THE PRINCIPLES
9 The relevant provisions of the Evidence Act are indeed ss 117, 118 but also 122 which relevantly provide as follows:
117 Definitions
(1) In this Division:
client includes the following:
(a) a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service);
(b) an employee or agent of a client;
…
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.
confidential document means a document prepared in such circumstances that, when it was prepared:
(a) the person who prepared it; or
(b) the person for whom it was prepared;
was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.
lawyer means:
(a) an Australian lawyer; and
…
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
…
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.
…
122 Loss of client legal privilege: consent and related matters
(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 paragraph (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) A 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:
(i) in the course of making a confidential communication or preparing a confidential document; or
(ii) as a result of duress or deception; or
(iii) under compulsion of law; or
(iv) if the client or party is a body established by, or a person holding an office under, an Australian law - to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held; or
(b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or
(c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.
(6) This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness's memory about a fact or opinion or has used as mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers).
10 It is common ground that a person claiming privilege must prove by admissible evidence the grounds of the claim. It would normally be expected that someone would produce evidence on oath or affirmation as to the purpose for which the disputed documents were created. It may, in an appropriate case, be open to the Court to examine the relevant documents to form a view as to whether the claim for privilege is properly made out. (Appropriately I think, no party in this proceeding has suggested such a course.)
11 A mere assertion the documents are privileged can never suffice because it is an inadmissible assertion of law. The claimant must set out the facts from which the Court can see that the assertion is rightly made (Gardner v Irwin. (1879) 4 Ex D 49 (at 53)). But there are a number of ways in which this might be done and regard should be had to all the circumstances in determining the correctness of the assertion. The claimant should expose 'facts from which the [Court] would have been able to make an informed decision as to whether the claim was supportable': National Crime Authority v S (1991) 29 FCR 203 per Lockhart J (at 211). Brereton J in Hancock v Rinehart [2016] NSWSC 12 (at [7]), noted that the evidence must reveal the relevant characteristics of each document in respect of which privilege is claimed and must do so by 'admissible direct evidence, rather than by hearsay'. In Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305, the Court of Appeal of New South Wales (Beazley P and Macfarlan JA) (at [29]-[34]) stressed that the facts in every case were different and that the remarks made in Hancock, particularly about hearsay evidence, should be construed to relate to inadmissible hearsay evidence, as distinct from admissible hearsay evidence (as the evidence is in this case). At [29]-[34], the Court said:
29 The respondents contended that in order to satisfy that onus, it was insufficient to rely on hearsay evidence. Rather, Hastie Group were required to adduce evidence of primary facts and had not done so. The respondents submitted, by way of example, that if privilege was claimed over a report to be provided to counsel, a statement to the effect, "[my] only reason for obtaining this report was because I wished to obtain it to provide to counsel, so that counsel could give me an advice", would be sufficient.
30 They further submitted that, on the evidence, it was apparent that the Report was prepared for the purpose of provision to CFA to assist in its decision as to whether to provide litigation funding. In other words, it was a report that went to the potential creation of the relationship.
Determination
31 In our opinion, Hastie Group has done enough to satisfy the onus they bore to establish that the Report is privileged. There are two principal reasons that have led us to that determination.
32 First, we consider that the respondents' contention as to the evidence required to satisfy the onus a claimant of client legal privilege bears raises the bar to a level that is not in accordance with the statement of the plurality in Grant v Downs in the passage set out above at [13].
33 We acknowledge that there are statements in the first instance authorities, and in particular, in Hancock v Rinehart (Privilege), which might be thought to support that submission. However, as is accepted, every case depends on its own facts and, as is stated by the plurality in Grant v Downs, there may be circumstances from which privilege may be established without the need for evidence of the detail that the respondents contend is required.
34 We are also of the opinion that the Court is not confined to the express statements made in support of the claim for privilege. The Court is entitled to draw inferences from other proved facts. That is of particular relevance in the present case.
12 Leeming JA refused to grant leave to appeal, but not for reasons which I would regard as being at all inconsistent with these observations of the plurality.
13 In relation to the topic of hearsay and inference, I would also respectfully agree with what was said by Rees J in Re Global Advanced Metals Pty Ltd [2019] NSWSC 1545, where claims for privilege were upheld (at [16]-[18]):
16 As to the proposition that evidence in support of a claim for privilege must be "admissible direct evidence, not hearsay", Brereton J referred to Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 at 503-4; [1997] HCA 3 where Brennan CJ made such a statement. I note that the Chief Justice's judgment in Propend is one of five majority judgments; the other majority judgments do not make a statement to like effect nor refer to the Chief Justice's reasons. Nor, of course, is there a strict dichotomy between admissible evidence, on the one hand, and hearsay, on the other: there is admissible hearsay evidence, such as business records. This is consistent with Brereton J's statement, at [35(2)] of Reinhart, that a claim must be made on "sworn direct evidence - not inadmissible hearsay or opinion" (emphasis added).
