Australian Crime Commission v Stewart [2012] FCA 29 (30 January 2012)

Last Updated: 2 February 2012

FEDERAL COURT OF AUSTRALIA

Australian Crime Commission v Stewart [2012] FCA 29

Citation:	Australian Crime Commission v Stewart [2012] FCA 29
Parties:	AUSTRALIAN CRIME COMMISSION v ANTHONY STEWART, JOHN CORNELL, PAUL HOGAN and RIMFIRE FILMS PTY LTD
File number:	NSD 23 of 2010
Judge:	STONE J
Date of judgment:	30 January 2012
Catchwords:	EVIDENCE – legal professional privilege – privilege claimed over documents obtained pursuant to search warrants and summons under the Australian Crime Commission Act 2002 (Cth) and Crimes Act 1914 (Cth) – whether Australian Crime Commission (ACC) entitled to inspect EVIDENCE – whether documents subject to legal professional privilege – applicable principles – Evidence Act 1995 (Cth) not relevant – no issue of admissibility of evidence - issue to be determined under common law – legal professional privilege a fundamental common law immunity – whether reference to common law is to common law of Australia PRIVATE INTERNATIONAL LAW – choice of law – whether right to inspect documents seized under Australian statute gives rise to choice of law question – question of statutory interpretation – no choice of law question – issue governed by Australian principles of legal professional privilege PRIVATE INTERNATIONAL LAW – if choice of law question arises whether Australian choice of law principles apply
Legislation:	Australian Crime Commission Act 2002 (Cth) Crimes Act 1914 (Cth) Evidence Act 1995 (Cth) ss 118-122 Trade Practices Act 1974 (Cth) s 155 Trade Practices Legislation Amendment Act (No 1) 2006 (Cth)
Cases cited:	A3 v Australian Crime Commission (No 2) [2006] FCA 929 Arrow Pharmaceuticals v Merck & Co Inc [2004] FCA 1131; (2004) 210 ALR 593 AWB Ltd v Cole [2006] FCA 571; (2006) 152 FCR 382 Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 Balabel v Air India [1988] 1 Ch 317 Barnes v Commissioner of Taxation [2007] FCAFC 88; (2008) 242 ALR 601 Bourns Inc v Raychem Corp (No.3) [1999] 3 All ER 154 Bunbury v Bunbury [1839] EngR 1036; (1839) 2 Beav 173 Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1996] HCA 3; (1997) 188 CLR 501 Corporate Affairs Commission of New South Wales v Yuill [1991] HCA 28; (1991) 172 CLR 319 Commissioner of Taxation v Pratt Holdings Pty Ltd [2005] FCA 1247; (2005) 225 ALR 266 Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 Daniels Corporation International Pty Limited v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 DSE Holdings Pty Ltd v InterTan Inc [2003] FCA 1191; (2003) 135 FCR 151 Esso Australia Resources Limited v Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49 Federal Commissioner of Taxation v Spotless Services Ltd [1996] HCA 34; (1996) 186 CLR 404 Garsec Pty Ltd v His Majesty the Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682 Grant v Downs (1976) 135 CLR 74 Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529 Grofam Pty Ltd v Australia and New Zealand Banking Group Limited (1993) 45 FCR 445 IBM Corporation v Phoenix International (Computer) Ltd [1995] 1 All ER 413 In re Duncan [1968] P 306 Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 Kruger v Commmonwealth [1997] HCA 27; (1997) 190 CLR 1 Kuru v New South Wales [2008] HCA 26; (2008) 236 CLR 1 at [37] Lawrence v Campbell [1859] EngR 385; (1859) 4 Drew 485 at 491; [1859] EngR 385; 62 ER 186 at 188 Mabo v Queensland [No 2] [1992] HCA 23; (1992) 175 CLR 1 McFarlan v Rolt (1872) LR 14 Eq 580 Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow [1995] 1 All ER 976 John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277 Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357 (FC) Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 152 CLR 328 Regie Nationale des Ursines Renault SA v Zang [2002] HCA 10; (2002) 210 CLR 491 Ritz Hotels Ltd v Charles of the Ritz Ltd (No 4) (1987) 14 NSWLR 100 Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48; [2005] 1 AC 610
Date of hearing:	8-12 November 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	110
Counsel for Applicant:	JC Sheahan SC with S Maharaj QC and J Gleeson
Solicitor for Applicant:	Australian Government Solicitor
Counsel for Respondents:	NC Hutley SC with P Kulevski
Solicitor for Respondents:	Robinson Legal

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 23 of 2010

BETWEEN:	AUSTRALIAN CRIME COMMISSION Applicant
AND:	ANTHONY STEWART First Respondent JOHN CORNELL Second Respondent PAUL HOGAN Third Respondent RIMFIRE FILMS PTY LTD Fourth Respondent

JUDGE:	STONE J
DATE OF ORDER:	30 JANUARY 2012
WHERE MADE:	SYDNEY

THE COURT DECLARES THAT:

1. The application of legal professional privilege to the documents contained in the files identified as MFI 2 and listed in the table identified as MFI 6 in this proceeding is to be determined in accordance with the law of Australia.
2. The documents listed in Annexure A to the reasons for judgment and described in column 4 under the heading, ‘Conclusion’ as being “prima facie privileged” are determined to be capable of attracting legal professional privilege subject to questions or issues relating to:

(a) whether such documents were made or used in furtherance of an improper purpose; or

(b) whether privilege in those documents has been lost through waiver or for any other reason.

3. The documents listed in Annexure A to the reasons for judgment and described in column 4 as being “not privileged” are not capable of attracting legal professional privilege.
   

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 23 of 2010

BETWEEN:	AUSTRALIAN CRIME COMMISSION Applicant
AND:	ANTHONY STEWART First Respondent JOHN CORNELL Second Respondent PAUL HOGAN Third Respondent RIMFIRE FILMS PTY LTD Fourth Respondent

JUDGE:	STONE J
DATE:	30 JANUARY 2012
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1. The applicant in this proceeding, the Australian Crime Commission (ACC), in exercise of powers under the Australian Crime Commission Act 2002 (Cth) (ACC Act) and warrants issued under the Crimes Act 1914 (Cth) (Crimes Act), obtained a large number of documents that relate to the affairs of the four respondents. The ACC disputes the respondents’ claims of legal professional privilege in respect of many of those documents (Disputed Documents) and seeks declarations that legal professional privilege does not apply.

Preliminary issues

Agreed questions

2. The parties agreed that, as an interlocutory step and before addressing any issue of improper purpose or waiver of privilege, it would be desirable for the Court to determine whether, absent those considerations, the Disputed Documents or any of them were capable of attracting legal professional privilege. Accordingly, with the consent of the parties, on 24 August 2010 the Court ordered that:

Pursuant to Order 29 rule 2 of the Federal Court Rules the following questions of fact and law be decided separately from any other question and before any trial in the proceedings:
2.1 which law or laws govern the determination of questions concerning the attraction of privilege for the documents identified by the applicant pursuant to direction 3 below (“Disputed Documents”);
2.2 whether the Disputed Documents are capable of attracting privilege, but for, and without any regard to be had to, any questions or issues relating to:
2.2.1 whether Disputed Documents were made or used in furtherance of an improper purpose;
2.2.2 whether privilege has been lost in the Disputed Documents through waiver or for any other reason.

3. The issues referred to in 2.2.1 and 2.2.2 are deferred to a later date to be considered in relation to those of the Disputed Documents that are found to be prima facie privileged in whole or in part.

Present controversy does not involve judicial review

4. The task of the Court in determining whether legal professional privilege attaches to a document which has been seized pursuant to a warrant or whose production has been compulsorily required does not involve review of the decision to seize the document or to require its production. This much is clear from the decision in Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1996] HCA 3; (1997) 188 CLR 501 (Propend) which predates Esso Australia Resources Limited v Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49 (Esso). Apart from the reference to “sole purpose” (which, following Esso, should be read as ‘dominant purpose’) the following comment of Brennan CJ in Propend at 513 remains authoritative:

When a claim of privilege attaching to a document seized under a warrant comes to be determined judicially, the court must ascertain for itself whether the document was brought into existence solely for a privileged purpose and, if it be found or assumed that the document is a copy of an unprivileged original but was brought into existence solely for a privileged purpose, whether the privilege has been lost. In determining the claim of privilege, the court is not reviewing judicially an executive action but is determining a distinct controversy between the person who seeks to inspect the seized document and the person who seeks to maintain its immunity from inspection on the ground of legal professional privilege.

