Kaye v Woods (No 2) [2016] ACTSC 87 (4 May 2016)

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

[2016] ACTSC 87

EVIDENCE - Client legal privilege - Loss of privilege under Evidence Act 2011 (ACT) s 125 by act that renders a person liable to a civil penalty - Act may be that of solicitor rather than client - Meaning of "in furtherance of the commission of a fraud ... offence ... or act" - Document must be connected to the fraud, offence or act in the sense of advancing or assisting it - Burden of proof lies with party challenging the claim of privilege

PROFESSIONAL CONDUCT - LAWYERS - Where first defendant's solicitors failed to serve a supplementary medical report until day before trial - whether statements made to and correspondence with other parties in relation to report was misleading - solicitors subject to a duty not to make misleading statements to other parties - whether affidavit of defendant's solicitor providing an explanation for the delay in service was misleading - duty of honesty owed by solicitors extends to avoiding misleading the Court - extends to conduct which is liable to mislead even where no false statement is made - duty breached even if Court is mislead temporarily - instructing solicitor failed to correct representations made by counsel which were likely to mislead the Court - solicitors subject to a duty to correct misleading statements

Evidence Act 2011 (ACT), ss 118, 119, 125, 131A

Legal Profession Act 2006 (ACT), s 425

Legal Profession (Solicitors) Rules 2007 (ACT), r 22.1,

Legal Profession (Solicitors) Conduct Rules 2015 (ACT), r 19.1

Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW), r 19.1

Professional Conduct and Practice Rules 1995 (NSW), r A51

Amcor Limited v Barnes [2011] VSC 341

AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30

Bailey v Department of Land and Water Conservation [2009] NSWCA 100; (2009) 74 NSWLR 333

Capar v Commissioner of Police (1994) 34 NSWLR 715

Clements, Dunne & Bell Pty Ltd v Commissioner of Australian Federal Police [2001] FCA 1858; (2001) 188 ALR 515

Legal Services Commissioner v Garrett [2009] LPT 12

Kang v Kwan [2001] NSWSC 698

Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56

Legal Services Commissioner v Mullins [2006] LPT 12

R v Central Criminal Court; Ex parte Francis and Francis [1989] AC 346

Re Thom [1918] NSWStRp 4; (1918) 18 SR (NSW) 70

Bobette Wolski, "The truth about honesty and candour in mediation: What the Tribunal left unsaid in Mullins' case" [2012] MelbULawRw 18; (2012) 36(2) Melbourne University Law Review 706

G E Dal Pont, Lawyers Professional Responsibility (Thomson Reuters, 5th ed, 2013)

LexisNexis Butterworths, Cross on Evidence: Australian Edition, vol 1 (looseleaf service)

LexisNexis Butterworths, Solicitors Manual vol 1 (looseleaf service)

Stephen Odgers, Uniform Evidence Law (Thomson Reuters, 11th ed, 2014)

John James Memorial Foundation Ltd (ACN 008 453 469) (Second Defendant)

Mr A.J. Bartley SC with Mr F Tuscano (22 April 2016), Mr F Tuscano (29 April 2016) (Plaintiff)

Mr A McQuillen (22 April 2016), Mr C Barry QC with Mr A McQuillen (29 April 2016) (First Defendant)

Mr D Higgs with Mr D Del Monde (22 April 2016) (Second Defendant)

The plaintiff's challenge to a claim of privilege

1. These proceedings involve a medical negligence claim against a doctor (the first defendant) and a hospital (the second defendant). The hearing of the proceedings was due to commence on 18 April 2016 before Penfold J. The first defendant had, well prior to the commencement of the hearing, served three reports by Dr B J Hudson, an infectious diseases physician and microbiologist. On Friday 15 April 2016, the Friday before the Monday on which the hearing was due to commence, the first defendant served on the other parties a fourth report by Dr Hudson dated 22 August 2014. The late service by the first defendant of Dr Hudson's fourth report led to the proceedings not commencing as anticipated. During the week of 18 April 2016 there were proceedings designed to determine whether leave should be granted so as to permit the first defendant to rely upon the report and what consequences should flow from the service of Dr Hudson's report. In support of the application for leave, the first defendant relied upon an affidavit of its solicitor, Ms Meadows sworn 17 April 2016. The first defendant was required (as a result of a call, a notice to produce and ultimately a subpoena issued to its solicitor) to produce documents relating to the decision to serve that report of Dr Hudson. Penfold J has referred to me a claim for privilege made by the first defendant over some of those documents. The application in relation to privilege was heard by me on 22 April 2016 and again on 29 April 2016.

2. Between the hearing on 22 April 2016 and the hearing on 29 April 2016, the first defendant indicated that he no longer wished to rely upon the fourth report of Dr Hudson. He contended at the commencement of the hearing on 29 April 2016 that, in those circumstances, there was no need to determine the privilege issue. The plaintiff did not accept that contention. In my view, that was an issue which should be agitated, if at all, before the trial judge, Penfold J. Having regard to the directions that I had made and the time that was available to hear the first defendant's argument in relation to the privilege issue, I considered that it was appropriate to hear that argument and, if requested to do so by the first defendant, defer giving my ruling until the first defendant had an opportunity to re-agitate the necessity for the ruling before Penfold J. At the conclusion of the argument the first defendant indicated that he did not wish to have the opportunity to re-agitate the issue before Penfold J and, as a consequence, I considered that it was appropriate that I determine the privilege issue.

3. The documents over which privilege is claimed are described in three exhibits before me. They are communications between solicitors, the insurer of the first defendant, the first defendant himself and counsel who appeared for the first defendant up until 20 April 2016, as well as some file notes of the solicitors. The documents cover the period 23 September 2014 through to 17 April 2016. They are listed in three handwritten lists prepared by a solicitor for the first defendant which became the open parts of Exhibits 3, 4 and 5 before me. The documents the subject of the claim form the confidential parts of those exhibits. The three different lists were prepared during the course of the week commencing 18 April 2016 and their non-consecutive numbering reflects the piecemeal way in which the documents were disclosed rather than having any greater significance for the purposes of their characterisation.

4. The appendix to these reasons contains these lists, with each document being identified by its exhibit number followed by the number which it bears in the exhibit. I will adopt the same naming convention in these reasons so that, for example, document 2 listed in Exhibit 3 will be referred to as Document 3.2.

5. The provisions of Division 3.10.1 of the Evidence Act 2011 (ACT) (Evidence Act) (ss 117-126) apply to the disclosure of documents required by reason of processes or orders of the Court: s 131A.

6. Each of the documents over which privilege is claimed is prima facie privileged pursuant to ss 118 or 119 of the Evidence Act. That much appeared from the terms of the lists provided, supplemented by knowledge of the identity of the individuals referred to in those lists. Even though the facts necessary to bring the documents within the scope of ss 118 or 119 was not proved by affidavit, the plaintiff accepted that a prima facie claim for privilege was established having regard to the terms of those lists and did not require formal proof of those facts.

7. The first defendant contended that each of the documents was within s 118. I have said ss 118 or 119 above because I am not satisfied that each of the documents was for the dominant purpose of the lawyer "providing legal advice to the client", as opposed to providing "professional legal services relating to an Australian... proceeding".

8. The plaintiff's contention was that privilege in the documents had been lost by operation of s 125 of the Evidence Act. The plaintiff did not submit that there had been an implied waiver of privilege over the subject matter addressed by the affidavit of Ms Meadows sworn on 17 April 2016 by reason of the reliance by the first defendant on that affidavit in support of its application for leave to rely upon Dr Hudson's fourth report.

Section 125

9. Because of the submissions made by the plaintiff, s 125 of the Evidence Act is of central importance for the purposes of this ruling. That section provides:

125 Loss of client legal privilege - misconduct

(1) This division does not prevent the presenting of evidence of -

(a) a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or

(b) a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power.

(2) For this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that -

(a) the fraud, offence or act, or the abuse of power, was committed; and

(b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power;

the court may find that the communication was made or the document was prepared as mentioned in paragraph (b).

(3) In this section:

power means a power given by or under an Australian law.

10. For the purposes of the operation of the section in the present case, the plaintiff relies upon that part of s 125(1)(a) which involves "the commission of an act that renders a person liable to a civil penalty". In the balance of these reasons, when referring to the various triggers for the operation of the provision, namely, fraud, offence, an act rendering a person liable to a civil penalty or an abuse of power, I will use the short hand reference "fraud etc" to encompass this collection of concepts.

11. The acts relied upon by the plaintiff as constituting "an act that renders a person liable to a civil penalty" were identified in her supplementary written submissions as follows:

(a) the representation [made by Brett Alexander (a solicitor employed by the solicitors for the first defendant)] to the Second Defendant that there was no such Report as at October 2014;

(b) the letter from Ms Meadows to the Plaintiff's solicitor dated 15 April 2016 asserting that the failure to serve was an oversight;

(c) the affidavit of Ms Meadows dated 18 April 2016 repeating that assertion; and

(d) the representation to the Court on Monday 18 April 2016 by the then Counsel for the First Defendant (made in the presence of Mr Cummings [a solicitor employed by the first defendant's solicitors]) that the failure to serve the report was an oversight.

