24 The plaintiff has argued this application on the basis that the question of privilege is to be governed by the doctrine of waiver of legal professional privilege as explained in Mann v Carnell (1999) 168 ALR 86, relying upon the decision of the High Court in Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 168 ALR 123.
25 Esso Australia Resources was concerned with putting to rest the question, which had been the subject of conflicting decisions within the Supreme Court of New South Wales and the Federal Court of Australia, whether client legal privilege and its waiver, as conceived in Pt 3.10 of the Act, applied to pre-trial processes. In Esso Australia Resources the High Court said that it did not.
26 However, there, the High Court was concerned with an appeal from the Federal Court of Australia, the Rules of which had no counterpart for Pt 23 r 1 and 3, or Pt 36 r16 of the Supreme Court Rules, as quoted earlier in these reasons.
27 The clear intention of those provisions and the definition within each of those parts of a privileged document, as being one of which evidence could not be adduced over an objection based upon Part 3.10 Division 1 of the Act, is to bring the concept of privilege and its waiver in pre-trial processes in this Court within the concept of client legal privilege and its waiver as espoused in the Act.
28 It was argued on behalf of the defendants that the exchange of views between the parties which involved the 27th March letter fell within s 131 of the Act. In so submitting, counsel for the defendants placed emphasis on the theme running through the exchanges between Gulf and Novus in which each party put forward their competing views of the agreement and of the governing legislation and expressed the hope that their difference of opinion could be resolved.
29 For example, the letter from Novus to Gulf of 19 November 1999 concluded with an expectation of a response from Gulf. In Gulf's letter of 21 December 1999, it concluded with an expression of regret over the disagreement and looked "forward to a positive business relationship with Novus in the future". Similarly, in the letter of Novus to Gulf of 2 February 2000, it expressed similar sentiment in looking "forward to this matter being progressed expeditiously to a resolution between Novus and Gulf" and invited contact "to discuss any aspects" of the views put forward by Novus in that letter.
30 One can find other similar expressions of anticipation by each party in their exchange of correspondence, that the matter could be resolved without resort to litigation. However, those expressions fall well short of the concept of settlement negotiations, as contemplated in s 131 of the Act.
31 Indeed, far from being settlement negotiations the parties steadfastly adhered to their opposing views of the construction of the agreement and the effect of the governing legislation upon that construction.
32 However, I think there is a fundamental difficulty in Gulf's contention namely, the fact that s 131 of the Act is to be found in Division 2 of Pt 3.10, whereas Pts 23 and 36 of the Supreme Court Rules are directed to the concept of privilege and waiver as expressed in Pt 3.10 Division 1.
33 In my view there is no warrant for bringing the concept of protection of settlement negotiations as expressed in Pt 3.10 Division 2 into the operation of discovery or the compulsory production of documents to the Court (see Esso Australia Resources supra). Further, there is nothing in the subject correspondence which, in my view would attract common law principles of protection of 'without prejudice' communications between parties.
34 In considering the operation of Pt 3.10 Division 1 of the Act in relation to the legal advice, the only question is whether the 27 March letter constitutes a knowing and voluntary disclosure of the substance of the legal advice within the meaning of s 122.
35 In my view there has been no such disclosure. Both parties on that issue, have placed reliance upon the views expressed by Rolfe J in Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd (1996) 40 NSWLR 12 and the observations of Kirby J on appeal ((1996) 137 ALR 28). I think the operation of s 122 will always turn on the particular facts of a case and, to a certain extent, that exercise may involve a matter of impression.
36 In this case it is clear, I think, exchanges between the parties of which the 27 March letter formed part, were nothing more than an expression of the parties' respective views of the legal effect of the agreement and of the governing legislation. I think the overwhelming tenor of the 27 March letter was the expression of Gulf's view and not the disclosure of the substance of any legal advice it had received.
37 Dissecting that letter: in the first paragraph, Gulf noted the receipt of the advice, asserted its own view of the ownership of the subject hydrocarbons and, in the second paragraph, stated that its conclusion had been arrived at following a review of the governing legislation. The following paragraph makes it clear that the interpretation of the agreement is the opinion of Gulf. I think that the reference to the Australian lawyers' advice as confirming the advice of Gulf's lawyers and as confirming Gulf's internal view of the ownership of the hydrocarbons is itself an expression of opinion of the effect of that advice and not a disclosure of the substance of the legal advice.
38 I think the issue may be tested by pondering the situation of having the advice produced only to find that the legal advice in no way confirmed, or supported Gulf's opinion of the effect of the agreement as expressed by Gulf in the 27 March letter. Such an approach underscores the true nature of the contents of the 27 March letter as an expression of a claimed opinion about the nature and effect of the advice as distinct from a disclosure of the substance of the advice.
39 In that context I note that Gulf did not respond to the last paragraph of the letter of Novus to Gulf of 13 April 2000 by satisfying Novus' interest in 'reviewing' the legal advice. For convenience of reference, that paragraph is as follows:
"Finally we would be most interested to review your Australian legal advice on this issue, if you are in a position to share this with us."
40 Although not determinative of the issue, it appears that Novus did not regard the substance of the advice as having been disclosed at that stage.
41 Accordingly, in my view, the client legal privilege attaching to the legal advice was not lost by reason of the reference to it in the 27 March letter. The plaintiff has argued that the question of waiver is governed by Manns case. Although it is not necessary to decide that question, I am satisfied that, if common law principles of waiver were to be applied, there has been no waiver of legal professional privilege by the 27 March letter. It is not suggested that there has been an express waiver, rather the argument has taken the line that there was an imputed or implied waiver.
42 However, for such a waiver of privilege to have occurred, the conduct of Gulf must have been such that it is inconsistent with the retention of legal professional privilege, having regard to any questions of fairness that might arise. All that has occurred, in my view, has been a fruitless exchange of opinion by each of Gulf and Novus on legal questions of construction of the agreement, and no question of unfairness arises in Gulf's retention of its claim for client professional privilege in the face of its reference to the legal advice in that exchange.
43 Rather than the 27 March letter being inconsistent with the retention of legal professional privilege, I think Gulf's conduct was entirely consistent with the maintaining of privilege as noted earlier, and although not necessarily relevant, Novus appears to have shared that view. I see no concept of fairness as dictating a contrary conclusion and none has been identified by Novus.