Plaintiff v Defendant

Supreme Court (General Civil Procedure) Rules 2015 r 42.11 - ASADA v 34 Players and One Support Person (No 2) [2015] VSC 14 - Hera Project Pty Ltd v Bisognin (No 4) [2017] VSC 270 - Charan v Nationwide News Pty Ltd (No 6) [2017] VSC 331.

For the First Subpoenaed Party, Australian Mines and Metals Association

1 This ruling is consequential to a ruling on a subpoena objection ('the subpoena ruling').[1] There are two issues for determination.

2 The first issue concerns a single document over which there is a claim of legal professional privilege. The document has been produced to the Court as a consequence of a subpoena addressed to a non-party: the Australian Mines and Metals Association (Incorporated) ('AMMA'). The defendant in this proceeding, namely the Construction, Forestry, Maritime, Mining and Energy Union ('CFMMEU'), caused the subpoena to be issued. AMMA says the document should not be inspected on the basis it is subject to legal professional privilege. For the reasons discussed below, I find the document is subject to legal professional privilege and therefore may not be inspected by the CFMMEU.

3 The second issue for determination is AMMA's application for the CFMMEU to pay its costs relating to the subpoena. I will make orders for the CFMMEU to pay some of AMMA's costs in respect of the subpoena.

4 On 12 December 2017, McDonald J made orders concerning a picket at the Webb Dock Terminal ('the injunction orders'). Victoria International Container Terminal ('VICT') operates from Webb Dock Terminal. The orders were directed at the Maritime Union of Australia ('MUA'), the Construction, Forestry, Mining and Energy Union ('CFMEU'), and various people including union officials. At that time, the MUA and CFMEU were named as the defendants to this proceeding.

5 Since the injunction orders were made, the MUA, CFMEU and another union have amalgamated to form the CFMMEU. The CFMMEU is named as the defendant to this proceeding. The amalgamation was approved by the Fair Work Commission ('the Commission'). However, the decision to approve the amalgamation is currently under appeal.

6 On 30 April 2018, VICT filed an amended summons seeking orders that the CFMMEU be punished for contempt of court in respect to some of the injunction orders.

7 CFMMEU says that a strong inference can be drawn that the contempt proceeding is an abuse of process because it has been instituted for an improper or ulterior purpose. It says that the contempt application was made for the improper or ulterior purpose of impeding or delaying or prejudicing the pending application before the Commission to fix an amalgamation date for the amalgamation between the unions.

8 At the hearing of the contempt summons, CFMMEU will seek for it to be struck out or dismissed or permanently stayed for abuse of process and/or will rely on VICT's conduct to seek indemnity costs. It says the subpoenaed documents, the subject of the subpoena ruling, are relevant to the issues of whether the contempt proceeding is an abuse of process and to the costs application.

9 In the subpoena ruling, I disallowed the objection to Category 1 of the subpoenas while allowing objection to Category 2.[2] The first issue in this present ruling is whether AMMA's claim of legal professional privilege over a Category 1 document should be upheld. Turning now to that issue.

10 The document is described in an affidavit of Kelly Louise Ralph, solicitor, affirmed on 3 August 2018 ('the first Ralph affidavit') as follows:

[A] file note of Michael Coonan, Australia [sic] Legal Practitioner and Partner at Herbert Smith Freehills. Mr Coonan took this file note on 21 February 2018 in the course of acting for AMMA.

11 The first Ralph affidavit contains the following paragraph:

On 3 August 2018, I communicated with Michael Coonan of Herbert Smith Freehills. Mr Coonan confirmed that the sole purpose of his file note dated 21 February 2018 was for the purposes of providing legal advice to AMMA, specifically about how and whether to proceed in the Fair Work Commission in light of the then new information about the existence of the VICT contempt proceedings. I have reviewed the file note and I understand this to be the purpose of the file note. On this basis AMMA is not required to produce the Privileged Document.

12 The Court required a second affidavit to be filed by AMMA deposing as to whether the file note is a record of a telephone conference or meeting (or other event) and to the first names and surnames of the people in attendance at the meeting or participating in the teleconference (or other) to which the file note relates, including the organisation, if any, which they were representing at the time. Subsequently, Ms Ralph affirmed an affidavit on 22 August 2018 ('the second Ralph affidavit'). It contains the following paragraphs.