Evidence Act not in issue

5. As the present controversy is confined to privilege in relation to legal advice references to legal professional privilege in these reasons should be so understood. Therefore, whether the ACC has a right to inspect the Disputed Documents must be answered by reference to the common law and not to the Evidence Act 1995 (Cth) which addresses questions of admissibility of evidence that are not in issue here: see ss 118-122.

The rationale for legal professional privilege

6. In considering the issues posed by the claim of legal professional privilege for the Disputed Documents, it is important to bear in mind the rationale underlying the doctrine and the inherent tension between competing policies. In their joint judgment in Esso, Gleeson CJ, Gaudron and Gummow JJ said, at [35]:

Legal professional privilege (or client legal privilege) protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court. In the ordinary course of events, citizens engage in many confidential communications, including communications with professional advisers, which are not protected from compulsory disclosure. The rationale of the privilege has been explained in a number of cases, including Baker v Campbell, and Grant v Downs itself. The privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers. In Waterford v The Commonwealth, Mason and Wilson JJ explained that legal professional privilege is itself the product of a balancing exercise between competing public interests and that, given the application of the privilege, no further balancing exercise is required. As Deane J expressed it in Baker v Campbell, a person should be entitled to seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communication. The obvious tension between this policy and the desirability, in the interests of justice, of obtaining the fullest possible access to the facts relevant to the issues in a case lies at the heart of the problem of the scope of the privilege. Where the privilege applies, it inhibits or prevents access to potentially relevant information. The party denied access might be an opposing litigant, a prosecutor, an accused in a criminal trial, or an investigating authority. For the law, in the interests of the administration of justice, to deny access to relevant information, involves a balancing of competing considerations.
[Footnotes not included]

7. The High Court in Esso resolved the tension between competing policies by abandoning the “sole purpose” test that had been accepted in Grant v Downs (1976) 135 CLR 74 and adopting the “dominant purpose” test.

The Disputed Documents

8. The number of Disputed Documents in respect of which a decision must presently be made has been reduced by concessions on both sides. In some cases the applicant accepts that the communication evidenced by a document is prima facie privileged; in others the respondents have not pressed their claim.
9. Copies of the Disputed Documents were provided to the Court in 7 lever-arch files behind individually numbered tabs. The files were marked collectively as MFI 2. The parties also provided a comprehensive table listing the Disputed Documents and marked as MFI 6. Each document listed in MFI 6 is identified by the relevant tab number of MFI 2 and an individual document number which relates to the provenance of the document. The table in MFI 6 contains a short description of each document, summarises the grounds of the legal professional privilege claim and the grounds on which that claim is disputed and notes if the claim is not pressed in respect of that document or if the ACC has conceded that it is prima facie privileged. The table also provides columns in which the applicant and the respondent have made additional comments.
10. Annexure A to these reasons lists only the Disputed Documents where the dispute as to whether the document is prima facie privileged has not been resolved by the parties. It lists, in relation to each document, the Court’s decision in respect of the claim and a brief comment as to the reason for that decision. In these reasons the Disputed Documents are referred to by the number in column 1 of Annexure A, which is the tab number for that document in MFI 2.
11. The Disputed Documents fall into six categories according to their provenance prior to their production or their seizure by the ACC. The categories may be described as follows:
    • Stewart Hard Copy Documents - documents seized by the ACC pursuant to search warrants issued under s 3E of the Crimes Act executed in June 2005.
    • EY Hogan Documents - documents pertaining to Paul Hogan produced by Ernst & Young to the ACC in late 2005 and in 2006 pursuant to notice under s 29 of the ACC Act;
    • EY Cornell Documents - documents pertaining to John Cornell produced by Ernst & Young to the ACC in late 2005 and in 2006 pursuant to notice under s 29 of the ACC Act. The Disputed Documents include only one document in this category and, as the ACC has conceded prima facie privilege in respect of that document no decision has to be made about it at this time;
    • Recall Documents - documents relating to Paul Hogan and John Cornell produced by Recall Document Storage to the ACC in July 2008 pursuant to notice under s 29 of the ACC Act;
    • Disc A, B and C Documents - copies of documents held on computer systems seized by the ACC in June 2005. No claims were pressed in relation to documents on disc C;
    • Gibb Documents – documents produced by Mr John Gibbs, a business advisor to John Cornell and Paul Hogan in response to a summons issued under s 28 of the ACC Act.
12. Before moving to a consideration of the substantive issues there is one other preliminary matter. In their written submissions the respondents referred to the decision of Emmett J in A3 v Australian Crime Commission (No 2) [2006] FCA 929 in which his Honour concluded that certain documents produced by “a firm with an office in Sydney” were “prima facie” subject to legal professional privilege of “P”, a person not otherwise identified in the judgment. The written submissions of the respondents claim that “A3” was Mr Stewart “whom Emmett J described as the agent for, and on behalf of, Mr Hogan [P] giving instructions and receiving advice”. They claim that,

as Emmett J has already ruled on those documents, his decision is binding as between the parties and the privileged status of those documents cannot now be challenged by the applicant.

13. The submissions state that the documents on which Emmett J ruled are listed in an annexure to the written submissions. No annexure was provided with the written submissions however MFI 6 lists four documents as covered by his Honour’s judgment. Those documents are documents 13-15 and 28 in Annexure A.
14. The respondents’ submission cannot be accepted. While the submissions identified the persons referred to as A3 and P as, respectively, Mr Stewart and Mr Hogan there was no evidence establishing this point. In oral submissions there was no mention by either party of the claim as to the privileged status of documents considered by Emmett J or his Honour’s decision. There is no way of confirming that the documents identified in MFI 6 are those to which his Honour referred. In the circumstance the status of those documents must be considered along with that of the other Disputed Documents.

STATUTORY FRAMEWORK

15. The applicant claims that the issue presently before the Court depends on the true operation of ss 28 and 29 of the ACC Act (relevantly as they relate to the production of documents) and ss 3E and 3F of the Crimes Act which relate to the issue and scope of search warrants.
16. The ACC, through an examiner appointed in accordance with s 46B(1) of the ACC Act, has statutory power to summon witnesses, take evidence and require the production of documents: ss 28 and 29. A person who is served with a summons to appear as a witness before an examiner has a mandatory obligation to appear, to answer the examiner’s questions and to produce any document or thing that he or she is required to produce by a summons served under the ACC Act: ss 30(1) and (2).
17. The parties, quite correctly, have not contended that disclosure of legally privileged documents is required either under the ACC Act or the Crimes Act. Indeed the Crimes Act, in s 3ZX, expressly provides that Part 1AA, which contains ss 3E and 3F, “does not affect the law relating to legal professional privilege”. As the issue is not in contention, it is not strictly necessary to examine the issue even under the ACC Act, however, as the rationale underlying the position is relevant to other issues arising in this proceeding it is convenient to consider it at this point.
18. Legal professional privilege is specifically addressed in ss 30(3)and (9) of the ACC Act as follows:

Section (30)(3)
Where:
(a) a legal practitioner is required to answer a question or produce a document at an examination before an examiner; and
(b) the answer to the question would disclose, or the document contains, a privileged communication made by or to the legal practitioner in his or her capacity as a legal practitioner;
the legal practitioner is entitled to refuse to comply with the requirement unless the person to whom or by whom the communication was made agrees to the legal practitioner complying with the requirement but, where the legal practitioner refuses to comply with the requirement, he or she shall, if so required by the examiner, give the examiner the name and address of the person to whom or by whom the communication was made.
Section (30)(9)
Subsection (3) does not affect the law relating to legal professional privilege.

