FEDERAL COURT OF AUSTRALIA Seven Network Limited v News Limited [2005] FCA 142 PRACTICE AND PROCEDURE – discovery – legal professional privilege – documents prepared by in-house counsel – claims of privilege withdrawn in respect of majority of documents – two affidavits of verification withdrawn after requests made to cross-examine deponents – remaining affidavit inadequate to sustain claims of privilege – no careful and reasonable evaluation of list of documents prior to swearing affidavit – appropriate for court to inspect documents COSTS – indemnity costs Federal Court Rules O 15 r 9 Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 cited Telstra Corp Ltd v Australis Media Holdings (unreported, Supreme Ct of New South Wales, Equity Division, McLelland CJ, 18 March 1997) cited Southern Equities Corporation Ltd (In liquidation) v Arthur Andersen & Co (No 6) [2001] SASC 398 discussed Balabel v Air India (1988) 1 Ch 317 discussed DSE (Holdings) Pty Ltd v InterTAN Inc [2003] 135 FCR 151 discussed Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48 discussed Latoudis v Casey (1990) 170 CLR 534 cited Ohn v Waltob (1995) 36 NSWLR 77 cited De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77 cited SEVEN NETWORK LIMITED (ACN 052 816 789) & ANOR v NEWS LIMITED (ACN 007 871 178) & ORS N1223 OF 2002 TAMBERLIN J SYDNEY 28 FEBRUARY 2005 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1223 OF 2002 BETWEEN: SEVEN NETWORK LIMITED & ANOR ACN 052 816 789 APPLICANTS AND: NEWS LIMITED & ORS ACN 007 871 178 RESPONDENTS JUDGE: TAMBERLIN J DATE OF ORDER: 28 FEBRUARY 2005 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Documents other than 16-19 inclusive and 25 be made available for inspection by the applicants. 2. News Limited pay the costs of the applicants on an indemnity basis and leave be granted to tax and recover those costs forthwith. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1223 OF 2002 BETWEEN: SEVEN NETWORK LIMITED & ANOR APPLICANTS AND: NEWS LIMITED & ORS RESPONDENTS JUDGE: TAMBERLIN J DATE: 28 FEBRUARY 2005 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The first applicant ("Seven") seeks an order for access to 22 documents in respect of which privilege has been claimed in an Affidavit verifying discovery on behalf of the respondents ("News"). Seven submits, among other reasons, that there has been no properly verified claim for privilege and, having regard to the unsatisfactory sequence of events in relation to the privilege claim, it should therefore be granted access. legal principles 2 The relevant test for determining whether a document attracts the protection of legal professional privilege is whether it came into existence for the dominant purpose of seeking legal advice or giving such advice or for the purpose of litigation or for use in legal proceedings: cf Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 at [61] (Esso). The dominant purpose test will often be much harder to apply than the sole purpose test previously applied. This is because in order to determine the dominant purpose, it may be necessary to consider, among other things, the state of mind of the person creating the document and to examine a number of diverse purposes and to balance them to resolve the question: cf Esso at [73] and [108]. 3 Where a contested claim for legal professional privilege depends upon the purposes for which a document or particular parts of a document were prepared, it is generally appropriate that the evidence supporting that claim be given by the person or persons from whom the documents or the request for them originated so that any assertions as to purpose may be tested by cross-examination: cf Telstra Corp Ltd v Australis Media Holdings (unreported, Supreme Ct of New South Wales, Equity Division, McLelland CJ, 18 March 1997) at [1]. 4 The dominant purpose test has particular importance in relation to the position of in-house counsel because they may be in a closer relationship to the management than outside counsel and therefore more exposed to participation in commercial aspects of an enterprise. The courts recognise that being a lawyer employed by an enterprise does not of itself entail a level of independence. Each employment will depend on the way in which the position is structured and executed. For example, some enterprises may treat the in-house adviser as concerned solely in advising and dealing with legal problems. As a matter of commercial reality, however, both internal and external legal advisers will often be involved in expressing views and acting on commercial issues. 