Parkview Qld Pty Limited v Commonwealth Bank of Australia

Judgment - EX TEMPORE 1By notice of motion filed on 25 October 2012, the defendant, Commonwealth Bank of the Australia ("CBA") seeks an order that the plaintiff, Parkview Qld Pty Ltd ("Parkview") provide for inspection all documents discovered over which legal professional privilege is claimed in a list provided by Parkview's solicitors to CBA's solicitors dated 17 October 2012. That application is brought under Uniform Civil Procedure Rules 2005 (NSW) r 21.2 which provides for orders of discovery. 2By its Amended Technology and Construction List Statement, Parkview contends that certain retention monies under a building contract between itself and a developer ("Fortia") were held in trust for parties to that contract in accordance with their contractual entitlements and that Bank of Western Australia Ltd ("BankWest"), to which CBA is the successor, holds those monies in accordance with that trust. CBA has denied that allegation. 3By its reply, Parkview relies on an estoppel by representation arising from BankWest's conduct. Parkview contends that BankWest made specified representations to it, including that BankWest held the retention monies and would hold them and distribute them in accordance with the parties' entitlements under the building contract. Parkview pleads that it acted in reliance on those representations and held specified expectations and, on the basis of those assumptions and expectations, took specified steps to its detriment. 4On 13 July 2012, Hammerschlag J made orders for disclosure of one category of documents by Parkview, namely: "All documents including communications or records of communications, recording or evidencing Parkview's understanding or belief as to whether retention monies had been drawn down by Fortia and/or they have been deposited with or were otherwise held by BankWest for Fortia." 5By Amended List of Documents filed on 23 November 2012, Parkview discovered 23 documents within that category without a claim for legal professional privilege and a further 24 documents subject to a claim for legal professional privilege. Two of those documents were dated February 2009, contemporaneous with the events in issue in the proceedings; seven of those documents were dated in the period immediately prior to the commencement of proceedings on 4 May 2012; and the remaining documents post-date the commencement of the proceedings. 6Parkview also tenders, in this application, the affidavit of one of its directors, Mr Emile Tabet dated 3 May 2012 which may be read in the substantive proceedings. Mr Tabet gives evidence that he held the belief pleaded in Parkview's Reply because of nine specified matters and did not take certain actions because of those matters. Those matters include dealings between Fortia, a quantity surveyor appointed by BankWest and BankWest. Mr Tabet's affidavit does not refer to any legal advice which may have been obtained by Parkview in respect of those matters, nor does he depose that such legal advice was not obtained. 7With this background, CBA contends that it is entitled to access to the relevant documents by reason that Parkview's conduct has been inconsistent with maintaining a claim for legal professional privilege for the purposes of section 122(2) of the Evidence Act 1995 (NSW). That section provides that Part 3.10 Div 1 of the Act, dealing with client legal professional privilege: "does not prevent adducing of evidence if the client or party concerned has acted in a way that is inconsistent with a client or party objecting to the adducing of evidence because it would result in a disclosure of [a privileged communication]. " Both parties accept that that section applies to pre-trial discovery in this Court by reason of Evidence Act s 131A and UCPR Part 21. 8CBA contends that the documents discovered are necessarily relevant to Parkview's understanding or belief specified in the discovery category, since they have been discovered as falling with that category; and that Parkview's estoppel claim lays open the correspondence as to its state of mind on which it positively relies in asserting that claim. CBA contends that: "If, for example, legal advice was given to Parkview about its contractual rights and prospect of recovery of retention monies from the insolvent Fortia, that would bear relevantly on the existence, degree and operation of the ascendency or influence on the mind, decision making processes and capacity of any representation made by the bank." 9Parkview contends that its putting its state of mind in issue does not constitute a waiver of legal professional privilege and that it had made no assertion, expressed or implied, as to the content of the privileged communications in its pleadings or its evidence and that no inconsistency with the maintenance of legal professional privilege is established. 10I have been assisted by Counsels' submissions as to the development of the applicable test for waiver at general law and under Evidence Act s 122(2) which is not without its complexities. The present section is plainly influenced by the general law test for waiver as formulated by the plurality of the High Court in Mann v Carnell (1999) 201 CLR 1 at [20], where the Court emphasised that a waiver arose from inconsistency, although necessarily informed by considerations of fairness, but not from "some overriding principle of fairness operating at large". 11The relevant inconsistency is established, both at general law and for the purposes of Evidence Act s 122(2) where a plaintiff directly or by necessary implication puts the legal advice it received in issue, in order to establish its cause of action, for example where the plaintiff has to prove that it had or did not have knowledge of its legal rights or the content of that knowledge: Thomson v Campbelltown Municipal Council (1939) 39 SR NSW 347. 