19. While the ACC Act exempts privileged communications by a legal practitioner in the circumstances set out above, the Act is silent on the question of disclosure by the individual in whom the privilege vests. To put the issue another way, prima facie, the Act does not qualify the obligation to produce documents or to answer questions on the ground of legal professional privilege by anyone other than the legal practitioner to whom a privileged communication was made in that capacity. That being so there is, with one exception, no basis on which compliance with the mandatory obligation imposed under ss 30(1) and (2) may be excused.
20. That exception depends on the fundamental principle identified in Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277 at 304 per O’Connor J and in Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 and confirmed in Daniels Corporation International Pty Limited v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543. This principle recognises the status of legal professional privilege as an important, indeed fundamental, common law immunity and, holds, as Gleeson CJ, Gaudron, Gummow and Hayne JJ said, at [11], in their joint judgment in Daniels:

It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect.

21. The principle was reiterated by McHugh J who, at [43], observed that there is a presumption that the legislature does not abrogate these fundamental rights, freedoms and immunities “unless it makes its intention to do so unmistakably clear”. His Honour added:

The courts will hold that the presumption has not been overcome unless the relevant legislation expressly abolishes, suspends or adversely affects the right, freedom or immunity or does so by necessary implication. They will hold that the legislature has done so by necessary implication whenever the legislative provision would be rendered inoperative or its object largely frustrated in its practical application, if the right freedom or immunity were to prevail over the legislation.

22. In Daniels the question was whether in the light of the above principle s 155 of the Trade Practices Act 1974 (Cth) (TPA) required the production of documents to which legal professional privilege attached. The High Court held that the section did not require their production. In 2006 the legislature indicated its approval of the High Court’s conclusion by amending the TPA to add a new s 155(7B) expressly stating that s 155 “does not require a person to produce a document that would disclose information that is the subject of legal professional privilege”: Trade Practices Legislation Amendment Act (No 1) 2006 (Cth).
23. In the form considered by the High Court in Daniels, s 155 provided that in specified circumstances a member of the Australian Competition and Consumer Commission (Commission) could by notice in writing, require a person to furnish information, produce documents or appear before the Commission. Section 155(5) imposed an obligation to comply with the notice ‘to the extent that the person is capable of complying with it’. Contravention of sub-s (5) was punishable by imprisonment or fine.
24. Section 155(7) stated that a person was not excused from compliance “on the ground that the information or document may tend to incriminate the person” however the section limited the use that might be made of such information or documents by providing in sub-s(7) that the documents or information would not be admissible in evidence against the person in criminal proceedings other than those brought under the TPA. Express exemption from the obligation to comply with the notice was given in s 155(7A) where to do so would breach the secrecy of the Cabinet of a State or Territory. There was no express exemption in relation to information subject to legal professional privilege.
25. In their joint judgment Gleeson CJ, Gaudron, Gummow and Hayne JJ distinguished between the issue of legal professional privilege in Daniels and the decision concerning exposure to civil liability to penalties in Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 152 CLR 328.
26. Pyneboard concerned the privilege against exposure to penalties which all members of the High Court treated as distinct from the privilege against self-incrimination. While not expressly referring to Potter v Minahan or Baker v Campbell, all members of the Court except Brennan J affirmed the principle articulated in those cases: per Mason ACJ, Wilson and Dawson JJ at 341; per Murphy J at 347.
    27. In their joint judgment Mason ACJ, Wilson and Dawson JJ commented on the question of statutory construction. Their Honours said at 341:

In deciding whether a statute impliedly excludes the privilege much depends on the language and character of the provision and the purpose which it is designed to achieve. The privilege will be impliedly excluded if the obligation to answer, provide information or produce documents is expressed in general terms and it appears from the character and purpose of the provision that the obligation was not intended to be subject to any qualification. This is so when the object of imposing the obligation is to ensure the full investigation in the public interest of matters involving the possible commission of offences which lie peculiarly within the knowledge of persons who cannot reasonably be expected to make their knowledge available otherwise than under a statutory obligation. In such cases it will be so, notwithstanding that the answers given may be used in subsequent legal proceedings.

28. Their Honours held that s 155 precluded reliance on the privilege for two reasons: first, s 155 would be “valueless” and the Commission would find it “virtually impossible” to prove that contraventions of the Act had occurred if those who participated in those contraventions were exempted from compliance with s 155; secondly, as the section expressly excluded the privilege against self-incrimination, there would be “bizarre consequences” if the privilege against exposure to a civil penalty were to be retained. As their Honours observed at 345, it would be “irrational to suppose that Parliament contemplated that a person could be compelled to admit the commission of a criminal offence yet be excused from admitting a contravention of the Act sounding in a civil penalty”.
29. Justice Murphy agreed that the privilege against exposure to penalties was inconsistent with s 155 for the second of the two reasons given in the joint judgment. Justice Brennan’s approach was contrary to the fundamental principle referred to in [5] above. His Honour held, at 357, that no qualification of the obligation to comply with a notice issued under s 155 “is to be implied arising from a privilege against exposure to a penalty in the absence of a contrary statutory provision”. Pyneboard was followed in Corporate Affairs Commission of New South Wales v Yuill [1991] HCA 28; (1991) 172 CLR 319.
30. In Daniels however the High Court declined to follow the approach in Pyneboard. While the Court accepted that the result in Pyneboard could be justified for the second of two reasons given in the joint judgment, its major criticism was that the approach in the joint judgment did not have regard to the provisions of s 155(2) and rendered the express abrogation of the privilege against self-incrimination otiose. Moreover, given the similarity between the words of s 10 of the Crimes Act and s 155(2) of the TPA, it was difficult to see any way in which, consistently with the construction of s 10 in Baker v Campbell and Propend, s 155(2) could be construed as “authorising entry to premises for the purpose of inspecting and copying material to which legal professional privilege attaches”: at [27].
31. It was submitted in Daniels that the investigation of contraventions of the TPA would be impeded if legal professional privilege could be relied on to resist compliance with a notice issued under s 155. This submission failed to take account of the fact that a communication between a lawyer and client for the purpose of illegal conduct would not be privileged and therefore, as the joint judgment in Daniels observed at [24], “it is difficult to see that the availability of legal professional privilege to resist compliance with a notice under s 155(1) of the Act would result in any significant impairment of the investigation of contraventions of the Act much less in the frustration of such investigations”.
32. Both the applicant and the respondents accept that, on the above authorities the provisions of the ACC Act pursuant to which the ACC took possession of the Disputed Documents do not abrogate legal professional privilege. Consequently, the ACC is not entitled to inspect documents which are subject to that privilege. As mentioned above, this is also the position under the Crimes Act which, in s 3ZX, makes explicit that which is implied under the ACC Act. Therefore the primary issue is whether the Disputed Documents are protected by legal professional privilege however, underlying that question, is a dispute about the relevant proper law to be applied.

THE PROPER LAW ISSUE

33. The respondents claim that certain of the Disputed Documents are governed by the law of California (the Californian documents). They claim that the Californian documents are protected by legal professional privilege under the law of California because they were:
    1. Prepared in California;
    2. Prepared by an attorney or attorneys admitted to practise in California and owing professional responsibilities to Californian Courts and under Californian law;
    100. Prepared pursuant to a retainer, the proper law in respect of which was Californian law;
    4. Prepared to advise clients primarily on Californian law.
34. The respondents submit that in determining the lex causae in relation to legal professional privilege, the court is to apply Australian choice of law principles: John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 at [42]; see also Regie Nationale des Ursines Renault SA v Zang [2002] HCA 10; (2002) 210 CLR 491 at [67] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. The authorities to date have not established indicative rules for selecting the lex causae in relation to legal professional privilege although the question has been adverted to in Kennedy v Wallace [2004] FCAFC 337; (2004) 142 FCR 185 and Arrow Pharmaceuticals v Merck & Co Inc [2004] FCA 1131; (2004) 210 ALR 593.
35. In Kennedy v Wallace the question of advice from foreign lawyers was considered by Allsop J with whom, on this point, Black CJ and Emmett J agreed in their joint judgment at [62]. Justice Allsop, at [202]-[203], accepted that the rationale underlying legal professional privilege would apply to extend that privilege to a foreign lawyer’s advice and that, in such circumstances it would not be necessary to adduce evidence about legal and ethical practices and controls by foreign courts. His Honour observed, at [204]:

The position may be different if the circumstances otherwise raise questions as to the position of the lawyer. There may be a question whether the adviser is a lawyer at all, properly understood. There may be a question whether, by the proper law of the country in which the lawyer is admitted to practice or in which the advice is given, there is any privilege recognised. Difficult questions may arise in any given case. This is not intended to be an exhaustive list.

