I. LOSS OF CLIENT LEGAL PRIVILEGE BY INADVERTENT DISCLOSURE

4.1 In Hooker Corporation Ltd v The Darling Harbour Authority¹ the notes of a conference with its legal advisers taken by one of the defendants’ officers were inadvertently produced to the plaintiff without claim of privilege. In the circumstances of the case Rogers J held that there had been no waiver of privilege by the defendant . In arriving at that conclusion Rogers J pointed out that the disclosure had been made by the unintentional inclusion of the notes in one of numerous folders of papers produced to the plaintiff by the defendant and that there had been no misconduct by the plaintiffs and no use of the documents, by plaintiff or defendant, which would make it unfair to withhold the notes from evidence.

4.2 In the Commission’s view the law as stated in this case is not represented in the provisions in the ALRC bill. The relevant provisions are clauses 106 and 107. Clause 105 protects confidential communications made between client and legal practitioner and clause 107 deals with the circumstances in which it can be lost. There is no provision in clause 107 to cover the Hooker Corporation situation, however. Subclauses (6) and (9) touch on the question by providing that the “substance” of evidence “voluntarily disclosed” by a party may be adduced in evidence despite the cl 106 protection, so long as the party has given express or implied consent to the disclosure. Subclause (7) adds the further protection that disclosure by an agent or employee will not operate as a waiver of privilege unless the agent was authorised to make the disclosure.

4.3 Although offering reasonable protection to the client in the circumstances they address, these provisions do not cover the situation in which a party or his or her agent or employee makes the disclosure inadvertently. The Commission recommends that provision to cover inadvertent disclosure be made in the new law of evidence in New South Wales.

II. JUDGES’ POWER TO CALL WITNESSES

2.4 This matter was not dealt with in the ALRC Report for two reasons:

• It was regarded as a procedural matter; and
• “A proper assessment of the question would depend on a detailed analysis of the nature and purpose of the adversary system .... The ALRC did not regard the analysis as either appropriate or manageable in the reference, on evidence. [Letter from Stephen Mason, Secretary and Director of Research of the ALRC of 13 October, 1987.]

4.5 There has, however, been substantial support for a change in the law in Australia in recent years. It began with an article in 1982 by the Honourable Mr Justice I F Sheppard entitled “Court Witnesses - A Desirable or Undesirable Encroachment on the Adversary System?”.² In the article Sheppard J argued that judges should be able to call witnesses in both civil and criminal proceedings. The main reason Sheppard J gave for his view related to cases in which the rule preventing the party who calls a witness from attacking the witness’s general credibility sometimes made it unattractive for the party to call a witness who may have important evidence to give. Several examples are given in the article of situations in which it would be useful to allow the judge to call a witness without the parties consent. We find this reasoning persuasive.

4.6 At present in civil cases the judge may only call a witness with the consent of both parties. In criminal cases, it is doubtful whether the judge may call a witness, and the right to question witnesses called by the parties is conceded only in rare and exceptional circumstances.³ Sheppard J recommended that both rules be reversed to allow the judge to call witnesses in all cases, criminal and civil, although the power to do so was to be “exercised sparingly and with great care”.⁴

4.7 Support for this view has been expressed by Street CJ in R v Damic,⁵ Wilcox J in Obacelo Pty Ltd v Taveraft Pty Ltd,⁶ Samuels JA in Superintendent of Licences v Ainsworth Nominees Pty Ltd⁷ and most recently by Kirby P in Marguet v Marquet.⁸ The question of whether further powers should be given to judges to allow them greater control of the proceedings is discussed in Chapter 6.

III. VOICE IDENTIFICATION

4.8 In August 1987 the Victorian Court of Criminal Appeal handed down its decision in R v Hentschel.⁹ That decision conflicts with established authority in this State on the question of the admissibility of voice identification evidence.

4.9 The law in New South Wales was first stated by O’Brien CJ of Cr D in Smith,¹⁰ approved by the Court of Criminal Appeal on the appeal in Smith¹¹ and Raymond George Brownlowe.¹² O’Brien CJ said that in describing how to exercise its discretion to assess whether the prejudicial effect of the evidence outweighed its probative value, the court had to be clear that either the witness making the identification by voice had recognised the voice at the time of the crime because of previous familiarity with it or, white there was no previous familiarity, the witness must have recognised the voice at a subsequent occasion because it was very distinctive when first heard at the time of the crime.¹³

4.10 In Hentschel, the Victorian Court of Criminal Appeal rejected the law as stated in Smith. Murphy J said:

The difficulty which I have with the decision in ... Smith (to which my brethren both refer) is that it purports to lay down as a rule of law apropos aural identification evidence, propositions which cannot, I believe, be supported as a matter of principle. Moreover, it lays down these propositions as conditions of the admissibility of such evidence, when I believe that at most they can only go to the weight of the evidence to be led.

