The legislation - the Evidence Act
27Part 3.10 of the Evidence Act provides some of the law concerning the availability of various privileges in court procedures. That Part runs from s 117 to s 134 inclusive. Division 1 runs from s 117 to s 126.
28Section 117(1) provides:
"confidential communication means a communication made in such circumstances that, when it was made:
(a) the person who made it, or
(b) the person to whom it was made,
was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law."
29Client legal privilege arises under ss 118 and 119:
"118 Legal advice
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication made between the client and a lawyer, or
(b) a confidential communication made between 2 or more lawyers acting for the client, or
(c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person,
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.
119 Litigation
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:
(a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or
(b) the contents of a confidential document (whether delivered or not) that was prepared,
for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party."
30Loss of client legal professional privilege is covered in s 122. It reads:
"(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.
(3) Without limiting subsection (2), a client or party is taken to have so acted if:
(a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or
(b) the substance of the evidence has been disclosed with the express or implied consent of the client or party.
(4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.
(5) The client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because:
(a) the substance of the evidence has been disclosed:
...
(iii) under compulsion of law ..."
31Section 131A(2) defines "disclosure requirement" as including pre-trial discovery.
32As can be seen from s 118, in order for evidence to be protected by client legal professional privilege, the plaintiff must demonstrate that the communication or the contents of the document was confidential.
33In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 (at [9]) the High Court held:
"it is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person to resist giving of information or the production of documents which would reveal communication between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings."
34The purpose for which a communication is made or a document is created is a question of fact which must be determined objectively, having regard to all of the evidence: Esso Australia Resources Ltd v Commission of Taxation [1999] HCA 67; (1999) 201 CLR 49; In the Matter of Southland Coal Pty Ltd (Rec and Mgrs Apptd) (In Liq) [2006] NSWSC 899.
35Ms Jayne Gurney is the Manager (Legal and Recovery) employed by the Bank. She deposed (Aff, 1/11/2012 at [26]) that the "comment logs" are utilised by the Bank to maintain a complete and accurate record of the Bank's collections activity in respect of delinquent loans and are to be used by the Bank for the predominate purpose of assisting its legal representatives in providing legal advice in circumstances where the Bank is undertaking its ordinary collections activity; and/or in anticipation of any proceedings that may arise during the course of the Bank's ordinary collections activity.
36At [33] Ms Gurney deposed that: "No steps were taken by the defendants' legal representatives to contact Galilee Solicitors to ascertain whether or not there had been a mistaken and inadvertent disclosure of the Comment Logs." The email dated 28 September 2011 from the then Bank's solicitors Galilee Solicitors requesting documents for discovery was sent to Ms Gurney (amongst others) and stated, "let us know if you have any objections to the inspection of any of the documents by the defendants". The comments logs must have been furnished by the Bank to Galilee Solicitors. In her affidavit Ms Gurney does not say whether she had any queries about supplying the comments logs nor whether there were any phone conversations between her and Ms Griffiths, from the Bank, and Mr Makura regarding any concerns he may have had. Her affidavit is silent as to her response to the email dated 28 September 2011.
37It is not known whether or not Mr Makura carried out a review of the documents and came to the conclusion that the comments logs did not attract a claim for client legal professional privilege. However, there is nothing to suggest that this process outlined in the emails of 28 and 29 September 2011 was not followed at the time the documents were being compiled for production. Rather it appears that Ms Gurney has now decided that the comments logs may have been confidential and subject to client legal professional privilege.
38The comment logs cover the period between 29 November 2010 to 16 September 2011. I have reviewed these documents. They refer, inter alia, to file notes of conversations between a bank officer and Aristides Stamatis, to the amount in arrears as at a certain date, and to the history of the progress of these court proceedings. While Ms Gurney says the predominate use of these comments logs are for the purpose of legal proceedings, I cannot agree. The comments logs are not documents of the type that refer to legal advice given by their solicitors to the Bank nor do they relate to the Bank seeking legal advice from the solicitors. The most that can be said is that some of the later comments logs recorded notes of the solicitor's reports of these proceedings (for example an entry on p 278, where it is recorded that instructions were sent to solicitors to issue a statement of claim). The predominate purpose of the comments logs do not appear to be for the purpose of legal proceedings. It is my view that the comments logs do not contain confidential communications. Hence they are not the subject of client legal professional privilege.
39If I am wrong, I shall consider whether the Bank waived client legal professional privilege and its ramifications. The Bank's position is that the comment logs were mistakenly and inadvertently disclosed to the defendants by the conduct of the Bank's former legal representatives, acting without the instructions of the Bank. Ms Gurney says that adequate steps were not taken to assess whether the comment logs should be produced or whether objections should be raised with respect to the request for production. As a result, the Bank has now instructed Gadens that it maintains its claim for client legal professional privilege over the comment logs.
