The decision handed down by the Full Court of the Federal Court on 20 March 2009 in Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd (2009) 254 ALR 198 demonstrates the potential risk associated with filing and serving documents which would normally attract litigation privilege. This case highlights the importance of being aware of what is being disclosed and the risks attached to serving and filing documents.

Background

In December 2005, the Australian Competition and Consumer Commission (ACCC) commenced proceedings against Visy Industry Holdings Pty Limited and related entities (Visy) in respect of alleged price fixing behaviour (Visy Proceedings). In the Visy Proceedings, the Court ordered that the ACCC serve Visy with approximately 111 proofs of evidence of witnesses (Proofs of Evidence). The ACCC filed and served the Proofs of Evidence it intended to rely on. However, the case settled and the Proofs of Evidence were never read into open court.

In separate civil proceedings, Cadbury Schweppes Pty Ltd (Cadbury) sought to recover damages for the loss it suffered in relation to the cartel conduct engaged in by Visy.

Cadbury sought orders that Visy deliver up the Proofs of Evidence. At first instance, the Federal Court held that the ACCC had waived privilege over the Proofs of Evidence and therefore Cadbury was entitled to the Proofs of Evidence. The ACCC sought to intervene in the proceedings and was granted leave to appeal this decision. Cadbury was also granted leave to argue on appeal that the Proofs of Evidence were never subject to privilege.

Judgment

On appeal, the Full Court identified that the two main issues were:

  1. whether the finalised Proofs of Evidence were subject to legal professional privilege (specifically, litigation privilege), and
  2. whether the act of filing and serving the Proofs of Evidence constituted waiver of legal professional privilege.

Litigation privilege attaches to communications made confidentially between a client and his or her lawyer for the dominant purpose of actual or anticipated litigation. Although the Full Court agreed that the Proofs of Evidence were created for the dominant purpose of litigation, it refused to attach “litigation privilege” to the Proofs of Evidence.

The Full Court observed (at [50]) that:

“The confidentiality relevant to legal professional privilege is that of preventing one’s opponent from seeing the confidential communications between a client and his or her legal representatives or otherwise brought into existence for the dominant purpose of litigation.”

On this basis, the Full Court held that it was impossible to attach litigation privilege to the Proofs of Evidence because they had been prepared for the purpose of serving them on the opponent in the proceedings and, for this reason, the essential element of confidentiality could not attach to the Proofs of Evidence.

Due to the fact that the Proofs of Evidence were created as a finalised version to give to the opposing party and were so given (regardless of whether they were read in open court or not), the Proofs of Evidence would not be afforded privilege.

Given the Full Court’s finding that the Proofs of Evidence were not privileged documents, it was not necessary for it to consider the issue of waiver. However, it concluded that in the circumstances of filing and serving the Proofs of Evidence, there had been a complete waiver of any claim by the ACCC for privilege in the documents.

Implications

It seems (contrary to previous approaches) that the relevant focus in deciding whether a document is subject to litigation privilege is not solely on the creation of the document but also on the “serving” of the document. This goes to the issue of confidentiality. As such, one must be mindful of the process of creating and serving documents in the course of litigation. This case therefore illustrates the need to have a well planned strategy from the outset of a litigious matter.

More specifically however, the direct implication of this case is that evidence and documents provided to an opponent in one set of proceedings may later be used in another set of proceedings – a potential risk that should be borne in mind when drafting any such material.