His Honour added at [209]:

I would prefer to rest my conclusion on the underlying rationale of the privilege being satisfied by the recognition of the availability of legal privilege in relation to foreign lawyers in a substantially similar fashion to the recognition of the privilege in relation to Australian lawyers, absent an issue being raised of the kind to which I have referred.

36. In Arrow Pharmaceuticals the issue was whether legal professional privilege attached to documents prepared in the United States by an in-house lawyer employed by the respondent, Merck. Justice Gyles said, at [13]:

All the relevant facts occurred in the United States. That immediately gives rise to a question as to which body of law governs the issue. That question was discussed inconclusively in Kennedy v Wallace [2004] FCA 332; (2004) 208 ALR 424 at 438-9 at [51]–[52]. The submissions in this case have not carried the matter any further. Counsel have been content to argue the question on the basis that the law which governs the issue is the same here as in the United States. Consideration of the Spalding case [Re Spalding Sports Worldwide Inc [2000] USCAFED 19; 203 F 3d 800(2000)] indicates that the principle being applied is the same, which is not surprising in the light of the common ancestry of the common law being applied in each place. That is not to say that there may not be differences in application of the principle at various times and in various places. A glance at the numerous cases in Australia and the United Kingdom which have concerned legal professional privilege in the last 20 years or so indicates twists and turns in the application of the general principle within single jurisdictions. In circumstances such as the present, it seems to me that, when dealing with international patents, it is appropriate to pay special regard to the situation in the place where the events have occurred, at least in circumstances where the principle applied there is the same as the principle applied here.

37. His Honour observed at [16] that other than the Spalding case there was no evidence concerning the state of United States law. Ultimately his Honour was of the opinion that, at least where the common law applied, the answer would be the same if the facts had occurred in Australia.
38. The respondents’ submission that there are no settled indicative rules for selecting the lex causae in relation to legal professional privilege is supported by the authorities considered above. The respondents submit that it is therefore incumbent on the Court to determine the indicative rules unassisted by authority. Their point is that “the choice of law questions raised by claims for legal professional privilege in respect of “foreign” documents can no longer be ignored and must be addressed in a principled manner when the issue is raised”. The point is unanswerable if the issue is raised, and if it must be resolved for the determination of the dispute before the Court.
39. The applicant submits that the issue is not raised and that the choice of law issue canvassed by the respondents does not arise in this proceeding. The applicant’s position is that whether the ACC has a right to inspect privileged documents is a matter of statutory interpretation to be resolved in accordance with the generally applicable principles and calls for an inquiry only into rights that arise under the Australian law of privilege.
40. The applicant’s argument has much force. The unqualified words of the statutes must be given effect unless, in accordance with the principle articulated in Daniels, an “important common law right or ... immunity” (ie legal professional privilege) precludes this. The High Court has the ultimate responsibility of declaring the common law in Australia: Mabo v Queensland [No 2] [1992] HCA 23; (1992) 175 CLR 1 at 29-30 per Brennan J. It is “the ultimate interpreter of the common law of Australia”: Kruger v Commmonwealth [1997] HCA 27; (1997) 190 CLR 1 at 75 per Gummow J. When the High Court refers to “the common law” without qualification it would be strange, even perverse, to understand it as referring other than to the common law of Australia.
41. Indeed, when the High Court refers to the common law of another jurisdiction it customarily makes that distinction clear as, for example, in Kuru v New South Wales [2008] HCA 26; (2008) 236 CLR 1 at [37]. Moreover, it should not be assumed that the High Court would take upon itself the authority to decide what would be an “important” or “fundamental” right in a common law jurisdiction other than Australia. It would follow that only an important Australian common law right or immunity would be protected by the principle referred to in Daniels.
42. The applicant finds additional support for its analysis in the fact that the law of privilege in Australia, “unlike the substantive laws conferring rights (contract, torts etc) contains its own rules for operation in the presence of foreign elements” in that it privileges communications with foreign lawyers for the dominant purpose of obtaining legal advice: see for example Kennedy v Wallace and Arrow Pharmaceuticals at [35]-[36] above and the cases referred to below at [59].
43. The respondents accept that the common law to which the High Court refers is the common law of Australia however they submit that it does not follow that it is the Australian law of privilege that applies. They argue that the common law of Australia includes the Australian choice of law rules and therefore common law rights or immunities include those recognised by the common law once the choice of law rules have been applied. The respondents submit that the applicant reads the High Court’s decision in Daniels as meaning the “common law of Australia excluding its choice of law rules”.
44. I do not accept this submission. I accept that the common law of Australia includes the Australian choice of law rules however it does not follow that when those rules direct one to a body of foreign law, the privileges or immunities granted under that foreign law are part of Australian common law. The submission is inconsistent with the concept of private international law, or conflicts of laws, which is directed to determining whether domestic or foreign law applies to a given situation. It is does not operate by incorporating foreign law into the domestic law.
45. For these reasons I accept ACC’s primary submission that no choice of law issue arises and therefore conclude that whether the Disputed Documents are subject to legal professional privilege must be determined under Australian law. In case I am wrong on this point and choice of law issues do arise I shall consider the alternative argument.

CHOICE OF LAW

46. The ACC submits that if a choice of law issue arises then it is the law of the forum, ie Australian law, which is to be applied. On the other hand the respondents submit that Australian choice of law principles dictate that Californian law of legal professional privilege applies. For reasons that follow I have concluded that the applicant’s position is correct and that, if there is a choice of law issue, application of the principles of Australian private international law lead to the conclusion that Australian law of legal professional privilege applies.
47. As a practical matter a choice of law issue will arise only if there is a conflict between the laws of the competing jurisdictions. As evidence of a conflict between the Australian and Californian law of legal professional privilege the respondents filed an affidavit sworn on 12 October 2010 by Professor David Alan Sklansky of the University of California, Berkeley, School of Law. Exhibited to Professor Sklansky’s affidavit is an expert report which advises on the law of legal professional privilege under Californian law and under United States federal law. For the purposes of addressing the choice of law in this proceeding I am prepared to assume that there are significant differences between the Australian law and the Californian and US federal law relating to legal professional privilege.
48. The question of foreign legal privilege has previously arisen in both England and Australia. The applicant says that in such cases it has consistently been held that legal privilege must be determined in accordance with the law of the forum. The respondents submit that, at least in the English cases, this is because the courts have proceeded on the incorrect assumption that privilege is a rule of evidence. In my view however this is not the case however even if it were, recognition of legal professional privilege as a substantive rather than procedural right does not preclude the governing law being the law of the forum in which proceedings are conducted and does not inevitably lead to the conclusion for which the respondents contend.
49. In Garsec Pty Ltd v His Majesty the Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682, Campbell JA referred to the views expressed in John Pfeiffer Pty Ltd v Rogerson at [99] by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ concerning the “guiding principles ... lying behind the need to distinguish between substantive and procedural issues”. Justice Campbell observed at [116] that,

bearing in mind the purpose for which one seeks to make the distinction raises the question of for what purpose is the distinction sought to be made in Australian choice of laws.

