Chen & Ors v City Convenience Leasing Pty Ltd & Anor

Court of Appeal (NSW)|2005-09-12|Before: Bryson JA, Windeyer J, Gzell J

Chen & Ors v City Convenience Leasing Pty Ltd & Anor [2005] NSWCA 297 CITATION: This decision has been amended. Please see the end of the judgment for a list of the amendments.

JUDGMENT OF: Bryson JA at 1; Windeyer J at 2; Gzell J at 3

CATCHWORDS: EVIDENCE - client legal privilege - consent and waiver - lease of city convenience store - lessors sued for rent &c, lessee cross-claimed for misrepresentation, misleading or deceptive conduct in negotiations preceding grant of lease - correspondence and drafts sent to lessee's solicitor before grant of lease contained statements relevant to alleged misrepresentations - lessee objected and DCJ rejected questions in cross-examination relating to communications and advice from solicitor in relation to lease before execution - held that conduct of cross-claim was inconsistent with maintenance of confidentiality for legal advice - in interests of fairness, client legal privilege ought not to be maintained and waiver of privilege is to be imputed by operation of law - consideration of Evidence Act 1995 (NSW) s 118, s 122 - extensive review of authorities - Telstra Corporation v B T Australasia (1998) 85 FCR 152 (FC FC) followed - new trial ordered.

Fair Trading Act 1987 Evidence Act 1995 Supreme Court Rules 1970 LEGISLATION CITED: Uniform Civil Procedure Rules 2005 Civil Procedure Act 2005 Suitors' Fund Act 1951

Jones v Dunkel (1959) 101 CLR 298 Telstra Corporation v Australis Media Holdings (1997) 41 NSWLR 277 Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 Akins v Abigroup Ltd (1998) 43 NSWLR 539 ESSO Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 District Court Rules 1973 Mann v Carnell (1999) 201 CLR 1 Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044 Garratt's Ltd v Thanga Thangathurai [2002] NSWSC 39 CASES CITED: Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd [2002] FCA 501 BP Australia Pty Ltd v Nyran Pty Ltd [2002] FCA 1302 United Rural Enterprises v Lopmand [2002] NSWSC 1142 DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 Wyadra Pty Ltd v Mailler (No 2) [2005] NSWSC 88 Equuscorp Pty Ltd v Kamisha Corp Ltd (1999) ATPR 41-697 John Tanner Holdings Pty Ltd v Mortgage Management Ltd (2001) 182 ALR 201 Liquorland (Australia) Pty Ltd v Anghie [2003] 7 VR 27 at 42 Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 1296 Stead v State Government Insurance Commission (1986) 161 CLR 141

Mr Xian Sheng Chen, Shu Hsing Tseng and Jie Chen Zheng - Appellants PARTIES: City Convenience Leasing Pty Ltd (formerly known as City Convenience Stores Pty Ltd) - First Respondent Jamal Gebara - second Respondent

Mr D B McGovern SC/ Mr A O'Brien - Appellants COUNSEL: Mr N Cotman SC/ Mr K Odgers - Respondents

Thomas Chang & Co Solicitors & Attorneys - Appellants SOLICITORS: Davis Breene Conti Solicitors - Respondents

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40749/04

BRYSON JA WINDEYER J GZELL J

MONDAY 12 SEPTEMBER 2005 XIAN SHENG CHEN & ORS v CITY CONVENIENCE LEASING PTY LTD (FORMERLY KNOWN AS CITY CONVENIENCE STORES PTY LTD) & ANOR Judgment

1 BRYSON JA: I agree with Gzell J. 2 WINDEYER J: I agree with Gzell J. 3 GZELL J: Xian Sheng Chen and his associates leased a ground floor shop, lot 60, to City Convenience Leasing Pty Ltd for five years. It was to be used as a convenience store. Gamal Gebara guaranteed performance under the lease. City Convenience fell behind in the payment of rent and subsequently claimed entitlement to rescind the lease. The Chen interests claimed that City Convenience had repudiated the lease and they were entitled to accept the repudiation and terminate it. 4 The Chen interests brought proceedings in the District Court claiming damages for unpaid rent to the end of the lease, repair costs, garbage removal, legal costs and interest. By way of defence, City Convenience and Mr Gebara alleged that Simon Lui, as agent for all the Chen interests, induced them to enter into the lease by false representations entitling them to rescind it. In their cross claim, they alleged that Mr Lui's representations were false, or misleading or deceptive and sought orders under the Fair Trading Act 1987 declaring the lease void and seeking damages, costs and interest. 5 The issues for determination on this appeal are whether the primary judge should have found that Mr Lui's representations did not entitle City Convenience and Mr Gebara to relief and whether the primary judge should not have excluded, on the basis of client legal privilege, evidence of any advice given by a solicitor to Mr Gebara about the terms of the lease prior to its execution.

