National Australia Bank v Sayed

Privileged documents

Mr Sayed sought access to the unredacted form of the documents identified at [11] above. The basis for the claim was to be found in s 122 of the Evidence Act 1995 (NSW) and the principle said to have been articulated in Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236 at [48]. The principle is concerned with implied waiver of client legal privilege.
Section 122 relevantly provides: Loss of client legal privilege: consent and related matters (1) … (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. (3) Without limiting subsection (2), a client or party is taken to have so acted if: (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or (b) the substance of the evidence has been disclosed with the express or implied consent of the client or party. (4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure. (5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because: (a) the substance of the evidence has been disclosed: (i) in the course of making a confidential communication or preparing a confidential document, or (ii) as a result of duress or deception, or (iii) under compulsion of law, or (iv) if the client or party is a body established by, or a person holding an office under, an Australian law - to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or (b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or (c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court. (6) …
The principle can be traced back to Attorney General (Northern Territory) v Maurice (1986) 161 CLR 475 and was restated in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at [29] as follows: Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.
In Archer Hodgson JA (with whom Campbell JA and Handley AJA generally agreed) said at [48]: … It is not enough to bring about a waiver of client legal privilege that the client is bringing proceedings in which the content of the privileged communications could, as a reasonable possibility, be relevant and of assistance to the other party. For the client to do this is not inconsistent with the maintenance of the privilege, and does not give rise to unfairness of the type in question. What would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. In this respect, it may be sufficient that the client is making assertions about the client's state of mind, in circumstances where there were confidential communications likely to have affected that state of mind.
The matter is put this way by Mr Sayed. Paragraph 31 of the Amended First Cross-Claim filed 18 August 2015 pleads: On or about 30 July 2009 NAB rejected without explanation a proposal under which Lot 41 would be sold for a consideration of $300,000. Particulars: Correspondence between Kells Lawyers and Dibbs Barker dated 3 July 2009, 30 July 2009 and 3 August 2009.
The Defence to that paragraph, being paragraph 23 of the Defence to Amended First Cross-Claim filed 9 October 2015, reads: As to paragraph 31 of the cross-claim, NAB: (a) Does not admit paragraph 31; and (b) Relies on the terms of the correspondence between Kells Lawyers and Dibbs Barker dated 14 July 2009, 30 July 2009, 3 August 2009 and 4 August 2009.
Mr Sayed then points to the dates and descriptions of documents 29, 32 and 37 as follows: [29] Diary note 16/7/2009. Communication between legal advisor and client containing advice on valuations and conditional offer for one lot. [32] Diary note 24/7/16 [scil. 09]. Communication between legal advisor and client containing advice as to conditional offer for one lot. [37] Diary note 6/8/2009. Communication between legal advisor and client containing advice concerning conditional offer for one lot.
Mr Sayed argued that what was relied on was the constructive denial in paragraph 23 of the Defence that there was a breach of duty by the taking of those steps. He submitted that this amounted to a pleading that the Bank's state of mind was informed by the advice and that this was the basis for the Bank not being negligent. Mr Sayed relied on the timing of the events, the description of the documents and from the fact that the Bank was aware at this stage that it was being pressed by Mr Sayed to comply strictly with its obligations as mortgagee in possession.
As far as documents 19, 20 and 30 (and probably 31 although that was not mentioned by Mr Sayed's counsel) those documents were said to be related to the issue of the landlocking of Lot 42.
In relation to document 58 Senior Counsel for Mr Sayed frankly acknowledged that he had very little information as to the content of the document. The description is this: Diary note 3/11/2009. Communication between legal advisor and client containing advice as to preparation of contracts for sale.
Senior Counsel suggested that there was a sufficient inference that the advice was relevant to the decision to proceed by a particular method, and that method of sale is what is attacked by Mr Sayed in his cross-claim and defended by the Bank in its Defence to the Cross-Claim.
