Federal Court of Australia - Victoria District Registry

Esso Australia Resources Ltd v Federal Commissioner of Taxation

Black CJ, Beaumont, Sundberg, Merkel and Finkelstein JJ

21 July, 13 August, 22 December 1998 - Melbourne

Merkel J.

Introduction

Since Grant v Downs (1976) 135 CLR 674 it has generally been accepted that legal professional privilege, which may now be more aptly described as client legal privilege, may be claimed in respect of documents which record confidential communications of a professional nature between a person and that person ' s lawyer and are brought into existence for the sole purpose of obtaining or giving legal advice or for use in legal proceedings.

Sections 118 and 119 of the Evidence Act 1995 (Cth) widened the criterion for client legal privilege. These sections provide that evidence is not to be adduced in federal courts as defined in the Evidence Act 1995 if, on objection by a client, the evidence would result in disclosure of a confidential communication of a professional nature between a person and his or her lawyer made for the dominant purpose of obtaining or giving legal advice or for use in legal proceedings.

The question arising on the present appeal is whether the common law "sole purpose" test or the statutory "dominant purpose" test is to be applied to certain ancillary processes of the court such as discovery or the inspection of subpoenaed documents, which relate to, but do not involve, the adducing of evidence in a proceeding in a federal court.

The question has arisen in 6 related applications to the court in which the appellant (Esso) is challenging certain assessments of the respondent (the Commissioner) made under the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) as amended. General orders for discovery were made on 18 October 1996. Esso, in its affidavit of documents in each of the applications, claimed client legal privilege in respect of a significant number of documents on the ground that the documents were prepared for the dominant purpose of giving or receiving legal advice.

By notices of motion issued under O 19 r 2 of the Federal Court Rules 1979 (Cth), the Commissioner sought an order that Esso produce for inspection each of the documents so listed, excepting those documents for which client legal privilege was claimed and which were prepared for the sole purpose of giving or receiving legal advice. The motions came on for hearing before the learned primary judge (Foster J) who, with the agreement of the parties, ordered pursuant to O 29 r 2 that there be decided separately the following questions of law (Esso Australia Resources Ltd v FCT (1997) 37 ATR 470 ):

1.
(a) Whether the correct test for claiming legal professional privilege in relation to the production of discovered documents is the "sole purpose" test as formulated by the High Court in Grant v Downs (1976) 135 CLR 674 or the "dominant purpose" test as set out in s 118 and s 119 of the Evidence Act 1995 (Cth)?

(b) Whether the Court has power pursuant to O 15 r 15 of the Federal Court Rules 1979 to make an order excluding from production discovered documents on the basis that such documents meet the "dominant purpose" test as set out in s 118 and s 119 of the Evidence Act 1995 (Cth)?

His Honour answered the questions of law as follows:

2. In respect of question (a), that the correct test for claiming legal professional privilege in relation to the production of discovered documents is the "sole purpose" test as formulated by the High Court in Grant v Downs.

3. In respect of question (b), that the question be answered in the negative.

The primary judge granted leave to appeal from his judgment and also ordered that Esso pay the Commissioner ' s costs of the application.

On the hearing of this appeal Esso contended that, as the "dominant purpose" test was the legislatively prescribed test where evidence was to be adduced in Evidence Act jurisdictions, it would be anomalous for a different test to apply in the ancillary processes in those jurisdictions. Accordingly, so it was said, the "sole purpose" test in Grant v Downs should not be applied as part of the common law for those jurisdictions. Esso submitted that ss 118 and 119 of the Evidence Act 1995 are to be interpreted to have that operation or effect or, alternatively, to result in a derivative modification of the common law, albeit that the modification may be beyond that which is provided for under the Evidence Act 1995. Esso relied on the decision of the Full Court in Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 at 428-9 per Olney, Kiefel and Finn JJ in support of its alternative submission. Esso also submitted that even if the Court did not accede to its primary submissions, it nevertheless had a general discretion under O 15 r 15 to refuse inspection on the ground that the "dominant purpose" test prescribed by ss 118 and 119 had been met.

The Commissioner disputed those contentions. He contended that the common law test for legal professional privilege was laid down in unambiguous terms by the High Court in Grant v Downs, and that only the High Court could modify that common law test. Until that occurred, so it was argued, it was the duty of every other court in the Australian judicial hierarchy faithfully to apply that decision. The Commissioner accepted that the common law "sole purpose" test was abrogated by ss 118 and 119 of the Evidence Act 1995, but maintained that the abrogation was only as provided by those sections, that is, in respect of the adducing of evidence in certain proceedings in Federal courts. The Commissioner drew support for his submission from the reports of the Australian Law Reform Commission (the Commission) upon which the Evidence Act 1995 was based. It was contended that it was plain from the reports that the distinction between the Evidence Act 1995 ' s application to adducing of evidence and its non-application to ancillary processes such as discovery, was recognised by the Commission and accepted by the legislature. Accordingly, so it was said, the primary judge was clearly correct in determining that the Evidence Act 1995 ' s operation was confined to the adducing of evidence with the consequence that the common law "sole purpose" test was to be applied to discovery. The Commissioner also disputed Esso ' s contention that the power conferred by O 15 r 15 can properly be utilised to overcome the sole purpose test. His simple contention was that, if the document in question was relevant to a matter in issue and was not privileged from production, production of the document could, and should, be ordered.

The Evidence Act 1995 (Cth)

The starting point for the competing contentions is the Evidence Act 1995. Sections 118 and 119 provide as follows:

118 Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication made between the client and a lawyer; or

(b) a confidential communication made between 2 or more lawyers acting for the client; or

(c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

119 Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or

(b) the contents of a confidential document (whether delivered or not) that was prepared;

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.

Section 117 contains a number of definitions (which include expanded definitions for the purpose of, inter alia, ss 118 and 119 ) of "client" , "lawyer" and "party" . "Confidential communication" and "confidential document" are defined in s 117 as follows:

"confidential communication" means a communication made in such circumstances that, when it was made:
(a) the person who made it; or

(b) the person to whom it was made;

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law;

"confidential document" means a document prepared in such circumstances that, when it was prepared:
(a) the person who prepared it; or

(b) the person for whom it was prepared;

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.

Sections 121 to 126 provide for the circumstances in which client legal privilege is lost in relation to evidence adduced in a proceeding to which the Evidence Act 1995 applies.

Plainly, the statutory provisions to which I have referred have, as their fundamental objective, the protection from disclosure of confidential privileged communications other than where the privilege is lost. The legislature has broadened the criterion for that protection by adopting the "dominant" , rather than the "sole" , purpose test for determining client legal privilege.

The application of the Evidence Act 1995 is provided for in Pt 1.2 . Section 4(1) provides for the Evidence Act 1995 to apply to "all proceedings in a federal court or an ACT court" . Proceedings to which the Evidence Act 1995 applies include "interlocutory proceedings or proceedings of a similar kind" : see s 4(1)(b) . Section 3 provides for certain definitions set out in the Dictionary at the end of the Evidence Act 1995 to apply. The Dictionary defines a "federal court" to mean the High Court, or any other court created by the Parliament other than the Supreme Court of a Territory and includes:

a person or body (other than a court or magistrate of a State or Territory) that, in performing a function or exercising a power under a law of the Commonwealth, is required to apply the laws of evidence.

Section 4(5) provides that the provisions of the Evidence Act 1995 do not apply in relation to certain proceedings, including an appeal from a court of a State and an appeal from a court of a state exercising federal jurisdiction: see s 5(a) . Section 5 provides for certain provisions of the Evidence Act 1995 (not including ss 118 and 119 ) to apply to all proceedings in "an Australian court" . It is unnecessary for present purposes to outline those provisions other than to say that, in general, they relate to formal, rather than substantive, evidentiary matters. Section 8 provides, subject to certain limited exceptions, that the Evidence Act 1995 does not affect the operation of the provisions of any other Act. Finally, s 11(1) provides that the power of a court to control the conduct of a proceeding is not affected by the Evidence Act 1995, except in so far as the Evidence Act 1995 provides.

The legislature has stipulated with precision the circumstances in which the Evidence Act 1995 is to apply and those in which it is not to apply. Sections 118 and 119 expressly relate only to the adducing of evidence in a proceeding in a federal court or a court of the Australian Capital Territory as provided in s 4(1) , including an interlocutory proceeding or a proceeding of a similar kind. The Act is silent in relation to ancillary processes such as discovery or the power to subpoena documents.

The anomaly created by the apparently confined operation of the Evidence Act 1995 is that it protects the confidentiality of communications the subject of client legal privilege at the evidentiary stage by the statutory "dominant purpose" test, but fails to protect that confidentiality in the ancillary processes if the narrower "sole purpose" test prescribed by the common law is to be applied. Put simply, the confidentiality protected by the wider test in the evidentiary process may have already been lost by the narrower test applied in the ancillary process, notwithstanding that the function of that process is to serve the evidentiary process by enabling the parties to identify the evidence to be adduced.

An identical problem has arisen in respect of the loss of client legal privilege. As with ss 118 and 119 , ss 121 to 126 altered the common law by stipulating a carefully defined statutory test for the loss of privilege which differed from the common law test enunciated by the High Court in Attorney-General (NT) v Maurice (1986) 161 CLR 475 .

The disparity, in relation to the existence and loss of privilege if the statutory tests are to be applied in the evidentiary process and the common law tests are to be applied in the ancillary processes, has given rise to significant differences of judicial opinion.

