consideration
14 Taking all of the relevant factors into account, contrary to Ms McKenzie's submissions, this is not a matter in which I would order that there be no order as to costs. Ms McKenzie has not provided any cogent reason why the usual order, that costs follow the event, should be displaced. In my opinion, Ms McKenzie should be ordered to pay Cash Converters' costs of the Interlocutory Application.
15 First, while some of the documents the subject of the Interlocutory Application were provided to Ms McKenzie following its filing, Ms McKenzie pressed her application for production of the remainder of the documents. It was the issue of whether the balance of the documents were privileged which was before the Court for determination. Insofar as those documents were concerned, Ms McKenzie was wholly unsuccessful in relation to each issue she raised as against the claims made by Cash Converters. The documents that were the subject of an order for production, although discovered by Cash Converters, were subject to a claim for privilege by the NFSF, not Cash Converters.
16 Ms McKenzie relies on Australian Lending Centre and Mitic v OZ Minerals Limited [2015] FCA 1152 (Mitic) as examples of cases where the Court ordered, on an application for production of documents subject to a claim for legal professional privilege, that there be no order as to costs.
17 In Australian Lending Centre Perram J ordered that, as both parties in that matter had had "some measure of success", there should be no order as to costs: at [36]. In that case the defendants made an application for the production for inspection of certain documents subject to a claim for legal professional privilege which were in the possession of and had been discovered by the plaintiff, the Australian Securities and Investments Commission (ASIC). There were a number of issues that the Court had to determine. Consideration of the Court's reasons discloses that his Honour made the costs order because each party had achieved some success in the determination of those issues. That is, ASIC had maintained its claim for privilege over the documents but only insofar as it came into existence after the date on which litigation was anticipated which, his Honour found, was a later date than that propounded by ASIC.
18 In Mitic Edelman J ordered that there be no order as to costs of Mr Mitic's challenges to OZ Minerals' claims for privilege. That case concerned claims for privilege over in excess of 4,000 documents discovered by three different parties with many challenges being made to those claims. By consent and cooperation between the parties, his Honour made orders giving effect to a regime permitting each party to nominate up to 20 sample documents representing the documents challenged by that party. During the exchange of evidence and submissions in relation to those documents many of the claims for privilege were conceded or challenges not pressed. Ultimately there were only seven representative documents over which a claim for privilege was contested and which thus had to be considered by the Court. Edelman J upheld the claims over all of the redacted parts of those documents, save for a passage in two documents over which OZ Minerals did not seek to maintain its claim for privilege: at [1]-[3].
19 In making the costs order, that there be no order as to costs, Edelman J noted that OZ Minerals abandoned its claims for privilege over nine of the 20 representative documents nominated by Mr Mitic, representing 45% of the documents over which OZ Minerals had initially made such a claim. His Honour considered that to be a strong reason weighing against the success of OZ Minerals in the application and for making no order as to costs: at [58]. His Honour continued at [59]:
OZ Minerals submits that it should be entitled to some of its costs in circumstances in which (i) it is successful and (ii) Mr Mitic abandoned his challenge to privilege over eight of the remaining documents nominated by Mr Mitic together with the 20 documents nominated by OZ Minerals. However, as counsel for Mr Mitic rightly said, Mr Mitic's conduct in not pressing claims for privilege over documents which he has not seen in light of submissions and evidence received is less significant in the exercise of my costs discretion than OZ Minerals' abandoning claims to legal professional privilege over its own documents where some or all of those claims for privilege might have precipitated this application. Although OZ Minerals' conduct in abandoning its claims to legal professional privilege over some of these documents was appropriate and laudable, Mr Mitic's persistence with his challenge in relation to the remaining seven documents must also be understood in that light, even bearing in mind the puzzle to which I referred above at [17]. Further, after a close reading of the seven representative documents in this case, I considered it strongly arguable that privilege had been waived over passages in two of them. A claim for privilege over those passages was not abandoned after the hearing.
20 Unlike the position in Australian Lending Centre Ms McKenzie did not achieve any success in the Interlocutory Application as against Cash Converters. On each of the issues before the Court for determination Ms McKenzie was unsuccessful. While, as was the case in Mitic, some of the claims for privilege were conceded by Cash Converters prior to the hearing, the majority of them were maintained and Ms McKenzie pressed her challenge to the balance of the claims including critically, on the issue of waiver which she described as the most significant question at the hearing, and on which she was unsuccessful.
21 Further:
(1) contrary to Ms McKenzie's submissions it is not the case that she would ordinarily be entitled to her costs of, and incidental to, the filing of the Interlocutory Application and the preparation of her evidence because Cash Converters over claimed privilege. There was no obligation on Cash Converters to "properly substantiate" its claims prior to the filing of the Interlocutory Application;
(2) the submission made by Ms McKenzie that, whatever the outcome of the Interlocutory Application, Cash Converters was obliged to substantiate its claims of privilege with affidavit evidence such that those costs are not recoverable is misconceived. For the purposes of the Interlocutory Application, Cash Converters was required to substantiate its claims for legal professional privilege over the documents in issue. For example, in National Crime Authority v S (1991) 29 FCR 203, one of the cases upon which Ms McKenzie relies, Lockhart J said at 211:
When questions of legal professional privilege arise in proceedings before courts there are well established procedures for dealing with them. The claim is asserted on oath and it is open to the court or the person who seeks access to the document or the answer to the question to cross-examine the person who makes the claim. …
But it does not follow that the costs of preparing that evidence are then not recoverable on a "costs follow the event" analysis. Once an application challenging a party's claim for privilege is made, the party whose documents are the subject of the challenge may wish to defend the claim and for that purpose provide evidence justifying the claim for privilege. That evidence is prepared and provided expressly for the purpose of the Interlocutory Application. That is what occurred here. That evidence is a part of a party's costs to which it would, in the absence of some disentitling conduct not present here, ordinarily be entitled on a costs follow the event analysis; and
(3) of the documents in issue between Ms McKenzie and Cash Converters there were only two documents in relation to which Ms McKenzie submitted that the Court would not exercise its discretion to inspect. I concluded that the evidence and, in particular, Mr Cooke's evidence, sufficiently established Cash Converters' claims for privilege, including in relation to those two documents. Having made that finding I inspected all of the documents as I considered it appropriate to do so.