50. The purposes to which his Honour referred included efficient management of litigation by a court applying its familiar rules of practice and procedure and discouragement of forum shopping. In this case no issue as to where the line between procedure and substance should be drawn arises. The High Court has authoritatively declared that the immunity conferred by legal professional privilege is substantive not procedural.
51. This does not mean however that in determining the lex causae regard should not be had to the purpose of the choice of law rules. The issue is a great deal more complicated than might first appear and, in my view, there are cogent reasons for the choice of law, should such a choice be necessary, being the law of Australia. Before expanding on these reasons however it is convenient to review some of the cases to which the parties have referred.
52. In Lawrence v Campbell [1859] EngR 385; (1859) 4 Drew 485 at 491; [1859] EngR 385; 62 ER 186 at 188, the question before the Court was whether there should be recognition of privilege for communications between a Scottish lawyer (with agents in London) and his client resident in England where the debts in question were contracted. Kindersley VC observed that if a Scotsman consults a Scottish lawyer in Scotland privilege is allowed, and asked, rhetorically, what difference should it make if the lawyer were to be resident in England for the purpose of advising Scottish clients in England. The answer was that it should make no difference. The Vice-Chancellor added at 491:

A question has been raised at to whether the privilege in the present case is an English or a Scotch privilege; but sitting in an English Court, I can only apply the English rule as to privilege, and I think that the English rule as to privilege applies to a Scotch solicitor and law agent practising in London, and therefore the letters in question are privileged from production.

53. A similar view was expressed by Ormrod J in the case of In re Duncan [1968] P 306. The plaintiff refused to give discovery of certain documents which embodied communications with his foreign legal advisers. Ormrod J accepted that English legal professional privilege protected communications between the plaintiff and his foreign legal advisers whether or not prepared in contemplation of litigation. Referring to earlier cases which had upheld claims of privilege, his Honour said at 311:

The basis of the privilege is just as apt to cover foreign legal advisers as English lawyers, provided only that the relationship of lawyers and client subsists between them. Any other conclusion would lead to an impossible position for if this court were required to investigate the position of such communications in foreign law it must first determine the foreign law, but what law governs the relationship of English client and foreign lawyer, at any rate, when no proceedings are in contemplation? There is no forum and therefore no lex fori. The nationality of the foreign lawyer is as irrelevant as his address for this purpose.

54. The respondents contend that Ormrod J’s comments, in particular the penultimate sentence, show that his Honour viewed legal professional privilege as procedural and not substantive which is, of course, contrary to the view of the High Court. While that may be so, it does not follow that where legal professional privilege, as a fundamental immunity, is in issue, the conclusion as to choice of law is necessarily different.
55. Among the cases to which the applicant referred was Bourns Inc v Raychem Corp (No.3) [1999] 3 All ER 154, in which the documents claimed to be privileged were provided to Raychem by Bourns in connection with a taxation of costs. Raychem’s application for leave to use the documents in other proceedings brought in the United States of America came before the Court of Appeal. Bourns claimed that the documents were privileged under English law and that privilege had been waived only to enable their use in the taxation proceedings and not otherwise. There was, Bourns submitted, an implied undertaking that they would be used only for the purposes of the English proceeding. Raychem claimed that privilege had been lost because of the proceedings in the United States and because under US law the documents should have been discovered in that proceeding.
56. Lord Justice Aldous, with whom other members of the Court agreed, said in response to this submission, that it was neither necessary nor desirable to decide the issue of US law, such issues, in his Lordship’s view, being best decided by US courts if possible. His Lordship confined his consideration to the principles of English law and said, at 167-168:

Our system of civil procedure is founded on the rule that the interests of justice are best served if parties to litigation are obliged to disclose and produce for the other party’s inspection all documents in their possession, custody or power relating to the issues in the action. ... Privilege is an exception to that rule justified on the ground of public interest. It involves a right to keep confidential the document and the information in it. The fact that under foreign law the document is not privileged or that privilege that existed is deemed to have been waived is irrelevant. The crucial consideration is whether the document and its information remain confidential in the sense that it is not properly available for use. If it is then privilege in this country can be claimed and that claim, if properly made will be enforced.
In the present case the documents and the information in them remain confidential in the sense that I have used that word. It follows that the documents remain privileged under English law, whether or not the right to privilege from production in a foreign country is deemed not to exist or to have been waived.

57. The respondents submit that Bourns Inc v Raychem Corp did not consider choice of law but proceeded on the uncontested basis that English law applied. That submission seems to me, to be inconsistent with the remarks quoted above in which Aldous LJ clearly rejects a submission based on the relevance of US law and applies English law. His Lordship’s conclusion was premised on a choice of law, that is, on English law.
58. A similar approach is evident in Grofam Pty Ltd v Australia and New Zealand Banking Group Limited (1993) 45 FCR 445. In Grofam the documents in question had been brought into existence by the Australian Tax Office or the Federal Police for the sole purpose of obtaining legal advice from the Commonwealth Director of Public Prosecutions (DPP) in relation to certain investigations. Two questions arose: first, under the relevant legislation was the DPP entitled to give legal advice and, if not, should the advice given be privileged. Assuming but without deciding that the DPP was not entitled to give legal advice, the Full Federal Court held that legal professional privilege attached to the legal advice and the communications in question. The relevance of the case for present purposes is to be found in the following observation of the Full Court at 455:

An imperfect analogy can be found in the cases where legal advice has been given within a jurisdiction by a foreign legal adviser not qualified to act within that jurisdiction. In Great Atlantic Insurance Co v Home Insurance Co [[1981] 1 WLR 529] Templeman LJ held that legal professional privilege applied to communications between a client and his foreign lawyers or attorneys. We share his Lordship’s view. It would be an anomalous and capricious result that legal advice, given by solicitors duly qualified and authorised to practise within a jurisdiction, especially in respect of a matter which involved a foreign element, although we do not consider that qualification to be decisive, was protected by the privilege, but legal advice given by properly retained foreign lawyers in respect of the same subject matter was not privileged.

59. There are numerous other authorities in which the privileged status of communications with foreign lawyers has been decided on the basis of Australian law, often without comment, and certainly without analysis of foreign law. They include Kennedy v Wallace (discussed at [35] above) and Ritz Hotels Ltd v Charles of the Ritz Ltd (No 4) (1987) 14 NSWLR 100. A similar position has been taken in English cases in relation to the English law of privilege: Bunbury v Bunbury [1839] EngR 1036; (1839) 2 Beav 173, 48 ER 1146, McFarlan v Rolt (1872) LR 14 Eq 580; IBM Corporation v Phoenix International (Computer) Ltd [1995] 1 All ER 413 at 429 and Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529 at 535-6. As the applicant submitted “this consistent judicial practice should not be attributed to oversight”.
60. As indicated above it does not follow from the fact that immunity from disclosure under legal professional privilege is a fundamental common law immunity and not merely a procedural doctrine, that its lex causae cannot be the law of the forum. Whether this is so must be determined by the application of Australian principles of private international law. This is not the place for a detailed examination of those principles however, even if each contender has jurisdiction, it is necessary to consider a variety of issues.
61. An important issue is the degree of connection between the matter and each of the competing jurisdictions. For example, depending on the nature of the right that is asserted, this may require a court to take into account: personal connecting factors such as domicile, residence and nationality; in relation to property, its location and whether it is movable or immovable; in relation to contract whether the contract contains a choice of law clause; in relation to tort, the place where the tort occurred. It may also be necessary to consider international conventions and statutory provisions applicable to each jurisdiction.
62. These considerations go to show that there is no bright line that determines such issues and similarly there is no bright line that will resolve the present choice of law question. Ultimately the Court must consider the relevant issues which include the rationale for the existence of legal professional privilege.
63. In this case the question involves the right of the ACC to inspect documents that have been produced in Australia in response to the exercise, by an Australian law enforcement agency, of Australian statutory powers directed to the investigation of conduct that is illegal under the laws of Australia. The connection with Australian law is self-evident and provides powerful support for the governing law to be the law of the forum. The fact that the Australian law of legal professional privilege may extend to advice given by foreign lawyers is additional support for the proposition.
64. In its written submissions the applicant emphasised the importance of the High Court’s characterisation of legal professional privilege as a substantive right. It submitted that being based on “a strong public policy of Australian law” the characterisation,

tells against any rule which would see Australian courts applying foreign law on the subject. So too does the grounding of the privilege in the service of public interest in the administration of justice. It would be anomalous for Australian Courts to be compelled to treat Australian law on such a subject as trumped by a different law.