5 The authorities recognise that in order to attract privilege the legal adviser should have an appropriate degree of independence so as to ensure that the protection of legal professional privilege is not conferred too widely. Commercial reality requires recognition by the courts of the fact that employed legal advisers not practising on their own account may often be involved to some extent in giving advice of a commercial nature related to the giving of legal advice. Such involvement does not necessarily disqualify the documents relating to that role from privilege. The matter is necessarily one of fact and degree and involves a weighing of the relative importance of the identified purposes. 6 It is well settled that simply to label a document as being "prepared for legal advice" or as "privileged" or as being "without prejudice" is of itself insufficient to justify the privilege. The Court will look to the substance of the matter, having regard to the content, context and evidence as well as the form of the document. 7 The onus, of course, is on the party claiming that a document is privileged to satisfy the court that the document came into existence for a dominant legal purpose. 8 In Southern Equities Corporation Ltd (In liquidation) v Arthur Andersen & Co (No 6) [2001] SASC 398, his Honour Debelle J, after reviewing the case law, concluded that because he had entertained doubts about whether a number of documents which had originated from four persons were privileged, the appropriate course was to inspect the documents to ascertain for himself whether the claims for legal professional privilege were well founded. His Honour did not accept at face value the assertions made by three of the deponents who had verified the assertions of privilege because they were employed in positions other than that of legal advisers, notwithstanding that two of them held practising certificates. His Honour was not the trial judge in that matter but had case-managed the proceeding for three years previously. He proceeded to inspect and rule on each of the claims for privilege. 9 Counsel for News referred to the Court of Appeal decision in Balabel v Air India (1988) 1 Ch 317 (Balabel). In that case, Taylor LJ (with whom Parker LJ and Lord Donaldson MR agreed), after extensively reviewing the case law, concluded at 332: "… As indicated, whether such documents are privileged or not must depend on whether they are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate. Accordingly, I agree with the formulation made by Master Munrow in the present case, subject to the additional words which I have placed in brackets. He said: 'Once solicitors are embarked on a conveyancing transaction they are employed to ensure that the client steers clear of legal difficulties, and communications passing in the handling of that transaction are privileged (if their aim is the obtaining of appropriate legal advice) since the whole handling is experience and legal skill in action and a document uttered during the transaction does not have to incorporate a specific piece of legal advice to obtain that privilege.'" 10 The principles adopted by Taylor LJ in Balabel as to the necessity for a broad approach were considered and applied by Allsop J in DSE (Holdings) Pty Ltd v InterTAN Inc [2003] 135 FCR 151 at 173. His Honour's reasons at [25]-[70] include a helpful and extensive review of the principles relating to legal advice privilege up to November 2003. 11 The principles concerning legal professional privilege were considered recently by the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48 at [28], [34] and [38]. At [28], Lord Scott (with whom Lords Roger, Carswell and Brown agreed) said: "There is a strong public interest that … in civil cases the claimant should succeed if he is entitled to do so and should fail if he is not, that every trial should be a fair trial and that to provide the best chance of these desiderata being achieved all relevant material should be available to be taken into account. These are the administration of justice reasons to be placed in the balance. They will usually prevail." (Emphasis added) 12 At [38] his Lordship continued: "If a solicitor becomes the client's 'man of business', and some solicitors do, responsible for advising the client on all matters of business, including investment policy, finance policy and other business matters, the advice may lack a relevant legal context. There is, in my opinion, no way of avoiding difficulty in deciding in marginal cases whether the seeking of advice from or the giving of advice by lawyers does or does not take place in a relevant legal context so as to attract legal advice privilege. In cases of doubt the Judge called upon to make the decision should ask whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or public law. If it does not, then, in my opinion, legal advice privilege would not apply. If it does so relate then, in my opinion, the judge should ask himself whether the communication falls within the policy underlying the justification for legal advice privilege in our law. Is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply? The criterion