CMA Corporation Ltd v Rowe

REASONS FOR JUDGMENT 1 These proceedings are in the docket of Flick J. They are listed for a final hearing on liability commencing on 27 September 2010. An issue has arisen which has been referred to me as Duty Judge for decision. The issue concerns whether client legal privilege has been lost in an email communication which was included amongst exhibits filed and served with an affidavit sworn by the fourth respondent. 2 On 1 September 2010 orders were made, by consent, imposing some interlocutory restraints upon the first and second respondents (Mr Douglas Rowe and Southernro Pty Ltd). The applicants came to the view that proper steps had not been taken to comply with the orders and, on 2 September 2010, Ms Peach, a partner with Minter Ellison Lawyers who act for the applicants, wrote to Mr Greenall, Special Counsel with Madgwicks Lawyers who act for the respondents, protesting the lack of action and requiring prompt compliance. 3 On 3 September 2010 the matter was before Flick J. His Honour required an affidavit to be filed by Mr Troy Rowe by 4 pm that day deposing to the steps which had been taken to comply with the orders made on 1 September 2010. It appears that Mr Troy Rowe came under that obligation because, in the absence of Mr Douglas Rowe, he had effective control of Southernro Pty Ltd. 4 Mr Troy Rowe's affidavit was "e-lodged" some minutes before 4 pm on 3 September 2010. The affidavit referred to a number of exhibits which were filed with the affidavit in the same manner. Ms Laura Simmons-Strempel is a solicitor employed by Madgwicks. She has the care and conduct of the proceedings for the respondents under the supervision of Mr Greenall. Exhibit TR4 to Mr Troy Rowe's affidavit sworn on 3 September 2010 was an email sent by Ms Simmons-Strempel on 2 September 2010 at 12.57pm to a number of respondents including Mr Troy Rowe and Mr Douglas Rowe. The email attached Ms Peach's letter bearing the same date. Ms Simmons-Strempel drew attention to the need to comply with the orders made on 1 September 2010. In his affidavit, after referring to the email from Ms Simmons-Strempel and the attached letter, Mr Troy Rowe deposed to a number of steps which he took in a period of one hour and 26 minutes thereafter (between 12.59 pm and 2.25 pm). He then referred to an email from Mr Greenall, received by him at 2.25pm which was identified as exhibit TR7. 5 Although only Mr Greenall's email was referred to, exhibit TR7 reproduced not only Mr Greenall's email to persons who included Mr Douglas Rowe, Mr Troy Rowe and Ms Simmons-Strempel but also reproduced Ms Simmons-Strempel's email (although not the letter attached to it) and an intermediate email from Mr Douglas Rowe to undisclosed recipients. It is accepted that Mr Douglas Rowe's email was privileged. However the applicants contend that its disclosure to them as part of exhibit TR7 caused the privilege to be waived. 6 Mr Greenall's email, which was the only subject of explicit reference in the paragraph of the affidavit referring to exhibit TR7, contained recommendations concerning compliance with the orders made on 1 September 2010. That email does not require any reference to Mr Douglas Rowe's intermediate email to make it intelligible. It may be accepted, as contended by Mr Cobden SC, who appeared for the applicants, that if all three emails are read together an inference is fairly available that Mr Greenall was responding to Mr Douglas Rowe as well as providing advice about Ms Peach's letter and the need for compliance with the orders. That circumstance alone, however, would not oblige disclosure of Mr Douglas Rowe's email. As I have said, it was accepted that Mr Douglas Rowe's was privileged. That privilege was not waived by any form of indirect disclosure. If privilege was waived it was only by the inclusion and publication of Mr Douglas Rowe's email as part of exhibit TR7. 7 In an affidavit sworn on 17 September 2010 for the purpose of providing evidence about the present issue, Ms Simmons-Strempel deposed to some aspects of the preparation of Mr Troy Rowe's affidavit. Ms Simmons-Strempel and her personal assistant assembled the material to which reference would be made in the affidavit. She deposed that Mr Troy Rowe's affidavit was "sworn in a great rush" at about 3.50pm on 3 September 2010 following receipt of instructions from Mr Troy Rowe a short time earlier concerning some additional material. She said that she did not at any stage receive instructions from Mr Troy Rowe or anyone else to include Mr Douglas Rowe's email. 8 The affidavit was e-filed at 3.57pm, just before the deadline set by Flick J. Shortly thereafter it was served on the applicants' solicitors by email. Ms Simmons-Strempel deposed that at approximately 4.30pm she realised that Mr Douglas Rowe's email was included in exhibit TR7. She said that she and her personal assistant then attempted to retract the email by using a "retract and delete" facility. A short time later she realised that the email had not been successfully retracted. She then caused emails to be sent (at 4.57pm) to the Associate to Flick J, and others, attempting to re-file and re-serve Mr Troy Rowe's affidavit (with Mr Douglas Rowe's email omitted) and asking that the earlier version be disregarded. 9 At 5.14pm Ms Peach sent an email to Ms Simmons-Strempel saying she had assumed that privilege in Mr Douglas Rowe's email had been waived intentionally and she had provided all the material to her clients. She invited Ms Simmons-Strempel, however, to "let us know if we have misunderstood". At 5.44pm Ms Simmons-Strempel sent an email to the Associate to Flick J and to Ms Peach informing Ms Peach that the omitted parts "were sent in error" and that privilege in them had not been waived. 