Gordian Runoff v Price & Ors

Supreme Court of NSW|2004-07-01|Before: McDougall J, Dougall J

CITATION : Gordian Runoff v Price & Ors [2004] NSWSC 600 HEARING DATE(S) : 1 July 2004 JUDGMENT DATE : 1 July 2004

JUDGMENT OF : McDougall J at 1 DECISION : See para [16] of judgment

CATCHWORDS : EVIDENCE - legal professional privilege - where plaintiff seeks to restrain first defendant from providing legal services to second defendant - where second defendant asserts that plaintiff gave consent to first defendant to do so - where second defendant relies on laches, acquiescence, waiver or estoppel - where second defendant claims privilege in evidence of conversations from which consent may be inferred and on which claims of laches, acquiescence, waiver or estoppel are based - loss of privilege - whether privilege lost - s 122 Evidence Act - whether implied consent -inconsistency - whether inconsistent for second defendant to assert that first defendant obtained consent of plaintiff to act for second defendant and maintain privilege in discussions said to prove consent - whether inconsistency where second defendant relies on relevant facts to support claims of laches, acquiescence, waiver or estoppel LEGISLATION CITED : Evidence Act 1995 (NSW) Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 Garratt's Limited v Thanga Thangathurai [2002] NSWSC 39 CASES CITED : Fort Dodge Australia Pty Limited v Nature Vet Pty Limited [2002] FCA 501 DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499 Re Doran Constructions Pty Ltd (in liq) (2002) 194 ALR 101 United Rural Enterprises v Lopmand [2002] NSWSC 1142 Mann v Carnell (1999) 201 CLR 1 Gordian Runoff Limited (formerly GIO Insurance Limited) (Plaintiff) PARTIES : Timothy Randolph Price and the persons referred to in Schedule "A" trading as Phillips Fox (First Defendant) Baulderstone Hornibrook Engineering Pty Limited (Second Defendant) FILE NUMBER(S) : SC 50072/04 R M Smith/M A Jones (Plaintiff) COUNSEL : P R Garling SC/I Pike (First Defendant) A J McInerney (Second Defendant) I Denham (Solicitor) (for TGI) Corrs Chambers Westgarth (Plaintiff) SOLICITORS : Phillips Fox (First Defendant) Freehills (Second Defendant) Moray & Agnew (TGI)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST McDOUGALL J

50072/04 GORDIAN RUNOFF LIMITED (formerly GIO Insurance Limited) v TIMOTHY RANDOLPH PRICE (and the persons Referred to in Schedule "A" trading as Phillips Fox) And BAULDERSTONE HORNIBROOK ENGINEERING PTY LIMITED

1 HIS HONOUR: The background and litigious context of these proceedings is set out in my judgment given on 21 June 2004, [2004] NSWSC 535, in particular at paras [1] to [7].

2 The plaintiff ("Gordian") seeks to restrain the first defendants ("Phillips Fox") from providing professional legal services to the second defendant ("BHE") in connection with what are referred to in my earlier judgment as the indemnity proceedings, namely proceedings 50176 of 2003 in this Court.

3 There are a number of issues, one of which is whether the agent of Gordian gave consent to Phillips Fox to act. That issue is raised in paragraph 14 of Phillips Fox's defence to the amended statement of claim. The consent in question is said to have been communicated verbally to Phillips Fox by a Ms Vicki Vordis of Cobalt Runoff Services Limited, or alternatively is said to be implied by conduct that is specified.

4 Mr Timothy Price of Phillips Fox has sworn affidavits in one of which, that sworn on 29 June 2004, he deposes to a number of circumstances from which, it is said, consent may be inferred. One of those paragraphs is paragraph 165 in the course of which Mr Price gives evidence of a discussion with Ms Vordis.

5 Ms Vordis replies to that paragraph in paragraph 30 of her affidavit sworn 30 June 2004.

6 It is desired to conclude the cross-examination of Ms Vordis as quickly as possible and accordingly although in a sense it might be seen to be out of turn, her affidavit has been read. BHE took a number of objections based on grounds of confidentiality and privilege. With the exception of the objection to paragraph 30, with which these reasons are concerned, I have admitted the paragraphs to which objection was thus taken (I interpolate that BHE did not take objection on any other basis, and that Phillips Fox took no objection).