must, in my opinion, be an objective one." (Emphasis added) 13 In reaching my conclusion on the privilege claims in the present case, I have had regard to the above expressions of principle. BACKGROUND TO THE CLAIMS OF PRIVILEGE 14 The evidence discloses that privilege was originally claimed for some 283 documents in an affidavit sworn on 28 May 2004 by Mr Philip, Chief General Counsel for News, and certified by the solicitor for News. Mr Philip is also the nineteenth respondent in the proceedings. He holds a number of other positions and offices in the News Group of companies. These include directorships and alternate directorships of six associated companies. He is also a member of the NRL Partnership Executive Committee. The evidence demonstrates that Mr Philip has been actively involved in a commercial role in a number of business activities which are set out in an affidavit of 24 November 2004 made by Mr Graeme Johnson on behalf of Seven. These activities include negotiations of numerous important commercial arrangements, including the grant of options, the making available of television channels to other parties and the conduct of negotiations concerning a content sharing agreement and the broadcast of football matches. This evidence as to his extensive involvement in commercial matters is not contradicted or qualified by any evidence on behalf of News or Mr Philip. 15 Seven notified News in its written submissions filed on 9 December 2004 that it considered that Mr Philip was incapable of relevantly providing independent legal advice having regard to his involvement in the commercial activities and the role he played in respect of those activities with the News Group. Seven said that as a consequence of his extensive involvement in making the purely commercial decisions for the Group, Mr Philip lacked the necessary independence to swear the affidavit. 16 After Mr Philip swore the affidavit on 28 May 2004, the privilege claims made in respect of 83 of the documents, or approximately one third of the 283 documents originally made the subject of the privilege claims, were withdrawn and the documents were made available by News. On the submissions made by Seven, this indicated significant defects or inadequate consideration in relation to the original assessment of the discovered documents in News' privilege claim. No correcting affidavit of discovery has been filed in respect of these matters nor does any explanation appear to have been given. 17 The present Notice of Motion by Seven, which was filed on 24 November 2004, seeks the production by News and Mr Philip of 26 documents the subject of the disputed claim for legal professional privilege. The Motion was set down for hearing before me on 17 December 2004. 18 On 9 December 2004, eight days before the hearing of the Motion and after correspondence between the parties, Messrs Allens Arthur Robinson ("Allens"), solicitors for News and Mr Philip, wrote to Seven informing it that News no longer relied on the affidavit of verification sworn by Mr Philip six months previously. The letter also belatedly withdrew the claim to privilege in respect of four of the 26 documents in respect of which the Notice of Motion was taken out and privilege as verified on affidavit by Mr Philip had been claimed. The basis of the claim for privilege in respect of two of the documents was varied. 19 Also on 9 December 2004, an affidavit of verification of the claim for privilege was sworn by Mr Michael Ball, who is a senior partner of Allens and is acting for News in this litigation. It is apparent that Mr Ball swore that affidavit largely, if not wholly, on the basis of information received from Mr Philip, who is the author of many of the documents in contention. 20 Objection was taken by Seven to Mr Ball swearing this affidavit of verification on the basis that he was not a person designated by O 15 r 9 of the Federal Court Rules ("the FCR") to swear the affidavit verifying discovery. 21 At about 4:00 pm on 16 December 2004, the day before the hearing, Allens sent a facsimile to the solicitors for Seven indicating that they did not intend to rely on the second verifying affidavit that had been sworn by Mr Ball seven days earlier. This was after Seven had given notification that Mr Ball was required for cross-examination. No previous intimation of non-reliance on Mr Ball's affidavit had been given. That facsimile foreshadowed a fresh list of documents, which was served after 5:00 pm on 16 December and was verified by Mr Brodie, the Secretary of News. 22 The importance of the availability of documentation to parties in litigation, particularly in litigation on the scale of the present case, and the public interest in the courts making fully informed decisions by reference to documentary records, requires scrupulous compliance with the requirements of the FCR and the accepted principles for discovery and the assertion of privilege. An affidavit verifying the authenticity of the claim for privilege in respect of a list of documents should not be sworn in a hasty or cursory manner. The deponent should ensure that proper instructions are obtained and followed before swearing the affidavit. The Court must be able to rely on diligent compliance with its orders and this is reflected in the requirement that the solicitor must give a certificate. Documentation will clearly play a central role in resolution of the complex issues which arise on the pleadings in the present case. The present litigation involves a number of disputes in respect of which documentation may prove to be critical. 