Ophthalmological Society of New Zealand Inc v Commerce Commission [2003] NZCA 26; [2003] 2 NZLR 145; (2003) 16 PRNZ 569 (13 February 2003)

Last Updated: 18 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA209/02

	BETWEEN	THE OPHTHALMOLOGICAL SOCIETY OF NEW ZEALAND INCORPORATED
		First Appellant

	AND	PHILIP BOULTON
		Second Appellant

	AND	KEN TARR
		Third Appellant

	AND	BRETT ROGERS
		Fourth Appellant

	AND	COMMERCE COMMISSION
		Respondent

Hearing:	5 December 2002
Coram:	McGrath J Baragwanath J William Young J
Appearances:	B W F Brown QC for the First, Second and Third Appellants J Gibson for the Fourth Appellant J O Upton QC and N J Wills for the Respondent
Judgment:	13 February 2003

JUDGMENT OF THE COURT DELIVERED BY McGRATH J

Introduction

[1] The Ophthalmological Society of New Zealand Incorporated and three medical practitioners appeal against the judgment delivered in the High Court by France J in Commerce Commission v The Ophthalmological Society of New Zealand Incorporated and Others HCWGTN CP354/97 26 September 2002. In that judgment the High Court dismissed an application for review of a decision of Master Gendall, who had refused to order production by the respondent Commerce Commission of documents subject to litigation privilege, which privilege the appellant Society contends has been waived.

Background

[2] On 18 December 1997 the Commission brought a proceeding in the High Court against the Society and five ophthalmologists alleging, in the first cause of action, collusive conduct by them in breach of s27 of the Commerce Act 1986. The statement of claim pleaded that the Society and the ophthalmologists had been parties to an arrangement or understanding that no routine cataract surgery would be performed in Southland, the relevant market, other than by or with the permission of one of them, Dr Rogers. At the relevant time Dr Rogers was the sole ophthalmologist in practice in Southland of which region Invercargill is the main city. The statement of claim also alleged that the arrangement or understanding had the purpose, or the effect, of substantially lessening competition in the relevant market. The alleged conduct of the Society and the ophthalmologists was said to have prevented or hindered two Australian doctors from entering the market.
[3] A second cause of action alleged that Dr Rogers had a dominant position in the market concerned which he had used for the purpose of restricting the entry of the Australian medical practitioners, and others, who might engage in competitive conduct into the market. The Society and the ophthalmologists other than Dr Rogers were also alleged to have aided or abetted him in the use of his dominant position in the relevant market.
[4] The factual background is that the Crown Health Enterprise responsible for provision of health services in the Southland region is alleged to have approached, successively, two medical practitioners in Australia to perform cataract operations in Invercargill. The Australian practitioners are alleged in each case to have declined to proceed with arrangements made with the Crown Health Enterprise as a result of pressure put on them, and the Crown Health Enterprise, by the appellants.

Course of the proceeding

[5] Earlier in the present litigation, the appellants and other defendants in the proceeding had appealed successfully to the Court against the grant of leave to the Commission in the High Court to file an amended pleading after the case had been set down for hearing, under Rule 187(2) of the High Court Rules. The amendment then sought by the Commission would have altered the size of the pleaded relevant market in respect of the s27 cause of action from one covering a region with a relatively small population, and only one resident ophthalmologist, to a market with national coverage. The proposed amended pleading did not include the second cause of action. In its judgment allowing the appeal this Court said that the proposed amendment, by altering the scope of the relevant market, would effectively create a new case against the Society and practitioners substantially at variance with that originally set up by the Commission. At that time s80(5) of the Commerce Act permitted proceedings for pecuniary penalties to be commenced “within three years after the matter giving rise to the contravention arose” and the application for leave to amend had been brought after that period had expired. A majority of this Court held the proposed amendment amounted to a new cause of action beyond the three year limitation period for which leave under Rule 187(3) could not be granted: The Ophthalmological Society of New Zealand Incorporated and Others v Commerce Commission 168/01 26 September 2001, paras [22], [26], [32] and [33]. This Court subsequently dismissed an application by the Commission to appeal to the Privy Council which was brought out of time. A petition to the Privy Council for special leave to appeal against the Court’s judgment was dismissed on 14 February 2002.

The present application for leave to amend

[6] Between 26 April 2002 and 4 June 2002 there was correspondence between the Commission and Bartlett Partners, solicitors for the Society and the ophthalmologists, concerning the Commission’s intentions in relation to the proceeding. The Commission’s failure to obtain leave to file the proposed amended statement of claim pleading a national market had left on the record the Commission’s original pleading of the s27 cause of action defining the relevant market in regional terms. In the correspondence the Commission foreshadowed its intention to proceed while Bartlett Partners maintained that, following refusal of special leave to appeal by the Privy Council, the Court of Appeal’s decision was “determinative of the Commission’s case”, adding “that it was not open to the commission to attempt to amend its case yet again”. The Commission asserted that it was able to revert to pleading a regional market for “the supply of routine ophthalmologic procedures” and in particular “routine cataract surgery including pre and post operative care”. Its fresh application to amend the statement of claim would be made in this context. There would also be “some consequential changes to the economic evidence”.
[7] The next step by the Commission was to file, on 14 June 2002, the application which is the subject of the present appeal, seeking leave to file an amended statement of claim which would assert:

The relevant market is the market for supply by ophthalmologists of routine cataract surgery (including pre and post operative care) in Southland (“the relevant market”).

The original pleading had simply asserted “the relevant market was the supply of routine cataract surgery in Southland”. The proposed amended statement of claim does not plead the s36 cause of action at all and we were informed from the bar, that the Commission has decided not to seek to proceed with it.

[8] On 21 June 2002 an affidavit was sworn by Mr Thorn an employee of the Commission holding the position of Director, Business and Competition Branch. He states that the affidavit is made in support of the application to file and serve an amended statement of claim. After referring to the history the prior application and subsequent changes to the legal team assisting the Commission’s senior counsel in the case, Mr Thorn proceeded:

Following the appointment of new counsel, and as a result of the Court of Appeal and Privy Council decisions, the Commission has further investigated and reflected on the issue of market definition.

...

The Commission also took the step of briefing another economist, Alex Sundakov, Director of the New Zealand Institute of Economic Research, to give the Commission a second opinion on market definition. His conclusion is that the relevant geographical market is Southland – not New Zealand, which was the original opinion of Professor Stephen King who has been assisting the Commission to date. Subject to further timetabling, a brief of evidence by Mr Sundakov will be provided in due course.

Accordingly, having regard both to the Court of Appeal and Privy Council decisions, and Alex Sundakov’s advice, the Commission has in its draft amended statement of claim retained the Southland market for the supply of routine cataract surgery, including pre and post operative care (paragraph 45). The proposed amended statement of claim also sets out the alleged acts of the defendants in a more logical time sequence and provides better particulars in order to assist both the Court and the defendants.

The defendants’ solicitors are aware that the Commission proposes to seek leave to file and serve an amended statement of claim. The defendants’ solicitors have advised that, in their view, the Commission is not entitled to change its view on market definition and to pursue this proceeding. They have advised further that as a result, the defendants will be opposing this application.

[9] The first paragraph of this extract omits a passage in the affidavit subsequently struck out by Master Gendall by consent because the parties had agreed it was irrelevant to the application and should not be read. It is unnecessary for us to go into the matters this passage raised.

The High Court judgments

[10] On 8 July 2002 notices of opposition were filed on behalf of all defendants. In view of the way that the argument proceeded in this Court it is unnecessary to discuss the detailed basis of the notices of opposition. The Society and three of the ophthalmologists (Drs Boulton, Tarr and Rogers), also applied under Rule 307 for orders for production of all documents recording the opinions on market definition of Mr Sundakov and Professor King which had been referred to by Mr Thorn in his affidavit. The application came before Master Gendall who after hearing argument delivered a reserved judgment refusing the application: Commerce Commission v The Ophthalmological Society of New Zealand Incorporated HCWN CP354/97 23 August 2002. Before the Master there was no dispute that the material which was the subject of the application was privileged; the issue was whether, as a result of the express references to the contents of the material in Mr Thorn’s affidavit, the Commission had waived that privilege.
[11] The Master decided that the Court should impute waiver of privilege where the party having protection had relied on the privileged material and positively advanced it in support of its case to the extent that the privileged material had become both relevant and significant to the resolution of the issues in the litigation. Ultimately the question came down to whether for reasons of fairness the requested documents should be disclosed to the other party. In the present instance the Master concluded that the disclosure of the economist’s opinions went beyond a bare reference, which would not result in imputed waiver, but only by a fine margin. Taking into account that the Society and ophthalmologists already had Professor King’s brief, that they would receive the other economist’s brief prior to commencement of the trial, and that they had in the course of the proceedings acknowledged the lack of relevance to the application of the contents of Mr Thorn’s affidavit, the Master decided that the case did not call for the Court to impute waiver. The application was accordingly refused. The Society and other applicants then sought a review by a High Court Judge of that decision under Rule 61C of the High Court Rules.
[12] In her judgment France J discussed the nature of the reviewing Judge’s task under Rule 61C. Because the decision was a reasoned one, delivered following argument at a defended hearing, the Court was required to conduct the review as an appeal by way of re-hearing. The applicant for review nevertheless carried the burden of persuading the High Court Judge that the Master’s decision was wrong because the approach was an appellate one.
[13] Her Honour also accepted that there was a higher threshold for appellate intervention where the decision of the Master involved the exercise of a discretion or judgment. The Judge saw the instant case as involving that element because it was necessary for the Master to decide whether the consequences of partial disclosure of privileged material were such as to warrant waiver being imputed by the Court. In terms of the Court’s general approach to appeals against the exercise of discretion, for the appeal to succeed, it had to be shown that the Master had applied wrong principles of law or had reached a plainly wrong decision on the application.
[14] Applying this approach France J decided that Master Gendall had correctly applied the relevant principles, by reference to the decisions of the High Court on implied waiver by disclosure in Equiticorp Industries Group Limited v Hawkins [1990] 2 NZLR 175 (“Equiticorp”), Cory-Wright & Salmon Limited (In Receivership and Liquidation) v KPMG Peat Marwick (1992) 5 PRNZ 518 (Cory-Wright & Salmon) and Tau v Durie [1996] 2 NZLR 190. The Judge observed that neither counsel had, in argument, sought to adopt the approach of the High Court of Australia in Mann v Carnell [1999] HCA 66; (1999) 168 ALR 86 where the majority judgment in considering when privilege is waived said that:

Disclosure by a client of confidential legal advice received by the client, which may be for the purpose explaining or justifying the client’s actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending on the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency (para 34).

In this passage the High Court of Australia appears to have refined the test expressed in its earlier decision in Attorney-General for the Northern Territory v Maurice [1986] HCA 80; (1986) 69 ALR 31 (“Maurice”). We shall return to this point later.

[15] Given, however, the way counsel had argued the matter France J was content to rely on Tau v Durie, a case in which a party enjoying the protection of lawyer-client privilege had pleaded that legal advice had been obtained and in relied on in particular the Judge the following passages in the judgment of McGechan J:

It is all in the end a matter of fairness. A party cannot expect to put forward the existence of legal opinion, with inference invited as to favourable content, or part of a legal opinion which is favourable, and refuse to disclose the opinion document, or the remainder of it, so enabling the position to be checked. If a party positively advances it, the party must disclose it. Mere passing mention in pleadings may not suffice to call the doctrine into play. I agree immediately that the assertion of the existence of legal opinion by a plaintiff and the simple admission or denial of its existence by a defendant ordinarily would not require that defendant to disclose. There are questions of degree. I do not accept that there is some inexorable standard which arises from some perceived need for invariable certainty. (at p194)

It would, in my view, be quite unfair to permit the first defendant to blow hot as to the existence of content of opinion, but cold on disclosure. I accept there has been an implied waiver within doctrine. Again I allow myself a comment that, questions of principle to one side, disclosure could well be to the first defendant’s ultimate advantage. Indeed I suspect it probably would have occurred eventually, and better now than later. (at p195)

[16] France J added that disclosure of content of legal advice on its own would not always mean waiver would be imputed by the Court. There had to be something about the use to which the disclosed material had been put which led the Court to impute waiver. Notions of “fairness” in themselves might not go a long way to describe the analysis required by the Court, but it was a way of characterising when waiver would be imputed.
[17] Guided by these principles, the Judge was not persuaded that the Master had failed to consider the importance of the disclosed material in terms of the issues raised in the proceedings. Nor was the Judge persuaded by an argument that the Master had failed to recognise the unfairness of permitting the plaintiff to support its application to amend the claim by referring to the content of Mr Sundakov’s opinion about the existence of a regional market without giving the defendants the opportunity to see all material in relation to the opinion. There was no error in the Master’s assessment that, on balance, the current and future provision of briefs of evidence would outweigh any unfairness that might arise. In doing so the Master had accepted that the material in the Thorn affidavit was being deployed to support the application for leave to amend, whatever view the Court might ultimately take of its relevance. The Master however had conducted the balancing exercise in that context and the outcome was open to the Master.
[18] Finally the Judge held that the Master was entitled to have regard to the fact that the appellants themselves had in a separate application taken the position that Mr Thorn’s affidavit was irrelevant and applied for an order that it not be read.
[19] After considering various other incidental matters raised in argument France J dismissed the application for review. The present appellants, being the Society and the three ophthalmologists who were unsuccessful before the High Court, appeal against that judgment.

Loss of privilege by imputed waiver

[20] It is well established that a party may lose the benefit of legal professional privilege, including litigation privilege, by its conduct in the course of litigation in relation to the privileged material. As it is of the essence of privilege that the material to which it attaches is confidential, where a party’s use of the material destroys that confidentiality, even if unintentionally, or is inconsistent with the party legitimately continuing to assert it, the privilege is treated as waived. The principle underlying this concept of unintentional implicit or imputed waiver is stated in a frequently cited passage in Wigmore on Evidence (McNaughton ed 1961) Volume 8 para 2327:

In deciding it, regard must be had to the double elements that are predicated in every waiver, i.e., not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point his election must remain final.

[21] The leading case of Attorney-General for the Northern Territory v Maurice and others [1986] HCA 80; (1986) 161 CLR 475, a decision of the High Court of Australia, was concerned with waiver of privilege in a “Claim Book”, which claimants were required to lodge in proceedings brought before the Aboriginal Land Commissioner claiming traditional ownership of land: In essence the Claim Book was a statement of the claimants’ case for use in the proceeding. It gave particulars of the claim and went into considerable historical, anthropological and ethnological detail in support of them. The principal issue in the High Court of Australia was whether by lodging the Claim Book with the Commissioner and distributing it to parties, as required under the Commissioner’s procedural directions, claimants waived their legal professional privilege, in the Claim Book’s source materials and were required to disclose them. The Court unanimously held that there was no waiver of privilege in relation to the source materials used in preparing the book.
[22] Each of the judgments delivered by the members of the High Court in Maurice is of value in clarifying the concept of when the privilege is lost due to implied waiver. In the present context which, like Maurice, is concerned with waiver of litigation privilege, that of Dawson J is of particular assistance. Speaking of waiver by implication he said:

This is a difficult area of the law, but it is clear enough that an implied waiver may be required by fairness notwithstanding that it was not intended. It would not be fair to allow privilege to be waived with respect to a portion of a document or a conversation without requiring disclosure of the rest of it, at least if the document or conversation dealt with the one subject-matter: see Burnell v British Transport Commission [1956] 1 QB 187 and Great Atlantic Insurance Co. v Home Insurance Co. [1981] 1 WLR 529. So much may be obvious, but legal professional privilege is concerned with protecting the confidentiality of a relationship and if that confidentiality is abandoned by a particular disclosure it may be necessary in fairness, whether further disclosure was intended or not, to require disclosure extending beyond the particular communication: see Wigmore on Evidence (McNaughton rev. 1961) vol. VIII, par. 2327. The cases are not entirely consistent and perhaps what is fair by way of disclosure must ultimately depend upon the relevant circumstances.

See also Gibbs CJ at p481, Mason and Brennan JJ at pp487-488 and Deane J at p493.