The findings below 6 O'Toole DCJ made adverse findings as to credit against Mr Lui and positive findings as to credit in favour of Mr Gebara. Her Honour found that Mr Lui told Mr Gebara that the shop was fully air-conditioned, the air-conditioner was an expensive one and Mr Gebara would not have to spend any money on fitting out a convenience shop with an air-conditioner. Mr Lui said it would cost nothing to install any further air-conditioning and that would save Mr Gebara up to $60,000. He said that Mr Gebara would only be responsible for paying the maintenance of the air-conditioner. 7 Her Honour also found that Mr Lui told Mr Gebara that the loading dock in the building was specifically for the occupiers of lot 60 and that Mr Gebara could use the lot for warehousing of product and the loading dock for deliveries to the convenience store. 8 Her Honour found that Mr Gebara accepted Mr Lui's representations that upon City Convenience's leasing lot 60, the air-conditioner would be available for its uninterrupted use, at its cost, and the loading dock would be available for its uninterrupted use. Her Honour also found that Mr Lui persuaded Mr Gebara to guarantee City Convenience's leasing of the lot. Her Honour accepted Mr Gebara's deposition that he relied materially upon Mr Lui's representations concerning the air-conditioner and the loading dock. 9 The loading dock was part of the common property of the building. The air-conditioner had been installed by some predecessor in title to the Chen interests without the approval of the building's owners corporation or the approval of the local Council. 10 City Convenience fell behind in rent payments, five to six months into the lease and paid rent intermittently thereafter. 11 Some 16 months after the lease commenced, the owners corporation disconnected the air-conditioner from the electricity supply and installed a chain preventing access to the loading dock from the driveway to the building. 12 20 months after the commencement of the lease, City Convenience ceased to pay rent. Two years into the term, City Convenience's solicitors dispatched a letter claiming to rescind the lease on the basis that the Chen interests had failed to rectify the air-conditioner issue. Later that month, City Convenience vacated the premises. 13 Prior to the execution of the lease, Mr Gebara's solicitors were notified that it would contain a special condition that the Chen interests did not warrant that the air-conditioner had been installed with requisite consents. It was in the following terms: "The Vendor has bought the property at its present condition and does not warrant that the air-conditioner was installed with the body corporate's approval or council's approval and the Lessee must rely on its own enquiries to use the air-conditioner and the Lessee cannot raise any claim or compensation in connection with the use of the air-conditioner." 14 That special condition was included in the lease. It was drawn to Mr Gebara's attention by his solicitor and he initialled it. 15 Prior to executing the lease, Mr Gebara carefully studied a certified copy of the strata plan. The depiction of the ground floor of the building on that plan clearly indicated that the loading dock was part of the common property. 16 Mr Gebara's assertion that he relied on Mr Lui's representations in executing the lease, was in issue before her Honour. It was put to Mr Gebara that when he read the special condition he knew that he was taking the risk that the air-conditioner could be disconnected. It was put to Mr Gebara, and her Honour found, that he knew that the loading dock was part of the common property. 17 Mr Gebara had been presented with a statement of outgoings to be paid by the lessee, prior to executing the lease. It stated an estimated figure of $1,440 per annum for air-conditioning/ventilation. Her Honour concluded that Mr Gebara understood the special condition in the context of this document and the lease and Mr Lui's representations and that Mr Gebara deduced, reasonably, that the lease, including the special condition, corresponded with the statement of outgoings to be paid by the lessee and with Mr Lui's prior representation that City Convenience would pay, and that Mr Gebara would guarantee, the cost of maintaining the air-conditioner aggregating some $1,440.00 per annum.

