Supreme Court of WA|2004-08-17

Buyquick.Com Ltd v Foxgold Pty Ltd (Acn 072 595 325) trading as Foxgold Communications and Algar Burns Computing [2004] WASC 180 (17 August 2004)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : BUYQUICK.COM LTD -v- FOXGOLD PTY LTD (ACN 072 595 325) trading as FOXGOLD COMMUNICATIONS AND ALGAR BURNS COMPUTING [2004] WASC 180

FOXGOLD PTY LTD (ACN 072 595 325) trading as FOXGOLD COMMUNICATIONS AND ALGAR BURNS COMPUTING

Practice and procedure - Application to compel production of a document referred to in an affidavit whether waiver of privilege - Turns on own facts

Attorney-General of the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475

Robinson v Adshead (No 1) (1994) 12 WAR 574

Buttes Gas & Oil Co v Hammer (No 3) (1980) 3 All ER 475

1 MASTER SANDERSON: This is the defendant's application seeking an order for production of an accountant's report. The application is brought pursuant to O 26 r 8(2). The defendant says that report is mentioned in an affidavit. It has served a notice requiring production of the report and the plaintiff has declined to produce the document. It is the defendant's position that the plaintiff has no good cause for not allowing inspection of the report and that an order should be made. To put the application in context it is necessary to say something, briefly, about the facts of the case and the way that the interlocutory steps have proceeded.

2 On the plaintiff's case as presently pleaded the defendant agreed to design two websites for the plaintiff (for the sum of $1,650) and agreed to "host" the websites (for the sum of $210 per annum). The plaintiff says that as a result of the defendant's services being deficient the plaintiff suffered loss. The damages presently claimed are just under $1.6 million. The damages case as pleaded involves making a number of assumptions and predictions about the plaintiff's trading performance. It is fair to say that the sum claimed is largely based on projections as to future sales and forecasts profits on those sales.

3 On 4 February 2004 I ordered the plaintiff to provide within 28 days particulars of inter alia the basis on which the damages were calculated. The plaintiff did not comply with that order. At a case management conference on 17 March 2004 the plaintiff was ordered to comply with the order for particulars by 7 April 2004. Again, the plaintiff did not comply. At a further case management conference on 5 May 2004 a springing order was made. The effect of that order was that unless the plaintiff complied with the order for particulars by 26 May 2004 the claim would be struck out, the action would be dismissed and judgment would be entered for the defendant with costs to be taxed. On 21 May 2004 the plaintiff filed an application to the case management Registrar seeking inter alia to vacate the springing order. The ground of the application was, in effect, that by reason of an accountant's report that had been completed on 20 May 2004 substantial amendments were necessary to the statement of claim, at least so far as the claim for damages was concerned. The affidavit in question was sworn by Harry Peter Gregory on 21 May 2004. It is this affidavit in which the accountant's report is mentioned. I will return to the specifics of the affidavit directly but before doing so I should complete the history of the matter.

4 On 24 May 2004 without hearing from the defendant, the case management Registrar made an order vacating the springing order. The plaintiff's application was otherwise adjourned. It is not entirely clear why the learned Registrar made the order he did. Perhaps it was due to the urgency of the matter. In any event, the order was made, no appeal has been brought against that order and the matter has moved on. The plaintiff has still not provided the particulars as ordered but has produced a minute of amended substituted statement of claim. That minute is dated 22 June 2004. There has been no agreement between the parties as to whether or not the minute ought stand on the amended statement of claim.

5 Returning then to Mr Gregory's affidavit, after outlining the history of the matter he refers to the defendant's request for particulars. He says (in par 8) that in the course of preparing answers to the requests it became apparent that the method of calculating the loss claimed by the plaintiff in the statement of claim "was no longer valid". He went on:

"9. Over 3 years have passed since the filing of the substituted statement of claim and the plaintiff's actual trading figures are now available to be used in the calculation of the plaintiff's loss.