No reference was made to document 36 which might be thought to be in a similar category. The description of that document is: Diary note 6/8/2009. Communication between legal advisor and client containing advice as to mortgagee's obligations in exercising power of sale.
Counsel for NAB submitted that waiver occurs when there is a forensic deployment of legal advice or the receipt of legal advice by a party, rendering maintenance of the confidentiality of that advice inconsistent. He said that no state of mind was involved. There was simply a denial of a breach of legal duty without any reference to a state of mind.
In Wayne Lawrence Pty. Limited v. Hunt & Ors. t/a Hunt Musgrave & Peach [1999] NSWSC 1044 Hodgson CJ in Eq (as his Honour then was) considered the decision of the majority of the Full Court of the Federal Court in Telstra Corporation Ltd. v. BT Australia Pty. Ltd. (1998) 85 FCR 152; 156 ALR 634. In that case a defendant pleaded that it undertook certain action in reliance on a certain representation. The majority of the Full Court held that the pleading thereby opened up as an element of the cause of action an issue which could not fairly be assessed without examination of the relevant legal advice. The majority considered that the party was taken to have waived reliance on the privilege. Hodgson CJ in Eq went on to say: [12] Accepting that the decision of the majority in that case correctly interprets and applies s.122(1), it seems to me still that the question of whether the advancing of a person's state of mind is to be taken as consenting to the giving of evidence of confidential communication, or as waiving privilege, is a matter of degree in each case. It does not seem to me that the assertion of a belief must, in all circumstances, be taken as consenting to evidence being led of any legal advice or confidential communication that could be relevant to whether such a belief was held or the reasonableness of such belief. It seems to me that factors relevant to whether that consent is to be considered as having been given, or whether privilege is taken to have been waived, would include the significance of the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; the probability or otherwise of the legal advice being relevant to the holding of that belief, or being relevant to its reasonableness; and in circumstances where the Court inspects the legal advice in question in order to make a decision, the extent to which the legal advice does in fact bear upon the holding of the belief or its reasonableness, and the extent to which the legal advice relevant to those matters is inextricably bound up with legal advice going to other questions as to which there has been no consent or waiver. It seems to me that, on the basis of all those matters at least, the Court has to make a judgment as to what is reasonable, and what is fair in the particular case.
In my opinion, the situation in the present matter is some distance removed from the cases where it has been held that a party has waived the privilege. It is not easy to discern from any pleading in the Defence to the Amended First Cross-Claim that the NAB is relying upon a state of mind or a belief, let alone that such state of mind or belief was informed by legal advice received. The thrust of NAB's Defence, as paragraph [23] thereof demonstrates, is that NAB denies that it acted in breach of its responsibilities as a mortgagee. The fact that there are diary notes which predate the alleged rejection of an offer does not lead to an inference that the Bank formed a belief or a state of mind in rejecting the offer based on advice to which the diary note refers. I was not, for example, taken to any of the correspondence referred to in paragraph 31 of the Amended First Cross-Claim or paragraph 23 of the Defence to the Amended First Cross-Claim to demonstrate that the pleading in effect identified a belief or state of mind on the Bank's part. Of course, as Hodgson CJ in Eq made clear in Wayne Lawrence, even if a belief or state of mind is asserted, that would not be sufficient in itself to amount to a waiver of the legal advice that may have brought that belief or state of mind about.
The references in documents 19 and 20 to DA approval and the reference in document 30 to advice concerning right of carriageway between the lots is quite insufficient to lead to an inference that a denial of breach of duty resulted from a state of mind that was informed by the legal advice referred to.
The legal advice identified in documents 36 and 58 is simply too speculative to draw an inference that it was a justification for the method of sale adopted by the Bank.
Nothing in the Bank's Defence to the Amended First Cross-Claim seems to me to involve inconsistency or unfairness by seeking to maintain the privilege on the documents concerned. In my opinion, the Bank should not be directed to discover unredacted copies of the documents concerned. That is not to say that when the evidence in relation to the Cross-Claim is complete the issue may not again be raised by what is said in the Bank's affidavits. My decision is based solely on the pleading in relation to the Cross-Claim.

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