23 Unfortunately, the discovery process in relation to the privilege claim, for reasons I have outlined above, indicates a failure, if not an unwillingness, to assist the Court in resolving the privilege question. The respondents furnished a verifying affidavit which was on its face regular but on examination totally inadequate to sustain a claim for privilege and engaged in a process of abstaining by not reading affidavits or making available relevant witnesses more familiar with the discovery process than Mr Brodie, who was clearly brought into the matter at the last moment. 24 Mr Brodie does not appear to have asked any of the persons from whom he made his cursory inquiries as to any specific matter relating to the privilege claim. It should be borne in mind that the earlier affidavit of Mr Philip had been sworn more than six months previously and that of Mr Ball one week previously. Mr Brodie, on his own recollection of what had happened a matter of hours earlier, says that he simply asked the four addressees of his inquiry whether everything in the affidavit was complete and had been disclosed. 25 While I would not go so far as to classify the discovery process undertaken by News as deliberately evasive, as submitted by Counsel for Seven, there is a real concern that sufficient attention has not been paid to the great importance of ensuring that discovery is made on a proper, reliable and sound basis. In the present case, approximately one third of the claims for privilege in respect of documents originally said to be privileged have been withdrawn. This, in itself, casts some doubt on the discovery process as a whole. Indeed, the position is that the affidavit of Mr Brodie, which is the only affidavit verifying the list of documents and the claim for privilege, is so unsatisfactory that there is in effect no relevant affidavit verifying the discovery in accordance with the FCR or otherwise. 26 On the hearing before me on 17 December 2004, an application was made to cross-examine Mr Brodie on his belated 16 December affidavit. Having regard to the history and the switching of deponents in relation to verification of the privileged claim and the release of the 87 documents in respect of which privilege had been wrongly claimed, and taking into account that a choice had been made not to call Mr Philip to verify the privilege claim, I granted leave to Counsel for Seven to cross-examine Mr Brodie. 27 The brief cross-examination (at 45-50 of the transcript) discloses a situation that gives some cause for concern. Mr Brodie had been asked by Mr Philip on 15 December 2004 to make his affidavit, two days before the hearing. There is no suggestion that Mr Philip, a solicitor with a current practising certificate, was unavailable to give evidence. The fact is that he elected not to give evidence as to the dominant purpose of the material originating from him for reasons referred to in [31] below. 28 Mr Brodie said in cross-examination that Mr Philip explained superficially what the contents were and why they were listed. Mr Brodie did not inspect any of the documents. He relied entirely on what he was told. He did not detail what he was told. He did not ask to see any of the documents and nor did any one tell him that he should inspect the documents. In particular, he was referred in court to two documents which he had sworn were created by Mr Philip for the dominant purpose of providing legal advice. He said that, in total, the process of considering the list and affidavit took about one hour, including four telephone calls of less than one minute to each of Mr Hartigan, Mr MaCourt, Mr Lachlan Murdoch and Mr Philip. He said that the only advice he had received was to make inquiries of these four people as to whether there was anything else that should have been disclosed. These were the only inquiries he made. He asked if everything was "complete" in relation to the documents and was told by these persons that this was the case. He does not suggest that any questions as to the privilege claim were asked by these persons. At the time of the telephone calls, he did not have any documents in front of him and he does not believe that the recipients of the calls had any documents available to them at the time. 29 It should be noted that the list of documents verified by Mr Brodie in the space of one hour, including his telephone calls, comprised 260 foolscap pages in the order of 22 documents including agreements, draft agreements, letters, faxes, emails, reports, and Board papers, each containing a number of pages. Clearly, in the short time available to him, there was no real opportunity for consideration by Mr Brodie of any of the documents in the list such as would enable him to adequately satisfy himself that his verifying affidavit was true and correct. 