FEDERAL COURT OF AUSTRALIA Kennedy v Baker (No 2) [2004] FCA 809 LEGAL PROFESSIONAL PRIVILEGE – s 3ZX Crimes Act 1914 – copying of computer hard drive under subs 3L(1A) – whether copying hard drive, where hard drive contains privileged material, necessarily unlawful Crimes Act 1914 (Cth) ss 3F(2), 3L(1A), 3ZX Allitt v Sullivan [1988] VR 621 distinguished Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 considered Commissioner of Taxation v Citibank (1989) 20 FCR 403 referred to Kennedy v Baker [2004] FCA 562 referred to TREVOR JOHN KENNEDY v PETER BAKER and AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION N 2366 of 2003 BRANSON J 28 JUNE 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 2366 of 2003 BETWEEN: TREVOR JOHN KENNEDY APPLICANT AND: PETER BAKER FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT JUDGE: BRANSON J DATE: 28 JUNE 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 6 May 2004 I published reasons for judgment in this proceeding (see Kennedy v Baker [2004] FCA 562). These reasons for judgment use certain terms as defined in those earlier reasons. 2 I pronounced no orders on 6 May 2004. I refrained from doing so for two reasons. First, I wished to check the accuracy of an assumption made by me that Mr Kennedy only pressed the fourth ground upon which he contended that he was entitled to relief ('the fourth ground') should I find that Mr Kennedy did not have a reasonable opportunity to claim legal professional privilege in the imaged hard drive. The fourth ground involved the contention that the creation and removal from the Premises of the imaged hard drive was unlawful because its contents included communications to which legal professional privilege attached. Secondly, I wished to hear from the parties as to the form of the final orders that were appropriate to be made having regard to my reasons for judgment. 3 My assumption concerning the fourth ground was not accurate. The parties have now filed written submissions on that ground and addressed the Court on it. At the close of the parties' oral submissions on the fourth ground I indicated that, for reasons which I would publish at a later date, I rejected the fourth ground. These are my reasons for rejecting the fourth ground. They should be read together with my earlier reasons for judgment. 4 It is accepted by the parties that a search of the imaged hard drive conducted by persons acting on Mr Kennedy's behalf has revealed that at least one document that contains privileged communications can be brought into existence by accessing the data held in the imaged hard drive. Mr Kennedy contends that the effect of s 3ZX of the Crimes Act: 'is to qualify the powers of seizure in section 3F(2) and the powers of imaging, copying and removal in section 3L(1A) so that those powers do not extend to documents to which legal professional privilege attaches (see Allitt v Sullivan [1988] VR 621, 641).' 5 Section 3ZX of the Crimes Act, which is contained in Part 1AA, provides: 'This Part does not affect the law relating to legal professional privilege.' 6 For present purposes the power of seizure contained in subs 3F(2) of the Crimes Act may, in my view, be disregarded. The imaged hard drive was created and taken from the Premises in reliance on subs 3L(1A) of the Crimes Act. In my earlier reasons for judgment I expressed the tentative view that the taking of the imaged hard drive from the Premises constituted a 'seizure' of the copy data on the imaged hard drive within the meaning of Part 1AA of the Crimes Act. However, I did not mean thereby to convey that the authority for that seizure was to be found in subs 3F(2). Subsection 3L(1A) is drawn in terms which give it an operation which is independent of subs 3F(2). 7 I am unable to see how the decision of the Full Court of the Supreme Court of Victoria in Allitt v Sullivan assists the argument advanced by Mr Kennedy. The decision of the Full Court concerned the validity of a warrant issued under s 465 of the Crimes Act 1958 (Vic) which did not bear an endorsement making it plain that it did not apply to documents to which legal professional privilege attached. The majority view (Murphy and Brooking JJ, Hampel J dissenting) was that the warrant was lawfully issued and that it authorised the executing officer to seize documents, including documents in respect of which a claim for legal professional privilege had been made, for the purpose of taking them before a justice. 8 In my view, Mr Kennedy's contention seeks to give s 3ZX of the Crimes Act a significance beyond that which its language suggests it was intended to have. Section 3ZX does not provide that the powers vested in an executing officer by subs 3L(1A) do not extend to documents to which legal professional privilege attaches. Rather the section makes plain that Part 1AA of the Crimes Act does not affect the law relating to legal professional privilege. The law relating to legal professional privilege is to be found in existing authority. As is mentioned in my earlier reasons for judgment, it is settled law that, generally speaking, those executing a warrant in respect of premises must ensure that the occupier of the premises has, in the circumstances surrounding the search, an adequate opportunity to make a claim of privilege (Commissioner of Taxation v Citibank (1989) 20 FCR 403). I am aware of no authority which suggests that a communication in respect of which legal professional privilege might be, but is not, claimed may not be seized in the execution of a warrant. Indeed the authorities suggest to the contrary. 