The orders below 18 Her Honour entered a verdict and gave judgment for City Convenience and Mr Gebara on the Chen interests' statement of claim. There was a verdict and judgment for City Convenience and Mr Gebara on their cross-claim under the Fair Trading Act 1987, s 72 and in the exercise of her discretion, her Honour declined to enforce the provisions of the lease. 19 Subsequently, her Honour entered a verdict and judgment for the Chen interests on the cross-claim as to damages and a verdict and judgment for the Chen interests on a motion for repayment of the bank guarantee to City Convenience and her Honour ordered the Chen interests to pay the costs of City Convenience and Mr Gebara of the statement of claim, the Chen interests to pay the costs of City Convenience and Mr Gebara of the cross-claim under the Fair Trading Act 1987, City Convenience and Mr Gebara to pay the Chen interests' costs of the cross-claim as to the damages and City Convenience and Mr Gebara to pay the Chen interests' costs of the motion for repayment of the bank guarantee.

The client legal privilege rulings below 20 On numerous occasions in the cross-examination of Mr Gebara, counsel for the Chen interests sought to elicit from him any advice given by his solicitor in relation to the lease before its execution. In particular, Mr Gebara was asked whether he was advised by his solicitor as to the implications of the special condition and he was asked whether, prior to executing the lease, his solicitor advised him as to what areas were common property areas and what areas were allocated to lot 60 to which there would be exclusive access. On each occasion a claim to client legal privilege was made by counsel for City Convenience and Mr Gebara which was upheld by her Honour. 21 It was argued before this Court that her Honour ought to have allowed the cross-examination on the basis that the respondents had impliedly consented to the adducing of the evidence. That argument was not put in the Court below when objection was taken to the cross-examination. 22 At the conclusion of the evidence, the hearing was adjourned for the taking of submissions. In his written submissions, counsel for the Chen interests argued that City Convenience and Mr Gebara should not be able to rely on the representations of Mr Lui where a solicitor had acted in the matter and privilege had been claimed. A number of authorities on the question of implied waiver of client legal privilege were cited, but in the context of a submission that Mr Gebara, having taken the objection and having refused to allow the Court to be informed of any legal advice, an adverse inference should be drawn in accordance with the decision in Jones v Dunkel (1959) 101 CLR 298). 23 The submission that an adverse inference should have been drawn is inconsistent with the submission that client legal privilege should have been denied. If it was denied, and evidence of the legal advice was adduced, there was no call for any adverse inference under Jones. It is only if the claim to privilege was open and taken that any question of an adverse inference arose.