40The Bank submitted that in accordance with that policy, the Bank did not intend and did not give any instructions to Galilee Solicitors to produce the comment logs to the defendants for inspection, nor did it intend to give any instructions to Galilee Solicitors that such privilege as contained in the comment logs was intended to be waived in these particular circumstances.
41The defendants submitted that any privilege that might previously have subsisted in the documents was waived when the documents were produced to the defendants' solicitors and subsequently placed in the defendants' evidence.
42Counsel for the Bank referred to Australian Competition and Consumer Commission v Cathay Pacific Airways Ltd [2012] FCA 1101 and submitted that it did not intend to waive legal professional privilege. In Cathay Pacific Airways, the solicitors for Cathay Pacific inadvertently disclosed communications. Importantly, it did not reflect any intention of Cathay Pacific that the communications be disclosed or the privilege in them be waived. Buchanan J made a finding that the disclosure of the communications should not be seen as the result of deliberate conduct of Cathay Pacific or its solicitors. At [17] to [21] his Honour stated:
"[17] In a case where disclosure of a privileged communication was the result of a deliberate act, even if that act was not intended to waive privilege, little difficulty may arise in deciding that privilege has been lost (see, by way of guidance, the examples given in Mann v Carnell at [28] and [29], which are not included in the passages set out earlier). Individual examples of that sort fall readily enough into a class of case identified by a Full Court of this court in Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 (Rio Tinto). The Full Court said (at [61]):
Both before and after Mann, the governing principle required a fact-based inquiry as to whether, in effect, the privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence. In DSE [(2002) 127 FCR 499] at [58], Allsop J put the matter somewhat more descriptively, saying waiver arises when:
the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication. (Emphasis in original.)
[18] At [65] the Full Court said:
...the question is not whether the Commissioner has put his state of mind in issue but whether he has directly or indirectly put the contents of the otherwise privileged communications in issue in the litigation, either in making a claim or by way of defence. Put another way, to adapt Allsop J's language in DSE, has the Commissioner (being the privilege holder) made an assertion as part of his or her case in the litigation that lays open the privileged documents to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege?
[19] On this analysis, the conduct which will waive privilege is either bringing a case which is in some way about (my emphasis) the contents of a confidential communication (that is not what has happened here) or bringing a case which lays open the confidential communication to scrutiny (my emphasis). ...
[20] However, it is not enough that a party which has, by chance, been provided with a confidential communication sees a way to turn it to some forensic advantage, or sees inconsistencies with some aspect of the case of its opponent, whether in the pleadings or the evidence. Such circumstances do not expose otherwise privileged communications to scrutiny (see also Boensch v Pascoe [2007] FCA 532 at [34]-[38] and the cases there cited). Moreover, the material for which privilege is claimed cannot normally be used to set up the inconsistency relied on. That would pre-empt the answer to the question for resolution. Nothing in the pleadings, or in the evidence, to which I was referred in argument exposes for scrutiny the content of confidential communications between Cathay Pacific and its lawyers. What has exposed those confidential communications to scrutiny is the inadvertent disclosure of them by solicitors for Cathay Pacific. That is not conduct of the necessarily quality. It does not meet the usual tests for implied waiver of privilege.
[21] The only possible exception to this approach might lie in the reservation by the High Court in Mann v Carnell of the possibility that some consideration of fairness might influence a conclusion about inconsistency between the conduct of a party claiming privilege and the maintenance of the privilege. I can see only two matters which might possibly deserve attention of this kind in the present case, although on analysis neither appears to me to fall within the limited reservation referred to in Mann v Carnell."
43In Cathay Pacific, the claim for privilege was upheld.
44Counsel for the defendants submitted that where the documents have been disclosed, the leading case on waiver and privilege in this Court is Armstrong Strategic Management and Marketing Pty Ltd v Expense Reduction Analysts Group Pty Ltd [2012] NSWCA 430. In Armstrong Strategic, during the discovery process the documents were inadvertently disclosed. The defendants' counsel submitted that these circumstances are relevantly indistinguishable from the present case.
45Campbell JA in Armstrong Strategic (with whom Macfarlan JA and Sackville AJA agreed) held that mandatory and prohibitory injunctions of the kind sought in the present case can only be supported by the law of confidential information (at [102] - [105]). Further, the Court of Appeal held that the relevant provisions of the Evidence Act do not give a party any entitlement to receive the documents back, nor do they provide any basis upon which a party could prevent its opponent from using the documents in the meantime (at [103]). Any privilege that might have attached to the documents is lost when the documents fall into the possession of the other party: see Australian Securities and Investments Commission v Lindberg [2009] VSCA 234; (2009) 25 VR 398 at [43], [51]; applied in Armstrong Management at [157] - [158] and [161].
