09 Jul 2009

Is evidence served in earlier proceedings covered by litigation privilege?

by Jennifer Ball, David Greenberg

Diligent solicitors must always be aware that the evidence they are preparing on behalf of a client may have consequences far beyond the immediate litigation.

A recent decision by the Full Bench of the Federal Court of Australia in Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd [2009] FCAFC 32 and Justice White in Buzzle Operations v Apple Computer Australia [2009] NSWSC 225 have each ruled that a party will not be able to maintain litigation privilege over affidavits they have served in other proceedings. Although each case presented slightly different facts, they were determined in accordance with the same underlying principle: these affidavits could not be privileged because they were not "confidential" or otherwise of a character capable of attracting litigation privilege.

Cadbury case

Cadbury was an appeal from an earlier judgment in Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88, which required the ACCC to produce all of the finalised proofs of evidence it had served upon Visy Board Pty Ltd in an earlier proceeding regarding price-fixing and other breaches of the Trade Practices Act 1974 (Cth).

Cadbury Schweppes Pty Ltd wanted access to the ACCC's proofs of evidence because it was pursuing Amcor Ltd (who in turn cross-claimed against Visy) in its own case for numerous breaches of the Trade Practices Act, some of which covered the same subject matter as the ACCC's claim. Although the ACCC had served 111 finalised proofs of evidence upon Visy, none of those proofs were ultimately referred to at trial of the ACCC case as the matter was heard on the basis of an agreed set of facts.

The ACCC resisted Cadbury's application on the basis that the finalised proofs of evidence were covered by legal professional privilege because they were prepared for the dominant purpose of litigation. It claimed that any confidentiality in the documents was not lost because the proofs of evidence had not been relied upon at trial. In the alternative, it argued that it had not waived any privilege that would otherwise subsist in those proofs because they had not been voluntarily served but had rather been served pursuant to the compulsion of law (namely, the orders at the case management stage of the proceedings).

Both at first instance and on appeal these submissions were rejected. The Full Bench ruled:

"In our view, whatever is the extent of confidentiality arising from litigation privilege, one element of confidentiality is essential, namely non-disclosure to one’s opponent. To say (as does the ACCC) that the finalised proofs of evidence were created and served for the existing litigation can be accepted. However, in our view it is impossible for litigation privilege to attach to the finalised proofs of evidence, when the finalised proofs of evidence were created for the purpose of serving them on the ACCC’s opponent and when they were in fact served on that opponent."

The Court went on to clarify that there are limits to this doctrine. For example, it was careful to emphasize that it is only the final served document that is bereft of all confidentiality. Earlier drafts and affidavits that are retained but not served on an opposing party are still covered by legal professional privilege because they are prepared not for the purpose of being communicated to the other side.

The Full Bench was not persuaded by the ACCC's submissions regarding waiver, holding that the ACCC had acted without compulsion. This was because although the ACCC's ability to lead oral evidence at trial was conditional on notice of that evidence being provided to Visy in compliance with the orders made by the Court, the ACCC still retained the absolute discretion to decide what, if any evidence it desired to serve. The ACCC had waived any privilege it would otherwise have in the proofs of evidence in that it had done a deliberate act (namely serving it on another party) which was inconsistent with any claim to confidentiality.


Buzzle was similar to Cadbury in that Apple Computer Australia Pty Ltd by Notice of Motion sought access to affidavits that Buzzle Operations Pty Ltd (in liq) had served on other parties in Federal Court proceedings to which Apple was not a party. After those affidavits were served, the related proceedings settled and the affidavits were accordingly never read or tendered in court. However, the case was different in that it was decided under statute rather than common law.

Buzzle claimed that, since it had only served its affidavits in accordance with orders of the Federal Court, it was saved from the effect of its purported waiver by the terms of section 122(5)(a)(iii) of the Evidence Act 1995 (NSW), which provides:

"Loss of Client Legal Privilege: Consent and Related Matters

(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because:

(a) the substance of the evidence has been disclosed:

(iii) under compulsion of law, or "

Apple submitted that section 122 only applied to documents that were privileged. As defined in section 119, litigation privilege is only applicable to "confidential communications" or "confidential documents" that were created for the dominant purpose of actual or anticipated legal proceedings. Under section 117 of the Act a document or communication will only be classified as "confidential" if the person who made it, or the person to whom it was made to, was under an obligation at the time it was made not to disclose its contents. Apple therefore submitted that the affidavits were not confidential because they had been made with the intention of serving them upon another party and were thus were incapable of failing within section 117.

There is a line of authority arising from earlier decisions (in Atkins v Abigroup Ltd (1998) 43 NSWLR 539 and Dubbo City Council v Barrett [2003] NSWCA 267) that the service of documents under compulsion by the Court does not waive legal professional privilege. Justice White held that those cases were distinguishable from this case. It was assumed in those decisions that the documents in question were privileged, in contrast to this case where that exact issue is in question. According to Justice White "those cases are authority for what they decide not what they assume".

In dealing with the question of confidentiality, Justice White referred approvingly to the Cadbury decision and noted that even though Cadbury related to the application of legal professional privilege at common law, its principles were equally applicable to cases heard under the Evidence Act. In dealing directly with the affidavits the subject of the Notice of Motion he ruled:

"Whatever might be the position with respect to drafts of affidavits or witness statements, or with respect to the instructions given to the first plaintiff's solicitors from which the affidavits and witness statements were prepared, the evidence does not establish that either the persons who prepared the document (the first plaintiff's solicitors) or the person or persons for whom it was prepared (either the deponent or the first plaintiff) was under an express or implied obligation not to disclose its content. to the contrary, the first plaintiff's solicitors and the first plaintiff were required to disclose the contents of the documents, given that the documents were prepared in compliance with the orders made by the Federal Court for the documents to be filed and served. There is no evidence that the deponents were under an express or implied obligation not to disclose."

Judgment on the Notice of Motion was subsequently entered in favour of Apple which was given access to the affidavits served by Buzzle in the related proceedings. Clayton Utz acted for Apple on the motion.

Practical considerations

The decisions in both Cadbury and Buzzle illustrate yet again how important it is for solicitors to be aware of the commercial context in which litigation occurs. In each of those cases parties have inadvertently (through the service of lay evidence in other proceedings) disclosed highly sensitive information that may be prejudicial to their overall legal position.

Hence, in acting on behalf of client, diligent solicitors must always be aware that the evidence they are preparing on behalf of a client may have consequences far beyond the immediate litigation. Once served, all claims to confidentiality are forfeited, meaning that as long as a third party can satisfy the requirements of relevance such documents are potentially discoverable in a related proceedings. A party must always look over its shoulder when litigating and if necessary serve its evidence with caution.

In terms of legal principle these cases are also important. Buzzle seems to have created, if not an exception, then certainly a way to circumvent the protection traditionally provided by section 122(5)(a)(iii) to a party who is filing and serving documents subject to an order from the court. This would seem to bring the law under the Evidence Act far closer to the common law position as discussed in Cadbury, and this issue will require further analysis in the future.


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