Hooker Corporation Ltd v Darling Harbour Authority

FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY ) No VG 372 of 1996 GENERAL DIVISION ) B E T W E E N: MELTEND PTY LTD (ACN 062 859 625) and SIMON ROSENBAUM Applicants AND RESTORATION CLINICS OF AUSTRALIA PTY LTD (ACN 008 081 785) and MARIO MARZOLA and HELEN LYNETTE MARZOLA Respondents A N D B E T W E E N: RESTORATION CLINICS OF AUSTRALIA PTY LTD (ACN 008 081 785) and MARIO MARZOLA Cross Claimants MELTEND PTY LTD (ACN 062 859 625) and SIMON ROSENBAUM Cross Respondents CORAM: GOLDBERG J PLACE: MELBOURNE DATE: 23 JUNE 1997 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The respondents serve on the applicants forthwith a copy of document number 8.017 referred to in the respondents' list of documents dated 26 November 1996. 2. The respondents pay to the applicants their costs of their motion filed 3 June 1997 but not including the costs of any appearance on that motion on 5 June 1997. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY ) No VG 372 of 1996 GENERAL DIVISION ) B E T W E E N: MELTEND PTY LTD (ACN 062 859 625) and SIMON ROSENBAUM Applicants AND RESTORATION CLINICS OF AUSTRALIA PTY LTD (ACN 008 081 785) and MARIO MARZOLA and HELEN LYNETTE MARZOLA Respondents A N D B E T W E E N: RESTORATION CLINICS OF AUSTRALIA PTY LTD (ACN 008 081 785) and MARIO MARZOLA Cross Claimants MELTEND PTY LTD (ACN 062 859 625) and SIMON ROSENBAUM Cross Respondents CORAM: GOLDBERG J PLACE: MELBOURNE DATE: 23 JUNE 1997 REASONS FOR JUDGMENT The applicants apply by notice of motion for an order, inter alia, that the respondents forthwith provide to the Applicants a copy of document number 8.017 referred to in the respondents' list of documents dated 26 November 1996. The application is made pursuant to O 15 r 11(1) of the Federal Court Rules which provides, so far as it is material: "Where - (a) it appears from a list of documents filed by a party under this Order that any document is in his possession, custody or power; ... the Court may, subject to any question of privilege which may arise, order the party- (d) to produce the document for inspection by any other party at a time and place specified in the Order; (e) to file and serve on any other party a copy of the whole or any part of the document with or without an affidavit verifying the copy made by a person who has examined the document and the copy. ... " In the proceeding the applicants seek relief in relation to and arising out of a franchise agreement entered into on or about 25 February 1994 between the first applicant and the first respondent. The first applicant is a director of the second applicant. The franchise agreement related to a business in Melbourne providing hair restoration and cosmetic surgery services and associated products. The applicants claim they were induced to enter into the franchise agreement on the basis of misleading and deceptive conduct comprising certain representations and warranties in relation, inter alia, to the income and profitability of the franchise business purchased. These allegations are denied by the respondents although they do plead that certain representations were made which were not misleading or deceptive. The initial application and statement of claim were filed on 1 July 1996 and amended on 24 July 1996. The respondents filed a defence and an amended cross‑claim on 7 August 1996 in which they claim damages and other relief arising out of and in relation to the franchise agreement. On 18 October 1996 Jenkinson J ordered by consent, inter alia, that each party provide discovery to each opposite party in the proceeding on the originating application and in the cross‑claim on or before 5 November 1996 and provide inspection on or before 19 November 1996. This order was superseded by a further order of Jenkinson J on 22 November 1996 whereby he ordered by consent, inter alia, that each party give discovery to each opposite party in the proceeding on the originating application and in the cross‑claim on or before 29 November 1996 and give inspection on or before 13 December 1996. On 27 November 1996 the respondents filed a list of documents which stated: "1. The Respondents have in their possession, custody or power, the documents enumerated in Schedule 1. 2. The documents enumerated in Part 2 of Schedule 1 are privileged from production on the grounds of legal professional privilege. ..." Part 1 of Schedule 1 comprised 61 pages of documents identified by reference to document number, date and description. On page 52 of the list there appeared the following: DOCUMENT DATE DESCRIPTION NO 8.017 02/08/96 Copy of facsimile letter from T Nicholas, Sims Richmond Pty Ltd to H Marzola, Restoration Clinics of Australia

Part 2 of Schedule 1 described the documents in respect of which privilege from production was claimed on the grounds of legal professional privilege. Paragraph 1(d) of Part 2 referred to correspondence, copies of correspondence and notes of communications between: "the respondents and third parties prepared for the purpose of existing or contemplated litigation".

Paragraph 2 of Part 2 referred to: "Documents, reports, memoranda, notes and other documents prepared by: (a) the respondents or their agents or solicitors for the purposes of obtaining or providing legal advice or for the purpose of existing or contemplated litigation; (b) third parties, at the request of the respondents or their agents or solicitors, or otherwise, for the purpose of existing or contemplated litigation".