The current state of the authorities

The views of judges sitting at first instance have differed widely as to the manner in which the anomaly to which I have referred is to be resolved. The issue was first considered by an appellate court in Adelaide Steamship v Spalvins (1998) 152 ALR 418 . The Full Court of the Federal Court (Olney, Kiefel and Finn JJ) outlined the problem at ALR 419:

The central issue on this appeal is whether questions relating to loss of legal professional privilege ought to be determined by applying principles derived from the common law as it has developed to date, or from provisions of the Evidence Act 1995 (Cth) ( "the Act" ).

The provisions of Pt 3.10 Div 1 (client legal privilege) of the Act are concerned with proceedings where evidence is adduced and are not expressed to apply to ancillary processes such as discovery or the inspection of subpoenaed documents. Difficulties may arise in practice because the Act approaches the question of the privilege, and its loss, in significantly different ways from the common law. For example the common law might require documents to be produced in an ancillary process because privilege did not attach to them, notwithstanding that they could not later be tendered in evidence because of the different scope the Act gives to client legal privilege: see Esso Australia Resources Ltd v FCT (1997) 150 ALR 117 [37 ATR 470]. Similarly, a document may be able to be adduced in a proceeding because it has lost privilege for the Act ' s purposes yet it may not be required to be produced in an ancillary process because it remains privileged at common law: see Abigroup Ltd v Akins (unreported, NSWSC, Bainton J, 2 October 1997) . The responses to those inconsistencies in approach have, however, diverged, and three quite distinct positions have been taken. The first has been to apply the principles of the Act "derivatively" to ancillary processes, modifying the common law so as to accord with the Act: see Telstra Corp v Australis Media Holdings (No 1) (1997) 41 NSWLR 277 ; Towney v Minister for Land & Water Conservation for New South Wales (1997) 147 ALR 402 ; KC v Shiley Inc (unreported, FCA, Tamberlin J, 11 July, 1997) ; Director of Public Prosecutions v Kane (unreported, NSWSC, Hunt CJ (CL), 10 September 1997) and see also Newcastle Wallsend Coal Co Pty Ltd v Court of Coal Mines Regulations (unreported, NSW Court of Appeal, 12 September 1997) .

The second, while not purporting to modify the common law as such, accepts that it is appropriate to have regard to the principles of the Act when exercising relevant discretions under rules of court regulating ancillary processes, for example O 15, r 15 of the Federal Court Rules 1979: see Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (1995) 132 ALR 645 ; B T Australasia Pty Ltd v New South Wales (1996) 140 ALR 268 ; Sparnon v Apand Pty Ltd (1996) 68 FCR 322 ; Relationships Australia v Pasternak(1996) 20 Fam LR 604 (and see also British-American Tobacco Co Ltd v Philip Morris Ltd (1996) 36 IPR 36 at 44).

The third position taken is to hold that as the Act does not apply to ancillary processes, the common law to that extent is preserved unmodified and is to be applied: Abigroup Ltd v Akins, above; Esso Australia Resources Ltd v FCT above; and see also Re Z (1996) 20 Fam LR 651 .

In this appeal it is necessary to determine which, if any, of the above positions ought to be adopted.

The court outlined the divergence between the principles to be applied by the Evidence Act 1995 and the common law (at ALR 427):

As we have already noted, the provisions of the Act are not expressed to, and in our view do not, apply to processes that are ancillary to a proceeding in which evidence is sought to be given or determined. They were not proposed to apply to those proceedings by the Australian Law Reform Commission (the ALRC) in its reports concerning the Act: see ss 118-126 and the reference to "adducing evidence" and Report No 38, ALRC, para 199 and cll 106-108 of the draft bill annexed to that report. Similar conclusions were drawn in Towney v Minister for Land & Water Conservation for the State of New South Wales; Telstra Corp v Australis Media Holdings (No 1); and Trade Practices Commission v Port Adelaide Wool Co Pty Ltd. The question whether the provisions should nevertheless be applied in substance to such processes, notwithstanding that they do not do so of their own force, is an important one. There are, as we have said, significant differences between the provisions of the Evidence Act 1995 and the principles of the common law. In the scope given to client legal privilege, s 118 adopts a "dominant purpose" test (as proposed by Barwick CJ, in dissent, in Grant v Downs (1976) 135 CLR 674 , at 678) and not the common law ' s "sole purpose" test, for protecting communications made in documents prepared for the purpose of the lawyer giving legal advice to a client. And as we have earlier explained, s 122 contains its own test to determine when the privilege is lost, one which differs from and is inconsistent with that applied by the common law in allowing for loss by partial disclosure: see also Telstra Corporation (No 2) at 349. These are not the only differences: see for example the discussion in G R Roberts, Client Legal Privilege, (1996) 70 Law Inst Jo 54.

Reference was made by the court to the observations of McLelland CJ in Telstra Corporation v Australis Media Holdings [No 1] (1997) 41 NSWLR 277 at 279-80 where his Honour said:

If principles of client legal privilege … applicable to the adducing of evidence were to differ from those applicable to ancillary processes, the consequences would be anomalous, conducive to confusion and disorder in the preparations for and conduct of proceedings, and verging on the absurd. The adducing of evidence of a hearing and ancillary processes are functionally linked. Moreover, both may occur at the same time and place … If different principles of client legal privilege were applied to the operation of the production of the document on the one hand, and the adducing of evidence in the application on the other, in situations of this kind, quite impractical consequences could ensue.

The Full Court, in dealing with the issue as one of principle rather than one of discretion under the Rules of Court, concluded that there had been a derivative modification of the common law as a consequence of ss 121 to 126 of the Evidence Act 1995. The underlying principle was explained by the court at ALR 428-9 in the following terms:

We accept, necessarily, that in ancillary processes it is the common law that determines the availability of a client legal privilege claim. In our view the issue that needs to be faced is what are the common law principles that are to be so applied. With the greatest respect to those who have expressed the contrary view (see for example Esso Australia Resources Ltd v FCT) we do not consider that those well known decisions of the High Court dealing generally with the common law to which we have earlier referred conclude the matter. In those decisions the High Court considered the common law in settings unencumbered by the Act. In our view such is the significance of the Act ' s provisions in this that their advent has created an entirely new setting to which the common law must now adapt itself, and adapt itself in such a way as to "include [the Act] as a fundamental part of its fabric" : see 1; R v Swaffield 151 ALR 98 ; on the analogical use of statutes in developing common law principles, see 1 and the references therein; 1

Our reasons for concluding that this adaptation is necessary are as follows. First, while it is the case today that claims to legal professional privilege are most commonly made in civil litigation in ancillary processes particularly on discovery, the privilege itself evolved as an exception to testimonial compulsion at trial and was then applied derivatively to ancillary processes as these emerged and developed: see Baker v Campbell (1983) 153 CLR 52 at 126; Telstra Corp v Australis Media Holdings Ltd (No 1) at 279. In this sense, as McLelland CJ (at 279) noted in the Telstra case, the principles applicable at the trial provide the paradigm and any change to the paradigm "should rationally be reflected in the derivatives" . For this reason alone we would consider it to be "undesirable to have two streams as it were, one legislative and the other judicial" (R v Swaffield at 127) capable of producing differing results depending upon the adventitious circumstance of when in the trial process the privilege claim is made.

Secondly, even if there is not uniform agreement as to the policies informing, and the purposes of, the privilege (see the discussion in the ALRC ' s Report No 26 paras 877-878, 881; and also McNicol, Law of Privilege, 46ff) we can see no principled reason for ascribing differing policies and purposes, and hence differing attributes, to the privilege depending upon whether or not the privilege is claimed when evidence is being adduced at trial. In the absence of such reason, the legislatively prescribed attributes of the privilege ought be reflected in those of the common law in jurisdictions where the two operate in tandem.

We acknowledge that a consequence of this view is that the "sole purpose" test of Grant v Downs ought not to be applied as part of the common law in Evidence Act jurisdictions. Given that the "dominant purpose" test is the legislatively prescribed one where evidence is to be adduced, we can see no reason for a different test in ancillary processes. We would add that the reasoning in Grant v Downs provides no justification for the maintenance of a difference in approach. Rather its premise is to the contrary.

Thirdly, impractical consequences could ensue if differing principles were to be applied by the Act and by the common law as McLelland CJ in Eq indicated in the Telstra (No 1) case. This of itself provides some reason for assimilating the Act ' s principles into the common law.

There is one further matter we should note. The effect of our decision is that Pt 3.10 Div 1 of the Act should, through the common law, be applied derivatively to ancillary proceedings. We do not need to express a concluded view on the questions (a) whether that Division in fact codifies the law on client legal privilege and (b) whether the common law in Act jurisdictions ought in consequence be regarded as limited in its content to the principles in Div 1 . We need, however, to emphasise that, insofar as previously established principles of the common law are now inconsistent with the Act and its purposes, they are to be taken as being modified correspondingly so as to avoid such inconsistency. Disclosure waiver falls into this category.

The decision of the Full Court was considered by the Court of Appeal of New South Wales in Akins v Abigroup Ltd (1998) 43 NSWLR 539 in relation to the Evidence Act 1995 (NSW), which contains substantially the same provisions in relation to privilege as those contained in the Evidence Act 1995. Akins was also concerned with loss of privilege. In his judgment Mason P, after considering the conflict between the authorities, adopted and followed the reasoning in Adelaide Steamship. Mason P then concluded that the principles of the Evidence Act 1995 (NSW) touching client legal privilege applied derivatively to ancillary processes involving the pre-trial gathering of evidence. His Honour ' s reasons for that conclusion may be summarised as follows:

1. The doctrine of legal professional privilege is a fundamental common law doctrine that furthers the rule of law and, as such, has continued to respond to changes in the law of procedure and evidence.