30 No other evidence or explanation has been proffered as to the circumstances in which the affidavit sworn by Mr Brodie came to be sworn. Mr Ball's affidavit was not read. Mr Philip has withdrawn his affidavit as substantiation of the claim and he has not offered any assistance to the Court as to the inquiries, conciliation or investigation he made or took into account to substantiate his certification. This is unsatisfactory in the extreme, particularly considering that the vast majority of the documents were authored by Mr Philip in circumstances, and this is conceded, in which he was clearly the appropriate person best placed to assist the Court as to the dominant purpose behind the documents. The Court is therefore left with a list of documents in respect of which privilege is claimed. 31 Mr Philip has declined to inform the Court as to his purpose in respect of the documents by withdrawing his affidavit for tactical or strategic reasons. The written submissions for News on this application at [9]-[13] make it clear that he was concerned to avoid cross-examination at this stage: "Evidence 9. In relation to those documents where Mr Philip was the legal advisor, it is clear that Mr Philip is the person best placed to give evidence about the purpose of the particular communication. The applicants have suggested in correspondence that if News proposes to rely on Mr Philip's understanding and purpose, they are entitled to test Mr Philip's evidence: see letters dated 10 and 14 December 2004. The applicants are not entitled to demand that a particular person be made available for cross-examination. 10. There is a very good reason why Mr Philip has not been called to give evidence in this context. This is a claim in which News and Mr Philip are being sued for vast sums of money. The applicants have suggested that the amount claimed approaches $500m. Mr Philip has signed a lengthy witness statement and it is intended that, in due course, he will be called as a witness in the case against himself and News. It may be assumed that the applicants will wish to test that evidence at the trial. The applicants would be given a significant forensic advantage if they were provided an opportunity to cross-examine Mr Philip in the present context. 11. The breadth of the evidence and written submissions filed for the applicants would suggest that the applicants might, in the present context, seek to cross-examine Mr Philip extensively about his witness statement and the matters in dispute in the hearing generally. News and Mr Philip may not be able to object to that kind of cross-examination. 12. It is not suggested that Mr Philip would be cross-examined for an improper purpose. But in testing Mr Philip's evidence for the purposes of the present application, there is a high risk that the applicants would, incidentally, obtain various advantages in terms of the final hearing. For an applicant, it is plainly of assistance in advance of a final hearing to see a witness give evidence, particularly where the evidence concerns factual matters that are relevant to the final hearing. It is a further advantage to have the opportunity to test the evidence. The forensic advantage to the cross-examiner at the hearing is potentially very significant. 13. Naturally, it is in the interests of News and Mr Philip to deny the applicants that forensic advantage. That can only be done if Mr Philip does not give evidence in this context. For the reasons given below, the claim for privilege can be substantiated without evidence from Mr Philip." (Emphasis added) 32 In my view, this explanation is unsatisfactory in circumstances where the Court is faced with a specific challenge to the claim for privilege and must determine the dominant purpose for which the documents came into existence. Accurate, adequate and reliable discovery is essential to the proper working of the adversary system and the just resolution of disputes before the Courts. The Court is left in a position where two practising solicitors, Mr Ball and Mr Philip, have sworn affidavits verifying the list, but then have withdrawn them and left it to Mr Brodie, who on the evidence has made no sufficient or reasonable inquiries, to satisfy himself as to the sufficiency or correctness of the list or claims to privilege in order to swear the affidavit of verification. The Court is therefore left without any real evidence, apart from the form and contents of the documents themselves, to determine the "dominant intention" behind the documents in circumstances where Mr Philip is clearly in the best position to inform the Court as to his purposes. 