In my affidavit dated 3 August 2018 (Previous Affidavit), I refer to a file note taken by Mr Michael Coonan, Australian Legal Practitioner and Partner at Herbert Smith Freehills taken on 21 February 2018 (File Note).

The File Note was taken by Mr Coonan on a teleconference. Present at the teleconference, in addition to Mr Coonan, was Ms Amanda Mansini, Director, Workplace Relations at AMMA, Mr Shaun Schmitke, Deputy Chief Executive Officer at Master Builders Australia (MBA), Ms Rebecca Sostarko, Lawyer at MBA and Mr Ben Jellis, a barrister.

At the time the File Note was taken, Mr Coonan and Mr Jellis acted jointly for AMMA and the MBA in the proceedings in the Fair Work Commission relating to the amalgamation of the Construction, Forestry, Mining and Energy Union, the Maritime Union of Australia and the Textile, Clothing and Footwear Union of Australia. My Previous Affidavit should have provided that the legal advice was provided to AMMA and MBA.

13 AMMA made oral and written submissions.[3] It relies upon the Ralph affidavits and says the document is subject to legal professional privilege.

14 AMMA says that file notes taken by external solicitors for the purpose of obtaining instructions to give legal advice are a quintessential example of privileged documents. It says this is such a case. Mr Coonan is the solicitor on record in the proceedings in the Fair Work Commission relating to the amalgamation. It is not necessary or appropriate for AMMA to provide further information about the content or nature of the file note.

15 In answer to the Court's question about whether litigation or advice privilege was claimed, AMMA's counsel said both types of privilege were claimed.

16 In reply to CFMMEU's submissions, AMMA observes that it does not appear that the claim of privilege is being rebutted, but rather that CFMMEU is relying upon some form of improper purpose.

17 CFMMEU made oral and written submissions.[4] It relies upon the affidavit of Ms Jessica Margaret Dawson-Field, solicitor, affirmed on 15 August 2018 ('the second Dawson-Field affidavit').

18 CFMMEU says that it is unable to assess the validity of the privilege claim because, despite request, AMMA has refused to provide further details of the file note.

19 CFMMEU says that the date on which the document is created, being the day before submissions were due to be filed in the amalgamation proceeding, gives rise to a question as to whether the document forms part of an unlawful scheme or plan. CFMMEU relies upon Commissioner of Australian Federal Police v Propend Finance Pty Ltd[5] ('Propend').

20 Sections 117-119 and 125 of the Evidence Act 2008 ('Evidence Act') relate to legal professional privilege:

117 Definitions

(1) In this Division -

client includes the following -

(a) a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service);

(b) an employee or agent of a client;

(c) an employer of a lawyer if the employer is -

(i) the Commonwealth or a State or Territory; or

(ii) a body established by a law of the Commonwealth or a State or Territory;

(d) if, under a law of a State or Territory relating to persons of unsound mind, a manager, committee or person (however described) is for the time being acting in respect of the person, estate or property of a client - a manager, committee or person so acting;

(e) if a client has died - a personal representative of the client;

(f) a successor to the rights and obligations of a client, being rights and obligations in respect of which a confidential communication was made;

confidential communication means a communication made in such circumstances that, when it was made -

(a) the person who made it; or

(b) the person to whom it was made -

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law;

confidential document means a document prepared in such circumstances that, when it was prepared -

(a) the person who prepared it; or

(b) the person for whom it was prepared -

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law;

lawyer means -

(a) an Australian lawyer; and

(b) a non-participant registered foreign lawyer; and

(c) a foreign lawyer or a natural person who, under the law of a foreign country, is permitted to engage in legal practice in that country; and

(d) an employee or agent of a lawyer referred to in paragraph (a), (b) or (c);

party includes the following -

(a) an employee or agent of a party;

(b) if, under a law of a State or Territory relating to persons of unsound mind, a manager, committee or person (however described) is for the time being acting in respect of the person, estate or property of a party - a manager, committee or person so acting;

(c) if a party has died - a personal representative of the party;

(d) a successor to the rights and obligations of a party, being rights and obligations in respect of which a confidential communication was made.

(2) A reference in this Division to the commission of an act includes a reference to a failure to act.

118 Legal advice

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of -

(a) a confidential communication made between the client and a lawyer; or

(b) a confidential communication made between 2 or more lawyers acting for the client; or

(c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person -

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

119 Litigation

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of -

(a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or

(b) the contents of a confidential document (whether delivered or not) that was prepared -

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.

...