10 That is where matters rested until 6 September 2010 when the proceedings resumed before Flick J. Apparently the matter was discussed between counsel but not then resolved. On 7 September 2010 Ms Simmons-Strempel wrote to Ms Peach reiterating that inclusion of Mr Douglas Rowe's email was unintended. On 16 September 2010 Ms Peach wrote to Mr Greenall indicating that the claim for privilege was contested. She referred to her earlier assumption that privilege had been intentionally waived. As a result, in a notice of motion filed in court on 20 September 2010, the respondents sought an order that Mr Douglas Rowe's email is privileged and that such privilege was not waived by Mr Troy Rowe. 11 The only evidence which I have, which bears directly upon the issue of whether privilege in Mr Douglas Rowe's email was intentionally waived, as Ms Peach assumed, is the affidavit of Ms Simmons-Strempel. She was not required for cross-examination on her affidavit. Her evidence was unchallenged in that, or in any other, fashion. I accept her evidence that Mr Troy Rowe did not give instructions for the inclusion of Mr Douglas Rowe's email. I accept also that the responsibility for the inclusion of the email, in those circumstances, lies with Ms Simmons-Strempel and/or her personal assistant. It is clear that Ms Simmons-Strempel attempted, within a very short period after filing the affidavit shortly before the deadline of 4pm, to retrieve it and, having failed to do so, attempted to replace the affidavit with another which omitted Mr Douglas Rowe's email. I accept her evidence that, so far as she was concerned, the inclusion of Mr Douglas Rowe's email was inadvertent and was a mistake on her part. 12 Mr Troy Rowe has not given any evidence about the circumstances in which he swore his affidavit on 3 September 2010. Although Ms Simmons-Strempel's letter of 7 September 2010 to Ms Peach referred to the fact that he was present at court on 6 September 2010, was available to give evidence and "would have given evidence that the process of completing and swearing the 78 page Affidavit to meet the deadline of filing by 4pm resulted in his failing to notice that the document had been inadvertently included", that is not a representation to which I attach any weight. 13 The applicants' argument, that privilege was waived, concentrated on the fact that Mr Troy Rowe swore his affidavit in circumstances where exhibit TR7 contained Mr Douglas Rowe's email. Counsel for the applicants pointed out that exhibit TR7 is accompanied by an exhibit note in which Ms Simmons-Strempel certified that the exhibit was shown to Mr Troy Rowe at the time he swore his affidavit. Exhibit TR7 included, and commenced with, the email from Mr Greenall which was identified in the relevant paragraph of the affidavit (and which was the only email so identified). It also included (as well as the text of Mr Douglas Rowe's email) the text of the email from Ms Simmons-Strempel which was, independently, part of exhibit TR4. It is certainly possible that Mr Troy Rowe was not as careful as he should have been in his scrutiny of this exhibit when it was produced to him but lay witnesses are often reliant upon advice concerning matters of privilege. In my view the matters relied on by the applicants do not add materially to the fact that inclusion of Mr Douglas Rowe's email was due to an error made by Ms Simmons-Strempel. 14 The present issue is to be resolved by reference to the provisions of the Evidence Act 1995 (Cth) ("the Evidence Act") rather than by reference to common law principles, although to the extent that any relevant distinction remains it has no significance for the present case having regard to amendments made to the Evidence Act in 2008 to which I will refer. The relevant paragraph of Mr Troy Rowe's affidavit has not yet been read in the proceedings. The respondents are not required to read it and may elect not to rely upon exhibit TR7. However, Mr Cobden has made clear his present intention to rely upon Mr Douglas Rowe's email in the proceedings and, if necessary, tender it in evidence. Accordingly the provisions of the Evidence Act will apply if that position is reached. Section 122(2) and (3) of the Evidence Act provide as follows: (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. (Emphasis added) 15 Consideration of the operation and effect of s 122 of the Evidence Act must commence with recognition of the fact that s 122 operates as an exception to the general rules set by ss 118 and 119 - namely, that evidence must not be adduced over objection where that would result in disclosure of material protected by client legal privilege. For that protection to be lost, in accordance with s 122(2), it is necessary to show, as earlier emphasised, that "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". The relevant party here is Mr Troy Rowe. 16 Mr Cobden made it clear that he did not rely on either limb of s 122(3) of the Evidence Act. He did not argue that Mr Troy Rowe knowingly or voluntarily disclosed Mr Douglas Rowe's email or that it was disclosed with his express or implied consent. However, he pointed out that the matters referred to in s 122(3) operate without limitation to s 122(2). He contended that Mr Troy Rowe had "acted in a way that is inconsistent with" a claim for privilege with respect to Mr Douglas Rowe's email. The inconsistent conduct upon which he relied was that Mr Troy Rowe swore his affidavit in circumstances where exhibit TR7 was shown to him at the time of swearing. That circumstance, which