Waiver of client legal privilege 24 Client legal privilege in court proceedings is set out in Div 1 of Pt 3.10 of the Evidence Act 1995. Section 118 excludes the adducing of evidence of confidential communications between client and lawyer. It provides: "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 or a lawyer; for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client." 25 Section 122 of the Evidence Act 1995 provides exceptions to this rule where a party consents to the adducing of the evidence, or the substance of the communication has been disclosed, or the document is used to refresh memory. It is in the following terms: "(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 a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made: (a) in the course of making a confidential communication or preparing a confidential document; or (b) as a result of duress or deception; or (c) under compulsion of law; or (d) 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 State or Territory, administering the law, or the part of the law, under which the body is established or the office is held. (3) Subsection (2) does not apply to a disclosure by a person who was, at the time, an employee or agent of a client or party or of a lawyer unless the employee or agent was authorised to make the disclosure. (4) Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than: (a) a lawyer acting for the client or party; or (b) if the client or party is a body established by, or a person holding an office under, an Australian law - the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held. (5) Subsections (2) and (4) do not apply to: (a) 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 (b) a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a 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 by police officers)." 26 In Telstra Corporation v Australis Media Holdings (1997) 41 NSWLR 277 McLelland CJ in Eq took the view that while those provisions did not, on their face, apply to ancillary process but were limited to the giving of evidence, they nonetheless applied derivatively to claims to privilege in ancillary process. That approach was adopted by a Full Court of the Federal Court in Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 and by this Court in Akins v Abigroup Ltd (1998) 43 NSWLR 539. 27 The approach was rejected by the High Court in ESSO Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49. It was said at [23] that as the provisions of the Evidence Act 1995 with respect to client legal privilege did not apply throughout Australia, there was not a consistent pattern of legislative policy to which the common law in Australia could adapt. Thus the common law could not be modified by analogy or derivation to accord with the provisions of the legislation and it was the common law that governed legal professional privilege in ancillary process. 28 That was not the position in New South Wales after 1 October 1999 for the Supreme Court Rules 1970 were amended to apply the Evidence Act 1995 provisions to discovery and inspection of documents under Pt 23 r 1, to answers to interrogatories under Pt 24 r 6 and to calls on subpoenas under Pt 36 r 13. Amendments to the same effect were made to the District Court Rules 1973, Pt 22 r 16 (discovery and inspection of documents), Pt 22A r 6(3)(c) (interrogatories) and Pt 29 r 1 (subpoenas). 29 At common law, a client who would otherwise be entitled to the benefit of legal professional privilege, might waive that privilege and that waiver might be express or implied (Mann v Carnell (1999) 201 CLR 1 at [28]-[29]). If the Evidence Act 1995, s 122(1) was meant to embrace or to restrict this principle, its expression is elliptical in the extreme. 30 In Adelaide Steamship at 370-371, the Court saw no reason for construing consent in s 122(1) of the Evidence Act 1995 as referring only to express consent notwithstanding the contrast with s 122(4) where reference is made to express or implied consent. In Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152, a majority of a Full Court of the Federal Court cited this observation and also concluded that the reference to consent in the Evidence Act 1995, s 122(1) included the implied consent of an imputed waiver of privilege. Their Honours said at 164: "But, unless "consent" has a meaning more extensive than actual, voluntary consent, it is difficult to see what s 122(1) adds to the opening words of s 118. And it may be observed that if s 122(1) of the Act is construed as being concerned only with intended or voluntary consent, Div 1 of Pt 3.10 of the Act will have effected a dramatic change to the pre-existing common law with respect to legal professional privilege." 31 In my view, that interpretation must be correct. Section 9(1) of the Evidence Act 1995 provides that the Act does not affect the operation of a principle or rule of common law or equity in relation to evidence in a proceeding to which the Act applies, except so far as the Act provides otherwise expressly or by necessary intendment. It would take more than the reference to implied consent in s 122(4) to exclude, by necessary intendment, implied consent from the reference to consent in s 122(1). 