Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 173 | Case summary

Supreme Court of NSW|2018-01-29|Before: Robb J

Solicitors: Levitt Robinson (plaintiff) Crown Solicitor(first defendant) Hunt & Hunt (second defendant) Ashurst Australia (third defendant) File Number(s): 2017/243774

Judgment

The primary relief sought in these proceedings by the plaintiff, Desane Properties Pty Ltd (Desane), is a declaration that a property acquisition notice (PAN) that its land situated at 68-72 Lilyfield Road, Rozelle (the Property) was to be compulsorily acquired under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) is void, invalid and of no effect. Desane also seeks an injunction to restrain the defendants from acting upon the invalid PAN.
The PAN was issued by the second defendant, Roads and Maritime Services NSW (RMS), which is a statutory corporation. The first defendant is the State of New South Wales (the State), and the third defendant, Sydney Motorway Corporation Pty Ltd (SMC), is a company incorporated under the Corporations Act 2001 (Cth), whose shareholders are three ministers in the State government.
In issuing the PAN, RMS did so for the alleged purpose that the acquisition of the Property was necessary for the completion of infrastructure works proposed to be undertaken in connection with Stage 3 of the West Connex project (the Project).

Nature of Desane's claims

Desane filed its commercial list statement on 10 August 2017. In substance, Desane made three claims. The first was that the PAN was invalid because it did not adequately identify the purpose of the proposed acquisition with sufficient particularity to enable Desane to form a view as to whether the issue of the PAN was within power. Desane asserted that the invalidity arose because the statutes that authorised the compulsory acquisition of its property required that the purpose be articulated clearly in the document. The determination of this first aspect of Desane's claim will depend upon an analysis of the PAN and the relevant legislation.
The second basis of Desane's claim was that, at the date of the issue of the PAN, RMS had not sufficiently formed a purpose as required by the relevant legislation to justify the issue of the PAN as a step in the compulsory acquisition of the Property. Desane alleged that RMS had not identified or finally settled upon a purpose, the purpose was not sufficiently certain or unconditional, and that RMS did not require the Property for a purpose that would entitle it to compulsorily acquire the Property. This aspect of Desane's case will require an investigation of the actual purpose relied on by RMS to justify the issue of the PAN. That will be a matter for evidence. The parties have characterised this claim as being the "purpose issue" for the purposes of the dispute the subject of these reasons.
The third basis of Desane's case, as originally formulated, was that RMS and SMC have made representations that RMS needed compulsorily to acquire the Property, that the acquisition was for a single public purpose, and that the purpose would finally and unconditionally be carried into effect, or alternatively that RMS had numerous different public purposes. Desane claimed that each of these statements of purpose was misleading and deceptive.
In order to make good its claim for relief for contravention of s 18 of the Australian Consumer Law, Desane alleged in par C36 that the State, RMS and SMC have in respect of the Project been undertaking a commercial enterprise, and carrying on a business, in relation to the procuring, funding, designing, construction and/or delivery of the Project. That allegation was necessary to satisfy s 36 of the Fair Trading Act 1987 (NSW) that has the effect that the Australian Consumer Law will only bind the Crown in right of the State in so far as the Crown carries on a business either directly or by an authority of the State. On that basis, Desane alleged that the representations were made in trade or commerce.
The relief sought by Desane in respect of the third basis of its claim is an order permanently restraining the defendants from acting in reliance upon the PAN or giving effect to it, including the compulsory acquisition of the Property. The parties have treated this claim as having given rise to the "trade and commerce" issue.
On 31 January 2018, after I reserved judgment in this matter, Desane filed a notice of motion in which it sought leave to file and serve an amended commercial list statement. It is sufficient for me to record that on 8 February 2018, Hammerschlag J gave Desane the leave sought.
Although the amended commercial list statement makes substantial revisions to the commercial list statement that has been filed, it in substance continues the three claims that were originally made that have been outlined above. I note that the nature of the misleading and deceptive conduct alleged against the defendants has been revised so that it is based upon three alleged representations, being that the Property was needed at the time for the Project, that it was necessary to acquire the Property at that time, and that the issue of the PAN was a lawful exercise of RMS' powers. The basis upon which the representations are alleged to have been made in trade or commerce has also been revised to include an allegation that the defendants have relevantly engaged in a joint venture in relation to the Project.
To the extent that the determination by the Court of the issues the subject of the present reasons depends upon the allegations made in Desane's amended commercial list statement, and the responses that have been filed on behalf of the defendants, the ground has changed after I reserved judgment. It will be convenient to defer consideration of the relevant allegations and responses until later in these reasons.

Making of orders for discovery

On 11 October 2017, the Court set down the proceedings for final hearing over four days commencing on 26 February 2018.
It will be appropriate for me to comment on the process whereby the defendants were ordered to give discovery in these proceedings.
At the request of the parties, the Court made an order that Practice Note No. SC Eq 11 concerning Disclosure in the Equity Division was not to apply. The effect of the order made by the Court was that it did not apply par 4 of the Practice Note, with the result that the order for discovery was not deferred until the parties had served all of their evidence. Paragraph 5 of the Practice Note provides further that there will be no order for disclosure in any proceedings unless it is necessary for the resolution of the real issues in dispute in the proceedings.
Notwithstanding that the Practice Note has been ordered not to apply, I have taken the view that the issue of whether or not discovery of particular documents is necessary for the resolution of the real issues in dispute in the proceedings remains relevant to the determination of the issues the subject of these reasons, as the Court has a discretion as to whether it should order a party to produce documents to the other, and as a general matter the need for production for the resolution of the real issues in dispute in the proceedings will always be relevant to whether such an order should be made.
As will be seen below, in respect of a significant number of the documents whose production remains in dispute, I have not upheld the claim for immunity or privilege made by the State or RMS, but I have nonetheless declined to order the production of the documents because my inspection of the documents has caused me to conclude that the documents are not in fact relevant to the resolution of the real issues in the proceedings.
Hammerschlag J heard argument on the issue of what categories of documents should be the subject of an order for discovery on 14 September 2017, and in the course of that argument stated his views on certain of the issues in dispute. It appears that his Honour was not informed that any of the proposed categories would give rise to the dispute that I am now required to determine by reason of the need for the Court to resolve claims for public interest immunity and client legal privilege in relation to a substantial quantity of documents.
The parties negotiated and agreed to the categories for discovery, and on 15 September 2017 Hammerschlag J made orders that the defendants respectively give discovery of the categories of documents identified in Schedules A to C to the orders.
It is not necessary to set out the terms of the categories at length. A number of observations should be made, however, which are relevant to the present dispute.
Paragraph 1 of Schedule A required the State to discover all documents created on or after 1 January 2016 "recording or referring to the proposed or potential acquisition of the [Property]" in the possession of the Office of identified Ministers, or the NSW Treasury. The inclusion in the description of documents "recording or referring to" the acquisition of the Property was very wide and capable of catching a great number of documents. Paragraph 1 of Schedule B imposed a similar obligation on RMS, as did par 1 of Schedule C on SMC.
Paragraphs 3 and 4 in Schedules A and C respectively, required the State and SMC to discover all documents created or received on or from 1 January 2016 to 15 September 2017 recording any proposed structure of how the sale or proposed sale of shares in SMC is to take place. This category relates to allegations made by Desane in its commercial list statement concerning various financial aspects of the Project. I will consider those allegations more fully below. It is sufficient to note for the present that the allegations appear to be relevant to Desane's claims that the State has engaged in a business in relation to the implementation of the Project, and that all of the defendants are engaged in a joint venture for that purpose. It will be noted that the category is drawn in relatively limited terms, in so far as it encompasses documents created or received by the State or SMC recording any proposed structure of how the sale or proposed sale of shares in SMC is to take place. However, even if that category is relatively limited, the ambit of par 1 of each of the Schedules to the orders would encompass all of the documents of the State and SMC recording or referring to the acquisition of the Property, where those documents contained financial information that was much more extensive than that which related to the structure of the sale of shares in SMC.
The only category that sought discovery of a valuation of the Property was Schedule A, par 2, which sought discovery by the State of any valuation of the Property as a consequence or result of any proposed or potential rezoning of the permissible use of the Property. The significance of this category is that it does not include any valuation held by a party other than the State, or any valuation of the Property with its present zoning.
The orders made by Hammerschlag J on 15 September 2017 did not specifically refer to the possibility that the defendants might make public interest immunity and client legal privilege claims. The position changed on 17 November 2017, when Hammerschlag J made further interlocutory orders, including by order 2 that each defendant give discovery by stipulated dates. The order included the words: "Such Discovery is to be given by each Defendant by serving on the Plaintiff a list of documents that deals with documents required to be discovered in accordance with the Court's orders of 15 September 2017 (with the exception of documents that are the subject of a potential claim for public interest immunity (PII))…" The italicized part of the order was added by hand, and in addition the following order 2A was made: Each of the defendants is to serve an unverified list of documents that are the subject of potential claim for PII by 20 November 2017.
It thus was made expressly clear, if it was not implied in any case, that the orders for discovery by categories made by the Court on 15 September 2017 preserved the rights of the defendants to make public interest immunity claims.

Desane's notice of motion seeking production

The issues that I am required to decide arise out of a notice of motion filed by Desane on 12 December 2017. In respect of many documents that were listed for discovery, the State resisted production of the documents on the ground of public interest immunity. The State and RMS resisted production of other documents that had been listed for discovery on the ground of client legal privilege.
On 14 December 2017, Hammerschlag J listed Desane's notice of motion for hearing before me on 16 January 2018, sitting as the vacation duty judge.
The hearing was contentious and strenuously contested and took place on 16, 24, 25 and 29 January 2018. Separate teams of counsel were briefed by the principal protagonists to argue the need for production of the documents the subject of the public interest immunity and client legal privilege claims. Initially, the documents the subject of the public interest immunity claim were contained in 44 large lever arch folders. The documents the subject of the client legal privilege claim were primarily contained in four folders. The folders were admitted as confidential exhibits on the hearing of the motion.
Over the course of the hearing, the parties privately communicated in order to refine the immunity and privilege claims made by the defendants and the claim for production made by Desane. Consequently, the number of documents that the Court was required to rule on was reduced.
Notwithstanding the reduction in the number of documents that required consideration, at the end of the hearing there remained a substantial number of documents for determination. Notwithstanding warnings made by me that it might take a considerable time for me to review all of the documents and give a reasoned judgment in relation to each of them, which would jeopardise the commencement of the hearing fixed for 26 February 2018, the parties were unable to agree upon any approach that they could jointly authorise the Court to take that would simplify the process of ruling on the privilege claims in relation to all of the documents, in a manner that could realistically enable the Court to give an expedited judgment.
The proceedings next came before Hammerschlag J for directions on 2 February 2018. I have been informed that as a result of the discussion between the Court and the parties on that occasion as to the possibility that the outstanding judgment on the privilege issues might require the Court to vacate the hearing, the parties changed their stance and agreed upon the following protocol to govern the basis of my determination of the outstanding privilege claims: 1. That the Court can rule on all documents where client legal privilege is claimed without giving any reasons. 2. That the Court can rule on the remaining 67 documents that relate to the "purpose issue", where public interest immunity is claimed, without giving any reasons in the case of documents where the immunity is upheld, and giving only truncated reasons with respect to documents where the immunity is denied. 3. That the Court can rule on the approximately 300 documents relating to the "trade and commerce issue", where public interest immunity is claimed (as Desane still presses for production of the documents notwithstanding that the State asserts that the documents are not relevant to that issue despite having been discovered), without giving any reasons in the case of documents where the immunity is upheld, and giving only truncated reasons with respect to documents where the immunity is denied.

