Ipsofactoj.com: International Cases [2000] Part 6 Case 1 [NZCA]


COURT OF APPEAL, NEW ZEALAND

Coram

Crisford

- vs -

Haszard

RICHARDSON P

GAULT J

THOMAS J

1 JUNE 2000


Judgment

Richardson P

  1. This interlocutory appeal concerns the applicability of litigation privilege in a novel situation. In essence, the question is whether a litigant can be denied inspection of a tape-recording (and transcript of the recording) of a conversation between the litigant and a third party where, unknown to the litigant, the third party was taping the conversation surreptitiously at the behest of the solicitor for the other side.

    THE FACTUAL BACKGROUND

  2. Mr. J A Crisford, the present appellant, is plaintiff in proceedings commenced in the High Court at Auckland in 1998 against a number of defendants including Mr. M H Haszard, a director and shareholder in Binary Research Ltd, a computer software maker. Mr. Crisford claims to have commissioned Mr. Haszard to make a software programme and to an entitlement arising from the sale of the copyright in the programme which, when developed, was sold to an American company for US$27.5 m. Mr. Crisford's affidavit of discovery includes, amongst documents relating to matters in question between the plaintiff and the defendants in the possession or power of the plaintiff:

    SECOND PART

    1.

    Tape recording of telephone conversations between Linda Harris and Haszard in January 1999.

    2.

    Transcript of above.

    The plaintiff objects to produce the documents listed in this Part ON THE GROUNDS that they are privileged, in that they were brought into being for the purpose of submission to the plaintiff's legal advisers to enable them to conduct and advise regarding the litigation.

  3. The affidavit also lists separately "undated .... Notes made by Linda Harris of conversations between herself and Murray Haszard relating to the plaintiff and his affairs".

  4. Mr. Haszard regarded Ms Harris as a friend. He telephoned her some time in January 1999. He arranged to speak to her about the litigation. He rang back. In the meantime she had spoken to the plaintiff who had taken her to his solicitor. The solicitor asked her to tape the conversation to record any statements which Mr. Haszard might make to her which could be of value in the litigation and provided her with a tape recorder and tape.

  5. Mr. Haszard was not told the conversation was being recorded. He says that had he been aware of that he would not have continued the conversation. He says it quickly became clear that Ms Harris was not prepared to appear as a witness for the defendants and that she put to him a number of allegations made by the plaintiff.

  6. The application for inspection of the tape and transcript was opposed on the ground that documents were privileged.

    THE JUDGMENT OF POTTER J

  7. The argument for the plaintiff was that the rationale of litigation privilege was to protect the process of gathering evidence for consideration by a lawyer acting for a party in existing or contemplated litigation and here the sole purpose in recording the telephone conversation between Ms Harris and Mr. Haszard was gathering evidence for the existing litigation.

  8. Potter J preferred the argument for the defendants that litigation privilege cannot attach to the record of an inter-parties conversation, including where, as here, the other speaker was acting on behalf of the other party. The tape-recording was a conversation between the first defendant, Mr. Haszard, and an agent of the plaintiff and the plaintiff's solicitor. It differed from a note or summary of the telephone conversation and we interpolate it seems from the affidavit of discovery that Ms Harris may have made a note of the conversation for that would have the imprimatur of her own recollection and emphasis and, created for the purpose of the litigation, would have attracted privilege. As communications between parties (or parties' agents) they fell within the basic principle expressed in Kennedy v Lyell (1883) 23 Ch D 387, 405.

  9. The Judge endorsed Robertson JA's observation in Flack v Pacific Press Ltd v Holm (1970) 74 WWR 275, 295 that it seemed absurd that litigation privilege should be extended to deny a party inspection of a document which he authored and handed to the representative of the other party. Potter J added that in the circumstances of this case it would be offensive on policy grounds that a party to litigation could surreptitiously record the conversation of another party and then, under the cloak of privilege, deny that other party inspection of the recording.

    THE RIVAL ARGUMENTS ON APPEAL

  10. Mr. Judd QC for the appellant submitted that Potter J's judgment was founded on the incorrect factual premise that the recording was of an inter-parties conversation; and, further, that litigation privilege protects not only lawyer/client communications but also documents prepared for the dominant purpose of submission to a legal adviser in connection with actual or anticipated litigation.