125 Loss of client legal privilege - misconduct

(1) This Division does not prevent the adducing of evidence of -

(a) a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or

(b) a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power.

(2) For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that -

(a) the fraud, offence or act, or the abuse of power, was committed; and

(b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power -

the court may find that the communication was so made or the document so prepared.

(3) In this section, power means a power conferred by or under an Australian law.

21 The common law position differs from s 125 of the Evidence Act. In Propend, Brennan CJ stated:

In determining whether a claim of legal professional privilege can be upheld, it is open to the party resisting the claim to show reasonable grounds for believing that the communication effected by the document for which legal professional privilege is claimed was made for some illegal or improper purpose, that is, some purpose that is contrary to the public interest. I state the criterion as 'reasonable grounds for believing' because (a) the test is objective and (b) it is not necessary to prove the ulterior purpose but there has to be something 'to give colour to the charge', a 'prima facie case' that the communication is made for an ulterior purpose. The purposes that deny the protection of privilege for a communication (whether documentary or oral) between a client and the client's solicitor or counsel include the furthering of the commission of an offence.

When a party in curial proceedings is seeking to rebut a claim of privilege by asserting that the communication with the legal adviser was made for an ulterior purpose, the evidence of ulterior purpose must be admissible in those proceedings...[6]

22 The document is a file note taken by a solicitor, Mr Coonan. It was taken during a teleconference. In addition to Mr Coonan, barrister Mr Ben Jellis was in attendance. At the time of the teleconference they were legal representatives of AMMA and MBA. The other persons attending the teleconference were representatives of AMMA and MBA. In short, this is a teleconference between legal practitioners and their clients.

23 Having inspected the document, it records legal advice given by Mr Coonan and Mr Jellis to their clients in respect of the amalgamation proceeding. Accordingly, I find that both ss 118 and 119 of the Evidence Act are applicable.

24 I observe that the document post-dates the commencement of the contempt proceeding. Having inspected the file note, I do not consider that either s 125 of the Evidence Act or Propend are applicable. The file note does not give rise to reasonable grounds for finding that the teleconference it records was for some illegal or improper purpose or in furtherance of an offence. Nor has CFMMEU established reasonable grounds for finding the same. At this stage, prior to the determination of its abuse of process application, CFMMEU's allegations concerning abuse of process remain just that. Whilst the allegations are arguable based on factual inferences,[7] there are presently no reasonable grounds which would lead the Court to find legal professional privilege has been lost over the file note.

26 AMMA says it is a stranger to the litigation and seeks its costs pursuant to r 42.11 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules'). AMMA says that it should not be out of pocket in respect of the costs incurred as a stranger to the litigation. It seeks its costs on an indemnity basis. AMMA says the onus of establishing the reasonableness of incurring the costs should be borne by the party issuing or seeking to issue the subpoena and accordingly the appropriate order is that costs be recovered on an indemnity basis.[8]

27 AMMA says that it was vindicated in its objection to Category 2 of the subpoena and it follows that in the ordinary course, CFMMEU should pay its costs. In respect of its unsuccessful objection to Category 1, AMMA says it added no significant work that would warrant a reduction in costs that CFMMEU should pay. It says it was not the only party objecting to Category 1 and it was reasonable to join in the objections. Therefore the costs were going to be incurred regardless.

28 CFMMEU says that a proper separation should be made in consideration of the costs incurred by a party that receives and complies with a subpoena by producing documents, and the costs of objection. In respect of the compliance costs, CFMMEU says it has nothing to say about those being ordered. Had AMMA just sought those costs, the hearing on costs could have been avoided.

29 CFMMEU says the objection made by AMMA failed on all grounds except one. So the real question arises as to what costs should be ordered given AMMA's objection was only partially successful. The question of costs is a discretionary matter. When served with the subpoena, AMMA requested a copy of the contempt proceedings and was provided with the documents. At no stage did AMMA offer a compromise by providing the Category 1 documents. It just made a blanket objection.

30 Given the above, CFMMEU says that there should be no order for costs in respect of AMMA's objection.

31 CFMMEU says the question of indemnity costs does not arise for a number of reasons. First, there is a question of reasonableness of the costs incurred. The fact the objection was only partially successful weighs against granting indemnity costs. There is no unreasonable behaviour that would normally attract an indemnity costs order and therefore costs should not be awarded on an indemnity basis.

32 Rule 42.11 of the Rules is as follows:

42.11 Costs and expenses of compliance

(1) The Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena.

(2) If an order is made under paragraph (1), the Court shall fix the amount or direct that it be fixed in accordance with the Court's usual procedure in relation to costs.

(3) An amount fixed under this Rule is separate from and in addition to -

(a) any conduct money paid to the addressee;

(b) any witness expenses payable to the addressee.

33 In Charan v Nationwide News Pty Ltd (No 6) ('Charan'),[9] J Forrest J provided the following outline of principles in respect of r 42.11 and their application in circumstances where the subpoenaed non-party, referred to as 'DET' sought costs, including the costs of making and prosecuting a public interest immunity objection, on the standard basis:

It is not necessary to address in any detail the history of the rules of the Court prior to r 42.11 or their application. The principles are dealt with comprehensively in Pyramid Building Society v Farrow Finance Corporation, and ASADA v 34 Players and One Support Person (No 2).

Pyramid stands for the proposition that once the requirements of the rule are satisfied then the Court has a wide discretion as to the award of costs, extending to an award on an indemnity basis. The current position is neatly summarised by Croft J in ASADA, in which his Honour said:

Rather, the proper question is, how are the provisions of r 42.11 to be applied having regard to the authorities to which reference has been made; authorities which indicate that where a person seeks to invoke the coercive powers of the Court with respect to subpoenas, a person who seeks to resist that process or to comply with the process is entitled to have costs and expenses reimbursed so that they are not out of pocket as a result. As the authorities indicate, this is particularly so in circumstances where they have no interest in the relevant proceedings and, in any event, seek to assist the Court with respect to the issue of or compliance with the subpoena.

In my view, the submissions of Mr Charan miss the point. The determination of whether an award of costs should be made under r 42.11 does not turn upon the result of the claim for privilege and the events preceding it. Rather, as the observations of Croft J regarding the purpose of the rule make clear, it is intended to provide a means for properly compensating a party which has gone to the trouble and expense of complying with a subpoena and where it would not adequately be covered by the provision of conduct money or witness expenses.

The application of this principle, particularly in the case of a claim for privilege, is made clear by Byrne J in Pyramid:

Where the recipient incurs costs in collating documents, copying them and seeking advice as to privilege or as to claim for restricted access or use, it is well established that such costs are recoverable.

...

But that is not the real point. Even if DET had lost the PII claim but had sufficiently arguable grounds to maintain it, then it may well have been entitled to an award of costs in its favour as the rule envisages. I repeat that, as Croft J pointed out in ASADA, the purpose of the rule is to endeavour to ensure that a party who acts reasonably in complying with a subpoena is not out of pocket.

...

I accept that in a proceeding where a PII claim was demonstrated to be untenable, then a Court may, on a discretionary basis, refuse to make a costs order under the rule. However, in this case where the PII submission has been upheld and the ambit of compliance with the subpoena determined, then there is no good reason why DET is not entitled to its costs of the subpoena including those on the PII claim.

To make it clear, I think such costs of 'compliance' include not only the taking of advice in relation to questions of privilege but also putting submissions and articulating the PII claim at the subpoena hearing. Those costs were reasonably incurred in compliance with the subpoena and fall within the ambit of the rule.

If I am wrong in my analysis of the scope of the rule, I think that there is no good reason not to exercise the costs discretion in favour of DET given that it had substantiated its claim, in the main, for PII. That in itself is sufficient to give rise to a prima facie entitlement to costs.[10]

The end result is that DET should have the costs of complying with the subpoena, including those of making and prosecuting the PII objection, on a standard basis.[11]

34 More recently, in Hera Project Pty Ltd v Bisognin (No 4) ('Bisognin'),[12] Riordan J provided the following analysis, which I adopt:

Expenses recoverable under rule 42.11

For an expense to be recoverable under r 42.11 it is necessary that it be incurred in complying with the subpoena and is reasonable. Expenses incurred in complying with a subpoena have been held to include expenses incurred in the following:

(a) Advice as to the validity of the subpoena and whether the addressee should comply with it at all or in part.

(b) Correspondence and attendances on the issuing party regarding its terms particularly with a view to narrowing or clarifying the scope of documents to be produced.

(c) Advice as to whether documents are subject to claims for privilege.

(d) Advice as to whether inspection of documents may be restricted on the basis of confidentiality including correspondence, attendances and negotiations with the issuing party as to the terms for inspection.

(e) Attendances in court on the return of the subpoena including attendances to assert that the subpoenaed documents should be protected from unrestricted access due to their confidential character and ensuring confidentiality undertakings have been properly given.

Whether an expense is incurred in compliance with the subpoena and whether the expense is reasonable are questions of fact. In my opinion, the addressee as the party applying for an order under r 42.11 bears the onus of proving each of these elements.

I should add that I do not consider that the above proposition is contrary to the statement of Croft J in ASADA v 34 Players and One Support Person [No 2] that:

It follows from these considerations, in my view, that it is not appropriate to cast the onus on the addressee of a subpoena to establish the reasonableness of costs and expenses incurred but, rather, this should be the burden borne by the party issuing or seeking to issue the subpoena.

His Honour analysed previous authorities about whether the addressee to a subpoena was entitled to its costs to be taxed on an indemnity basis; and noted that:

(a) an addressee was entitled to all costs and expenses reasonably incurred; and

(b) the principal difference between a standard costs order and an indemnity costs order 'lies in the onus of establishing the reasonableness of incurring of the costs and that this does shift against the opposite party in relation to "indemnity" costs'.

Accordingly, his Honour concluded that the addressee was entitled to an indemnity costs order. In my opinion, his Honour was not intending to change the usual onus that falls on an applicant for relief.[13]

35 The principles outlined in Charan and Bisognin are applicable. The starting point must be r 42.11. For that reason, I do not accept AMMA's contention that the orthodox position is that a subpoenaed party is entitled to costs and expenses on an indemnity basis. AMMA relied upon the ASADA decision (discussed above) in support of that contention. I reject that analysis. Further, ASADA is distinguishable on the basis that, unlike this case, it concerned a circumstance where the party subpoenaed to appear was the only contradictor and provided considerable assistance to the Court with respect to the issues raised in the particular application.

36 Applying r 42.11, AMMA is entitled to its reasonable costs and expenses of complying with the subpoena.

37 Applying Bisognin, the costs will not be ordered on either a standard or indemnity basis, but rather as outlined by r 42.11, on a reasonable basis.

38 The question then is whether to exercise my discretion to exclude or reduce any costs. In particular, the question arises as to whether the costs of the objection should be excluded on the basis it was only partially successful. Applying the authorities above, those costs should not be excluded. A broad brush approach needs to be taken. The objection was not untenable and was partially successful.

39 I will however exclude the costs of AMMA's appearance on 16 August 2018, the preparation for that hearing and the second Ralph affidavit. It was unreasonable for AMMA not to provide a basic description over the document in circumstances where a reasonable request had been made. Had that occurred, the hearing on 16 August 2018 may well have been unnecessary. As CFMMEU submits, it could not properly assess the validity of the privilege claim in the absence of the information. I observe the hearing on 16 August 2018 did include submissions on costs. There is however no reason the costs submissions could not have been made at the earlier hearing or indeed, on the papers.

40 In summary, considering AMMA's list of items for which costs is sought in paragraph 26(b) of its submissions, I will order that the CFMMEU pay AMMA's reasonable costs and expenses in respect of those items pursuant to r 42.11 save for items (xii) and (xiii).

41 The privileged file note will be returned to AMMA.

42 I will make the following costs order: the defendant pay AMMA's reasonable costs in complying with the subpoena in respect of items (i)-(xi) in paragraph 26(b) of AMMA's submissions filed on 15 August 2018, to be taxed in default of agreement.

[1] [2018] VSC 417.

[2] The categories are defined in VICT v CFMMEU [2018] VSC 417, [3].

[3] Outline of Submissions of AMMA - Privileged Documents and Costs, dated 15 August 2018.

[4] Defendant's Response to the Claim for Legal Professional Privilege Made by AMMA, dated 10 August 2018.

[5] (1997) 188 CLR 501, 514 (citations omitted) (Brennan CJ).

[6] Propend (1997) 188 CLR 501, 514 (citations omitted) (emphasis added) (Brennan CJ).

[8] ASADA v 34 Players and One Support Person (No 2) [2015] VSC 14 ('ASADA'); Taylor v Dixon Advisory Ltd [2010] ACTSC 161, [47].

[9] [2017] VSC 331.

[10] See De Simone v Legal Services Board [2015] VSC 286 (19 June 2015) [27].

[11] [2017] VSC 331, [18]-[21], [23], [26]-[29].

[12] [2017] VSC 270.

[13] At 45]-[48] (citations omitted).