12. The persons alleged to be exposed to the civil penalty are contended to be (a) Mr Alexander, (b) and (c) Ms Meadows and (d) Mr Cummings.

13. The civil penalty said to be applicable is contended to be a professional disciplinary penalty imposed on those solicitors pursuant to the relevant legal disciplinary regime for reasons analogous to those that were found to exist in Legal Services Commissioner v Mullins [2006] LPT 12 (Mullins) (a decision of the Queensland Legal Practice Tribunal).

14. I will outline the circumstances of these events in more detail when I outline the chronology of events below.

15. Section 133 of the Evidence Act provides that where a question arises in relation to a claim of privilege over a document the court may order that the document be produced to it and may inspect the document for the purposes of determining the question.

16. The documents over which privilege is claimed were produced to the Court. I was invited by the parties to inspect them for the purposes of determining the claim for privilege and I did inspect them. Following inspection, I requested a transcription of three of the documents contained within Exhibit 3 from the solicitors for the first defendant. Those transcriptions were provided and I have included them in the confidential part of Exhibit 3.

17. I have taken into account the content of the documents only for the purposes of:

(a) determining whether or not each document would be prima facie privileged; and

(b) determining whether, by reference to its content, each individual document is not subject to privilege by reason of s 125.

I have not used the facts disclosed in the privileged documents generally to make findings as to whether or not s 125 applies to an individual document: cf Bailey v Department of Land and Water Conservation [2009] NSWCA 100; (2009) 74 NSWLR 333 at [57]. In other words, I have relied upon the publicly known evidence to determine the operation of s 125 in combination with the content of each individual document.

18. The submissions of the plaintiff outlined the chronology of events and activities disclosed by the available evidence. The plaintiff submitted:

(a) The reference in s 125(1)(a) to "a person" removed the requirement that it be the client who was liable to a civil penalty. Counsel drew attention to the decision of Kyrou J in Amcor Limited v Barnes [2011] VSC 341 (Amcor) in which his Honour preferred a construction of s 125 that required the client to be knowingly involved in the act that rendered a person liable to a civil penalty.

(b) The report of Dr Hudson expressed a view contrary to the view expressed in his earlier reports and its non-service was therefore to the benefit of the first defendant.

(c) The first defendant had to decide by 16 September 2014 whether to serve report and decided not to.

(d) Each of the acts relied upon by the plaintiff involved the characterisation of the conduct of the first defendant in failing to serve Dr Hudson's fourth report as caused by an oversight, rather than a deliberate forensic decision not to serve the report.

(e) The making of those representations exposed Mr Alexander, Ms Meadows or Mr Cummings to a civil penalty for professional misconduct.

19. As to this last submission, I understood this to be a reference to conduct of a solicitor which would give rise to disciplinary consequences including a civil penalty rather than necessarily involving the statutorily defined concepts of "professional misconduct".

20. Following the conclusion of the plaintiff's submissions on 22 April 2016, the proceedings were adjourned and directions made so as to permit the first defendant to put on any evidence that he wished to in relation to the plaintiff's contentions and to consider the submissions that he wished to make. Directions were made in relation to the filing and service of evidence as well as written submissions. Written submissions prepared by Mr McQuillan were filed and served. Mr Barry QC, who appeared with Mr McQuillan on 29 April 2016, also made some additional oral submissions. No evidence was tendered or led by the first defendant.

21. The written submissions of the first defendant made the following points:

(a) when invoking s 125(1) the conduct to be established is that of the client, not that of the lawyer as argued by the plaintiff in the present case; and

(b) the plaintiff had not and could not establish any relevant conduct by the first defendant as opposed to the first defendant's lawyer.

22. The additional oral submissions made by Mr Barry on 29 April 2016 were limited. He submitted that each of the communications was within s 118. He submitted that while a relationship of agency generally exists between client and solicitor, that relationship was severed in circumstances where the solicitor engaged in misconduct. He submitted that there was nothing in the circumstances that would engage s 125. Further, he submitted that the communication recorded in Ms Daley's affidavit (which related to the statements made to her by Mr Alexander in October 2014) could not be characterised as being misleading because it accurately stated the fact that the first defendant did not intend to serve any further reports from Dr Hudson. He submitted that the recorded statement that the first defendant did not intend to obtain any further reports from Dr Hudson would not mislead the solicitor receiving that communication as to whether or not such a report had in fact previously been obtained but not served. Finally, he objected to the Court having regard to the terms of the transcript of proceedings before Penfold J except to the extent to which the transcript had been tendered on the challenge to the claim of privilege. That meant that the only portion of the transcript before me was that portion of the transcript tendered by the plaintiff in support of her contentions which formed part of Exhibit 1.

An act that renders a person liable to a civil penalty

23. The inclusion, in s 125, of an act which renders a person liable to a civil penalty in addition to the commission of a fraud or an offence involves an extension of the exception compared to that recognised by the general law: Cross on Evidence: Australian Edition, vol 1 (at Service 186) [25 300]. Of this requirement Odgers' Uniform Evidence Law (Odgers) says (at [1.3.11620]):

Under the common law a civil penalty is involved where a pecuniary payment is required as punishment rather than compensation to an injured party or enforcement of an agreement to pay money. Fines imposed under legislation are penalties. In addition, dismissal from employment or reduction in rank can constitute a penalty. (Footnotes omitted)

24. The plaintiff relied upon the decision of the Queensland Legal Practice Tribunal in Mullins as demonstrating the nature of the civil penalty to which the persons particularised would be exposed.

25. In that case the allegation was that a barrister was guilty of professional misconduct because he knowingly misled an insurer and its lawyers about his client's life expectancy in the course of negotiations for a compromise of his client's claim for personal injuries. The barrister acted for a client who had been made a quadriplegic in a motor vehicle accident. A mediation had been arranged. The barrister was made aware three days prior to the mediation that his client had been diagnosed with cancer which had metastasised and his doctors were unable to find the primary cancer. He was instructed by his client that "he did not wish to reveal the cancer facts unless he was legally obliged to do so". There was a statutory obligation to disclose any significant change in medical condition within a month of the claimant becoming aware of that change. The mediation occurred inside that one month period. The barrister, having spoken to senior counsel about his situation, came to the view that "for as long as the claimant's lawyers did not positively mislead [the insurer] and its lawyers about the claimant's life expectancy they would not be violating any professional ethical rules". The barrister, both before and at the mediation, proceeded to propound a claim for damages based upon a life expectancy inconsistent with the facts about his client's cancer known to him. The matter was settled at mediation. Had the insurer been informed of the facts in relation to cancer it would not have agreed to the compromise. The Tribunal comprised Justice Byrne of the Queensland Supreme Court and two other members. The arguments put by the barrister and the Tribunal's conclusion were as follows:

[25] The respondent argues that his conduct in continuing to rely on the Evidex reports without disclosing the cancer facts was not tantamount to some representation that he was not aware of facts that could deleteriously impact on longevity. His case characterizes the compromise negotiations as "commercial", conducted on a tacit, common assumption that, in deciding whether to settle, the parties would rely exclusively on their own resources and information. There would not, it is said, have been a reasonable expectation that influential information communicated during the negotiations would not knowingly be false.

[26] These, at first blush startling, contentions presuppose that neither the general law nor any more demanding ethical duty required disclosure of the cancer facts or else disavowal of the life expectancy assumption.

[27] Context influences the extent of legal and equitable obligations of disclosure. The disclosure duties of a fiduciary, for example, ordinarily extend beyond those of parties dealing at arm's length in the pursuit of economic self-interest. But that negotiations between a potential litigant and a tortfeasor's insurer for the compromise of a damages claim may be tinged with a commercial aspect serves rather to support the idea that the negotiants anticipate a measure of honesty from each other. After all, honesty promotes confidence in the process. As Lord Bingham of Cornhill puts it: "Parties entering into a commercial contract ... will assume the honesty ... of the other[s]; absent such an assumption they would not deal". And the common law enforces such an expectation through the tort of deceit, which "provides a legal remedy for harm suffered in consequence of dishonesty" in business contexts.

[28] Nor does the involvement of lawyers suggest that negotiations about settling a personal injuries claim are conducted in a shared expectation that legal consequences will not attach to intentional deception about material facts.

[29] When this mediation was held, Queensland barristers could not have approached the exercise on the basis that they were entering an honesty-free zone. For one thing, Rules adopted by the Bar Association of Queensland then included:

"51. A barrister must not knowingly make a false statement to the opponent in relation to the case (including its compromise).

26. The plaintiff's submissions proceeded on the basis that if conduct equivalent to the misleading conduct found to have existed in Mullins was established then that would expose the relevant solicitor to a civil penalty. That submission is correct. In the event that conduct falling within either of the statutorily defined concepts of "unsatisfactory professional conduct" or "professional misconduct" under the legal profession legislation of New South Wales or the Australian Capital Territory was established then the solicitor would be exposed to the disciplinary consequences set out in that legislation, which include the possible imposition of a fine: Legal Profession Act 2006 (ACT) s 425, Legal Profession Uniform Law (NSW) s 302. In the present case, it is sufficient that I assess the claim that s 125 applies by reference to the lower of the two statutorily defined concepts, namely, conduct of a lawyer in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.