Claims that remain in contention

The Court has subsequently been provided by the Crown Solicitor's Office on behalf of the State with additional information that further restricts the ambit of the Court's task in ruling upon the State's public interest immunity claim.
In relation to the 67 documents relevant to the "purpose issue" that remain the subject of a public interest immunity claim, the Court was provided with a folder containing 13 documents, together with an affidavit of the solicitor who has the carriage of the proceedings on behalf of the State. In essence, the 67 documents have been reviewed to identify "example documents", by a process of sorting the documents into sets of identical or near-identical drafts of Cabinet submissions or attachments, on the basis that the closest to final version of each set has been chosen as the example. Only one copy of the Cabinet decision has been included. A small number of emails disclosing the content of the Cabinet submissions have also been included.
A similar process has been undertaken in relation to the approximately 300 documents going to the "trade and commerce issue". The number of documents has been reduced to 113 "example documents" in three ring binders. An affidavit made by the solicitor with the carriage of the matter on behalf of the State explains that substantially the same process was engaged in of sorting documents and then including the documents that are the closest to the final version of each document. The affidavit explained that the documents fell into wider categories than was the case for the documents that were discovered in relation to "purpose", as they concerned Cabinet submissions and attachments, documents prepared by a steering committee or department or agency for the purpose of providing advice to Cabinet, reports prepared by external consultants at the request of a steering committee for the purpose of preparing submissions or advice to Cabinet; and a variety of other documents internal to the government.
The issues that remain for determination concerning the client legal privilege claims remain the same as when I reserved judgment. They concern the orders sought in par 1(a) of the 12 December 2017 notice of motion in relation to documents produced by the State, and par 2(a) in respect of documents produced by RMS.
In relation to the claim for client legal privilege made on behalf of the State, the small number of documents that were claimed to be privileged were included in Confidential MFI 1.
The documents that RMS claimed were subject to client legal privilege were listed in a schedule that became MFI 2.

Summary of conclusions

Having considered all of the submissions made on behalf of the parties, and having reviewed all of the documents that remain the subject of contention, I have decided that (with a small number of exceptions that I will deal with below) the defendants' claims that production of documents should not be ordered on the basis of either public interest immunity or client legal privilege should be upheld, in relation to all of the substantive documents for which public interest immunity or client legal privilege have been claimed. By substantive documents, I mean all of the documents that contain information bearing upon the subject matter that led to their production, as opposed to emails and other documents that were apparently brought into existence in order to communicate the substantive documents as attachments, or for other administrative purposes concerning the underlying subject matter. I do not presently intend to order the production of the documents that I have not classified as substantive, and I will explain the position I have taken below.
It may well be that the process engaged in by the parties in negotiating and refining the respective claims for privilege or production has been productive, and that the parties have between themselves resolved much of the dispute that initially existed. Although I have resolved the remaining disputes substantially in favour of the defendants, the most significant conclusion that I have reached from reading the disputed documents is that very few of them were necessary or relevant to the resolution of the real issues in dispute in the proceeding. While the defendants clearly went to great efforts to justify their claims for immunity or privilege, and provided substantial information of a general nature to support their claims, the fact is that they did not provide transparent explanations that enabled Desane to appreciate that almost all of the documents were likely to be immune or privileged, their production was not necessary for the resolution of the real issues in dispute, and ultimately they were not worth fighting for.
In respect of those documents where I have declined to make an order that they be produced by the defendants, either because (a) there may be a basis to support the claim for immunity or privilege but because of the content of the documents the resolution of that issue is not called for, or because (b) it seemed clear to me that the documents are irrelevant to the issues in dispute, I would give Desane leave to ask the Court to review its determination by summary decision, on good cause being shown.

Approach to provision of reasons

The protocol that has been agreed between the parties that I have set out above would, in the light of the determination that I have made, justify me in not giving any further reasons for my determination, save for the few exceptions where I have ruled that the State should produce redacted copies of documents to Desane.
However, given the manner in which the hearing was conducted, and the submissions put to the Court, I have decided that it will be appropriate for me to give reasons for the determinations that I have made. In accordance with the protocol, I will not always give reasons in relation to individual documents. Also in accordance with the spirit of the protocol, the observations that I do make will be truncated.
The reason that I have departed from the agreed protocol depends upon the nature of the evidence led by the State and RMS to support the privilege claims. Ordinarily, a claim for privilege from production would be supported by evidence that, without disclosing the privileged content of each document, would explain the circumstances in which the document had been produced in a manner that would enable the other party at least to understand the basis of the claim for privilege on a document by document basis. Possibly by reason of the number of documents concerned in the present case, although the State and RMS supported their claims for privilege by substantial and detailed evidence, it was presented at a level of generality that did not permit Desane to understand how the claim was made document by document. Where the evidence is sufficient to enable the other party to understand the claim document by document, it may be a reasonable expedient where urgent rulings are necessary for the parties to accept a protocol such as the one described above. Both parties would in effect accept the Court's ruling following its reading of the individual documents in the light of the individual descriptions of the circumstances in which they were produced. In the present case, however, while my determination has depended upon my reading of the documents, I have generally found my understanding of the content of the documents to be determinative, and I have had to draw inferences concerning the circumstances in which the documents were produced by relying upon the terms of the documents, and drawing inferences from the generally worded evidence tendered by the State and RMS to support the immunity and privilege claims. This process has led me to form the view that, if I did not provide at least some truncated reasons where appropriate in addition to what was required of the Court by the protocol, Desane would have no real basis for understanding why the Court had made rulings against it.

Principles governing public interest immunity claims

The exclusionary rules relevant to claims of what is commonly described as 'public interest immunity' are contained in s 130 of the Evidence Act 1995 (NSW) (Evidence Act). This section relevantly provides: (1) If the public interest in admitting into evidence information or a document that relates to matters of state is outweighed by the public interest in preserving secrecy or confidentiality in relation to the information or document, the court may direct that the information or document not be adduced as evidence. … (4) Without limiting the circumstances in which information or a document may be taken for the purposes of subsection (1) to relate to matters of state, the information or document is taken for the purposes of that subsection to relate to matters of state if adducing it as evidence would: … (f) prejudice the proper functioning of the government of the Commonwealth or a State. (5) Without limiting the matters that the court may take into account for the purposes of subsection (1), it is to take into account the following matters: (a) the importance of the information or the document in the proceeding, … (d) the likely effect of adducing evidence of the information or document, and the means available to limit its publication, …
Section 130 applies to the admissibility of evidence during proceedings but does not extend to the disclosure of documents through the process of discovery. However, s 131A of the Evidence Act extends the operation of s 130 to preliminary proceedings of courts. It provides relevantly: (1) If: (a) a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A, 1C or 3, and (b) the person objects to giving that information or providing that document, the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence. (2) In this section, "disclosure requirement" means a process or order of a court that requires the disclosure of information or a document and includes the following: … (b) pre-trial discovery, …
The effect of s 131A is that a person may claim public interest immunity under s 130 in respect of documents that it has been ordered by the Court to discover, and that the Court must determine the claim by applying s 130 with any necessary modifications, as if the objection to discovering the documents was an objection to adducing those documents as evidence. The expression 'person' in s 131A has been interpreted to include the State: State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60, [39] (Allsop P, Hodgson and Sackville JJA agreeing).
In Ku-ring-gai Council v West [2017] NSWCA 54; (2017) 220 LGERA 386, Basten JA (with whom Macfarlan JA agreed) explained the relationship between s 130 and the common law relating to public interest immunity in the following way: [84] The case law is replete with statements to the effect that s 130 "closely reflects the common law position" or that "what differences exist are of no practical significance" and that common law principles "assist in informing of the content and operation of the Evidence Act, s 130". (It is not strictly correct, as suggested in Ryan, that this Court held that "the assessment of the claims for public interest immunity was to be undertaken both by reference to common law and statute"; rather, the Court said it was necessary to determine whether the provisions of the Evidence Act were engaged, but having decided that the Act was not engaged, nevertheless proceeded to assess the claims by reference to both the common law and s 130.) [85] Two things should be stated about the correct approach to the consideration of objection on the grounds of public interest immunity, in a case where s 130 is engaged. First, the statutory structure should be followed. That requires identification of the scope, content and importance of (a) the public interest in admitting information or a document into evidence, and of (b) the public interest in preserving secrecy or confidentiality in relation to that information or document. It is only when the latter outweighs the former that the court is empowered to direct that the information or document not be adduced in evidence. [86] Secondly, in other respects the terms of s 130 are permissive rather than restrictive. That fact engages s 9(1) of the Evidence Act which provides: 9 Application of common law and equity (1) This 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 this Act applies, except so far as this Act provides otherwise expressly or by necessary intendment. [87] Accordingly, so far as principles or rules can be derived from authorities operating under the common law or equity, which are not inconsistent with ss 130 and 131A, those principles or rules continue to apply. It is for that reason that consideration of common law authority may not only be permissible, but necessary. (references omitted)
Apart from a disagreement about the level of precision required of the evidence to support a claim for public interest immunity, I do not understand the parties to be at issue concerning the principles that the Court is required to apply. As the parties have agreed that these reasons may be truncated, I will not explore the applicable principles at length.
Section 130(1) of the Evidence Act applies only to "information or a document that relates to matters of state". The evidence relied upon by the State makes plain that the information and documents relevant to the present dispute ultimately concern investigations and deliberations relevant to the planning, construction, implementation and funding of the Project. Although the indicia of matters of state set out in section 130(4) are not exhaustive of what constitutes such matters, the indicium relied upon by the State in the present case is that set out in par (f), being that the disclosure of the information or documents would prejudice the proper functioning of the government of the State.
The information or documents which the State seeks to protect in the present case have not only a governmental dimension in so far as they relate to the provision of a major piece of infrastructure for the public of the State, but they also have an economic dimension in that they relate in a substantial way to the manner in which the State might fund the Project and also realise part of the value of the Project for the purpose of the proper financial administration of the State. Indeed, Desane seeks the documents to support its claim that the defendants are engaging in a joint venture or business in relation to the implementation of the Project.
As I understand Desane's position, it does not submit that the documents for which it seeks production by the State do not relate to matters of state, or are not sufficiently capable of protection in the public interest to attract the operation of public interest immunity.
Although in some respects the State's submissions appeared to claim immunity for the documents from production as a class, it will be seen that I have generally dealt with the claims on the basis of the contents of the documents: see The Commonwealth v Northern Land Council (1993) 176 CLR 604; [1993] HCA 24 at 616. The contents of the documents cover many facets of the implementation of the Project, but the one that I have found to be most significant is the proposed funding and realisation of part of the State's investment in the Project. That is an activity that has been in the planning for some time but has not yet been implemented. Many of the documents disclose in more or less direct ways the strategies available to and contemplated by the State in achieving the optimal financial outcome possible in the interests of the public of the State. It is self-evident from a consideration of many of the documents that they are highly sensitive to the State's negotiating position with the substantial private interests who might engage in a bidding process for the right to participate financially in the Project. The disclosure of this information would as a matter of common sense be highly prejudicial to the interests of the State and the public. Although the sensitivity of the information in some of the documents is more obviously apparent than in others, the nature of the information as a whole triggers a rational concern that it may be prejudicial to the State and the public if some information, that is not obviously sensitive to a Judge who does not have the expertise or understanding, is disclosed because sophisticated potential investors may be able to learn more of the State's secrets than may be apparent on the face of the documents. Shortly put, the information in the documents as a whole is such as to trigger a general, rational concern that it should not be disclosed except for very good reason.
In my view the proper functioning of the government of the State for the purposes of s 130(4)(f) of the Evidence Act plainly extends beyond the functioning of the government in an administrative sense and includes the outcomes that may be achievable by the government as a result of its administrative operation.
In Mark Ryan v State of Victoria [2015] VSCA 353, Tate JA, with whom Santamaria and Ferguson JJA agreed, said: [115] Secondly, I do not consider that the remarks of the Chief Justice and Maxwell P indicate that "the proper functioning of government" in the context of para (f) of subs (4) should be confined to deliberations at the highest level of executive government. This is in part because para (f) is addressed not simply to the character of the information involved but more expressly to the effect the disclosure of the information would have on the functioning of the workings of government as is apparent from the need to consider whether documents adduced as evidence would "prejudice the functioning of government". It is the effect of disclosure upon the proper functioning of government rather than the level of sensitivity of the information that is all-important. Of course, a court may readily infer that the proper functioning of government would be prejudiced if information was adduced in evidence that recorded deliberations at the highest levels of government, or if the information related to a particularly sensitive area of executive responsibility. But that is not to deny that an inference may be open that the proper functioning of government would be prejudiced if information was adduced in evidence that did not record deliberations at the highest levels of government but instead related, relevantly, to police methodologies which, if released, could impair police operations.
Both parties accepted that s 130 of the Evidence Act and the common law involve a balancing exercise. Section 130(1) provides that the public interest in admitting a document that relates to a matter of state must be weighed against the public interest in preserving secrecy or confidentiality in relation to the document.
Section 130(5)(a) of the Evidence Act expressly authorises the Court to take into account, for the purpose of carrying out the balancing exercise required by sub-s (1), the importance of the information or the document in the proceeding.
That exercise would ordinarily require the Court to understand the issues as they are raised by the pleadings or other documents filed by the parties in order to distil the issues. It would also require that the Court have some understanding of how the evidence available to the party seeking production of the information or document would have a tendency to prove or disprove the relevant issue, as the case may be, so that a rational judgment could be made by the Court about the forensic importance of the information or document being made available to the party calling for its production in order to complete the necessary proof.
That is an exercise that is likely to be easier for the Court if undertaken during the course of a hearing, which is the direct province of s 130. Where the principles contained in s 130 are required to be applied in advance of the hearing, by the operation of s 131A of the Evidence Act, the Court is likely to find that the exercise is a more difficult one because of the Court's limited understanding of the evidence that is available to the party calling for the information or document, and accordingly of the importance of that material in the proceeding.
That is a difficulty that I have experienced on this application, in that Desane has sought production of the documents the subject of the State's public interest immunity claim in a virtual vacuum in respect of what it is precisely that Desane wishes to prove, and what other evidence is available to Desane to prove the necessary matters, so that the Court can make a judgment about the forensic importance of the documents as a step in weighing the competing public interests that are the subject of sub-s (1).
In due course I will have to rely upon an analysis of the relevant aspects of Desane's amended commercial list statement, and the defendants' responses to that document. That task has been all the more difficult because an analysis of pleadings without an understanding of the evidence will not usually be sufficient to establish the true importance of particular information or documents to the proceeding, and as I have already mentioned, Desane was given leave to amend its commercial list statement after I reserved judgment.
It will be convenient to deal with a submission made by Desane to the effect that the Court should treat all documents that have been discovered by the defendants in response to the orders made on 15 September 2017 as necessarily being relevant to issues in the proceedings for the purpose of considering the application of s 130(5)(a) of the Evidence Act. Accordingly, Desane submitted that the State should be ordered to produce all of the listed documents on the basis that the documents are plainly relevant to Desane's case, or they would not have been discovered as was ordered by the Court: see Adelaide Brighton Cement Limited v South Australia (1999) 75 SASR 209 at 216; [1999] SASC 379. I accept that in that case Debelle J followed an observation made by Toohey J (in dissent) in Commonwealth v Northern Land Council (above) at 635 "that, once documents appear in a list of documents, concerns as to relevance may be put to one side". The majority made a similar observation at 613-14 where their Honours said: "The Commonwealth made discovery of these documents and there is no dispute, therefore, that they were discoverable. That is to say, it may be assumed that the notebooks contain entries which relate to matters in issue in the action in the sense they would, or would lead to a chain of enquiry which would, either advance the Northern Land Council's case or damage that of the Commonwealth".
I do not accept that, in cases where the parties have been ordered to give discovery by category, the Court is bound to accept that every document that has been listed is relevant to an issue in the proceedings, at least where the Court is required to read the document, and is able to make a judgment based upon what it sees, that the document is unlikely to be relevant, or sufficiently relevant, to an issue to require its production. The submissions in this case did not explore the rule of court under which discovery was given in the cases referred to in the previous paragraph. If the South Australia Supreme Court Rules 1987 applied, then rule 58.01 would have required the parties to list all documents that are, or have been, in their possession, custody or power, relating to any matter in question in the action. That is similar to the old basis for discovery in this State. Discovered documents would presumptively be relevant because the party giving discovery was required to make a judgment that the document related to a matter in question in the action.
Since 2006, the relevant rule of the Supreme Court of South Australia has been in the same terms as rule 21.2 of the Uniform Civil Procedure Rules 2005 (NSW). Under sub-rule (3)(b), a class of documents may be specified by description of the nature of the documents and the period within which they were brought into existence. It is true that sub-rule (4) states that an order for discovery may not be made unless the document is relevant to a fact in issue. However, as a practical matter the Court or the parties may need to fix upon descriptions of documents that appear likely in general to be relevant to a matter in issue sometime before the parties are required to make a judgment as to whether the individual documents fall within a stated category. Realistically, when the judgment comes to be made as to whether or not a document falls within a particular category, it may be too late to argue whether or not the individual document is relevant to a matter in issue.
I am fortified in this view by the changes made to the discovery regime contained in the Court's 15 September 2017 orders by the later orders made on 17 November 2017. In my view the effect of the later orders was to entitle the defendants to support any claim of public interest immunity on any proper basis, including a submission that particular documents were not in fact relevant to the issues in dispute, or were insufficiently relevant to justify an order for their production.
This is not a merely technical point in this matter, as I have found that the categories the subject of the order made on 15 September 2017 have caught many documents that do not appear to be relevant to the matters raised by the parties' contentions, or whose apparent irrelevance is a significant factor in deciding the public interest immunity claim. In these circumstances it would be wrong for the Court to treat all of the documents that have been listed on the basis that they fall within a particular category for discovery as being necessarily relevant to a matter in issue.

