FEDERAL COURT OF AUSTRALIA SVI Systems Pty Ltd v Best & Less Pty Ltd & Ors [2000] FCA 1507 EVIDENCE – application for access to another party's legal advice - legal professional privilege – derivative modification of common law – circumstances in which a party is to be taken to have consented to disclosure or waiver of privilege on contents of confidential legal advice – relevance of representations that party acted on legal advice – fairness and integrity of legal proceedings if legal advice not produced Evidence Act 1995 (Cth), s 122(2) Trade Practices Act 1974 (Cth) Telstra Corporation Ltd & Anor v BT Australasia Pty Limited & Anor (1998) 85 FCR 152 referred to BT Australasia Pty Ltd v State of New South Wales & Telstra Corporation Limited [No 7] (1998) 153 ALR 722 referred to SVI SYSTEMS PTY LTD v BEST & LESS PTY LTD & ORS N 342 OF 1999 EINFELD J 19 OCTOBER 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 342 of 2000 BETWEEN: SVI SYSTEMS PTY LTD Applicant AND: BEST & LESS PTY LTD & ORS Respondent JUDGE: EINFELD J DATE: 19 OCTOBER 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Access is sought by the Ginger Max or, as they have been called here, the "old Best & Less", parties to certain subpoenaed material identified as including legal advice given to the Pepkor or, what has been described here as, the "new Best & Less", parties at the time when a decision was made by those parties not to proceed with the roll out of the applicant's point of sale system in their operating 82 Best and Less stores. 2 Reliance is first placed upon the provisions of section 122(2) of the Evidence Act 1995 (Cth)to support an argument that in a fax of 20 October 1998, referring to a telephone conversation of five days earlier, Mr MacDonald disclosed that in determining not to proceed with the roll out, the new Best and Less parties relied upon legal advice which was obtained, apparently causatively, from their solicitors Abbott Tout on or about the day on which the decision not to continue with the roll out was taken. 3 That subsection does give rise to difficulties of interpretation but this is not the occasion for a detailed analysis of its terms. It will suffice to say for present purposes that what needs to be established is that there has been no involuntary disclosure of the substance of the advice. Although there is reference to the advice in his affidavit which will no doubt be read, oral evidence has not yet been given by Mr MacDonald about this matter. The affidavit evidence is open to the inference, if not more, that the new Best & Less parties acted upon legal advice that they were not bound under the contractual arrangements entered into by their predecessors to complete the roll out of 82 stores. 4 This matter is said to be of importance because in the relevant cross-claim, there is reference to the fact that reliance was placed in the decision not to proceed with the roll out on advice given prior to their sale by Mr Ginges, the previous proprietor of the Best & Less stores, to the effect that Best and Less was not bound to do so. The argument put forward is that it is forensically necessary for the old Best & Less (Ginger Max) parties to have the advice in their hands so as to test what Mr MacDonald means when he speaks in his affidavit of the advice that they did not have an obligation to continue the roll out and also to test the assertion in the pleadings that they relied upon Mr Ginges' advice to that effect. 5 I have said that the content of section 122(2) raises problems that do need consideration. It can be well argued that its reference to "the substance" of advice is limited to what the client ought or ought not do in a particular given situation or, more particularly in this case, is bound or not bound to do by the existing contractual arrangements. But I find it very difficult to imagine, as has been argued by the Ginges Max parties, that this legislative provision was intended to open up for scrutiny by an opposing litigant all the body of a legal advice merely because its recipient told his opponent that he was acting on legal advice in taking a particular stance on a particular disputed matter between them. 6 To illustrate how far this could go if that were a proper way to approach it. A lawyer could give advice to a client that the client should not disclose to another party that the client is taking a particular position on legal advice. If the Ginger Max argument is correct, the client may then be required to produce the lawyer's advice to that effect with, as it seems to me, absurd consequences. I therefore conclude for present purposes that when the subsection is referring to the substance of advice, it is not talking about the, as it were, "bottom line" of the advice, but to what its content is and possibly even the reasoning which led to it. 7 I have been referred to some observations by Justices Branson and Lehane as members of a Full Court of this Court in Telstra Corporation Ltd & Anor v BT Australasia Pty Limited & Anor (1998) 85 FCR 152 at 166G - 167A that are said to be entirely apposite to the present case and which I am bound or ought to apply to the facts here. However, the relatively speedy reading of the case that time has permitted me now, and from a consideration of the first instance judgment of Justice Sackville from which that appeal came: see BT Australasia Pty Ltd v State of New South Wales & Telstra Corporation Limited [No 7] (1998) 153 ALR 722, it seems to me that what their Honours were dealing with and talking about on that occasion is not this case at all but quite a different set of circumstances. Accordingly that decision does not assist in the resolution of the present case. 8 The situation here is that when Mr MacDonald gives evidence he will say that he and his principals acted upon advice that they were not contractually obliged to continue the roll out of the 82 stores as the applicants allege. That will primarily require from the Court a finding, not on the legal advice, but as to what the contract was and what obligations it imposed first upon the old Best & Less parties, and then by novation or otherwise upon the new parties. What Abbott Tout thought about the contractual obligations is irrelevant and no evidentiary basis exists for suggesting that the Court's decision could be in any way assisted or influenced by that advice in its interpretation or construction of the relevant documents and conversations such as would have an effect on that conclusion. 9 In relation to the action under the Trade Practices Act 1974 (Cth), the first thing to observe, as I think I did earlier in conversation with counsel, is that this cause of action is unlikely to play a major role in this case. Whatever the result, the argument on the contract will seemingly have a significant influence on the result of the trade practices allegation. 10 To the extent to which there may be some separate considerations, the question whether the new Best & Less parties relied upon the comment of Mr Ginges or on Abbott Tout or on a combination of both or on neither is a matter which will have to arise by way of oral evidence supported by the documents that bear on the subject and could not be assisted by the detailed content of Abbott Tout's advice to the new Best & Less parties at the time. 11 Thus, even if it could be said that there was some form of waiver or voluntary disclosure by reason of what Mr MacDonald has admitted to have said – and it may later be alleged that he said even more – I can see no basis for an assertion, in the terms in which Justice Beaumont addressed the matter in the Telstra v BT litigation, that there would be some unfairness in refusing to permit this advice to be disclosed. 12 If the law is going to be expanded – as I believe it would be significantly – to permit the details of legal advice to be disclosable by compulsion because a party mentions that they have received legal advice or even acted on legal advice, it will take a serious and detailed consideration by an appellate court. I hold that there is no basis for the release of the legal advice at this time. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld AO. Associate: Dated: Counsel for the Applicant: Mr C. Gee QC with Mr R. Kaye Solicitor for the Applicant: Derrick Zabow & Co. Counsel for the First, Third & Fourth Respondents: Mr J.C. Campbell QC with Mr T.J. Hancock Solicitor for the First, Third & Fourth Respondents: Abbott Tout Counsel for the Second Respondent: Mr D.E. Horton QC with Mr V.R.W. Gray Solicitor for the Second Respondent: Denes Ebner Date of Hearing: 19 October 2000 Date of Judgment: 19 October 2000