Articles  |  April 2025

Privilege Upheld: Federal Court affirms litigation shield in Mitsubishi Class Action

By: Rosemary Kanan and Lily Kitteringham

The Federal Court has reinforced the strength of legal professional privilege (‘LLP’) in the commercial litigation context, dismissing an interlocutory application against Mitsubishi Motors. On 14 March 2025, the Court handed down its decision in Holt v Mitsubishi Motors Corporation [2025] FCA 191, dismissing a challenge to a claim for LLP over documents central to a consumer class action. The Court’s ruling confirms that internal corporate documents, including those embedded within larger reports, are protected by LLP when created for the dominant purpose of existing or anticipated legal proceedings.

Background:
The dispute stems from a class action brought by Benjamin Holt and Jason Teuma against Mitsubishi Motors Corporation (MMC) and its Australian subsidiary, Mitsubishi Motors Australia Limited. The Applicants, representing consumers who purchased Mitsubishi Triton Utes between 1 May 2015 and 25 November 2021, alleged that the vehicles’ fuel consumption labels were misleading due to improper testing procedures.

The Applicants sought access to internal Mitsubishi documents related to fuel consumption testing. The evidence revealed that Mr. Shirakawa, a corporate officer and general manager in MMC’s engineering division, had directed the creation of these documents during another litigation before Australian courts and after recognising potential litigation risks. Accordingly, he engaged colleagues to compile and analyse testing data, leading to the production of three key categories of documents:

1. Emails and attachments exchanged between Mr. Shirakawa and MMC employees.
2. PowerPoint presentations prepared for internal review.
3. Embedded documents contained within these presentations.

The Applicants argued that the documents were part of standard internal investigations rather than litigation focused materials. MMC, however, maintained that the documents were prepared specifically in anticipation of legal proceedings.

When does privilege apply?

The key issue before the Court was whether the documents, including embedded copies of non-privileged material, were protected by litigation privilege. The Applicants challenged the assertion, arguing that:

1. The documents were not created for the dominant purpose of litigation.
2. There was no litigation on foot or reasonably apprehended at the relevant time.
3. Even if the litigation existed, MMC was not a party to earlier proceedings and could not claim privilege over documents prepared in anticipation of a separate class action. 
4. Embedded non-privileged documents did not automatically become privileged.

In contrast, MMC maintained that the documents were created specifically to prepare for, or respond to, litigation. Central to their position was evidence from Mr Shirakawa, who led efforts to prepare litigation-focused materials in response to an earlier case (the Begovic proceeding in the Victorian Civil and Administrative Tribunal) and the clear threat of a broader class action. The Court relied on common law principles to conclude that LLP extends to documents created in anticipation of litigation, provided there is a real prospect of legal proceedings, rather than just a hypothetical or remote possibility.

The Court’s findings:

Ultimately, Justice Raper sided with the Respondents, holding that the documents, embedded or otherwise, were created for the dominant purpose of litigation. The Court accepted Mr. Shirakawa’s testimony that MMC was actively preparing for legal proceedings when the documents were produced. Even if the Applicants’ interpretation of privilege was correct, the Court found that MMC had reasonably apprehended litigation, further reinforcing its claim.

Crucially, the Court dismissed the argument that MMC could not assert privilege because it was not a party to previous litigation. Given Mitsubishi’s global structure and the technical nature of the allegations, the Court recognized MMC’s direct involvement in legal strategy.

Regarding the Applicants’ claim that embedded documents lost their privilege, Justice Raper identified that when non-privileged materials are incorporated into privileged documents for the dominant purpose of litigation, they too become privileged.

As a result, the Court dismissed the Applicants’ motion for production and ordered them to pay MMC’s legal costs.

Commercial implications:

This decision offers timely reassurance for corporations managing litigation risk in an era of sprawling data sets and cross-functional document flows.

The case reinforces the need to:

1. strategically manage document creation during anticipated disputes;
2. ensure that litigation-focused communications are carefully isolated;
3. maintain contemporaneous records supporting claims of privilege. 

As class actions and regulatory scrutiny continue to rise, the ability to safeguard sensitive legal communications will remain a cornerstone of effective corporate defence.

For more information contact Rosemary Kanan.

This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice and should not be relied upon as legal advice. Formal legal advice should be sought in relation to particular transactions or on matters of interest arising from this communication.

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