Cadbury and Amcor – No privilege in ACCC witness statements
ACCC v Cadbury Schweppes Pty Ltd & Ors  FCAFC 32
In the interlocutory decision of ACCC v Cadbury Schweppes Pty Ltd & Ors  FCAFC 32, the Full Court held that legal professional privilege (LPP) does not subsist in witness statements once they are in the form in which they are intended to be served on a party’s opponent in litigation. The Full Court went on to find that if LPP had subsisted in the statements, service of them amounted to a completewaiver. The statements were served in one proceeding and ordered to be produced in a subsequent proceeding after Visy was released from the implied undertaking recognised in Harman  1 AC 280 not to use the statements for any ulterior or collateral purpose.
Facts of the case
In the earlier high profile case brought by the ACCC against Visy for colluding with Amcor to fix prices in the cardboard box market (the ACCC proceeding), the ACCC was ordered to file and serve on Visy the witness statements on which it intended to rely in the proceeding. The ACCC subsequently filed and served 111 witness statements summarising statements made to ACCC investigators. On 2 November 2007, judgment was pronounced on facts agreed between the parties without the witness statements being admitted into evidence or the witnesses being called to give oral evidence. As was well publicised, Amcor assisted the ACCC to prosecute its claims in return for immunity from prosecution.
Cadbury subsequently brought proceedings against Amcor (which cross-claimed against Visy) (the Cadbury proceeding) seeking damages for losses incurred due to the price fixing. The ACCC is an intervening party in the Cadbury proceeding.
In the Cadbury proceeding, Gordon J ordered Visy to produce the 111 witness statements which had been served on Visy by the ACCC in the ACCC proceeding. To allow Visy to do so, Gordon J ordered that Visy be released from the implied undertaking given to the Court not to use the witness statements for a purpose outside the ACCC proceeding. Such an implied undertaking is given by every party inspecting a document produced in a proceeding and it prevents that party from using the document otherwise than for the legitimate purposes of the proceeding (Harman v Secretary of State for Home Department  1 AC 280). Justice Gordon released Visy from the implied undertaking on the basis that the issues in the Cadbury proceeding were not substantially different to the issues in the ACCC proceeding and production of the witness statements would contribute to achieving justice in the Cadbury proceeding.
The ACCC, concerned that the immunity granted to Amcor in the ACCC proceeding would be undermined, claimed that the witness statements continued to be subject to LPP.
In the interlocutory decision at first instance, Gordon J considered the only issue before the Court to be that of waiver and held that the ACCC had waived LPP in the witness statements by filing and serving them on Visy in the ACCC proceeding.
On appeal the Full Court allowed Cadbury to argue that the witness statements were not privileged documents prior to them being filed and served. The two issues on appeal were therefore:
- whether the witness statements were privileged documents; and
- if the witness statements were privileged, did the filing and service of the witness statements constitute a waiver of that privilege?
The existence of LPP in the witness statements
The Full Court held that LPP did not subsist in the witness statements because they were intended to be served on Visy. The Court considered the rationale for LPP and stated that non-disclosure to a party’s opponent is a crucial element of the confidentiality sought to be protected by LPP.
The Full Court noted that in litigation, LPP allows lawyers and their clients to decide what, if any, evidence to rely on in support of their case. However, where a document (be it a witness statement or affidavit) is in the form intended to be given to an opposing party such that that decision has been made, it is not a document in which privilege subsists.
Importantly, the Full Court clearly distinguished between finalised witness statements and draft witness statements, the latter having been created for the purpose of review by solicitors or counsel prior to deciding whether and in what form those documents would be filed and served. The Full Court noted that draft witness statements or affidavits intended only to be reviewed by a party’s legal advisor would be privileged. It is well established that in order to determine whether LPP subsists in a document, the question is the purpose for which the document was brought into existence. In this regard, the Full Court stated that the purpose of creating a finalised witness statement is different to the purpose of creating a draft witness statement. The Full Court stated that the “essential character” of a finalised witness statement or affidavit is to disclose to the opponent and the Court the evidence which is proposed to be led at trial.
The ACCC sought to rely on the case of State Bank of South Australia v Smoothdale (No 2) Limited (1995) 64 SASR 224 in which the Court held that witness statements served on an opposing party retained a degree of confidentiality sufficient to support LPP until either the witness verifies the statement on oath in the witness box or LPP is waived. The Full Court found the principles in Smoothdale to be inconsistent with the rationale for LPP and clearly wrong.
Waiver of any LPP
Notwithstanding that the Full Court held that no LPP subsisted in the witness statements, it went on to consider whether, if LPP was found to subsist, it had been waived by the filing and service of the witness statements. The Full Court agreed with the primary judge that the filing and service of the witness statements operated as a compete waiver. In doing so the Full Court rejected the body of earlier authority led by Smoothdale which held that witness statements filed and served but not read in open court or otherwise tendered into evidence remain subject to LPP in the hands of the recipient.
The Full Court accepted that it is possible for conduct to constitute a limited waiver, such as where a document has been provided to an opponent subject to conditions that it may not be read in Court, placed into evidence or relied on in cross-examination. However, in this case no such conditions were imposed on Visy and the Court stated that the Harman undertaking does not give rise to a sufficient degree of confidentiality to maintain a claim for LPP.
Based on the Full Court’s decision, once a party has decided to rely on a particular witness and to put forward their evidence as set out in a witness statement or affidavit, that document is not a privileged document. The Full Court therefore considered the party’s intentions with respect to the document in order to determine whether or not privilege subsists. Once those intentions have been formed, the service of the document does not constitute a waiver of privilege because privilege did not subsist in the document prior to it being served.
If Visy had not been released from the implied undertaking recognised in Harman, the undertaking would have prevented access to the statements by Cadbury. The undertaking prevents the use of inspected documents other than for the purposes of the proceeding in which inspection was given (in this case the ACCC proceeding). In Federal Court proceedings, the undertaking subsists until the information is disclosed in open court, unless the Court otherwise orders: O15, r 18.
In order to minimise the risk that witness statements or affidavits that might be served on an opponent in litigation could be denied the protection afforded by LPP, draft watermarks should appear on documents, including “finalised” documents, where the decision to serve and rely on the document is yet to be made. It may also be prudent to include a header with words such as “Prepared solely for review by Counsel – not intended to be filed and served”.