The State's evidence in support of its public interest immunity claim

It will be appropriate to refer to the evidence led by the State to support its public interest immunity claim. The State relied upon an affidavit of Ms Karen Smith affirmed on 22 December 2017. Ms Smith is the Deputy Secretary, Cabinet and Legal of the Department of Premier and Cabinet of the State of New South Wales. The claim initially related to 952 documents. That created a practical difficulty in how the State could clearly and conveniently provide a description of each of the documents and the basis of the public interest immunity claim sufficient to support the claim. The State took the course of classifying all of the documents within eight categories as follows (noting that categories H and I were not used): A. Decisions of Cabinet; B. Cabinet Submissions and Minutes submitted to Cabinet on behalf of a Minister, drafts of those Submissions and Minutes and documents that disclose the deliberations of Cabinet and related briefings and correspondence; C. Draft speaking notes prepared for Ministers to use in Cabinet; D. Draft advices prepared for Cabinet and Premier by NSW Treasury or the Department of Premier and Cabinet in relation to matters being put before Cabinet for decision; E. Documents prepared by a Steering Committee established by Cabinet, or by other Departments or government agencies, for the purpose of providing advice to Cabinet; F. Reports prepared by external consultants at the request of a Steering Committee solely for the purpose of either: (i) the report being submitted to Cabinet to advise it on an issue being considered by it, or (ii) to assist in the preparation of advice for Cabinet; G. Other documents the release of which would prejudice the proper functioning of the NSW Government; and J. Draft House Folder Notes and other Notes, including Budget Estimates Notes, created for the use of Ministers in Parliament and related documents.
The State further categorised the documents as relating to one of three subjects, being: 1. The properties to be acquired and the level of funding to be allocated for the acquisition of properties required for [the Project]. 2. The source of funding from the existing Government budget or otherwise for [the Project]. 3. The proposed structure of how the sale or proposed sale of shares in SMC, or its subsidiaries, is to take place.
All of the documents were then given a description constituted by a letter to signify the category of the document (within the range A to J) and a category of subject (within the range 1 to 3), plus a number to identify the page in the folders where the document would be found. Thus a document described as C2-21 would be a draft speaking note prepared for a Minister to use in Cabinet on the subject of the source of funding from the existing Government budget or otherwise for the Project, and be at page 21.
Ms Smith's affidavit contained a detailed explanation of the underlying government processes that had led to the eight categories of documents being prepared for one or more of the three subjects that were identified. It may be observed from the list of eight categories that they range from documents being directly and intimately connected with the Cabinet process, through the preparation of Ministers to participate in that process, to the high-level administrative functions necessary to enable proper advice to be given to Cabinet, and to the provision of advice by various professional advisers as would be necessary in relation to the consideration by the government of the State of an undertaking as substantial as the Project. Ms Smith provided an extensive explanation of the significance of the various levels of input into the decision-making process of Cabinet, and identified the participants, but she did not do so in a way that explained the circumstances in which each of the individual documents had been produced. To have done so would have been a very substantial undertaking given that the public interest immunity claim was initially made in respect of 952 documents.
That course may have been understandable given the number of the documents involved, but it should be recorded that it made it difficult for Desane to make a judgment about the validity of the public interest immunity claim in relation to the individual documents, or to decide on the significance of the documents to the case that Desane wishes to present at trial. It also had the consequence that the only way that the Court could rule upon the public interest immunity claim was to read all of the documents in contention.
With this background, it is possible to summarise the descriptions of the documents that have now been provided to the Court by the State as "example documents" in respect of the "purpose" and "trade and commerce" categories.
Before I set out those summaries, it will be appropriate to note that generally the approach that was apparently adopted to produce the folders of documents involved the separation of many documents that probably formed a single communication. Thus, a covering email will be one document, while the attached Cabinet submission will be another document, while an attachment to a Cabinet submission will be a further document. That often creates the difficulty that the true context of individual documents has been obscured by the process by which the lists of documents and the copies of the documents in the folders have been produced. In particular, many of the covering emails contain only formal information, and on the one hand do not contain any information that is a matter of state, while on the other hand they appear to be entirely immaterial to any issue in the proceedings. Had the physical integrity of the whole of the communications been maintained, then it may more readily have appeared from the context that a particular email, Cabinet document, and attachment were part of a single communication that might warrant the claim of public interest immunity being sustained.

