Case: Daniels Corporations International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 ; (2002) 213 CLR 543
Outcome: applied
The High Court cases of Baker v Campbell [1983] HCA 39 ; (1983) 153 CLR 52 (' Baker ') at 76, 97 and 132, Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3 ; (1997) 188 CLR 501 (' Propend ') at 506, 513, 523, 533, 567-568 and 576, and Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 ; (2002) 213 CLR 543 (' Daniels ') at 549 [3], 561 [37], 567 [56] and 585 [117] proceed on the footing that the Federal Court has original jurisdiction to declare that legal professional privilege attaches to a document whose production has been compulsorily required, without any need to review or set aside the decision of the relevant officer to seize the document or to require its production. In Propend , Brennan CJ said at 513: '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.' Both parties submitted that the Court can approach the question of legal professional privilege in the manner indicated by Brennan CJ. 32 In Australia, legal professional privilege is a rule of substantive law that reflects an important common law immunity. In Daniels , Gleeson CJ, Gaudron, Gummow and Hayne JJ said at 552-553 [9]-[11]: 'It is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. It may here be noted that the "dominant purpose" test for legal professional privilege was recently adopted by this Court in Esso Australia Resources Ltd v Federal Commissioner of Taxation in place of the "sole purpose" test which had been applied following the decision in Grant v Downs . Being a rule of substantive law and not merely a rule of evidence, legal professional privilege is not confined to the processes of discovery and inspection and the giving of evidence in judicial proceedings. Rather and in the absence of provision to the contrary, legal professional privilege may be availed of to resist the giving of information or the production of documents in accordance with investigatory procedures of the kind for which s 155 of the Act provides. Thus, for example, it was held in Baker v Campbell , that documents to which legal professional privilege attaches could not be seized pursuant to a search warrant issued under s 10 of the Crimes Act 1914 (Cth). Legal professional privilege is not merely a rule of substantive law. It is an important common law right or, perhaps, more accurately, an important common law immunity. 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. That rule, the expression of which in this Court can be traced to Potter v Minahan , was the foundation for the decision in Baker v Campbell .' 34 The RCA does not abrogate legal professional privilege. It does not do so expressly and there is no basis for arguing that it does so by necessary implication. Powers that are conferred in general terms, such as those found in s 2(3A) and s 6F(1), will not be construed as abrogating or adversely affecting a fundamental common law right or immunity, unless Parliament makes its intention unmistakeably clear: see Baker at 96-97 per Wilson J, at 116-117 per Deane J, and at 132 per Dawson J; and Daniels at 553 [17] per Gleeson CJ, Gaudron, Gummow and Hayne JJ, at 562-563 [43] per McHugh J, at 576 [88] and 578 [93]-[94] per Kirby J, and at 591-593 [132]-[135] per Callinan J. 37 There is, however, a dispute as to how the RCA is to be construed so as to preserve legal professional privilege. AWB contends that, consistently with the approach adopted in Baker and Daniels , the power conferred by s 2(3A) is to be read down so that it does not reach documents which are the subject of legal professional privilege. The Commonwealth submits that legal professional privilege is preserved by s 3(5). It says that s 3(5) operates to displace the obligation to produce documents imposed by s 3(4) in circumstances where a person has a reasonable excuse for non-production. 38 In Daniels , the ACCC argued that s 155(5) of the Trade Practices Act 1974 (Cth) ('TPA') indicated that the power to compel the production of documents conferred by s 155(1) was not subject to legal professional privilege. Section 155(5)(a) provided that a person shall not refuse or fail to comply with a notice to the extent that the person is capable of complying with it. Section 155(5)(a) of the TPA therefore performed a role similar to s 3(4) and (5) of the RCA, except that it was expressed in more restricted terms. 