I agree that in a case where the only evidence of the identification of the accused man with the person who in f act committed the crime is evidence that his voice sounds like the voice of her assailant (as she remembers it was heard) by a complainant or witness, consideration such as “close familiarity beforehand” or “very distinctive features” in the voice would be most relevant. In their absence, it might well be altogether unsafe to base a conviction on such evidence alone.

However, to require that such conditions exist before allowing any aural identification evidence to given in any case, is surely not the law.¹⁴

4.11 Brooking and Hempel JJ also rejected the New Wales authority. Brooking J said:

Notwithstanding the great persuasive weight of decisions of the Court of Criminal Appeal of New South Wales I have reached a clear conclusion that the rule of law laid down in Smith’s Case is not supported either by principle or by authority. Nor do I accept the submission ... that the rule should be adopted in the modified sense of requiring the exclusion of evidence of an identification which does not answer its requirements in the exercise of a discretion to exclude admissible evidence.

I am pleased to be able to conclude that the rule in Smith’s Case does not exist, for I should be sorry to think that we were in this country in the early stages of the development of a jurisprudence of voice identification, a set of principles and detailed rules dealing with the admissibility, the exercise of the discretion and the warning given to a jury. For, while judges will not admit it, and like to think that everything depends on the facts of the particular case and that they have not forged fetters and formed formulas, I find it hard to resist the conclusion that we have, essentially in the last few years, gone very close to creating a whole jurisprudence of identification by trying to reduce into a set of principles and rules what is really only a matter of common sense. This development has gone hand in hand with the ever increasing prominence of “the discretion” and its handmaid, the voir dire, with the sometimes ludicrous results on which I had occasion to comment in R v Haidley & Alford [1984] 1 VR 229 at p 255.I fear that the voice provides a whole new field in which the seeds of many novel propositions are even now germinating.¹⁵

In Haidley and Alford, Brooking i had pointed out that if all the matters raised in previous cases in relation to the discretion to admit identification evidence were to be taken into account there would be in excess of so items to be put to the jury.

4.12 In view of the conflict between the authorities in the two States it is thought likely that the question will go before the High Court for decision in the near future. As the Commission regards it as a substantive rather than an evidentiary issue, it makes no recommendation for resolution of the conflict in this Report.

IV. LEGAL PROFESSIONAL PRIVILEGE OF IN-HOUSE LAWYERS

4.13 The High Court decision in Waterford v The Commonwealth¹⁶ was also handed down after the release of ALRC 38. The decision confirms established principles of common law that confidential communications between government agencies and their salaried legal staff are protected by legal professional privilege so long, as the communications are made for the sole purpose of furnishing legal advice on anticipated or pending litigation.¹⁷ However, in his judgment, Brennan J suggested that there may be a distinction to be made between retained and salaried lawyers in allowing the privilege. Brennan J said:

The purpose of legal professional privilege is to facilitate the seeking and giving of legal advice and thereby to ensure that the law be applied and litigation be properly conducted. ... If the purpose of the privilege is to be fulfilled, the legal adviser must be competent and independent.

Competent, in order that the legal advice be sound ani the conduct of litigation be efficient; independent,, in order that the personal loyalties, duties or interests of the adviser should not influence the legal advice which he gives or the fairness of his conduct of litigation on behalf of his client. ...

It is a question of judicial policy, not yet a question of law, whether the privilege should apply when the legal adviser is an employee of the client: to what extent does a contract of employment by the client impair a legal adviser’s independence? I find great weight in the view of the European Court of Justice that an independent lawyer is “one who is not bound to his client by a relationship of employment”.¹⁸ That view faces up to reality; by contrast, the aspirations which Lord Denning MR expresses in Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners[No.2]¹⁹ sound, in my ears, pious but unreal His Lordship said that salaried legal advisers “must uphold the same standards of honour and of etiquette... [and] are subject to the same duties to their client and to the court” as are legal advisers who are not salaried. The difficulty, which His Lordship appreciated, is that the employment relationship creates a conflict between the independence necessary for a legal adviser and the loyalties, duties and interests of an employee. ... Lord Denning’s observation which clothed salaried legal advisers with independence has been followed by some judges in other common law countries... as well as by Gibbs CJ, Wilson and Dawson JJ in Attorney General (NT) v Kearney.²⁰ However, in that case, as in this, the legal advisers were the salaried employees of government and their position is, for reasons presently to be mentioned, distinguishable from the position of salaried employees of other clients.²¹

