claim. In lodging the documents and giving the undertakings, the AFP officers were complying with the practice set out in the guidelines.
After the warrants were executed, the respondents instituted proceedings in the Federal Court challenging the validity of the warrants and the manner of their execution. In addition, they sought the return of the documents the subject of the privilege claim.
The proceedings before the Federal Court of Australia
In the Federal Court, the respondents applied for declaratory relief under the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B of the Judiciary Act 1903 (Cth) on the basis that the search warrants were invalid. Alternatively, they sought a declaration that some of the seized documents were protected from disclosure by legal professional privilege.
Exhibited to one of Mr Dunkel ' s affidavits in support of the proceedings was a compendious schedule entitled " Schedule of Privileged Documents " . In the affidavit, he swore that each document for which privilege was claimed, or a copy thereof, had been brought into existence for the sole purpose of providing legal advice or for use in legal proceedings.
At first instance, Davies J held that, in the absence of any particular legal expertise used in the selection of the documents to be copied, legal professional privilege did not apply to them. His Honour also held that the evidence before the justice of the peace constituted prima facie evidence of fraud and prevented legal professional privilege applying to the documents. As a result, his Honour rejected the claim of legal professional privilege in respect of various documents. [3]
The respondents then appealed to the Full Court of the Federal Court of Australia. That court allowed the appeal in part and ordered that there be a fresh hearing on the respondents ' claim of legal professional privilege in respect of the documents.
On appeal to this court, the appellants seek an order that the appeal to the Full Court from the orders of Davies J be dismissed. In their cross-appeal, the respondents seek to set aside the order of the Full Court for a general hearing on the issue of privilege. They contend that the only issue on the rehearing is, which copy documents are the subject of legal professional privilege.
Whether copies of non-privileged documents may be privileged
Legal professional privilege is the shorthand description for the doctrine that prevents the disclosure of confidential communications between a lawyer and client, confidential communications between a lawyer and third parties when they are made for the benefit of a client, and confidential material that records the work of a lawyer carried out for the benefit of a client unless the client has consented to the disclosure. [4] To be protected by the privilege, a communication must be made solely for the purpose of contemplated or pending litigation or for obtaining or giving legal advice. [5] The privilege does not extend to communications that are made to facilitate the commission of crime or fraud, [6] to abuse the exercise of public power [7] or to frustrate the order of a court. [8]
To many, it has seemed an illogical, even absurd, proposition that the copy of a document can be privileged from disclosure when the original document is not privileged. [9] For this and other reasons, many judges who have considered the question have held that legal professional privilege cannot apply to a copy of a document unless the original was privileged. For example, the Divisional Court has held that, where letters have been lost or destroyed, no privilege attaches to copies of them taken by a solicitor for use in pending litigation. [10] But other English courts have held that a copy document may be privileged although the original was not privileged. [11] In Australia, a similar division of judicial opinion on the question has emerged. [12] However, the balance of authority in this country favours the view that, if the original is not privileged, neither is a copy, even if it was made for the sole purpose of advice or use in litigation. Because the precedents and their reasoning are so inconsistent, this court can only decide the present case by reference to the fundamental principles and the rationale behind the doctrine of legal professional privilege.
The rationale for legal professional privilege
This court has stated the rationale for legal professional privilege [13] in the following terms: [14]
The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision.
Three important points emerge from this statement. First, the statement properly identifies the inherent tension in the doctrine of legal professional privilege: on the one hand, there is the need to protect the confidences of the client and, on the other, there is the public interest in parties to litigation having access to all relevant evidence. [15]
Second, the statement correctly identifies the subject matter of the privilege - communications. This point, however trite it may seem, is fundamental to the determination of the present appeal. Much of the confusion present in the case law arises from a failure to apply it. Legal professional privilege is concerned with communications, either oral, written or recorded, and not with documents per se.
Third, the statement emphasises the paramountcy of the principle of legal professional privilege in our legal system. In this country, legal professional privilege is more than a mere rule of evidence; it " is a substantive general principle which plays an important role in the effective and efficient administration of justice by the courts " , [16] the best explanation of which is that it is a " practical guarantee of fundamental, constitutional or human rights " . [17] In Carter, [18] I pointed out that:
By protecting the confidentiality of communications between lawyer and client, the doctrine protects the rights and privacy of persons including corporations by ensuring unreserved freedom of communication with professional lawyers who can advise them of their rights under the law and, where necessary, take action on their behalf to defend or enforce those rights. The doctrine is a natural, if not necessary, corollary of the rule of law and a potent force for ensuring that the equal protection of the law is a reality.
No doubt it seems contrary to commonsense that the law should give privilege to the copy of a document when it does not give it to the original. But in this area of the law, as in other areas of law and life, commonsense turns out to be a misleading guide. This is because legal professional privilege turns on purpose, and no argument is needed to show that the purpose of a client or lawyer in making a copy document may be very different from the purpose of the person who created the original.