39 The Full Federal Court in Australian Competition and Consumer Commission v Daniels Corporation International Pty Ltd [2001] FCA 244 ; (2001) 108 FCR 123 (' ACCC v Daniels' ) accepted the argument founded upon s 155(5). Moore J considered that the language of s 155(5)(a) was emphatic and required compliance with a notice issued under s 155(1) if the recipient was physically capable of complying with it: at 145 [81], see also at 137 [59] per Wilcox J. Lindgren J agreed generally with the reasons for decision of Wilcox J and Moore J. On appeal, the High Court rejected the argument. 40 In their joint judgment in Daniels , Gleeson CJ, Gaudron, Gummow and Hayne JJ construed s 155(1) and (2) as not conferring a power that abrogated legal professional privilege. They did so for essentially two reasons. In the first place, their Honours observed that subss (1) and (2) of s 155 must be construed consistently. Section 155(2) of the TPA is similar to the search warrant provision in s 10 of the Crimes Act 1914 (Cth) (' Crimes Act ') that was considered in Baker and Propend . They said that it was difficult to see any basis upon which that subsection could be construed, consistently with Baker and Propend , as authorising entry to premises for the purpose of inspecting and copying material to which legal professional privilege attaches: at 558-559 [27]-[28]. Secondly, their Honours thought that s 155(5)(a) did not support the implication that the Full Court had drawn from it (at 560 [33]): 'It is very much to be doubted that sub-s (5)(a) is exhaustive of the matters that may be raised in answer to a charge of failing to comply with a notice under s 155(1). At the very least, ordinary principles of construction would suggest that there is an intentional element to the offences created by s 155(5) and (6A). More to the point, however, it is necessary to determine the meaning and effect of s 155(1) before it can be determined what constitutes a refusal or failure to comply with a notice.' 42 The High Court in Daniels was considering a different statutory scheme and consequently the decision provides guidance only: see Daniels at 566 [53] per McHugh J; Western Australia v Ward [2002] HCA 28 ; (2002) 213 CLR 1 at 216 [480] - [481] per Kirby J; and Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 (' Project Blue Sky ') at 381-382 [69]-[71] per McHugh, Gummow, Kirby and Hayne JJ. The Commonwealth submits that the key to understanding the High Court's construction of s 155 is that the obligation to comply with a notice under s 155 was cast very widely in s 155(5)(a); it operated to the extent that the person concerned was capable of complying with the notice. To preserve legal professional privilege, the Commonwealth says that the power conferred by s 155(1) and (2) had to be read down because there was no other vehicle to achieve that result. 43 The scheme of the RCA is somewhat different. The combined effect of s 3(4) and (5) is that the obligation of a person served with a notice issued under s 2(3A) to produce the documents specified therein 'does not apply if the person has a reasonable excuse'. The definition of 'reasonable excuse' in s 1B operates in relation to any act or omission by a witness or a person summoned as a witness before the Commission. The obligations of a witness, or a person summoned as a witness, before a Commission are addressed in s 3(1) to (3) inclusive. But the definition does not apply directly to s 3(5) , which is directed to the obligations of a person (who may not be a witness) to produce documents at a time or place specified in the notice. 44 In Re HIH Insurance Limited [2002] NSWSC 231 at [12] , Barrett J said that the non-application of the definition of 'reasonable excuse' in s 1B to a person served with a s 2(3A) notice seems to mean that the term 'reasonable excuse' in s 3(5) is confined to physical or practical difficulties of complying and does not extend to matters such as legal professional privilege. This view was expressed somewhat tentatively, it predates the decision of the High Court in Daniels , and it was heavily influenced by the decision of the Full Federal Court in ACCC v Daniels and the earlier decision of the High Court in Corporate Affairs Commission (NSW) v Yuill [1991] HCA 28 ; (1991) 172 CLR 319 (' Yuill '). Neither AWB nor the Commonwealth contended that 'reasonable excuse' in s 3(5) should be construed in this manner. 45 The Commonwealth submitted that, even though the definition of reasonable excuse does not apply directly to s 3(5) , it is reasonable to infer that Parliament intended the term to bear the same substantive meaning throughout s 3. Further, the Commonwealth submitted that there is no reason to exclude legal professional privilege from the concept of 'reasonable excuse' where it is used in s 3(5). To do so would not be consistent with the parliamentary intention of ensuring that legal professional privilege is preserved and not abrogated. 