2. If the law relating to pre-trial gathering of evidence was not responsive to relevant and applicable changes in the Evidence Act 1995, it would be departing from its history of appropriate response to changes in the law. This would create anomalies and lead to a waste of expenditure as a result of different principles applying to the same document or piece of information, depending upon whether access was sought prior to or even at the trial or whether it was actually put into evidence. Although some of the anomalies could be overcome by the exercise of judicial discretion, there remained force in criticism of a state of affairs brought about by the common law ' s refusal to adapt itself to the changed statutory setting.

3. Although the Commission did not extend its proposed reforms to ancillary processes and did not regard such a state of affairs as "unreasonable" , neither the caution of the Commission or the legislature should stultify "the capacity of the common law to develop incrementally" to reflect the "gravitational pull" of statutes.

4. Provisions in the Evidence Act 1995 which stipulated that it did not affect the operation of certain principles or rules of common law or equity in relation to evidence did not touch the situation before the court as it was not, at that stage, dealing with evidence.

5. The provisions relating to client legal privilege do not abrogate the privilege or undercut its high function. Consequently, the principles of statutory interpretation touching the construction of legislation abrogating fundamental common law rights have little or no impact in the present context.

6. Doctrines of precedent require that appellate courts follow the decisions of other appellate courts in relation to the reach of indistinguishable statutory provisions, unless convinced that the decisions of other courts are plainly wrong. In that regard it was also relevant that in Re Z(1996) 134 FLR 40 at 66-9 a majority of the Full Court of the Family Court took the same approach as in Adelaide Steamship.

Mason P stipulated 1 qualification which he stated in the following terms (at NSWLR 548):

I mention one caveat. A nice question would arise were the matter in issue whether a document prepared for the dominant but not sole purpose of providing legal advice was privileged from disclosure in some ancillary process involving the pre-trial gathering of evidence. Grant v Downs still represents the common law in this State. I recognise that most of the cases which arrived at the view which I have adopted saw it as an inevitable consequence that Grant v Downs no longer applies in jurisdictions where the Evidence Act principles apply: see, eg Adelaide Steamship at 428-9. According to Goldberg J in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (at p 35), Telstra (No 1) turned on the dominant purpose issue; but this is not apparent on the face of the report of that case. I am far from convinced that any court other than the High Court has the right to depart from Grant v Downs merely because of the indirect or flow-on effect of the Evidence Act. Notwithstanding the gravitational pull of s 118 it may be that only the High Court could administer the coup de grace to Grant v Downs if that is to be its fate in the Federal Court and courts in New South Wales in the light of the Evidence Act 1995. In Ravenor Overseas Inc v Roadhead (1998) 72 ALJR 671 at 672 Brennan CJ said that:

Nothing is more important to the due administration of justice than that the Courts of Australia should faithfully follow decisions of this Court. This Court has the responsibility of determining the law applicable throughout the Commonwealth. Nor should it be thought that, because some new argument can be devised contrary to a holding of this Court, the authority of its decisions become problematic. Although the decisions of this Court will, when this Court deems it necessary, be revisited, there should be no qualification about the duty of other Courts faithfully to apply the decisions of this Court as they stand.

Priestley JA agreed with the conclusion of Mason P that the principles of the Evidence Act 1995 (NSW) regarding legal privilege apply derivatively to ancillary processes involving the pre-trial gathering of evidence. Rolfe AJA also agreed with Mason P.

As I later point out, there is some justification for the caveat of Mason P in Akins. However, his Honour ' s use of the caveat as a qualification to his decision in that case is not easy to follow. Sections 118 to 119 and 121 to 126 modify the common law as laid down by the High Court in Grant v Downs and Attorney-General v Maurice respectively. If the caveat is to apply, it must apply equally to any derivative modification in respect of all of those sections. Further, it was central to the decision in Adelaide Steamship that the Evidence Act 1995 resulted in a derivative modification of the common law in relation to the loss of privilege by waiver. The Full Court in Adelaide Steamship then stated (at ALR 428-9) that a necessary consequence of the decision was a similar modification in respect of the sole purpose test of Grant v Downs. Senior counsel for the Commissioner contended that whilst Adelaide Steamship and Akins were authorities on loss of privilege, it did not follow that the same reasoning applied in relation to the existence of privilege. I do not accept that contention. Assuming for the moment that the principles applied in Adelaide Steamship are correct, those principles must, both as a matter of logic and principle, apply in the same way to the applicability of common law principles relating to the existence of privilege as they do to the loss of privilege in relation to proceedings governed by the Evidence Act 1995. In each situation, the issue is whether there has been a derivative modification of the common law beyond that which is provided for under the Evidence Act 1995.

The same issue again came before a Full Court of the Federal Court in Telstra Corporation Ltd v BT Australasia Pty Ltd (unreported, FCA, Beaumont, Branson and Lehane JJ, NG 280 /1998, 24 July 1998). Branson and Lehane JJ (at 4 of their reasons) decided not to depart from the approach of the Full Court in Adelaide Steamship, saying:

In the Adelaide Steamship case the Full Court held that, because the Evidence Act 1995 (Cth) (the "Act" ) is, in terms, operative only in respect of the adducing of evidence, legal professional privilege, for the purposes of ancillary processes such as the production of discovered documents and access to documents produced on subpoena, continues to arise, and is waived, in accordance with common law principles. Those principles, however - and this is for present purposes the ratio decidendi of the Adelaide Steamship case - so far as they are inconsistent with the Act, have been modified (as they are applied in courts in which the Act is in operation) so as to avoid such inconsistency. That is so because of the entirely new setting, resulting from the advent of the Act, in which the common law must now operate.

Beaumont J dissented in the result, but in so doing assumed, without deciding, that Adelaide Steamship was correctly decided.

Is Adelaide Steamship to be followed?

The primary submission made on behalf of the Commissioner was that this Court ought not to follow Adelaide Steamship. The Commissioner submitted that the decision of the Full Court in Adelaide Steamship was clearly wrong, and further, in so far as it was relied upon to reject the application of the Grant v Downs "sole purpose" test in Evidence Act jurisdictions, the court transgressed the fundamental principle that it was for the High Court alone to determine whether one of its previous decisions is to be departed from.

It is well recognised that this court is not bound by its previous decisions but will normally follow an earlier decision unless convinced it is wrong: see Chamberlain v The Queen (1983) 72 FLR 1 at 8-9 per Bowen CJ and Forster J; Perrett v Comr for Superannuation (1991) 29 FCR 581 at 592; Byrne v Australian Airlines Ltd (1994) 47 FCR 300 at 304, 315, 333; Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 111 and Qantas Airways Ltd v Bruce Cornwall (1998) 83 IR 102 . The principle was stated in Nguyen v Nguyen (1990) 169 CLR 245 at 269 per Dawson, Toohey and McHugh JJ:

Where a court of appeal holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong. The occasions upon which the departure from previous authority is warranted are infrequent and exceptional and pose no real threat to the doctrine of precedent and the predicability of the law: see Queensland v. The Commonwealth [(1977) 139 CLR 585 , at pp 620 et seq], per Aickin J. (Footnote incorporated)

The principles acted upon by the Full Court in Adelaide Steamship may be summarised as follows:

• the relevant statutory provisions concerning client legal privilege are confined in their operation to the adducing of evidence in proceedings in federal courts;

• in ancillary processes, the common law is to determine the availability of a claim for client legal privilege;

• such is the significance of the provisions of the Evidence Act 1995 concerning client legal privilege that its advent has created an entirely new setting to which the common law must now adapt itself, so as to "include [the Act] as a fundamental part of its fabric" ;

• due to the entirely new setting in which the common law must now operate, in so far as the common law is inconsistent with the Evidence Act 1995, it is to be taken to have been modified in Evidence Act jurisdictions so as to avoid such inconsistency; and

• accordingly, the "sole purpose" test of Grant v Downs ought not to be applied as part of the common law in Evidence Act jurisdictions.

I have already set out the reasons given in Adelaide Steamship and Akins for the conclusion that modification of the common law is necessary. I have also adverted to the anomalous situation which has been created by the disparity between the two tests operating in respect of the same confidential communications in a proceeding in a Federal court. However, even accepting for the moment that the resulting situation was accurately described by McLellan CJ in Telstra Corporation [No 1] as "verging on the absurd" , that merely raises, but does not answer, the question of whether it is for the courts, rather than for the legislature, to resolve the problem. In Adelaide Steamship, the Full Court opted for judicial intervention to resolve the problem. Through the analogical use of statutes in developing common law principles the court concluded that there has been a derivative modification of the common law as a result of the advent of the Evidence Act 1995. It is necessary to consider the correctness of that approach.

The analogical use of statutes in developing common law principles

The relationship between statutes and the common law, and the extent to which statutory developments may affect the common law has received academic and judicial consideration in a number of jurisdictions. The idea that statutes could be used in developing the common law by way of analogy appears to have evolved from the writing of Roscoe Pound early this century: see Common Law and Legislation (1908) 21 Harvard Law Review 383. Pound identified 4 ways in which courts could approach a legislative innovation. The first approach was to "receive it fully into the body of the law as affording not only a rule to be applied but a principle from which to reason" and, taking statutes as a more democratic and hence superior source of principle, to reason from them by analogy in preference to common law rules on the same subject. Under the second approach, legislation was used to reason from by analogy, with equal authority to any common law rule. The third approach did not allow reasoning from legislation by analogy, but interpreted it liberally to ensure that it covered the entire ground that it was intended to cover. The fourth and most limited use of legislation was to apply it directly only, with a strict interpretation to ensure that it covered only the cases expressly referred to. Pound considered that whilst the fourth approach constituted the "orthodox common law attitude" , the third approach represented the attitude towards which American courts were tending, and that:

… the course of legal development upon which we have entered already must lead us to adopt the method of the second and eventually the method of the first hypothesis. (at p 386)

See also The Common Law in the United States (H F Stone (1936) 50 Harvard Law Review 4).

As predicted by Pound, analogical use of statutes now appears to be widely accepted as a mode of legal reasoning in the United States. Following a number of examples of application of the doctrine in State courts (see for example Klin Co, Inc v New York Rapid Transit Corporation (1936) 271 NY 376 ; 3 NE 2d 516 , where the New York Court of Appeals modified the common law in relation to a prescriptive easement in respect of light and air above property, by reference to an equivalent change in the legislation relating to prescription by adverse possession) the United States Supreme Court accepted the doctrine. In Moragne v States Marine Lines Inc (1970) 398 US 375 ; 26 L Ed 2d 339 , the Supreme Court was required to consider whether an action for wrongful death caused by violation of maritime duties existed in maritime law. An earlier decision of the Supreme Court had held that "in the absence of a statute there is no action for wrongful death" . The Supreme Court noted that the earlier decision was based on principles which, even at the time, were discarded in England and "had never existed in this country at all" . However, the Court did not consider it necessary to determine whether the earlier case was correctly decided at the time, as:

A development of major significance has intervened, making clear that the rule against recovery for wrongful death is sharply out of keeping with the policies of modern American maritime law. (at 398 US 388; 26 L Ed 350)

This development was, in part, the rejection of the rule by English judges. However, the primary development was the disapproval by English and United States legislatures of the rule against recovery for wrongful death:

In the United States, every State today has enacted a wrongful-death statute … . These numerous and broadly applicable statutes, taken as a whole, make it clear that there is no present public policy against allowing recovery for wrongful death. The statutes evidence a wide rejection by the legislatures of whatever justifications may once have existed for a general refusal to allow such recovery. This legislative establishment of policy carries significance beyond the particular scope of each of the statutes involved. The policy thus established has become itself a part of our law, to be given its appropriate weight not only in matters of statutory construction but also in those of decisional law. (at 398 US 390-391; 26 L Ed 351)

The court referred to academic and judicial observations in support of `this use of statutes, and concluded (at 398 US 392; 26 L Ed 352):

It has always been the duty of the common-law court to perceive the impact of major legislative innovations and to interweave the new legislative policies with the inherited body of common-law principles - many of them deriving from earlier legislative exertions.

The court found that the Congress had not indicated any intention to preclude a wrongful death remedy and overruled the earlier decision. However, the court in observing that the statutory policy it had identified arose from "numerous and broadly applicable statutes" and that caution would need to be exercised in identifying policies from statutes, said:

The legislature does not, of course, merely enact general policies. By the terms of a statute, it also indicates its conception of the sphere within which the policy is to have effect. In many cases the scope of a statute may reflect nothing more than the dimensions of the particular problem that came to the attention of the legislature, inviting the conclusion that the legislative policy is equally applicable to other situations in which the mischief is identical. This conclusion is reinforced where there exists not one enactment but a course of legislation dealing with a series of situations, and where the generality of the underlying principle is attested by the legislation of other jurisdictions. On the other hand, the legislature may, in order to promote other, conflicting interests, prescribe with particularity the compass of the legislative aim, erecting a strong inference that territories beyond the boundaries so drawn are not to feel the impact of the new legislative dispensation.(at 398 US 392 26 L Ed 352)

See also the discussion of this case and other United States authority by Kelly in The Osmond Case: Common Law and Statute Law (1986) 60 ALJ 513.

The analogical use of statutes does not, however, appear to be as clearly accepted in other jurisdictions. In England 1 claimed that it was arguable that the English legal system had accepted "for a considerable time" Pound ' s hypothesis that legislation could be received as a source of principles from which to reason, with equal or even superior force, to those of the common law. He cited a limited number of authorities for his conclusion that:

… in England, a legislative innovation is received fully into the body of law to be reasoned from by analogy in the same way as any other rule of law. (at 170)

There has been some academic questioning of this view by commentators who consider that in practice, courts have regarded legislation as being an inferior analogical source to the common law, if a source at all: see 1 P S Atiyah, Common Law and Statute Law, 1985, 48 Modern Law Review 1; 1. Atiyah accepts, however, that there is "some scope for a cautious development" of the theory. For example, where a common law principle is based on out-dated values, legislative amendment to that principle may be "eminently suitable for extension by the courts" (at p 28). Bennion observes that a legislative innovation based on a legal principle has the effect that the principle is thereafter embodied in legal policy (at p 390).

The analogical use of statutes has found judicial expression in the House of Lords in Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 , a passing off case. Lord Diplock said at 743:

… the increasing recognition by Parliament of the need for more rigorous standards of commercial honesty is a factor which should not be overlooked by a judge confronted by the choice whether or not to extend by analogy to circumstances in which it has not previously been applied a principle which has been applied in previous cases where the circumstances although different had some features in common with those of the case which he has to decide. Where over a period of years there can be discerned a steady trend in legislation which reflects the view of successive Parliaments as to what the public interest demands in a particular field of law, development of the common law in that part of the same field which has been left to it ought to proceed upon a parallel rather than a diverging course.

See also the comments of Lord Scarman in R v Lemon [1979] AC 617 at 665, and Gillick v West Norfolk & Wisbech Area Health Authority [1986] AC 112 at 185-8.

There has also been support in Australia for the analogical use of statutes as a method of judicial reasoning. Sir Anthony Mason referred to Pound ' s writing on the subject in expressing the view that legislative inroads on the common law make the erosion of the formal separation between the common and statute law "inevitable" (1). He observed:

… the failure of the courts to adapt the common law in the light of statutory policy is both a reflection of judicial reluctance to make use of policy arguments and a ground for the accusation that the law is excessively legalistic. There are strong arguments for treating statute law as well as existing judicial decisions as a platform for future elaboration of the common law … .

R S French (now Justice French), in considering the interaction between legislation and the common law in the area of torts referred to the analogical use of statutes and the academic writings on the subject (1. He observed that:

Statutory rules are capable of contributing to the content of generally expressed common law rules of liability. There is some indication that analogical reasoning from statute law to the common law may be open. (at 211)

However, it was acknowledged that the influence of the common law on statute remained greater than that of statutes on the common law and that an integrated approach to the 2 sources of law was not yet available.

Professor P D Finn (now Justice Finn) has also considered the relationship between statutes and the common law. In "Statutes and the Common Law" (1992) 22 Western Australian Law Review 7 he concluded that the law appropriately accommodates different views of the relationship between the common law and statutes, including the use of statutory analogues where the relevant statute builds on a fundamental theme in the common law. Two examples of the analogical use of statutes that were referred to were the High Court decision of R v L (1991) 174 CLR 379 and the decision of the NSW Court of Appeal in Osmond v Public Service Board (NSW) [1984] 3 NSWLR 447 .

In R v L, Mason CJ and Deane and Toohey JJ (at CLR 390) acknowledged the early common law authority that there could be no rape within marriage as marriage gave rise to an irrevocable consent to sexual intercourse and referred to later authority which did not appear to accept that proposition. They concluded (at CLR 390) that:

… even if the respondent could, by reference to compelling early authority, support the proposition … that by reason of marriage there is an irrevocable consent to sexual intercourse, this Court would be justified in refusing to accept a notion that is so out of keeping with the view society now takes of the relationship between the parties to a marriage. The notion is out of keeping also with recent changes in the criminal law of this country made by statute, which draw no distinction between a wife and other women in defining the offence of rape. (Footnote omitted)

See also Dawson J at CLR 405. R v L is an example of the courts referring to changes in social and community values in formulating the common law and interpreting legislation.

In Osmond v Public Service Board, Kirby P held that the common law required decision-making tribunals to provide reasons for its decisions. In reaching that conclusion, his Honour referred to the development of legislation in administrative law and specifically to legislative provisions requiring the giving of reasons. His Honour then referred to the observations of Lord Diplock in Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd referred to above. Kirby P (at NSWLR 465) considered that the legislative changes in the field of administrative law could:

… simply reflect the same social changes and expectations that may also be evidenced in the common law … [W]here a number of relevant Parliaments have enacted laws elaborating modern conceptions of administrative justice and fairness, it is appropriate for the judiciary in development of the common law in those fields left to it, to take reflection from the legislative changes and to proceed upon a parallel course.

In Ralevski v Dimovski (1986) 7 NSWLR 487 at 493, Kirby P reiterated these views and while acknowledging that "[t]here may be doubt that Lord Diplock ' s suggestion is applicable where the legislation, from which analogies are sought to be drawn, is enacted by different legislatures in the one federal polity" , noted that the enactment of existence of anti-discrimination legislation by the Commonwealth and NSW legislatures, indicated changing community attitudes which should be reflected in the common law.