4.14 Bretinan J then discussed the position of the salaried lawyer in non-government employment and said that the cowers of professional disciplinary tribunals to sanction breaches of ethics were greatly diminished when “the breach is committed in the interests of an employer and the security and environment of employment tend to insulate a salaried lawyer from the chief disciplinary influence of the profession - the opinion of one’s professional peers”.²² For these reasons Brennan J was “unable to accept the notion that salaried lawyers are generally to be assimilated to the position of the independent legal profession for the purpose of determining t lie availability of legal professional privilege”.²³ Other matters had to be weighed in relation to lawyers in government employment, however. Brennan J said:

The Commonwealth, State and Territorial statutes under which officers are employed in the offices of Crown Solicitors, the Australian Government Solicitor and in the Departments of the respective Attorneys-General give them a certain security of tenure and those statutes Would be construed, in the absence of contrary express provisions, as leaving these officers completely professionally independent. The protection of the respective Attorneys-General, as the first Law Officers of the Crown, should extend to all of these officers, so that none of them will be affected in the performance of their professional duty by any sense of loyalty or duty to, or hope of reward from, the government of the day. ... I would therefore reject the submission that the officers of the Attorney-General’s Department or the Commonwealth Crown Solicitor’s Office lack the independence which is essential if legal professional privilege is to attach to documents brought into existence for the purpose of their giving advice or for the purpose of obtaining, advice from them.²⁴

4.15 Although Brennan J was the only justice to discuss the matter, his judgment leaves the position of salaried lawyer’s employed privately or by government agencies other than the Department of the Attorney General in some doubt . Courts in jurisdictions outside Australia have not expressed such doubts.

4.16 In England the leading authority is Alfred Crompton Ltd v Customs and Excise (No 2)²⁵ which states that in-house and retained lawyers are regarded by the law as being in an identical position, and with the same privileges with respect to their clients. This principle was not challenged on appeal to the House of Lords. Crompton was applied by the Supreme Court of Ireland in Geraghty v Minister for Local Government.²⁶

4.17 Crompton was followed in Canada in Crown Zellerbach Canada Ltd v Department of the Attorney General of Canada²⁷ in which the Court stated there is no distinction for the purpose of a claim to legal professional privilege, between lawyers in private practice and salaried legal officers”.²⁸ The lawyer in question was the vice-president, secretary and general counsel of the petitioner company. The Court added that the privilege could “arise only in respect of those communications made to or by him while wearing his legal hat”.²⁹ In Re Director of Investigation and Research and Shell Canada Ltd³⁰ the question whether the lawyer-client privilege was abnegate by an Act empowering, the Director to search and enter was considered. The Court took it to be “common ground that the principles applicable are the same in this case, where the communications were between Shell and its salaried lawyers, as they would have been had the communications been between Shell and a firm of general legal practitioners”.³¹ However, in Duncan City of Vancouver³² it was held that a solicitor appointed head of the City’s legal department and serving exclusively in that capacity, was examinable for discovery as an “officer” of the corporation.

4.18 In the United States corporate house counsel qualify as attorneys for the purposes of the attorney-client privilege, although mere solicitors of patents do not.³³ In US v United Shoe Machinery Corp³⁴ it was held that a corporation’s resident general counsel and his juniors receiving annual salaries and occupying offices in the corporation’s buildings, although having the status of employees rather than independent contractors, stood in the same position as outside counsel for the purposes of attorney-client privilege.³⁵ The Supreme Court in Ford Motor Co v OW Burke Co³⁶ held that the fact that an attorney was employed in the plaintiff’s legal department, as distinguished from being a specially retained outside counsel, did not in itself vitiate client-attorney privilege. This was the case notwithstanding that attorneys in corporation’ legal departments were paid annual salaries, used the corporations’ buildings and advised them, alone and not a number of clients.³⁷

4.19 The privilege has been held to extend beyond the provision of solely legal material as well. In Burlington Industries v Exxon Corp,³⁸ a case involving an action for patent infringement, the plaintiff corporation relied on attorney-client privilege to protect confidential communications between members of its control group and in-house counsel from compulsory disclosures, even though the communications contained some non-legal. data. The US District Court held, that such communications could attract the privilege so long as they were primarily legal in nature.

4.20 There has also been judicial comment in the United States on the nature of the protection offered. In Steel Corp v US³⁹ in-house counsel were described as being officers of the court in the same way as are retained counsel. They were said to be bound by the same code of professional responsibility and subject to the same sanctions as members of the private profession. Access to information before the Court of International. Trade was therefore to be granted or denied to both in-house and retained counsel on the same principles. There is some qualification to be made to the extension of the privilege to in-house counsel, however. In the Re Sealed Case⁴⁰ a corporation under investigation by a grand jury was held to be entitled to assert attorney-client privilege with regard to the advice of a lawyer who served as both in-house attorney and company vice-president. Such advice was only protected upon clear demonstration that it was given in a professional legal capacity.

4.21 The ALRC draft bill does not resolve the doubts raised by Brennan J in Waterford. The definitions of “client” and “legal practitioner” contained in clause 108 of the attached draft⁴¹ contemplate that employees or agents of either party to a confidential communication may be included within the privilege. There is no clear indication that those lawyers working as salaried employees, either in business or government, would fall within the definition of legal practitioner. As the definition of “client” goes no further than to include its employees and agents within the term, it is open to doubt whether it can properly be construed to include the corporate or government employer.

4.22 Two matters are left outstanding following Brennan J’s comment in Waterford:

• Does legal professional privilege extend to the relationship between a non-government employer and its in-house legal advisers or are these employees to be treated as third parties? if they are treated as third parties they will not be protected by the privilege unless litigation is in prospect , as they were by Cooke J in the New Zealand Court of Appeal in Guardian Royal Exchange, Assurance of New Zealand Ltd v Stuart?⁴²
• Does legal professional privilege extend to all communications between an in-house lawyer and the employer? The accepted test at common law was laid down by the High Court in Grant v Downs⁴³ and approved in Waterford.⁴⁴ This is the so-called “sole purpose” test which grants privilege only to those documents which are created for the sole purpose of giving or seeking legal advice. Once the purpose of the document is established to be within this purpose, “then the fact that it contains extraneous matter will not deny it the protection of the privilege”.⁴⁵ The High Court in Waterford did acknowledge, however, that “the presence of matter other than legal advice may raise a question as to the purpose for which it was brought into existence” but commented that the answer to that question was “simply a question of fact”.⁴⁶ The ALRC draft bill changes the Grant v Downs test from “sole purpose” to “dominant purpose”,⁴⁷ thus accepting the test as formulated by Diplock J in Longthorn v British Transport Commission⁴⁸ and approved in New Zealand.⁴⁹

4.23 The ALRC accepted that the dominant purpose test may be more difficult to apply than the sole purpose test, but indicated that in its view the dominant purpose test struck the correct balance between the competing public interests of having full disclosure and of allowing free and frank communication with one’s legal adviser.⁵⁰ It may be that application of the new test will be exacerbated by the doubts left by Waterford. The Commission does not make any recommendations on these matters. It regards them as best settled by the development of case law following implementation of the bill.

V. HEARSAY EVIDENCE - BUSINESS RECORDS EXCEPTION

4.24 The business record exception to the hearsay rule is contained in clause 61 of the ALRC draft bill. It provides inter alia that previous representations container in a document forming part of a record made in the course of business will be admissible in evidence despite the Hearsay rule if made by a person reasonably supposed to have personal knowledge of the asserted fact or on the basis of knowledge supplied by that person. Applied to the facts of the recent case of Ross McConnel Kitchen & Co Pty. Ltd (in lig) v Ross (No 1)⁵¹ this provision would seem to give the opposite result to the decision arrived at by the Supreme Court under Part IIC of the Evidence Act 1898.

4.25 In the case a series of sheets marked “Current Account Statement” were submitted in evidence. They had been processed by the clearing house of the Sydney Futures Exchange from material supplied by tile plaintiff. Under s14CE of the Evidence Act such material is admissible in evidence if it is part of a business record, made in the course of or for the purposes of business and prepared by a qualified person. “Qualified person” as defined by s14CD means the owner of the business, an employee or agent, a person retained for the purposes of the business or a person associated with the business in the course of another business.