  11. Ms Harris, he said, was a potential witness. Mr. Haszard was not intending to communicate with the plaintiff or the plaintiff's advisers. The fact that Ms Harris was recording the conversation for the purpose of giving the recording to the plaintiff's solicitor could not make the discussion an inter-parties conversation. All she did, at the request of the plaintiff's solicitor, was to record it rather than relying on notes and / or recollections. He emphasised that, had Mr. Haszard taped the conversation for submission to his solicitors, the tape would have been privileged. The plaintiff would not have been able to claim that it was not privileged on the basis that what Ms Harris said was a communication from the plaintiff to Mr. Haszard. That underscored that the recording was not of inter-parties communications.

  12. Next, referring to authorities, particularly Ventouris v Mountain [1991] 1 WLR 607 and Re Barings plc [1998] 1 All ER 673, he submitted that whatever may have been the origins of litigation privilege, it is now firmly established that materials generated to go into the lawyer's "brief" are privileged if the work of producing them has been carried out with the dominant purpose of conducting the litigation. In his submission a record of a statement made by a party, which the maker of the record makes for the purpose of submission to another party's solicitor for the purposes of the litigation, is privileged.

  13. Mr. Asher QC for the respondent submitted that the claiming of privilege for this tape does not fall within any recognised head of litigation privilege, and the rationale of litigation privilege does not extend to protecting tape recordings which are no more than an exact electronic replica of conversations that have taken place: a tape recording is not a note of a conversation or impression of it or description of it, but rather is the actual conversation in electronic form (referring to Telebooth Pty Ltd v Telstra Corp Ltd [1994] 1 VR 337).

  14. A tape recording is no more than an electronic replica of a discussion that has taken place. It is not in any way confidential and, save as a record of a non privileged discussion, has nothing to do with the process of preparing for litigation. There is no "seal" of confidence or secrecy to guard against where the opposite party is a participant in the communication. The policy in favour of allowing a party to prepare the case without revealing the effect of the advice, or materials for the brief, can have no application where the "materials" are the opposite party's own statements, or statements made in his or her presence.

  15. His second submission was that Ms Harris was acting on the instructions of the plaintiff's solicitor and as agent for the plaintiff in surreptitiously recording the conversation, and the rationale of the principle that communications between opposite parties are not privileged, must apply in this case. The necessary requisite of confidentiality and/or secrecy is not present.

    DISCUSSION

  16. There are no New Zealand cases and it seems no reported authorities in other comparable jurisdictions directly in point. We must approach the matter on first principles, drawing on relevant analyses and authorities but recognising that the variety of circumstances which may arise precludes the adoption of a formula or universal touchstone as applicable without qualification in all situations.

  17. Both pre-trial disclosure and litigation privilege are directed to the same end, the public interest in the administration of justice. Each stresses a different aspect of that public interest. The first, the ready availability to the parties of relevant material, is entrenched in the High Court Rules and is reflected in the contemporary emphasis on case management and the avoidance of trial by ambush. In Fletcher Timber Ltd v A-G [1984] 1 NZLR 290 we concluded that in our setting and against that procedural background our rules express the social philosophy that, except where there is a valid claim to privilege, a party needs to have access to all documents relating to the case in order for justice to be done. (See also Guardian Royal Exchange Assurance of NZ Ltd v Stuart [1985] 1 NZLR 596, 601 and 604).

  18. Litigation privilege applies to communications between a legal professional adviser and a third party and between a client and a third party which are made with a view to obtaining information to be submitted to a legal professional adviser. In Dinsdale v CIR (1997) 11 PRNZ 325, 326, Blanchard J delivering the judgment of the court noted three features of the privilege: first, that it protects the process of gathering evidence for consideration by a lawyer acting for a party in current or threatened litigation; second, referring to the Law Commission's discussion paper on Evidence Law: Privilege (1994) NZLCPP 23, para 109, that the central feature of litigation privilege is that it represents the fruits of effort on the part of the litigants in preparing for the case; and the third, that the evidence may have been gathered by the lawyer, the client or an agent for either of them, but the work must have been carried out with the dominant purpose of conducting or advising on actual or reasonably anticipated litigation.

  19. As it was put in the Guardian Royal Exchange Assurance case (p 604), there is no readily discernible reason for attaching any lesser significance to the social policies underlying the disclosure of documents relating to any question in the proceedings when balancing those public interest considerations against the public interest considerations served by legal professional privilege. The judgment went on to cite the observation of the majority in Grant v Downs (1976) 135 CLR 674, 686 that "the privilege .... detracts from the fairness of the trial by denying a party access to relevant documents or at least subjecting him to surprise"; and concluded, along with Lord Edmond-Davies in Waugh v British Railways Board [1980] AC 521, 543, that we should start from the basis that the public interest is best served by rigidly confining within narrow limits the cases where material relevant to litigation may lawfully be withheld. To the same effect Nemetz JA in Flack at p 303 considered that legal professional privilege ought not to be extended beyond the limits of the rationale on which it is founded.