I accept, does not take the matter far enough. A further step was required before any privilege was waived. The further step was the disclosure of the material to another person. Although it may be accepted that Mr Troy Rowe understood, when he swore his affidavit, that he was doing so for the purpose of it being provided to the Court, and to the applicants, that does not exclude the possibility that he acted upon a misunderstanding. I have already indicated that I do not propose to give any weight to the fact that an offer was made that he could give evidence to that effect. In fact he has not done so. Nevertheless, I think the conclusion may safely be drawn from the matters to which I have already referred that there is no reason to think that he was particularly conscious that Mr Douglas Rowe's email was included in the material he was shown or that privilege in it would be waived when the affidavit was served. No attempt was made to explore that possibility with Ms Simmons-Strempel. 17 Based on Ms Simmons-Strempel's unchallenged evidence, I find that the service of Mr Douglas Rowe's email upon the solicitors for the applicants was inadvertent and that it was not the result of any volition upon the part of Mr Troy Rowe. That, however, does not completely resolve the question of whether the disclosure of Mr Douglas Rowe's email may be effective to waive any privilege in it, even if inadvertent. 18 Both parties referred me to cases where questions of inadvertence have been considered. Some involved the application of common law tests and some involved the application of earlier provisions of the Evidence Act. As counsel for the applicants pointed out in their written submissions, s 122(2) of the Evidence Act is, in its present form, the result of amendments contained in the Evidence Amendment Act 2008 (Cth). One intention informing the amendments to s 122 was to align its operation more closely with the common law test on the issue of waiver. In those circumstances, cases which examine the common law tests bear some scrutiny. However, as has been observed on more than one occasion, the decided cases provide no uniform answer to the issue which arises for present decision. The brief survey which follows lacks the depth of the discussion in a number of the cases I will mention, where the development of the law in the United Kingdom and Australia was examined in some detail. My present purpose is to concentrate on when inadvertent disclosure may, nevertheless, waive legal client privilege in modern times in Australia and, particularly, in this Court. 19 In Kabwand Pty Ltd v National Australia Bank Ltd (1987) 16 FCR 85, copies of documents were sought which had been discovered and inspected with no claim for privilege having been made. There was some basis to think that the failure to claim privilege was an error. Pincus J said that whether "production by mistake" waived the privilege depends upon the circumstances. For example the privilege would no longer be protected if it had lost its point. His Honour said (at p 87): To the extent that knowledge has been acquired of the privileged documents, privilege has been waived, and nothing can be done about that. but his Honour nevertheless refused orders for copies of the documents. In the present case a successful claim for privilege would have some continuing utility. It does not seem to me that the protection of privilege is altogether lost merely because inadvertence leads to the acquisition of knowledge of contents of privileged documents. 20 In Goldberg v Ng (1994) 33 NSWLR 639 Clarke JA undertook an examination of the common law principles for deciding when privilege with respect to documents was waived. His Honour distilled the following principle (at 674): In my opinion, as a general rule, a party should be found to have waived his or her privilege if: (1) the party has expressly waived the privilege; or (2) the party has so conducted himself or herself that the law imputes to that party an intention to waive the privilege and such imputation will occur when the party (or his or her agent) intentionally performs a deliberate act which renders it unfair to another party that the privilege be maintained. and (at 675): Those decisions which support the proposition that inadvertent disclosure constitutes a waiver are sometimes supported on the ground that the doctrine of legal professional privilege is only concerned with the maintenance in confidentiality in communications. According to the argument it follows that as any revelation of those communications must destroy that confidentiality there is no basis for continuing the privilege. My difficulty with this approach is that a finding of waiver is made in circumstances where there has been no deliberate conduct upon which, consistently with principle, the waiver could be based. On this approach to the common law, inadvertent disclosure would not constitute a waiver of privilege in the absence of intentional conduct generating an unfairness to another party. On the facts of the present case the unfairness test would not be met. On the view taken by Clarke JA privilege was not waived in the present case. 21 Clarke JA's analysis was referred to by Goldberg J in Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 75 FCR 511 ("Meltend"). In Meltend, documents which were later claimed to be privileged were included in a discovery list of non-privileged documents and then provided for inspection. After a request for copies was made it was asserted that the documents had been included in the list of non-privileged documents by mistake. Goldberg J, after referring to the observations of Clarke JA in Goldberg v Ng, concluded in Meltend that "there was a sufficient deliberate and intentional disclosure". His Honour took the view that the solicitors had acted within ostensible authority to waive privilege and also that it would be unfair, disclosure having occurred, that the party receiving the information not be able to use it in the proceedings. His Honour said (at 526-7): In the absence of an obvious mistake apparent to an inspecting party and fraud I consider that the appropriate principle to apply is that once inspection has been allowed of a document listed in that part of an affidavit or list in which privilege from inspection is not claimed, any privilege attaching to that document is to be regarded as waived by being included in that part of the affidavit or list and by being made available for inspection. 