Plaintiff v Defendant

Supreme Court of Victoria|2016-08-09|Before: DERHAM AsJ

PRACTICE AND PROCEDURE - Discovery and inspection of documents - Client legal privilege - Waiver of privilege - Issue waiver - Inspection of document the subject of claim of privilege - Application equivalent to objection raised to inspection of documents produced on subpoena - Whether privileged communications likely to have affected party's relevant state of mind - Circumstances in which appropriate to inspect privileged communication under the Evidence Act 2008 (Vic) s 133 - Evidence Act 2008 (Vic) ss 122 and 133 - ; ; ;

1 The plaintiff ('Patrick') seeks orders for discovery (including production for inspection) or for production of the written advice the defendant ('Port') received from its lawyers, Minter Ellison dated 25 July 2011 ('the Advice') concerning the renewal of leases 20452 and 20506 ('Leases') and a Preferential Berthing Licence numbered 17040.

2 Patrick has not served a summons relying upon Rule 29.08 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules') or a notice to produce under Rule 35.08 of the Rules. The parties have written to each other setting out their positions and co-operated in bringing the matter before the Court. The parties have each prepared a small bundle of the relevant documents, pleadings and proposed evidence, including a witness statement of Mr Saleeba.

3 Port resists production on two bases - relevance and client legal privilege. Patrick contended that the Advice is relevant, accepted that it is privileged and argued that the privilege had been waived. The Advice has come to the notice of Patrick because it is referred to in a discovered document, being an instruction given by Port to Minter Ellison on 6 March 2013 to prepare the renewal documents.

4 This proceeding had previously been referred to me by Croft J for the determination of applications by the plaintiff for discovery and inspection of documents. Most of the issues were determined ex tempore on 20 October 2015. One matter, an application that the defendant produce for inspection certain documents subject to a claim for client legal privilege ('privilege'), was reserved and judgment given on 29 October 2015. In relation to that issue, the plaintiff claimed that the defendant had, by its pleadings, waived the privilege ('issue waiver'). The relevant issue giving rise to the question of waiver then under consideration is now not in issue. But again the plaintiff claims there has been an 'issue waiver' of privileged communications.

5 The Judge with the conduct of the matter in the Commercial Court, Justice Croft, has referred the matter to me to determine. This is at least partly because the defendant has suggested that it is appropriate that I inspect the document the subject of dispute pursuant to the power given by s 133 of the Evidence Act 2008 (Vic).

6 From 1993 until 31 December 2013, Patrick operated its container terminal business at East Swanson Dock pursuant to the Leases.

7 Each of the Leases contained an option for a 21 year term commencing 1 January 2014 ('Options'). Clause 4.6 in Lease 20452 is typical of the Options and it provides:

4.6 Option to renew

If the Tenant is desirous of taking a renewed Lease of the Premises for a further term of 21 years from the expiration of the term hereby granted and at least six calendar months prior to the expiration of such term signifies such desire by notice in writing to be delivered to the landlord or sent to it by security post addressed to the landlord at its address hereinbefore appearing the Landlord shall at the costs and charges (inclusive of stamp duties) of the Tenant provided the Premises or any part thereof is not required -

4.6.1 by Her Majesty the Queen; or

4.6.2 by any instrumentality of the Crown in right of the State of Victoria or the Commonwealth of Australia.

4.6.3 by the Landlord for any of the purposes of the Port of Melbourne;[1]

grant and exercise a new lease to the Tenant of the premises on the same terms and conditions as this Lease for a further term of 21 years at an annual rental determined in accordance with clause 1.2 hereof as if the date of commencement of the further term and each second anniversary of such date of commencement of the further term (or at such lesser interval as the Landlord may determine) were a Review Date as defined in clause 1.2.1 hereof PROVIDED FURTHER that the annual rental shall consist of Ground Rent only and that in fixing or determining the said rental the value of the buildings pavements and improvements erected, or alterations made thereto on the Premises shall not be taken into account and the said renewed Lease shall be subject to the same covenants agreements and provisions as are contained in this present Lease save and except this present agreement for the renewed Lease and the substitution in clause 4.3 of the years 2018, 2023, 2028 and 2033[2] PROVIDED ALSO that the Tenant at its own costs and charges shall execute and deliver to the Landlord a counterpart of the said renewed Lease.

8 Patrick exercised the option to renew in accordance with the Lease in July 2011. The parties negotiated the terms of the renewal and Deeds were executed on or about 19 November 2013, that is prior to the commencement of the new term ('the Renewal Deeds'). Each of the Leases was renewed for the 21 year term commencing 1 January 2014. An issue that arises between the parties is whether the Renewal Deeds give Patrick an option for another term commencing in 2035.