There are examples of the analogical use of statutes in other Commonwealth jurisdictions. In South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282 at 298, Cooke P observed that "[t]he analogy of a statute may properly influence the development of the common law" and referred to a number of English and New Zealand judgments to that effect. His Honour also referred approvingly to Professor J F Burrows ' view (expressed in 1) that this type of reasoning is "so sensible that it is surprising that it did not occur earlier" . See also Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 at 422 and Common Law and Statute Law J F Burrows, (1980) New Zealand Law Journal 98. Use of the doctrine in Canada (albeit unacknowledged) is found in the Supreme Court decision R v B (KG) [1993] 1 SCR 740 where Lamer CJ, with whom Sopinka, Gonthier, McLachlin and Iacobucci JJ agreed, referred extensively to abandonment by statute of the rule as to inadmissibility of prior inconsistent statements (and by the judiciary in other jurisdictions) as a factor supporting an equivalent change in the common law.

The High Court of Australia has neither accepted nor rejected the doctrine. In Public Service Board (NSW) v Osmond (1986) 159 CLR 656 , Gibbs CJ (with whom Brennan and Dawson JJ agreed) rejected the Court of Appeal ' s view that the common law of natural justice required the giving of reasons for decisions. His Honour referred to Kirby P ' s reference to the Warnink decision and said (at CLR 669):

… Lord Diplock did not intend to say that because there has been a trend of legislation in one jurisdiction, the courts of a different and independent jurisdiction should develop the common law of that jurisdiction on a parallel course. Such a proposition would be as impossible to sustain as it would be to put into practice when different States had taken different legislative courses.

His Honour, added by way of example (at CLR 669), that:

The common law of New South Wales cannot be judicially modified to make it accord with the statute law of, say, Victoria.

Although his Honour ' s view as to the common law of a State rather than the common law of Australia would not, as I later explain, now be accepted, clearly his Honour was cautioning against analogical use of statutes of other jurisdictions; cf Moragne at 398 US 392 ; 26 L Ed 352 .

Gibbs CJ rejected the proposition apparently espoused by Kirby P that a trend of legislation in one jurisdiction can lead the courts of another jurisdiction to develop the common law on a corresponding course. However, as noted by Kelly in The Osmond Case: Common Law and Statute Law Gibbs CJ did not reject the possibility of analogical reasoning; rather his Honour limited its potential use to legislation of the legislature in the relevant common law jurisdiction.

More recently, in R v Swaffield (1998) 72 ALJR 339 Toohey, Gaudron and Gummow JJ (at 361) commented on the undesirability of having 2 streams:

… one legislative and the other judicial, the latter simply echoing the former or perhaps deviating from it.

The concept of the analogical use of statutes may be compared with the sixteenth century method of statutory construction known as giving effect to "the equity of the statute" . This doctrine, advocated by Sir Edward Coke, involved judges interpreting statutes to cover cases clearly not covered by the statute ' s terms but which fell within the statute ' s policy, or interpreting cases which were within the statute ' s terms but outside the range of its "mischief" as being outside the statute ' s operation. This doctrine, which was subjected to criticism in the eighteenth and nineteenth centuries, fell into disuse. However, in Nelson v Nelson (1995) 184 CLR 538 at 553-4, Deane and Gummow JJ acknowledged that despite criticism of the doctrine:

… the doctrines developed in equity survived. In the legal system as a whole there remained, and indeed entered the statute law itself, particular applications, developed by the eighteenth century judges, of the broader concept of the equity of the statute. One such instance in the modern law of bankruptcy is the avoidance of preferences. This was first devised by Lord Mansfield, as it was said, "without any positive enactment" and as a protection or furtherance of the policy disclosed by the existing statute law. (Footnote omitted)

The "equity of the statute" doctrine built on and extended the operation of a statute into areas not covered by its terms. By contrast, the analogical use of statutes in the evolution of the common law does not give the statute any operation beyond its terms; rather, it is a method of ensuring that developments in the common law are not out of step or inconsistent with social change reflected in significant legislative change.

The theme running through the analogical use of statute cases is that in seeking to identify change in social or legal policy it is appropriate to look to widely enacted legislation which evidences a legislative acceptance of such change in contemporary values. An important premise for analogical use of statutory policy appears to be that the extent of its enactment warrants it being regarded as a policy to be thereafter applied uniformly as part of the overall body of the common law.

Justice McHugh speaking extra-judicially, in a paper entitled Democracy and the Law (5 July 1998) which discussed the impact of social change on the law, observed that:

Extrinsic values and practical experience derived from democracy, economics, science, social and political forces, public morality and contemporary conceptions of justice are often relevant factors in shaping the development of the law.

Plainly, legal policy in relation to the factors discussed by his Honour, evidenced in widely enacted legislation, would offer significant guidance in shaping any requisite consequential developments in the common law.

In that context there are sound reasons for referring to legal policy, clearly expressed in legislation, as a premise for legal reasoning in developing the common law. However, it is not sufficient that a statute adopts or even some statutes adopt, a changed social or legal policy. The doctrine is premised on the relevant statutory policy evolving as an integral part of a clear and coherent change in social or legal policy in the jurisdiction within which the common law is to adapt. In Moragne the United States Supreme Court justified its analogical use of statute on the basis that the applicable statutes evidenced "a wide rejection by the legislatures of whatever justifications may once have existed" for the relevant common law rule.

As was observed by Kirby P in Ralevski at NSWLR 493 and by Toohey, Gaudron and Gummow JJ in R v Swaffield at ALJR 361 , there are greater difficulties in the analogical use of statutes in an Australian federal setting where some, but not other, legislatures enact legislation with the consequence that any consequential legal policy change only occurs in some States or jurisdictions.

Further, unlike the situation in the United States, there is only one common law in Australia; the common law of Australia. The High Court considered the interaction of the Constitution, statute law and the common law in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 . In the unanimous joint judgment at CLR 562-3 the court said:

With the establishment of the Commonwealth of Australia, as with that of the United States of America, it became necessary to accommodate basic common law concepts and techniques to a Federal system of government embodied in a written and rigid constitution. The outcome in Australia differs from that in the United States. There is but one common law in Australia which is declared by this Court as the final court of appeal. In contrast to the position in the United States, the common law as it exists throughout the Australian States and Territories is not fragmented into different systems of jurisprudence, possessing different content and subject to different authoritative interpretations: [cf Black & White Taxi Co v Brown & Yellow Taxi Co (1928) 276 US 518 at 533-534; Erie Railroad Co v Tompkins (1938) 304 US 64 at 78-79]. (Footnote incorporated)

And at CLR 564:

The Constitution, the Federal, State and territorial laws, and the common law in Australia together constitute the law of this country and form "one system of jurisprudence" [McArthur v Williams (1936) 55 CLR 324 at 347; cf Thompson v The Queen (1989) 169 CLR 1 at 34-35]. (Footnote incorporated)

The enactment of a federal statute will, by reason of the limitations on Commonwealth legislative power under the Constitution, usually have only a confined operation within Australia. The statute may abrogate the common law, in so far as it is inconsistent with the operation of the statute, but only within the area covered by the statute.

In Western Australia v Commonwealth (1995) 183 CLR 373 at 487 in the joint judgment (Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ) their Honours explained the limited effect of a law of the Commonwealth on the common law. Their Honours said:

A "law of the Commonwealth" , as that term is used in the Constitution, cannot be the unwritten law. It is necessarily statute law, for the only power to make Commonwealth law is vested in the Parliament. But the laws of the Commonwealth operate in the milieu of the common law. As Sir Owen Dixon observed: "We act every day on the unexpressed assumption that the one common law surrounds us and applies where it has not been superseded by statute." A law of the Commonwealth may exclude, wholly or partially, the operation of the common law on a subject within its legislative power or it may confirm the operation of the common law on such a subject or it may simply assume that the common law applies to the subject, as in truth it does unless excluded. (Footnotes omitted)

Although I accept the role of the analogical use of statutes in developing the common law of Australia, the statutory limitations on the exercise of Commonwealth legislative power under the Constitution and, subject to the Constitution, the extensive legislative power conferred on State and Territory Parliaments, would usually require extensive legislative action before the doctrine is capable of being attracted. Such a requirement was explicitly recognised in Moragne and appears to have been implicitly recognised by Gibbs CJ in Public Service Board (NSW) v Osmond (1986) 159 CLR 656 at 568 and Kirby P in Ralevski at NSWLR 493 .

In R v Swaffield (1998) 72 ALJR 339 consideration was given to the effect of the enactment of s 90 of the Commonwealth and NSW Evidence Acts on the unfairness discretion as a basis for excluding confessional statements in a criminal proceeding. In considering an argument that the principles on that subject in the Evidence Act 1995 should be adopted as part of the common law, Toohey, Gaudron and Gummow JJ said at ALJR 361:

It is relevant to bear in mind the provisions of the Evidence Acts. Although, in general, the Commonwealth Act applies only in the external Territories and in proceedings in Federal courts and courts of the Australian Capital Territory, [ss 4 , 5 and 6 ], it has been substantially re-enacted in New South Wales. It may well be re-enacted in other States. It may be thought undesirable to have two streams, as it were, one legislative and the other judicial, the latter simply echoing the former or perhaps deviating from it. On the other hand there is no comparable legislative provisions in Queensland and Victoria, the two States with which the Court is presently concerned. It is therefore appropriate to develop the common law in Australia in terms of a broad principle based on the right to choose whether or not to speak. (Emphasis added, footnote incorporated)

Thus, on the basis of the absence of uniform legislation and, in that case, of legislation applicable in the relevant jurisdictions from which a generally applicable statutory principle could be drawn, their Honours found that it was appropriate to develop the common law by reference to broad policy principles rather than statutory policy principles.

