Seven Network Limited v News Limited

FEDERAL COURT OF AUSTRALIA

Case Overview

• Case Title: Seven Network Limited v News Limited
• Citation: [2005] FCA 142
• Date of Ruling: 28 February 2005
• Judge: Justice Tamberlin
• Location: Sydney

Practice and Procedure

Discovery

• Legal professional privilege pertained to documents prepared by in-house counsel.
• Claims of privilege were withdrawn in respect of the majority of documents.
• The court deemed two affidavits of verification insufficient after requests to cross-examine deponents.
• The remaining affidavit was inadequate to support claims of privilege.
• Emphasized that there was no careful evaluation of the list of documents prior to swearing the affidavit.
• The court found it appropriate to inspect the documents in question.

Costs

• The court ordered indemnity costs.
• Reference made to Federal Court Rules O 15 r 9.
• Relevant cases cited include:
    - Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49
    - Telstra Corp Ltd v Australis Media Holdings (unreported, Supreme Ct of New South Wales, Equity Division, McLelland CJ, 18 March 1997)
    - Southern Equities Corporation Ltd (In liquidation) v Arthur Andersen & Co (No 6) [2001] SASC 398
    - Balabel v Air India (1988) 1 Ch 317
    - DSE (Holdings) Pty Ltd v InterTAN Inc [2003] 135 FCR 151
    - Three Rivers District Council v Governor and Company of the Bank of England [2004] UKHL 48
    - Latoudis v Casey (1990) 170 CLR 534
    - Ohn v Waltob (1995) 36 NSWLR 77
    - De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77

Court Orders

1. Documents other than 16-19 inclusive and 25 were ordered to be made available for inspection by the applicants.
2. News Limited was ordered to pay the applicants' costs on an indemnity basis.

Background to Claims of Privilege

• Seven Network Limited sought access to 22 documents that had been claimed as privileged by the respondents (News Limited).
• Seven contended that there had not been a verified claim for privilege.
• The relevant test for privilege is whether documents were created for the dominant purpose of obtaining legal advice or for use in litigation (Esso case reference).

Legal Principles

1. Dominant Purpose Test:
      - The dominant purpose of the document must be for legal advice or litigation.
      - More challenging than a sole purpose test; includes consideration of creator's state of mind and diverse purposes. (Esso at [73] and [108]).
2. Evidence for Claims of Privilege:
      - Evidence should come from those originating the request or documents, to allow cross-examination.
3. Independence of In-House Counsel:
      - Courts recognize that in-house counsel's involvement in commercial matters might affect their independence.
      - The degree of involvement in commercial decisions can impact claims of privilege.
4. Labeling of Documents:
      - Merely labeling documents as “privileged” is not sufficient.
      - The court will consider the substance of the matter (content & context) as well as the form.
5. Burden of Proof:
      - The burden lies with the party claiming privilege to prove that it exists.

Findings on Privilege Claims

• Initial Claims:
    - Privilege was claimed on 283 documents based on affidavit by Mr. Philip (Chief General Counsel for News) sworn on 28 May 2004.
• Claims worth 83 documents withdrawn, indicating inadequate evaluation or consideration in initial claims.
• The Motion filed by Seven sought 26 documents with disputed privilege claims.

Cross-Examination Details

• Mr. Brodie (company secretary) swore an affidavit but lacked sufficient knowledge or proper inquiry to verify the privilege claim.
• Lack of cooperation from Mr. Philip raised concerns about the claims made.
• The court granted leave for Seven to cross-examine Mr. Brodie based on inconsistencies in the claims and lack of evidence.

Detailed Rulings on Documents

1. Document 1: Draft agreement, not privileged.
2. Document 2: Memorandum concerning negotiations, not privileged.
3. Documents 3-6: No longer the subject of privilege claims.
4. Document 7: Memorandum with deal points, not privileged.
5. Document 8: Summary of issues, not privileged.
6. Document 9: Summary provisions, not privileged.
7. Document 10 & 11: Commercial decisions referenced, not privileged.
8. Document 12: Executive summary titled "PRIVILEGED" did not attract privilege.
9. Document 14: Draft response to Telstra, not privileged despite the label.
10. Document 16-17: Conclusion documents, privileged.
11. Document 18: Concerns appeal prospects, privileged.
12. Document 19: Legal advice request, privileged.
13. Document 25: Discussed legal implications, privileged.
14. Remaining Documents (20, 21, 22, 23, 24, 26): Not privileged.

Indemnity Costs Order

• Justified due to the inadequate verification process and substantial success achieved by Seven regarding the dispute over a significant number of documents.