22 I would not read Goldberg J's statements in Meltend as laying down a general principle applying to a case such as the present. In Meltend the failure to identify the asserted error continued for some months. It was a case of very different dimensions from the present one. In any event, the discovery process raises quite different issues from a case such as the present. When discovery is given there is usually, as there was in Meltend, a series of separate steps including identification of documents, service of a list (at which time privilege should be claimed) and subsequent inspection. Parties are entitled to rely upon the regularity of the process if questions of privilege are not identified and asserted in a timely manner. 23 In Director of Public Prosecutions (Commonwealth) v Kane (1997) 140 FLR 468; Hunt CJ at CL concluded that privilege in a document inadvertently sent with a letter had not been waived. That conclusion appeared to follow directly from the terms of s 122 of the Evidence Act as it then stood and it was important that the document was not sent voluntarily. However, his Honour said (at 478-9): At common law, the prevailing line of authority is that an inadvertent disclosure of a privileged document does not necessarily constitute a waiver by which the privilege is lost. 24 His Honour also said (at 482): In my opinion, the discovery cases [which included Meltend] have little to do with the situation with which I am concerned, where the document in question was inadvertently enclosed with a letter. I do not accept the submission that relief should be granted only where the inadvertence can be explained in the way suggested in the discovery cases. 25 In Mann v Carnell (1999) 201 CLR 1 the High Court dealt in a general fashion with the common law position. The High Court said at [28]: Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. (Footnote omitted, Emphasis added) and (at [29]): 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. … 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. 26 The reflection of these observations in the present form of s 122(2) of the Evidence Act may readily be seen. Tested in that way in the present case, I would not conclude, as the circumstances were explained by Ms Simmons-Strempel, that Mr Troy Rowe's actions were inconsistent with the maintenance of confidentiality in Mr Douglas Rowe's email. 27 In Boensch v Pascoe [2007] FCA 532 privileged documents were inadvertently tendered by counsel. When the error was appreciated a claim for privilege was asserted but not accepted by a Federal Magistrate. On appeal Jacobson J took a different view. His Honour said (at [37]-[39]): 37 It is unnecessary for present purposes to determine whether or to what extent the provisions of s 122 of the Evidence Act dealing with the circumstances in which privilege may be lost correspond with the common law principles; see Mann v Carnell at [23]; see also Van Zonneveld v Seaton [2004] NSWSC 960 at [11] (per Campbell J). 38 It seems to me that on either approach, what is required is a voluntary act which is inconsistent with the purpose of maintaining confidentiality. An inadvertent or unintentional act will not be sufficient to amount to waiver. 39 Of course, "a mere plea" of inadvertence may not by itself necessarily enable a party to avoid a waiver of privilege; Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538 at 542-543. Thus, the Court must be satisfied on the material before it that the act was in truth inadvertent. (Emphasis added) 28 That case is a closer parallel with the present case than the others I have so far mentioned. 29 In Unsworth v Tristar Steering and Suspension Australia Ltd [2007] FCA 1081 Gyles J, although drawing attention to the lack of apparent uniformity in some of the authorities, also upheld the maintenance of privilege in a case of inadvertent disclosure. 30 The disclosure of Mr Douglas Rowe's email was the inadvertent consequence of mistakes made by some or all of Ms Simmons-Strempel, her personal assistant or Mr Troy Rowe. The error was quickly discovered and prompt and serious attempts were made to retrieve the position. Neither the error made, nor the particular conduct of Mr Troy Rowe, is inconsistent, in my view, with maintenance of the privileged status of Mr Douglas Rowe's email. There is remaining utility in preservation of that privilege. In my view the burden of authority, as it applies in this Court, favours the view that inadvertent and unintended disclosure of privileged material, in a case such as the present one, does not destroy legal client privilege or prevent it thereafter from being asserted. 31 In my view, therefore, the respondents have made out a case for the order which they seek. 32 Costs will be reserved. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.