32 In my view, the majority in Telstra were correct in concluding, at 168, that the Evidence Act 1995, s 122(1) is to be construed as reaching to cases in which the client or party concerned is deemed to have consented to the disclosure of otherwise privileged material in terms of the common law rule. 33 This approach has been adopted in a number of single judge decisions. In Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044, Hodgson CJ in Eq at [12] accepted that the decision of the majority in Telstra correctly interpreted and applied the Evidence Act 1995, s 122(1). In Garratt's Ltd v Thanga Thangathurai [2002] NSWSC 39, Bergin J concluded at [51] that consent for the purpose of the sub-section included conduct amounting to imputed or implied waiver. Those terms appear to be used interchangeably in the authorities. In Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd [2002] FCA 501 at [10], Hely J, while acknowledging that the issue before him in ancillary process was one of waiver of privilege at common law rather than by reference to s 122(1), observed that there was little difference between the issue as to whether a party had given its implied consent to the disclosure of the substance of evidence over which privilege was claimed as that term was used in the provision, or whether a party's conduct amounted to an imputed waiver at common law. His Honour cited Bergin J's judgment in Thanga. In BP Australia Pty Ltd v Nyran Pty Ltd [2002] FCA 1302, Nicholson J at [8] concluded that he must apply the common law of imputed waiver, but followed Telstra in saying that s 122(1) was to be understood in terms of the common law on that topic. Campbell J came to the same conclusion in United Rural Enterprises v Lopmand [2002] NSWSC 1142 at [12]. The decisions are discussed without dissent by Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 at [102]-[111]. McDougall J came to the same conclusion in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 at [52], [56]. And see my judgment in Wyadra Pty Ltd v Mailler (No 2) [2005] NSWSC 88 at [6]. 34 It was submitted that decisions relating to ancillary process were of little assistance as they applied the common law principle and not that under the Evidence Act 1995, s 122(1). 35 A number of things can be said of that submission. First, it does not apply to New South Wales decisions on ancillary process since 1 October 1999 because the Supreme Court Rules 1970 imported the provisions of the Evidence Act 1995 into ancillary process. Secondly, as was established in Telstra and referred to in Fort Dodge there is little difference between the two because the common law principle of implied waiver is encompassed within consent for the purposes of s 122(1). Thirdly, United Rural Enterprises concerned an objection to evidence and did not involve ancillary process. 36 In my view the single judge decisions that have followed Telstra have conformed to it and, in particular, have accepted that the Evidence Act 1995, s 122(1) is to be construed as including implied waiver of client legal privilege within consent. 37 In Telstra, the majority held, at 168, that where a party relies on a cause of action an element of which is the party's state of mind, the party is taken to have waived privilege in respect of legal advice that the party had before or at the time of the relevant events material to the formation of that state of mind. Their Honours based this conclusion on fairness. At 166 they said: "A party who initiates an undue influence case puts in issue in the proceeding the quality of his or her consent or assent ( Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 per Deane J at 474). The quality of such consent or assent will ordinarily be affected by relevant legal advice received by the party. The principle that requires that in such circumstances the party not be entitled to maintain the confidentiality of such advice is one of fairness which goes to the integrity of the legal process. To allow a party to put in issue the quality of his or her consent or assent whilst, at the same time, withholding evidence relevant to that issue, would be to allow him or her unfairly to handicap the opposing party to the proceeding, and to comprise the ability of the court realistically to determine the issue." 38 Hodgson CJ in Eq in Wayne Lawrence was of the view that it was not every assertion of belief that gave rise to implied waiver and the significance of the belief to the case, the relevance of the reasonableness of the belief to the case, and the probability of legal advice being relevant to the holding of the belief, or to its reasonableness, must be taken into account. His Honour said at [12]: "Accepting that the decision of the majority in that case correctly interprets and applies s 122(1), it seems to me still that the question of whether the advancing of a person's state of mind is to be taken as consenting to the giving of evidence of confidential communication, or as waiving privilege, is a matter of degree in each case. It does not seem to me that the assertion of a belief must, in all circumstances, be taken as consenting to evidence being led of any legal advice or confidential communication that could be relevant to whether such a belief was held or the reasonableness of such belief. It seems to me that factors relevant to whether that consent is to be considered as having been given, or whether privilege is taken to have been waived, would include the significance of the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; the probability or otherwise of the legal advice being relevant to the holding of that belief, or being relevant to its reasonableness; and in circumstances where the Court inspects the legal advice in question in order to make a decision, the extent to which the legal advice does in fact bear upon the holding of the belief or its reasonableness, and the extent to which the legal advice relevant to those matters is inextricably bound up with legal advice going to other questions as to which there has been no consent or waiver. It seems to me that, on the basis of all those matters at least, the Court has to make a judgment as to what is reasonable, and what is fair in the particular case."