17 I do not think the Chief Justice had in mind in Propend to revise the application of the Evidence Act including in respect of interlocutory hearings. Although Propend was handed down in 1997, the judgment at first instance was decided before the enactment of the Evidence Act 1995 (Cth), and so was not argued with the present legislation in mind. In any case, the privilege claimed was in relation to search warrants and the source of the privilege was the common law. The question was whether allegations of improper purpose such as to displace a claim for privilege could be founded upon hearsay evidence rather than whether a claim for privilege can rest upon hearsay. The decision was final, not interlocutory, and section 75 of the Evidence Act would not have applied in any case. The matter at hand, by contrast, is interlocutory for the purposes of section 75, as it arises in the course of proceedings: see, for example, Kennedy v Wallace (2004) 208 ALR 242; [2004] FCA 332 at [110] ff. Consistently with this, the Court of Appeal in Rinehart v Rinehart envisaged the evidence on such an application might be given on information and belief: at [26]; see also Hastie Group Ltd (In Liq) v Moore (t/as Deloitte Touche Tohmatsu) (2016) 339 ALR 635; [2016] NSWCA 305 at [32]-[34].
18 Global Advanced Metals submitted that the solicitor's third affidavit did not fill the evidentiary lacuna having regard to Hancock v Rinehart and Propend, and had other deficiencies. Bearing in mind that the onus may be discharged "by reference to the nature of the documents supported by argument or submissions" (AWB v Cole), I consider that the evidence relied upon by Metallurg in toto is sufficient to establish a claim for privilege - albeit without the finesse and overwhelming force one may be accustomed to seeing in large, commercial litigation. The circumstances in which the affidavits were prepared may account for this: urgency, an overseas witness and a parallel substantive hearing. Global Advanced Metals agreed that I should inspect the documents in those circumstances, which I have done, so as to determine whether Metallurg's claim should be upheld under sections 118 and 119 of the Evidence Act.
14 I also note that a different perspective on hearsay evidence was given in Tavcol Pty Ltd v Valbeet Pty Ltd [2016] NSWSC 1002, where McDougall J said (at [36]-[37]):
36 Ms Painter also relied on what Brereton J had said in Hancock (Privilege) at [35(2)] - that there must be "sworn direct evidence - not inadmissible hearsay or opinion". She submitted, further that there should have been, but was not, "direct evidence… given by the person whose purpose is in question": Brereton J in Hancock (Privilege) at [32].
37 I do not accept that hearsay evidence may not be relied upon. The application is interlocutory in character. It is accordingly subject to s 75 of the Evidence Act, which renders admissible (although it says nothing about the weight of) hearsay evidence if there is evidence of the source:
75 Exception: interlocutory proceedings
In an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source.
15 I do not see any difficulty in production of the company's records by the liquidator in order to demonstrate and prove the facts on which a claim for privilege is asserted. Of course the hearsay evidence must be admissible hearsay evidence. In this instance, I am satisfied that it is admissible. As to whether the admissible evidence discharges the onus on the balance of probabilities, a number of matters may be taken into consideration. If clearly better evidence were apparently readily available, this would be a significant factor which might be taken into account against discharging the onus.
16 In McKenzie v Cash Converters International Ltd [2017] FCA 1564, Markovic helpfully set out relevant principles (at [61]-[67]) albeit dealing with a common law claim rather than a claim under the Evidence Act:
61 The following principles can be shortly stated:
(1) legal professional privilege "is a rule of substantive law and an important, indeed fundamental, common law right or immunity": DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 (DSE v Intertan) at [24];
(2) the privilege exists "to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers": Esso at [35];
(3) in the case of legal advice privilege, a confidential communication will attract the privilege if it was made for the dominant purpose of giving or obtaining legal advice: Esso at [61]; The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [9]. In AWB Ltd v Cole (No 5) (2006) 155 FCR 30 (AWB (No 5)) at [44(7)] Young J noted that the concept of legal advice is fairly wide and that "[i]t extends to professional advice as to what a party should prudently or sensibly do in the relevant legal context; but it does not extend to advice that is purely commercial or of a public relations character"; and
(4) the party claiming privilege bears the onus of proving that the communication was made or the document created for the dominant purpose of giving or obtaining legal advice, although there is no fixed or rigid rule as to the nature and content of the evidence that is required to discharge that onus: see Grant v Downs (1976) 135 CLR 674 (Grant v Downs) at 688-689 (per Stephens, Mason and Murphy JJ); and
(5) the Court retains a power to examine the documents for itself, "a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege": Grant v Downs at 689; Esso at [52]. In AWB (No 5) Young J said at [44(12)]:
The Court has power to examine documents over which legal professional privilege is claimed. Where there is a disputed claim, the High Court has said that the court should not be hesitant to exercise such a power: Esso; see also Grant v Downs at 689. If the power is exercised, the court will need to recognise that it does not have the benefit of submissions or evidence that might place the document in its proper context. The essential purpose of such an inspection is to determine whether, on its face, the nature and content of the document supports the claim for legal professional privilege.
