A reprieve for professional privilege Law Reporter

Monday, 01 May 2000

    Current

    The high court opts for a dominant rather than a sole purpose in establishing legal professional privilege.


    Since 1976 the common law test for the application of the doctrine of legal professional privilege in Australia has been based on the High Court decision in Grant v Downs ((1976) 135 CLR 674). In that case the majority of the court held that legal professional privilege will only protect information contained in a confidential communication between lawyers and the lawyers' client, whether oral or in writing, if it was made for the sole purpose of obtaining or giving legal advice or assistance, or for use in legal proceedings. In 1995 the Commonwealth of Australia passed the Evidence Act which prescribed that for the purposes of that legislation a dominant purpose test would apply rather than the sole purpose test.

    While this legislation appears only to apply to litigation involving matters arising under Commonwealth law it may eventually have had a similar effect on the common law. But in the decision of Northern Territory v GPAO ((1999) 161 ALR 318), the High Court held that the relevant sections of the Evidence Act were only concerned with the obtaining of evidence in interlocutory proceedings or in a final hearing - it did not apply in situations where documents were produced in response to a subpoena. So, parties could not argue when asked to produce documents which had been prepared for the dominant purpose of obtaining or giving legal evidence, that was not good enough. Indeed, as the regulatory environment changes, and more and more companies are placed under investigation by different regulators under different legislation and receive notices to produce documents etc, it is important to ascertain whether the sole or the dominant purpose test will apply.

    Now, as a result of the High Court decision in Esso Australia Resources Ltd v The Commissioner of Taxation ((1999) 75 ALJR 339) the High Court has reconsidered the decision in Grant v Downs and by a four to two majority has rejected the sole purpose test enunciated in Grant v Downs. Instead it opted for the dominant purpose test which was supported by the minority including Chief Justice Barwick in the relevant case. But the case may not apply across all areas of the law.

    The relevant facts of the case, for our purposes, are fairly simple. Esso Australia Resources Ltd (Esso) commenced proceedings in the Federal Court appealing against certain amendments to its income tax assessments. General orders of discovery had been made by the relevant court. Esso filed a list of documents and there was a disagreement between it and the Commissioner of Taxation as to whether certain documents were privileged. The Commissioner filed notices of motion seeking orders that Esso produce the disputed documents. Esso argued that most of the documents under dispute were protected by the High Court decision in Grant v Downs.

    Foster J in the Federal Court ruled that two questions of law be considered first. These were:

    1. Whether the correct test for claiming legal professional privilege in relation to the production of discovered documents was the sole purpose test (as per the High Court decision in Grant v Downs) or the dominant purpose test as set out in the Evidence Act.

    2. Whether the court had the power to exclude documents on the basis that the dominant purpose test applied.

    Foster J then held that the correct test was the sole purpose test and that therefore he could not exclude the relevant documents.

    Esso appealed to the Full Court of the Federal Court which by a majority upheld the decision of Foster J. Esso then appealed to the High Court.

    It is unnecessary for the purposes of this note to go into detail in relation to the arguments before the High Court.

    Chief Justice Gleeson, Gaudron and Gummow JJ delivered a common judgment (and Callinan J agreed with their conclusions) while McHugh J and Kirby J delivered separate judgments in dissent.

    The thrust of the majority judgments was that the sole purpose test was too narrow. If it was to be taken literally then when the facts showed that there was one other purpose in addition to a legal purpose this would defeat the operation of the doctrine of legal professional privilege regardless of how relatively unimportant that other purpose was. The majority felt that the relevant sections of the Evidence Act were clear - they dealt with all questions relating to adducing evidence and this would cover both evidence under subpoena or interlocutory proceedings or elsewhere. In the circumstances the dominant purpose test was to be the relevant test.

    If the case is followed in more general areas of the law then the doctrine of legal professional privilege will have been given some added weight. Whilst it still remains less prominent as a result of specific legislation in statutes such as the Trade Practices Act, it will still apply to protect the position of many companies and their officers.

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