The same difficulty arises in the present case. The client legal privilege provisions in the Evidence Act 1995 are of limited operation. The provisions do not affect the operation of the common law, even in relation to offences against Commonwealth law, except in proceedings in federal courts as defined. Other than in New South Wales "no comparable legislative provision" has been enacted in any other State or Territory. Although the second reading speech anticipated that counterpart legislation might be enacted in the States, that has yet to occur. It seems to me that, as in Swaffield, the enactment of the Evidence Act 1995 with its confined operation is insufficient to justify the analogical use of the Act in the development of the common law of Australia.

Whilst it is true that the Full Court in Adelaide Steamship confined its decision to modification of the common law only "in Evidence Act jurisdictions" , for the reasons set out above such an approach is impermissible. It is in the nature of the common law that it is "subject to affection by the exercise of legislative power" (Western Australia v Commonwealth at CLR 487 ) by excluding, confirming or assuming the continued operation of the common law. However, in Australia legislative power cannot fragment the common law so that its content differs within the Commonwealth. Thus, to the extent the common law is inconsistent with the operation of a statute the statute might abrogate or supersede the common law but only to the extent of the inconsistency. To the extent the common law is not abrogated or superseded by the statute it remains part of the common law of Australia. Thus there is not, and cannot be, a different common law "in Evidence Act jurisdictions" even if that phrase was intended to be confined to proceedings governed by the Evidence Act 1995.

There is a further difficulty with the decision of the Full Court. The difficulty is that raised by the caveat of Mason P in Akins. The principles governing client legal privilege were authoritatively laid down in Grant v Downs and are not to be departed from other than by the High Court. Whilst it can be accepted that it is open to the courts to adapt the common law to a new policy setting, including that which is derived from the analogical use of statutes, that is not the case where the common law has already been authoritatively determined by the High Court albeit, in the view of the lower court, in a different policy setting. In that situation, it is for the High Court alone to determine that its decisions are to be departed from or overruled by reason of the new setting: see Garcia v National Australia Bank Ltd (1998) 155 ALR 614 at 619 (para 17) per Gaudron, McHugh, Gummow and Hayne JJ.

For the above reasons I am of the view that the reasoning employed by the Full Court in Adelaide Steamship in arriving at its conclusion that the common law in respect of privilege had been modified derivatively by reason of the enactment of the Evidence Act 1995 is wrong. However, that does not lead to the conclusion that the result arrived at by the Full Court was also wrong. The same result might be reached by a process of construction of the relevant statutory provisions.

The construction of ss 118 and 119

The ordinary meaning conveyed by the text of ss 118 and 119 is that the prohibition against disclosure contained in the sections only arises when evidence is to be adduced in a proceeding in a federal court. Surprisingly little, if any, consideration has been given to whether the sections may be construed as applying to ancillary processes in a manner which avoids the anomalous or unreasonable outcomes suggested in many of the cases.

Plainly, ss 118 and 119 apply to ancillary processes insofar as those processes involve the adducing of evidence in "interlocutory proceedings or proceedings of a similar kind" (s 4(1)(b) ) and proceedings that "are heard in chambers" (s 4(1)(c) ). I cannot discern any principle or reason why the prohibition on disclosure should operate in some ancillary processes (for example, interlocutory hearings) but not in respect of other ancillary processes (for example, discovery), in respect of the same communications in the same proceeding, simply because the other processes do not involve the adducing of evidence. If the primary judge ' s conclusions in the present case are correct, production of the disputed documents is to be determined on the basis of "sole purpose" test but any objection to evidence (including cross-examination) based on whether the documents satisfy that test on the motion for production, is to be determined on the basis of the "dominant purpose" test.

In Baker v Campbell (1983) 153 CLR 52 ; 14 ATR 713 ; 83 ATC 4606 the High Court determined that the doctrine of legal professional privilege was not confined to judicial and quasi-judicial proceedings. In explaining his reasons for arriving at that conclusion Deane J observed at CLR 115-17; ATR 756; ATC 4642:

Once one recognizes that the principle underlying legal professional privilege is that a person should be entitled to seek and obtain legal advice without the apprehension of being prejudiced by subsequent disclosure of confidential communications and that the privilege is not confined to such communications as are made in the course of or in anticipation of litigation but extends generally to confidential communications of a professional nature between a person and his lawyer made for the purpose of obtaining or giving legal advice, common sense points to a conclusion that the principle should not be seen as restricted to compulsory disclosure in the course of such proceedings. Indeed, the doctrine of legal professional privilege would represent an aberration of the common law if it withheld from the courts information or documents which were material in the search for truth in circumstances where the disclosure thereof could be compelled as a matter of course by any administrative officer with a relevant and general statutory mandate to require the provision of information or the production of documents.

…

Both logic and authority support the present-day acceptance of the preservation of that confidentiality as a fundamental and general principle of the common law.

The observations of Deane J are particularly pertinent to the present case if different privilege tests are applied in the ancillary processes than those which apply to evidentiary processes. It would be anomalous, or as his Honour puts it an "aberration" , if disclosure of communications could be compelled in the discovery process but the same communications could be withheld from the federal courts, notwithstanding that they are material in the court ' s search for truth. It seems to me to be no answer to the issue raised in the present matter to contend that the court ought to be cautious about interpreting legislation in a manner that might extend the operation of client legal privilege and thereby hinder the court ' s search for truth. That hindrance has already occurred by the enactment of ss 118 and 119 which prohibit the privileged communications from being adduced in evidence in order to protect the confidentiality of those communications. The primary issue is whether that purpose would be defeated or frustrated if the court does not interpret ss 118 and 119 on the basis that it is implicit in the express prohibition that is contained in those sections that the same test is to apply in the ancillary processes of federal courts which are directed at determining the evidence to be adduced in proceedings in those courts.

If the construction of ss 4(1) , 118 and 119 based on the ordinary meaning of the words used in those sections would defeat or frustrate the object or purpose of their enactment, that can afford a basis for determining the meaning of the provisions to be something different from the ordinary meaning. A substantial body of authority supports that approach.

In Cooper Brookes (Wollongong) Pty Ltd v FCT (1981) 147 CLR 297 at 311; 11 ATR 949 at 959; 81 ATC 4292 at 4299-300 Stephen J declined to adopt a literal application when to do so:

will, in the words of Fry LJ, be to construe "the Act in order to defeat its object rather than with a view to carry its object into effect" , Curtis v Stovin. (Footnote omitted)

In a much cited passage in that case (at CLR 320-1; ATR 966; ATC 4305-6) Mason and Wilson JJ said that departure from the ordinary grammatical sense is not restricted to cases of absurdity or inconsistency. Their Honours said at CLR 321; ATR 966; ATC 4306 that:

… when the judge labels the operation of the statute as "absurd" , "extraordinary" , "capricious" , "irrational" or "obscure" he assigns a ground for concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.

Quite obviously questions of degree arise. If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.

These principles have been applied more recently. In MacAlister v The Queen (1990) 169 CLR 324 Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ said at CLR 330:

To give the words "an offence" in s 77 their literal meaning would defeat the purpose of the legislation and produce the unreasonable result that there was no right of appeal from the County Court against a s 70(b) order. Such a result was certainly not intended. On the other hand, if the words "an offence" are read as "his or her offence" , as we think their context and the apparent intention of the section suggest they should be read, the provision has a sensible meaning which gives effect to its evident purpose. In Luke v Inland Revenue Commissioners, Lord Reid, when confronted with a similar problem, said:

The general principle is well settled. It is only where the words are absolutely incapable of a construction which will accord with the apparent intention of the provision and will avoid a wholly unreasonable result, that the words of the enactment must prevail.

In Saraswati v The Queen (1991) 172 CLR 1 , after referring to the passages from the judgment of Mason and Wilson JJ in Cooper Brookes set out above, McHugh J said at CLR 22:

Moreover, once a court concludes that the literal or grammatical meaning of a provision does not conform to the legislative purpose as ascertained from the statute as a whole including the policy which may be discerned from its provisions, it is entitled to give effect to that purpose by addition to, omission from, or clarification of, the particular provision: see Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd.; Jones v. Wrotham Park Settled Estates; Cooper Brookes; In re Lockwood. (Footnotes omitted)

See also Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing & Community Services (1992) 39 FCR 225 at 229 per Wilcox, Burchett and French JJ, Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421-4 per McHugh JA and Agfa-Gevaert (1996) 186 CLR 389 at 400-1; 35 ATR 249 at 256-7; 96 ATC 5240 at 5246-7.

There are numerous cases in which courts in the United Kingdom have applied similar principles to give effect to, rather than defeat or frustrate, the manifest intention or purpose of the legislature: see 1. See also Ministry of Housing & Local Government v Sharp [1970] 2 QB 223 at 264 per Lord Denning and R v Sheffield Crown Court Ex parte Brownlow [1980] QB 530 at 538-9 per Lord Denning.

