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Frucor Beverages Ltd v Rio Beverages Ltd

(CA 55/00, 22nd March 2001)

The appellant and respondent were fruit beverage manufacturers. The respondent marketed a beverage under the trade mark "c2" and the appellant intended to market a similar beverage in Australia under the trade mark. The respondent had issued proceedings alleging passing off, breach of the Fair Trading Act 1986, and conspiracy. As a result of a ruling by Williams J (reported at (1999) 9 TCLR 498), the appellant had been directed to produce for inspection certain documents, communications with its patent attorney relating to trade marks or applications for them. This was because the Court ruled that section 34 of the Evidence Amendment Act (No 2) 1980 does not confer statutory privilege for the patent attorney-client relationship in the same way that privilege exists between solicitor and client, that is, the client was not protected.

In 1977 the Torts and General Law Reform Committee presented a report on professional privilege in evidence law which recommended, among other things, that communications to and from patent attorneys be protected in the same way as communications between solicitor and client. This was a recognition that "a legal quality permeates all [a patent attorney's] work". When in 1979 the relevant Bill to amend the Evidence Act 1908 was introduced, the explanatory note began by saying the Bill implemented the committee's recommendations. It went on to say clause 41 (which became section 34) set out the privilege over communications relating to patents, trade marks, and designs but that it was "framed in a different manner" from what the committee had recommended. The explanatory note also said of the clause 41 privilege that "the Bill attempts to prescribe the privilege in its own terms".
Section 34 appears in Part III of the Evidence Amendment Act (No 2) 1980, dealing with the privilege of witnesses. Section 35 gives a general discretion to the Court to excuse a witness from breaking a confidence. In the High Court Williams J appeared to take the approach that sections 34 and 35 should be read together and provided a legislative scheme.

On appeal the appellant submitted that by implication section 34 did confer on such communications a privilege between client and patent attorney because it was the policy of the Act. The respondent submitted that the words of section 34 were incapable of any such meaning. However, the respondent did not claim legal professional privilege for the documents in issue and it was not disputed that the common law offered no protection in respect of communications between patent attorneys and their clients.

The Court of Appeal allowed the appeal, holding that a purposive interpretation is required to give effect to Parliament's will. A problem existed relating to the confidentiality of communications between patent attorneys and their clients. If the literal meaning of section 34 is adopted, Parliament will not have dealt with the problem or mischief giving rise to concern. Rather, it will have enacted a provision for which there is no sound rationale and which is anomalous, illogical, and futile in terms of Parliament's objective. No such absurd intention should be attributed to Parliament. Moreover, the practical consequences will be inconvenient and confusing, and Parliament should not be thought to have intended to create those consequences. The Court should also bear in mind that patent attorneys and their clients appear to have relied on and acted on the assumption that Parliament has done what it set out to do, and done what it said it was doing in the explanatory note to the Bill. The justification for a purposive interpretation is compelling.

The Court of Appeal held that while it is true that there are no particular words in section 34 which are ambiguous or obscure, in this case the purposive interpretation must be founded on the section read as a whole. The section must be read as implicitly giving clients protection against having to disclose the category of documents defined in section 34(4). It would frustrate Parliament's intended purpose not to give effect to it merely because there are no particular words or phrases that are ambiguous or obscure to which the purposive interpretation can be attached.