[23] As France J observed in the High Court of Australia’s subsequent decision in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 the joint judgment of Gleeson CJ, Gaudron, Gummow and Callinan JJ elaborated on the test as stated in Maurice, in relation to the basis on which the fairness criterion is relevant. The judgment emphasised that it is “inconsistency between the conduct of the client and maintenance of the confidentiality which effects waiver of privilege” and that what brings about the waiver is the inconsistency which the Courts, “where necessary informed by considerations of fairness, perceive between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large”. (para 29 emphasis added).
[24] In New Zealand the leading discussions of implied waiver of privilege appear in the High Court decisions in three cases discussed in the High Court judgments in this case. Equiticorp Industries Group Ltd v Hawkins [1990] 2 NZLR 175 concerned lawyer-client privilege, though the document in issue was an investigative report going beyond provision of legal advice on supplied facts. The plaintiffs had filed an affidavit by the author of the report in opposition to an application for security for costs. It referred extensively to the character of the author’s investigation and asserted that certain facts alleged in the pleading of the litigation were correct. In those circumstances Wylie J held that privilege in the report had been waived. He cited Deane J’s view in Maurice that waiver by implication of law is based upon notions of fairness, but helpfully added:

Legal privilege like every other privilege carries with it obligation, and must not be abused. If it is abused it is likely to be lost (p181).

[25] This indicates that Wylie J saw the test of fairness as governed by the content of the privilege itself. The plaintiffs had used a selective part of the report for the purpose of adding weight to their opposition to the application for security. The use to which the affidavit had been put was an abuse of privilege. Whether the content of the report was so clear-cut had been put squarely in issue. Considerations of fairness demanded that the whole document be disclosed, to ensure that it was accurately summarised in the affidavit (p182).
[26] Gallen J distinguished Equiticorp Industries in Cory-Wright and Salmon Ltd (in receivership and liquidation) v KPMG Peat Marwick (1992) 5 PRNZ 518, another case concerning security for costs. The second plaintiff, who was a liquidator, had filed a notice of opposition stating that he had good grounds for the application having regard to the legal advice which he had received. After referring to Maurice, Gallen J held that waiver will be imputed:

...where the person entitled to claim it uses protected material in such a way as to give rise to unfairness in the resolution of the proceedings if that material is not available to the other side for assessment and to answer (p521).

[27] As Gallen J saw it the question was one of degree (p522). The rationale was that waiver “is an illustration of the natural justice principle that the material which a party faces must be available to that party so that it has the opportunity to answer it” (p521). Gallen J, however, rejected the claim that fairness required disclosure in those particular circumstances. Although the second plaintiff was using the fact that he had taken advice to indicate that he was acting appropriately, he had not put the content of that advice in issue (p522):

I accept that by placing some reliance on the fact that advice has been obtained, the second plaintiff could be said to have come within the ambit of the formulation of the principle as it appears in the decision of Deane J in A-G v Maurice (supra), but I think those comments need to be considered in context. There is nothing intrinsically unfair in saying “I have brought these proceedings because I have obtained legal advice to support such action.” That must apply in almost every case.

[28] By contrast, legal professional privilege was held to have been waived in Tau v Durie. In that case, the plaintiffs sought judicial review of what they said was a decision by the Waitangi Tribunal to suspend consideration of their claim indefinitely. The first defendant, who was the presiding member of the Tribunal, claimed privilege in a legal opinion relating to his powers when not sitting on a particular claim. His statement of defence referred to the existence of the opinion. In response to allegations of acting on an improper purpose, predetermination, bias and unreasonableness, the defendant asserted that he had relied upon the opinion. Although no express reference was made to the content of that advice, McGechan J nonetheless held that the privilege had been waived. In a passage we have already cited he said:

It is all in the end a matter of fairness. A party cannot expect to put forward the existence of legal opinion, with inference invited as to favourable content, or part of a legal opinion which is favourable, and refuse to disclose the opinion document, or the remainder of it, so enabling the position to be checked. If a party positively advances it, the party must disclose it (p194).

[29] McGechan J held that on the facts, the privilege had been waived, because the reference was being used to support an inference that the first defendant had been advised of his powersas presiding member, and to emphasise the bona fides of the defendant (pp194-195). A shift in approach can be discerned over these three judgments. Whereas Wylie J emphasised the need for an “abuse” of privilege, the subsequent decisions are reasoned more broadly by reference to notions of fairness. Tau v Durie in particular may go too far in this respect. While it might be said that it is unfair in the abstract for a party to blow hot by making such a claim, while blowing cold on disclosure, the reference to the advice was arguably not inconsistent with the maintenance of confidentiality in its contents. That indeed is the view reached by Gallen J in Cory-Wright and Salmon.
[30] The fairness factor has, however, rightly been treated as of particular importance in cases where partial disclosure of legal advice raises questions over whether natural justice requires disclosure of the whole advice. In the end, however, as Mann v Carnell makes plain, it is the court’s objective judgment as to the consistency of the conduct with maintaining the privilege which must be assessed in all the circumstances. That requires close analysis of the particular context: what is the issue in relation to the privilege; how does the evidence relate to that issue and is there inconsistency that could lead to injustice if the privilege is upheld. The weight to be given to fairness in the Court’s exercise of judgment will differ according to the circumstances including the character of the privilege it is said has been waived which, as in this case it is litigation privilege.
[31] Litigation privilege is a branch of legal professional privilege which is distinct from the lawyer-client privilege. Although sharing the general purpose of legal professional privilege of promoting the sound administration of justice, litigation privilege is justified by a distinct public policy consideration. It is that the effective conduct of litigation in an adversary system requires that parties and their lawyers be free to conduct their preparations for litigation in the confidence that they will not have to disclose material they gather, including that from third parties, to their opponents. Litigation privilege is not directly concerned with promoting the lawyer-client relationship as such (McNichol Law of Privilege 1992 pp46-52). As the Law Commission has put it litigation privilege “does not protect private secrets but only the process of collecting evidence.” (see discussion by the Law Commission in “Evidence Law: Privilege” (NZLC PP23 1994 paras 89-99). Although the introduction of case management to the adversary process of litigation has impacted on the premise on which the privilege is based, litigation privilege clearly remains part of our law. The leading case defining the scope and affirming the continuing place of the privilege in New Zealand is Guardian Royal Exchange Co Ltd v Stuart [1985] 1 NZLR 596. It was, furthermore, the Law Commission’s considered view in its final report that it should continue to do so substantially in its present form. (Evidence NZLC Report 55 – Volume 1 paras 316 and 317).

The High Court’s approach to the review

[32] We next consider the Judge’s approach to review of the Master’s decision. Section 26P of the Judicature Act 1908 gives a party affected the right to apply for review of an order or decision made by a Master in Chambers. The High Court Judge “must review the order or decision in accordance with the High Court Rules” and “may make such order as may be just” (s26P(1)). The nature of the review is prescribed by Rule 61C (4) (4A) (4B) and (5) as substituted and inserted in 1999 (R6 High Court Amendment Rules 1995 (SR 1999/334). They provide:

61C – Review of Masters –

...

(4) A review under section 26P(1) of the Act of an order or decision proceeds as an appeal by way of rehearing, if the order or decision-

(a) Was made following a defended hearing; and

(b) Is supported by recorded reasons.

(4A) If subclause (4) does not apply to an order or decision that is to be reviewed under section 26P(1) of the Act, the review proceeds as a rehearing de novo.

(4B) A Judge who reviews an order or decision in accordance with subclause (4) may, in his or her discretion, rehear the whole or any part of the evidence, or may receive further evidence, if the Judge thinks that the interests of justice so require.

(5) A Judge who reviews an order or decision in accordance with subclause (4A) may give the order or decision such weight as the Judge thinks appropriate.

[33] It is axiomatic that the nature of a right of appeal turns on construction of the legislation or other instrument conferring the right. That will determine the important question of the extent to which a particular decision appealed against can be reviewed in the appellate process. Following the introduction to the High Court Rules in 1987 of provisions relating to the jurisdiction and powers of Masters of the High Court different views arose as to the nature and thus the extent of the original provision in R61C for the review by Judges of the High Court of decisions of Masters in Chambers. The issues in the debate, which centred on whether the review under R61C was de novo or of lesser scope, especially where the Master’s decision turned on exercise of a discretion, are helpfully surveyed by Fisher J in Wilson v Neva Holdings Ltd [1994] 1 NZLR 481. The substitution in 1999 of the current provisions in R61C cited above can be seen as the response of those responsible for making rules regulating the practice and procedure of the High Court. Rule 61C now specifies when the s26P review proceeds as an appeal by way of rehearing, and when as an appeal de novo.
[34] That distinction between two forms of appeal is well known in New Zealand legislation. There are discussions of their different scope, in the context of particular legislative provisions, by Cooke P in Shotover Gorge Jet Boats Ltd v Jamieson [1987] 1 NZLR 437, 441 and Greig J in Auckland Bulk Gas User Group v Commerce Commission [1990] 1 NZLR 448, 458 HC It is sufficient on this aspect to refer to a passage in the former judgment. Speaking of the legislative provision in the District Courts Act for a general appeal to the High Court by way of rehearing on the review of the lower court’s evidence, with a discretionary right to hear further evidence, Cooke P said:

In that class of case the appellate Court makes the customary allowance for any advantages that the Court or tribunal appealed from may have had in seeing and hearing the witnesses. It is also customary in such cases to exercise restraint in interfering with discretionary decisions. The authorities as to the traditional constraints on appellate review in this area are numerous and some are very well-known. In practice an appellate Court which has not seen and heard the witnesses is slower to disturb a discretionary decision of a Court that has had that advantage; stress is laid on the need to show that the decision under appeal was wrong (at p441).

The principle that an appellate court exercises restraint in interfering with discretionary decisions is of course long established and is not confined to cases where the tribunal appealed from has heard and seen witnesses: eg. Hawkes Bay Farmers Meat Co Ltd v Meehan [1960] NZLR 114, 119 CA per North J; and more recently Alex Harvey Industries v CIR [2001] NZCA 356; (2001) 15 PRNZ 361, cited by Mr Upton QC for the Commission.

[35] The policy of the 1999 changes to Rule 61C was to specify when the review would proceed as a fresh appellate hearing with a discretion as to the weight given the Master’s decision, and when it would proceed as a rehearing having particular regard to whether the decision below was wrong. Rule 61C(4) applied in the present case and France J was required to and did treat the review of the Master’s decision as an appeal by way of rehearing. As the Judge said, the appellants accordingly assumed the burden of demonstrating that the Master’s decision was wrong. However the Judge also took the view that whether the effect of the Commission’s disclosures amounted to waiver of privilege was a question of discretion so that the appellants also had to show the Master had applied wrong principles of law or reached a plainly wrong decision.

Was this a discretionary decision?

[36] In his argument on behalf of the appellants in this Court Mr Brown QC accepted that the Judge’s approach was correct provided that the Master’s decision was discretionary in nature. He submitted, however, that it was not and that as a result the approach that the Judge took in reviewing the Master’s decision was narrower than that to which the appellants were entitled in a review proceeding as an appeal by way of rehearing under R61C.
[37] It is by no means easy to define when the process of applying the law to the facts is the exercise of a discretion. The difficulty of this question of characterisation is brought out in the discussion in K J Keith “Appeals from Administrative Tribunals” (1969) 5 VUWLR 123, 134-153. The contrast is sometimes described as being between the exercise of a discretion and a finding based on evidence, as in Merck & Co Inc v Pacific Pharmaceuticals Ltd [1990] 2 NZLR 55, 58 CA, a case cited by Mr Brown. A key indication of a discretion is whether the area for personal appreciation by the first instance court or decision maker is large (Keith op cit p135). In the context of the orders and decisions of Masters, whether the interests involved in a particular matter are purely procedural, or concern wider issues of principle in relation to the application of the law to the facts, will also be relevant to whether a decision is discretionary in nature. In the latter type of case it may more readily be seen that ultimately only one view is legally possible, even if there is scope for considerable argument as to what it is. If that is the case the decision maker does not have the margin of appreciation inherent in discretion.
[38] In this judgment we have concluded that whether legal professional privilege has been waived by the conduct of the holder in the course of litigation turns on whether, in all the circumstances, that conduct is inconsistent with maintaining the confidentiality of the privileged material in a way that could lead to injustice if the privilege is upheld. Considerations of natural justice and fairness will often be of great importance to that question but in some circumstances they will be of less importance. In applying the test, the judicial decision required as to whether privilege has been waived is not appropriately characterised as exercising a discretion. It is rather reaching a finding on the evidence, involving a judgment as to important competing values, in which generally only one view will be legally correct. It follows that a review of a Master’s decision on implied waiver of privilege under s26P of the Judicature Act, where Rule 61C requires the review proceed by way of rehearing, should not proceed on the basis that the review of the exercise of a discretion is involved. The applicant for review accordingly must show the High Court Judge that the Master’s decision was wrong, but need meet no higher standard. That was not the test applied by the Judge.