7 It is apparent that if paragraph 30 is to be admitted, it being only relevant in reply to paragraph 165 of Mr Price's affidavit, that paragraph 165 will in due course be read. It is apparent on reading paragraph 165 that in the course of the conversation to which Mr Price deposes, reference was made to privileged matters. Prima facie, therefore, the litigation privilege for which s 119 of the Evidence Act provides would be infringed. So much is not in dispute.

8 Because the particular objection, and my ruling on it, will have significant consequences for the conduct of these proceedings, I have heard argument at greater length than would normally be the case and I have considered the authorities to which I have been referred. For better or for worse, I take the view that the correct principle is set out in my own decision in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380. I reviewed the question of loss of privilege, in the context of s 122 of the Evidence Act, in paragraphs [50] to [62] of those reasons. I referred, in particular, to the decision of the Full Federal Court in Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 and to the contrary decision of the same Court (differently constituted) in Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152. I referred to two first instance decisions, namely Bergin J in Garratt's Limited v Thanga Thangathurai [2002] NSWSC 39 and Hely J in Fort Dodge Australia Pty Limited v Nature Vet Pty Limited [2002] FCA 501.

9 Mr McInerney of Counsel, who appears for BHE, referred me to the judgment of Allsop J in DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499. His Honour discussed the question of loss of privilege at considerable length and referred, among many others, to the authorities to which I referred. It appears from paragraph 112 that his Honour, with some reluctance, regarded himself as obliged to follow the view that had been expressed by Hely J in Fort Dodge which I also followed in Singapore Airlines. He therefore decided to approach the question of implied (or imputed) consent under s 122(4) by reference to the principle of inconsistency.

10 Mr McInerney referred me to two decisions of Campbell J, namely Re Doran Constructions Pty Ltd (in liq) (2002) 194 ALR 101 and United Rural Enterprises v Lopmand [2002] NSWSC 1142. The decisions in both those cases seem to me to be distinguishable on their facts. In any event, given the trend of authority to which I have referred, I would not follow them if (which I doubt) they expressed a contrary view of the principle to be applied.

11 I therefore, as I have indicated, approach the question of whether there has been express or implied consent for the purposes of s 122(4) of the Evidence Act by reference to the principles summarised by me in Singapore Airlines.

12 In the present case BHE has consistently asserted, in written submissions and otherwise, that it maintains privilege in the relevant communications. Those communications include the one referred to in paragraph 165 of Mr Price's affidavit and, no doubt, in many other paragraphs. However, BHE asserts, as does Phillips Fox, that Phillips Fox had the consent of Gordian to act for BHE in respect of the claim that is advanced against Gordian (among others) in the indemnity proceedings. That proposition was advanced in written submissions provided to the Court by BHE on 18 June 2004, and is advanced again in the statement of facts, contentions and issues for trial provided by BHE to the Court for the hearing today.

13 Phillips Fox, as I have said, wishes to assert that it has obtained legal consent. In support of that case it seeks to adduce evidence of the conversations from which, it says, consent can be inferred. However, as is acknowledged, Phillips Fox cannot waive the privilege of its client.

14 The question therefore seems to be whether it is inconsistent for BHE to take the position, on the one hand, that Phillips Fox obtained the consent of Gordian to act for BHE in the indemnity proceedings and, on the other, to maintain any claim for privilege in the relevant discussions that are said to prove that consent. As the High Court made clear in Mann v Carnell (1999) 201 CLR 1, the question is not to be addressed simply by reference to considerations of fairness, although the question of inconsistency may, in some circumstances, be informed by considerations of fairness.

15 In my judgment, it is inconsistent for BHE to act in the manner that it seeks to do. I think that it is inconsistent to assert, on the one hand, that it has legal professional privilege in the content of certain discussions but to assert, on the other hand, that it is the beneficiary of a consent, evidence of which can only be obtained through those discussions. BHE also relies (as does Phillips Fox) on the relevant facts (including the conversations and other communications in respect of which privilege is asserted) to support defences of laches, acquiescence, waiver and estoppel (the formulations are manifold). In my judgment, that too gives rise to relevant inconsistency. The consequence is that there has been at least implied consent for the purposes of s 122(4) of the Evidence Act.

16 In my judgment, the relevant paragraph of Mr Price's affidavit should be admitted (subject to any other proper objection that may be taken). It follows, in fairness to Gordian, that paragraph 30 of Ms Vordis' affidavit in reply should be admitted and I propose to do so.

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