9 In Commissioner of Australian Federal Police v Propend Finance Pty Ltd ('Propend') (1997) 188 CLR 501 Brennan CJ at 505-506 observed: '…the view that legal professional privilege qualified the power of search and seizure conferred by a warrant … necessitated the devising of some procedure for determining a claim of privilege if it should be raised during the execution of a warrant. Such a procedure was not devised by the courts, but the Law Council of Australia and the Australian Federal Police agreed upon "General Guidelines".' (emphasis added) 10 The Chief Justice in Propend at 513 concluded that the warrant under consideration in that case was not invalid because it authorised the search of premises in which privileged documents were to be found. His Honour noted: 'The issuing justice restricted the execution of the warrants so as to ensure observance of the guidelines for dealing with documents in the event that a claim of privilege was made. The conduct of the police in executing the warrants complied with the guidelines. In accordance with those guidelines, the documents for which privilege was claimed were not seized under the warrant but were sealed up and delivered to a third party.' (emphasis added) 11 The guidelines were also referred to in Propend without adverse comment by Dawson J at 523, McHugh J at 548, Gummow J at 560-561 and Kirby J at 578. Gaudron J at 537 was alone in expressing doubt about the utility of the guidelines. 12 The warrant with which I am concerned was issued on the basis that, if a claim for legal professional privilege was made, the guidelines to which reference was made in Propend would, so far as reasonably practicable, govern the course of action to be followed (see [19] of my earlier reasons for judgment). The Claim for LPP document was attached to the warrant. It has not been suggested that the first respondent did not follow the course of action set out in the Claim for LPP document. 13 Mr Kennedy did not claim legal professional privilege in the imaged hard drive, or in anything contained in the imaged hard drive, on 13 November 2003. As indicated in my earlier reasons for judgment, I am of the view that it has not been established that Mr Kennedy did not have an adequate opportunity on that day to make such a claim. Mr Kennedy cannot, in my view, be in a better position because he advanced no claim during the execution of the warrant for legal professional privilege than if he had advanced such a claim. 14 However, the creation and removal from the Premises of the imaged hard drive did not result in the disclosure of any communication to which legal professional privilege might attach. Neither of the respondents sought to access the data held in the imaged hard drive without giving Mr Kennedy further time within which to make a claim or claims of privilege. The removal of the imaged hard drive did not result in a situation in which a person other than Mr Kennedy or his legal advisors could give secondary evidence of the content of any document that can be brought into existence by accessing the data held in the imaged hard drive (see Baker v Campbell (1983) 153 CLR 52 per Dawson J at 129). 15 It was not contended by either respondent that the creation and removal from the Premises of the imaged hard drive resulted in any loss of privilege. The respondents each contended that Mr Kennedy had a reasonable time thereafter within which to make a claim for legal professional privilege. While the approach adopted by the respondents appears consistent with the legislative intention disclosed by subs 3L(1A), the position adopted by them make it unnecessary for me to reach a final view on whether it might have been open to the respondents to proceed on the basis that privilege had earlier been waived. However, I accept the submission of the first respondent that the operation of subs 3L(1A) would be substantially frustrated if the mere identification within copied data of a file from which a privileged communication could be brought into existence could retrospectively invalidate the decision to copy the data. Were this so, it would seem that any data could be protected from copying under subs 3L(1A) by the expedient of placing a file of the above nature in it. 16 For the above reasons I rejected the contention of Mr Kennedy that the creation and removal from the Premises of the imaged hard drive was unlawful because its contents included communications to which legal professional privilege attached. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate: Dated: 28 June 2004 Counsel for the Applicant: P M Wood Solicitor for the Applicant: Arnold Bloch Leibler Counsel for the First Respondent: A Robertson SC and K Morgan Solicitor for the First Respondent: Commonwealth Director of Public Prosecutions Counsel for the Second Respondent: G Lindsay SC and M Sneddon Solicitor for the Second Respondent: Australian Securities and Investment Commission Date of Hearing: 7 June 2004 Date of Judgment: 7 June 2004 Date of Publication of Reasons 28 June 2004