A court does not disregard or override the statute; rather it gives effect to the legislative intention by interpreting the statute "in accordance with the judicially presumed parliamentary concern for common sense and justice" per Ungoed-Thomas J in Re Maryon-Wilson ' s Will Trusts [1968] Ch 268 at 282 . The role of "logic and common sense in matters of statutory construction" was reiterated recently by the High Court in Agfa-Gevaert Ltd at CLR 400 -1; ATR 256 - 7; ATC 5246 -7 per Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ. As Lord Diplock observed in The Courts As Legislators in The Lawyer and Justice, Sweet & Maxwell , 1978, at p 274:

… if … the Courts can identify the target of Parliamentary legislation their proper function is see that it is hit; not merely to record that it has been missed.

Such considerations recently led Lord Templeman to comment in Re M (A Minor) [1994] 2 AC 424 at 438:

My Lords, this appeal is an illustration of the tyranny of language and the importance of ascertaining and giving effect to the intentions of Parliament by construing a statute in accordance with the spirit rather than the letter of the Act.

See also Bennion at 614-16.

Section 15AA of the Acts Interpretation Act 1901 (Cth) reinforces the common law position, by providing that a construction which promotes the purpose or object underlying the Act shall be preferred to a construction that would not promote that purpose or object. Section 15AAA provides that in determining the purpose or object of an Act for the purpose of s 15AA , reference may be made to extrinsic material. Section 15AB permits the use of extrinsic material in the interpretation of an Act, inter alia, to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purposes or object underlying the Act (s 15AB(1)(a) ) or to determine the meaning of the provision when the ordinary meaning conveyed by the text of the provision, taking into account its context in the Act and the purpose or object underlying the Act, leads to a result that is "manifestly absurd or is unreasonable" (s 15AB(1)(b)(ii) ).

However, as was pointed out in the joint judgment of Brennan CJ, Dawson, Toohey and Gummow J in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408:

It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. [Black-Clawson International Ltd v Papierwerke Waldhof- Aschaffenburg Aktiengesellschaft[1975] AC 591 at 614, 629, 638; Wacando v Commonwealth (1981) 148 CLR 1 at 25-26; Pepper v Hart [1993] AC 593 at 630.] Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. [Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461, cited in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312, 315.] Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd [(1986) 6 NSWLR 363 at 388], if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent [Cooper Brookes (Wollongong) Pty Ltd v FCT (1981) 147 CLR 297 at 320-321.] (Footnotes inserted)

See also Newcastle City Council v GIO General Ltd(1997) 149 ALR 623 at 631 and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 72 ALJR 841 at 855. In the latter case, reference was made to Commission for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397 where Dixon CJ pointed out that:

… the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed.

Any consideration of the object or purpose of ss 118 and 119 must commence with Grant v Downs. In that case the High Court adopted the "sole purpose" test (with only Barwick CJ preferring the "dominant purpose" test) as the suitable criterion for determining whether documents in respect of which legal client privilege is claimed are protected by the privilege. The rationale of this head of privilege, as identified in Grant v Downs, is that it promotes the public interest by assisting and enhancing the administration of justice through facilitating the representation of clients by legal advisers by:

… keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. Grant v Downs per Stephen, Mason and Murphy JJ at [CLR] 685.

The Australian Law Reform Commission considered the issue of client legal privilege under the following terms of reference:

TO REVIEW the laws of evidence applicable in proceedings in federal courts and the courts of the territories with a view to producing a wholly comprehensive law of evidence based on concepts appropriate to current conditions and anticipated requirements AND TO REPORT:
(a) whether there should be uniformity, and if so to what extent, in the laws of evidence used in those courts; and

(b) the appropriate legislative means of reforming the laws of evidence and of allowing for future change in individual jurisdictions should this be necessary.

In its Interim Report No 26, the Commission recommended that the "dominant purpose" test be substituted for the "sole purpose" test in respect of a claim of client legal privilege in relation to evidence which is sought to be given in federal and territory courts.

At para 878 of the Interim Report, the Commission identified the rationale for legal professional privilege to be the public interest in the provision of legal advice and assistance and in the functioning of the adversarial trial system. The Commission stated that it is not desirable to abolish the privilege nor to extend it further than is necessary. The Commission concluded:

The proposals, therefore, do not set out to extend the privilege but rather are directed to addressing deficiencies in the law.

One of the deficiencies identified by the Commission was said to be the "sole purpose" test. After considering the reasons put forward in favour of the "dominant purpose" test in the context of the Commission ' s identification of the rationale for the privilege the Commission concluded that:

The "dominant purpose" test strikes the correct balance and should be adopted.

The Commission then set forth its interim recommendations and proposals, including a draft bill containing provisions which were not relevantly distinguishable from ss 118 and 119 .

In its Final Report No 38, after having received further submissions, the Commission recommended that, subject to minor changes which are not presently relevant, its interim recommendations and proposals should be implemented. The Commission interpreted its terms of reference as excluding any consideration by it of ancillary processes which did not involve the adducing of evidence. At para 199 of the Final Report, the Commission explained its failure to make recommendations in respect of the ancillary processes in the following terms:

The limits of the Terms of Reference. The Terms of Reference limit the Commission to considering the application of the privilege in the courtroom where evidence is sought to be given. Situations may arise where a party obtains access to documents [eg in pre-trial discovery, on search warrant], outside the courtroom which are protected in the courtroom by the proposed privilege [eg third party communications that do not satisfy the "sole purpose" test but satisfy the "dominant purpose" test]. Under the proposal, the privilege will still apply in the courtroom unless the client voluntarily disclosed the document. Having wider access on discovery or under a search warrant is usual. Access is not determined by the rules of admissibility such as relevance and hearsay. It is not unreasonable to have wider access in the investigative stage. (The passages in parentheses were in the footnotes to para 199.)

Paragraph 199 was relied upon by the Commissioner in support of his contention that the Evidence Act 1995 ' s failure to deal with ancillary processes, such as discovery, was deliberate and, more importantly, was a consequence that was determined by the Commission to be not inappropriate on the basis that it was "not unreasonable to have wider access in the investigative stage" . There is considerable force in the Commissioner ' s submission. It plainly accords with what is stated in para 199. It also accords with the well established rule that discoverable documents which relate to any matter in question between the parties are not limited to documents which would be evidence to prove or disprove any matter in question in the action. As was stated by the Full Court in Commonwealth v Northern Land Council (1991) 30 FCR 1 at 23:

A document relates to a matter in question between the parties if it is "reasonable to suppose" that the document "contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary" . A document will answer that description if it may fairly lead to a train of inquiry which might have either of those consequences: see The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55 , per Brett LJ (at 62-63) and per Baggallay LJ (at 60). This extended meaning was described by Lord Scarman in Burmah Oil Co Ltd v Bank of England [1980] AC 1090 at 1141 as "a vital part of the law of discovery, enabling justice to be done where one party knows the facts and possesses the documents and the other does not" . The class of documents thus discoverable is not limited to those which would be evidence to prove or disprove any matter in question in the action.

Accordingly, the Commission ' s observation that wider access is given on discovery for a broader investigative purpose is plainly correct. However any implicit suggestion that there is nothing "unreasonable" about different tests applying in relation to privilege at each stage is more difficult to accept. As has been pointed out above:

• the rationale for the existence of client legal privilege is to keep the privileged communications secret;

• it was central to the recommendation of the Commission that maintenance of the secrecy of the privileged communications was based on the public interest in the provision of legal advice and assistance and in the functioning of the adversarial trial system;

• adoption of the "dominant purpose" test was said by the Commission to strike the correct balance in achieving those public interest objectives;

• although the Commission ' s proposals were not intended to extend the area in which privilege was to operate, they were directed to addressing deficiencies in the law, one of which it identified to be the "sole purpose" test.

In order to give effect to its conclusions the Commission proposed the enactment of provisions not relevantly distinguishable from ss 118 to 119 and 121 to 126 of the Evidence Act 1995 in order to protect the secrecy of the privileged communications.

In para 199 the Commission explained why it did not deal with the ancillary processes, such as discovery, in its proposals. It did not assert, nor in my view could it assert, that it was desirable for a different test to apply to those processes. However, any statement of the Commission that it is "not unreasonable" to protect the confidence at the evidentiary and discovery stages by different tests is based on false reasoning. The different functions of discovery and evidence are irrelevant to the rationale identified by the Commission for the maintenance of the confidentiality of communications in respect of which client legal privilege is claimed. As a consequence, the explanation given by the Commission in para 199 is, in my view, fundamentally inconsistent with the policy considerations which led the Commission to adopt the "dominant" , rather than the "sole" , purpose test in proceedings in federal courts. If public policy considerations dictate that there be non-disclosure of privileged documents or information material in the search for truth at the evidentiary stage then surely the same considerations, with the same criterion, must apply in the same court in a proceeding at the investigative stage to prevent non-disclosure of the documents or information. That is particularly so as:

• the primary purpose of the investigative stage is to determine the evidence to be adduced at the evidentiary stage;

• disclosure at the investigative stage will commonly be to the party ' s adversary in respect of whom the party would most wish to maintain the confidentiality of the documents and information.

The Evidence Act 1995 was based substantially on the recommendations and proposals of the Law Reform Commission, as was the Evidence Act 1995 (NSW).