9 Since the parties were before me in October 2015, Port has, (as an alternative to a contention that the Renewal Deeds on their proper construction do not grant to Patrick a further option to renew the Leases) commenced a counterclaim seeking rectification of the Renewal Deeds. Port alleges that if it is wrong about the proper construction of the Renewal Deeds, it mistakenly gave Patrick an option for a further 21 year term commencing on 1 January 2035 ('Further Option') and seeks to rectify each Renewal Deed to remove the Further Option.

10 Port's principal witness is Paul Saleeba ('Saleeba'). Saleeba gave written instructions to Minter Ellison on 6 March 2013, to prepare the Renewal Deeds. Saleeba's instruction sheet to Minter Ellison stated the 'matter' to be an 'ongoing matter' and explained:

Preparation of renewal of leases 20452 and 20506 and PBL 17040. Minter Ellison has provided written advice concerning the renewal dated 25 July 2011.[3]

11 In his witness statement Saleeba says that at all times since 2007 he held certain beliefs about the Options. In this regard, Patrick submits that Saleeba says that:

(a) in July 2011 he 're-read' clause 4.6 of the Leases (i.e. the Options).[4] However, he says nothing about obtaining the Minter Ellison Advice at that time;

(b) on 12 March 2013 he gave instructions to Minter Ellison about the Renewal Deeds,[5] but omits to mention the instruction sheet he gave on 6 March 2013 which refers to the Advice and its relevance to the Renewal Deeds as being one 'ongoing matter';

(c) in April 2013, 'having closely read the terms of clause 4.6', he held a belief about Patrick's obligation to pay Improvements Rent and that he has held that same belief since 2007 until the present time.[6] However, again he says nothing about the impact of the Advice on his belief;

(d) 'it has always been my understanding' that clause 4.6 only granted Patrick one option and not the Further Options and that this belief arose from the 'language in clause 4.6'.[7] However, again he says nothing about the impact of the Advice on his belief.

12 The principles concerning waiver of privilege[8] have been considered in a number of recent authorities. There was no dispute that privilege is a fundamental right or entitlement[9] which should not lightly be found to have been waived. It is also not disputed that in determining whether there has been a waiver of privilege the question is whether Port, as the privilege-holder has, by its conduct in pleading and relying on evidence of its state of mind, acted in a way that is inconsistent with the maintenance of the privilege in the Advice.[10] That generally turns on the relevance of the Advice to that state of mind.

13 Both parties referred to the decision in Council of the NSW Bar Association v Archer,[11] where in a passage approved by the Victorian Court of Appeal,[12] Hodgson JA expressed the matter as follows:[13]

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. [emphasis added]

14 In his recent decision in Mullett v Nixon,[14] J Forrest J referred to Archer, and a number of other authorities, and pointed out[15]:

The points that arise out of these decisions are twofold. First, it is necessary that a party maintaining the privilege put in issue an assertion about a confidential communication which relates to a matter to be determined at trial. Second, in determining whether a party has put a matter in issue, the court is not confined to the pleadings. It is entitled to take into account the evidence put in a case,[16] and the steps taken in the conduct of a proceeding.[17] That process enables the court to determine whether there is the relevant inconsistent conduct on the part of the privilege holder. A party's conduct, aside from the pleadings, 'necessarily lays them [the contents of the privileged documents] open to scrutiny.'[18]

(a) part of the Court's assessment involves an examination of the precise nature of the asserted state of mind and of the likely contribution of the privileged communication to that state of mind;[19]

(b) the Court looks to see whether the privilege holder, by its conduct, has 'approbated' so as to prevent it from 'reprobating'. Considerations of fairness will inform the Court's view about the conduct;[20] and

(c) the principles concerning production under a notice to produce are the same as those for a subpoena.[21] However, whereas documents going solely to credit are not discoverable (unless credit is an issue as in defamation proceedings),[22] a notice to produce will not be set aside merely because it seeks production of documents going only to credit.[23]

16 Patrick submitted that privilege has been waived in the Advice because:

(a) Port asserts in its pleadings and evidence that since 2007 it held particular beliefs about the meaning of the Options and the Renewal Deeds;

(b) Port had sought legal advice about the renewal in 2011;

(c) after pleading its rectification case, Port has given discovery of all its privileged documents except the Advice. Port wishes to withhold from the Court's scrutiny the Advice it received and which its principal witness was familiar with;

(d) the Advice was so at the forefront of Saleeba's mind that he included express reference to it in his 6 March 2013 instruction sheet to Minter Ellison; and

(e) on any view (whether for the purposes of discovery or with respect to legitimate forensic purpose) the Advice is relevant to Saleeba's state of mind.