Claim for public interest immunity - purpose issue

I will consider first the dispute between Desane and the State concerning the validity of the public interest immunity claim made by the State in relation to the documents that remain in contention on the "purpose issue".
All of the 13 documents in the folder containing the documents related to the "purpose issue" are described as B1, save for one document described as A2, one document described as E1, and one document whose description is inexplicably missing, but is referred to as "Briefing seeking approval of Cabinet Submission D" - Tab 13.
Category B1 documents would be Cabinet submissions and Minutes submitted to Cabinet on behalf of a Minister, drafts of those documents and documents that disclosed the deliberations of Cabinet and related briefings and correspondence concerning the properties to be acquired and the level of funding to be allocated for the acquisition of the properties required for the Project.
Not all of the 13 documents fall within this description, which is likely to be a function of the fact that covering emails and the like have been separated from the attachments referred to in the emails. Category B is on examination drafted in a loose way in so far as it extends to "related briefings and correspondence".
None of the documents in any real way disclose the deliberations of Cabinet. In The Commonwealth v Northern Land Council (above) at 614-15 the majority made the following distinction (footnotes omitted): It should be observed at the outset that the documents for which the Commonwealth claims immunity from disclosure are documents which record the actual deliberations of Cabinet or a committee of Cabinet. They are not documents prepared outside Cabinet, such as reports or submissions, for the assistance of Cabinet. Documents of that kind are often referred to as Cabinet documents. When immunity is claimed for Cabinet documents as a class and not in reliance upon the particular contents, it is generally upon the basis that disclosure would discourage candour on the part of public officials in their communications with those responsible for making policy decisions and would for that reason be against the public interest. The discouragement of candour on the part of public officials has been questioned as a sufficient, or even valid, basis upon which to claim immunity. On the other hand, Lord Wilberforce has expressed the view that, in recent years, this consideration has "received an excessive dose of cold water".
As none of the documents disclose the actual deliberations of Cabinet, they do not attract the extremely high level of immunity considered by the majority. Nonetheless, I consider the majority to have left open the possibility that what they described as Cabinet documents could be protected as a class. I have not found it necessary to reach a final view on that question, as I have read all of the documents in accordance with the invitation of the parties, and I have been able to decide whether public interest immunity should be accorded to the individual Cabinet submissions having regard to their content.
The document at Tab 1 is a Cabinet submission, and the document at Tab 2 is an email that circulated the Cabinet submission to various people. The Cabinet decision contains a statement of the budget allowance for the allocation of properties including the Property, and also includes relatively precise statements concerning the timing and purpose of the acquisition of the Property. The information in the email is relevantly uninformative.
In my view it would be prejudicial to the proper functioning of the government of the State if Desane were to be provided any Cabinet submission or other document which disclosed the funds available to the State to pay any agreed price or compensation for any property that needed to be acquired for the implementation of the Project. That is so even if the amount disclosed covered all of the properties proposed to be acquired.
The Cabinet submission contains information that specifically identifies the State's purpose in acquiring the privately held properties at Rozelle that include the Property. This aspect of the submission takes the form of explaining to Cabinet where the acquisition of the Property fits into the implementation of the Project and potential, related infrastructure development. It does not appear to be information that would be relevant to the deliberations of Cabinet as a matter of governmental policy. I understand that this information may be germane to the case that Desane wishes to pursue in relation to the purpose claim.
I do not see that it will be prejudicial to the proper functioning of the government of the State if a redacted version of the Cabinet submission at Tab 1 is provided to Desane. In deciding whether the provision of the unredacted part of the Cabinet submission to Desane will further the public interest in facilitating the effective conduct of Desane's proceedings in a manner that is not outweighed by the public interest in preserving the secrecy or confidentiality of the disclosed material in the Cabinet submission, the Court is hampered by the fact that it does not generally know what other information has been produced by the State to Desane, and in particular does not know whether the Cabinet submission is the only document that would enable Desane to learn the information about the State's purpose.
In these circumstances in my judgment the State should be required to produce this Cabinet submission to Desane redacted to exclude all of the information before the heading that precedes par 3.15 and all of the information from and including the heading that precedes par 3.21. As to the heading that precedes par 3.51 to the end of par 3.20, the State is entitled to redact all information that discloses the amount of any sum of money referred to.
The document at Tab 3 is a Cabinet submission, and the document at Tab 4 is an attachment to the submission. The submission contains general statements about the Project that do not closely address the acquisition of the Property. The attachment contains budget information concerning the Project and a line item being the budget allowance made for the acquisition of properties including the Property. The State should not be required to disclose these documents to Desane.
The document at Tab 5 is in fact an email recording a Cabinet decision. The decision relates to the Project generally save for two statements that relate broadly to the area that includes the Property.
A document that discloses a decision made by Cabinet is not entitled to the same protection as a document that discloses the deliberations of Cabinet. It may still be the case that public interest immunity can be established under s 130 of the Evidence Act, but the enquiry into that issue will have to be from the perspective of whether it will be prejudicial to the proper functioning of the government of the State for the State to be required to disclose a decision actually made by Cabinet.
Ms Smith explained the rationale for the State's claim for public interest immunity for Cabinet decisions in pars 41 to 43 of her affidavit. The State also relied upon the background evidence in pars 21 to 35. Ms Smith explained that it was vital to the good governing of the State that Cabinet decisions be recorded accurately, precisely and as succinctly as the subject matter permits. She said that Cabinet decisions are recorded in that manner, but that they are not designed for publication. Ms Smith also claimed that the disclosure of a Cabinet decision would disclose, implicitly or explicitly, the deliberations of the Cabinet. For instance, they may disclose dissenting views or the position of particular Ministers. In that case disclosure of Cabinet decisions would undermine the principle of collective responsibility upon which the Cabinet operates. Finally, Ms Smith claimed that if records of Cabinet decisions were liable to be disclosed pursuant to the discovery process, it would tend to inhibit the phrasing and recording of those decisions. Decisions may be phrased and recorded in a manner calculated to be suitable for disclosure to the public. There would also be a tendency to phrase and record decisions in more circumspect and inhibited language, perhaps with statements of reasons and qualifications. A tendency would also arise for the phrasing and recording of decisions in less precise terms. It would be against the public interest for Cabinet decisions to be recorded imprecisely or verbosely.
I accept that where, in a particular case, the manner in which a Cabinet decision has been recorded reveals the deliberations of Cabinet, the decision may attract public interest immunity no less than any other documents that record the deliberations of Cabinet. That is a proper extrapolation of the judgment of the High Court in The Commonwealth v Northern Land Council (above).
The State's submissions did not explain in any particular way how the document at Tab 5 would disclose the deliberations of Cabinet if it were ordered to be produced to Desane.
It is no doubt an exemplary proposition that Cabinet decisions be recorded accurately, precisely and succinctly, as it would be alarming to think that the persons responsible for recording Cabinet decisions would do so in obfuscatory language, given the danger of such a course to the effective government of the State. I am not willing to accept without reservation that the risk that very occasionally a Cabinet decision will be required to be disclosed to a party in litigation, subject to the restrictions imposed upon that party not to misuse the information disclosed, would lead to a collapse in the level of accuracy with which Cabinet decisions are recorded. The accurate recording of Cabinet decisions is required for a host of reasons essential for the effective governance of the administrative apparatus of the State.
Ms Smith gave detailed evidence of the procedures adopted within government to protect the fundamental constitutional principle of the collective responsibility of the Cabinet for Cabinet decisions. For that purpose she annexed to her affidavit the Cabinet Practice Manual created by the Department of Premier and Cabinet, March 2017 version. The part of the Manual dealing with the actual decisions of Cabinet merely states: "In line with the conventions of collective responsibility and confidentiality, details of Cabinet discussions are not recorded. The Cabinet Secretary instead records consensus Cabinet decisions". The Manual does not describe any regime of secrecy for actual Cabinet decisions.
Nonetheless, in my view, the Court should still be reticent to require the disclosure of records of Cabinet decisions that have not already been disclosed by the government to the public. There is some force in the arguments put by Ms Smith even where the disclosure of a Cabinet decision will not disclose the deliberations of Cabinet and so put at risk collective ministerial responsibility.
On the other hand, the disclosure of an actual Cabinet decision may be warranted because it may reflect an actual decision that will govern the conduct of the State; whereas all other types of documents, from Cabinet submissions down, might ultimately only contain advice and opinions that will not be operative until and unless accepted by Cabinet and reflected in a Cabinet decision.
In the present case sub-pars i) and ii) of the document at Tab 5 state matters that relate to the ultimate use of part of the property that may include the Property, in a manner that I apprehend may be material to Desane's case on its purpose claim. I cannot see any prejudice that is likely to arise as to the proper functioning of the government of the State if the Court requires the State to produce to Desane those two sub-paragraphs. I note that the email is dated 26 July 2016, and its contents may have been superseded by later developments. The State is entitled to redact the balance of the email.
The document at Tab 6 is a Minute of the Cabinet Infrastructure Committee. It contains general statements about the Project that do not closely address the acquisition of the Property, and the State should not be required to disclose it to Desane.
The documents at Tabs 7 and 8 are said to be emails discussing the Cabinet submission. Two of the emails are not readily legible as the words are printed in a single vertical line downwards at the edge of the page, and some of the words have been altered in revision mode. It also appears that the pages may be out of order. The illegible part is said to set out key amendments to the Cabinet submission. The balance of the emails is relatively uninformative.
Doing the best I can, the email at Tab 7 appears to deal with the need for remediation of State-owned land that will be used for the Rozelle Interchange, and the costs of the remediation. Notwithstanding the difficulty in understanding the email, I would not on the present evidence order that it be produced to Desane. Given the difficulty, however, I would give Desane leave to require the State to produce a legible version of the email and submit it to the Court for a further summary ruling in respect of the document, if Desane takes the view that that course is worthwhile.
The document behind Tab 9 is a Cabinet submission, and the document behind Tab 10 is an attachment to the submission. As the submission is in revision mode, I assume it is in reality a draft that would reflect the final submission if all revisions were accepted.
The Cabinet submission contains recommendations including two recommendations that have found their way into the sub paragraphs of the email at Tab 5 recording the Cabinet decision that I have ruled should be provided to Desane. However, as those recommendations form part of a Cabinet submission, it is not warranted that the State be ordered to disclose those aspects of the recommendation to Desane, as Desane will already have the benefit of the actual Cabinet decision by reason of the unredacted part of the document at Tab 5.
The balance of the Cabinet submission deals primarily with unrelated aspects of the Project, and in so far as it touches upon the area that includes the Property, it does not add any information of any substance to that which will be disclosed as part of the document behind Tab 5.
On balance, the State should not be required to disclose the documents at Tabs 9 and 10.
The document at Tab 11 is described in the index as an attachment to Cabinet Decision D: "attachment B". It concerns consultations that apparently took place with various government departments in relation to the planning of the Project, and is not material to any issues in the proceedings. The State should not be required to produce the document to Desane.
The document at Tab 12 is entitled "Chapter 5 Design Cost Estimates". It is described in the index as an attachment to a Cabinet submission. It contains the information that its title would suggest and relates generally to the whole of the costs of the Project.
Only one part of the document appears to be directly relevant to Desane's purpose case. That is the part on page 5-10 starting from the heading before the last paragraph on the page and including Table 5-6 on page 5-11. The information contained is related to that part of the Cabinet submission at Tab 1 that I have ruled the State should disclose to Desane. In my view the State should be required to disclose to Desane the parts of the Cabinet submission that I have just described, but it should be entitled to redact the information concerning estimated costs if it wishes. The State should be entitled to redact the balance of the document.
The document at Tab 13 is a briefing for the Minister for Roads, Maritime and Freight prepared by Transport for NSW. It does not disclose any information material to the issues in the proceedings, and given its nature it is not a document that I would order the State to produce to Desane.
I have ruled that the State should be ordered to produce to Desane redacted copies of some of the documents for which the State claimed public interest immunity in relation to the purpose issue. I am conscious that the State has not been given an opportunity to put precise submissions in relation to each of the documents concerning the extent of the redactions that should be permitted. I also do not know whether the parts of the documents that my limited understanding of the forensic issues in the proceedings causes me to believe will be relevant to the issues in the case have been disclosed by the State to Desane in other documents that have been produced. Given the significance of a public interest immunity claim, I would give leave to the State to approach the Court to relist the matter for a summary reconsideration by me of these questions.
If the partially redacted documents are produced by the State to Desane in accordance with these reasons for judgment, I do not think that the State should have to rely solely upon Desane's obligations under the principle in Harman v Secretary of State for the Home Department [1983] 1 AC 280. The parties should agree a protocol for how the confidentiality of the documents will be protected, and for the documents to be destroyed or returned to the State once they are no longer needed. I will rule on the terms of the protocol if the parties cannot agree.

