Green v AMP Life

Supreme Court of NSW|2005-02-16|Before: Campbell J, Malcolm J

CITATION : Green v AMP Life [2005] NSWSC 95

CATCHWORDS : EVIDENCE - facts excluded from proof - client legal privilege - whether copies of documents not themselves privileged which are provided to a solicitor for the purpose of obtaining advice are privileged under Evidence Act 1995 - whether drafts of transaction documents prepared by a solicitor are privileged under Evidence Act 1995 - exception to privilege in section 121(3) Evidence Act 1995 concerning "a communication or document that affects a right of a person"

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 Dalleagles Pty Ltd v Australian Securities Commission (1991) 6 ACSR 498 Glass v Demarco [1999] FCA 482 CASES CITED : Lakatoi v Walker [1999] NSWSC 156 Packer v Deputy Commissioner of Taxation (Queensland) (1985) 55 ALR 242 R v P (2001) 53 NSWLR 664 Talbot v NRMA Ltd [2000] NSWSC 602

Gary Sydney Green - Plaintiff/Cross-Defendant AMP Life Ltd - First Defendant/Cross-Claimant PARTIES : Roger Patterson - Second Defendant/Second Cross-Claimant John Kelly - Third Defendant/Third Cross-Claimant Kevin McLean - Fourth Defendant/Fourth Cross-Claimant

M J Heath - Plaintiff/Cross-Defendant COUNSEL : N Perram - Defendants/Cross-Claimants

Malcolm J Wright - Plaintiff/Cross-Defendant SOLICITORS : Malleson Stephen Jaques - Defendants/Cross-Claimants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

3268/04 GARY SYDNEY GREEN v AMP LIFE LTD & ORS JUDGMENT - Ex Tempore, revised 21 February 2005 HIS HONOUR: Nature of the Case 1 This is the hearing of a notice of motion which seeks access to certain documents for which privilege has been claimed and, in the alternative, an order for discovery of documents. Factual Background 2 The plaintiff worked for AMP as an insurance agent. Trustees for the insurance agents of AMP took out an insurance policy underwritten by AMP which provided disability cover to insurance agents of AMP. The benefit of that policy was at all times held on trust for the members of the Income and Agency Protection Plan. In May 2001 the plaintiff was accepted as a member of that Plan and thereby became entitled to benefits under the policy. While it was AMP who issued the policy much of the risk of the policy was borne by Swiss Re under re-insurance arrangements. 3 In October 2001 the plaintiff began to suffer from a mental illness. It is common ground that he continued to suffer from that illness for at least 2 years. The issue in the case concerns when a variation to the insurance policy became effective. AMP claims that an agreement was reached on 14 October 1999 between itself and the trustees to amend the policy documentation so as to impose a 2-year limit on the time during which benefits would be paid for a mental illness. AMP also contends that that amendment was effective from 1 January 2000 or alternatively that the policy should be rectified with effect from 1 January 2000 to impose a 2-year time limit on those benefits. 4 Affidavits which are filed in the proceedings show that AMP consulted Swiss Re concerning amendment of the policy. There is some contemporaneous documentation which the plaintiff submits shows that no final agreement was reached on 14 October 1999, that an actual amendment to the policy was dependent on both AMP and the trustees signing off on a draft of the wording by which the amendment was to be effected, and that there was no agreement on the wording of such a draft until June 2004. 5 The documentation concerning the Plan involved a trust deed establishing the trust on which the policy was held, the policy document itself and a customer information brochure which sought to explain the policy in ordinary English. 6 Minter Ellison acted as the solicitors for AMP in connection with the making of some amendments to the policy and the customer information brochure. It is essentially the Minter Ellison file concerning those amendments that the plaintiff seeks access to by the present notice of motion. The file has been produced on subpoena and a claim has been made for privilege concerning all of it. The plaintiff contests that claim of privilege. 7 There is an alternative prayer for relief, that AMP give discovery of the documentation in the Minter Ellison file. However, given that there has been for the purposes of this application a listing of the documents in the Minter Ellison file, no further information would be gained if there were to be a formal order for discovery, if the documents were privileged. In those circumstances, both prayers for relief depend upon whether the documents in the file are privileged. Whether the Documents are Privileged under Section 118 8 An affidavit has been sworn by Mr Jones, the solicitor for AMP, which gives evidence, on information and belief from the partner at Minter Ellison who had charge of the file, that the documents fall into five categories. These are: "(A) correspondence from in-house counsel at AMP giving instructions to Minter Ellison … for the purpose of obtaining legal advice; (B) correspondence from Minter Ellison to AMP … for the purpose of giving legal advice to AMP; (C) copies of AMP documents made by AMP and given to Minter Ellison … for the purpose of obtaining legal advice; (D) draft documents prepared by Minter Ellison containing handwritten and typed mark-ups of Minter Ellison solicitors … for the purpose of providing legal advice to AMP; and (E) draft documents prepared by Minter Ellison … for the purpose of providing legal advice to AMP."

The affidavit presumes that each of those five categories is a category of privileged document. 9 The AMP solicitor has prepared a table which identifies each of the documents individually and allocates it to one or other of those categories. As he would presumably not have personal knowledge of the purpose of each individual document being provided to Minter Ellison, I have inspected the documents myself. Subject to the matters I will discuss later, each of the documents appears to have been accurately categorised by the AMP solicitor. 10 Some parts of the documents contain advice on whether a statute is applicable. Advice on that topic is clearly privileged, but would be severable if the balance were not privileged. Most of the material in the file concerns the detail of wording to be adopted to make changes to the policy and to the customer information brochure. I shall give consideration first to whether documents falling into categories (C) and (E) are privileged. Privilege of Copies of Unprivileged Documents Given to a Lawyer, and Drafts of Transaction Documents 11 Some of the documentation in the file is a copy of a document, the original of which is not privileged. It has been established under the common law that copies of documents not themselves privileged, which are provided to a solicitor for the purpose of obtaining advice, are privileged.: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501. 12 However, the test for the existence of client legal privilege under section 118 Evidence Act 1995 is different to the common law test in some respects (not all of which are of substance). The section provides: "Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication made between the client and a lawyer, or (b) a confidential communication made between 2 or more lawyers acting for the client, or (c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client." 13 Another category of documents contained in the file is drafts of a proposed policy and proposed customer information bulletin brochure. Some of those drafts are clean - they contain no handwritten or typewritten mark-ups by the solicitor. 14 The common law recognised that a solicitor's drafts of transaction documents could themselves be privileged. In Packer v Deputy Commissioner of Taxation (Queensland) (1985) 55 ALR 242 at 250 McPherson J said that: "... a communication may be privileged even though it is both not intended for use in litigation and not strictly speaking made for the purposes of legal advice but for the purposes of providing legal assistance, for example, draft conveyances and the like: Mostyn v West Mostyn Coal and Iron Co Ltd (1876) 34 LT 531, although they are not perhaps legal advice in a literal sense."

15 In Dalleagles Pty Ltd v Australian Securities Commission (1991) 6 ACSR 498 Anderson J reviewed the common law on this topic and concluded, at 505-6: " Mostyn v West Mostyn Coal and Iron Co Ltd (1876) 34 LT 531 is long standing authority for the rule that summaries of agreements and draft agreements prepared by legal advisers with hand written observations and cancellations on them are prima facie privileged, as well as instructions given to draw an agreement. … whenever a lay client gives instructions to a legal practitioner to perform specialist legal services involving the exercise of professional skill, there is imposed on the solicitor a duty to give any advice reasonably necessary to protect the client's interests in the transaction whether expressly requested or not. Two cases in this court illustrating that rule are Watts v Public Trustee (WA) [1980] WAR 97 and Stone James & Co v Investment Holdings Pty Ltd [1987] WAR 363. See also MacPherson and Kelley v Kevin J Prunty & Associates [1983] 1 VR 573. It is not a large step from that position to say that whenever a client gives instructions to his solicitor there is assumed to be a request for advice. In my opinion, discourse between solicitor and client with reference to the transactions covered by those instructions, that is, professional discourse in a professional capacity, should be regarded as prima facie for the purpose of giving and receiving advice. This would apply to any communication that is on its face a communication of a professional nature from the solicitor to the client or his agent touching the subject matter of the solicitor's engagement and any communication from the client to the solicitor in connection with that engagement. Only if the rule is applied in that way can the policy of it be carried out and its object practically fulfilled. I think this is recognised in the earlier English cases such as Mostyn v West Mostyn Coal and Iron Co Ltd ; Minet v Morgan [1873] 8 LR Ch App 361 and Lawrence v Campbell (1859) 4 Drew 485 referred to with evident approval by Dawson J in Baker v Campbell at 128, and as well, Australian cases such as Haydon v McLeod [1900] 26 VLR 452 in which Hodges J said at 454: "I take it to be now established as a correct principle that a professional communication between a solicitor and his client, made to him as a solicitor, is privileged - certainly prima facie - unless there is something else to take it out of the privilege." See also Kelly v Commonwealth of Australia 29 ACTR 11 where Blackburn J in the Supreme Court of the Australian Capital Territory referred to Haydon v McLeod as "a case which appears never to have been questioned". What is protected, of course, is that which is communicated between solicitor and client. It is the communication that is privileged. But this is not to say that material that is not literally a communication or manifestly the record of a communication is never protected. There are many instances of protection being extended to such material. The examples of the draft letter that never leaves the solicitor's office, the draft agreement and the draft statement of claim have already been referred to. The reason why such material is protected is often stated to be that disclosure of it will, or will tend to, reveal the privileged communication. A-G (NT) v Maurice per Dawson J at 496. Thus a note made by a solicitor of a conference with his client will be privileged in so far as it is a record of the communication from the client (that communication being privileged) but also in so far as it might contain notes of the solicitor's own thoughts in regard to the matters communicated to him. Protection is afforded in the latter case on the ground that disclosure of that material might tend to reveal what had been communicated to the solicitor. There is much in the cases to support the view that this is the true basis upon which draft agreements, draft letters, draft pleadings and the like have long been accepted as privileged; that it is not so much because they are themselves "advice" or "communication" but because they will, if disclosed, reveal, or tend to reveal, the content of privileged communications. Material created by the solicitor in fulfilment of his engagement "is the result of the solicitor's mind working upon and acting as professional adviser with reference to" material communicated to him confidentially in his professional capacity ( Kennedy v Lyell [1883] 23 Ch D 387 at 407) and, as such, will by its very nature tend to reveal the content of the communication in response to which it had been prepared."

16 In Lakatoi v Walker [1999] NSWSC 156 Rolfe J considered the position of draft documentation under the Evidence Act 1995. His Honour followed the decision in Dalleagles, and said, at [15]: "It seems to me that in principle the production of such a draft, even without notations amendments and corrections, would properly be held to constitute a disclosure of instructions and, in my opinion, for this reason the draft would attract client legal privilege." 17 The test for client legal privilege under section 118 depends upon the Court making a decision about what would happen if the evidence were to be adduced. At the time the Court comes to make that decision, the evidence has not been adduced, and hence the Court's decision is an exercise in prediction. The consequence which triggers the existence of legal professional privilege is that if the adducing of the evidence "would result in disclosure of" certain communications or documents. 18 The notion of "disclosure" involves something becoming revealed which was previously hidden, or known which was not previously known. There can, it seems to me, be disclosure of a matter, even if not everything concerning that matter is disclosed. In the present case, it seems to me that allowing inspection of the material which is contained in the file, insofar as it consists of drafts of the policy and customer information brochure, would result in some information becoming available to the person who carries out the inspection, about the topics concerning which the assistance of Minter Ellison had been requested in the drafting of the documents. To that extent, it would result in disclosure of a confidential communication made between client and lawyer. 19 There remains a question of whether the purpose required by section 118 is attracted, namely, "for the dominant purpose of the lawyer... providing legal advice to the client." 20 It is elementary that the construction of a document is a matter of law. In essence, the task that Minter Ellison was engaging in was expressing, in the policy and the customer information brochure, what it understood to be its instructions, in language which a court would construe to have a meaning which was in accordance with the client's intentions. The rationale of client legal privilege is that people ought to be able to consult lawyers about their affairs without the risk of their disclosure to those lawyers being later used against them. In my view it is within the rationale of the privilege to protect communications made when a client requests a lawyer to draft a complex insurance policy, as this is, and a complex brochure, which seeks to make that complex policy document intelligible. For these reasons, the communication of instructions from AMP to Minter Ellison should be held to be "for the dominant purpose of providing legal advice to the client" within the meaning of section 118. Hence, it seems to me that the drafts of the transaction documents are themselves privileged. 21 The same analysis leads to the conclusion that the copies of documents, not themselves privileged, which were provided to the solicitors to assist them in drafting the policy and the customer information brochure, are themselves privileged. 22 The other three categories of documentation are ones where the existence of the privilege requires no discussion. 23 For these reasons, I hold that all the documentation in the file is documentation to which client legal privilege attaches within the meaning of section 118. Exception from Privilege under Section 121(3)? 24 Another basis upon which the plaintiff sought access to the documents is that they fall within the exception to client legal privilege which is contained in section 121(3). That subsection provides: "(3) This Division does not prevent the adducing of evidence of a communication or document that affects a right of a person." 25 The provision has been construed by Justice Hodgson when Chief Judge in Equity in Talbot v NRMA Ltd [2000] NSWSC 602 para [3], where his Honour said: "In my opinion [the words 'affects a right of a person'] cannot mean a communication or document that is relevant to a right of a person because that would virtually eliminate the legal professional privilege as a ground for non-admission of evidence. In my opinion, that must mean a communication or document that affects in some fairly direct way what are the actual rights and perhaps also duties of a person." 26 In a paper given to the New South Wales Bar Association on 10 October 1995 Mr L P Robberds QC gave some examples of situations where the Court had decided, under the common law, that legal professional privilege did not apply. These examples are: (A) In the case of a testamentary disposition, the legal professional privilege rule did not prevent the court receiving evidence from a solicitor whose client had died, that the client had given the residue of his estate by will to the defendants, intending them to hold it upon a secret trust and that the defendants had agreed to accept that trust ( Russell v Jackson 68 ER 558); (B) A creditor could tender in evidence a statement made by a debtor (in a without prejudice letter written to compromise a dispute), that the debtor had suspended payment of his debts. The creditor relied upon that statement as an act of bankruptcy and it was held that he could do so ( In re Daintrey Ex parte Holt (1893) 2 QB 116); and (C) A notice of exercise of an option contained in a without prejudice letter written in an attempt to settle pending litigation, could be proved by the tender of the letter ( Tenstat Pty Limited v Permanent Trustee Australia Limited (1992) 28 NSWLR 625."

Mr Robberds suggests, correctly in my view, that it is communications of this general type that section 121(3) is concerned with. 27 In R v P (2001) 53 NSWLR 664 at 679 Hodgson JA said that in his view section 121(3): "... applies only in relation to communications that affect rights directly, and not merely by way of being evidentiary as to rights created or affected otherwise. One example of such a communication might be that considered in Conlon v Conlon Ltd (1952) 2 All ER 462, which concerned an alleged agreement to settle proceedings made on behalf of a client by a solicitor, where an interrogatory was directed to the client asking whether the client had authorised the solicitors to enter into the settlement. The Court of Appeal in that case held that the communication in question was not confidential, so that privilege did not arise. Another approach in New South Wales could be that this was a communication affecting the rights of parties not merely in an evidentiary way, thus falling within s121(3)." 28 Though Ipp AJA disagreed with some aspects of that judgment of Hodgson JA, and Mason P did not need to decide who was correct about that disagreement, I do not read Ipp AJA as expressing any disagreement with the portion of Hodgson JA's judgment which I have just quoted. 29 I also mention that the section 121(3) is in identical terms to the exception from the "without prejudice" privilege contained in section 131(2)(i) Evidence Act 1995. That provision is one concerning which Justice Emmett in Glass v Demarco [1999] FCA 482 at [10] said: "I consider that the reference to a right in section 131(2)(i) is to an existing right and it is not satisfied by reason of a right coming into existence upon the making of an offer. If it were to be given such a construction, paragraph (i) would constitute a most significant exception to the operation of s 131(1)."

In this way, his Honour construed the scope of the exception by reference to the purpose of the privilege, in a similar way to the way that Hodgson CJ in Eq had proceeded in Talbot v NRMA . That the same words in section 121(3) and section 132(i) have been construed in analogous ways provides some additional reason to be persuaded that the passages quoted above from R v P are right. Those passages are, in any event, binding on me. 30 In the present case, there are no documents in the Minter Ellison file which, of themselves, affect any rights of the plaintiff. There are no documents which are of themselves agreements to amend the policy, or authority for anyone to amend the policy, or an executed original of an amended policy. Rather, the documents are the sort of things commonly found in a solicitor's file, which involve preparation for and advice about a decisive step which, if taken, might affect people's rights, but not any such decisive step itself. For these reasons, the exception in section 121(3) does not apply. 31 For these reasons, I decline to make the orders sought in the notice of motion. * * * * * * * * * * 32 The respondent to the motion seeks costs. It is opposed on the ground that the affidavit which gave particularity concerning the documents was filed very late, and that the affidavit by Mr Jones which gave hearsay evidence about the basis upon which privilege was claimed was in bald terms. I do not think that affidavit is quite as black as it is painted. It contains a degree of generality, it is true, but it is a degree of generality which is commonly - and necessarily - found in claims for privilege. The categories of documents which were identified were ones which are legitimate categories for privilege of documents. While it is always possible for a person faced with such an affidavit, under the procedures that the Court adopts these days, to challenge the correctness of the claim for privilege, it is something which is done at a risk as to costs. Having found that the claim to privilege was correctly made, I do not see any reason why costs should not follow the event. I order the applicant to pay the costs of the respondent. **********

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