17 The application of the test of inconsistency requires an examination of the precise nature of the pleaded state of mind and of the impact of the particular communication upon it.[24] There is no dispute that Patrick has the onus of showing that the defendant's state of mind was likely to have been formed due to the legal advice.

18 The state of mind raised by Port's pleadings and evidence (or proposed evidence) is that clause 4.6 only granted Patrick one option and that Port never intended to confer the further option in fact included in the Renewal Deeds. The proposed evidence of Saleeba is that it has 'always been' his understanding that only a single option to renew was granted by the Leases.

19 Port contended, and Patrick did not dispute, that in context, 'always' should be interpreted to refer to all times since he assumed management of Port's relationship with Patrick in July 2007. His intention that the Renewal Deeds should not confer any further option existed as at the time of the drafting and execution of the Renewal Deeds in late 2013. No available evidence provides a basis for the inference that the Advice is relevant to the formation of that state of mind.[25]

20 Port submitted that no adequate basis exists for an inference that the Advice contributed to this relevant state of mind. Surrounding documentation indicates the contrary:

(a) the email exchange on 14 July 2011 between Mr Ken Leigh, General Manager of Port, and Saleeba, Major Property Account Manager of Port,[26], suggests that the 'legal review of the lease' proposed would relate to the validity of the exercise of the original option and how Port might respond to it;

(b) the subsequent letter dated 28 July 2011 from Stephen Bradford, Chief Executive Officer of Port to Ms Saana Bourne, National Property Asset Manager of Patrick[27] and sent after the date of the Advice, is consistent with that reading of the email of 14 July 2011. It acknowledges receipt of the exercise of the option, expresses surprise that it is exercised 2 years early and asks why Patrick raises the exercise of the option at that time; and

(c) the instruction sheet dated 6 March 2013 directed to Minter Ellison,[28] makes a simple statement of fact: that the firm had provided advice 'concerning the renewal.' That statement is consistent with a reading of the email of 14 July 2011 that foreshadows advice being sought about the validity of the exercise of the option and the response by Port to it. Moreover, the solicitors for Port have asserted that the contents of the Advice are 'not relevant to any issue in dispute' in the proceeding.[29]

21 Pursuant to s.133 of the Evidence Act 2008, the Court may order that the Advice be produced to it and may inspect it for the purpose of determining the question of waiver. Patrick submitted that there was no need to exercise this power as the inference was that the Advice was likely to have affected Port's state of mind. Port submitted that the absence of merit to Patrick's application renders inspection of the Advice unnecessary, but invited me to take that step if I considered that it will be of assistance. I accepted Port's invitation, and I have inspected the Advice. I will mention briefly the reason for doing so.

22 The informality with which the question of issue waiver is thrown up between the parties is similar to the position that might obtain had Patrick subpoenaed Minter Ellison to produce the Advice and sought leave of the Court to inspect it. Similarly, as Counsel for Patrick put the application in their outline of submissions, Patrick might have given Port a notice to produce under r 35.08 of the Rules. In each case, the application by Patrick would, in my view, have attracted the principles applicable to the inspection of subpoenaed documents as explained in, for example, Commissioner of the Australian Federal Police v Magistrates' Court of Victoria,[30] and Woolworths Ltd v Svajcer.[31] In the latter case, the Court of Appeal of this Court said:

It will not usually amount to an error in the House v King[32] sense for a judge to decide whether access should be granted to documents without inspecting them. However except in cases where the subpoena is plainly too broad, and merits the description of a fishing expedition, the judge should normally inspect the documents for the purpose of making a final decision as to whether access should be granted. In this case it would have been unnecessary for the judge to inspect the documents because the material produced was based on a 'bare unsupported assertion' that there might be something in there that would assist the applicant.[33]

23 I am firmly of the view that Patrick has not shown any real as opposed to fanciful likelihood that the Advice affected the relevant state of mind of Port. There is no dispute between the parties that it is Saleeba's state of mind that is really in question. His evidence will be that he held the relevant belief consistently between 2007, when he began his position at Port, right through the relevant negotiations leading to the execution of the Renewal Deeds and through to the present time. There is no possible basis to infer any likelihood that the Advice had anything to do with the formation of his state of mind in 2007, or even the confirmation of that state of mind in 2011 when the Advice was given.

24 The sequence of events pointed to by Port (above at paragraph 20) negatives any inference that the Advice is likely to have contributed to the state of mind. The recommendation made by Saleeba to Mr Ken Leigh in the email of 14 July 2011 was that there be a legal review of the Leases and to respond to Patrick's early exercise of the option with a response that acknowledged receipt but did not accept the exercise 'until a review of all obligations has been completed and it is agreed internally to accept the option.' Mr Leigh responded that he agreed and that 'we need to ensure there are no outstanding lease issues or breaches before acknowledging that they have validly exercised the option.

25 What is clearly at the forefront of the minds of those at Port considering the exercise of the option in 2011, in the period leading to the giving of the Advice, is whether there are any breaches of the Leases by Patrick that might prevent a valid exercise of the Options. The early exercise of the Options clearly piqued the interest of Port in finding out the reason for the early exercise. The subsequent letter dated 28 July 2011 from Stephen Bradford, Chief Executive Officer of Port, to Ms Saana Bourne, National Property Asset Manager of Patrick,[34] sent after the date of the Advice, confirms that interest because it asks why Patrick raises the exercise of the option at that time.

26 For these reasons, I am not satisfied that Port has, by its conduct in pleading and relying on evidence of its state of mind, acted in a way that is inconsistent with the maintaining privilege in the Advice. This is not a case where Port is making assertions about its state of mind in circumstances where there were confidential communications likely to have affected that state of mind.

27 Last, but not least, on inspection of the Advice in accordance with the reasons for doing so given above (paragraphs 21-22), the position I have reached is confirmed. The Advice does not concern whether by clause 4.6 Port only granted Patrick one option for a further term.

28 For these reasons, Patrick's application for discovery and inspection of the Advice given by Minter Ellison to Port dated 25 July 2011 is refused.

29 The parties should submit proposed orders (if any) by email to my Associate.

[1] Clause 4.6.3 was amended in 1998 - see CB 153.

[2] The years were added by amendment in 1998 - see CB 153.

[3] Saleeba's instruction to Minter Ellison and his covering email are at pages 11-13 of the bundle. Saleeba's amended witness statement is at pages 14-26 of the Bundle ('Saleeba's Statement').

[5] See [12] of Seleeba's witness statement.

[6] See [18] of Seleeba's witness statement.

[7] See [48] of Seleeba's witness statement.

[8] The loss of privilege under s 122 of the Evidence Act 2008 (Vic).

[9] The Daniels Corp International Pty Ltd v ACCC [2002] HCA 49; (2002) 213 CLR 543 at [9], [11], [44], [85], [86] and [132]; DSE (Holdings) Pty Ltd v Intertan [2003] FCA 384; (2003) 127 FCR 499 at [22] and [24].

[10] Vic Hotel Pty Ltd v DC Payments Australasia Pty Ltd [2015] VSCA 101, [34].

[12] Chong & Neale v. CC Containers Pty Ltd [2015] VSCA 137, [200].

[16] United States Surgical Corp v Hospital Products International Pty Ltd (unreported, Supreme Court, NSW, McLelland J, 13 October 1981); quoted with approval in Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341, [50].

[17] DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 [1], [13].

[19] Vic Hotel at [53]; Liquorland (Australia) Pty Ltd v. Anghie [2003] VSC 73; (2003) 7 VR 27 at [32] and [41].

[21] Matthews v SPI Electricity (No. 27) [2013] VSC 483.

[22] Beecham Group Ltd v Bristol-Myers Co [1979] VicRp 27; [1979] VR 273.

[23] Liristis v Gadelrabb [2009] NSWSC 441 at [5]; Thomas v SMP (International) Pty Ltd [2010] NSWSC 870 at [19]. In this connection I note that Senior Counsel for Port submitted that the latter case establishes that it is not sufficient to support a notice to produce merely to say that the document relates to the credit of a witness, but that a precise and clear basis must be identified for a conclusion that the document might be probative of the creditworthiness of a witness. Further, that no such basis is established in the current circumstances.

[24] Liquorland (Australia) Pty Ltd v Anghie [2003] VSC 73; (2003) 7 VR 27 at [32] and [41].

[25] DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499, [128].

[26] Marked SB-1 in the bundle of documents attached to Port's written Outline of Submissions. This is discovered document PLM.500.001.2343, which appears as page 454 in the Court Book for trial and was referred to in my ruling on 29 October 2015 at [13(b)].

[27] Marked SB-2 in the bundle of documents attached to Port's written Outline of Submissions.

[28] In Patrick's bundle at pages 12-13.

[29] See the letter dated 30 June 2016 in Patrick's bundle at page 3.

[30] [2011] VSC 3; followed by Kyrou J in DPP v Debono [2012] VSC 350, [197]; See also HRF Nominees Pty Ltd (In Liq) & Others v Man Civil Constructions Pty Ltd & Others (No.2) [2014] VSC 613, [29]-[30].

[31] [2013] VSCA 270, [40]-[47] (Nettle, Ashley and Neave JJA).

[34] Marked SB-2 in the bundle of documents attached to Port's written Outline of Submissions.

Supreme Court (General Civil Procedure) Rules 2015

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