46In Armstrong Strategic, Campbell JA at [165] - [166] stated:
"165 Rather, whether the injunctions should have been granted depended upon whether the circumstances in which the Disputed Documents were communicated to or obtained by the Armstrong Parties were such as to impose an obligation of conscience on the Armstrong Parties. One way in which such an obligation might arise is if the documents had been obtained by fraud, but there is no question of that having happened. Alternatively, if either Ms Marshall or Mr Armstrong realised that the documents were confidential and had been disclosed by mistake, that might suffice to impose such an obligation: Al Fayed v Commissioner of Police for the Metropolis [2002] EWCA Civ 780; [2002] All ER (D) 450 at [16] (vii) (a). However, it is not established that either of them had any such realisation.
166 Another way in which it might be imposed is if a reasonable solicitor in the position of Ms Marshall should have realised that the documents had been disclosed by mistake. The test of whether a reasonable solicitor would have realised that the documents had been disclosed by mistake has been applied in Herbert Smith at 149, Guinness Peat at 1045, DPP v Kane at 485, Meltend at 516, Trevorrow at [41], [147] and Al Fayed at [16] (vii). Even though that test had been referred to in the submissions of both sides, her Honour did not apply it."
47Counsel for the defendants submitted that if the Bank is to succeed, it is therefore necessary for it to demonstrate that the facts of the case fall within the requirements for an injunction restraining use of confidential information, as set out in Armstrong Management at [106]-[170], which applied AG Australia Holdings Ltd v Burton (2002) 58 NSWLR 464 at [141]. According to the defendants, the Bank must show that the documents have the necessary element of confidence which equity would protect, or at least that the documents are privileged; and that the circumstances in which the documents were communicated to the defendants were such as to impose an obligation of conscience on them.
48If the comments logs were privileged, the claim for equitable relief will turn on firstly, whether the documents were inadvertently produced; secondly, whether the defendants' solicitor should have known that the documents were inadvertently or mistakenly produced (ie whether it was an "obvious mistake"); and thirdly, whether other factors, principally delay, disentitle the Bank from relief.
49The defendants submitted that the Bank fails on each of these grounds because firstly, it is not established that the documents were inadvertently produced. As previously stated, it appears that both the Bank itself conducted a review of the documents, and then the Bank's solicitors were instructed to do so. It is my view that at the time the documents were produced, neither the Bank nor its solicitors considered the comments logs to be the subject of client legal privilege. The Bank's production of the comments logs was intentional and disclosure of their contents was voluntary. There is nothing other than the belated opinion of Ms Gurney to suggest that the documents were mistakenly produced. The comments logs do not have the obviously privileged character of some documents such as a misdirected brief to counsel (English and American Insurance Co Ltd v Herbert Smith & Co [1987] NLJ 148) or legal advice from the solicitors.
50Whether or not this Court would intervene had the documents properly been the subject of client legal professional privilege and had inadvertently been disclosed depends upon whether a reasonable solicitor in the position of the defendants' solicitor should have realised that the documents had been disclosed by mistake (Armstrong Management at [166]). In Grace v Grace [2010] NSWSC 1514 at [15] Brereton J, quoted with approval in Armstrong Management at [170], said:
"... the question is not whether the disputed documents were 'obviously privileged', but whether their disclosure was an 'obvious mistake'. These are quite distinct concepts, because a party may voluntarily disclose a privileged document for a myriad of reasons."
51The defendants' solicitor Ms Hughes, on receipt of the comments logs, did not regard them as containing legal advice flowing between the Bank and its solicitors because shortly after receipt of them on 4 April 2012, Ms Hughes referred to them (and attached copies of two of the comments logs) in correspondence to the Bank's solicitor. Those comments logs were also used to compile the defendants' affidavits which were sworn on 17 April 2012.
52The comments logs are not the sort of documents that a reasonable solicitor inspecting them would have then become aware that there had been an obvious mistake in their disclosure. In my view, equity would not intervene to protect "confidential information" in the present case, because a reasonable solicitor in the position of the defendants' solicitor, Ms Hughes, would not have realised there was a mistaken disclosure. This is because there was no "obvious mistake" that would give rise to the orders the Bank seeks in equity.
53I have already determined that the comments logs are not confidential communications and do not attract client legal privilege. Nor do I think that the comments logs were inadvertently disclosed. This is because at the time they were disclosed they were not regarded by the Bank and its solicitors as ones capable of being the subject of client legal professional privilege.