Application of waiver principles in this case

[39] Mr Brown emphasised to us that Mr Thorn’s affidavit had not merely stated the fact that the Commission had reconsidered its case, having sought further advice. He had gone on to disclose the nature of the request to Mr Sundakov for a second opinion and the essence of the opinion given on the appropriate market in pleading the s27 cause of action. The motive for that disclosure of privileged material was certainly, as Mr Brown argued, to justify the Commission’s reversion to the view that the local market was the appropriate one. Whether it adds anything of material value is another matter. Mr Brown’s argument is that without reference to this newly obtained evidential support the Court might well be very sceptical at the Commission’s change of approach in considering whether to allow the present application to amend the statement of claim. He submitted that as the content of the economist’s opinion was disclosed, rather than the mere existence of an unspecified opinion, the appellants were entitled to be satisfied that disclosure had been complete. Otherwise incomplete disclosure of the privileged material risked injustice through a misunderstanding of its real weight or meaning. Mr Brown argued that once the content, as opposed to the existence, of the opinion was disclosed, the disclosure being of more than minimal significance, the privilege had been waived.
[40] It is common ground that privilege attached to the communications between Mr Sundakov and the Commission (or its legal advisers) in the course of obtaining his opinion on market definition and briefing his evidence. The privilege concerned is litigation privilege which attaches to preparations for litigation and covers communications between a party or its legal advisers and third parties made for the purposes of litigation. Such material, if of a confidential nature, and obtained by or for submission to legal advisers in anticipation of or for the purposes of litigation, is privileged from inspection by opposing parties. Where there is more than one purpose for which the material has been obtained the dominant purpose must be to enable the legal adviser to conduct and advise regarding the litigation if the privilege is to apply. The rule directly applicable in the present circumstances was stated by James LJ in Anderson v Bank of British Columbia (1876) 2 Ch.D. 644, 676 to be that:

...as you may have no right to see your adversary’s brief, you have no right to see that which comes into existence really as materials for the brief...

[41] Ultimately, under the processes of case management and in accordance with their policy, the briefs of witnesses to be called in the present case will be disclosed to opposing parties prior to trial. That will not however of itself destroy the confidentiality of privileged material associated with their preparation. Nor does the use of that material for other purposes prior to trial necessarily involve any unfairness or breach of natural justice indicating a use inconsistent with maintaining the privilege.
[42] In our view the analogies drawn in the appellants’ argument with the circumstances when a party discloses part of privileged legal advice while seeking to retain confidentiality in the remainder are misplaced. In the present case the appellants’ complaint is essentially that the Court hearing the application to amend the pleading will be told of the contents of an intended brief, to the Commission’s significant advantage, in its application to amend its pleadings. That use of privileged material on the High Court’s decision will be made without having to disclose at this point the brief itself or ever disclose the source communications made with the witness in the briefing process. It is not however unusual for counsel to indicate to their opponents, prior to formally serving briefs, the content of the evidence they intend to call. By doing that for their own purposes they do not intend to nor, considered objectively, do they act in a manner that is inconsistent with maintaining their client’s privilege in material associated with the briefing process.
[43] In some circumstances such disclosures may be acts inconsistent with maintaining confidentiality of all privileged material. The mere fact that the disclosure is made to support obtaining the Court’s approval for taking a different approach in the litigation to the relevant market from one strongly but ultimately unsuccessfully taken previously does not, however, in itself amount to inconsistent conduct of a kind that could lead to injustice. We refrain from making any comment on the outstanding application to amend itself as it has not yet been dealt with by the High Court.
[44] Ultimately we are satisfied that in the circumstances presently before us the Commission has not acted in any respect inconsistently with the privilege attaching to its preparations for litigation while briefing the two economists is concerned or in respect of the actual brief of Mr Sundakov’s evidence that it proposes eventually to serve.

Result

[45] It follows that the Master’s decision, upheld by France J, was right. The appeal is accordingly dismissed. Bearing in mind that Mr Brown was successful on one part of his argument, although ultimately unsuccessful in persuading us that the outcome in the High Court was wrong, the order for costs in the High Court will stand, but we will make no order as to costs in this Court.

Solicitors
Bartlett Partners, Wellington, for appellants
P H Rainsford, Commerce Commission, Wellington, for respondent