62 As to the standard of proof required, in National Crime Authority v S (1991) 29 FCR 203 at 211-212 Lockhart J, with whom Keely J agreed, said that it was not sufficient for a party claiming privilege to merely assert that claim without exposing the facts on which the claim is based.
63 In Barnes v Commissioner of Taxation (Cth) (2007) 242 ALR 601; [2007] FCAFC 88 (Barnes) a Full Court of this Court (Tamberlin, Stone and Siopis JJ) considered the nature of the evidence required to establish a claim for legal professional privilege. At [18] their Honours said:
The authorities emphasise the need for focused and specific evidence in order to ground a claim for legal professional privilege. In Kennedy v Wallace (2004) 142 FCR 185; 213 ALR 108; [2004] FCAFC 337 (Kennedy), Black CJ and Emmett J reiterated the principles that verbal formulae and bare conclusory assertions of purpose are not sufficient to make out a claim for privilege: see also National Crime Authority v S (1991) 29 FCR 203 at 211; 100 ALR 151 at 158-60 (per Lockhart J); Grant at CLR 689; ALR 589 (per Stephen, Mason and Murphy JJ). Where possible the court should be assisted by evidence of the thought processes behind, or the nature and purpose of advice being sought in respect of, each particular document. The fact that generalised evidence is not challenged in cross-examination does not mean that such evidence must be accepted, particularly when it is as manifestly inadequate as it is in this case. As in Kennedy, mere general assertions of the purpose of creation of the documents are insufficient to discharge this onus. Even though in that case some evidence as to the purpose of particular records was adduced, Allsop J at [168] considered that the onus had not been discharged because the evidence did not permit a conclusion to be drawn as to the dominant purpose of the creation of any particular document or entry in a document. Simply to show that one purpose for creation of the document was to obtain legal advice or assistance is not good enough.
(original emphasis)
64 The application before me is interlocutory. It is well established that in an application of this kind it is open to follow the usual practice taken when receiving evidence in interlocutory applications and that s 75 of the Evidence Act applies: Kirby v Centro Properties Ltd (No 2) (2012) 87 ACSR 229; [2012] FCA 70 (per Bromberg J) at [14]; Morton v Bolinda Publishing Pty Limited [2017] FCA 187 (per Burley J) at [61].
65 Ms McKenzie's application raises the issue of whether there has been an implied or imputed waiver of the legal professional privilege that would otherwise attach to certain communications. In Mann v Carnell (1999) 201 CLR 1 (Mann v Carnell) a majority of the High Court (Gleeson CJ, Gaudron, Gummow and Callinan JJ) held at [29] that disputes as to implied waiver usually arise from the need to decide "whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect". Their Honours continued:
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.
66 In DSE v Intertan Allsop J, as his Honour then was, observed that:
(1) the principle in Mann v Carnell is the "overriding guiding principle" and "[t]he expression of that principle and the subordination of the notion of 'fairness' to possible relevance in the assessment of the inconsistency between the act and the confidentiality of the communication produces … an important change to the existing law" (original emphasis): at [14];
(2) it is important to recognise that legal professional privilege is a fundamental common law right or immunity in appreciating "the operation of inconsistency, as opposed to some more broad ranging notion of fairness informed, perhaps, by balancing of competing interests in the administration of justice": at [24]; and
(3) the "confidentiality is in the nature of an entitlement or a right to keep the communications immune from disclosure; it is acting inconsistently with it that destroys that fundamental entitlement" (original emphasis): at [24].
67 In Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 (Rio Tinto) a Full Court of this Court (Kenny, Stone and Edmonds JJ) said at [45]:
Where, as here, one party alleges that another has impliedly waived legal professional privilege, a court is bound to analyse the acts or omissions of the privilege holder that are said to be inconsistent with the maintenance of the privilege. In concluding that the Commissioner had waived the privilege in the eight contested documents, the docket judge in fact applied the "inconsistency" principle of Mann, as he was obliged to do: see Rio Tinto (2) at [20]. Plainly enough, the inquiry that it mandates focuses on the facts of the particular case. It follows that other cases in which implied waiver has been considered provide limited guidance unless they arise out of similar facts.