46 I am not persuaded that the definition in s 1B should be extended, by implication or by construction, to s 3(5). Where a witness fails to produce a document that was required to be produced under s 2(1) or (2), s 3(2A) provides that any resulting offence is one of strict liability. Under s 6.1 of the Schedule to the Criminal Code Act 1995 (Cth) (' Criminal Code '), this means that there is no fault element, but a defence of mistake of fact is available. As there is no similar provision in relation to s 3(4) , there is an intentional element to the offence created by s 3(4): see s 5.6 of the Criminal Code . In these circumstances, I consider that the legislature intended that the expression 'reasonable excuse' should carry its ordinary meaning in s 3(5). That meaning may be wider than the definition in s 1B; certainly it is wide enough to cover any matter, including absence of intention, which the law acknowledges by way of answer, defence, justification or excuse for refusing or failing to produce the specified documents: see Yuill at 338-339 per Gaudron J. 51 In my opinion, it is a false dichotomy to suppose that a choice must be made between the construction advanced by AWB and that advanced by the Commonwealth. I prefer to see the two arguments as complementary threads in the harmonious construction of the RCA: see Project Blue Sky at 381-382 [70] per McHugh, Gummow, Kirby and Hayne JJ. The principle enshrined in Baker and Daniels is that, in the absence of clear and unmistakable language, a compulsive notice such as that which can be issued under s 2(3A) will not be construed as requiring the production of legally privileged documents. There is no reason why this principle should not apply in its full rigour to the RCA. A construction of s 2(3A) that accords with this principle is supported by s 3(5) ; it affords a textual indication that a notice under s 2(3A) does not reach, and consequently s 3(4) does not apply to, documents which are the subject of legal professional privilege. 52 The joint judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ and the separate judgment of McHugh J in Daniels also make the point that it is necessary to determine the meaning and effect of the provision under which the notice for production is given before it can be determined what constitutes a refusal or failure to comply with the notice. There is nothing to suggest that the approach of the High Court in Baker and in Daniels would have been any different if the offence provisions relating to s 10 of the Crimes Act and s 155 of the TPA contained a 'reasonable excuse' exception. 53 The role that both threads can play in the overall construction of the RCA is illustrated by the facts of this case. Exhibit 665 was produced to the Commissioner in answer to the notice, albeit inadvertently and without waiving legal professional privilege in respect of the document. In those circumstances, the provisions of s 3(4) and (5) are not directly applicable and the question would arise whether the Commissioner's powers under s 6F to inspect, retain and copy documents which have been produced under a notice under s 2(3A) are to be read down, consistently with Baker and Daniels , as not extending to documents which are the subject of legal professional privilege. 55 I do not consider that it is any objection to the construction I prefer that the application of the principle in Baker and Daniels to read down the scope of a notice issued pursuant to s 2(3A), and the inclusion of legal professional privilege within the concept of reasonable excuse, might be described as a 'belt and braces' approach. There is nothing incongruous in such an approach where the objective of the exercise is the protection of a fundamental immunity recognised by the common law. 59 Furthermore, I do not accept the second step in the Commonwealth's argument. A reasonable excuse can obviously arise in a range of circumstances. Some circumstances amounting to reasonable excuse, such as physical incapacity, may intervene after the notice to produce has been served. In such a case, it may be appropriate to speak of s 3(5) displacing the obligation to produce non-privileged documents that is otherwise imposed by s 3(4). But to my mind it offends the general principles enunciated in Baker and Daniels to argue that a notice under s 2(3A) imposes an unqualified obligation to produce documents that are the subject of legal professional privilege, unless and until a reasonable excuse is established within the meaning of s 3(5). In my opinion, there is nothing in the RCA to support the contention that the Commissioner has implied authority to inspect documents produced under a s 2(3A) notice for the purpose of determining whether they attract legal professional privilege. 