33 Senior Counsel for Seven points out that the obligation of a person verifying a list of documents in respect of which legal professional privilege is claimed is to consider the documents and make a careful and reliable evaluation of whether it is proper to make the claim. It may well be that minds may differ after carrying out such a process as to whether a document attracts privilege, however, in the present case, the evidence indicates that a token exercise was undertaken. The cumulative effect of the limited time, the sequence of events including the pattern of withdrawal of evidence previously sworn and the cursory approach taken by Mr Brodie in ensuring that the statements and facts were true and correct lead me to conclude that the affidavit of Mr Brodie can be given no weight. 34 In his affidavit of verification, Mr Brodie states that he is the Company Secretary and to the best of his knowledge and information and belief, the statement of facts made in the list are true. There is a certification by Mr Michael Ball that according to his instructions the list and statements in it are correct. Mr Ball's certification is dated 16 December 2004. By O 15 r 6 of the FCR the contents of a list of documents must be in the form of Form 22. That form provides for a sworn claim that the statement of facts made in the affidavit are true. It does not provide for statements on hearsay and belief. In the present case, the affidavit is made on hearsay and belief. The statement that the facts are true and correct "to the best of my knowledge and belief" carries with it, in my view, the representation that reasonable and sufficient inquiry and steps have been taken to ensure that the statements are in fact true and correct. In the present case, this has not been done. Furthermore, in a context where there was live and strenuous dispute as to the existence of privilege, no evidence was forthcoming by Mr Ball to the court as to the instructions which he had received as the basis for the certificate or the nature and extent of the investigations made by him and by those instructing him in order to satisfy himself that the list of documents was properly verified. 35 Mr Hughes QC, for Seven, submits that the conduct of Mr Philip and Mr Ball and their behaviour in withdrawing the affidavits is "evasive". In the circumstances, he says that because there is no supporting evidence as to the purpose leading to the creation of the documents, as required by the rules, the documents should be made available automatically and without inspection by the Court. The claim, he submits, has not been verified or properly made. In relation to Mr Brodie, he describes Mr Brodie as frank and open about what occurred, but says that he was assigned the task of verification in circumstances where he had not been properly instructed as to his obligation in making discovery. He refers to the procedure adopted in the making of the claim for privilege in this instance as "shoddy" and submits there was no admissible evidence that would warrant any weight whatsoever being given to the claims. As indicated above, the affidavit of Mr Brodie gives no support to the privilege claim. 36 Although there is some force in the submission that the documents should be made available without inspection in the special circumstances of this application, I do not consider, in spite of the lack of co-operation by Mr Philip, that I should simply make the documents available without inspection. I form this view bearing in mind that O 15 r 9 specifically requires that a party on whose behalf a verifying affidavit is sworn should choose a person to make the affidavit who is qualified and has knowledge of the facts. In the case of Mr Brodie, that is clearly not the position. 37 Accordingly, I have decided to inspect the documents and make rulings on each of them having regard to their contents and provenance, while keeping in mind the evidence as to extensive involvement of Mr Philip in the commercial activities of the News Group, in negotiations and his participation in commercial decisions and evaluations. I do not accept the submission by News that in considering the commercial role of Mr Philip I should confine my attention to his role in one single company. Rather I consider it is appropriate to bear in mind his activities in relation to associated entities in the News Group. 