The applicants' solicitors received that list shortly after the date it was sworn. There was included in the list, apart from document number 8.017, other documents that had been prepared by Sims Richmond Pty Ltd. On 17 December 1996 Christine Youl, a solicitor employed by the applicants' solicitors, attended the office of the respondents' solicitors by appointment for the purpose of inspecting the documents contained in the list of documents. She was shown to a conference room containing several boxes of documents comprising the respondents' documents and she spent most of the day inspecting the documents. She carried out her practice of dictating notes in relation to the documents she was inspecting by making a note of the document number, its description and any comments she had in relation to it and also making a notation as to whether it was necessary to obtain a copy of the document. During the course of the inspection she inspected document number 8.017 and dictated a note in relation to it in the following terms: "8.017 Letter to Helen Marzola from Accountants Sims Richmond re: Melbourne clinic. The accountants have compared the Management Profit and Loss Statement for the 10 months period ended 30 April 1993 to the figures provided to Dr Simon Rosenbaum and have highlighted a number of discrepencies (sic). *This is a very important document and should be obtained. For example product sales were advised to Simon in the sum of $5,200. This was not an actual figure, it was an estimate because the revenue received from product sales for clinics Australia wide were banked together with no records that enabled accurate allocation between the clinics. Licence fees and registration $2,500 was not provided to Dr Rosenbaum. Various other matters mentioned as well."

On 21 January 1997 Ms Youl wrote to the respondents' solicitors requesting copies of documents including document number 8.017 and on or about 29 January 1997 she received a letter from the respondents' solicitors enclosing copies of the documents requested but not document number 8.017. In relation to that document the respondents' solicitors said: "Document 8.017, a copy of which has been requested by you, is privileged. A copy was included in our clients' list of documents and the documents which you inspected by mistake. Our clients now claim privilege over this document which was produced for the sole purpose of these proceedings and to facilitate the provision of legal advice." The applicants' solicitors did not accept that the document was subject to privilege and sought an explanation on 3 February 1997 as to the nature of the document and the basis upon which the respondents asserted that it was created solely for the purpose of these proceedings and to facilitate the provision of legal advice. They also asserted that the respondents by including that document in Part 1 in Schedule 1 of the list of documents and by producing it for inspection had waived any claim that the document was privileged. On 7 April 1997 the respondents' solicitors wrote to the applicants' solicitors stating in relation to document number 8.017: "Document 8.017 is a letter from our clients' former accountants to our clients provided at our clients' special request. It does not form part of the normal accounting services provided by our clients' former accountants to our clients. It was provided to our clients for the sole purpose of use in this proceedings. Had the proceedings not been instituted, the document would not have been produced." The applicants' solicitors assert that the document has significant bearing on the applicants' case and their allegations concerning the respondents' representations prior to the acquisition of the franchise business. The following explanation as to how document 8.017 came to be described in Part 1 of Schedule 1 of the respondents' list of documents has been given by Mr Thomas Jarvis a solicitor employed by the respondents' solicitors: "5. An amended statement of claim was received from the Applicants' solicitors on or about 24 July 1996. 6. Instructions were then sought from Helen Marzola on behalf of Restoration Clinics of Australia Pty Ltd ("RCA") in respect of the amended statement of claim so that a defence could be prepared. 7. Numerous discussions took place with Helen Marzola over the course of the next few days by telephone and with her in person. 8. The defence and amended cross‑claim was finalised on 6 August 1996. In order for Helen Marzola to provide adequate instructions for the preparation of a defence, it was necessary for her to obtain input from RCA's accountant, Mr Tony Nicholas. 9. I am informed by Ms Carolyn Reynolds, the solicitor who was then responsible for this matter and in particular, the preparation of the defence, and believe that Helen Marzola told her during the course of preparation of the defence that she was discussing the matter with Mr Tony Nicolas. Ms Reynolds is no longer employed by Finlaysons. 10. The Respondents' list of documents filed in this matter dated 26 November 1996 was prepared under my supervision. 11. The list of documents was originally compiled by a paralegal. 12. I then considered each document described on the list and settled the list of documents which has been placed on the Court file. In particular, I considered whether individual documents were relevant and/or privileged. 13. In my opinion, the document which has been included on the list of documents and described with the number 8.017 is privileged. It should not have been discovered. The document properly falls within the heads of privilege claimed in Schedule 2 to the Respondents' list of documents dated 26 November 1996 and in particular, items 1(d) and 2(b) of Schedule 2. 14. At the time I settled the content of the Respondent's list of documents I did not appreciate that document 8.017 was a privileged document. 15. Documents included in the Respondents' list of documents dated 26 November 1996, including the document numbered 8.017, were subsequently inspected by the solicitors for the Applicants. 16. On 21 January 1997, the solicitors for the Applicants requested copies of documents which had been discovered by the Respondents. During the course of compiling copy documents in response to that request, I realised that a claim for privilege ought properly to have been made in respect of document 8.017. I forwarded copy documents to the solicitors for the Applicants under cover of letter dated 29 January 1997, but indicated that document 8.017 was priviliged (sic), that a copy had been included in the Respondents' list of documents and the documents which the Applicants' solicitors had inspected by mistake, and that the document had been produced for the sole purpose of these proceedings and to facilitate the provision of legal advice. 17. Inclusion of the document numbered 8.017 in the Respondents' list of documents dated 26 November 1996 and the provision of a copy of this document to the Applicants solicitors to inspect was a mistake. The document numbered 8.017 was, in my view, produced for the sole purpose of these proceedings and to facilitate the provision of legal advice."

The writer of the letter, Anthony Nicolas, says that a few days prior to 2 August 1996 Helen Marzola, the third respondent, telephoned him and told him that the court proceedings had been commenced, that one of the issues which had arisen was the accuracy of figures prepared by him which were contained in a schedule to a document given to the applicants, and that she was in the process of preparing instructions to give to solicitors setting out the respondents' response to the matters which had been alleged. She asked him to consider the financial information contained in the schedule to the document and the respondents' management accounts and to compare the two so that she could provide instructions to the solicitors. He then prepared the subject letter. Mr Panna, who appeared for the applicants, did not concede that the document came into existence as a privileged document but the thrust of his submissions was that such privilege as existed in relation to the document had been waived by the respondents. Mr Waller, who appeared for the respondents, submitted that there had been no express waiver of privilege, which required knowledge and intention, and that there was no basis for any assertion of an imputed or implied waiver. He submitted that the circumstances in which the mistaken insertion of the document in Part 1 of Schedule 1 of the list and its availability for inspection had occurred should be looked at in the context of the fact that there had been accelerated discovery. He relied on the judgment of Rogers J in Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538. It appears that the document came into existence for the purpose of enabling the respondents to give instructions to their legal advisers for the purpose of these proceedings and accordingly was privileged. However the facts to which I have referred do not require or compel an inference that the applicants' solicitors must have known or realised that the letter had been included in Part 1 of Schedule 1 by mistake. The document on its face is not patently privileged, such as, for example, an advice from counsel might be. It does bear a date subsequent to 1 July 1996, the date of the filing of the initiating process but that of itself does not point unequivocally to a privileged document, particularly where it emanates from a non‑legal source and is directed to a non‑legal person. Further the contents of the letter would not necessarily have made Ms Youl realise that a claim for privilege would arise. I do not accept that Ms Youl was seeking to take advantage of what she must have realised was an obvious error or mistake on the part of the respondents' solicitors. If that had been the situation I would have expected her to have made a full note or copy of the letter. Ms Youl was not cross‑examined and I am not prepared to find that she must have realised that the inclusion of the letter in Part 1 of Schedule 1 to the list was an obvious error or mistake on the part of the respondents' solicitors. What inferences should I draw from the respondents' evidence? Mr Jarvis says that at the time he examined the documents in the list prepared by the paralegal he did not appreciate that the letter was a privileged document. Nevertheless he turned his attention to the issue whether the letter was relevant and/or privileged. He determined that it was relevant and that it was not privileged. Therefore he kept it in Part 1 of Schedule 1, thereby intending it to be discovered and made available for inspection. From an "objective standpoint", to use the language of Slade LJ in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 at 1045, Mr Jarvis' intention was to disclose the contents of the letter, thereby waiving any privilege that may have attached to it. Mr Waller submits, however, that the disclosure was inadvertent and a mistake and therefore not made knowingly or intentionally. The critical issue which arises for determination is whether there is disclosed an intention on the part of the respondents to waive any privilege attaching to the letter. I infer from Mr Jarvis' evidence that he directed his attention to the point - is this letter privileged? He decided that it was not privileged and that is why it remained in Part 1. He now says the inclusion of the letter in Part 1 of Schedule 1 of the list was a mistake. I will return to the respondents' evidence after reviewing some of the relevant authorities. Mr Waller submitted that a court will protect the privilege of a document that has been inadvertently disclosed and relied on a number of decisions in support of that submission. But stated so baldly the principle is too wide. This is exemplified by Mr Waller's reference to Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra). In that case Slade LJ (with whom Woolf LJ and Sir George Waller agreed) found that the experts and solicitors to whom the relevant documents were disclosed must have realised that the privileged letter had been included in the correspondence file made available for inspection by mistake. The letter did not fit the description under which it was set out. His Lordship after noting the disclosure was due to inadvertence said (1043 ‑ 1044): "Nevertheless, a mere plea of inadvertence does not by itself necessarily enable a party to litigation to avoid a loss of privilege. Privilege may be lost by inadvertence. ... Ordinarily, a party in my judgment who sees a particular document referred to in the other side's list, without privilege being claimed, and is subsequently permitted inspection of that document, is fully entitled to assume that any privilege which might otherwise have been claimed for it has been waived. Let there be no doubt about that." His Lordship's only reservation was that the Court was not powerless to exercise its equitable jurisdiction by way of injunction "if the particular circumstances warrant such intervention on equitable grounds", referring to Lord Ashburton v Pape (supra); Goddard v Nationwide Building Society [1986] All ER 264 and English and American Insurance Co Ltd v Herbert Smith & Co (1987) 137 NLJ 148. His Lordship concluded that the inspecting parties were seeking to take advantage of what they must have known was an obvious error. It was in that context that his Lordship stated the following principles (1045 - 1046): "(1) Where solicitors for one party to litigation have, on discovery, mistakenly included a document for which they could properly have claimed privilege, the court will ordinarily permit them to amend the list under RSC Ord 20 r 8, at any time before inspection of the document has taken place. (2) However, once in such circumstances the other party has inspected the document in pursuance of the rights conferred on him by RSC Ord 24, r 9, the general rule is that it is too late for the party who seeks to claim privilege to attempt to correct the mistake by applying for injunctive relief. Subject to what is said in (3) below, the Briarmore decision [1986] 1 WLR 1429 is good law. (3) If, however, in such a last‑mentioned case the other party or his solicitor either (a) has procured inspection of the relevant document by fraud, or (b) on inspection, realises that he has been permitted to see the document only by reason of an obvious mistake, the court has the power to intervene for the protection of the mistaken party by the grant of an injunction in exercise of the equitable jurisdiction illustrated by the Ashburton, Goddard and Herbert Smith cases. Furthermore, in my view it should ordinarily intervene in such cases, unless the case is one where the injunction can properly be refused on the general principles affecting the grant of a discretionary remedy for example, on the ground of inordinate delay (see Goddard's case[1986] 3 WLR 734, 745 E-F per Nourse LJ. Possibly there may be other exceptions to the general rule set out in (2) above. However, in my judgment, the exception set out in (3) above suffices to cover the present cases. Save where it is too late to restore the previous status quo (eg on facts similar to those of the Great Atlantic case[1981] 1 WLR 529), I do not think the law should encourage parties to litigation or their solicitors to take advantage of obvious mistakes made in the course of the process of discovery" Those principles do not assist the respondents as I have found that Ms Youl did not, on inspection, realise that she had been allowed to see the document only because of an obvious mistake. Mr Waller also relied on Hooker Corporation Ltd v Darling Harbour Authority (supra) where notes of a meeting with solicitors for the defendant for the purpose of obtaining legal advice and to give instructions were included in a list of documents. No claim for privilege was made in respect of them and the plaintiff inspected the notes and copied them. Counsel for the plaintiff sought to use the notes in cross‑examination. Rogers J did not accept the view of Sheppard J then sitting in the Supreme Court of New South Wales in Australian Oil Refining Pty Ltd v Decca Survey Australia Ltd (29 March 1974, unreported) that a claim for privilege was in effect waived by the affidavit of discovery. Rogers J said that such a view paid insufficient regard to the need for reconciling the business of the court with the interests of justice. However in my view the issue of waiver should not be determined by reference to the manner in which the business of the court is conducted. Rather the issue should be determined by reference to the express or imputed intention of the disclosing party: Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra); Attorney‑General (NT) v Maurice (1986) 161 CLR 475; Goldberg v Ng (1996) 185 CLR 83 Rogers J concluded that the protection of legal professional privilege had not been waived apparently on the basis that the notes had been discovered and inspected by mistake. He was influenced in reaching this conclusion by reference to United States authority where documents were disclosed by mistake in an "exceptional accelerated discovery process": Transamerica Computer Co Inc v IBM Corporation 573 F 2d 646 (1978). In that case, 17 million pages had to be discovered within a three month period and 1,138 documents inadvertently slipped through a screening process. Rogers J applied the reasoning in that case to the circumstances before him where, although the number of documents did not run into millions, the task of discovery was "just as burdensome" (543). Rogers J relied on the fact that the burdensome task of discovery resulted in the inadvertent disclosure as justifying the conclusion that there had not been a waiver of the protection of legal professional privilege. However those circumstances do not exist in this case. The initial order for discovery was made by consent and then extended by consent. The list of documents may have comprised 61 pages but there is no evidence that it was any onerous burden of discovery which caused or contributed to the inadvertence. The list was originally compiled by a paralegal, Mr Jarvis examined the relevant document and formed a view about it. Mr Waller placed considerable reliance on Goldberg v Ng in the New South Wales Court of Appeal (1994) 33 NSWLR 639, where Clarke JA was constrained to disagree with the reasoning in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) and the decisions which led to it (675) because he regarded it as standing for the proposition that an inadvertent, and therefore unintentional, act could result in waiver. Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) was not considered in this context when the decision was on appeal to the High Court. Clarke JA expressed the view that Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) involved an unwarranted extension of the doctrine of waiver, cited Hooker Corporation Ltd v Darling Harbour Authority (supra) and observed at 673: "This area of the law is not without difficulty and there is a degree of internal conflict within the authorities. Further, it is difficult, if not impossible to reconcile all the case (sic) and in particular, Lord Ashburton v Pape [1913] 2 Ch and Calcraft v Guest (1898) 1 QB 759". His Honour emphasised two points - waiver is constituted by an intentional act with knowledge and waiver looks to the conduct of the person who is said to have waived a right. He noted that a party should be found to have waived privilege either expressly or where an intention to waive is imputed by law as a result of a deliberate act which renders it unfair that the privilege be maintained and said (674): "If this is correct there is no basis for holding that the inadvertent inclusion of a reference to a document in a list of documents (or affidavit of discovery) constitutes a waiver of privilege in that document". Clarke JA accepted that a deliberate and intentional act would result in waiver and said: "On the other hand I would accept that waiver can occur when a party (or his or her agent) deliberately (and intentionally) discloses material which he or she would not have disclosed if aware that the material was part of a privileged document containing other material which would never have been intentionally revealed: Great Atlantic Insurance Co v Home Insurance (1981) 1 WLR 529 at 537. The act upon which the waiver was based was a deliberate one. For these reasons I am not disposed to agree with the series of decisions leading to Guinness Peat." Mr Waller submitted that I should adopt these observations and find that the respondents had not deliberately or intentionally disclosed the letter. However for the reasons to which I shall refer I consider in the circumstances of this case that there was a sufficient deliberate and intentional disclosure. The issue was not one of partial disclosure, rather it was one of full disclosure. In Derby & Co Ltd v Weldon (No 8) [1991] 1 WLR 73 the Court of Appeal ordered that privileged documents inadvertently discovered by the plaintiff in their list of discovered documents and subsequently inspected be delivered up and granted an injunction restraining the defendants from relying on any information in them on the ground that there had not been any waiver of privilege. However the Court expressly found that the inspecting parties must have realised the documents had been disclosed to them by mistake and that accordingly the principles laid down by Slade LJ in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) were satisfied. Mr Waller also sought to rely on Woollahra Municipal Council v Westpac Banking Corporation (1994) 33 NSWLR 529 where the circumstances were quite different. However at 539, Giles J observed that not every disclosure to a third party was a waiver of the privilege and he set out a number of examples. One example was that inadvertent disclosure in the course of discovery is not a waiver and he cited Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) and Hooker Corporation Ltd v Darling Harbour Authority (supra) for this proposition. However that proposition must be understood in the light of the analysis of those cases to which I have referred. Giles J also observed that non‑inadvertent discovery of a document for which privileged could have been claimed is a waiver, referring to Trade Practices Commission v Arnotts Ltd (1989) 21 FCR 306. In that case the relevant privilege was 'without prejudice" privilege and not legal professional privilege. Objection was taken to the admissibility of the document into evidence so Beaumont J had to consider the application of the fairness principle as enunciated in Attorney‑General (NT) v Maurice (supra). The issue of discovery and inspection by mistake or inadvertence did not arise. There was always an intention to discover the document which summarised a conference between the representatives of the Trade Practices Commission and Arnotts. The decision in Rank Film Distributors Ltd v ENT Ltd (1994) 4 Tas R 281 is of no assistance to the respondents as the court was concerned with a claim for common interest privilege. Nor is Spicers Paper (NZ) Ltd v Whitcoulls Group Ltd (1996) 1 NZLR 72 where no note, memorandum or copy of the relevant document had been made on inspection. The issue of inadvertent disclosure was considered by the New Zealand Court of Appeal in National Insurance Co Ltd v Whirlybird Holdings Ltd [1994] 2 NZLR 513 where the plaintiff's list of documents included mistakenly a privileged document in the non‑privileged part of the list. The defendant's solicitors requested a copy of it and a copy was supplied. Two days later the plaintiff's solicitor realised there had been a mistake and wrote to the defendant's solicitors telling them that a document discovered and sent to them was privileged and asking for its return uncopied. Four days later the defendant's solicitors replied saying they were unable to return the document as it was included amongst the plaintiff's discoverable documents and any right to privilege had accordingly been waived. The trial judge found that prior to the receipt of the letter from the plaintiff's solicitors asking for the document to be returned the contents of the document were not known to anyone in the defendant's solicitor's office with any real knowledge of the litigation and prior to the receipt of that letter the defendant's solicitors had not examined the document. The trial judge was satisfied that after the receipt of the plaintiff's solicitor's letter asking for the return of the document, the defendant's solicitors examined the document. Cooke P, delivering the judgment of the Court of Appeal noted that the defendant had been placed on express notice that the contents of the document had been disclosed by mistake and that it had been intended to claim privilege in respect of it. He also noted that at the time of that notice no one had inspected the documents "and therefore had not profited from it in any way" (517). His Honour then said: "In such cases a party who seeks, albeit in good faith (and the good faith of Mr Upton's clients is not questioned), to take advantage of the notified mistake does so at its peril. It is as if the document in question had been sent in an envelope and the claim of privilege had been notified to the defendant before the envelope had been opened". His Honour found the relevant principle to apply in Derby & Co v Weldon (No 8) (supra) and Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) to the effect that where inspection of a privileged document was obtained by fraud or by taking advantage of a known mistake the party obtaining the inspection would be precluded from taking advantage of the mistake. The trial judge had ordered that the document and any copies of it be returned to the plaintiff and that at the trial there be no reference by the defendant to the statement made in the document or the fact that it had been made. The appeal from this order was dismissed. That decision does not deal directly with the issue presently before the Court. Rather it was dealing with the issue more akin to the Court in its equitable jurisdiction protecting the confidentiality of a document inadvertently disclosed in circumstances where the recipient of the document is aware of the mistake which has occurred (cf Lord Ashburton v Pape (supra); Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra at 1044); Webster v James Chapman & Co (supra)). I should also refer to Kabwand Pty Ltd v National Australia Bank (1987) 81 ALR 721 in which Pincus J refused to order production or inspection of certain documents which had been produced for inspection and which the respondent wished to copy. The relevant documents had not been listed in affidavits and lists of documents but had been produced on inspection notwithstanding that instructions had been given to the applicants' solicitors to claim privilege and that they intended to do so. Pincus J accepted that there had been production of documents for which privilege had been claimed, that the production had occurred by mistake and that although the solicitors for the respondent had acquired some knowledge of the contents of the documents that knowledge was not complete. He concluded that although nothing could be done about the privilege which had been waived, he would refuse an order for production of the documents for the purpose of copying as the documents might still be the subject of protection by the court. In that respect, presumably His Honour was referring to the equitable jurisdiction of the court to restrain the mis‑use of confidential information such as was exercised in Lord Ashburton v Pape (supra) and is referred to in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) and Webster v James Chapman & Co (supra) . Pincus J distinguished Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) and Re Briarmore Manufacturing Ltd (1986) 1 WLR 142 on the basis that in those cases inspection had taken place in the course of discovery of documents which were not the subject of a claim for privilege and that in Re Briarmore Manufacturing Ltd (supra) the solicitors who inspected the documents had more complete knowledge than the solicitors had before him. His Honour was not concerned therefore with a situation such as here, where there was production of documents for which privilege had not been claimed. I have reached the conclusion that there has been either an express waiver or imputed waiver of such privilege as exists in relation to the letter. I start with the proposition that from an objective standpoint there was a waiver of privilege in that no claim for privilege was made. So much appears from the inclusion of the letter in Part 1 of Schedule 1. Mr Waller submitted that the letter was included in Part 1 of Schedule 1 of the list by inadvertence and mistake and that inspection of it was allowed by mistake. Mr Waller said he did not need to submit that the letter was included by an obvious mistake and said it was sufficient to maintain the privilege that it had been disclosed by inadvertence and mistake. The evidence however is equivocal as to the nature of the mistake. Mr Jarvis says that he considered each document described on the list from which I infer he considered document 8.017. He says further that, in particular, he considered whether individual documents (which I take to be a reference to each document he considered) were relevant and/or privileged. As document 8.017 remained in Part 1 of Schedule 1 I infer that Mr Jarvis concluded that document 8.017 was not privileged. In other words Mr Jarvis determined that no claim for privilege would be made for the letter. He then says that in his opinion the letter is privileged and should not have been discovered as it properly falls within the heads of privilege claimed in Schedule 2 to the list of documents. He says that at the time he settled the content of the list of documents he did not appreciate that it was a privileged document. He does not say, however, that he was not aware of the circumstances in which the document had come into existence or had been delivered to the respondents or their solicitors. On the basis of these facts it appears that if there was a mistake, the mistake was not that a decision had been made to claim privilege in respect of the document but that inadvertently or by mistake it had been wrongly included in Part 1 of Schedule 1 to the list. Rather the mistake was that although he decided not to claim privilege in respect of the letter he now says he should have done so because having regard to what he now knows he misunderstood the nature of the document. In short Mr Jarvis' intention, on behalf of his clients, was not to claim privilege for the letter. Insofar as the letter was privileged Mr Jarvis' action constituted a waiver of that privilege. The principle of waiver involves an intentional act with knowledge. Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305, 326; Commonwealth of Australia v Verwayen (1990) 170 CLR 394. But of what matters must there be knowledge? Presumably in this context that knowledge must be the right to claim privilege in respect of the document. Mr Jarvis turned his mind to this issue and was prepared to make a decision. In my view, he must be taken to have known of the contents of the letter and the date upon which it came into existence as he considered each document within the context of a claim for privilege. It follows, in my opinion that he had the requisite knowledge to enable him to waive privilege. Against this it may be said that Mr Jarvis did not know that the letter had been prepared in the circumstances deposed to by Mr Nicolas and that if he had known what Mr Nicolas now says he would have claimed privilege in respect of the letter. However Mr Jarvis' evidence does not go so far. He says that at the time he settled the content of the list he did not "appreciate" that the letter was privileged and that when compiling documents in response to the applicants' solicitors request he "realised" that a claim for privilege ought to have been made. I do not know the circumstances by reason of which he came to that realisation. It may be that he always knew about the circumstances in which the letter came into existence and changed his view as to whether the document was privileged. It may be that he did not know those circumstances and was later informed. In either case there was only inadvertence or mistake in that he did not direct his attention to the correct principle or the relevant facts although he did direct his attention to the issue whether the letter should be the subject of a claim for privilege. In my view inadvertence in the sense to which I have referred is not enough on its own to re‑instate and maintain the privilege where a decision has been made not to claim the privilege. Although legal professional privilege is the privilege of the client which cannot be waived without the clients' consent, I consider that there are circumstances where it is within the ostensible authority of a solicitor to waive privilege in respect of a document on the client's behalf. Such ostensible authority exists in relation to the preparation of a case for trial and the conduct of the trial. In Great Atlantic Insurance Co v Home Insurance Co [1981]1 WLR 529 at 539 Templeman LJ said: "The general principle is that 'a solicitor is the agent of his client in all matters that may reasonably be expected to arise for decision in the cause:' per Denning LJ in Griffiths v Evans [1953] 2 All ER 1365, 1371" Lord Denning restated this principle in a dissenting judgment in Causton v Mann Egerton (Johnsons) Ltd [1974] 1 WLR 162, 167 but the majority of the Court of Appeal expressed no view on the authority of a solicitor to waive privilege as they found there had been no agreement which could amount to a waiver. In this case it is the solicitors who prepared the list of documents and, according to the evidence, made the decision as to which documents were privileged from production and which documents were not. The evidence does not disclose that they sought their clients' instructions as to the categories and schedules they had prepared but I am prepared to assume that they had done so and that their clients had left the final decision to the solicitors. In other words, the clients left it to the solicitors to determine, and gave them the authority to determine, whether or not any particular document should be subject to a claim for privilege.

If I am wrong that there was an express waiver I consider that a waiver of privilege should be imputed by operation of law. Recent cases have shown that waiver will be imputed where the person entitled to claim the privilege has performed some act which renders it unfair to another party that the privilege be maintained: Attorney‑General (NT) v Maurice (supra); Goldberg v Ng (supra). The cases in which imputed waiver has been found have involved a use of the relevant documents which has involved a partial or limited disclosure of the contents of the documents: Attorney‑General (NT) v Maurice (supra); Goldberg v Ng (supra). However the principle does not appear to be limited to such cases. It is true that the judgments in Attorney‑General (NT) v Maurice (supra) were predicated upon a consideration whether a partial or limited use or disclosure of privileged material made it unfair not to disclose the balance of the material. However in Goldberg v Ng (supra) at 95 Deane, Dawson and Gaudron JJ said: "The circumstances in which a waiver of legal professional privilege will be imputed by operation of law cannot be precisely defined in advance. The most that can be done is to identify a number of general propositions. Necessarily, the basis of such an imputed waiver will be some act or omission of the persons entitled to the benefit of the privilege. Ordinarily, that act or omission will involve or relate to a limited actual or purported disclosure of the contents of the privileged material. When some such act or omission of the person entitled to the benefit of the privilege gives rise to a question of imputed waiver, the governing consideration is whether 'fairness requires that his privilege shall cease whether he intended that result or not'. That does not mean, however, that an imputed waiver must completely destroy the privilege. Like an express waiver, it can be limited so that it applies only in relation to particular persons, materials or purposes." It appears from this passage that their Honours were leaving open the categories of imputed waiver yet recognising that imputed waiver is underpinned by an act or omission of the beneficiary of the privilege. Although their Honours said that "ordinarily" that act or omission will involve a limited actual or purported disclosure they did not appear to be restricting themselves to a situation of a party intending to disclose to a limited range of persons such as in the case before them. The question of fairness arises in my view where, due to an act of a party or his authorised agent, a document is disclosed to another party which is relevant to issues in the litigation. Is it fair to the party receiving the information that it cannot use the information in the proceeding? The accounts of the respondents are a relevant issue. If the respondents raise issues as to their accounts as paragraph 9 of the defence and amended cross‑claim anticipates they will, are the applicants to shut out of their minds the information their solicitor obtained on inspection? Rogers J thought so in Hooker Corporation Ltd v Darling Harbour Authority (supra) but in my view the doctrine of imputed waiver of privilege has undergone further development since that time. I am not suggesting that the existence of privilege or its maintenance is to be determined by a balancing exercise, that is balancing the existence of the privilege and the right to maintain it against the significance or importance of the document. Such a suggestion was rejected in Derby & Co Ltd v Weldon (No 8) (supra at 783). Legal professional privilege is a substantive principle of law and not simply a rule of evidence: Attorney‑General (NT) v Maurice (supra, 490). But once documents have been disclosed to an opposite party as part of the formal process of discovery and inspection, in circumstances involving no criticism of that party, I consider that fairness requires that that party be not disadvantaged in the use it can make of those documents. I am conscious that there is a power in the court to restrain a party by injunction from using information acquired in circumstances whether such use would be a mis‑use of confidential information. That power gives rise to the interesting issue of reconciling Calcraft v Guest (1898) 1 QB 759 with Lord Ashburton v Pape [1913] 2 Ch 469. This was considered in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (supra) and Webster v James Chapman & Co [1989] 3 All ER 939 (see also Newbold, Inadvertent Disclosure in Civil Proceedings (1991) 107 LQR 99). However, no proceeding has been taken to restrain the applicants from using the information obtained by Ms Youl. Mr Waller also submitted that O 15 r 15 of the Federal Court Rules provided that the Court should not make an order for the production of a document for inspection unless the Court was satisfied that the order was necessary at the time the order was made. He submitted that as the letter had not been knowingly and voluntarily disclosed within the terms of s 122 of the Evidence Act 1995 (Cth) there was no point in ordering production or inspection of the document as it could not be adduced at trial on the ground of client legal privilege. He relied on the observations of Branson J in Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (1995) 60 FCR 366 and Sackville J in BT Australasia Pty Ltd v State of New South Wales (1996) 140 ALR 268. In Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) (1995) 58 FCR 426 at 436 - 437 Lindgren J concluded that "necessary" in this context implied necessary in the "interests of a fair trial" and for the "fair disposition of a case". It is well established that the scope of discovery is not limited to documents which would be admissible in evidence: Mulley v Manifold (1959) 103 CLR 341, 345. In Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (supra) Branson J thought that the fact that evidence could not be adduced over objection at trial if it would result in disclosure of the contents of a confidential information would ordinarily "be telling as to whether the production of that document can be said to be necessary for the fair disposal of the proceedings" (649). Her Honour thought it would be a curious result if a party could be required to produce for inspection a document which was subject to legal professional privilege notwithstanding that at trial the producing party could object to it being adduced in evidence. However, I can conceive of situations where a document might not be able to be adduced in evidence at trial but which nevertheless puts a party on a train of enquiry which will assist it in the manner in which it presents its case or cross‑examines the other party's witnesses. As Lindgren J pointed out in Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) (1995) 58 FCR 426 at 437 said: "The notion of 'the interests of a fair trial' and of the 'fair disposition of a case' encompasses, in my view, an opening up of a train of enquiry of the kind referred to above which is part of the proper function of discovery".

Having regard to the issues raised on the pleadings which make relevant what was said to the appellants and given to them by the respondents in relation to turnover and profitability I consider that in the interests of a fair trial and the fair disposition of the case it is necessary that inspection be given of the letter. Mr Waller also submitted that by virtue of s 122 of the Evidence Act 1995 (Cth) the letter could not be adduced at trial because the respondents had not "knowingly and voluntarily" disclosed the substance of the letter to the applicants' solicitors. However on the facts as I have found them there was a knowing and voluntary disclosure which was not made, in the terms of sub‑s (2) of s 122: "(a) in the course of making a confidential communication or preparing a confidential document; or (b) as a result of duress or deception; or (c) under compulsion of law; or (d) if the client or party is a body established by, or a person holding office under, an Australian law-to the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held." In Ampolex v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12 at 22 Rolfe J said: "I assume that the word 'voluntarily' is intended to mean something other than 'under compulsion of law', which appears in par(c). I think the distinction is that the disclosure was made voluntarily, in the sense that it was not made by way of mistake, it being possible that a disclosure may be made 'knowingly' yet by way of mistake, and accordingly, perhaps not voluntarily." His Honour then considered whether or not the relevant disclosure had been made under compulsion of law and decided that it had not. It was not necessary for His Honour's decision to consider whether the notion of a voluntary disclosure excluded a disclosure made by mistake. In my opinion s 122 is not to be so limited in circumstances where formal discovery is made. In my opinion the disclosure of the letter was a voluntary disclosure as part of the formal process of discovery and inspection. Thus, the reservation which motivated Branson J to conclude that she was not satisfied that the order for production was necessary as part of the pre‑trial management of the matter before her does not apply. Further sub‑s (4) of s 122 provides that subject to sub‑s (5) (not relevant for present purposes) Division 1 of Part 3.10 of the Evidence Act does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of a party to another person other than specified persons (none of whom are relevant for present purposes). On the basis of my findings the letter was disclosed to the applicants' solicitors with the implied consent of the respondents. The conclusion I have reached is consistent with the obligations which are undertaken by parties and their legal advisers in relation to discovery. The obligation is on the party giving discovery to determine what documents are discoverable and what documents are able to be inspected. Any claim for legal professional privilege should be taken at the time an affidavit or list in relation to discovery is filed. A party seeking inspection should be entitled to assume that the discovering party has carried out the process of discovery properly and in accordance with relevant principles. Otherwise parties will be placed in difficult situations if documents can be withdrawn from inspection after an initial inspection with the result that there is an inability to use information properly obtained on discovery. If parties are to be able to change their mind about the privilege attaching to a document after it has been inspected the process of discovery has the potential to become unworkable. In the absence of obvious mistake apparent to an inspecting party and fraud I consider that the appropriate principle to apply is that once inspection has been allowed of a document listed in that part of an affidavit or list in which privilege from inspection is not claimed, any privilege attaching to that document is to be regarded as waived by being included in that part of the affidavit or list and by being made available for inspection. I therefore consider that the respondents are obliged to produce document number 8.017 to the applicants forthwith and to provide them with a copy of it under O 15 r 11(1). Counsel for the applicant: Mr A Panna Solicitors for the applicant: MacPherson & Kelly Counsel for the respondent: Mr I Waller Solicitors for the respondent: Finlaysons Date of hearing: 18 June 1997 Date of Judgment: 23 June 1997

I certify that this and the preceding twenty‑eight (28) pages are a true copy of the reasons for Judgment of the Honourable Justice Goldberg Associate: Date: 23 June 1997