60 In the passages that I have extracted from Daniels , Gleeson CJ, Gaudron, Gummow and Hayne JJ said that legal professional privilege applies to communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. McHugh J added that the immunity also protects the disclosure of documents that record legal work carried out by the lawyer for the benefit of a client, such as research memoranda. 127 As an adjunct to the first limb of the privilege, protection against disclosure has been extended to documents that record confidential legal advice or confidential legal work. Examples commonly given include legal research memoranda, draft pleadings, summaries of argument and draft agreements: see Daniels at 563 [44] per McHugh J; Propend at 550 per McHugh J and at 569 per Gummow J; Attorney-General (NT) v Maurice [1986] HCA 80 ; (1986) 161 CLR 475 (' Maurice' ) at 496 per Dawson J; Sterling [1978] 36 FLR 244 at 246 per Lockhart J; Mostyn v West Mostyn Coal Co (1876) 34 LT 531; and Packer v Deputy Commissioner of Taxation (Qld) [1984] 1 Qd R 275 (' Packer' ) at 284-285. 157 In Pratt Holdings , Stone J concluded that the High Court's exposition of legal professional privilege in Daniels , Esso and other cases demonstrates that it is supported by a single rationale which applies to both litigation privilege and legal advice privilege: at 381 [85]. Merkel J agreed with this conclusion. However, Stone J added that the existence of a single rationale does not mean that it is no longer necessary to have regard to the different categories of legal advice and litigation privilege. Finn J did not find it necessary to decide whether legal professional privilege should now be recognised as a unified doctrine which, though having two applications (ie advice and litigation), has a single rationale. His Honour regarded this controversy as a well recognised one and observed that, at an appropriate level of abstraction, a common and unifying rationale can be found for both manifestations of the privilege: at 361 [9]. 159 AWB also relied upon the broad terms in which legal professional privilege was expressed in the joint judgments in Daniels at 552 [9] and Esso at 64 [35]. In the latter case, Gleeson CJ, Gaudron and Gummow JJ said that the privilege protects the confidentiality of certain communications made in connection with the provision of legal services, including representation in proceedings in a court. AWB also referred to s 119 of the Evidence Act 1995 (Cth) which refers to 'professional legal services relating to an Australian or overseas proceeding'. In my opinion, these matters do not support the extension of litigation privilege to the context of a commission of inquiry. In Daniels and Esso, the High Court was trying to describe the scope of the privilege in a summary way. The description recognises that in appropriate cases the privilege can extend beyond legal advice to include other forms of legal work. It would be wrong to infer from the High Court's summary statement that it was intending to radically enlarge the operation of the rule. And in my view the language used in s 119 does not disclose any intention to extend litigation privilege to the conduct of a commission of inquiry. 179 In Baker , Mason J said that a decision of an executive officer on a question of legal professional privilege would not be conclusive; a decision of a court on a prosecution for contravention of the statutory obligation or in proceedings for a declaration as to the existence of the privilege would be required in order to provide a conclusive answer: at 76; see also at 97 per Wilson J, at 105 per Brennan J, and at 132 per Dawson J. Daniels proceeded on the same basis. 188 The second area of dispute between AWB and the Commonwealth related to the Commonwealth's submission that the Commissioner has an implied authority under the RCA to require production of a document that is claimed to be the subject of legal professional privilege for the limited purpose of inspecting it in order to determine whether the claim to privilege is made out. In the course of considering the proper construction of the RCA, I rejected this submission on the grounds that it is not supported by the RCA and infringes the principles enunciated in Baker and Daniels .