38 In carrying out this task, I am cognisant of the fact that there is no bright line separating the role of an employed legal counsel as a lawyer advising in-house and his participation in commercial decisions. In other words, it is often practically impossible to segregate commercial activities from purely "legal" functions. The two will often be intertwined and privilege should not be denied simply on the basis of some commercial involvement. In the present case, however, I am persuaded that Mr Philip was actively engaged in the commercial decisions to such an extent that significant weight must be given to this participation. In many circumstances where in-house counsel are employed there will be considerable overlap between commercial participation and legal functions and opinions. As can be seen from the specific rulings below, I am not persuaded that in this proceeding Mr Philip was acting in a legal context or role in relation to a number of the documents in respect of which privilege was claimed. Nor am I persuaded that the privilege claims were based on an independent and impartial legal appraisal. 39 I note that the claims in respect of these documents are not based on any segregation of parts of the documents. The claims are that the whole of each document is privileged. The claims relate to the whole of each of the documents. Some of the documents are extensive and compromise many pages. I now turn to consider the twenty-two documents. ruling ON THE CLAIMS OF PRIVILEGE 40 The documents in issue are set out below. 41 In relation to the 22 documents in respect of which disputed privilege is now claimed, I make the following rulings after examining the documents and considering the evidence and submissions: · The first document dated 9 April 1998 is the original of a draft agreement. It is not from Mr Philip. On its face, it does not disclose any legal advice and does not appear to envisage, refer to, or embody legal advice. In these circumstances I am not persuaded that the dominant purpose was for legal advice or litigation has been made out. The document is not privileged. · The second document is dated 7 May 1998 and is a memorandum from Mr Philip. It does not disclose any dominant purpose of being for legal advice or use in litigation. It refers to negotiating commissions and the wishes of the parties and to a large extent involves a commercial appraisal of the demands of Optus Vision. I am not persuaded that it has a dominant purpose such as to attract privilege. · Documents 3 to 6 inclusive are no longer the subject of the claim for legal privilege. · Document 7 is a memorandum from Mr Philip referring to a re-draft. It is dated 9 June 1998 and headed "Fox Sports". It refers to open issues and deal points. I am not persuaded that it has a dominant purpose which would attract privilege. · Document 8 is a memorandum of 17 June 1998 from Mr Philip. Again, it refers to a reaction from Optus Vision to issues and a summary of issues. I am not persuaded it has a dominant legal purpose which would attract privilege. · Document 9 is a memorandum from Mr Philip, dated 26 June 1998. It summarises provisions of the agreement. There is nothing in it to sustain the dominant purpose claimed. I do not consider it is privileged. · Document 10 is a memorandum from Mr Philip, dated 5 August 1998. It refers to the need for a commercial decision. I am not satisfied it has the requisite dominant purpose. · Document 11 is a file copy of the above document and the same ruling applies. · Document 12 is from Mr Philip to Mr Lachlan Murdoch, dated 21 December 1998 relating to Fox Sports. It is entitled "PRIVILEGED – CONTAINS LEGAL ADVICE". It is an executive summary of a meeting between Mr Philip and Mallesons. It records discussions between Mallesons and Mr Philip but having regard to its contents and notwithstanding the label given to it by Mr Philip I am not persuaded that its dominant purpose was within a legal context even on the broadest view. · Document 13 is a copy of the above document and the same ruling applies. · Document 14 is a Draft Report in response to a Telstra letter of 15 March 1999 in relation to Fox Sports. It originated from Mr Philip. It is labelled "PRIVILEGED – PREPARED FOR THE PURPOSE OF OBTAINING LEGAL ADVICE IN RELATION TO THREATENED LEGAL PROCEEDINGS". It sets out comments on a letter from Telstra. In my view, the comments and the letter commented upon, are a summary of a commercial position and are not within a legal context such as to warrant the grant of privilege. This document should be made available as not privileged. · Document 15 is a copy of the above document and comes within the same ruling. · Document 16 is a memorandum from Mr Philip to Mr Lachlan Murdoch and Mr Peter Macourt relating to an access request from Seven. It contains conclusions as to legal consequences of action by relevant parties. I consider that this document is privileged and that the purpose is sufficiently within a legal context in