10. The day before Registrar Rimmer made the springing order, the plaintiff instructed Accountants Stamfords to prepare a report on the losses incurred by the plaintiff which could be used as a basis to recalculate the plaintiff's losses.

11. The Stamford's report was completed on Thursday, 20 May 2004. The manner of calculating the plaintiff's loss has now completely changed and this will necessitate substantial amendments being made to the substituted statement of claim. A minute of proposed substituted statement of claim is attached to this application. The loss claimed by the plaintiff is now based on actual trading figures."

6 It was the defendant's submission that the reference to the report in Mr Gregory's affidavit amounted to a waiver of privilege. Thus it was no longer open to the plaintiff to assert that it was protected from having to produce the report because the report was prepared for the purposes of litigation. Furthermore, it was not just a matter of Mr Gregory referring to the existence of the report in passing. The purpose of the affidavit was to support an application to set aside a springing order. To obtain such an order it was necessary to satisfy the Registrar that the methodology for calculating the plaintiff's alleged loss found in the statement of claim was no longer valid. That in turn would mean that the particulars ordered should not now be provided. Counsel submitted that even though the Registrar had not seen the accountant's report it was clear that the application was actually based upon the report itself. It was said that in those circumstances the report ought to be produced.

7 On behalf of the plaintiff it was not seriously argued that privilege had not been waived. Indeed, this may be a case where there is an explicit waiver of the privilege. It is difficult to see how par 8, par 10 and par 11 could do otherwise than waive privilege. If that is not correct, there has been an implied waiver of privilege.

8 The circumstances in which a waiver of privilege will be implied have been considered by the High Court in a number of cases including Attorney-General of the Northern Territory v Maurice [1986] HCA 80; (1986) 161 CLR 475, Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83 and Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1. In Mann v Carnell the majority (Gleeson CJ, Gaudron, Gummow and Callinan JJ) put the position as follows (at 13):

"Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of confidentiality which the privilege intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is 'imputed by operation of law'. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. ... What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large."

9 In my view, there is a clear inconsistency in this case between the plaintiff attempting to maintain confidentiality in the accountant's report while at the same time using that report as the basis for setting aside a springing order. It must be remembered that as at 21 May the defendant was within a hare's breath of having the claim against it dismissed. The plaintiff had consistently failed to comply with an order to provide particulars. To have that order set aside in the circumstances, undoubtedly, required a convincing argument so that the Registrar could be persuaded to set aside the springing order. The accountant's report was central to the plaintiff's application. In the circumstances there should be implied a waiver of any privilege.

10 That then leads to the second question. Should the production of the accountant's report be ordered under O 26 r 8(2)? The rationale for the rule at least so far as pleadings are concerned is that reference to the document has the same effect as if the document was fully set out in the pleading: see Robinson v Adshead (No 1) (1994) 12 WAR 574. The position is not quite the same with an affidavit. That is particularly the case when the affidavit is for use in interlocutory proceedings and a deponent need only state his belief provided he sets out the basis of that belief: see O 36 r 7. But, nonetheless, the rule requires production of a document referred to in an affidavit and if it is not produced it is up to the party served with a notice under r 8(2) to show good cause why it is not being produced. Thus, it is the plaintiff in this case who must establish that there is good cause why the accountant's report should not be produced.

11 In my view, they have not discharged that onus. As I have set out above the accountant's report was central to the plaintiff's application to have the springing order set aside. Mr Gregory's affidavit supported that application and his affidavit makes clear that reliance was placed on the accountant's report. Whatever now may be the status of that report - and it is the plaintiff's position that it has been overtaken by a later report - the defendant is entitled to see it and to analyse what it says. Accordingly, I will order that the plaintiff produce the accountant's report for inspection.

12 I will hear the parties as to the precise form of orders and as to costs.

Buyquick.Com Ltd v Foxgold Pty Ltd

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Buyquick.Com Ltd v Foxgold Pty Ltd (Acn 072 595 325) trading as Foxgold Communications and Algar Burns Computing [2004] WASC 180 (17 August 2004)

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