65. The applicant also made some submissions based on Professor David Alan Sklansky’s account of the principles of Californian law or the difference, if any, between United States federal law of privilege and Californian law. Given the conclusion to which I have come I do not need to consider those submissions.
66. I have concluded that no choice of law issue arises in this case or, if there is a choice of law issue the relevant law is the law of the forum. Thus, on either view, the disputed documents must be considered under the principles of Australian legal professional privilege.

AUSTRALIAN LEGAL PROFESSIONAL PRIVILEGE

67. The principles of legal professional privilege under Australian law are well established and are not in contention between the parties. They were set out clearly and comprehensively by Kenny J in Commissioner of Taxation v Pratt Holdings Pty Ltd [2005] FCA 1247; (2005) 225 ALR 266 (Pratt). Her Honour, at [30], articulated 12 propositions which, though tailored to the particular questions before her are nonetheless generally applicable to the present enquiry: see also AWB Ltd v Cole [2006] FCA 571; (2006) 152 FCR 382 (AWB v Cole). Relying as I do on the principles identified in these authorities, it is not necessary to traverse this well-trodden path other than briefly to comment on aspects that are especially pertinent to the status of the Disputed Documents.
68. While it is common to speak of whether a document is subject to legal professional privilege, such a comment must be understood as referring to the communication contained in the document. It is well accepted that the privilege attaches to a communication, written or oral, not to a physical document, or indeed, to an electronic form: Propend at 525 per Toohey J; Grant v Downs at 690 per Jacobs J.

Onus of proof

69. It is for the respondents, being the parties who claim the benefit of legal professional privilege to prove that the applicable criteria have been met: AWB Ltd v Cole at [63]. The evidence necessary to discharge the onus will depend on the circumstances and context in which the communications were made or the documents created. It may be that the dominant purpose behind the creation of a document is apparent on the face of the document which the Court may inspect. In Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689, Stephen, Mason and Murphy JJ made the following comment:

It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence.

Legal advice

70. A preliminary issue in any enquiry concerning legal professional privilege, and one that is particularly pertinent to the present matter, is what qualifies as legal advice. While there may be some uncertainty in particular instances, it is clear that not all communications between lawyer and client may be so characterised. In Balabel v Air India [1988] 1 Ch 317, at 330, Taylor LJ observed that privilege may also attach to information passed between lawyer and client where it is “aimed at keeping both informed so that advice may be sought and given as required” and that, “legal advice is not confined to telling the client the law: it must include advice as to what should prudently and sensibly be done in the relevant legal context”.
71. Lord Justice Taylor cautioned however that dicta in the authorities to the effect that privilege extended to all solicitor and client communication on matters within the ordinary business of a solicitor and referable to that relationship are too wide. His Lordship added, at 331-2:

It may be that the broad terms used in earlier cases reflect the restricted range of solicitors’ activities at that time. Their role then would have been confined for the most part to that of lawyer and would not have extended to business adviser or man of affairs. To speak therefore of matters “within the ordinary business of a solicitor” would in practice usually have meant the giving of advice and assistance of a specifically legal nature. But the range of assistance given by solicitors to their clients and of activities carried out on their behalf has greatly broadened in recent times and is still developing. Hence the need to re-examine the scope of legal professional privilege and keep it within justifiable bounds.

72. In Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48; [2005] 1 AC 610, the House of Lords upheld the Bank of England’s claim of privilege over documents which provided information to lawyers who had been retained to assist the Bank. The Bank of England required the lawyers’ assistance in relation to its presentation of evidence to an enquiry into the collapse of another bank said to be subject to supervision by the Bank of England. In doing so their Lordships approved Taylor LJ’s comment that legal advice extended to “what should prudently and sensibly be done in the relevant legal context”: see in particular per Lord Scott of Foscote at [43], Lord Rodger of Earlsferry at [59]-[60], Baroness Hale of Richmond at [62]. Lord Carswell at [114] and Lord Brown of Eaton-Under-Heywood at [120], without mentioning Taylor LJ’s comment, took a similarly broad approach as did Anderson J in Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 at 332-3.
73. Lord Justice Taylor’s views were amplified and explained in Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow [1995] 1 All ER 976 at 982-3. Justice Colman stated that Taylor LJ’s view of the scope of privilege did not “disturb or modify” long-established clear law,

that if a solicitor is instructed for the purpose of getting legal advice in relation to a particular transaction or series of transactions, then all the communications between the solicitor and the client relating to that transaction will be privileged notwithstanding that they do not contain advice on matters of law or construction, provided that they are directly related to the performance by the solicitor of his professional duty as legal adviser of the client:
...
As Taylor LJ observed, a solicitor’s professional duty or function is frequently not exclusively related to the giving of advice on matters of law, or, in the context of this kind of case, on drafting or construction of documents. It not infrequently relates to the commercial wisdom of entering into a given transaction in relation to which legal advice is also sought.

74. The distinction between a lawyer, in the performance of his or her professional duty as legal adviser, giving advice as to what may prudently and sensibly be done in the relevant legal framework and giving advice as to the commercial wisdom of entering into a particular transaction may be difficult to draw. In DSE Holdings Pty Ltd v InterTan Inc [2003] FCA 1191; (2003) 135 FCR 151 at [45], Allsop J recognised the distinction and that privilege does not extend to pure commercial advice. His Honour commented that,

In any given circumstance, however it may be impossible to disentangle the lawyer’s views of the legal framework from other reasons that all go to make up the “advice as to what should prudently and sensibly be done in the relevant legal framework”.

75. As is evident from the discussion below, the difficulty to which Allsop J referred has been especially significant in relation to the claims made in this proceeding. That difficulty relates to the threshold question of whether the communications claimed to be privileged involve or are associated with the giving or receiving of legal advice. Only then does the question of dominant purpose arise.

The dominance of dominant purpose

76. The critical question in determining whether legal professional applies to a communication requires an inquiry into the purpose for which it was created. In Esso the High Court held that for the purpose of seeking or obtaining legal advice to attract privilege it must be the dominant purpose. The Court did not explain or define “dominant” however some guidance can be obtained from the fact that in his dissenting judgment in Grant v Downs Barwick CJ rejected both ‘primary’ and ‘substantial’ in favour of ‘dominant’ which, the Chief Justice said, “in my opinion satisfies the true basis of the privilege”. In Federal Commissioner of Taxation v Spotless Services Ltd [1996] HCA 34; (1996) 186 CLR 404 at 416, Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ said in their joint judgment that, “in its ordinary meaning, dominant indicates that purpose which was the ruling, prevailing or most influential purpose”. Whether a purpose is the dominant purpose is a question of fact to be determined as a matter of judgment. It is an issue on which informed minds may differ however such differences are not able to be avoided by further exegesis of the meaning of ‘dominant’.
77. It is, of course, possible for one document to contain multiple communications some of which have the relevant dominant purpose and some of which do not. There may be some differences of opinion concerning whether in such a case it is possible to sever or redact the privileged part of the document and allow the remainder to be inspected: see Pratt at [17]-[18] where Kenny J discussed but did not need to decide the issue.
78. Theoretically I do not see that there should be much difficulty provided that one keeps in mind that legal professional privilege attaches to communications not documents. If there is only one communication, albeit having multiple purposes, then the issue is the dominant purpose of that communication. If the dominant purpose is such as to attract privilege then the whole of that communication must be privileged and no question of severance arises. If there is more than one communication in the document then the same test must be applied to each. If the communications are sufficiently independent as to be characterised as two communications then it is unlikely that there will be much difficulty in redacting or otherwise maintaining the confidentiality of one and retaining the other.
79. It is not necessary for a document to contain legal advice if it has been created for the dominant purpose of obtaining or giving legal advice. Thus the drafts, notes, memoranda or other documents prepared by the lawyer or the client will be privileged if they were created with the requisite purpose.
80. Similarly, as long as the requisite dominant purpose is made out, legal professional privilege may extend beyond communications directly between lawyer and client to documents created by third parties. In Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357 (Pratt (FC)) the issue was whether a report valuing the appellant’s losses prepared by an independent firm of accountants and forwarded to the appellant was privileged. The appellant had asked the accountants to prepare the report for the information of the lawyers to assist them in providing legal advice to the appellant. On receipt of the report the appellant passed it to the lawyers. The Full Federal Court held that the fact that the accountants were not the appellant’s agents did not preclude the documentary communication from being privileged. All members of the Court were of this opinion. Justice Finn said at [42]-[43]:

There are in my view, clear reasons of policy that support extending the privilege to such third party authored documentary communications. Whether a natural person or a corporation, a party seeking to obtain legal advice may not have the aptitude, knowledge, skill and expertise, or resources to make adequately, appropriately or at all such communications to its legal adviser as is necessary to obtain the advice required. Such is commonplace today where advice is sought on complex and technical matters. To deny that person the ability to utilise the services of a third party to remedy his or her own inability or inadequacy unless he or she is prepared to forego privilege in the documents prepared by the third party, is to disadvantage that person relative to another who is able adequately to make the desired communication to a legal adviser by relying on his or her own knowledge, resources, etc.
For the law to provide such an incentive not to utilise the services of third parties in such circumstances is to undercut the privilege itself. It would not facilitate access to effective legal advice nor would it facilitate effective communication with legal advisers for the purpose of obtaining legal advice.

81. Justice Merkel, at [52], agreed with Finn J, as well as with the view I expressed at [105] that as long as it can be established that the document was created with the requisite dominant purpose there is no reason why privilege should not extend to such a communication.
82. Provided it is created with the requisite dominant intention a document may also attract legal professional privilege even if it is a copy of a document that is not privileged: Federal Police v Propend Finance Pty Ltd at 509 per Brennan CJ, 543-4 per Gaudron J and 554 per McHugh J.

Purpose to be determined objectively

83. As noted above, for a document or other form of communication to attract legal professional privilege it must have been brought into existence for the dominant purpose of giving or obtaining legal advice. The purpose must be determined objectively. In AWB v Cole Young J made the point as follows at [110]:

In Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd, Kenny J observed at [30], correctly in my view, that the dominant purpose must be determined objectively, having regard to the evidence, the nature of the document and the parties’ submissions. Kenny J added that the evidence of the intention of the document’s maker, or of the person who authorised or procured it, is not necessarily conclusive of that purpose: see GSA Industries (Aust) Pty Ltd v Constable [2001] QSC 180; [2002] 2 Qd R 146 (‘GSA Industries’) at [28] per Holmes J; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 545 per Goldberg J; Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 at 1036 per Slade LJ; Hartogen Energy Ltd (in liq) v Australian Gas Light Company (1992) 36 FCR 557 at 568-569 per Gummow J; and Sparnon v Apand Pty Ltd (1996) 68 FCR 322 at 328 per Branson J. As these cases make clear, it may be necessary to examine the evidence concerning the purpose of other persons involved in the hierarchy of decision-making or consultation that lead to the creation of the document and its subsequent communication.

THE EVIDENCE

84. The respondents have the onus of proof in respect of their claims for privilege. They relied on three witnesses, one of whom was Professor Sklansky whose evidence, for reasons given above at [65], does not need to be considered further. The other two witnesses were Mr Craig Emanuel, a United States attorney-at-law, and the first respondent, Mr Anthony Stewart. Both Mr Emanuel and Mr Stewart gave detailed affidavit evidence and were extensively cross-examined.

Mr Emanuel’s evidence

85. Mr Emanuel is an attorney-at-law in the United States who has been involved in advising the respondents for more than 20 years. He commenced working as a paralegal for the law firm, Denton Hall & Burgin (Denton Hall) in Los Angeles, California in June 1985 and qualified as an attorney under Californian law in mid 1986.
86. Denton Hall was retained by Rimfire Films Pty Ltd (Rimfire) to provide legal advice in relation to the production of the film Crocodile Dundee during 1985. The directors of Rimfire during this period were John Cornell, Paul Hogan and John Gibb. In 1986 Denton Hall was instructed to act for Rimfire and Messrs Cornell and Hogan in relation to film distribution and other agreements. In his evidence, oral and written, Mr Emanuel described his initial work on these matters and his continuing and deepening involvement in the affairs of these clients.
87. Mr Emanuel described the work as advising on agreements for the international sale of film rights, distribution and allocation of revenue arising from the sale of the film and associated agreements. Other professionals were engaged by Denton Hall to advise on tax and legal matters in relation to this work. After the distribution agreements were in place, Denton Hall was retained to monitor compliance with the agreements and to advise on various matters pertaining to the agreements, including contract entitlements and studio audits.
88. Mr Gibb was a business advisor to Rimfire and to Messrs Cornell and Hogan (respondent clients) and from time to time he gave instructions to and received advice from Denton Hall on behalf of the respondent clients. According to Mr Emanuel, copies of Denton Hall’s advices were provided to Mr Gibb and/or Mr Stewart so they could deal with Denton Hall on behalf of the clients. On occasions, the respondent clients would provide instructions directly to Denton Hall.
89. In 1989 Mr Emanuel left Denton Hall for a firm set up by former attorneys of Denton Hall, Sinclair Tenenbaum. He later became a partner of this firm which changed its name to Tenenbaum Emanuel and Fleer. Mr Emanuel continued to act for the respondent clients on the retainer which was previously held by Denton Hall in relation to the distribution agreements and other matters in respect of the Crocodile Dundee films.
90. In 1998 Mr Emanuel moved to Loeb & Loeb under a continuous retainer with the respondent clients. Loeb & Loeb continue to hold this retainer and Mr Emanuel is the principal attorney responsible for the legal affairs of the respondent clients in relation to their film distribution agreements throughout the world.
91. On cross examination, Mr Emanuel admitted that he provided business and commercial advice as well as legal advice to the respondent clients. This included facilitating projects by advising on the structure of films. Depending on the period in question, this advice was usually given to Mr Stewart or Mr Gibb, acting on behalf of the respondent clients. Mr Emanuel said that by 2005 he was Mr Hogan’s principal legal advisor in the United States. While he resisted a comment from Mr Sheahan, senior counsel for the applicant, that his role was as a general business advisor it is nevertheless apparent from his evidence that Mr Emanuel had a broad role in the affairs of the respondent clients.
92. Mr Emanuel was involved in setting up film distribution arrangements for the Crocodile Dundee films. He said that Denton Hall did not have specialist tax skills during the period 1986/1987 and as a consequence he made recommendations on where tax advice, which he said was of a legal and accounting nature, might be obtained in relation to the proposed transactions.
93. In his three affidavits, Mr Emanuel gave specific evidence about some of the Disputed Documents and the circumstances in which they were created, in each case stating that his purpose was to provide legal advice or to enable it to be provided. While evidence of Mr Emanuel’s subjective purpose is relevant, it is not determinative: see [83] above.
94. Many of the documents to which Mr Emanuel referred provide commercial or financial rather than legal advice. I accept that legal expertise may have played a role in preparing that advice however in most cases I have concluded that the provision of legal advice was not the dominant purpose. Reference to specific comments made by Mr Emanuel may illustrate the point.
95. In his third affidavit, sworn on 10 November 2010, Mr Emanuel referred to the documents under tabs 259 to 268 of MFI 2 each of which is a memorandum that he prepared. He said that these memoranda “formed part of a package of memoranda prepared at the same time and supplied as a package to the clients”. According to Mr Emanuel the documents were prepared for the purpose of giving advice to the respondent clients and each “was a product of my work as an attorney”. He also said:

Each of these documents was prepared by me on the basis of me analysing a number of distribution and other agreements and documents with a view to extrapolating from that analysis a series of flow charts and tables indicating funds flows under the agreements.
For most of my major clients in this industry, as part of my retainer I review participation statements. I analyse whether the revenue disclosed may warrant an audit of the studio and give advice to the clients of potentially pending audit deadlines which if not complied with may remove an entitlement to an audit for a particular accounting period.