  20. Against that background we turn to consider two special features of this case. One is that the tape recording, while reproducing the conversation, is separate from the conversation and it is the document itself which was obtained for the use of the plaintiff's solicitor. The other is that Ms Harris, in taping the conversation, and in doing so surreptitiously, was acting at the request of the solicitor even though Mr. Haszard was unaware that she was acting on the solicitor's behalf and was taping their conversation.

    THE CONVERSATION AND TAPE RECORDING

  21. The first question is whether the action of Ms Harris in obtaining the recording for the plaintiff's solicitor for the purposes of litigation rendered that document a potentially privileged document.

  22. The starting point is that the tape reproduces the conversation in electronic form. In Telebooth Hedigan J said at 348:

    But the tape is not a note of the conversation, an impression of it or a description of it. It contains the actual conversation in electronic form. It evokes the voices of each party's agent, instantaneously encapsulating the non-confidential communications. It is the conversation. Kinchin was as much the author of it as Harris. The policy basis of legal professional privilege confidentiality in the public interest is wholly lacking when what is solely sought to be protected is an actual reproduction of the voices of the parties speaking in a non-confidential mutual communication. The tape itself is not a communication to anybody. It is simply a record.

  23. Mr. Judd submitted that the conversation in this case was not non-confidential but accepted that it was admissible and so, if called by the plaintiff, Ms Harris could give evidence of the conversation with Mr. Haszard as defendant and Mr. Haszard could be cross-examined on the conversation. Clearly the conversation itself was not privileged and, further, could not be regarded as confidential on Mr. Haszard's part.

  24. Again, in Grant v Southwestern and County Properties Ltd [1975] 1 Ch D 185 Walton J held that the recording there, while properly characterised as a document for discovery purposes, was a record of communications made by both parties to each other and not for the benefit of the plaintiff's solicitor and, accordingly, was not in the circumstances a privileged communication. He rejected the argument that the tape was merely a note made at the time for the benefit of the plaintiff's solicitors (p 199):

    It was a recording of two things: (a) communications made by the plaintiffs as they were being made to the other side and (b) communications made by the other side, which were not in any way being made for the benefit of the plaintiffs' solicitors. The fact that when made the tape might be useful to the plaintiffs is, of course, neither here nor there. I, therefore, reject any claim to the privilege under this head completely.

  25. The crucial point is that the recording of the conversation does not disclose anything about the plaintiff's or the defendants' case that is not revealed by the fact of the conversation having occurred and in the conversation itself. If the tape recording is a reproduction of a non-privileged conversation there is no room for arguing that it has the stamp of the plaintiff's agent's opinions and impressions of the conversation. As Dawson J said in Baker v Campbell (1983) 153 CLR 52, 122,

    The privilege cannot operate to put beyond the reach of the law documentary or other material which has an existence apart from the process of giving or receiving advice or the conduct of litigation.

  26. There are two analogous situations which provide some support for this conclusion. One is where a document which existed before litigation was contemplated is obtained by a solicitor for the purposes of the litigation. The other is where a copy of a non-privileged document is made for the purposes of the litigation. In both situations the authorities tend to the conclusion that privilege from production and inspection is not available unless the document which is obtained betrays the advice or views of the solicitor or client or agent obtaining the document. The necessary rationale for the privilege is that the proper preparation of a litigant's case demands that information be freely assembled, sifted and evaluated, and strategy be planned under the seal of confidence.

  27. The position is considered at length in the judgment of Bingham LJ in Ventouris. It is sufficient for present purposes to refer to two passages in the judgment. First, and referring to Lyell v Kennedy (No 3) (1884) 27 Ch D 1 and Cotton LJ's discussion of an earlier case, Walsham v Stainton, Bingham LJ said at 615:

    The ratio of the decision [upholding privilege] is, I think, that where the selection of documents which a solicitor has copied or assembled betrays the trend of the advice which he is giving the client the documents are privileged. Mr. Tomlinson for the plaintiff put this forward as an exception to what he claimed was the general rule, that non-privileged documents do not acquire privilege simply by being copied. If the ratio I have given is correct, the authority is consistent with the fundamental principle underlying the privilege.

    Second, and referring to Chadwick v Bowman (1886) 16 QBD 561, where copies of certain letters had been obtained from third parties, and where Denman J said at p 562:

    The originals of these documents would have been admissible in evidence against the defendant, and it seems to me that there is nothing in the circumstances under which the copies came into existence to render them privileged against inspection.

    Bingham J continued:

    This does suggest a general rule that non-privileged documents do not, without more, acquire privilege simply because they are copied by a solicitor for purposes of an action.

    See also Lubrizol Corporation v Esso Petroleum [1992] 1 WLR 957.

  28. For these reasons we conclude that recording a non-privileged conversation on tape, without more, does not change the nature of the resulting "document" so as to attract privilege.

    THE RECORD OF MR. HASZARD'S CONVERSATION AS A COMMUNICATION BY THE OPPOSITE PARTY

  29. The second point arising on the present facts can be dealt with very shortly. The short answer is that no such communication made by the opposite party can be confidential.

  30. 13 Halsbury's Laws of England, 2d, para 81 expresses the principle as being that "communications passing between opposite parties or made by or on behalf of the opposite party cannot be confidential, and are accordingly liable to disclosure unless they attract the protection of 'without prejudice' negotiations". In McKay v McKay [1988] NILR 611 Hutton LCJ delivering the leading judgment in the Court of Appeal of Northern Ireland, concurred in by O'Donnell and MacDermott LJJ, contrasted information coming from the adverse party, which is not privileged, with material which a party obtained from a third party for the presentation of his case, which is privileged (p 618). And in Flack Robertson JA said at p 284, "the information having originated with the one party, there is no secrecy to guard".

  31. In this regard the rationale for treating a party's own statement differently from that of other witnesses is that the discovery rules are aimed at permitting the disclosure of, at least, all admissible evidence, and a party's own statement constitutes substantive evidence which is admissible as an admission (23 Am Jur 2d para 65).

  32. Where the statement is recorded mechanically it must follow, in our view, that the party remains the maker of the taped statement, whoever pushes the recorder button. In principle, there is no justification for treating any other person who openly or surreptitiously records the conversation as the maker of the communication recorded. There is insufficient exercise of skill, selection, effort or judgment to come within the rationale for litigation privilege.

  33. Without suggesting that copyright in a document must be shown to attract privilege, it is instructive to note the approach of the law of copyright to originality where mere mechanical reproduction is involved. Leaving aside particular statutory provisions relating to sound recordings there is nothing originating from the button pusher to impart a quality or character which the raw material (the conversation) did not possess and which differentiates it from the raw material (see the extensive discussion in Ricketson, The Law of Intellectual Property: Copyright, Designs and Confidential Information, paras 7.70, 7.190 and 14.15; Laddie, Prescott & Vitoria, The Modern Law of Copyright (2d ed) paras 2.71 and 11.8; and Television New Zealand Ltd v Newsmonitor Services Ltd [1994] 2 NZLR 91, 97-99). As early as the classic decision Walter v Lane [1900] AC 539, 561 Lord Robertson observed that the phonograph (the predecessor of the tape recorder) "which has .... no intellect, great or small, will record .... speeches better than the best of reporters".

    RESULT

  34. For these reasons the appeal is dismissed with costs of $5,000 to the respondents together with all reasonable disbursements as fixed, if necessary, by the Registrar.


Cases

Kennedy v Lyell (1883) 23 Ch D 387; Flack v Pacific Press Ltd v Holm (1970) 74 WWR 275; Ventouris v Mountain [1991] 1 WLR 607; Re Barings plc [1998] 1 All ER 673; Telebooth Pty Ltd v Telstra Corp Ltd [1994] 1 VR 337; Fletcher Timber Ltd v A-G [1984] 1 NZLR 290; Guardian Royal Exchange Assurance of NZ Ltd v Stuart [1985] 1 NZLR 596; Dinsdale v CIR (1997) 11 PRNZ 325

Grant v Downs (1976) 135 CLR 674; Waugh v British Railways Board [1980] AC 521; Grant v Southwestern and County Properties Ltd [1975] 1 Ch D 185; Baker v Campbell (1983) 153 CLR 52; Lyell v Kennedy (No 3) (1884) 27 Ch D 1; Lubrizol Corporation v Esso Petroleum [1992] 1 WLR 957; McKay v McKay [1988] NILR 611; Television New Zealand Ltd v Newsmonitor Services Ltd [1994] 2 NZLR 91; Walter v Lane [1900] AC 539

Authors and other references

Evidence Law: Privilege (1994) NZLCPP 23

13 Halsbury's Laws of England, 2d

Ricketson, The Law of Intellectual Property: Copyright, Designs and Confidential Information

Laddie, Prescott & Vitoria, The Modern Law of Copyright (2d ed)

Representations

G J Judd QC for Appellant (instructed by A J Witten-Hannah, Auckland)
R J Asher QC and P J P Grace for Respondents (instructed Bell Gully, Auckland)


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