order to claim privilege. · Document 17 is a copy of the above document and the same ruling applies. In relation to document 17, I am also satisfied that the draft letter is included within the privilege. · Document 18 is an internal memorandum dated 29 March 2000, originating from Mr Philip. It is entitled "ISSUES ASSOCIATED WITH APPEAL DECISION". I am satisfied that the dominant purpose of this document was to provide legal advice because it refers to prospects of success and expresses legal opinions in relation to actions by Telstra and Foxtel. It is privileged. · Document 19 is a letter from Mr Philip seeking legal advice from Allens, together with a bid proposal. The proposal is entitled "AFL BID PROPOSAL – PRIVILEGED". I am satisfied that this document came into existence for the purpose of obtaining legal advice and is therefore privileged. · Document 20 is a memorandum from Mr Philip to Mr Hartigan and Mr Macourt. In my view, it gives commercial advice as to a negotiating position and I do not consider it comes within the privilege. · Document 21 is a file copy of the above Memorandum and comes within the same category. · Document 22 is a memorandum from Mr Macourt to Mr Miller, the Group Marketing Director of News Limited, dated 5 December 2000, referring to AFL newspaper support. I do not consider that this document is privileged. · Document 23 is an internal memorandum from Mr Philip to Mr Macourt of 19 September 2001 referring to the Movie Network deal. It refers to Senior Counsel's advice as being in existence but does not disclose the contents of it sufficiently to attract privilege. It simply expresses that there is a difference of view but does not state what the views are. I do not consider it is privileged. · Document 24 is an email from Mr Rose to Mr Philip. It relates to the conduct of discussions and not to any legal considerations or advice. It is not in the context of legal advice. I am not persuaded that it is privilege. · Document 25 is headed "SPORTS PROPOSAL – PRIVILEGED – DRAFT". The author was Mr Philip. I am satisfied that this document is within the appropriate legal context and has the relevant purpose to the dominant degree required to attract privilege. It refers to the structure of arrangements and contains observations as to possible legal implications. · Document 26 is a handwritten note by Mr Philip in what appears to be a notebook or diary. It is undated. It relates to the supply of newspaper. I am not persuaded that this document attracts legal professional privilege and therefore it should be made available. 42 In summary, my conclusion and ruling is that documents 16, 17, 18, 19 and 25 attract legal professional privilege and that the balance do not. There has been a substantially excessive claim for legal professional privilege in respect of 17 of the 22 documents in dispute. In all, there have on the evidence been unfounded claims for privilege in respect of 104 of the documents originally claimed as privileged by Mr Philip. Of these, 87 documents were conceded by News to be non-privileged. 43 I therefore order that the non-privileged documents be made available for inspection by Seven and its solicitors because the claim for legal professional privilege has not been made out in respect of these documents. INDEMNITY COSTS 44 An application was made by Seven for indemnity costs in this matter and this application was opposed. The matter was argued on the hearing. The purpose of indemnity costs is to ensure that the successful party is fully compensated and the amount of costs on this basis is compensatory and not punitive: cf Latoudis v Casey (1990) 170 CLR 534; Ohn v Waltob (1995) 36 NSWLR 77 at 79 per Gleeson CJ; De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77 at [6] per the Court. Having regard to the history of the matter, the vacillating positions adopted by News and Mr Philip in relation to verification, the lack of assistance given by Mr Philip, the apparent inadequate advice given to Mr Brodie and his unsatisfactory affidavit, the withdrawn affidavits of Messrs Philip and Ball and the lack of any information as to enquiries made by him in this matter to the Court and the substantial degree of success achieved by Seven in respect of over 100 documents in respect of which privilege was claimed, I am persuaded that this is an exceptional case where indemnity costs are clearly justified to compensate Seven. Accordingly, I order that the respondent, News Limited, pay the costs of the applicant in this application on an indemnity basis. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 28 February 2005 Counsel for the Applicant: T E F Hughes QC and T D F Hughes Solicitor for the Applicant: Freehills Counsel for the Respondent: Peter Brereton Solicitor for the Respondent: Allens Arthur Robinson Date of Hearing: 17 December 2004 Date of Judgment: 28 February 2004