96. Mr Emanuel did not accept that the documents were merely summaries of business or financial information. He said that reading the terms of the distribution agreements and ensuring distributors were complying with those terms involved legal analysis and the provision of legal advice. He nevertheless conceded that anyone who could read and count was capable of coming to a conclusion as to when distribution statements under the distribution agreements were due.
97. Mr Emanuel also accepted that, from time to time, he provided general business or commercial rather than legal advice, as for instance when he was involved in obtaining valuations of particular intellectual property rights or, for example, in relation to the valuation of a company called Trelene Investments Limited with which Mr Hogan was commercially involved. From time to time Mr Emanuel received instructions from Mr Stewart, acting on behalf of the respondent clients to make payments to third parties and to follow up money owed by third parties to them. He also gave advice on transactional matters, but for advice on corporate and tax issues made recommendations as to those from whom that advice could be obtained.

Stewart evidence

98. Mr Stewart qualified as a chartered accountant in 1982 and worked as a partner of several accountancy practices until 1994, when he ceased to practise. He assisted John Gibb, initially his employer and later his partner, in providing consulting services to the respondent clients from 1985 to 1994. He deposed that since 1994 he has directly provided consulting services to those clients. He was appointed to the board of Rimfire in 2004.
99. Mr Stewart said that he now has no relationship with Mr Gibb who refuses to take telephone calls or communicate with him. Mr Stewart attributes the situation to being asked by Messrs Hogan and Cornell to take on more responsibility for their tax and financial affairs following the breakdown of Mr Gibb’s relationship with them. Mr Stewart was not precise about when this had occurred but deposed that since 1994 he has provided consulting services to Messrs Hogan and Cornell directly.
100. In his affidavit of 6 October 2010 Mr Stewart describes his role in providing consulting services to the respondent clients as broad. It included providing financial advice, obtaining taxation and legal advice both in Australia and internationally on their behalf and in relation to their personal affairs and relaying this advice to them. Mr Stewart also assisted members of the Hogan and Cornell families. The advice obtained generally related to financial affairs which Mr Stewart describes as “complex and involving international and Australian aspects”.
101. Mr Stewart said that when he was obtaining advice on commercial transactions or investments it was sometimes necessary for him to direct that lawyers engaged to act for the respondent clients liaise with taxation and financial advisers in preparing their advice; obtain taxation and financial advice directly from financial advisers for the purpose of giving instructions to lawyers; provide copies of correspondence with lawyers to the taxation and financial advisers for the purpose of giving instructions or in the course of requesting the advisers to provide information to the lawyers; and provide copies of his correspondence with taxation and financial advisers to lawyers for that purpose.
102. From time to time, Mr Emanuel would provide him with a report summarising receipts in respect of the films. Mr Sheahan cross examined Mr Stewart on one such document and put to him that documents such as these were used for a number of purposes not just for the purpose of obtaining legal advice. In response, Mr Stewart said that Mr Gibb was the lead partner at the date of the document (1988) and had more to do with the relationship between Denton Hall and Messrs Cornell and Hogan at that time.
103. Mr Stewart agreed that the reports would have been used to monitor performance of both the films and the distributors and to assess the quality of the agreements reached with the distributors. He added that, “more importantly, from a lawyer’s point of view” the reports would have been used to ensure that distributors were complying with the terms of the distribution agreements.

Overview

104. The evidence given by Mr Stewart and Mr Emanuel shows that each was deeply involved in the various business enterprises of the respondents. Despite Mr Emanuel painting a picture of only limited involvement in the business the documents that I have inspected are not consistent with that picture. Not only do they show that he gave commercial and financial advice but also that he played a significant role in keeping track of the respondents’ financial interests and providing information about them. In many cases the documents convey mixed commercial and legal advice and in such cases it is a matter of judgment as to whether the requisite dominant purpose has been established.
105. Mr Stewart’s evidence, both written and oral, shows that he also had a mixed role, in part reflecting the role of Mr Emanuel. I am satisfied that on many occasions Mr Stewart provided information to Mr Emanuel for the dominant purpose of obtaining Mr Emanuel’s legal advice however on other occasions the purpose was mixed or predominately business, commercial or financial advice. This was illustrated in the reports summarising receipts in respect of the films referred to above. I accept Mr Stewart’s submission that the reports would have been used to check the distributors’ compliance with their legal obligations and even that they would have been used for that purpose. I do not accept however, that this was the dominant purpose for their creation. The detailed financial information which they contained had very obviously a commercial purpose that was at least as important.
106. The dates of the Disputed Documents as given in Annexure A show that many were created in the period from 1986 to 2005. Given the passage of time it is not surprising that the evidence in support of the respondents’ claims of privilege was often imprecise and even speculative. Both Mr Emanuel and Mr Stewart gave evidence in relation to particular documents. That evidence has been taken into account in considering each document and is, to some extent referred to in the comments in Annexure A.
107. When it comes to particular documents submissions are necessarily limited by the need not to waive privilege by disclosing their contents. Ultimately the respondents submit that the evidence of the witnesses who were so intimately involved with their affairs should be accepted. This submission was strongly pressed in relation to the evidence of Mr Emanuel, who by virtue of his role is able to depose with some authority as to the purpose for which many of the documents were created. Where, despite these considerations, some doubt remains, the respondents urged me to inspect the documents which I did.
108. With some documents inspection was of assistance in resolving doubts about their status while with others inspection did not assist. Ultimately the claim for privilege failed in respect of many documents because the evidence, even coupled with inspection of the documents, was not sufficient to discharge the onus that the respondents bore to establish the requisite dominant purpose. This is not an unprecedented situation. In Barnes v Commissioner of Taxation [2007] FCAFC 88; (2008) 242 ALR 601 at [8] the Full Federal Court commented on this issue:

Although the courts have taken a pragmatic or realistic approach in circumstances where there is mixed advice given by or sought from a legal adviser, the test for privilege remains whether the dominant purpose of the creation of the document was for the provision of legal advice. ... if the advice given by a legal adviser is predominately for a financial, personal or commercial purpose, as opposed to a purpose of seeking legal services or assistance, it will not be protected ...

109. In Pratt (FC) I again had occasion to refer to the difficulties of proving the requisite dominant purpose where commercial advice is sought whether solely or in conjunction with legal advice. The comments I made there at [106]-[107] are equally pertinent here:

The difficulties in proving the relevant purpose should not be underestimated. Advice as to commercially advantageous ways to structure a transaction are extremely unlikely to attract privilege because the purpose in putting the advice together will, in most cases, be quite independent of the need for legal advice. Even if the parties have in mind that the advice will be submitted to a lawyer for comment, the purpose is unlikely to be the dominant purpose. Determining the dominant purpose underlying a communication may be difficult but no more so than many questions that come before courts. Courts would need to take into account exactly what function was served by the expert advice and whether it was really required in order to instruct the legal advisers fully. Obviously if the third party is an agent of the client and the client has the requisite purpose the determination is comparatively simple. Similarly if the material sought by the lawyer is required for litigation it is not difficult to determine the chain of authority and to find the requisite purpose ... Ultimately the question is one of fact and the onus is on the person seeking privilege protection to establish the case.

110. It must be accepted that whether an evident purpose for the creation of a document is the dominant purpose is a matter of judgment. It is a question on which informed minds, after careful consideration may differ however it is the task of the Court to exercise that judgment. My conclusion in respect of each of the Disputed Documents about which a decision is required is stated in the third column of Annexure A under that heading. The brief comments in the fourth column should be read in conjunction with these reasons.

I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated: 30 January 2012