James Hardie & Coy v Yeomans

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11194 of 2000 JAMES HARDIE & COY PTY LTD v BYRON ROBERT YEOMANS JUDGMENT 1 The defendant brought proceedings in the Dust Diseases Tribunal. The matter was resolved by compromise. Orders were made by consent (including an order that the plaintiff pay the defendant's costs). 2 A Bill of Costs was prepared (in the sum of $97,269.23). The costs were not paid. An application was made to this Court for an assessment of party/party costs. The application was referred to a Costs Assessor (Mr Robinson). The plaintiff made a preliminary notice of objection. This notice raised as an issue the question of whether or not the plaintiff was liable to pay any costs to the defendant (it was founded on the indemnity principle). 3 The plaintiff (by its solicitors Allen Allen & Hemsley) informed the Costs Assessor that it was necessary for him to direct the defendant to produce documents (including a copy of any costs agreement) and he was requested (regardless of any claim for legal professional privilege) to give the plaintiff access to any documents so produced. The communication made submissions (including submissions founded on Giannarelli v Wraith (No 2) (1991) 71 CLR 692 and s 208H of the Legal Profession Act 1987 (the Act) ). 4 It appears that prior to the making of that submission the Costs Assessor had by notice dated 23 March 2000 already sought the production of any costs agreement and other documentation (including fee disclosure documentation) from the solicitors for the defendant (Turner Freeman). He declined to make certain of the directions sought by the plaintiff. It appears that there was no initial reply to the notice from the Costs Assessor. Accordingly, he wrote a letter dated 27 March 2000. It made certain requisitions and repeated his requirements as to the matters referred to in the earlier notice. The letter drew attention to s 207. 5 Documents (being cost disclosure documents) were produced by the defendant to the Costs Assessor by letter dated 13 April 2000. The letter made reference to the earlier communications of 23 and 27 March 2000. An objection was taken to those documents being made available to the plaintiff on both the bases of privilege and that they did not pertain to any issue between the parties. A reference was made to an earlier decision in which it was said that there had been a ruling to the effect that the documents were protected by privilege. The Costs Assessor was advised that there was no written costs agreement. There was a submission that there was no reason for there to be a call for a costs agreement or cost disclosure. Submissions were also made inter alia in relation to Giannarelli and s 208H. 6 Further submissions were made to the Costs Assessor by Allen Allen & Hemsley (inter alia there was a reiteration that directions be made and of the request to produce to them any documents made available by the defendant). There was a submission that "the documents are required to enable you to satisfy yourself that the indemnity principle has not been offended". 7 There was a response from the Costs Assessor. It advised that he had perused the documentation. It informed that he intended to uphold the claim for privilege and that his perusal satisfied him that the indemnity principle had not been breached in this case. 8 There were yet further submissions from Allen Allen & Hemsley. The Costs Assessor responded by communication dated 1 May 2000. The Costs Assessor advised that the documents confirmed that under the arrangements that existed between the defendant and his solicitors, the client was liable for no more than may be recovered from the unsuccessful party by way of agreement or assessment. He expressed views as to the submissions made (including those founded on Giannarelli ). He informed that he had not been persuaded "that the limited purpose for which I have requisitioned the Costs Appellant's solicitor's disclosure correspondence with its client requires me to make this correspondence available to you". Accordingly, the documents were not made available to the plaintiff. 9 A Summons was filed in this Court on 17 May 2000. It purports to bring an appeal pursuant to s 208L of the Act against the whole of the decision of the Costs Assessor. It seeks inter alia to have the decision made by the Costs Assessor upholding the claim for privilege set aside. 10 Before proceeding further, for completeness I should perhaps mention one matter. It concerns s 208H. The provision is in the following terms:- "Effect of costs agreements in assessments of party/party costs

(1) A costs assessor may obtain a copy of, and may have regard to, a costs agreement.

(2) However, a costs assessor must not apply the terms of a costs agreement for the purposes of determining appropriate fair and reasonable costs when assessing costs payable as a result of an order by a court or tribunal." 11 Subsection (1) confers certain discretions. Subsection (2) imposes a prohibition on the application of terms of a costs agreement for the purposes set forth therein. It could be thought that one of the purposes of the provision was to deal with attempts to recover contingency fees. Whilst the provisions were ventilated during submissions to the Costs Assessor, they received little airing during this appeal. 12 The hearing took place on 6 June 2000. The plaintiff read an affidavit sworn by Mr Carey. This was the only evidence led on the appeal. The parties have made written submissions. These were orally addressed to at considerable length. 13 The plaintiff has submitted that the disclosure documents do not themselves attract legal professional privilege. This submission was not put to the Costs Assessor. He was left to deal with the matter of privilege on the basis that there was no such issue between the parties. In my view, the plaintiff should not now be allowed to raise the point on this appeal. (see inter alia Chilcotin Pty Ltd & Anor v Cenelage Pty Ltd & Ors (1999) NSWCA 11). I should add that the disclosure documents have not been placed before the court. Accordingly, in any event, the court is not in a position to deal with this argument. The Costs Assessor had the advantage of perusing the material. I should add that if the point had been taken in the assessment, it may be that other material could have been made available to him to prevent such a submission from succeeding. 14 The principal argument relied on by the plaintiff is that the claim for privilege has been lost. Firstly, it was said that it was open to the defendant to refuse to produce the documents to the Costs Assessor and accordingly the production is to be regarded as voluntary. This submission looks to the provision of s 207 and to the decision in Giannarelli (which was a decision made in respect of a direction given by a taxing officer for the production of documents for the purposes of a taxation of costs under provisions contained in the High Court Rules) . Secondly, it is said that once documents were produced there was an implied or imputed waiver. 15 Apart from Giannarelli , the parties have referred to a number of decisions (including Attorney General v Maurice (1986) 161 CLR 475; Goldberg v Ng (1995) 185 CLR 83; Mann v Cornell (1999) HCA 66; Network Ten v Capital TV (1995) 36 NSWLR 275 and Sevic v Roarty (1998) 44 NSWLR 287). 16 In Giannarelli , four questions were referred to the court. It was held that a party could refuse to produce the documents on the ground of privilege. One question was regarded as "probably hypothetical". In answering this question, McHugh J said that "ultimately a party either waives the privilege entirely and allows the taxing officer and the other side to see the privileged documents or asserts the privilege and maintains the confidentiality of his or her documents". It was further said that if a decision was taken to disclose privileged documents to the taxing officer, he is obliged to make copies of the documents available to the other party (p.607). 17 There is an acceptance in the cases of the concept of limited waiver. It has been said to be an exception to express general waiver. Considerations of fairness do not arise. It may have application inter alia in circumstances where there are statutory compulsory processes and documents are made available to recipients to enable them to carry out their statutory functions. 18 The cases establish the principle that there is implied or imputed waiver where there are circumstances which are inconsistent with the maintenance of the privilege. 19 The plaintiff says that there were such circumstances in this case. It is said that the defendant made use of the documents to achieve a result (the assessor's determination on the question of privilege). 20 In Sevic at p.301, Powell JA said:- "Whatever may earlier have been the position (see, eg, Warner v Women's Hospital [1954] VLR 410) the position would seem now to be that waiver is not to be implied or imputed where the document the delivery of which is relied upon to found the implication, or to support the imputation, of waiver was delivered - whether to the other party to the litigation or to a third party - pursuant to an order of a court or otherwise under compulsion of law unless the documents be later tendered in evidence on the hearing of the proceedings in which the parties are involved, or otherwise used in such a way on the hearing of those proceedings as would make it unfair to the other party not to treat the privilege as having been waived." 21 The first question which is raised by the submissions from the plaintiff is whether or not the documents were produced voluntarily or under compulsion of law. 22 As an initial observation, it may be said that there are matters which distinguish what happened in this case from what was considered in Giannarelli . There are factual differences. There was inter alia a compliance with the requirement made under statute by a costs assessor to compel production together with an assertion of privilege. Further, Giannarelli was a case in which the concept of limited waiver was not considered. 23 Section 207 is in the following terms:- " (1) A costs assessor may, by notice in writing, require a person (including the applicant, the barrister or solicitor concerned, or any other barrister, solicitor or client) to produce any relevant documents of or held by the person in respect of the matter. (2) The costs assessor may, by any such notice, require further particulars to be furnished by the applicant, barrister, solicitor, client or other person as to instructions given to, or work done by, the barrister or solicitor or any other legal practitioner in respect of the matter and as to the basis on which costs were ascertained. (3) The costs assessor may require any such particulars to be verified by statutory declaration. (4) A notice under this section is to specify the period within which the notice is to be complied with. (5) If a person fails, without reasonable excuse, to comply with a notice under this section, the costs assessor may decline to deal with the application or may continue to deal with the application on the basis of the information provided. (6) A barrister or solicitor who fails, without reasonable excuse, to comply with a notice under this section is guilty of professional misconduct." 24 At this stage, it is convenient to make some observations concerning that section. At the outset, it can be said that there are differences between it and the taxation provision which came before the High Court in Giannarelli . 25 Section 207 has to be seen in the context of the assessment process implemented by the Act. The statutory regime makes no provision for interlocutory processes (such as discovery, interrogatories, subpoenas and notices to produce) which are available to parties in proceedings in the court. 26 The section is intended to arm the Costs Assessor with certain powers. The powers are given to the Costs Assessor to enable performance of the statutory functions imposed by the Act. In its terms, it enables the Costs Assessor to require certain things to be done. 27 Subsections (5) and (6) have been said to prescribe sanctions where there has been failure, without reasonable cause, to comply with notice given under the section. On one view, subsection (5) confers express powers as to what may be done by the Costs Assessor in dealing with the application in the prescribed circumstances. The expression "without reasonable excuse" is not defined in the Act. There was some argument as to its meaning. However, in this case, it is unnecessary to explore that consideration. 28 For present purposes, the relevant subsection is subsection (1). This provision empowers the Costs Assessor, by notice in writing, to require the production of "relevant documents of or held by a person in respect of the matter". This was the process used by the Costs Assessor to compel production of the documents. It may be said to create a statutory compulsory process (see inter alia Woollahra Municipal Counsel v Westpac (1992) 33 NSWLR 529). 29 The documents were produced under cover of a letter dated 13 April 2000. The plaintiff makes the point that this letter does not assert that the documents are being produced under compulsion of law. Be that as it may, regard must be had to the substance or effect of what was done. This letter refers to earlier communications from the Costs Assessor (one of which had been a notice; the defendant's attention had been drawn to the provisions of s 207 and the expression "requisition" had been used) and identifies that the documents have been produced in response to the notice. In my view, the substance or effect of what was done was to produce the documents under the threat of the statutory compulsory process provided by s 207. Whilst it was not a matter which excited much argument, I should observe that in the circumstances of this case it seems to me that an express assertion that the documents were being produced under compulsion of law could be regarded as otiose. 30 In my view, a person producing documents in those circumstances is not to be regarded as doing so voluntarily. In any event, the plaintiff has not satisfied me that this is not a situation to which the concept of limited waiver may have application. The Costs Assessor treated the situation as one where he had requisitioned and used the documents solely for a limited purpose (see letter dated 1 May 2000) in the course of performing statutory functions. 