27. For the purposes of s 125 it is only necessary to demonstrate that a person is rendered "liable" to a civil penalty. For that purpose is it is sufficient to demonstrate that a civil penalty is a remedy which is available, rather than demonstrating that such a penalty has been or would be imposed.

28. The defendant's contention was that s 125 had no application because any wrongful conduct was that of the solicitor and not of the client or his insurer.

29. In Amcor Kyrou J addressed whether or not, for the purposes of s 125, the fraud etc must be committed by the client who has the benefit of the privilege. His reasons on this issue (at [48]-[56]) were as follows:

Whether the client must be knowingly involved in the fraud, offence or act

48 It appears that there is no authority on the question of whether the fraud, offence or act that renders a person liable to a civil penalty to which reference is made in s 125(1)(a) must be committed by the client who has the benefit of the privilege. There is, however, authority for the proposition that the common law so-called 'crime or fraud exception' applies to legal advice given in furtherance of a fraud committed by a third party in which the client is not knowingly involved.

49 The reference in s 125(1)(a) to 'a person', rather than to 'the client', provides some support for the proposition that, consistently with the common law, the section does not require that the client be knowingly involved in the fraud, offence or act that renders a person liable to a civil penalty. So does the presence of the words, 'the client ... knew or ought reasonably to have known' in s 125(1)(b) and their absence from s 125(1)(a).

50 In my opinion, a construction of s 125(1)(a) that does not require that the client be knowingly involved in the fraud, offence or act that renders a person liable to a civil penalty would be contrary both to the public interest principles that underpin privilege and to the statutory context of the provision.

51 Privilege is a powerful immunity that can be abrogated by statute only by clear words or by necessary implication. At common law, the privilege was lost if the client engaged in conduct that was inconsistent with the maintenance of the confidentiality of the privileged communication. Consistent with this common law principle, of the Act evinces a clear statutory intention that the privilege is not lost by conduct unless the client or an authorised agent of the client is knowingly involved in the impugned conduct. In my opinion, the same intention underpins of the Act.

30. As his Honour correctly recognised, there is considerable authority for the proposition that at common law wrongful conduct of third parties is sufficient to deny the existence of privilege: Capar v Commissioner of Police (1994) 34 NSWLR 715; Clements, Dunne & Bell Pty Ltd v Commissioner of Australian Federal Police [2001] FCA 1858; (2001) 188 ALR 515; AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 at [214]; Cross on Evidence: Australian Edition, vol 1 (at Service 174) [25 290]; R v Central Criminal Court; Ex parte Francis and Francis [1989] AC 346 at 392.

31. It is unnecessary to decide whether his Honour's reasons (which were obiter dicta) correctly reflect the operation of s 125 with the effect that notwithstanding the use of the words "a person" in s 125(1)(a) and the position at common law, the section requires that the person involved in the fraud etc be the client or the client's authorised agent. That is because, in my view, each of the relevant solicitors was an authorised agent of the first defendant for the purposes of the conduct of the proceedings. In the absence of evidence to the contrary, I proceed on the basis that the conduct of the solicitors was either expressly or impliedly authorised by the scope of the solicitors' instructions in relation to the prosecution of the proceedings on behalf the first defendant. That being the case, the circumstances fit within the scope of the section as described at [51] in the quotation above.

32. Mr Barry made a submission that if there was conduct which exposed the solicitor to a civil penalty then that had the effect of severing any relationship of agency for the purposes of s 125. No authority was provided for this proposition. Without attempting to resolve this submission at the level of abstraction at which it was put, I do not consider that in the circumstances of the present case any relationship of agency was severed by reason of the fact that a solicitor's conduct could expose the solicitor to a civil penalty.

33. The effect of s 125, also reflecting the common-law position, is to recognise that certain categories of conduct take documents or communications outside the scope of the rationale for legal professional privilege. Section 125 has included in its scope conduct which exposes a person to a civil penalty. Where that threshold is met, it only excludes the privilege in relation to communications and documents that are "in furtherance of" that act. It would be most unusual if the solicitor acting as agent for the client could engage in acts which involved fraud or an offence within the scope of the solicitor's instructions which, if engaged in by the client, resulted in a loss of privilege, yet maintain that privilege because it was the solicitor rather than the client who engaged in the act. The fact that the professional duties of a solicitor are not duties which apply to the client does not appear to me to be a sufficient reason to distinguish between the situation of fraud and offences on the one hand and acts exposing a person to a civil penalty. Each case involves conduct of a sufficient gravity so as to undermine the rationale for the privilege.

34. I note that if the approach taken in Kang v Kwan [2001] NSWSC 698 (Kang) was adopted, this issue would not arise. In that case, Santow J analysed the case of misleading conduct by a party as a case of an abuse of power under an Australian law because the capacity to bring or defend proceedings was a power that existed under statute: see Kang at [42] and [44].

35. For these reasons I have proceeded on the basis that the conduct of a solicitor acting for a party which exposes the solicitor to a civil penalty can be an act which results in loss of the client's privilege under s 125.

36. In Amcor, Kyrou J also considered whether or not conduct occurring after the fraud etc was "in furtherance of" it. In doing so he explained the meaning of "in furtherance of" as it appears in s 125. His Honour said (at [58]-[59]):

58 In my opinion, there is no absolute rule that conduct occurring after a fraud, an offence or an act is completed cannot be held to be 'in furtherance of the commission' of the fraud, offence or act. Whether such conduct satisfies the expression, 'in furtherance of the commission' in s 125 will depend on the nature and purpose of the conduct.

59 The Shorter Oxford English Dictionary defines 'furtherance' as 'the fact of being helped forward; the action of helping forward; advancement, aid, assistance'. In my opinion, this definition provides a useful indication of conduct that may be held to be 'in furtherance of the commission' of a fraud, offence or act.

37. Of this requirement Odgers (at [1.3.11620]) says:

The communication must be made or the document prepared with the intention of facilitating the fraud etc. It is not enough that the document is evidence of fraud, etc. As under the common law, it is likely that a distinction would be drawn between seeking advice for the purpose of being guided or helped to commit a proposed or current fraud, and seeking advice for the purpose of being defended against a past fraud. (Footnotes omitted)

38. In my view, the requirement that the document or communication be "in furtherance of" the fraud etc requires more than the document or communication be relevant to it. Rather it must be connected to the fraud etc in the sense of helping it, advancing it or assisting it. If the document is prepared as part of the process or scheme of the fraud etc then it is within the scope of s 125.

39. Relying upon the decision in Kang the plaintiff submitted that for the purposes of s 125 it was only necessary for her to produce sufficient evidence so that there was "something to give colour to the charge": Kang at [36](7). In my view, however, it is clear that the passage from Kang relied upon ([37](4)-(6)) involved an explanation of what is required in the circumstances where s 125(2) applies. In those circumstances, the burden of proof is similar to that which was required under the common law.

40. Section 125(1) is the provision which determines whether a document is privileged. Section 125(2) is a subordinate provision that assists in giving effect to s 125(1) by defining, for the purposes of a subset of the circumstances in which s 125 might apply, what must be proved in order to make s 125(1) applicable. Section 125(2) applies in circumstances where the fraud etc is a fact in issue in the proceedings. That does not have the effect of confining the operation of the section as a whole to circumstances where the fraud etc is a fact in issue: Amcor at [70]. What it does mean is that it is only in those circumstances that s 125(2) provides that what must be proven is only that "there are reasonable grounds for finding" the commission of the fraud etc and the making of the communication or preparation of the document was "in furtherance of" the fraud etc. In other words, the position that would apply at common law, which only required the establishment of prima facie evidence or reasonable grounds, is only maintained under the Act where the fraud etc is a fact in issue: Cross on Evidence: Australian Edition, vol 1 (at Service 188) [25 300].

41. In the present case, the commission of the particularised acts which expose a person to a civil penalty are not facts in issue in the proceedings. Rather they are issues which arise only on an evidentiary question relevant to a procedural dispute in the course of the hearing.

42. In circumstances where s 125(2) does not apply because the fraud etc is not a fact in issue in the proceedings, then:

(a) The burden of proof remains on the party seeking to persuade the court that the privilege has been lost: Kang at [37](3); and

(b) Section 142(1) requires the Court "to find the facts necessary for deciding" factual questions have been proved "if it is satisfied that they have been proved on the balance of probabilities".

43. In other words, because s 125(2) does not apply, the facts necessary for the operation of s 125(1) must be proved by the party challenging the claim of privilege on the balance of probabilities.

44. In Amcor, Kyrou J explained the operation of s 125(1) where the fraud etc was not a fact in issue somewhat differently. His Honour said:

68 Where, however, the commission of a fraud, offence or act is not a fact in issue in a proceeding, a document will not be privileged under s 125(1) if the party that alleges that the document is not privileged satisfies the Court that there is a prima facie case that a fraud, offence or act has been committed and that the document was prepared in furtherance of that fraud, offence or act [Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, 514, 546-7, 556, 591-2].