Claim for public interest immunity - trade and commerce issue

The State's revised claim to public interest immunity in relation to documents discovered under categories perceived to be relevant to the trade and commerce issue was explained in an affidavit by the solicitor with the conduct of the State's case made on 5 February 2018. The affidavit explains that the documents have been reduced to 113 example documents that were provided to the Court in three large folders. (A post-it note, placed on volume 1 of the 3 folders provided to the Court contains a note: "All documents in Folders 1, 2 + 3 are claimed to be PII in full except for the documents at Tab 80, 109, 112 and 113." I am not sure what this note means. I assume that immunity is claimed for part of the documents listed. If that is correct, I am unsure as to how to identify the part of the documents for which immunity is maintained - but suspect it might have something to do with the yellow highlighting on the documents. In the circumstances I have dealt with the documents as if immunity was claimed for the entirety of the documents).
An analysis of the documents in the three folders by reference to the descriptions of them in the original index which became Exhibit KS-3, shows that about 75 of the documents were prepared by a steering committee, or other government department or agency, for the purpose of providing advice to Cabinet (Category E is explained above at par 65). Almost all of these documents are claimed to concern subject 2, being: "the source of funding from the existing Government budget or otherwise for the Project" (see par 66 above).
About 27 of the documents are claimed to be reports prepared by external consultants at the request of a steering committee solely for the purpose of either the report being submitted to Cabinet, or to assist in the preparation of advice for Cabinet (Category F). Most of these documents are said to concern subject 2, but a number also concern subject 1, being "the properties to be acquired and the level of funding to be allocated for the acquisition of properties required for the Project".
Only five Cabinet submissions are included in the documents (Category B) on subjects 1 and 2. There is one draft advice prepared for Cabinet and Premier (Category D) on subject 2, two documents described as other documents the release of which would prejudice the proper functioning of the State government (Category G) on subject 2, and one note created for the use of Ministers in Parliament and related documents (Category J) on subject 2.
As appears from this analysis, a substantial majority of the documents for which the State has claimed public interest immunity for documents discovered as falling within the trade and commerce discovery categories are more remote than documents that record Cabinet deliberations, Cabinet submissions, or speaking notes for Ministers in Cabinet. They are instead documents said to have been produced by a steering committee or a department or other government agency, or by external consultants at the request of a steering committee for the purpose of being submitted to Cabinet or advising Cabinet.
It is appropriate that I set out briefly the approach that I have adopted in applying s 130(1) of the Evidence Act in deciding whether to accept the State's claim for public interest immunity in relation to the contentious documents that have been discovered by the State concerning the trade and commerce issue.
The State has only been required to discover these documents because of Desane's case that the State is itself engaging in a business and that the defendants are conducting a joint venture in implementing the Project. Those allegations are necessary to support Desane's misleading and deceptive conduct claim, and would fall away if that claim were baseless.
In par A6(b)(ii) and (c)(iv) of its amended commercial list response filed on 6 December 2017, the State pursued the unorthodox course of claiming that Desane should not be permitted at trial to pursue its misleading and deceptive conduct claims against the State. The State appears to have adjusted its position in its commercial list response to amended commercial list statement, in that the State now only lists reasons why on its case Desane's misleading and deceptive conduct case against it must fail. There are reasons to be sceptical about the soundness of the misleading and deceptive conduct case. If Desane wins on either of its purpose cases, then the PAN will be invalid. If it fails, then it will follow that RMS had a purpose that accorded with the requirements of the legislation. It is hard to see how the Court could enjoin RMS from acting on the PAN just because extraneous misleading statements were made on its behalf as to its purpose. The Court might restrain the making of those statements, but not restrain acting upon the valid PAN. The amended commercial list statement does not appear to recognise the centrality of causation to relief for misleading and deceptive conduct, in so far as in par A3 it simply refers to various officers or employees of RMS and SMC "either represented to Desane, or stated in internal communications or otherwise stated in public releases" misleading and deceptive representations concerning the purpose of RMS in resuming properties.
Yet the misleading and deceptive conduct claim remains an issue in the proceedings, and the present dispute must be decided on the basis that it is to be treated as a real issue.
The essential difficulty that arises in deciding the State's public interest immunity claim in relation to documents that have been discovered that relate to the trade and commerce issue lies in the need to understand what form of financial information is relevant to whether the State has been engaging in a business, or has participated in a joint venture with the other defendants.
Desane relied upon the decision of the Victorian Court of Appeal in Murphy v Victoria (2014) 45 VR 119; [2014] VSCA 238 at [58] and [62]. Earlier, at [56], the Court had said: "… It is conceivable that the State might have commenced, or alternatively might yet commence, to carry on the business of designing, constructing and operating a motorway as a tollway for reward at some point before the tollway begins to operate". Here, the Court described the business as one of "designing, constructing and operating a motorway as a tollway for reward". Later, at [62], the Court of Appeal, when discussing the arguments put by the appellant, used the expression: "that the State is properly to be seen as having begun to carry on a business of designing, constructing, building and operating the motorway as a tollway for reward".
The Court of Appeal did not include any reference to the manner in which the State may have sought to fund the operation. When one considers the indicia of the carrying on of a business that the primary judge considered, and the Court of Appeal listed with approval at [46], it appears that the issue of whether a business is being carried on depends upon the objective nature of the activities and not how those activities are funded. Still less does it appear that the manner in which a party may seek to realise part of the value of its activity is material to whether the activity is a business or not.
Nonetheless, Desane correctly pointed out that in Murphy v Victoria at [42] the Court of Appeal said "that the question whether the impugned representations were made by the respondents in the course of carrying on business (and in trade and commerce within the meaning of the Australian Consumer Law) is a question of fact and degree which turns on a consideration of all of the relevant facts and circumstances…"
In par 26 of its initial written submissions, Desane included in its list of factors that justified a finding that the State was in the "business of designing, constructing and operating a motorway as a tollway for reward": b) the funding model for [the Project] is independent of government… d) the tollway is proposed to be sold as a way of raising revenue for the State and the equity sale process has already commenced.
Desane expanded upon this list at par 40 of its further written submissions in the following terms: For the plaintiff to establish the defendants' engagement in trade and commerce, which appears to arise from the documents currently available to it, the plaintiff requires access to documents which disclose: 1. The terms upon which SMC and/or its subsidiaries are receiving State funding; 2. The terms upon which RMS has been receiving State funding, and will receive State funding for Stage IIIB; 3. The terms of the provision of private sector finance; 4. Whether the State has guaranteed the repayment of private finance; and 5. Whether or not SMC is operating with a view to making a profit.
Desane did not explain to the Court in its submissions how or why any of these matters were relevant to its case that the State was engaging in business or a joint venture with the other defendants.
Of the various factors listed by Desane in these two paragraphs of its submissions, only sub-par (d) of the list given in the initial written submissions falls within the category of documents for discovery by the State and SMC included in the Court's 15 September 2017 orders described as "documents…recording any proposed structure of how the sale or proposed sale of shares in [SMC] is to take place".
I will now consider how this issue has been addressed by Desane in its initial and amended commercial list statements, and how the defendants, particularly the State, have responded.
Desane alleges in par A2 that the State, acting through RMS and SMC, is carrying on the business of acquiring property for, constructing and conducting a commercial toll road project in Sydney. Desane has added in par A2B of its amended commercial list statement that each of the defendants is engaged in a joint venture for the "financing, delivery, construction and operation" of the Project, for and on behalf of and for the benefit of the State. Desane thereby introduced the function of "financing". Desane also included the function of "financing" in par A6(b), where it alleges that the defendants have engaged in misleading or deceptive conduct.
In par C27A and C28(a) and (b) of its amended commercial list statement, Desane alleges that "financing" the Project is part of the activities of SMS. In its response SMS effectively admitted these allegations, as it admitted that between October 2015 and 31 October 2017 it had responsibility for the "delivery" of the Project, and it expressly admitted par C28. RMS in its response substantially admitted par C27A, and expressly admitted par C28. In its response, the State adopted the RMS response to par C27A, and expressly admitted par C28.
There does not appear to be any issue between the parties concerning SMC's financing of the Project for the period for which that was SMC's responsibility.
Desane has alleged in par C30A of its amended commercial list statement that the State has provided initial equity capital and other funding to SMC, and in par C30B that the State is the effective owner of 100% of the shares in SMC. The State and SMC (who are the operative parties in relation to these allegations) have admitted both paragraphs, although RMS has not.
Desane has alleged in par C35 that on 12 May 2017, the State announced that it would proceed with the sale of at least a 51% stake in SMC. It alleges in par C35A that the State and SMC have commenced that sale process, and in par C35B that the proceeds of the sale of at least a 51% stake in SMC will form part of the consolidated revenue of the State. The State has effectively admitted those allegations, although it has added a number of explanatory allegations. RMS has effectively admitted the first two allegations but not the third. SMC has taken the same stance in substance as RMS.
In par C35C, Desane alleges the basis of the joint venture between the defendants as being the matters alleged in pars C22 to C30C.
The basis of the allegation by Desane that the defendants were carrying on a business is set out in par C36. The allegation is: In the premises of paragraphs C12-35C above, in circumstances which include that: (a) the [Project] is to be operated as a tollway at least until 2060; (b) the [Project] is funded by private sector debt funding which is non-recourse to the State; (c) SMC and its subsidiaries, as the operating entities of [the Project], are private companies that are not representing the State; (d) various subsidiaries of SMC have obtained concessional tolling rights to parts of the WestConnex motorway, including the right to levy a toll and to retain revenue derived by the toll; (da) SMC (or one or more of its subsidiaries) has commenced to receive tolling revenue from the operation of the M4 Widening (WestConnex Stage 1A); and (e) the State is undertaking a sale process to sell a majority stake in SMC to the private sector, Each of the State, the RMS and SMC was, at the date of the issuing of the PAN and the time in which the Conduct was engaged in, undertaking a commercial enterprise, and carrying on a business, for the financing, procuring, construction, delivery and/or operation of the [Project] (the Business)".
It is instructive that, of the reasons given by Desane as to why it needs production of the documents the subject of the State's public interest immunity claim (set out in pars 120 and 121 above), none are repeated in par C36 of the amended commercial list statement, save for the ground in sub-par (e).
The response of the State was to admit the allegation in sub-par (d) and to respond to sub-par (e) by repeating its response to par C35A. That response was to say that a sale process has commenced for the sale of a 51% stake in SMC, but to otherwise not admit the allegations. It is difficult to understand the subtlety of these distinctions, but in substance the State has admitted the allegation in sub-par (e).
RMS' response was somewhat obscure, in so far as it repeated many of its other responses to other paragraphs of the amended commercial list statement, and it otherwise denied the allegations. This response is not of prime significance as Desane's allegations concerning the activities of RMS are confined to its attempts to compulsorily acquire the Property, and it is not alleged to have engaged in the financing of the Project.
SMC simply denied the allegations in par C36 in so far as they alleged the carrying on of business by the defendants in connection with the Project. Although SMC made a blanket denial of par C36, it admitted in substance the allegations in par C35 that on about 12 May 2017, the State announced that it would proceed with the sale of at least a 51% stake in SMC, and in par C35A that the State and SMC have commenced a sale process for a sale of at least a 51% stake in SMC to an entity or entities in the private sector not connected with the State.
Thus, SMC has admitted in substance the allegation made by Desane in par 36(e), which was also in substance admitted by the State, and which is the only ground given in Desane's submissions as to why it is entitled to production of the documents that is included in the particulars given of why the State and SMS have engaged in financial activities that show that the defendants have been conducting a business, and been engaged in a joint venture.
The question becomes, given the substantial admission by the State and SMS of the only allegations now made by Desane in the amended commercial list statement concerning the financial component of Desane's case, what is the consequence for the resolution of the State's claim for public interest immunity?
First, although I have not ruled out that the financial matters relied upon by Desane may be relevant to deciding whether the defendants were engaged in business, or in a joint venture, they are not at the forefront of that enquiry, and it is reasonable that the Court require some specific explanation for why a broad range of documents should be produced to Desane. It would ordinarily be expected that relatively straightforward aspects of the financing of an undertaking would be determinative of whether the undertaking was a business or a joint venture. The financial matters actually alleged by Desane in its amended commercial list statement have been admitted in substance by the State and SMC, who were the only defendants who participated in the financial aspects of the Project. The specific category for discovery concerns the proposed structure of how the sale of shares in SMC is to take place, but once it is established that the State proposes to sell 51% of the shares in SMC to the private sector, it is difficult to see what other structural aspects of the proposal are required to be known by Desane in order to prove that the defendants engaged in business or a joint venture. While it cannot be ruled out that additional information might be necessary, Desane has not articulated why that information is necessary. Further, nothing has been said by Desane that establishes why all documents in the possession of the relevant Ministers of the State that have any bearing on the trade and commerce issue are needed by Desane, simply because they happen to fall within the category of documents that requires discovery of all documents recording or referring to the proposed acquisition of the Property.
Reduced to its essentials, the task of conducting the weighing exercise in respect of the conflicting public interests required by s 130 of the Evidence Act, involving as it does consideration of the importance of the documents in the proceedings, requires the Court to start from the position that the financial matters involving the State and SMC actually alleged by Desane in its amended commercial list statement have been substantially admitted by those parties, and Desane has not made out, or even attempted to make out, a case that it requires the wide-ranging class of documents that I described in par 51 above.
It is reasonable to divide the documents into a number of categories. The first category consists of the following types of documents, all of which contain substantive information concerning the Project. The first consists of Cabinet submissions (Tabs 1, 2, 3, 5, 6, although Tab 5 is an attachment which has been separated from the relevant Cabinet submission). The second consists of documents that fall within the description of Category E, being documents prepared by a steering committee established by Cabinet, or other departments or government agencies: Tabs 19, 32, 33, 35, 36, 37, 39, 40, 41, 42, 43, 47, 48, 49, 50, 52, 54, 61 to 64. The third consists of documents that fall within Category F, being reports prepared by external consultants at the request of a steering committee: Tabs 4, 8 to 18, 20 to 28, 30, 38, 60.
All of these documents contain substantive detail, in many cases highly complex and technical, about financial aspects of the Project. Given the self-evident significance of the Project because of its size, cost and complexity of implementation, I consider the information contained in these documents to relate to matters of state for the purposes of section 130(1) of the Evidence Act. The information is all highly confidential and sensitive from a governmental and commercial perspective. It relates to the evolving decision-making process that would naturally be expected from the defendants' engagement in such a significant public project. A substantial part of the information in the documents concerns strategies that the State might employ in realising its investment in the Project in a manner that would yield the greatest return possible to the public of the State. My commercial experience is sufficient to give me confidence that it could be damaging to the interests of the State in the extreme if information of this nature by any means became known to the parties with whom the defendants might negotiate for the purpose of entering into private contracts with commercial enterprises.
In my judgment the documents in this category fall within a range of significance from documents that contain patently sensitive information the disclosure of which could be highly injurious to the public interest, to documents whose sensitivity is not so obviously apparent, but which could well offer insight to potential investors in the Project that could be detrimental to the public interest.
These considerations must be balanced against my judgment that none of the documents tended to establish in a direct way how the Project will be financed, but rather they constitute a complex evolution of comprehensive and detailed technical consideration of all of the policy considerations involved in the defendants' competent and conscientious exploration of the optimal implementation of the Project.
In my judgment, none of the documents would have any true significant bearing on the issue of whether the defendants, or any of them, were or will be engaged in any business in the sense considered by the Victorian Court of Appeal in Murphy v Victoria. Even if it be allowed that some aspects of the manner in which a particular activity will be funded, or how the party engaged in the activity proposes to realise its investment, may be material to the question of whether the party is engaging in business, in my judgment the information in this category of documents goes far beyond the evidence that would be necessary to determine that issue.
The parties put submissions on the issue of whether the State's public interest immunity claim should be dealt with on the basis that it relates to the 'class' or the 'contents' of the documents: see Commonwealth v Northern Land Council (above) at 616. As I understand the State's submissions, it submits that the Court should find that the documents in Categories B, E and F are immune from production on a class basis. Given the contents of the Cabinet submissions within Category B, I would be prepared to find in the application of section 130(1) of the Evidence Act in this case that the documents fall within a class that justifies immunity from production.
However, I am not prepared to proceed upon a class basis in relation to the documents within Categories E and F, and would prefer to base my decision in relation to Category B on the contents of the documents, rather than their class.
The State made a case that the documents within Category E were prepared for the purpose of providing advice to Cabinet, and the documents within Category F were prepared by external consultants solely for the purpose of either the report being submitted to Cabinet, or to assist in the preparation of advice for Cabinet. The State relied upon the proposition, putting it simply, that the disclosure of these documents would in various ways expose the reasoning of the Cabinet in making decisions, or would inhibit the provision of proper advice to Cabinet.
I am not inclined to proceed on this basis because of the insufficiency of the evidence in establishing the link between the production of documents within these two categories and the conduct of Cabinet business. In effect, the State relied upon a general assertion about the use to which the documents in these categories would be put. I have not ignored the evidence given on this subject by Ms Smith in her 22 December 2017 affidavit at pars 58 to 77, in explanation of the connection between these documents and the deliberations of Cabinet, but perhaps for reasons of economy Ms Smith has not explained that connection fully in relation to each of the documents. There is insufficient direct evidence concerning each of the documents as to what was done with it, and in this respect the descriptions of the documents in the index are not enlightening.
However, for the reasons that I have outlined above, I am satisfied having regard to the contents of the documents that the State's claim for public interest immunity should be upheld.
A qualification is necessary to the reasons that I have given based upon the contents of the documents in Category F. While I am satisfied that I should not order the State to produce any of these documents, it must be allowed that although confidential, it may be that the production of some of the documents would not be highly injurious to the public. I refer in particular to the detailed reports prepared by Rider Levett Bucknall: Tabs 11 to 14 and 16. Rider Levett Bucknall is, as its reports demonstrate, a firm of quantity surveyors. That firm was mentioned by Ms Smith in par 70 of her affidavit as being one of the consultants that were engaged. However, as a reasonably representative sample, the index described the report at Tab 11 as: "WCX M4M5 Link IBR Estimate Report_DRAFT_Rev03_161219_Issued.pdf". It need hardly be said that the description did not provide Desane with much information to understand what it was fighting about. Being a quantity surveyors' report, it primarily contains estimates of the costs of the Project. Taking a representative example, the report would tell the reader of the estimated cost of the longitudinal drainage and sub-pavement cross drains for each of the proposed ramps for a proposed part of the Project. The report also includes many more general observations about how the Project could be implemented, and the Court would not be justified in the circumstances in wholly ignoring the phrase "SENSITIVE: NSW CABINET" that is printed on every page.
The point is that when one reads the content of documents such as the report at Tab 13, one is at the one time overwhelmed by a number of coexisting considerations. First, there is a basis for thinking that the report may have been submitted to Cabinet, even if the evidence does not strictly prove that fact. Secondly, taken as a whole the information contained in the report is inherently confidential, and the most safe and natural conclusion to draw is that it should not be disclosed unless there is a very good reason for disclosure. Thirdly, the information in the report has no real or genuine forensic connection to the issues in these proceedings.
That part of the protocol whereby the parties have agreed that the Court is entitled to give truncated reasons, and not to give reasons at all in cases where it rules against production of a document, justifies the Court in taking the position that it should not have to minutely analyse documents such as the report at Tab 13 to make fine judgements about the extent to which its production would be injurious to the public interest, as opposed to the documents not containing information of importance to the proceeding.
Accordingly, I will not order production of the documents within Categories B, E and F that I have identified above.
The second category of document that I have identified for the purpose of dealing with the State's public interest immunity claim is documents which the State asserts fall within Categories E and F, but which turn out on inspection to be nothing more than emails.
The documents described as falling within Categories E and F but which are in fact separate emails (without distinguishing between emails that contain substantive comment and those that do not appear to do so) are Tabs 44 to 46, 51, 53, 55 to 59, 65 to 76, 78, and 80 to 109.
I have mentioned above that one feature of the way discovery has been undertaken by the defendants in this matter has involved the separation of many emails and other covering documents from the attachments to which they relate. That often has produced the somewhat artificial result that the emails divorced from the relevant attachments do not themselves contain information that could properly be considered to be a matter of state. The emails if understood in their proper context may well be part of the matter of state, in so far as they provide information as to how attachments that do contain information that could be considered to be a matter of state was conveyed between officers of the State government.
In some cases the emails do little more than convey attachments, but in others commentary is included that could reasonably be considered to involve matters of state.
The difficulty that the Court faces has been compounded by the opaque and uninformative descriptions of the documents in the index. For example, the document at Tab 44 is described as "[REDACTED] Steering Committee Papers". The document itself is only a one-page email from an officer of the Treasury to other officers of the government which apparently attached a document described as a "Risk Register".
There is scope for endless argument in respect of each of these emails as to whether by reason of their content or the fact of their being sent by one officer of the government to other officers as to whether they sufficiently relate to matters of state to attract the operation of section 130(1) of the Evidence Act in the first place. That argument did not occur because the State did not address it, and Desane was in the dark as to whether the argument arose. I am satisfied that many of the emails do contain sufficient commentary about the contents of the attachments to justify a finding that they are entitled to immunity from production.
It is, however, clear that argument on this issue would be entirely pointless, as it is inconceivable that production of the emails that do not contain any substantive content would provide evidence that was material to any issue in the proceedings. Accordingly, I do not intend to order the production of any of the emails.
The third type of document includes a small number of documents that are not easily categorised. The document behind Tab 7 is a PowerPoint display prepared, as its title suggests, for the "SMC Board Sale Committee". The document contains highly confidential and sensitive information concerning the actual process whereby SMC's interest in the Project will be sought to be sold to commercial investors. I am satisfied that it is subject to public interest immunity.
The document at Tab 31 is described in the index as: "Evaluation and selection of proposals for probity advisor" for the Project, and is the report of the "Evaluation Committee". This description was at least informative, and it is true. I cannot see how the document is entitled to public interest immunity, but I will not order its production because it is entirely irrelevant to the issues in the proceedings.
The documents at Tabs 34 and 77 consist of legal advices given by the State Crown Solicitor to the Treasury. It is doubtful that the advices are entitled to public interest immunity, but they are clearly on their face protected by client legal privilege under section 118 of the Evidence Act (and also possibly under section 119). In the circumstances I will not order their production.
The document at Tab 79 is a letter from the Premier to the Treasurer and Minister for Industrial Relations, and the Minister for Western Sydney, WestConnex and Sport. The letter confirms the Premier's agreement concerning the fixed percentage of the Project that the State should attempt to sell. The letter was described in the index as falling within category E2. The letter does not fall within the description of a document prepared by "government agencies, for the purpose of providing advice to Cabinet". Also, it was not prepared on subject 2, being "the source of funding from the existing Government budget or otherwise for the Project", although it may fall within subject 3.
I do not see why this document is entitled to public interest immunity, and the State has not provided any separate argument as to why the Court should find to the contrary. The letter is part of an act of the executive government outside the deliberations of Cabinet, and has some relevance to the allegation made by Desane in pars 35 and 35A of the amended commercial list statement. In the absence of persuasive argument to the contrary, I order the State to produce the document at Tab 79 to Desane.
The State also resisted the production of one document in Category D, two documents in Category G and one document in Category J.
The Category D document is the document at Tab 110 and on its face is a confidential advice by Treasury to the Expenditure Review Committee of Cabinet and is entitled to public interest immunity.
As I understand a handwritten note in the index, the two documents within Category G are only partly subject to a claim for public interest immunity. They are the documents at Tabs 112 and 113. They are working drafts prepared by the Treasury and Transport for NSW concerning financial aspects of the Project. They contain information concerning the assets that would be offered to potential investors in the Project, and the approach that might be adopted to sell part of the State's investment in the Project. Although the documents are working drafts, they contain concise statements of the types of information that I have held above justify the acceptance of the State's public interest immunity claim. On the other hand it is true that some of the information contained in the documents tends to prove the allegations made in pars 35 to 35B of the amended commercial list statement.
The problem is that, assuming that I have rightly interpreted the handwriting on the index, the documents in folder 3 are not marked up to show which parts of the documents remain the subject of the immunity claim. I note that some parts of the documents are highlighted in yellow, but I am not sure whether that is significant, and the affidavit of the solicitor acting for the State does not illuminate the matter.
Consequently, I am not in a position to rule in respect of these two documents, and if the parties cannot resolve the issue, it will be necessary for them to relist the matter before me so that I can make a summary determination about it.
The final document is the document at Tab 111, which falls within Category J. On its face it is a marked up revised draft of notes provided by Treasury to the Minister for use during Budget Estimates in Parliament, and is entitled to public interest immunity on a class basis, or alternatively to protect the privileges of the Parliament.

Claim for client legal privilege

Desane submitted, relying upon the decision of Brereton J in Hancock v Rinehart (Privilege) [2016] NSWSC 12 at [7], that it is necessary for the party claiming the privilege to sustain it by proving facts in the conventional way: "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, not hearsay." The essence of Desane's argument was that much of the evidence of Ms Hasti Kalarostaghi, of Hunt & Hunt, RMS' solicitor, was evidence of her purpose or understanding, and was hearsay when it came to the purpose or understanding of relevant officers of RMS, and the facts relevant to those officers' actions.
RMS responded in its submissions by arguing that Brereton J had overstated the nature and extent of the evidence necessary to sustain a claim of client legal privilege.
I have not found it necessary to resolve this aspect of the dispute. Both Desane and RMS submitted that the Court has power to inspect the documents over which a claim for privilege has been made and that the Court: "should not be hesitant to exercise such power": Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67 at [52]. That accords with the clear terms of section 133 of the Evidence Act.
A feature of the present dispute is that a substantial number of the documents whose production is at issue are, in the modern way, chains of emails. In many cases the different chains contain many emails in common but differ because they contain additional emails in some part of the chain as a result of the process whereby different authors have added emails in the somewhat protean way that email chains develop.
It is well established that client legal privilege may extend to copies of documents that would otherwise not be privileged, if the purpose for the creation of the copies satisfies a relevant dominant purpose test: see Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 507, 544, 553-554, 571-572, and 587. Where documents are electronically 'copied' in a chain of emails, there is authority for the proposition that it is necessary to consider the circumstances in which the emails were produced and the final chain sent to its addressee: see Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796 at [27] to [44] per Beach J. See also Hutchins v Cap Coast Telecoms Pty Ltd (in liq) [2015] FCA 945 where Gleeson J at [12] adopted the statement made by Beach J at [29] that "focused and specific evidence is required in respect of each communication, rather than mere generalised assertion let alone opaque and repetitious verbal formulae".
In Kamasaee v Commonwealth of Australia [2016] VSC 404, Macaulay J made the following observations concerning the circumstances in which email chains may be found to be privileged (footnotes omitted): [43] The Commonwealth did not seek to argue that disclosure of these four emails themselves would result in the disclosure of confidential legal advice. Rather, it argued that by attaching them to record the subject matter about which legal advice was sought, these versions of the emails were, in effect, brought into existence for the dominant purpose of seeking legal advice. Reference was made to the High Court decision of Commissioner of Australian Federal Police v Propend Finance Pty Ltd as authority for the proposition that legal advice privilege can attach to copies of non-privileged documents when the purpose of bringing the copy into existence may be different from the purpose of bringing the original into existence. That is, if the dominant purpose of bringing the copy into existence is for the purpose of obtaining confidential legal advice, then the copy may be protected by the privilege even though the original would not have been. [44] This raises a somewhat interesting question in the context of modern email communication. Whilst the emails of the 9th and 10th of March between third parties and officers of the Department, and between officers of the Department, may not have attracted legal advice privilege in their own right, if they were 'copied' and then attached to a request sent to a lawyer for legal advice, those 'copies' could qualify for privilege because of the purpose for which they were brought into existence. [45] Using the particular processes of email communication, instead of making additional 'copies' of emails that precede a proposed new email to another person, it is possible (and commonplace) to 'attach' the earlier emails by simply 'forwarding' them prefaced by the new email. In this case, the earlier emails of 9 and 10 March were 'forwarded' by Ms Abbott to Mr Nilsson with the request for advice. [46] In my view, that on-forwarding of the email chain was tantamount to making 'copies' of the original email communications for the purpose of seeking the advice. Emails, of course, do not exist in their original form as the printed documents that have been shown to the court. In their original form, emails are digital data transmissions which are collected and displayed on a computer screen in the form of letters and words due to computer software which causes that to occur. Each email is a standalone communication. But at the click of a particular button on the computer a received email can be reproduced and on-sent to a new recipient with or without a new message, or copied back to the original recipient in the course of a reply. In my view, the use of these processes in email communication effects a copying (or reproducing) function which generates a new form of the original email. The purpose for generating that new form is whichever purpose lies behind the decision to choose to 'reply to' or 'forward' the original email.
In my view truly difficult questions may arise where the Court is required to determine whether a chain of emails is protected by client legal privilege. The position may be much more difficult than the case where a photocopy of a document is made. A shopping list may not be privileged, but if a party wishes to obtain legal advice about the shopping list, or to provide it to a lawyer for the dominant purpose of the party being provided with professional legal services related to an anticipated, pending or subsisting proceeding, the fact will be that the photocopy of the shopping list will be produced by the conscious act of the client in photocopying it for the particular purpose. That will not necessarily be the case for chains of emails, which may often include emails that have little to do with the purpose of sending the whole chain to the final recipient, but may in part be created because of lazy decisions along the chain to click on "Reply" or "Reply All", rather than to take the trouble to create a new email for the relevant protected purpose, containing only the earlier emails or other information necessary to achieve the protected purpose.
Another problematic issue is that email chains tend to proliferate by reason of the "Reply All" function, sometimes in order to spread information among interested persons, and sometimes out of laziness. Many versions containing substantially the same chains may be created with, in a particular case, say, the last email in the chain asking a worker in a neighbouring office to bring back a sandwich for the sender after lunch. All of the prior emails in the chain may be privileged, but the final one obviously is not.
With respect to the views expressed by Macaulay J, the problem created by email chains may not always be solved by treating the on-forwarding of the email chain as being tantamount to making copies of the original email communications for the purpose of seeking legal advice. It will often not be sufficient to consider the circumstances in which the last email in the chain has been produced, as the purpose for its production may not be protected, but emails earlier in the chain may warrant protection.
However, I respectfully agree with Macaulay J that in a particular case, an examination of the final email in the chain in the context of the chain, as a whole, may justify treating the whole chain as if the individual emails had intentionally been copied for a protected purpose.
I will deal first with the claim of client legal privilege made by RMS.
The claim was initially supported by an affidavit made by Ms Kalarostaghi on 15 January 2018. The affidavit explained that initially RMS made a claim of client legal privilege in respect of 647 documents, which taking into account duplicates and near duplicates represented 220 documents. By the date of the affidavit, RMS only pressed its privilege claim in relation to 72 documents. Over the course of the hearing, RMS withdrew its claim in relation to some documents and Desane withdrew its claim for production of other documents.
As I have noted above, ultimately the documents for which RMS pressed its claim for legal professional privilege, in the face of Desane's claim that the documents should be produced to it, were listed in the document that became MFI 2.
MFI 2 separated the documents into 6 categories (which I will list in reverse order): (6) Final reports from experts and associated correspondence; (5) Draft reports from experts and associated correspondence; (4) Correspondence between Hunt & Hunt and experts; (3) Letters of instructions from Hunt & Hunt to experts; (2) Correspondence among RMS Legal Branch officers; and (1) Correspondence amongst RMS officers (as client), RMS lawyers and external lawyers. I have listed the categories in reverse order because the documents as a whole concern the steps taken by or on behalf of RMS to obtain the final expert reports included in category (6), and for reasons that are obvious from the descriptions of the categories in reverse order, the categories are respectively more remote from the actual production by the experts of their reports in response to instructions given by RMS to Hunt & Hunt, and instructions given by that firm to the experts. It is easier to deal with the client legal privilege claim if the categories are considered in reverse order.
The documents that were the subject of the client legal privilege claim at the time of Ms Kalarostaghi's 15 January 2018 affidavit were contained in Confidential Exhibit HK-2 to the affidavit, which was marked for identification as MFI 4. Exhibit HK-1 (subsequently replaced by Exhibit HK-3) set out in relation to each of the documents the basis of RMS' client legal privilege claim. In the body of her affidavit, Ms Kalarostaghi set out the factual background to the claim, the circumstances of her retainer by RMS, the identification of officers within RMS who provided internal legal services, and also in respect of some only of the documents additional circumstances to support the client legal privilege claim. For most of the documents the subject of the claim, Desane was only given the information in Exhibit HK-3 as to the specific basis for that claim in relation to the particular documents.
Exhibit HK-3 contains a column called "Document Description", under which a relatively brief description of the document is given. For example, for one of the documents still in contention, the document at Tab 64, the description was: "Email chain between Hasti Kalarostaghi, Davendra Chandra and Harold Bear". The body of Ms Kalarostaghi's affidavit identified Davendra Chandra as "Priority Acquisition Task Officer, Property and Acquisition Branch, Stakeholder and Community Engagement Division, RMS". Mr Bear was identified as "Lawyer, Environment Planning and Property, RMS Legal Branch". This information identified Ms Kalarostaghi and Mr Bear as lawyers and Davendra Chandra as a non-legal officer of RMS. The basis for the client legal privilege claim was stated in a separate column of Exhibit HK-3 as: "Confidential communication between the client and lawyer for the dominant purpose of the client being provided with professional legal services relating to an anticipated Australian proceeding in which the client is a party (Evidence Act 1995, s 119)".
That evidence did not provide to Desane a sound foundation for judging the validity of RMS' client legal privilege claim in relation to the document at Tab 64. Nothing in the information provided about this document connected it with the final expert reports that are claimed to be found at Tabs 46, 48 and 53 of Exhibit HK-2.
It will be instructive to consider the information included in respect of those three documents, because, as a result of the further restriction of the ambit of RMS' client legal privilege claim, in a practical sense all of the documents are related to the final expert reports.
Tab 46 is described as: "Expert report attached to the email chain involving Maureen Peatman and David Lunney". The basis of the client legal privilege claim is stated in the bare terms of s 119 of the Evidence Act. Tab 48 is described as: "Email from Garth McKenzie to Hasti Kalarostaghi". The same bare claim for privilege is stated. Tab 53 is described as: "Expert report". Again the claim is supported by a bare statement of the ground in s 119 in terms: "Confidential document that was prepared by an expert for the dominant purpose of the client being provided with professional services relating to an anticipated Australian proceeding".
This level of detail is representative of the evidence given by RMS to Desane to support almost all of RMS' client legal privilege claims. It left Desane largely in the dark. Desane responded by mounting a formidable response to RMS' client legal privilege claims - as if the exercise was necessary and worthwhile.
Taking a somewhat liberal view of a limited leave granted by the Court to RMS to augment its evidence, and in the apparent belief that its evidentiary foundation was somewhat rickety, RMS served a further affidavit of Ms Kalarostaghi dated 24 January 2018. That affidavit provided significant additional detail of the circumstances in which the individual documents were produced, and the purpose for their production, although still with a level of generality that fell tantalisingly short of establishing the subject matter of each of the documents without revealing their contents.
Ms Kalarostaghi had stated in par 22 of her 15 January 2018 affidavit that on or about 16 September 2016, she engaged Mr Garth McKenzie of McKenzie Land Planning Services Pty Limited to provide expert planning advice. She said in par 23 that on or about 14 October 2016, she engaged Mr David Lunney of Lunney Watt & Associates Pty Limited to provide expert valuation advice. Ms Kalarostaghi said at par 17 of her 15 January 2018 affidavit that on or about 26 August 2016, she had a telephone conversation with Mr Harold Bear regarding the acquisition of the Property, in which Mr Bear said words to the effect: "We are engaging you prior to the compulsory acquisition of the Property as this matter is likely to be vigorously litigated and we require legal advice at an early stage". She said in par 20 that she considered it highly likely that Desane or other persons holding an interest in the Property would make an application to the Land and Environment Court of NSW in relation to the amount of compensation being offered by RMS or determined by the Valuer General.
In par 32 of her 24 January 2014 affidavit, Ms Kalarostaghi identified the document at Tab 46 as being Mr McKenzie's final report, and in par 36 she identified the document at Tab 53 as being a copy of Mr Lunney's final report. She also, at par 32, identified the document at Tab 48 as being an email to her from Mr McKenzie by which he forwarded his final report.
In its submissions, Desane's first argument was that many of the documents were prepared prior to the formation of any relevant solicitor and client relationship between RMS and Hunt & Hunt. Desane submitted that the relationship could not have been established before 5 October 2006, when Hunt & Hunt provided an estimate of anticipated legal costs to RMS. In essence, this submission relied upon the protocol established between RMS and Hunt & Hunt as to what was required to establish a retainer by the former of the latter, and argued that there could not be any client legal privilege before the retainer was made in accordance with the protocol.
I do not accept this submission. I accept the evidence given by Ms Kalarostaghi both in her affidavits, and in cross examination. There is an appearance that a number of the requirements in the protocol were implemented after Ms Kalarostaghi was given oral instructions by Mr Bear on 26 August 2016. I am satisfied that Ms Kalarostaghi acted upon the instruction and RMS accepted the benefit of the legal work undertaken by Hunt & Hunt before the formalities were implemented. RMS could not have denied the retainer, and in any event, I do not accept that the availability of client legal privilege is dependent on proof of a formal and binding retainer, in cases where the client and the lawyer act as if they were parties to the retainer.