31 Whilst the defendant has complied with the notice he has sought also to maintain his claim for privilege. The approach taken by the defendant is one envisaged in proceedings in the court where a party is required to respond to a subpoena or notice for production of documents. The authorities establish that the first step is obedience to the subpoena and that this involves the bringing of the documents to court and handing them to the judge ( Waind v Hill (1978) 1 NSWLR 372 at 381-383). It involves the determination of objections. This step is distinguished from the second step (which concerns preliminary use of the documents). It is a point at which the documents are in the control of the court. 32 It needs to be further observed that s 207 is available at the instance of the Costs Assessor only. It was not intended as a vehicle for parties to the assessment to in effect achieve what may be obtained by the use of interlocutory processes such as discovery or the serving of subpoenas and notices to produce. I may add that this appears to be what was had in mind by the plaintiff in this case. The correspondence from Allen Allen & Hemsley evinces a clear and determined purpose to have this provision used to enable their client to get before the Costs Assessor material to support their preliminary objection. 33 For completeness, it may be said that it appears from the material that the present dispute is merely one of many that has taken place between the plaintiff and clients of the solicitors for the defendant. It appears that there has been a long running battle relating inter alia to questions of costs. 34 The next question which arises from the submissions of the plaintiff is whether or not there has been an implied or imputed waiver. The plaintiff says that there was use of the documents by the defendant to produce a result (the decision on the question of privilege). It is then said that the rules of natural justice dictate that the documents be made available to the plaintiff. 35 In my view this submission is founded on error of fact. At the outset, it was the plaintiff that had wanted to get the documents before the Costs Assessor. Although the production of the documents was required by the Costs Assessor, it was the plaintiff that wanted him to look at them. It said that the documents were required to enable him to satisfy himself that the indemnity principle had not been offended (see letter dated 4 April 2000). It was the hope of the plaintiff that the documents would assist it in making out the objection founded on the application of the indemnity principle. 36 The defendant had no need to use the documents. He says that they were not produced to make good his claim for costs. It is his case that there were circumstances which would in the usual course lead to an entitlement to costs (inter alia a retainer that had not been challenged in the earlier proceedings, legal services provided pursuant to the retainer and the consent orders including the order for the payment of costs). 37 The circumstances were such that the defendant was entitled to have his assessed costs unless the Costs Assessor decided that the indemnity principle had application. A submission that was made to the Costs Assessor by the defendant was to the effect that there was no reason for there to be any call for a costs agreement or cost disclosure documentation. The plaintiff had the task of making out its preliminary objection. The defendant took the stance that it sufficed for him to deny that there had been any breach of the indemnity principle. 38 I do not accept the contention that he was in effect engaging in secret communications with the Costs Assessor and that there was thereby a denial of natural justice. 39 Accordingly, I do not accept the submission that the circumstances of this case were inconsistent with the maintenance of the privilege. 40 For completeness, I should mention one matter. In the course of reply, it was said on behalf of the plaintiff that there had been some lack of natural justice in the sense that the Costs Assessor dealt with the question of privilege without giving the plaintiff a specific opportunity to address specifically in relation to the letter dated 13 April 2000. 41 I do not accept that submission. Not only did the plaintiff have a reasonable opportunity to put submissions, it in fact made detailed submissions of considerable length (see letters dated 23 March 2000, 4 April 2000 and 20 April 2000) on the matters that it wanted to propound. Largely, apart from responding to the s 207 requirements, the letter dated 13 April 2000 canvassed matters raised earlier in submissions made by the plaintiff. 42 The plaintiff bears the onus of demonstrating an error of law justifying the disturbing of the decision of the Costs Assessor. In my view, that onus has not been discharged. Accordingly, the Summons is dismissed. 43 I order the plaintiff to pay the defendant's costs. The defendant has submitted that the costs should be paid on an indemnity basis. This application was the subject of little argument. The issues ventilated by the parties were of complexity and saw detailed submissions being made by counsel. Whilst I have concern about what has happened in the assessment and the motivation in the bringing of these proceedings, I am not satisfied that an order should be made for indemnity costs. **********

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