39 In Mann at [29], the High Court stated the principle of implied waiver in terms of conduct inconsistent with the maintenance of confidentiality: "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 the confidentiality which the privilege is 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" (eg Goldberg v Ng (1995) 185 CLR 83 at 95). 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."

And later their Honours said: "What brings about the wavier 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." 40 The width of the statement in Telstra has been the subject of criticism by single judges (Equuscorp Pty Ltd v Kamisha Corp Ltd (1999) ATPR 41-697 at 42,894, John Tanner Holdings Pty Ltd v Mortgage Management Ltd (2001) 182 ALR 201 at 206, Liquorland (Australia) Pty Ltd v Anghie [2003] 7 VR 27 at 42, DSE at 502, 526, Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 1296 at [40], [43]). The proposition is that Mann requires a narrower statement of principle. As Allsop J said in DSE at [5]: "My own view is that Mann v Carnell evinces more than a modification of the approach of the majority in Telstra and amounts to a rejection of that approach and that the notion of inconsistency of conduct by the holder of the privilege and the maintenance of the confidence in question (though informed where relevant by notions of fairness) works a narrower and more confined operation for implied waiver than as expressed by the majority in Telstra ."

41 I doubt that a different result will follow from the sort of question referred to in Wayne Lawrence and the sort of question that needs to be answered in order to determine whether there is inconsistency between the conduct of a party and maintenance of client legal privilege as discussed in Mann. In a case like the present one in which reliance upon representations is alleged, questions such as the following need to be explored: Were representations made to the party by or on behalf of the opponent? Does the party say that he or she relied upon the representations and altered his or her course of conduct? Is reliance upon the representations a central, or merely peripheral, aspect of the party's case? Is it likely that the party received legal advice that had a bearing on the allegation of reliance? Was it likely that the legal advice might raise doubts as to the allegations of reliance or any loses or damage alleged to have been suffered? 42 Her Honour found that representations were made and relied upon. City Convenience and Mr Gebara altered their course of conduct by entering into and guaranteeing the lease. The cross-claim sought relief under the Fair Trading Act 1987 as a result of that reliance. That reliance was an essential element of the case of City Convenience and Mr Gebara. 43 As to the likelihood that Ms Conti gave Mr Gebara legal advice, it was submitted that it could not be said that it was probable that Mr Gebara received legal advice relevant to the holding of his belief in the truth of the representations. It was submitted that all the evidence established was that Mr Gebara was told of the special conditions in the lease by his solicitor and that his attention was directed to the special condition in the lease in relation to air-conditioning by his solicitor. It could not be said, it was submitted, that her Honour would have upheld a claim to privilege. 44 But a claim to client legal privilege was made when Mr Gebara was asked whether he was advised by his solicitor as to the implications of the special condition and he was asked whether, prior to executing the lease, his solicitor advised him as to what areas were common property. Those claims could not have been made unless Ms Conti gave Mr Gebara legal advice on those topics. 45 Because of the presence of the special condition, apparently inconsistent with a continued assertion of reliance upon Mr Lui's representations as to the air-conditioning, and Mr Gebara's inspection of a plan clearly depicting the loading bay as common property, it was likely that the legal advice given to Mr Gebara prior to the execution of the lease might raise doubts as to the continued assertion of reliance upon the representations and the entitlement to relief under the Fair Trading Act 1987. 46 In my opinion, the circumstances of this case established that the conduct of Mr Gebara in maintaining his assertion of reliance upon the representations of Mr Lui, was inconsistent with the maintenance of confidentiality with respect to the legal advice he received. In the interests of fairness, client legal privilege for the advice ought not to be maintained and waiver of that privilege is to be imputed by operation of law. For the purposes of the Evidence Act 1995, s 122(1) that imputed waiver constitutes consent by Mr Gebara and City Convenience to the adducing of evidence of the legal advice given by Ms Conti. 47 Had her Honour received appropriate submissions, she would have allowed cross-examination of Mr Gebara as to the legal advice given to him by Ms Conti. 48 It follows from the rejection of the evidence that the Chen interests were deprived of the possibility of a successful outcome. It is not possible for this Court to conclude that if the evidence had been admitted, the trial could not possibly have produced a different result. And it is impossible to divorce the excluded evidence from central considerations of reliance and any entitlement to relief under the Fair Trading Act 1987. In these circumstances, the appropriate order is a new trial (Stead v State Government Insurance Commission (1986) 161 CLR 141).

Miscarriage 49 The Supreme Court Rules 1970, Pt 51 r 23(1)(b) provides that this Court shall not order a new trial on the ground of the improper rejection of evidence unless it appears to the Court that some substantial wrong or miscarriage has been occasioned thereby. Since that rule is not inconsistent with any rule in the Uniform Civil Procedure Rules 2005, those rules do not prevail over it (Civil Procedure Act 2005, s 11). 50 In my view, there was a substantial miscarriage of the trial process. As already indicated, the facts excluded from evidence were likely to have an important bearing on the central issues of reliance and causation. 51 City Convenience and Mr Gebara share the responsibility for the trial judge not having had the advantage of all relevant facts. Objection was taken to questions whether legal advice had been given to Mr Gebara. That preceded the point of disclosure of any confidential communication and, hence, before the Evidence Act 1995, s 118 was enlivened. It ought to have been obvious that by taking the objections, the issue of implied waiver arose. Yet the objections were not supported by reference to case law, by reference to s 122 or by reference to any facts elicited on a voire dire. 52 In these circumstances, it is appropriate for this Court to order a new trial.

Discretion 53 The question arises, however, whether the Chen interests should have that order in view of their failure to make any submission to her Honour with respect to the Evidence Act 1995, s 122(1). 54 In my view the Chen interests ought not to be deprived of a new trial. There was error of law albeit that her Honour's attention was not drawn to the appropriate legislative provision. But in my view the failure of the Chen interests to do so can be adequately dealt with by denying them an order for costs.

Conclusion 55 Since I am of the view that a new trial should be ordered, it is unnecessary to deal with the other submissions of the Chen interests as to her Honour's findings. 56 The orders I propose are: Appeal allowed. Set aside the verdicts and judgments of the trial judge and in lieu thereof order that there be a new trial. No order as to costs of the appeal. City Convenience and Mr Gebara to have a certificate under the Suitors' Fund Act 1951. Costs of the first trial to abide the event.

16/09/2005 - Amendment requested by Saunthra Thambyrajah - Paragraph(s) Repeating CA removed from file number field 12/10/2005 - Agreement of Windeyer J was not included. - Paragraph(s) 2

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Evidence Act 1995(NSW)s 118, s

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