To concentrate on the similarity between the original and the copy or on how the copy came to be made is to miss the whole point of legal professional privilege. The privilege attaches whenever the communication or material is made or recorded for the purpose of confidential use in litigation or the obtaining of confidential legal advice. The protected communication or material may be a telephone conversation between a solicitor and client, a research memo of the legal adviser on an issue pertinent to the client ' s affairs or, as in the present case, the collection and collation of material and documents for the purpose of litigation or obtaining legal advice. As long as the communication was made or the material recorded for the sole purpose of legal advice or pending litigation and was intended to be confidential, the actual form of the communication or recording is irrelevant.
Part of a protected communication may even be a document that was created for a non-privileged purpose but which has been given to, and is in the custody of, a lawyer for the purpose of obtaining legal advice or for confidential use in litigation. As Mason J, with whose judgment Barwick CJ, Stephen, Jacobs and Aickin JJ agreed, pointed out in National Employers ' Mutual General Insurance Association Ltd v Waind: [19] " [d]ocuments submitted by the client to his solicitors for advice or for use in anticipated litigation attract the privilege. " Thus, in Palermo, [20] the Court of Appeal upheld the judgment of Butt J who had refused to order discovery of depositions made by the master and crew of a ship in proceedings before the Board of Trade which the plaintiffs had " obtained for the purposes of this action, and as the phrase is, ' to form part of the brief ' " . If the privilege does not attach to such documents while they are in the custody of the lawyer, disclosure of their contents while in that custody, coupled with the surrounding circumstances, might reveal the nature of the advice that the client was seeking or the client ' s or the lawyer ' s view of the pending litigation. [21] By compelling disclosure, more than just the documents themselves might be handed over to an adversary.
When original documents leave the lawyer ' s custody, however, they cannot by themselves identify the contents of the communication between the lawyer and his or her client. Thereafter, their privileged status depends on the purpose of their original creation. No doubt if the client is required to produce an original document which has been the subject of a communication between a lawyer and the client, an inference can sometimes be drawn as to why the document was in the lawyer ' s custody. But since the original document was not created solely for the purpose of obtaining legal advice or assistance, it would be stretching legal professional privilege too far to cloak the document with privilege merely because at some stage it was the subject of legal advice or assistance.
Where a claim for privilege is made in respect of the copy of a document given to a lawyer for the purpose of obtaining legal advice or assistance, it is likely that the copy was prepared solely for that purpose. Because this is so, the copy will usually have a stronger claim for privilege than the original document. It will usually have a stronger claim because the relevant communication is not the original document; it is the client ' s conduct in giving the copy to the lawyer. Handing the copy to the lawyer is as much a part of the communication between lawyer and client as an oral summary of the original document would be part of a communication between lawyer and client. If handing the copy to the lawyer satisfies the test in Grant v Downs, [22] as it usually does, it is privileged.
It follows that, if a solicitor makes a copy of a document that was not privileged, the copy will be privileged if it was created for the sole purpose of obtaining or giving confidential legal advice or for the confidential use of legal advisers in pending litigation. Similarly, if the client makes a copy of a document solely for that purpose or use, the copy will be privileged. If this were not so, inspection of the copied material could expressly or inferentially reveal information that would destroy the confidentiality of the communication between the legal representative and the client. Either in their assembly or their selection, disclosure of the documents could reveal a line of reasoning as to the relevant issues in the case or their relative merit. Moreover, once the privilege attaches, it remains until the client waives it. The copy document constitutes and records part of the communication between the lawyer and the client and was created solely for the purpose of obtaining legal advice. In these circumstances, the copy is always privileged. Even if it is sought for use in subsequent and unrelated proceedings, it is privileged from production. [23]
It also follows that, whether the claim for privilege concerns a communication or the work product of a lawyer, purpose and not skill is the criterion for determining the claim. It is true that statements can be found in the cases to the effect that a copy will be privileged if it involves the application of legal skill on the part of a lawyer. [24] Thus in Lyell v Kennedy, Bowen LJ seems to have upheld a claim of legal professional privilege in respect of copies of public documents on the basis that their collection was " the result of professional knowledge, research, and skill " . [25] If the application of legal expertise was the test for determining whether privilege attached to a copy document, however, an unmarked photocopy of a solicitor ' s notes for use by counsel would arguably have no privilege.