12A broad view of the circumstances giving rise to waiver was taken in Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 where Giles CJ Comm D held that a party that had exposed its corporate state of mind to scrutiny, where legal advice was likely to have contributed to that state of mind, could not withhold the relevant advice from its opponent. In Telstra Corporation Ltd v BT Australasia (1998) 85 FCR 152 at 166-167 Branson, and Lehane JJ (Beaumont J dissenting) held that a party that pleaded that he or she took action "in reliance on" a particular representation by another "opens up as an element of his or her cause of action, the issue of his or her state of mind at the time he or she undertook such action" and thereby put in issue a matter which cannot fairly be assessed without examination of relevant legal advice and that: "In such circumstances, the party, by putting in contest the issue of his or her reliance, is to be taken as having consented to the use of relevant privilege material, or to put it another way, to have waived reliance on the privilege which such material would otherwise attract." 13The reasoning in Ampolex and in that passage in Telstra v BT Australasia was in turn relied upon by Hely J in Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd [2002] FCA 301, on which CBA relies, where his Honour held that a pleading of estoppel waived legal professional privilege in contemporaneous legal advice with respect to specific matters the subject of the alleged estoppel. I pause here to note that, even on the view expressed by Hely J, it appears a waiver in this case would not extend beyond the correspondence in 2009 to the correspondence immediately prior to the commencement and following the commencement of the proceedings from May 2010. 14Parkview draws attention to a possibly narrower view of the circumstances in which an issue waiver will be established expressed by Allsop J in DSE (Holdings) Pty Ltd little Intertran Inc (2003) 127 FCR 499 and in subsequent appellate decisions of this Court. In DSE (Holdings) v Intertran, Allsop J referred to the view expressed by Hodgson J in Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87 that waiver arose from an assertion made by a party, expressly or impliedly, in its pleadings or evidence as to the content of a confidential communication between a party and its legal advisors. His Honour indicated that, if he were free to do so, he would follow the observations of Heerey J in Equuscorp Pty Ltd v Kamisha Corporation Ltd [1999] 1 ATPR 41-697 at 42,894 that the mere pleading of reliance does not give rise to a waiver of legal professional privilege, and his Honour also noted that whether advancing a state of mind gives rise to waiver is a question of degree in each case. His Honour held that the mere denial of a state of mind did not waive privilege, but acted on a concession by one party as to the waiver of privilege over contemporaneous communications, and held that no inconsistency so as to give rise to waiver of privilege was established in later communications as to the conduct of the case. 15In Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; 229 ALR 304, waiver of legal professional privilege was established not by filing a pleading which raised the Commissioner's state of mind, but by the provision of particulars which identified grounds for that state of mind by reference to specified privileged documents. 16In New South Wales Bar Association v Archer [2008] NSWCA 164 at [48], Hodgson JA, with whom Campbell JA and Handley AJA relevantly agreed, similarly observed that: "It is not enough to bring about a waiver of client legal professional privilege that the client is bringing proceedings in which the content of the privilege 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." 17In Bailey v Department of Lands and Water Conservation [2009] NSWSC 100, Allsop P (with whom Hodgson JA agreed) emphasised that the relevant issue in waiver is inconsistency, not general fairness, and that this would be established by expressed or implied assertion of the content of a confidential communication, and held that no waiver was established when no defence of reliance on legal advice was raised in those proceedings. 18In the present case, I do not consider that CBA has at this point established conduct on the part of Parkview giving rise to inconsistency by any expressed or implied assertion of the content of legal advice which it may or may not have received in respect of a relevant matter, so as to establish a basis for an order for discovery of the documents subject to the claim for legal professional privilege. 19It is important in this context to note that the discovery category ordered by Hammerschlag J is in fact wider than documents going to the existence or non-existence of the asserted understanding and belief as to the trust and would extend, for example, to advices which provided no more than, for example, an outline of the relevant contractual provisions or deposit arrangements for the retention monies. It is therefore not possible to assume, merely because documents have been discovered within that discovery category, that they relate to the particular state of mind on which Parkview relies to found the estoppel. 20Second, the pleading and Mr Tabet's evidence do not presently deploy the content of, or even the fact of, legal advice as contributing to the Parkview's state of mind, nor do they seek to negate the existence of such advice. Third, no such inconsistency is established for the majority of the documents, postdating the commencement the proceedings in May 2010, on the basis that, even if Parkview had put in issue its state of mind in the earlier period, that would not be inconsistent with maintaining legal professional privilege in respect of documents brought into existence for the purpose of the conduct of the proceedings, for the reasons noted by Allsop P in DSE (Holdings) v Intertran above. 21Parkview does not presently take any step in these proceedings that its state of mind was the product of such advice or even that such advice was received. No doubt, any such advice may be relevant in the sense that it may advance or undermine CBA's defence of the proceedings, but that that is not sufficient in itself to establish the relevant inconsistency in Parkview's conduct so as to give rise to the application of Evidence Act s 122(2). That position may, of course, change if at some point in the future Parkview seeks to establish what advice it had received or that it had not received such advice as to the relevant issues. The possibility that that might occur in the future does not establish a waiver of legal professional privilege at this point. 22Accordingly, I order that: