Wonky privileges claim from News' lawyers

Murdoch's local lawyer-in-chief Ian Philip back in the news again ... This time threating action against anyone who publishes leaked internal News Corp documents about the poor health of its newspapers ... Last time Justinian mention Philip it was March 2005 and Justice Tamberlin was unimpressed with his "substantially excessive" claims of privilege in the C7 case ... From our bulging treasure trove of stories 

Ian Philip: criticised for overreaching claims of legal profession privilegeWHAT a towelling Brian Tamberlin handed out in the Federal Court to the in-house and out-house lawyers attending to the affairs of the Digger’s local Grub Street operations, News Ltd.

On Monday (February 28, 2005) he gave reasons for allowing Seven Network Ltd access to all but five of the 22 documents News Ltd claimed attracted legal professional privilege.

We know the Digger’s scrofulous hacks have been giving the judges a shocking time in his local tissues, so it was an interesting change to read a judgment boring it up the way affairs are conducted at the Holt Street newspaper shop.

The application by Seven was part of the gigantic trade practices litigation the TV network is taking against News, the House of Packer, Telstra, the National Rugby League, the Australian Football League and a dressing room full of others.

Seven says Murdoch, Packer, Telstra, et al, used their market power to remove competition from the pay TV market and that as a result C7 lost football broadcast rights and its business was destroyed.

Seven and Kerry Stokes want at least $700 million damages and the divestiture of the News and PBL shareholdings in Foxtel.

The discovery of documents is a crucial component of the litigation and the respondents are claiming as much privilege as they can muster.

Tamberlin J said that the evidence disclosed that privilege was originally claimed for some 283 of News’ documents. An affidavit to that effect was sworn by Ian Philip, News’ in-house counsel, and a respondent in the main proceedings.

Philip is quite a big cheese in the News’ factory. He’s a director and alternate director of six associated companies and a member of the NRL partnership executive committee. He has been deeply involved in negotiations concerning content sharing agreements and the broadcast of football matches.

Seven claimed that Philip was incapable of providing arms length legal advice to News and so lacked the independence to swear the affidavit claiming the documents are privileged.

Later the privilege claims made in respect of 83 of these documents were withdrawn.

Seven said that this indicated significant defects or inadequate consideration in respect of the original assessment of the documents in News’ claim of privilege.

Eight days before the dispute over a pile of 26 documents was to be heard by Tamberlin, Allens Arthur Robinson, for News, wrote to Seven to say that they no longer relied on the affidavit of verification sworn by Ian Philip six months previously.

The claim of privilege was also withdrawn in respect to four of the 26 documents.

On the same day (December 9, 2004) an affidavit of verification of the claim for privilege was sworn by Michael Ball of Allens [now Mr Justice Ball of the NSW Supremes], the firm’s “top analytical mind”. As Tamberlin put it:

“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.”

Seven gave notice that it required Ball for cross-examination whereupon, a day before the hearing by Tamberlin, Allens sent a fax to Freehills, for Seven, saying that it did not intend to rely on the second verifying affidavit that had been sworn by Ball seven days earlier. The judge noted:

“No previous intimation of non-reliance on Mr Ball’s affidavit had been given.”

Ball: affidavit in support of privilege not relied onA fresh list of documents was served after 5pm that day (December 16, 2004) and verified by Keith Brodie, a News Ltd company secretary.

Brodie clearly was brought in at the last moment. The judgment says he 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.

Brodie says he simply asked the four addressees of his inquiry (executives at News) whether everything in the affidavit was complete and had been disclosed.

Tamberlin J was not amused:

“Unfortunately, the discovery process in relation to the privilege claim indicates a failure, if not an unwillingness, to assist the court in resolving the privilege question.”

He went on:

“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 [Frosty T. Hughes], 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.”

According to the judgment, Brodie did not inspect any of the documents he was verifying were privileged. He relied on what he was told by Philip, but he did not detail what he was told. He did not ask to see any of the documents, nor did anyone tell him that he should inspect them.

The process of considering the list of documents and the affidavit took Brodie one hour, including four telephone calls of less than a minute each to company wallahs John Hartigan, Peter Macourt, Lachlan Murdoch and Ian Philip.

Brodie gave evidence that the only advice he had received was to make inquiries of these four as to whether there was anything else that should be disclosed.

At the time of the calls he did not have the documents in front of him, nor did he think the executives he was speaking to had the documents available to them at the time.

The list of documents verified by Brodie in the space of one hour comprised 260 foolscap pages, involving agreements, draft agreements, letters, faxes, emails, reports and board papers.

There was no opportunity for the company secretary in these circumstances to adequately satisfy himself that his verifying affidavit was true and correct.

No explanation was proffered as to the circumstances in which Brodie’s affidavit came to be sworn. Ball’s affidavit was not read. Philip had withdrawn his. The judge said:

“This is unsatisfactory in the extreme.”

Tamberlin also found “unsatisfactory” News’ submission explaining why Philip was concerned to avoid cross-examination at this stage.

“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.”

The judge added:

“In a context where there was a 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.”

Frosty submitted that Philip and Ball’s conduct was “evasive” and the procedure adopted for making the claim of privilege was “shoddy”.

In the end the judge found that five documents were privileged and the balance were not. There was a “substantially excessive” claim of privilege in respect of 17 of the 22 documents in contention.

On the evidence there had been unfounded claims of privilege in relation to 104 of the documents originally said by Ian Philip to be privileged.

Costs on an indemnity basis were awarded against the Digger’s camp.

Will this inflame his hacks to even greater indignation about the judiciary?

See also Philip's cross examination in Delaware proceedings: News lawyer couldn't sleep at night