Not surprisingly the second reading speech in respect of the Evidence Act 1995 (Hansard, Wednesday 15 December 1993 at 4,087-90) is silent on this particular issue. However, the second reading speech does make a number of points which relevantly were:

• one of the main objectives of the bill is "to provide an evidence law to apply in proceedings in federal courts" ;

• another and, perhaps the most important, object of the bill was that it was hoped to "form the basis of substantially uniform evidence law throughout Australia" ;

• the bill was stated to be based "largely" on the Commission ' s recommendations;

• existing common law was to have effect "subject to inconsistency with the bill" .

In my view, it was the intention of the legislature, when enacting the bill proposed by the Commission, to change the common law in relation to privilege in proceedings in the federal courts as defined. In particular, in adopting the "dominant purpose" test in ss 118 and 119 the legislature was accepting the Commission ' s recommendation that that test would better and more appropriately protect the confidentiality of privileged communications in proceedings in federal courts. The legislature, in adopting the "dominant purpose" test, adopted the test that has now been accepted in the United Kingdom (Waugh v British Railways Board[1980] AC 521 ); New Zealand (Guardian Royal Exchange Assurance of New Zealand v Stuart [1985] 1 NZLR 596 ) and in Canada save for Ontario (Sopinka Lederman and Bryant "Evidence" (1992) at 656-8). On this particular aspect the legislature was dealing with what was perceived by it to be a particular defect in one of the criteria necessary to establish the existence of client legal privilege rather than extending the operation of the privilege.

The Commissioner submits that the purpose of ss 118 and 119 is clearly expressed in the terms of the sections. That purpose, so it is said, is to prohibit communications protected by client legal privilege from being adduced in evidence in a proceeding in a federal court. In my view the Commissioner ' s approach to the issue of purpose is too narrow. It focuses upon the terms of the provisions rather than the reason for their enactment. It also suffers from the vice of interpreting the provisions in order to ascertain the purpose or object of their enactment rather than ascertaining the purpose or object of the enactment of the provisions in order to interpret them by ascertaining whether the ordinary meaning of the words used is to be departed from. As pointed out above ascertaining the legislative purpose or object is an important step in determining whether the ordinary meaning is to be displaced.

The Commissioner also relied upon the extrinsic material to support his submission. However, the extrinsic material does not suggest a legislative intention that different tests would apply to the same communication in the ancillary and the evidentiary processes in a proceeding in the federal courts. Rather, the legislative intention was that existing common law was to have effect "subject to inconsistency with the bill" .

But for the Commission ' s explanation in para 199 I would have little doubt that the legislative intent was for the "dominant purpose" test to apply to ancillary evidence gathering processes of the federal courts. The generality of the observations in the Second Reading Speech do nothing to dispel that conclusion. In particular there is no reason to suspect that the legislature was cognisant, let alone approved, of the Commission ' s explanation for not providing for the ancillary processes in its proposed reforms of the laws of evidence. In these circumstances I am not prepared to elevate the false reasoning of the Commission to a legislative intention. To do so would be contrary to both logic and common sense.

For the reasons I have set out, to confine the prohibition in ss 118 and 119 to the adducing of evidence, whether at an interlocutory or final hearing, and not extend it to the ancillary evidence gathering processes is inconsistent with the Evidence Act 1995, is unreasonable and would tend to frustrate and defeat an important object and purpose of the amendments, namely the adoption of the "dominant purpose" test to protect legal client privilege in proceedings in the federal courts. Put another way, it is implicit in the express prohibition in ss 118 and 119 against evidence being adduced in respect of confidential communications that satisfy the "dominant purpose" test that the same test would apply in the court ' s ancillary processes for the purpose of determining the evidence to be adduced. That result will avoid:

• inconsistency;

• removing one of the significant benefits sought to be conferred by ss 118 and 119 ;

• unreasonable and anomalous outcomes.

For the above reasons the prohibition in ss 118 and 119 is to be construed as applying explicitly to evidence adduced in proceedings in the federal courts as defined and implicitly to any of the ancillary processes of the federal courts, including discovery, which serve the purpose of determining the evidence to be adduced in a proceeding. That construction gives effect to, rather than frustrates or defeats, a significant object and purpose of the Evidence Act 1995, recognises the role of "logic and common sense in matters of statutory construction" (Agfa-Gevaert at CLR 400 -1; ATR 256 -7; ATC 5246 -7) and ensures that the legal meaning of ss 4(1) , 118 and 119 includes what is necessarily or properly implied so as to give effect to the legislative intention gleaned from the language used: see Chorlton v Lings(1868) LR 4 CP 374 at 387 per Willes J and 1.

It must follow that the statutory, rather than the common law, test would also apply to loss of privilege in the ancillary evidence gathering processes of the federal courts.

Thus, using the language of the joint judgment in Western Australia v Commonwealth at CLR 487 , the common law of client legal privilege has been "subject[ed] to affection by the exercise of legislative power" . The Evidence Act 1995 has excluded the operation of the common law relating to legal client privilege in relation to evidence adduced in a proceeding in a federal court and in the court ' s ancillary processes, such as discovery, for the purpose of determining the evidence to be adduced.

I have arrived at the same conclusion, albeit by different reasoning, as was reached by the Full Court in Adelaide Steamship. Notwithstanding that conclusion there will remain a disparity between the tests applicable to client legal privilege depending on whether the issue arises in an evidence related process in a proceeding in a federal court. Obviously, that is an unsatisfactory state of affairs. However that outcome was anticipated by the legislature which regarded the Evidence Act 1995 as the forerunner of uniform evidence legislation throughout the Commonwealth. If, and when, such uniformity occurs then there may well be occasion for the analogical use of such legislation in the development of the common law.

In conclusion the result in Adelaide Steamship, although not the path by which it has been reached, is correct. The judgment the subject of appeal in the present case was handed down prior to the decision of the Full Court in Adelaide Steamship. The primary judge approached the issue before him as one of construction. On that basis his Honour, construing ss 118 and 119 by reference to the ordinary meaning of the words used, concluded that the relevant statutory provisions only operate in respect of the adducing of evidence and that the common law test in Grant v Downs was to be applied in the ancillary process of discovery. For the reasons set out above I have arrived at a different conclusion.

The answer to the question of law in para 1(a) is that the correct test for claiming legal privilege in relation to the production of discovered documents is the "dominant purpose" test set out in ss 118 and 119 of the Evidence Act 1995 (Cth).

Order 15 rule 15

Order 15 r 15 of the Federal Court Rules 1979 provides as follows:

The Court shall not make an order under this Order for the filing or service of any list of documents or affidavit or other document or for the production of any document unless satisfied that the order is necessary at the time when the order made.

The question the court was asked to determine was whether it has power pursuant to O 15 r 15 to make an order excluding from production discovered documents on the basis that such documents meet the "dominant purpose" test as set out in ss 118 and 119 of the Evidence Act 1995. The primary judge answered the question in the negative on the basis that the court had no power to exclude from production documents that were discoverable and were not privileged. In view of the answer to question 1(a) it is unnecessary to answer question 1(b). However, as the present matter may proceed further it is desirable that I briefly set out my views on the rule.

In Commonwealth v Northern Land Council at 30 FCR 24 -5 the Full Court considered the operation of O 15 r 15 :

As appears later in these reasons dealing with the leading English cases upon the inspection and production of documents for which public interest immunity is claimed, the Federal Court Rules 1979 relevant to those topics are more liberal than the equivalent provisions of the Rules of the Supreme Court in England. The same criterion of "necessity" governs orders for the filing or service of lists of documents as governs orders for their production. It is a reflection of the policy of judicial case management that underlies the Federal Court Rules 1979 generally. It is a broad criterion which requires consideration of the interests of justice in the particular case as well as its economic and efficient disposition.

The criterion in O 15 r 15 is broad and requires the exercise of the power conferred under the rule after consideration of the interests of justice in the particular case. Plainly, there might be circumstances in a particular case where the court will exercise the power conferred under the rule to refrain from ordering documents to be produced for inspection notwithstanding that they were discoverable and not privileged from production under common law principles. Unless the criterion set out in the rule is satisfied the court is to refuse to make an order for production under the rule. That is a matter which depends on the facts of the particular case. Further, O 15 r 15 , like all other rules of court, is subject to O 1 r 8 which empowers the court to dispense with compliance with the rules, including O 15 r 15 . That only serves to emphasise the inappropriateness of a question which assumes that O 15 r 15 relates to power. Ultimately the rule is not concerned with power. Rather, it is concerned with whether production might be ordered in a particular case.

The issue sought to be raised by the parties was whether, in the event that the common law test in Grant v Downs was to apply to discovery, it would be an improper exercise of the power conferred under the rule to refuse production solely on the basis that the document met the "dominant purpose" test as set out in ss 118 and 119 and therefore could not be adduced in evidence. Plainly the fact that documents are not able to be adduced in evidence is not a valid objection to their discovery or to their production. Further, in general it would not be a proper exercise of the court ' s discretion to refuse production of documents under O 15 r 15 in order to remove any disparity between the statutory and common law tests for privilege. The refusal would deny a right one party usually has to production and to give the other party a right to refuse production, which that party usually does not have, without regard to whether the order for production is "necessary" or in the interests of justice in the particular case.

It is unnecessary to pursue this aspect further as, having regard to the answer to question 1(a), it is unnecessary to answer question 1(b).

Conclusion

For the above reasons it is my view that the appeal should be allowed with costs and the questions of law answered as set out above. The order of the primary judge that Esso pay the Commissioner ' s costs of the application should be set aside and in lieu thereof it should be ordered that the Commissioner pay Esso ' s costs of the application to the primary judge.