In accordance with the parties' invitation, I have read all of the documents the subject of the client legal privilege claim. The contents of the documents have augmented the evidence in Ms Kalarostaghi's affidavits. That has allowed me to determine the dispute without having to rule upon the correctness of the observations made by Brereton J in Hancock v Rinehart (Privilege) (above), or to consider in any detailed way whether Ms Kalarostaghi's affidavit is deficient to sustain the privilege claim in relation to individual documents.
The third submission put by Desane related to the many documents for which the only claim for client legal privilege was based on the documents being prepared for the dominant purpose of RMS being provided with professional legal services relating to an anticipated or pending proceeding, under section 119 of the Evidence Act. Desane submitted that the privilege could not arise where litigation was not a 'real prospect' at the time of the relevant communication, and Desane contended that litigation privilege could not apply to communications that occurred prior to the issuing of the PAN on 26 May 2017.
I do not accept that litigation cannot properly be anticipated before a party has taken the objective step in relation to the other party that will trigger the dispute that is anticipated to give rise to litigation. I can see no reason why, if the facts of the case are otherwise sufficient to prove the anticipation, the anticipation cannot arise at an earlier time after the party claiming the privilege has made a decision to embark on a course that will lead to the step that is anticipated to trigger an adverse litigious response from the other party.
I will now address the categories of documents into which RMS divided its client legal privilege claim.
Consistently with the approach I have adopted above, I will start with Category 6. The document at Tab 46 is a report by Mr Garth McKenzie, a town planner, in which he provides his opinion on a number of town planning questions that are logically material to the determination of the market value of the Property at the date of his report. The document at Tab 50 establishes that Hunt & Hunt provided Mr McKenzie's report to Mr Lunney for the purpose of assisting him to provide a market valuation of the Property. The document at Tab 53 is Mr Lunney's valuation report.
Mr Lunney's valuation report expresses an expert valuation opinion as to the market value of the Property as of February 2017. The valuation was not made on the basis of any proposed or potential rezoning of the permissible use of the Property or any other place, within the meaning of par 2 of Schedule A to the Court's orders made on 15 September 2017.
I am satisfied that the two expert reports are not relevant to the issues raised in these proceedings. They are directed to ascertain the market value of the Property, being a matter relevant to the compensation that RMS might be obliged to pay to Desane if it effectively resumed the Property.
When during the course of argument I observed that it appeared that the expert reports did not go to either the purpose issue or the trade and commerce issue, senior counsel for Desane responded at T 25/01/18 21.16 and 24.26 by suggesting, as I understood him, that the documents were relevant to the purpose issue and not the trade and commerce issue. Senior counsel continued: "That's why we are fighting for these documents because we understand they are produced in answer to the orders made". I cannot comprehend how either of the expert reports could be relevant to the purpose issue. No explanation to the contrary was advanced on behalf of Desane.
As I have noted, the valuation report does not fall within the description of the only category referred to in the orders that included a valuation report. It is a matter for speculation as to why the two expert reports and the documents relevant to them were discovered by RMS. For what it is worth, it would seem that the expert reports might fall within par 1 of Schedule B to the 15 September 2017 orders, in so far as they referred to documents "recording or referring to the proposed or potential acquisition of the [Property]". The emails by which the final reports were provided to Hunt & Hunt do not appear to be included in the list of emails in Schedule B.
Whatever the reason may have been why the two expert reports and associated emails have been discovered by RMS, the documents are not, as I have said, in my view relevant to the issues in the proceedings. The fact that they have been discovered may prove that the categories of documents for discovery were more extensive than was necessary. The fact that they have been discovered does not prove that they are relevant.
Desane did not contend that RMS' retainer of Hunt & Hunt to obtain the two expert opinions was spurious, in the sense of an artificial device to avoid the legal consequences of RMS directly retaining the experts, which may have generated wider discovery obligations and obviated the availability of client legal privilege protection.
I am prepared to accept on the evidence that, based upon their experience, the officers of RMS whose responsibility it was to prepare for the consequences of a resumption of the Property anticipated as a real possibility that Desane would challenge the amount of compensation determined initially in accordance with the Just Terms Act in the Land and Environment Court, and for that purpose retained Hunt & Hunt to obtain the two expert reports, and to provide RMS with legal advice concerning the effectiveness and consequences of the reports. The evidence does not disclose whether or not RMS anticipated the present litigation involving a challenge to the validity of the PAN. It is still possible that if Desane fails in these proceedings, it will go on to challenge the amount of any compensation that is assessed to be payable to it for the resumption of the Property.
The three documents in Category 5 are an email from Mr McKenzie to Hunt & Hunt that states that it attaches a draft report (Tab 42), the draft report of Mr McKenzie (Tab 47), and a draft report of Mr Lunney (Tab 54). The documents are privileged under section 119 of the Evidence Act for the same reasons as the final reports. The covering email contains comments which I consider to be confidential.
Category 4 is described as "Correspondence between Hunt & Hunt and experts". That description is true for the documents behind tab is 26 to 33, 45 and 50. I consider that correspondence to be privileged under section 119 of the Evidence Act.
The document at Tab 20 is an email chain of 13 emails all of which bar the thirteenth are between internal RMS lawyers and RMS officers or between RMS officers and Ms Kalarostaghi.
I am satisfied that all of the emails sufficiently concern the giving of instructions by RMS to Ms Kalarostaghi, and Ms Kalarostaghi giving to or reporting on communications with an expert, to support a claim for client legal privilege under section 119 of the Evidence Act.
In the case of the email chain behind Tab 20, the final email was sent by Ms Kalarostaghi to Mr McKenzie, and had the effect of advising Mr McKenzie of the chain of communications contained in the earlier emails.
The chain of emails behind Tab 23 also includes emails between officers of RMS who do not appear to be lawyers, but those emails are followed by an email giving instructions to Ms Kalarostaghi, who, as the final email in the chain, forwarded the chain to Mr McKenzie for his information. I therefore uphold the claim for privilege.
Because of its structure, it is difficult to discern the number of emails that constitute the chain of emails behind Tab 34. It is sufficiently clear that the chain consists of emails sent and received by Mr McKenzie, whereby he obtained information concerning planning issues relevant to the Property from third parties, and then by the last email in the chain forwarded the information to Ms Kalarostaghi and people in Mr Lunney's firm. I am satisfied that this chain of emails is also privileged.
Category 3 consists of formal retainer letters from Hunt & Hunt to Mr McKenzie, Mr Lunney and Dr Rodney Ferrier. Dr Ferrier was instructed to provide a business valuation report for each business conducted on the Property. (It is not clear why the results of the retainer of Dr Ferrier do not appear elsewhere in the documents for which client legal privilege is claimed). The documents are subject to client legal privilege.
The documents that constitute Category 2 are described as "Correspondence amongst RMS Legal Branch officers". The document behind Tab 146 appears to fall within that description, but it is an email between RMS' internal lawyers attaching a draft letter of application for RMS to be authorised to brief senior counsel in respect of the compulsory acquisition of the properties of which the Property forms part. The document behind Tab 149 is an internal reply on the same subject. (The documents behind Tabs 147 and 148 appear to be RMS' application to the Department of Justice for the necessary authority, or drafts thereof. I do not know why the internal emails are the subject of a privilege dispute, while no mention is made of the application for authorisation to which the emails relate).
I do not accept that internal correspondence between legal officers of RMS on the subject of RMS receiving authority to brief senior counsel can satisfy the requirements of section 118 or section 119 of the Evidence Act, as the claim in Exhibit HK-3 in relation to the documents state. The dominant purpose is not a lawyer providing legal advice or professional legal services relating to an anticipated proceeding. The dominant purpose is to obtain the authority required.
It would follow that neither document is privileged. On the other hand, the documents are plainly irrelevant to the issues in the proceedings. I do not propose to order that the two documents be produced to Desane.
Category 1 is described as "Correspondence amongst RMS officers (as client), RMS lawyers and external lawyers".
I am satisfied from my reading of all of the documents listed within Category 1 that the involvement of RMS' internal lawyers supports a finding that they are privileged, save in respect of the following documents.
The document behind Tab 11 consists of a chain of emails. The chain is the same as the chain of emails behind Tab 9, which ends with an email giving instructions to Hunt & Hunt, with a final email in the case of the Tab 11 email chain advising an RMS officer that other officers are waiting for the first officer to dial in to a telephone conference. The last email is not privileged, but its inclusion in the chain does not abrogate the privilege in respect of the other emails, and is of itself trivial. I do not propose to order the production of the final email.
The document behind Tab 16 is a chain of emails the penultimate of which is an email from an officer of RMS giving instructions to Ms Kalarostaghi. The final email in the chain provided to Ms Kalarostaghi what were called LEX ID numbers for each of the properties that RMS proposed to resume, including the Property. The provision of the numbers was a step in the protocol whereby RMS instructed Hunt & Hunt. Generally, letters of retainer will not attract the protection of client legal privilege: Hancock v Rinehart [2017] NSWSC 530 at [42]; FSR Limited v Eddie (2008) 70 NSWLR 725 at [62-63]. The final email providing the numbers as part of the retainer process is probably not privileged. The remainder of the email chain is privileged. The final email is not relevant to any issue in the proceedings, and I do not propose to order its production.
The document at page 231 of Tab 1 is a covering letter from Hunt & Hunt to RMS that states that it encloses Hunt & Hunt's tax invoice for a particular period. That letter is not privileged, but again it has no relevance to any issue in the proceedings. I will not order its production.
Pages 201 to 207 of Tab 155 consist of the same covering letter from Hunt & Hunt to RMS enclosing a tax invoice, but also include the tax invoice. Sometimes tax invoices may give rise to a proper claim for privilege because they disclose confidential information which itself is privileged. I consider these documents to have no relevance to any issue in the proceedings, and I will not order their production.
It is finally necessary to deal with the claim made by the State concerning client legal privilege in relation to a small number of documents. As counsel for the State made clear (T 24/01/11 35.10 and 36.1), the State did not make the claim in relation to its own confidential information, but did so in relation to the information contained in other documents of RMS' in relation to which RMS had made claims for client legal privilege.
Counsel was given three brief opportunities to address the State's position, but I now appreciate by reference to the transcript that by reason of the time given to counsel for more active parties and the exigencies of trying to conduct the hearing during the vacation list, counsel was not given a full opportunity to expand upon the State's position. As I have said above, the State provided to the Court the relevant documents which were marked for identification as MFI 1.
The documents included Annexure B to the affidavit of discovery which listed the documents for which legal professional privilege was claimed, together with a number of plastic sleeves containing in essence a number of versions of the same email. I infer from the list in Annexure B concerning item 3, that it was an attachment to the emails, and was the town planning report prepared by Mr McKenzie for Hunt & Hunt on instructions from RMS that I have considered above and found is privileged in favour of RMS.
I infer from Annexure B that the emails were written by an officer of RMS and were addressed to a number of people in the offices of Ministers of the State government and also to a senior officer of RMS. There is no reason to find that the author of the emails was a lawyer, but it appears clearly from the text of the emails that the author had summarised some of the opinions expressed by Mr McKenzie that the author apparently thought would be significant to the addressees.
In the other version of the email, the author forwarded the email I have considered above, with the attached report, to another person within the office of a Minister of the State government.
As I understand the position, the State is in reality making a client legal privilege claim on behalf of RMS, on the basis that the State had a common interest with RMS, so that the act by the officer of RMS in forwarding Mr McKenzie's report to various people within ministerial offices did not have the effect of waiving RMS' client legal privilege.
In its final written submissions, Desane submitted that the Court should order the State to produce to it the documents listed in Annexure B (save for item 1 for which production was not pressed). If I understand the submissions correctly, Desane's claim in relation to the State's documents is put upon the basis that the same or related documents in the hands of RMS should not be found to be privileged for the reasons generally put by Desane, so that Mr McKenzie's report in the State's hands and any summary of the opinions expressed by Mr McKenzie should also not be privileged. I do not understand Desane to have argued that, if the documents were privileged in the hands of RMS, there was no common interest between RMS and the State, so RMS' privilege was lost when the information in the documents was communicated to representatives of the State.
That being the case, I would uphold the claim made by the State on behalf of RMS.

Conclusion

I invite the parties to bring in short minutes of order to give effect to these reasons for judgment.
If any party wishes to avail itself of any leave that I have granted, that should be done as soon as possible through my Associate, so that I can deal with any outstanding questions in a summary way so as not to jeopardise the commencement of the hearing.
If the parties cannot agree as to the appropriate costs order on the notice of motion then they should arrange for the matter to be relisted for the Court to deal with that issue.

Amendments 23 February 2018 - Paragraphs amended 174 "1992" to "1999" 176 "documents" to "copies" 180 and 181 "Macauley J" to "Macaulay J" 23 February 2018 - Cases cited: Esso Australia Resources Ltd v Federal Commissioner of Taxation "(1992)" changed to "(1999)" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 February 2018

Evidence Act 1995(NSW)ss 130, 131A

(2017) 220 LGERA 386

Desane Properties Pty Limited v State of New South Wales

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