Two arguments have been used against giving legal professional privilege to copy documents. In Roux v Australian Broadcasting Commission, Byrne J said that such a rule would result in " trial by ambush " which in the " modern era " was " no longer acceptable " . [26] But the question of privilege for a copy document has no bearing on litigation where the original non-privileged document is in the hands of the party required to make discovery. That party must produce the original, whether or not any copy of it is privileged. Moreover, if a party copied a non-privileged document with the intention of destroying the original, the copy would not be privileged even if it was also made for the sole purpose of obtaining legal advice or for confidential use in litigation. In that situation, the conclusion is inevitable that one of the purposes of making the copy was to ensure that the maker could safely destroy the original yet at the same time retain a record of the underlying transaction. Similarly, if a party copied a document and placed the non-privileged original in the custody of a lawyer, there would probably be no privilege for either document.
A second argument commonly put against giving privilege to a copy of a non-privileged document is that the public interest is not served by denying parties access to information relevant to litigation if obtaining the information in its original form would cause delay or expense. This argument has much force. But if a copy were not privileged unless the original was privileged, a lawyer could still make a summary of the original and that summary would be privileged. If copies had only a derivative privilege, lawyers would be forced to summarise the contents of original documents to protect their clients ' confidences. Such a practice would add to the expense of litigation. [27] Overall, that expense would almost certainly be greater than the additional expense incurred from time to time in obtaining original documents when copies are in the possession of the person claiming privilege.
The first question in this appeal must therefore be answered, " yes " .
In the present case, many of the documents listed by Mr Dunkel in the " Schedule of Privileged Documents " attached to his affidavit were described as being created solely for a privileged purpose. If this is so, then, subject to the issue of fraudulent purpose, those documents are protected by legal professional privilege. It follows that the Full Court of the Federal Court was correct in setting aside the orders made by Davies J in respect of this part of the decision.
Whether the allegations of criminal offences prevent legal professional privilege applying to the communications
In one of his orders, Davies J declared 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 [which he identified] are not subject to legal professional privilege " . [28] I agree with Gummow J for the reasons he gives that the Full Court did not err in setting aside this declaration. However, by their cross-appeal, the respondents claim that this issue should have been decided in their favour. To this issue, I now turn.
Communications in furtherance of a fraud or crime are not protected by legal professional privilege because the privilege never attaches to them in the first place. [29] While such communications are often described as " exceptions " to legal professional privilege, they are not exceptions at all. Their illegal object prevents them becoming the subject of the privilege. [30]
A mere allegation of illegal purpose or fraud is not, of itself, sufficient to displace a claim of legal professional privilege. A person who alleges that legal professional privilege does not apply to a communication tenders an issue for decision and has the onus of proving it. Subject to any statutory provisions to the contrary, any evidence tendered in a court of justice to prove an issue must comply with the ordinary rules of evidence. Legal professional privilege is a legal right. Its prima facie application to a communication can only be displaced by admissible evidence. That evidence does not have to prove that the communication was made in furtherance of a crime or the commission of a fraud, but it must establish a prima facie case that the communication was so made. In O ' Rourke v Darbishire, [31] Viscount Finlay said that what is required is " something to give colour to the charge. The statement must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact " .
To displace the privilege in the present case, the appellants relied on an affidavit of Assistant Commissioner Baer to which was exhibited a copy of the information put before the justice of the peace. The information was sworn by Detective Sergeant Taciak, the second appellant in this appeal, who did not give evidence before Davies J. Davies J held that the affidavit of Assistant Commissioner Baer and its exhibit was sufficient to discharge the evidentiary onus upon the appellants and to displace any attached privilege. [32]
However for the purpose of the proceedings before Davies J, the statements in the informations were hearsay. The out of court statements of Detective Sergeant Taciak recorded in the information were not evidence in the proceedings before his Honour. They got before the Full Federal Court only through the affidavit of Assistant Commissioner Baer. In so far as he can be taken to have deposed to the facts in the information, his evidence was hearsay and inadmissible. There is nothing in s 10 of the Crimes Act 1914 (Cth), any other part of that Act or any other legislation which declares that the rules of evidence do not apply in determining whether a communication is privileged. That being so, the claim of the appellants that the respondents could not rely on legal professional privilege failed because there was no admissible evidence before Davies J to support the claim.
The appellants relied on Baker v Evans [33] for the proposition that the contents of the information used to obtain a search warrant can be used to prove that evidence exists to support a claim of fraudulent purpose. In Baker v Evans, a case where the prosecution appears to have relied only on the " facts " in the information to displace legal professional privilege, Pincus J held that the claim of privilege could not prevail. [34] However, while there is no legal rule that prevents the facts alleged in an information being used to determine whether legal professional privilege has been displaced, such facts can only be relied on when somebody with first-hand knowledge of them has sworn to their accuracy in the judicial proceedings which has to decide the issue of privilege. Whether or not that was the case in Baker v Evans, [35] it is not the case here.
The cross-appeal must therefore be allowed because there was no admissible evidence before Davies J upon which he could find that legal professional privilege did not attach to the documents because of the respondents ' illegal object or purpose.
Orders
I agree with the orders proposed by Gaudron J.
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