Commercial Litigation Update - May 2026

There have been two interesting recent Federal Court appeal decisions on legal professional privilege (LPP).

In Medibank, the Full Court dismissed Medibank’s application for leave to appeal against findings that LPP did not apply to three Deloitte reports prepared following a cyber incident in late 2022. 

The Full Court found no error in the primary judgment, in which it was accepted that the reports were commissioned for a legal purpose but not accepted that this was the dominant purpose when assessed objectively against the broader factual context, particularly having regard to Medibank’s: 

1. public statements regarding the engagement of Deloitte; and 
2. engagement with APRA concerning the terms of reference for Deloitte’s review. 

In Mastercard, the Full Court considered whether the filing of affidavits gave rise to a waiver of LPP. The affidavits did not disclose the contents of legal advice but addressed the state of mind of relevant decision makers. 

The Full Court also found no error in the primary judge’s findings that:

1. Mastercard waived LPP over underlying communications regarding the subject matter of the evidence – it was inconsistent for Mastercard to advance a positive case regarding the deponents’ knowledge while maintaining privilege over related communications; and 
2. the filing and serving of the affidavits was sufficient to give rise to a waiver – it was not necessary that the affidavits be ‘read’ at trial before waiver occurred.

See: Mastercard Asia/Pacific (Australia) Pty Ltd v Australian Competition and Consumer Commission [2026] FCAFC 37; Medibank Private Limited v McClure [2026] FCAFC 38.
See further: Australia: Briefing note - Medibank Private Limited v McClure [2026] FCAFC 38 

Intersection of artificial intelligence and LPP

While on the subject of privilege, several recent overseas court decisions have considered the interaction between the use of artificial intelligence tools and LPP. 
In the United States, recent decisions have gone in different directions. For example, in United States v Heppner, the Court found that: 

1. the communications were not privileged because they were not between a lawyer and client and were not confidential; and
2. the work product was also not privileged, because it was not prepared at the direction of counsel and did not disclose counsel’s strategy. 

By contrast, in Warner v Gilbarco Inc, the Court upheld a claim to LPP in connection with the plaintiff’s use of AI tools, in circumstances where it was not satisfied that the use of ChatGPT met the high bar required to prove waiver of work product protection. 

In the UK, the Upper Tribunal (Immigration and Asylum Chamber) recently delivered the first such decision by an English court or tribunal, in which it drew a distinction between public and private AI tools, finding that privilege will be lost where information or documents are uploaded to public facing tools, on the basis that doing so places the information or documents in the public domain.  

See: US v. Heppner, No. 25 Cr. 503 (S.D.N.Y.), Warner v. Gilbarco, Inc., No. 24 Civ. 12333 (E.D. Mich.); UK v Secretary of State for the Home Department (AI hallucinations; supervision; Hamid) [2026] UKUT 81 (IAC). 

See further: Privilege and AI: When AI-generated documents are not protected; US courts find privilege applies to use of public AI tools by self-represented litigants 

Court considers relevance of legal advice in determining civil penalty

Continuing with this theme, a recent Federal Court decision has taken the fact of legal advice into account in determining the appropriate civil penalty to be imposed.

The precise terms of the legal advice were not in evidence (and the company had declined to waive LPP) but the Court had before it a report which stated legal advice was obtained and that the company had made changes to its business model to trade “legally”. 

The Court found that the receipt of the legal advice (and the limited inferences that were available to the effect that it had been followed) did not, in the circumstances, exonerate the respondents from liability to pay a pecuniary penalty but accepted that it was nonetheless relevant in reducing the amount of the penalty which would otherwise be appropriate. 

The Court also rejected a submission that the contraventions were the result of deliberate or reckless conduct, principally based on the evidence that the respondents had obtained legal advice concerning compliance.  

See: ASIC v BSF Solutions Pty Ltd (Penalty) [2026] FCA 450 

Increased penalties for competition and consumer law contraventions

Still on civil penalties, the Treasury Laws Amendment (Doubling Penalties for ACCC Enforcement) Act 2026 (Cth) (Act) came into effect on 28 March 2026. 

The Act has amended the Competition and Consumer Act 2010 (Cth) (CCA) to increase the penalty from $50 million to $100 million for offences related to:

1. cartel conduct;
2. acquisitions under the new merger control regime; 
3. anti-competitive conduct; and 
4. various contraventions of the Australian Consumer Law such as unconscionable conduct and unfair practices. 

Additionally, the Act has increased the penalty under the CCA for anti-competitive conduct in the telecommunications industry to:

1. the sum of $100 million (previously $50 million) and $1 million for each day that the contravention continued; 
2. the sum of $121 million (previously $71 million) and $3 million for each day exceeding 21 that the contravention continued. 

See: Treasury Laws Amendment (Doubling Penalties for ACCC Enforcement) Act 2026 (Cth) 

Gathering foreign evidence in Australia: Supreme Courts refuse letters of request

The Supreme Courts of Queensland, New South Wales and Western Australia have each dismissed applications made under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (Hague Convention) which sought orders for the US-style deposition of witnesses residing in Australia. 

The Supreme Courts of Queensland and Western Australia accepted that there was jurisdiction to make the orders sought but declined to exercise the discretion to do so. Principally, that was because the requests were so broad that they could not be meaningfully interrogated in order for appropriate limits to be placed on the scope of the examination and would therefore be oppressive to the witnesses. 

By contrast, the Supreme Court in New South Wales did not accept that it had jurisdiction to make the orders. The Court was not satisfied that the requests were issued for the purpose of taking evidence for use at trial, as opposed to an investigation.

Australian courts commonly make orders in support of letters of request issued under the Hague Convention related to foreign proceedings. However, these decisions serve as a reminder the courts will not permit a fishing expedition for pre-trial discovery. 

See: CF Industries Sales LLC [2026] QSC 17; CF Industries Sales LLC v No Defendant [2026] NSWSC 123; CF Industries Nitrogen v Wijaya [2026] WASC 69.