4.26 In Ross McConnel the clearing house was held not to come within this definition of “qualified person”. The most relevant part of the definition, “person associated with the business in tile course of another business” could not be read widely enough to cover the clearing house, for to do so would have deprived the definition of its purpose, which was to ensure that only documents prepared by “insiders” were admissible.⁵² Nor could the clearing house be included in the part of the definition which covered servants and agents engaged in tile business. This had to be read “ejusdem generis with employee” to “connote the sort of situation where a person is doing some service for the business under a contract for services or the like not as an actual employee.”⁵³ There was insufficient evidence in Ross McConnel to show what the contractual relationship was between the clearing house and the plaintiff, to enable the Court to find that the clearing house was an employee or agent of the plaintiff company.

4.27 If the facts of the case were to be decided under clause 61 of the ALRC draft bill, the Current Account Statement would seem to qualify is a business record which could be submitted evidence. Under paragraph 61(1)(d) the record must have been made “on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the assented fact”. The status of the clearing house as insider, employee or agent is unimportant to the definition, the crucial element being who supplied the information.

4.28 It would also seem that the evidence obtained from the clearing house could be introduced under cII 56(b) and 125(1)(d) and (e) of the draft bill. In spite of the hearsay rule, cl 56(b) allows evidence of a previous representation to be addressed by the production of a document “to which it is reasonably necessary to refer to understand the representation”. It only applies, however, where the person who made the previous representation is unavailable. Cl 125 is specifically directed to the problem of adducing evidence from computer banks. It would allow a computer print out to be used for the purposes of cl 56.

4.29 The Commission sees no need to make a recommendation on the issue. We merely draw attention to the possible reversal of New Wales authority which may be caused by implementation of the bill.

1. (1987) 9 NSWLR 538.

2. (1982) 56 ALJ 234

3. Titheradge v The King (1917) 24 CLR107, 114.

4. 56 ALJ at 243.

5. [1982] 2 NSWLR 750, 755-56.

6. (1986) 66 ALR 371.

7. (1987) 9 NSWLR 691, 698-699.

8. Unreported NSW Court of Appeal 23 September 1987.

9. Unreported, 11 August 1987.

10. (1984) 12 A Crim R 439; [1984] 1 NSWLR 462.

11. (1986) 7 NSWLR 444.

12. (1987) 24 A Crim R 377.

13. Summary from judgment of Hunt J in Brownlowe, cit 379.

14. Hentschel, 4-5.

15. Id 7.

16. (1987) 163 CLR 54.

17. Id Mason and Wilson JJ, 63-64.

18. [1983] QB 878, at 951.

19. [1972] 2 QB 102.

20. [1985] 158 CLR 500 at 510, 520-521, 530-531.

21. Waterford, at 71.

22. Id at 72.

23. Ibid.

24. Id at 72-73.

25. [1972] 1 QB 102, 129.

26. [1975] 1 R 300, 312.

27. [1982] CTC 121 (BC SC).

28. Id at 123.

29. Ibid

30. (1975) 55 DLR (3d) 713, 721.

31. Id at 721.

32. (1917) 36 DLR 218.

33. 328 AM Jur 2d 554 174.

34. (1950) 89 F Supp 357 (DC Mass).

35. See also US v Aluminium Co of America (1960) 193 F Supp 251 (DC NY).

36. (1969) 299 NYS 2d 946, 59 Misc 2d 543.

37. See also 8 in 1 Pet Products Inc v Swift & Co (1963) 218 F Supp 2S3 (DC NY): legal advice rendered to a corporation by in-house counsel was said to fall clearly within the attorney-client privilege.

38. (1974) 65 FRD 26 (DC Md).

39. (1984) 730 F 2d 1465 (US District Court in the District of Maryland).

40. (1984) 237 App DC 312, 737 F 2d 94.

41. Clause 108 of the draft bill attached to ALRC 38.

42. [1985] 1 NZLR 596, 602.

43. (1976) 135 CLR 674.

44. Waterford, 66.

45. Ibid.

46. Id 66.

47. Clause 106.

48. [1959] 1 WLR 530.

49. Guardian Royal Exchange Assurance v Stuart, op cit at 603.

50. ALRC 26, 881, discussed also in Waugh v British Railways Board [1979] 1 WLR 150, 154.

51. [1985] 1 NSWLR 233.

52. Id at 236.

53. Ibid.