Plaintiff/Defendant by Counterclaim v Defendants/Plaintiffs by Counterclaim

Plaintiff/Defendant by Counterclaim v Defendants/Plaintiffs by Counterclaim - [2018] VSC 99 - VSC 2018 case summary — Zoe

[74]

(a) Legal professional privilege is an important common law right (not just a rule of evidence).[35]

(b) That right is only destroyed if the right-holder acts inconsistently with the maintenance of the privilege: that is, the relevant inconsistent act needs to be the act of the right-holder, not some other person.[36]

(c) It follows that the combination of the relevance of the confidential material to an issue in the case, and the forensic unfairness that may follow if the material is not made available to the other party, does not of itself bring about waiver: it is the inconsistent act of the right-holder that does that.[37]

(d) Accordingly, the task for this Court is not to make a choice between one public interest or right over another, or to balance 'fairness and justice' against the right-holder's interest in the maintenance of confidentiality. Instead, the task is deciding whether the important common law right has been lost by the right-holder's act of waiver.[38]

(e) The right can be waived even though the right-holder did not subjectively intend to waive it: that is, the waiver can be imputed objectively from the inconsistent acts of the right-holder.[39]

(f) Inconsistency refers to a contradiction between the confidential nature of the communication, on the one hand, and the act of the privilege holder which necessarily lays open the communication to scrutiny, on the other: so inconsistency is the test for waiver because it exposes the contradictory act which effects the waiver.[40]

(g) Relevant inconsistency is found in the making of an assertion (express or implied) or the bringing of a case either about the contents of a confidential communication or which necessarily lays open the confidential communication to scrutiny.[41]

(h) In either event, it is the contents of the privileged communication which the assertion or the case must be about or which is necessarily laid open to scrutiny - not merely some 'state of mind' to which legal advice might be relevant.[42]

(i) Putting a state of mind in issue, even together with a likelihood that legal advice was obtained that might be relevant to the issue (for example, by showing chronological coincidence[43]), is not necessarily enough. The privileged communication must itself be 'central' to the case.[44]

(j) An assessment of whether an act is in fact contradictory and inconsistent may involve questions of judgment and degree.[45]

(k) Because it does not involve a 'balancing exercise' between competing public interests, the waiver of privilege is not determined by the application of a general test of fairness;

(l) Rather, as Mann v Carnell explains, where necessary, considerations of fairness may inform the Court's perception of the essential ingredient of inconsistency[46] - it follows, considerations of fairness are subordinate to the essential test of inconsistency.

[88]

In my view, there has been no conduct on the part of the Cargill Parties that is inconsistent with their maintenance of legal professional privilege over documents which evidence the Cargill Parties' knowledge of the Undisclosed Matters. Indeed, the Viterra Parties' failure to make any such application until two years after the commencement of the proceeding (with the pleading of the relevant matters remaining largely in the same terms over that time) suggests a tacit understanding on the part of the Viterra Parties that the claims by the Cargill Parties are indeed 'common garden variety' misleading and deceptive conduct and breach of warranty claims, the pleading of which ordinarily would not give rise to a waiver going to the knowledge or state of mind of the plaintiff. While I accept that applications such as these turn on their own facts and circumstances, I agree with the submissions of counsel for the Cargill Parties that the decisions in Liquorland, Anbu, and Sage are illustrations of the proposition that there must be something more than merely pleading a state of mind, and in the decisions where there has been found to be a waiver (VicHotel, Rio Tinto, and the 30 March ruling), there has been 'something more'.
It is apparent from the authorities relied upon by counsel for the Cargill Parties, starting with Liquorland, and continuing with Sage, and Anbu, that a party putting in issue its knowledge or other state of mind as a relevant issue in its pleading is merely the starting point of determining the question of whether there has been a waiver of otherwise privileged communications recording, evidencing, or relevant to that knowledge or state of mind. There must be 'something more', to strip away this significant common law right. Here, there has been no 'approbating or reprobating' on the part of the Cargill Parties, or any other conduct by the Cargill Parties inconsistent with the maintenance of the privilege. As noted succinctly in Austral Dutch Kaolin Pty Ltd v Hanjin P & C Co Ltd:

[194]

(a) Should I allow the additional evidence? I will not give leave to allow the Reply to be admitted on the hearing of the appeal. I make that decision without having read it. The whole argument turns on the case pleaded by Cargill and the assertions made expressly or impliedly in it. In my view, subtle changes could alter the analysis. It is inappropriate on the appeal to be analysing a case with anything other than the precise assertions at that time of hearing below. A further complication is that there is a debate whether the version of the defence to which the Reply responds was before her Honour in only a 'proposed' form. Regardless of whether it was or was not, it is my view I should not consider the Reply. As to whether the further affidavit evidence should be admitted, it falls into a different category than the Reply although I also conclude I should not admit it. I have made that decision having looked at the material. I viewed it to assess whether it assisted in clarifying my understanding of the nature or contents of the documents that are the subject of dispute. In my view those further affidavits make no material difference to my understanding from what I had gleaned from the evidence before the court below. Accordingly, I do not exercise my discretion to allow the admission of those affidavits into evidence on the appeal.

(b) Is 'embedded assertion' a new argument? Certainly, a new emphasis was placed upon it on the appeal. The argument was not put below in the elaborate form it was put on appeal. In hindsight, one may see some traces of it below, but it would be difficult to be critical of the Associate Judge for not recognising it in the way it was put before me. For that reason it would seem artificial to find that her Honour was in error for not dealing with it. But assuming she was in error for not dealing with it, in my view her consideration of that argument ought not have made a difference. I would make the same decision as the Associate Judge made even having considered it.

(c) What bearing should the 30 March ruling have on my consideration? Whether the Associate Judge was correct in deciding that Viterra had waived its privilege by pleading its third party action is irrelevant to my consideration in this matter. Her Honour appeared to consider that case as having stronger merit because, there, Viterra alleged that the third parties failed to tell it of the Viterra Practices and then sought to use privilege to stop the third parties producing the documents that evidenced that they did. Perhaps, in that respect, that scenario bears shades of similarity to Vic Hotel. And this is an area where judgment may be affected by degrees of difference. But I do not have to decide that case.

(d) Does the case for breach of warranty give rise to any different considerations? Viterra did not argue that its case based on breach of warranty had any stronger prospects than its case based upon the pleading of misleading and deceptive conduct or should otherwise succeed where the other fails. Nor can I see that it does or should. The argument on that basis shares the same fate as the one that has been more fully discussed in these reasons.

At a glance

Court

Decision date

Before

Source

Judgment (244 paragraphs)

Parties

Cases Cited (15)