69 My conclusion at [68] above is supported by the fact that a document to which s 125 applies may be adduced for the purpose of cross-examining a witness on credit on a matter that is not pleaded in the proceeding. My conclusion is also supported by the fact that, in accordance with s 131A of the Act, s 125 is to be applied to determine privilege issues in interlocutory disputes where production of documents may be sought to assist a party to prepare its case irrespective of whether the documents are subsequently tendered as evidence at the trial. Indeed, where s 125 is applied in the context of pre-trial discovery, there may never be a trial.

(Footnotes included as text)

45. This explanation applied the authorities on the common law, such as Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, to circumstances where the fraud etc was not a fact in issue. In my respectful opinion such an approach is not warranted by the terms of s 125. The terms of the section appear to confine the less stringent standard of proof equivalent to that at common law to circumstances where the fraud etc is a fact in issue. Outside those circumstances the general rules of proof apply under the Act, notwithstanding that they potentially impose a heavier burden upon the party challenging the claim of privilege.

What is known independently about the documents?

46. In order to determine whether the plaintiff has established that privilege does not apply to the documents by reason of s 125, it is necessary to assess what the publicly available evidence shows in relation to the circumstances in which the documents were produced. In order to do this I have set out the facts established by that evidence and in so doing have identified the documents over which privilege is claimed.

47. The dramatis personae that appear in the following chronology are as follows:

(a) Dr Bernie Hudson: an infectious diseases physician and microbiologist engaged by the solicitors for the first defendant to provide expert evidence in the proceedings;

(b) Natalie Meadows: a partner in the firm of solicitors acting for the first defendant (TressCox);

(c) Brett Alexander: a solicitor employed by the solicitors for the first defendant up until July 2015.

(d) Tim Cummings: a solicitor employed by the solicitors for the first defendant;

(e) Dr Kevin Woods: the first defendant;

(f) Deborah Jackson: the representative of the insurer of the first defendant;

(g) Gary Gregg: counsel for the first defendant up until he was given leave to withdraw on 20 April 2016;

(h) Marjorie Daley: a solicitor employed by the solicitors for the second defendant.

48. On 1 November 2010, Dr Hudson reported to the solicitors for the first defendant (first report).

49. On 18 October 2012, Dr Hudson provided his second report to the solicitors for the first defendant (second report).

50. On 12 April 2013, Dr Hudson provided his third report to the solicitors for the first defendant (third report).

51. On 29 October 2013, the solicitors for the first defendant wrote to Dr Hudson enclosing a copy of the plaintiff's further expert evidence. Time costing records indicate that a solicitor at TressCox spent 0.4 hours on that task. The solicitors subsequently asked the doctor to defer responding to that letter because the plaintiff intended to amend her claim.

52. On 16 July 2014, Ashford AJ ordered that the defendant serve all evidence in reply by 22 September 2014.

53. Time costing records demonstrate that a solicitor at TressCox drafted a letter to Dr Hudson. Time costing records show that Ms Meadows settled that letter and others on 20 July 2014.

54. On 21 July 2014, the solicitors for the first defendant provided a further briefing letter to Dr Hudson which enclosed the plaintiff's Further Amended Statement of Claim dated 4 June 2014. The doctor was asked to provide a further report commenting on the reports enclosed with the 29 October 2013 letter along with the Further Amended Statement of Claim.

55. Ms Meadows had a conversation with Dr Hudson on 12 August 2014 in relation to his opinion. As a result of that she noted that she had to find certain blood test results and send them to him. The time costing records show that Ms Meadows spent 0.2 hours on the telephone call, 0.2 hours locating specific biochemistry and blood results requested by Dr Hudson and 0.1 hours drafting a fax to Dr Hudson.

56. On 22 August 2014, as Dr Hudson was completing his report of that date, Ms Meadows had two conversations with him. Time costing records show that she spent half an hour on these conversations.

57. On 25 August 2014, Dr Hudson sent a fourth report dated 22 August 2014 to the solicitors for the first defendant (Dr Hudson's fourth report). The email was in fact sent to Ms Meadows. The internal records of TressCox show that Dr Hudson's invoice was paid that day.

58. On 9 September 2014, the Deputy Registrar made directions by consent which permitted the defendants until 31 October 2014 to serve their expert reports.

59. On 18 September 2014, Marjorie Daley, a solicitor at Minter Ellison, the solicitors for the second defendant, sent an email to Ms Meadows. That email stated that the solicitors for the second defendant had reviewed the expert evidence of Dr Hudson who was instructed on behalf of Dr Woods. The email suggested that it might be beneficial to obtain verbal evidence and if supportive a supplementary report from Dr Hudson in respect of certain identified matters. It is uncontroversial that at this time Dr Hudson's fourth report had not been provided to the second defendant.

60. Privilege is claimed over an email and letter to Dr Woods dated 23 September 2014 (document 3.1). The internal records show that Ms Meadows spent 0.1 hours drafting it.

61. On 26 September 2014, the internal records of TressCox show that Mr Alexander spent 1.1 hours reviewing Dr Hudson's report and drafting a summary.

62. On 30 September 2014, time costing records show Ms Meadows spent 0.2 hours "discussing conclusions in evidence and recommendations and strategy". On 2 October 2014, time costing records show that Ms Meadows spent 0.3 hours "reviewing analysis and recommendations, suggest changes".

63. On 2 October 2014, Ms Meadows sent an email to Deborah Jackson attaching a letter of advice and supplementary reports of Dr's Fox, Coolican and Hudson. In that email she sought instructions on a range of matters. The letter includes consideration of the service of Dr Hudson's report dated 22 August 2014. Privilege is claimed over the email and letter (Document 3.2).

64. On 10 October 2014, there was a conversation between Ms Meadows and Ms Jackson. Time costing records show that this took Ms Meadows 0.1 hours. A file note of that conversation made by Ms Meadows records her instructions on a number of matters including speaking to Dr Hudson. Privilege is claimed over this file note (Document 3.3).

65. On 20 October 2014, Mr Alexander had a conversation with Ms Daley. Ms Daley's file note of the conversation records

-They are not intending to serve any more liability/causation reports - they have spoken to Dr Hudson but have decided not to get another report.

Don't want to hand causation to the plaintiff

Have received Dr Katsogiannis report

I will send them Dr Morris and psych report ASAP

66. It is uncontroversial that at this point the second defendant had not been served or otherwise provided with Dr Hudson's fourth report to the second defendant.

67. The plaintiff relies upon this communication as being one which exposed Mr Alexander to a civil penalty, because it was misleading in so far as it suggested that Dr Hudson's fourth report did not exist.

68. On 3 November 2014, the Deputy Registrar ordered that the defendants serve any expert reports within 14 days, that is, by 17 November 2014. The Deputy Registrar noted that a private mediation was foreshadowed.

69. Privilege is claimed over an email exchange between Ms Meadows and Ms Jackson dated 31 March 2015 (Document 3.6).

70. On 10 April 2015, there was a teleconference between Ms Meadows, Mr Alexander and Ms Jackson. A file note was written by Mr Alexander concerning service of Dr Hudson's report of 22 August 2014. The file note also contained material relating to a conversation between those three persons and Dr Woods concerning the mediation. Privilege is claimed over this file note (Document 3.4). Time costing records show that Ms Meadows spent 1.3 hours in preparing for and attending this conference but did not charge for all of this time.

71. On 22 April 2015, Mr Alexander drafted a letter to counsel enclosing documents for inclusion in his brief and other matters. The next day Ms Meadows settled that draft. Privilege is claimed over the letter to Gary Gregg dated 24 April 2015 (Document 5.5).

72. On 4 May 2015, Ms Meadows spent 1.8 hours "reviewing pleadings, expert evidence and damages for mediation", but did not charge for all of this time.

73. A bench sheet in the proceedings records that a mediation took place on 5 May 2015.

75. On 22 December 2015, there was a conversation between Ms Meadows and Ms Jackson. A file note of that conversation was written by Ms Meadows. That included reference to a conversation between Ms Jackson and Mr Nevin Agnew (a solicitor from the firm acting for the second defendant). It also included material relating to Dr Hudson's fourth report, consideration of conferring with Dr Hudson and serving his report. Privilege is claimed over this file note (Document 3.7). Time costing records show that Ms Meadows charged for 0.1 hours of her time.

76. Privilege is claimed over emails sent between Ms Jackson and Ms Meadows on 5 April 2016 as follows:

(a) email from Ms Meadows to Ms Jackson at 9:15 am (Document 5.13);

(b) email from Ms Meadows to Ms Jackson at 1:16 pm (Document 5.10);

(c) email from Ms Meadows to Ms Jackson at 2:06 pm (Document 5.12);

(d) email from Ms Jackson to Ms Meadows at 2:13 pm (Document 5.11);

(e) email from Ms Jackson to Ms Meadows at 4:15 pm (Document 5.9).

77. On 6 April 2016, the time costing records show that a solicitor spent 0.2 hours "reviewing all relevant case law on admissibility and service of supplementary expert reports". By reference to the rate charged this appeared to be a junior solicitor, most likely to be Mr Cummings. Privilege is claimed over a file note prepared by Ms Meadows of a teleconference between Ms Meadows, Mr Gregg and Mr Cummings on 6 April 2016 (Document 5.7). Privilege is also claimed over a file note which appears to be of the same teleconference, prepared by Mr Cummings (Document 5.8).

78. Privilege is claimed over an email from Ms Meadows to Ms Jackson on 7 April 2016 at 9:38 am (Document 5.5) and an email from Ms Jackson to Ms Meadows on the same date at 9:46 am (Document 5.6).

79. On 7 April 2016, there were communications between the solicitors for the parties to arrange an informal settlement conference on 8 April 2016 (Exhibit 2).

80. On the 14 April 2016, Ms Meadows spent 2.8 hours "reading the file for evidence re Dr Hudson" and 0.2 hours drafting an email to Ms Jackson in relation to Dr Hudson's supplementary report.

81. Privilege is claimed over an email from Mr Gregg to TressCox dated 14 April 2016 (Document 3.8).

82. Privilege is claimed over a file note of a conversation between Ms Meadows, Mr Cummings and Mr Gregg dated 14 April 2016 (Document 3.9). This probably corresponds to the time costing record which indicates that Ms Meadows charged 0.3 hours dealing with a telephone call from Mr Gregg "re supplementary report". The time costing records for a solicitor (likely to be Mr Cummings) indicate that he charged 0.8 hours in relation to that teleconference. Also on that day the same solicitor spent 0.7 hours "reviewing all files, drafting schedule of plaintiff's served reports". The same day a solicitor (likely to be Mr Cummings) charged 0.2 hours for drafting an email to Dr Wood's insurer seeking instructions to serve Dr Hudson's report.

83. Privilege is claimed over an email from Ms Meadows to Ms Jackson dated 14 April 2016 (Document 3.10).

84. On 14 April 2016, Ms Meadows sent a copy of Dr Hudson's report dated 22 August 2014 to the solicitors for the plaintiff, saying:

We enclose by way of service Dr Bernie Hudson's report dated 22 August 2014 which has been unfortunately overlooked until now.

85. The plaintiffs identify the terms of this letter as misleading and as exposing Ms Meadows to a civil penalty as a result of disciplinary proceedings.

86. Privilege is claimed over an email from Ms Jackson to Ms Meadows dated 15 April 2016 (Document 3.11). The time costing records show that Ms Meadows charged for 0.1 hours in relation to email exchanges with Ms Jackson.

87. Privilege is claimed over the following email communications on 17 April 2016:

(a) an email from Ms Meadows to Mr Gregg at 12:13 pm (Document 4.1);

(b) an email from Ms Meadows to Mr Gregg at 1:23 pm (Document 4.2);

(c) an email from Mr Gregg to Ms Meadows at 1:35 pm (Document 4.3);

(d) an email from Mr Gregg to Ms Meadows at 1:37 pm (document 4.4).

88. On 17 April 2016, Ms Meadows swore an affidavit the whole of which was as follows:

1. TressCox received Dr Hudson's supplementary report dated 22 August 2014.

2. From my review of the file the solicitor with carriage of the matter Mr Brett Alexander did not serve the report.

3. When Mr Alexander left the firm in July 2015 it appears that he did not identify Dr Hudson's report as an outstanding issue for the next solicitor assuming conduct of the matter.

4. On the evening of Thursday 14 April 2016 the solicitor with conduct of the matter and I were discussing various matters in preparation for the hearing and discussed that the report had not been served and needed to be served.

5. Dr Hudson's supplementary report was served on Friday, 15 April 2016.

89. The plaintiff identified the making of this affidavit and its use in Court as an act which made Ms Meadows liable to a civil penalty.

90. On 18 April 2016, the first day of what was meant to be the trial, Mr Gregg, counsel who then appeared for the first defendant, immediately raised the issue of the late service of the report with Penfold J. He provided her Honour with a copy of the report and of the affidavit of Ms Meadows of 17 April 2016. (I observe that all but the first of the statements attributed to Mr Bartley, senior counsel for the plaintiff, on page 2 of the transcript should probably have been attributed to Mr Gregg.) After her Honour was provided with the affidavit and the report, the following exchange took place between Mr Gregg and Penfold J:

HER HONOUR: If it's not allowed in. In effect, what you're saying is it is really important part of the trial?

MR GREGG: I am.

HER HONOUR: But no one noticed that it hadn't been served until Friday or whatever?

MR GREGG: I have what your Honour has, the affidavit. It appears that it was overlooked.

HER HONOUR: I can understand things being overlooked, but it's not so easy to understand how over nearly 2 years that hasn't come to light. That's what I'm surprised about, but anyway. I'm also surprised, from what you say, that that hasn't come to light in the course of what I understand to have been something in the way of negotiations. Am I wrong about that? Has there not been any sort of mediation or settlement---

MR GREG: I don't have instructions about that. There have been some discussions.

HER HONOUR: Since this report was done.

MR GREG: Yes:

HER HONOUR: And despite how vital it was, it somehow never came to light then that your client had a vital report that no one else knew about?

MR GREGG: All I can say is, your honour, it assists the first defendant's case.

HER HONOUR: Which you might think would have emerged in the course of discussion, if there had been any real discussion. I thought there were supposed to have been.

MR GREGG: I don't have instructions to speculate about that, your Honour. I don't have knowledge that I can inform your Honour about that.

HER HONOUR: Sorry, you don't?

MR GREGG: No.

HER HONOUR: No, but presumably the people instructing you do.

MR GREGG: Your Honour, I asked for an affidavit, Mr Bartley asked for an affidavit, and I have been provided with the affidavit, and that's the limit of my instructions.

91. As I understand the plaintiff's submission it was that the statement by Mr Gregg that the report was "overlooked" was misleading and that Mr Cummings, the instructing solicitor in court, would be exposed to a civil penalty as a result of disciplinary proceedings by permitting that statement to be made and not subsequently corrected.

92. Ms Meadows was not cross-examined on her affidavit, although Ms Meadows was subpoenaed and cross-examined before Penfold J about her production of documents pursuant to a subpoena. Having regard to the fact that only a very limited portion of the transcript was before me (as to which see [22] above), it is not possible to determine whether the absence of cross-examination was because no cross-examination was sought, cross-examination was not permitted, because the manner in which the matter proceeded meant that the stage where cross-examination would have been appropriate was not reached or for some other reason.

93. I will address each of the particularised acts separately in order to assess the consequences for the documents over which privilege has been claimed. In relation to each act, I will identify the standard of conduct that the authorities indicate should be met by a solicitor acting with the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. I will then make findings relevant to whether or not that standard has been met. I will then consider whether, in relation to any of the documents, the connecting requirement that the document or communication be "in furtherance of" an act which renders a person liable to a civil penalty has been met.

94. In making the findings that I have, I have had regard to the seriousness of those findings both in relation to the privilege otherwise available to the first defendant as well as in relation to the professional conduct of the relevant solicitors. I note, however, that the findings are findings made only for the purposes of these proceedings between the parties and the solicitors were not parties to the proceedings (even though Mr Barry announced an appearance on behalf of Ms Meadows for the purposes of the hearing on 29 April 2016).

95. I also note that it has been easier to make the findings that I have on the balance of probabilities by reason of the fact that no evidence was led on behalf of the first defendant from persons who might reasonably have been able to give evidence to displace the inferences that would otherwise arise from the known facts.

96. The conduct said to engage s 125 was the making of a statement that was false or alternatively misleading and known to be false or misleading by a solicitor acting for the first defendant, Mr Alexander, to a solicitor acting for the second defendant, Ms Daley. The relevant rules in the solicitors rules then in force in the Australian Capital Territory and New South Wales did not clearly apply to communications that were made where the solicitor was not appearing as an advocate: Legal Profession (Solicitors) Rules 2007 (ACT) r 22.1, Professional Conduct and Practice Rules 1995 (NSW) r A51. However, in the light of the decision in Mullins and the authorities referred to in Dal Pont Lawyers Professional Responsibility (5th ed, 2013) at [25.15] the making of such a statement would fall below an acceptable standard of conduct for a solicitor.

97. On the balance of probabilities the relevant facts are as follows:

(a) The report of Dr Hudson had been obtained by the solicitors for the first defendant on 25 August 2014.

(b) The report of Dr Hudson had not been provided to the solicitors for the second defendant.

(c) As at 20 October 2014, Mr Alexander knew that his firm had the report and that the solicitors for the second defendant did not have the report.

(d) The conversation that Mr Alexander had with Ms Daley was as described in her affidavit and conveyed (and was intended to convey) the following:

• (i) the first defendant did not intend to serve any more expert reports relating to liability/causation;
• (ii) the solicitors for the first defendant had spoken to Dr Hudson (since his third report), but decided not to get another report and had not got another report; and
• (iii) the reason for that decision was that obtaining and serving such a report would adversely affect the first defendant's case in relation to causation.

98. In relation to my findings as to what was conveyed during the conversation, it will be apparent that I do not accept the submission of Mr Barry that the representation recorded was accurate. It was submitted that the statement that the first defendant was not intending to serve any more liability/causation reports was in fact accurate, because that was in fact the intention of the first defendant at the time. That submission is correct as far as it goes. However, what is either false or misleading about the conversation was that which is necessarily implied from what has been recorded by Ms Daley, namely, that no fourth report existed as at the date of the conversation. The submission that the statements were accurate fails to take account of two things:

(a) First, the conversation took place in the context that the first defendant and second defendant had been cooperating to the extent that the second defendant had reviewed the contents of earlier reports and made suggestions to the first defendant as to what more might be done in relation to Dr Hudson. That is made clear by the terms of the email annexed to Ms Daley's affidavit.

(b) Second, the conversation also communicated that the decision (i.e. serving no further report) occurred in circumstances where the doctor had been spoken to and a decision had been made not to obtain a further report. That necessarily implied that no further report beyond those which had been provided to the second defendant had been obtained.

99. As a consequence, I find that the statements made were false or misleading and known to be false or misleading at the time they were made.

100. None of the documents over which privilege was claimed record the conversation deposed to in Ms Daley's affidavit. Nor do they record any specific plan to make such a statement or document steps taken after the making of the statement that relate to the making of the statement. The mere fact that a privileged document provides further evidence consistent with the commission of a fraud, offence or act is not sufficient to establish that the documents were "prepared... in furtherance of the commission" of the act exposing a person to a civil penalty. As noted earlier in these reasons (see [38]), the phrase "in furtherance of" means that the documents must be prepared as part of or to aid the commission of the relevant act. None of the documents meet that requirement in relation to Mr Alexander's communication to Ms Daley.

101. In my view, the relevant standard of conduct is that articulated in Mullins. The obligation not to make misleading statements to a lawyer acting for another party is one which applies in the context of an impending court hearing to at least the same extent as it does in the conduct of a mediation. The obligation on a solicitor not to make a false statement to an opponent now clearly applies to litigation generally: Legal Profession (Solicitors) Conduct Rules 2015 (ACT) r 22.1; Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 (NSW) rules 22.1,

102. The terms of the brief letter serving the fourth report of Dr Hudson are set out above (at [84]). The provision of some exculpatory explanation in the letter for the late service of the report was not essential for the effective service of the report. To the extent to which an explanation was provided it necessarily involved an attempt to advance the first defendant's position by providing some explanation or excuse for the late service. The terms of the letter are brief and unhelpful. The reference to "unfortunately overlooked" could be a reference to service being "unfortunately overlooked" or the report itself being "unfortunately overlooked". Either statement would not be accurate.

103. If the letter was intended to convey that the report itself had been overlooked by the first defendant's solicitors, then that was plainly not correct. The activities of the first defendant's solicitors described at [55] and following the above indicate that they and the first defendant were very well aware of the existence of the report.

104. If, on the other hand, the statement was intended to suggest that service of the report had been "unfortunately overlooked", then that would imply that there was an intention to serve the document, but that intention had not been given effect to. In my view the evidence is inconsistent with that being the fact. The relevant evidence which tends against there having been an intention to serve Dr Hudson's fourth report which was not given effect to, is as follows:

(a) The evidence of the consideration of the report given prior to the conversation between Mr Alexander and Ms Daley in October 2014 ([61] - [64] above). This evidence indicates a level of rigour in the consideration of Dr Hudson's report and influences the characterisation of Mr Alexander's subsequent conduct.

(b) The making of the misleading statement by Mr Alexander ([65] above), which is consistent with there having been a deliberate decision not to serve the report which was in the possession of the solicitors.

(c) The preparation for, and participation in, the telephone conference by Ms Meadows on 10 April 2015 ([70] above), which involved consideration of service of Dr Hudson's fourth report, is consistent with there being ongoing consideration of whether or not to serve that report, rather than its service having been overlooked.

(d) The review of material by Ms Meadows the day before the mediation ([72] above), in the context of the recent telephone conference on 10 April 2015, makes it unlikely that the issue of service was not a matter of which she was reminded at that point.

(e) Notwithstanding the departure of Mr Alexander in July 2015, on 22 December 2015 there was a discussion between Ms Meadows and the first defendant's insurer which included consideration of conferring with Dr Hudson and service of his report ([75] above). That indicates that at the end of 2015 the status of and service of the report remained a matter which was under active consideration by Ms Meadows.

105. Having regard to this evidence, on the balance of probabilities there was, at least up until the end of 2015, active consideration of whether or not to serve Dr Hudson's fourth report and no decision made or intention formed to serve the report that was not given effect to.

106. I am therefore satisfied on the balance of probabilities that the statement that the failure to serve was an oversight was at the least knowingly misleading, in that it is clear that consideration was given to the service of the report at different points and a decision was made not to serve it at least up until December 2015. So far as the period between December 2015 and 6 April 2016, there is no evidence of an intention being formed to serve the report and, having regard to the previous history and the conduct of the solicitors, it is unlikely that an intention to serve was formed. From 6 to 14 April, I consider that it is more likely than not that an unfulfilled intention to serve the report was not formed. Therefore, in my view, on the balance of probabilities it was inaccurate to say that service of the report was "unfortunately overlooked".

107. Further, identifying that the failure to serve the document was due to an oversight and only identifying that factor carried with it the implication that it was not due to some other factor. Having regard to my finding above that the statement that it was due to an oversight was misleading, I am satisfied that to identify the only cause as being an oversight was also misleading.

108. In relation to the statement of Ms Meadows in her letter of 14 April 2016, while there are documents relevant to the decision to serve Dr Hudson's fourth report, the only document which can be characterised as a document in furtherance of Ms Meadows making the statement that she did is Document 3.9, a file note of a telephone conference she had with Mr Gregg and Mr Cummings. That records discussion of the service of Dr Hudson's report. It describes aspects of the history of dealings by the solicitor and insurer in relation to Dr Hudson's report and includes a statement "You can't say that in the explanation". In contrast to the balance of the file note, this statement is underlined. The description of the history of dealings is inconsistent with the inferences that would be drawn from the letter sent on 15 April 2016 or Ms Meadows' affidavit. It is not clear whether the quoted words above reflect a statement or conclusion, but it is clear that there was discussion of an approach to the explanation for late service which involved the exclusion of relevant facts.

109. In my view, Document 3.9 can be considered to be evidence of a communication or document prepared in furtherance of the act of providing a misleading explanation for the late service in the letter because it documents, immediately prior to the sending of the letter on 15 April 2016 and the preparation of the affidavit on 17 April 2016, an approach to the explanation of late service which excludes relevant facts which was then implemented by the letter and the affidavit. In that sense, it is part of the scheme which is implemented by the letter.

110. By the making and reliance upon the affidavit, Ms Meadows was making statements to the Court and the other parties as to the circumstances surrounding and reasons for the failure to serve Dr Hudson's fourth report prior to 15 April 2016.

111. The scope of a lawyer's duty in relation to representations made to the court is described in Dal Pont's Lawyers Professional Responsibility (Thomson Reuters, 5th ed, 2013) at [17.95] as follows:

As an "assistant in the administration of justice", a lawyer must be able to command the confidence and respect of the court. Central to this is an unyielding commitment not to knowingly mislead the court on any matter. (Footnote omitted)

112. Riley's Solicitors Manual, vol 1 (at Service 58) [22,050.5] states (under the heading "Duty to avoid creating a misleading impression"):

Being a party to the presentation of evidence, or the making of statements, to the court that is partly true, but by omitting the whole truth creates a misleading impression to the court, represents a breach of the lawyer's duty to the court.

113. In Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56, 60 [12] (Kyle), Ipp J said:

...It is the general duty of lawyers not to mislead the court by stating facts which are untrue, or mislead the judge as to the true facts, or conceal from the court facts which ought to be drawn to the judge's attention, or knowingly permit a client to deceive the court.

114. Parker J made similar remarks at 73 [66]-[67].

115. Re Thom [1918] NSWStRp 4; (1918) 18 SR (NSW) 70 was a case in which a solicitor had settled an affidavit involving a general non-admission of certain allegations about the client's character. In some respects the non-admission was correct, but in others the facts alleged against the client were true and known to be so. The solicitor had proceeded on the basis (and advised the client) that the court would recognise that she would have denied the allegations if she could, that the non-admission would be recognised by the court as not being a denial and therefore the court would regard it as, effectively, an admission. The trial judge saw things differently, reading the non-admission as a denial of the facts. The true situation was quickly resolved by cross-examination. However, of this course of conduct Cullen CJ said (at 74-75):

It is perhaps easy by casuistical reasoning to reconcile one's mind to a statement that is in fact misleading by considering that the deponent is not under any obligation to make a complete disclosure. By this means a practitioner may be led into presenting a statement of fact which, although it may not be capable of being pronounced directly untrue in one particular or another, still presents a body of information that is misleading, and conceals from the mind of the tribunal the true state of facts which the deponent is professing to place before it. For that reason it is proper on such an occasion as this to express condemnation of any such casuistical paltering with the exact truth of the case. (Emphasis added)

116. The obligations of solicitors are reflected in the content of the formal conduct rules under Australian Capital Territory and New South Wales legislation. The relevant solicitors rules provide that a solicitor must not "knowingly or recklessly mislead the court": Legal Profession (Solicitors) Conduct Rules 2015 (ACT) r 19.1; Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) r 19.1. Further r 19.2 of both sets of rules requires solicitors to take all reasonable steps to correct any misleading statement they have unknowingly made to the Court upon becoming aware of it.

117. The balance between the duty of honesty and the absence, except where there is a particular obligation to do so, of an obligation to put forward facts which will damage the client's case is well summarised in the judgment of Kyrou AJA (with whom Weingberg and Harper JJA agreed) in Forster v Legal Services Board (2013) 40 VR 587 at [161], where his Honour said:

161 In Meek v Fleming [[1961] 2 QB 366], Holroyd Pearce LJ agreed with the proposition that while a lawyer must not knowingly mislead the court as to the facts or the law, he or she may put such matters as he or she believes will best advance the client's case. A party need not reveal something to the discredit of that party. However, this does not mean that the party can by implication falsely pretend that a particular state of affairs exists, and knowing that the court has been misled with respect to a material matter, foster and confirm the misrepresentation through answers given by the party. A lawyer who is a party to the presentation of evidence or the making of a statement to the court that is partly true, but which does not amount to the whole truth, can create a misleading impression to the Court and thereby breach his or her duty to the Court. Once a misleading impression has been created, even if innocently, the lawyer has an obligation to correct that impression as soon as he or she becomes aware of the true position. That obligation continues until judgment is given. (Footnotes omitted)

118. Therefore in civil proceedings where the other party is present there may not, in the absence of some additional obligation, be a duty of full disclosure of the relevant facts contrary to the interests or instructions of the client. However, the authorities referred to above make it absolutely clear that there is a duty of honesty which extends to avoiding misleading the Court. (The distinction between honesty and candour, in the sense of full disclosure, is discussed in B Wolski, "The truth about honesty and candour in mediation: what the Tribunal left unsaid in Mullins case" [2012] MelbULawRw 18; (2012) 36(2) Melbourne University Law Review 706, 714).

119. That duty to be honest extends to not putting forward facts which are liable to, or which in fact, mislead the Court or the opponent. That is illustrated by the decision in Mullins(see above at [24]-[25]). It extends to conduct which is liable to mislead even where no false statement is made expressly or impliedly. Meek v Fleming [1961] 2 QB 366 provides an example of such conduct. Further, it is a breach of duty to mislead the court temporarily. Therefore the fact that the true position is likely to emerge during the course of evidence is not sufficient to excuse a practitioner for misleading the court. Kyle is an example of such a case: see in particular [67].

120. The affidavit is set out in full above (at [88]). It is significant that the affidavit was not produced in response to a specific direction of the Court which governed its scope, nor was it produced pursuant to another requirement which made clear the obligation upon the party for whose benefit it was sworn to provide full disclosure. An example of the latter kind of obligation is that provided by Practice Direction No. 2 of 2014 at paragraph 28(b).

121. It was, however, relied upon by the first defendant in support of the first defendant's application for leave to rely upon the fourth report of Dr Hudson. Ms Meadows was not cross-examined on it.

122. The interpretation of the affidavit must occur in the context of the representation that service of the report or the report itself had been "unfortunately overlooked", made in the letter sent when Dr Hudson's fourth report was served on 15 April 2016.

123. The affidavit is plainly carefully drafted and is minimalist in its content.

124. Paragraph 1 says that TressCox received the report. It does not disclose when the report was received. However, other evidence indicates that it was received by Ms Meadows on 25 August 2014.

125. In relation to paragraph 2, it is notable that the affidavit does not disclose any involvement of Ms Meadows with the case prior to 14 April 2016. While the affidavit does not say that she was not involved with the case, the language used in paragraph 2 is suggestive of her lacking involvement or knowledge of the case:

(a) the reference to Mr Alexander being the "solicitor with carriage of the matter" without any reference to her supervising Mr Alexander or being otherwise involved with the case; and

(b) the reference to "From my review of the file" suggesting that her source of knowledge was a review of the file rather than her knowledge of the situation from her own involvement.

126. In relation to paragraph 3, this is a statement of conclusion based on the terms of the file. It provides evidence of a fact. That fact would only be relevant in so far as an inference was to be drawn from that fact that the failure to serve Dr Hudson's fourth report after July 2015 was as a result of an oversight in giving effect to an intention to serve the document.

127. The statement in paragraph 4 does not say that the need to serve the report was first identified on that date. However, the fixing the point of the discussion of the need to serve the report at 14 April 2016 carries with it that implication as no other date is identified.

128. Thus while the affidavit contains certain facts, when read without making the inferences which appear to be intended, the affidavit in fact provides no explanation at all for the failure to serve Dr Hudson's fourth report. It does not explain whether the decision was a forensic decision made by the first defendant or resulted from some administrative or legal error on the part of the first defendant's solicitors. However, while it does not state any matter which can be proven to be false, the way in which it offers information has a tendency to cause the following implications to be reasonably drawn from its terms:

(a) Ms Meadows had little personal knowledge of the matter (and hence obtained her knowledge from the terms of the file rather than from personal knowledge);

(b) The reason why it was not served was because it was not identified as an outstanding matter when Mr Alexander left the firm in July 2015;

(c) Consistently with the representation in the earlier letter, the failure to serve the report arose from an oversight rather than from a forensic decision;

(d) Until 14 April 2016, Ms Meadows did not have any other relevant involvement with the non-service of the report.

129. If these exculpatory inferences were not intended to be drawn from the affidavit it is difficult to understand what the point of the affidavit was, having regard to the fact that without the inferences it provided no explanation whatsoever for the non-service of the report.

130. Based upon the affidavit it is clear that Penfold J drew the inference similar to that identified at [128](c) above. This is illustrated by the extract of the transcript of 18 April 2016, set out above at [90], which includes the characterisation of the affidavit as indicating that service had been "overlooked" for a period of two years during which there were "some discussions".

131. Having regard to the publicly known facts, it is clear that each of the inferences which might be drawn are not inferences which should be drawn in the circumstances:

(a) It is clear that Ms Meadows had ongoing and detailed involvement in the case both as a result of supervision of junior solicitors and otherwise. That included detailed reviews of the file at important points, communications with the insurer and formulation of strategy.

(b) The evidence demonstrates on the balance of probabilities that there was a deliberate decision not to serve the report in accordance with the timetable required by the rules or in accordance with the Court's directions, and that following Mr Alexander's departure there was further consideration by Ms Meadows in December 2015 of whether to serve the report. That is inconsistent with Mr Alexander's failure being the cause of non-service.

(c) It is clear that Ms Meadows had substantial involvement in the matter prior to the first involvement referred to in the affidavit on 14 April 2016.

132. In my view, because the affidavit was drafted so as to invite the drawing of inferences which did not accord with the facts, and that in the absence of drawing those inferences the affidavit would contain nothing of relevance for the purpose for which it was brought into existence, it was misleading. Having regard to the involvement of Ms Meadows disclosed in the chronology set out above and to the apparently careful drafting of the affidavit, I consider that it is more likely than not that Ms Meadows was either reckless as to the potential for the affidavit to be misleading or intended it to mislead the Court or the parties.

133. In relation to the affidavit of Ms Meadows there are documents relating to the content of that affidavit. Each of those involve communications relevant to what should be disclosed in the affidavit. Those are Documents 4.1, 4.2, 4.3, 4.4 which involve email exchanges between Ms Meadows and Mr Gregg on 17 April 2016 relating to the content of Ms Meadows' affidavit. In my view, they are sufficiently closely connected with the formulation of the terms of the affidavit which I have found to be misleading to be documents produced or communications made "in furtherance of" an act which expose Ms Meadows to a civil penalty.

134. There is also a file note prepared on 14 April 2016 (Document 3.9) which I have dealt with at [108] above. This document is, in my view, also "in furtherance of" the act of making the misleading affidavit, because it is closely associated in time with that affidavit and documents the formulation of an intention to deliberately limit the content of the explanation given to the Court.

135. It is alleged that a solicitor present in court during a hearing in which a misleading statement was made, was under a duty to give instructions to have that statement corrected. The best illustration of this obligation is provided by the decision in Legal Services Commissioner v Garrett [2009] LPT 12 (Garrett). That was a decision of Justice Mullins of the Queensland Supreme Court sitting with two other members. The case arose out of the same factual circumstances as in Mullins, except that the legal practitioner was the instructing solicitor of Mr Mullins rather than a barrister. The case is a powerful illustration of the extent of the obligations upon an instructing solicitor. In addition to the circumstances described at [25] above, the following additional facts were relevant in relation to the position of the solicitor:

(a) The barrister, Mr Mullins, had provided written advice to the solicitor as to whether, in the circumstances, there was an obligation to disclose the facts about the plaintiff's cancer on the morning when the mediation occurred. That advice was described by the Tribunal as "comprehensive in many respects", but reached the incorrect conclusion because counsel had asked himself the wrong question.

(b) The solicitor considered the written advice and was found to have wrongly accepted it as being correct. As a result, he provided advice to the client and obtained instructions from the client which were to not disclose the facts about cancer.

(c) During the course of the mediation during which the barrister referred to and relied on aspects of the schedule of damages based upon the Evidex reports, the solicitor remained silent.

136. The parties in Garrett agreed that reliance upon the barrister's advice was not a defence to the discipline application. However, the Tribunal addressed the submission that reliance upon counsel's advice was a circumstance that could be favourably taken into account when characterising the solicitor's conduct. The Tribunal found:

[23] Whether it is reasonable for a solicitor in the position of the respondent to rely on counsel's advice will be affected by many factors. In the circumstances of this mediation, the respondent was not a passive recipient of counsel's advice, but brought his own legal knowledge, skill and experience to his consideration of it. The observations made by Kirby J in the context of an allegation of professional negligence in Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209, 240 [142] are apposite.

[24] Notwithstanding the urgency that applied to the respondent's consideration of Mr Mullins' advice, the advice was patently flawed and that should have been apparent to the respondent. The fact that the respondent acted on the advice is an explanation for why the respondent behaved the way he did at the mediation, but is not a factor that can favour the respondent in characterising the respondent's conduct at the mediation.

Characterisation of the respondent's conduct

[25] In the circumstances in which this mediation took place, the respondent by remaining silent at the mediation practised a fraudulent deception (analogous to that committed by Mr Mullins), in that the respondent intentionally deceived Mr Kent and the other representatives of [the insurer] to believe that he knew of no facts likely to affect significantly [his client's] life expectancy.

137. The Tribunal ultimately found that the conduct amounted to "professional misconduct" rather than "unprofessional conduct or practice", publicly reprimanded the solicitor, required the solicitor to pay a penalty of $15,000 and made a costs order against the solicitor.

138. Although the decision in Garrett is fact sensitive and can be seen as being influenced by the fact that the solicitor was a solicitor with considerable experience in personal injury matters himself, it makes clear the separate obligation upon a solicitor to ensure that statements made on behalf of the client are not misleading. Garrett provides an example of a case where even counsel's considered, but incorrect, advice provided no defence to the charge of failing to meet appropriate professional standards.

139. The obligation on a solicitor to correct misleading statements to a court must be at least as strict as that to correct statements made to another party during the course of a mediation. Therefore, the standard applicable to a solicitor instructing the court can be no less than that articulated in Garrett.

140. I find that Mr Cummings was present in court when the statements were made by Mr Gregg. There was no formal evidence to that effect, although Mr Cummings was the instructing solicitor in court when the proceedings were before me during that week and did prepare the list of documents and an affidavit during the course of that week. I consider it more likely than not that in those circumstances he was in court at the commencement of the case where significant matters relating to the late service of Dr Hudson's fourth report were being agitated. No evidence was put on behalf of the defendant which indicated that he was not present at that time, and had it been not appropriate to draw the inference that I have, it would have been easy to put on such evidence.

141. I find that the statements were made by Mr Gregg as set out in the transcript (which appears at tab 6 of the Exhibit 1), the most significant portions of which are contained in the extract set out above. That is subject to the correction of the identity of the speaker on page 2 which I have referred to at [90] above.

142. The statements made were misleading to the extent that they had a tendency to, and did in fact, give to the Court and the other parties the impression that the failure to serve the report was the result of an oversight and not some other cause. The reason that was misleading is because the evidence that I have set out in the chronology above is more consistent (and establishes on the balance of probabilities) that the question of service of the report was under active consideration from the date when it was provided to the solicitors for the first defendant, and its non-service was something of which Ms Meadows was aware.

143. I find that Mr Cummings knew of the circumstances that led to the statements made to the Court being misleading, because he was the solicitor with carriage of the matter under the supervision of Ms Meadows and was involved with the issue arising from the non-service of the report from 6 April 2016 up until 18 April 2016, in particular, the discussions with Mr Gregg and Ms Meadows and the review of files and preparation of the schedule of the plaintiff's served reports on 14 April 2016 ([82] above).

144. I find that while Mr Cummings was responsible for instructing counsel during the course of the hearing he was doing so under the supervision of Ms Meadows. It is not possible to make a finding about the extent of Mr Cummings' experience, although it is possible to gain some insight into his seniority by reference to the charge-out rate disclosed in documents in Exhibit 1. Those rates suggest that he is a relatively junior solicitor. Further, the extent of supervision by Ms Meadows appears to have been quite close having regard to her involvement in settling correspondence.

145. There is no evidence about what steps were taken by Mr Cummings following the exchange with the Court set out above. Therefore there is no evidence that Mr Cummings took steps to obtain instructions to correct the misleading impression given by the affidavit or counsel's statement to the Court, or in fact give those instructions to counsel as a matter of professional duty. There is no evidence about the limits upon his authority vis-a-vis Ms Meadows. Plainly enough, if there was evidence that could be put before the Court it would have been easy for the first defendant to have done so.

146. There has, to date, been no explanation given to me (or, so far as the evidence discloses, to Penfold J) in relation to the late service of Dr Hudson's fourth report that differs from the explanation given in the evidence to which I have referred above.

147. In relation to the conduct of Mr Cummings there are no documents which record any instructions which he was given or sought in relation to what Mr Gregg was obliged to tell the Court. To the extent to which Mr Cummings was acting consistently with a scheme of limited disclosure, that is reflected in Document 3.9 and Documents 4.1, 4.2, 4.3, and 4.4 which have been dealt with above.

148. At the commencement of the hearing, on 29 April 2016, Mr Barry who then appeared with Mr McQuillan for the first defendant and also announced an appearance for Ms Meadows, asked me to expunge from the transcript of the proceedings certain submissions made by Mr Bartley on 22 April 2016 (transcript p253 ll 24-29 and p276 ll 8-20). Those statements by Mr Bartley involved the submission that "Ms Meadows gave evidence to this court that it was an oversight". Mr Barry submitted that the submissions were not reasonably open and should not have been made and that therefore the Court should exercise the power to control its own processes to expunge those submissions from the public record.

149. I do not accept that I should make any such direction or order. Without repeating the contentious passages, I consider that the conduct described in those submissions was a characterisation which, although contentious as between the parties, was reasonably open. I do not accept the submission that because the affidavit of Ms Meadows did not use the word "oversight" that the submission that the affidavit read as a whole gave that impression and was intended to do so, was not reasonably open. That is particularly so when counsel for the first defendant (Mr Gregg) and Penfold J characterised the effect of her evidence in the same way and the letter that Ms Meadows wrote specifically referred to the report or its service being "unfortunately overlooked".

150. In the light of the conclusions that I have reached, I will make an order granting access to Documents 3.9, 4.1, 4.2, 4.3, 4.4 to the plaintiff. I was asked by counsel for the first defendant to stay those orders for a period so as to permit the first defendant to consider his position. I will make such an order, but in terms which allow it to be varied by Penfold J or another judge of the Court if appropriate. I have reserved the question of costs. Whether Penfold J or I should determine the question of costs is a matter that Penfold J may determine.

1. The plaintiff is granted access to the documents described at Exhibit 3 item 9 and Exhibit 4 items 1, 2, 3 and 4.

2. Unless otherwise ordered by a judge of the Court, Order 1 is stayed for a period of seven days from today.

3. Pending further order of the Court, except as provided for by Order 1, the copies of documents and transcripts forming part of Exhibits 3, 4, and 5 remain confidential.

Lists of documents subject to a claim for privilege by the first defendant

Filenote of conversation between Natalie Meadows (NM) and MDA National (Deborah Jackson) 10.10.14

Filenote of conference between N Meadows and B Alexander of TressCox, D Jackson of MDA National and Dr Woods 10.04.15

Email exchange N Meadows and D Jackson of MDA National 31.03.15

Filenote of conversation between N Meadows and D Jackson 22.12.15

Filenote of conversation between N Meadows, T Cummings and G Gregg dated 14.04.16

Filenote of teleconference between N Meadows, G Gregg and T Cummings 06.04.16 (by N Meadows)

Filenote of teleconference between N Meadows, G Gregg and T Cummings 06.04.16 (by T Cummings)

Email from D Jackson to N Meadows 05.04.16 at 16:15

Filenote of teleconference D Jackson, N Meadows, T Cummings 05.04.16

Filenote of teleconference G Gregg, T Cummings 07.04.16

Filenote of teleconference T Cummings, and G Gregg 07.04.16 at 14:10

Filenote of teleconference T Cummings, G Gregg 07.04.16, 14:40

I certify that the preceding one-hundred and fifty-one [151] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop.