Plaintiff v Defendants

EVIDENCE - loss of client legal privilege - s 125 Evidence Act 2010 (Vic) - whether communications made in furtherance of a deliberate abuse of power - authority to enter land - whether orders should be made for SPI to produce evidence of consent or permission of landowners to enter land for purpose of plaintiff's reliance on s 125.

1 On 12 March 2013 I was asked by J Forrest J, who is conducting the trial of this Group Proceeding, amongst others, to hear a further application[1] for production of discovered documents the subject of a claim of client legal privilege ("privilege").

2 The parties appeared before me on 13 March 2013, at which time I made directions to facilitate the hearing of the claim. The first matter was described by Mr Keogh SC, who appeared with Ms Szydzik for the plaintiff, as a preliminary issue. It is the issue of the landowners giving their consent to the first defendant ("SPI") entering their land to set up the Valley Span test, as to which I give a more detailed background below. The existence or non-existence of such consents is said to be material to whether privilege may not exist over some of the privileged documents by reason of the operation of s 125 of the Evidence Act 2008 ("Evidence Act").

3 Therefore the first order I made on 13 March was to direct the issue of a summons and supporting affidavit raising the preliminary issue.

4 The summons, dated 13 March 2013, seeks orders that:

The first defendant, by 4.00pm on 18 March 2013, serve on the plaintiff an affidavit deposing:

(i) access permits;

(ii) written consent of landowners; or

(iii) other documents;

Evidencing permission of the landowners of properties on which poles 38 and 39 of the Pentadeen Spur are located ("the relevant properties") for the first defendant or other persons under its direction to access the relevant properties for the purposes of installing and conducting a field test on the Valley Span;

(b) in respect of each of the relevant properties, to whether consent or permission was given, and if so:

(i) whether such consent or permission was given orally or in writing;

(ii) the time and date on which any consent or permission was given;

(iii) the individual(s) who gave consent or permission;

(iv) the individual(s) to whom such consent or permission was given; and

5 This is the third of a sequence of decisions. The background facts relating to the proceeding are set out in my two earlier decisions, Matthews v SPI Electricity Pty Ltd and SPI Electricity Pty Ltd v ACN 060 674 580 & Ors (formerly Utilities Services Corporated Ltd) [2013] VSC 33 ("Matthews (No) 1") and Carol Ann Matthews v SPI Electricity Pty Ltd & Anor (No 2) [2013] VSC 86 ("Matthews (No 2)"). Although it is unnecessary to repeat that background, there are some matters that are important to an understanding of the present application which bear repetition, as follows:

(a) The plaintiff sues SPI and alleges, among other things, that the Kilmore East-Kinglake bushfire that started on 7 February 2009 in Kilmore East ("KEK bushfire") was caused by breaches of duty by SPI in the management, inspection and engineering of the Valley Span.[2]

(b) Of particular relevance to the present application, the plaintiff alleges that a section of a powerline, or conductor, strung between poles 38 and 39 of the Pentadeen Spur ("Valley Span") fell into a high risk category for vibration - high-frequency low-amplitude vibration induced by wind[3] ("Aeolian vibration"). It is alleged that SPI should have installed spiral vibration dampers on the span to prevent or reduce vibration.[4] The plaintiff also alleges that industry guidelines require fitting a damper on conductors that are more than 300m long, operating in the conditions of the failed conductor.[5] The Valley Span was over 1000m long and was not fitted with such a damper. The plaintiff alleges that the Valley Span failed due to Aeolian vibration and if a damper had been installed this conductor would not have failed on 7 February 2009 ("the plaintiff's vibration case");[6]

(c) The conductor failed near the fittings at pole 39 and, it is alleged, the failure was due to metal fatigue in the conductor wires. The plaintiff alleges that the fatigue cracks leading to failure were propagated by Aeolian vibration. It was submitted that this sort of vibration may occur on conductors when a steady, relatively slow wind blows across a conductor. That sets the conductor vibrating at a high frequency, but with low amplitude of vibration;

(d) SPI denies that the conductor failed due to Aeolian vibration. The expert reports filed on behalf of SPI acknowledge that the fracture in the conductor propagated due to metal fatigue but say that the fatigue was caused by something other than Aeolian vibration. SPI's defence in this regard relies substantially upon the results of a field test ("the Valley Span test"), which has been reported on by its independent expert, Mr John Vazey. That test involved SPI stringing three test conductors between poles 38 and 39 of the Valley Span, about three metres below the original conductor, and measuring stresses generated on the test conductors near the conductor fitting where the failure occurred on the original conductor. Thus, the test was intended to replicate and measure the conditions that existed on the original conductor;

(e) The plaintiff submitted that SPI's experts, Mr Vazey and Dr Barter, rely heavily on the results of the tests to suggest that the conductor failure could not have occurred by the mechanism alleged by the plaintiff (Aeolian vibration) because the tests did not detect levels of stress sufficient to have caused the failure and it must therefore have been some other mechanism that caused the conductor to fatigue and fail;[7] and

(f) The plaintiff submitted that other experts have expressed the view that the Valley Span tests do not replicate the conditions in relation to wind induced vibration that were experienced by the original conductor. She therefore contends that the Valley Span test was not designed and set up so as to enable it to detect the vibration stressors that would have existed on the original conductor at the location where it fatigued and failed.[8]

6 In Matthews (No 1) the plaintiff sought the production of documents the subject of privilege concerning the design, setup and operation of the Valley Span test. It was common ground that the design and set up of the three test conductors installed between poles 38 and 39 was undertaken by SPI. It was said that a waiver of privilege arose from the reliance by SPI on the expert reports of Mr Vazey, in particular. The plaintiff lost that application because it did not establish, and after inspecting the documents in question I did not find, that the privileged documents influenced or underpinned the experts reports so as to give rise to a relevant inconsistency for the purposes of s 122 of the Evidence Act; and nor were they reasonably necessary to enable a proper understanding of the experts reports, within the meaning of s 126 of the Evidence Act.

7 Nevertheless, documents concerning the design, setup and operation of the Valley Span test continue to be of critical interest to the plaintiff and, after much correspondence, I was informed that SPI agreed to provide further discovery of what have been called the 'Baumgarten documents'. It was Noel Baumgarten and a team of linesmen from SPI who designed, installed and rigged the test conductors.[9] These documents are the subject of a list of documents dated 7 March 2013 and include 86 documents that are not claimed to be privileged and 556 that are claimed to be privileged.

8 In order to install and operate the Valley Span test, SPI or its agents have had access to the properties upon which poles 38 and 39 are situated, and perhaps other adjacent properties. I considered in Matthews (No 2) the Electricity Distribution Code 2011 ("Code") and the Electricity Industry Act 2000 (Vic) ("Electricity Act") empowering SPI to access the distribution equipment on the properties for the purposes of the supply of electricity. They do not authorise SPI to have access to those properties for the purpose of erecting the test conductors and carrying out the Valley Span test for the purpose of defending this proceeding. Thus, the consent of the landowners is necessary for SPI to have the entitlement to enter upon the landowners respective properties for the purpose of conducting the Valley Span test.

9 I also referred in Matthews (No 2)[10] to the plaintiff's numerous requests of SPI's solicitors for evidence of the landowners' consents for SPI to carry out the Valley Span test. SPI had refused to provide any substantiation of its response that it had the consent of the landowners.

10 None of the documents discovered by SPI and available for inspection by the plaintiff, including the discovery recently made by list dated 7 March 2013 ("Baumgarten documents"), contain any evidence of any consent or permission given to SPI by landowners to access their land for the purposes of conducting the Valley Span test.[11]

11 The plaintiff contends that the Court has power pursuant to s 29 of the Civil Procedure Act 2010 (Vic) ("CPA") to require SPI to depose to the matters set out in the plaintiff's summons. The plaintiff also contends that the case management powers of the Court under Order 34 of the Supreme Court (General Civil Procedure) Rules 2005 ("Rules") provides the power to require a party to take steps in the proceeding not strictly required by the Rules or the CPA, but which are necessary in the interests of justice: Watson v AWB,[12] and Australian Securities and Investments Commission v Infomercial Management Group Pty Ltd.[13]

12 The plaintiff submits that in the interests of justice the Court should exercise its discretion and make the orders sought in the summons because:

(a) SPI has had multiple opportunities to provide a substantive response to the requests for evidence of the consents of the landowners, but has refused to provide that evidence;

(b) persistent refusal has frustrated the plaintiff's efforts to resolve issues of client legal privilege in relation to SPI's discovery;

(c) compliance by SPI with orders in accordance with the summons is confined, will not be costly nor take any great time;

(d) the issue is of potential significance to the substantive rights of the plaintiff and the group members;

(e) SPI's response is a necessary ingredient in the resolution of the issue of client legal privilege attaching to many of SPI's most recently discovered documents;

(f) SPI has not been consistent in its position stated in correspondence compared with its submissions before the Court.

13 SPI makes several responses to the plaintiff's application as follows:

(a) The orders sought are novel. Their declared purpose is to advantage the plaintiff and disadvantage SPI in an interlocutory application involving a challenge to SPI's claim for privilege. That challenge has already been made and will proceed regardless of the disclosure sought by the plaintiff's summons;

(b) There are established processes for a party to obtain discovery of documents. The framework established by those processes may, in extraordinary cases, be departed from, whether pursuant to the CPA or the inherent powers of the Court. But the plaintiff establishes no reason why those processes, which have been ongoing for a considerable time prior to the commencement of the trial in this proceeding, should now be employed to advantage the plaintiff;

(c) Making orders of the kind sought by the plaintiff cuts across the trial processes. Trial is now in its second week. The question of consent of the landowners was raised by the plaintiff over ten months ago. Since then there have been numerous directions hearings dealing with interlocutory and trial management issues. In none of those hearings has the plaintiff raised with the Trial Judge the prospect of seeking coercive orders requiring affidavit evidence as to the landowners' consent, or anything akin to it;

(d) The plaintiff seeks the orders to assist her in establishing that SPI trespassed on the land on which poles 38 and 39 are located in order to conduct the Valley Span test. If such a trespass can be established by the plaintiff, she intends to use that trespass as a step in an argument that SPI has lost privilege in a number of documents by reason of the operation of s 125 of the Evidence Act. But that argument must fail because even if SPI did not have the consent of the landowners there would be no room for s 125 to operate. That is because it cannot be said that a trespass is the abuse of any power, there being no contention by the plaintiff that s 125(1)(a) of the Evidence Act is applicable;

(e) Orders of the kind sought by the plaintiff would be contrary to the overarching purpose of the CPA, being to facilitate "the just, efficient, timely and cost effective resolution of the real issues in dispute";[14] and

(f) If SPI had responded to the enquiries of the plaintiff regarding the consent of the landowners to enter the land with a response to the effect that no response was called for or would be given, there would be no occasion now to order that a response should be made. Where, as here, SPI had responded that SPI has or had the consent of the landowners, to make some further order would discourage candour and inhibit 'frank exchange' between the parties.

14 I have previously set out in Matthews (No 2) the text of s 125 of the Evidence Act and a survey of the applicable law. I also set out several provisions of the CPA then relevant.

15 The plaintiff now seeks to invoke rule 34.01 of the Rules, or s 29 of the CPA.

16 Rule 34.01 of the Rules provides that at any stage of a proceeding the Court may give any direction for the conduct of the proceeding which it thinks conducive to its effective, complete, prompt and economical determination. The subsequent rules in Order 34 do not limit the breadth of this very wide power. It may be seen, to some extent, as a precursor to the much more extensive purpose, obligations and powers in the CPA.

17 In Aon Risk Services Australia Ltd v Australian National University[15] French CJ noted that the adversarial system has been qualified by changing practices in the courts, directed to the reduction of costs and delay, and the realisation that the courts are not only concerned with justice between the parties, which remain the priority, but also with the public interest in the proper and efficient use of public resources.

18 The overarching purpose in s 7 of the CPA, although expressed as one purpose, involves several elements and there can arise a tension between them. So the efficient, timely and cost effective resolution of a dispute may, and no doubt does, impact on or affect the "just" resolution of the dispute. Thus, in giving effect to the overarching purpose, the court may in some instances be involved in a balancing exercise, balancing efficiency, cost and timeliness, on the one hand, and a just resolution on the other.

19 The plaintiff relies upon recent authority in Victoria that emphasises the requirements of the CPA for the Court to be proactive and innovative in its approach to achieve the Act's objectives.[16] In this regard, one of the main purposes of the CPA is to reform and modernise the practice, procedure and processes relating to civil proceedings in the Supreme Court, and other courts.[17] In my view, the term 'modernise' in the present context involves the movement away from antiquated or obsolete[18] forms of proceeding and the adoption of innovative solutions to disputes in the conduct of litigation. In its central meaning, "of or pertaining to present or recent times", it might be said it gives rise to circularity, or begs the question: what is the present applicable law or procedure? In the second reading speech for the Bill which became the CPA, Attorney-General Hulls said, amongst other things, that the reforms were to make achievable the essential goals of the civil justice system, being "accessibility, affordability, proportionality, timeliness and getting to the truth quickly and easily".[19]

20 I referred in Matthews (No 2) to s 20 of the CPA, which provides that "[a] person to whom the overarching obligations apply must cooperate with the parties to a civil proceeding and the court in connection with the conduct of that proceeding."

21 Section 29 of the CPA, so far as relevant, provides:

(1) If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to -

(d) an order that the person take any steps specified in the order which are reasonably necessary to remedy any contravention of the overarching obligations by the person;

(f) any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.

[52] The absence of a power to enter the land for the purpose of conducting the Valley Span test under the Electricity Act, the easement and the Code provides the springboard from which MBL justified and explained its requests for evidence of the owners' permissions to access the properties. In my view, it was not unreasonable for MBL to request from HSF (as the solicitors acting for SPI) information relating to the permissions that were asserted by HSF to have been given by the landowners. I take into account in assessing the reasonableness of this request the fact that the overarching obligation in s 20 of the Civil Procedure Act requires the parties and their solicitors to cooperate in connection with the conduct of the proceeding. Beyond the assertion by HSF that the entry onto the land was with the consent of the landowners, there was only limited cooperation from HSF in responding to MBL's request. Indeed the letter from HSF dated 11 January 2013 showed a resistance to cooperation.

[53] That it was not unreasonable for MBL to make the request is particularly so where at least one of the landowners in question (Sullivan) instructed MBL to request details of the consent. That instruction gives rise to a reasonable implication that Sullivan had instructed that he or she had not given, or had no recollection of giving, the consent or permission in question.

[53] If that were so, then some of the disputed documents, being those generally identified by the plaintiff[21] before the affidavit of Ms Overington of 17 January 2013, revealed detailed information about many of the documents, and even afterwards in relation to the documents identified in her affidavit and described by me in my earlier reasons for decision as the "Category 5" documents,[22] were potentially connected with the alleged deliberate abuse of power. That is because they are documents concerning the specifications for the construction of the test conductors, and for the testing equipment installed on the conductors, and, for all that the plaintiff knew, may have been prepared "in furtherance of the deliberate abuse of power" (within the meaning of s 125(1)(b) of the Evidence Act) in the sense that they (the communications or contents of the documents) were a necessary precursor to the installation of the conductors, which required entry onto the land.

23 It should not be forgotten that in the application for costs against the plaintiff or her solicitors (Matthews (No 2)), Ms Overington, of Herbert Smith Herbert Smith Freehills, the solicitors for SPI, in her affidavit sworn 21 January 2013, identified clause 3.3.2 of the Code as authorising entry onto the land on which poles 38 and 39 are situated for the purposes of conducting the Valley Span test and that, in addition, pole 38 sits on land over which SPI has a registered easement (the "easement argument"). Further, in its written submissions in that costs application, SPI contended that the Code identifies circumstances in which a customer must provide a distributor's representatives access to premises, implying, without expressly saying, that clause 3.3.2 of the Code was applicable to authorise SPI to enter the land to install the test conductors and carry out the test.[23] As I concluded in that case, this appears to misconstrue the clause.

24 Given that SPI sought to justify entry onto the land as authorised by the Code or the Easement and the Electricity Act, then the power there conferred may be argued to have been abused, deliberately, by entry without permission or consent. That is, if the lawyers advance the Code and the Easement as the relevant authority, it may be inferred that so too did SPI. But SPI as the electricity distributor could hardly have been in doubt about its powers under the Code and the easement. If, assuming there are no landowner consents, SPI entered the land in purported reliance on the Code, etc, there is the possibility that it did so in deliberate abuse of its power to enter the land for the purposes related to the supply of electricity, the installation of the test conductors having nothing to do with that.

25 Alternatively, the consents may turn out to be partial, or, as counsel for the plaintiff submitted, given in circumstances of non-disclosure of the purpose of entry onto the land, or were consents to entry for the purpose, ostensibly, of undertaking work on the distribution equipment rather than the Valley Span test. The range of possibilities can only adequately be addressed if some detail of the consents is given by SPI.

26 In those circumstances, I disagree with the submission that the 'trespass argument' (as I called it in the Matthews (No 2) decision) cannot involve under any circumstances a deliberate abuse of power. Having said that, I observe that if SPI did enter the land purportedly in exercise of the power in the Code, or pursuant to the rights conferred by the Easement and the Electricity Act, and without permission from the landowners (or with permission that was not clearly permission for the purpose of the Valley Span test), it is possible that is because of a mistake made as to the breadth of the power under the Code, etc.

27 By asserting in correspondence that SPI had the consent of the landowners to conduct the Valley Span test, SPI has sought to justify entry onto the land whatever may be the position under the Code, etc. In the interests of an effective determination of the issues to be agitated in the plaintiffs application to inspect, or have produced, the privileged documents in the Baumgarten documents, it can hardly be denied that the production of the consents, if written, or the provision of the details of the consents, if oral, is either an undue burden on SPI or disadvantages SPI. After all, SPI has asserted that it had the consent of the landowners to enter the land to conduct the test.

28 In this regard SPI submitted that no discovery could be justified of documents relating to the consents as they did not, and could not, relate to any issue in the proceeding. But the further discovery given by SPI on 7 March 2013 relates to the Valley Span test. That discovery is relevant, if at all, as relating to the design and installation of the 'infrastructure' upon which the Valley Span test is conducted and thus is relevant to establishing the basis for the reports of the Experts relied on by SPI, particularly Mr Vazey. I ask rhetorically, if the documents discovered on 7 March are properly discoverable, why are the alleged consents of the landowners, if written, also not discoverable? SPI cannot have it both ways.

29 Those documents may also be relevant to evidence to be given by Mr Baumgarten. I was told in argument that Mr Baumgarten is on SPI's witness list and his evidence, if given, will be given viva voce and without any witness statement or outline of evidence being given in advance. In those circumstances, the documents in the privileged section of the list of documents may be introduced into evidence through Mr Baumgarten with the result that there is then waiver of the privilege now claimed.

30 In my view, making orders for production of the consents, if written, or details of them, if oral, does not cut across the conduct of the proceeding now in trial. The dispute about the claim for privilege over documents in the list of documents dated 7 March 2013 has been referred to me for adjudication by the trial judge. The application by the plaintiff is made for the purpose of that adjudication.

31 Given that the plaintiff has only had the recent list of documents for about a week (at the time of this application), the contentions of SPI relating to delay in pursuing evidence of the consents does not persuade me that the plaintiff should not have the orders along the lines sought. It will be recalled that the plaintiff gave up its trespass argument, as I called it in Matthews (No 2), shortly before the hearing of the argument which challenged the privilege claims dealt with in Matthews (No 1). At that point, there had been no further discovery, as there now is, as to the design and construction of the infrastructure for the Valley Span test. The documents then discovered that related to the infrastructure turned out to be very limited. Now that there are many such documents I think the plaintiff is justified in agitating again its application for an order that SPI substantiate its assertion of the consent of the landowners.

32 In my view, orders along the lines sought by the plaintiff would advance, rather than retard, "the just, efficient, timely and cost effective resolution of the real issues in dispute".[24] They also follow on from fact that SPI has asserted that the relevant consents have been given, and furthers the cooperation required by s 20 of the CPA. I do not need to decide whether SPI has breached that overarching obligation to make orders of the kind I propose below. Accordingly, I do not decide whether or not SPI, in asserting the consent of the landowners but declining to give particulars of those consents, has breached the overarching obligation to cooperate with the plaintiff in connection with the conduct of the proceeding.

33 In my view the approach taken in the cases referred to by the plaintiff concerning the Court being proactive and innovative in applying the CPA, and the approach taken by Harper J in reliance on Rule 34.01, albeit in different circumstances, in Australian Securities and Investments Commission v Infomercial Management Group Pty Ltd,[25] amply justify and warrant the exercise of the Court's power to require SPI to produce any written consent or permission, and details of any oral consent, for SPI to enter the land upon which poles 38 and 39 of the Pentadeen Spur are located. Orders to that effect are conducive to the effective, complete, prompt and economical determination of the proceeding, in that they will advance the effective determination of the issues to be agitated on the application to inspect, or have produced, the privileged documents revealed in the List of Documents dated 7 March 2012, and the ability to inspect these may advance the plaintiff's vibration case, or not, as the case may be. That in itself is calculated to be conducive to the effective, complete, prompt and economical determination of the proceeding within the meaning of rule 34.01.

34 SPI submitted that if an affidavit is required it will be an affidavit of Mr Baumgarten as to the consents he sought and obtained. SPI proposes to lead evidence about the Valley Span test at the trial from Mr Baumgarten . In those circumstances, an order that there be an affidavit by him does have the potential to cut across the orders for the conduct of the trial. Accordingly, I will not require an affidavit by him.

35 I will, however, make orders requiring SPI to produce the consents, if written, or provide the details of the consents, if oral, to the plaintiff.

36 I will hear counsel as to the appropriate orders.

[1] The first such claim was decided in Matthews v SPI Electricity Pty Ltd and SPI Electricity Pty Ltd v ACN 060 674 580 & Ors (formerly Utilities Services Corporation Ltd) [2013] VSC 33 ('Matthews v SPI (No 1)').

[2] Plaintiff's Seventh Amended Statement of Claim dated 30 November 2012 ('Statement of Claim') [19].

[4] Ibid [19(b)(xxii)]; a spiral vibration damper is a plastic spiral placed on the conductor to disrupt vibration and to decrease the stresses caused by it.

[5] Plaintiff's written Outline of Submissions dated 18 January 2013 [2.9] ('Plaintiff's Submissions').

[6] Affidavit of Rory John Walsh, 7 December 2012, [7] ('First Walsh Affidavit').

[7] Matthews (No 1), above n 1, [11].

[9] Expert Report of Mr John Vazey (22 August 2012), section 6.

[11] Affidavit of Irina Lubomirska sworn 13 March 2013.

[12] [2009] FCA 1234; (2009) 261 ALR 725.

[13] [2001] VSC 181 per Harper J (as he then was) at [8], [9], [20], [22] & [23].

[14] Civil Procedure Act 2010 (Vic) ss 7(1) and 8(1)(a).

[15] [2009] HCA 27; (2009) 239 CLR 175, [23] per French CJ.

[16] Amcor Ltd & Ors v Barnes & Ors [2012] VSC 434, [78] per Vickery J; Thomas v Powercor Australia Ltd (No 1) [2010] VSC 489, [41] per Forrest J; Crowe v Trevor Roller Shutter Services Pty Ltd [2010] VSC 536, [19]-[20] per Beach J and on appeal Trevor Roller Shutter Service Pty Ltd v Crowe (2011) 31 VR 249; [2011] VSCA 16 (Warren CJ, Nettle and Ashley JJA). See also the observations in the Civil Procedure Bill Second Reading Speech: Victoria, Parliamentary Debates, Assembly, 26 June 2010, 2606-9 (Hulls).

[17] Civil Procedure Act 2010 (Vic) s 1.

[18] See the Macquarie Dictionary, 3rd Ed, definition of 'modernise' and 'modern'.

[19] Hansard (Vic), Legislative Assembly, 24 June 2010, p 2067.

[20] Carol Ann Matthews v SPI Electricity Pty Ltd & anor (No 2) [2013] VSC 86, [52]-[53].

[21] See paragraph [57] of the reasons in Matthews v SPI Electricity Pty Ltd & Ors [2012] VSC 33.

[22] See Matthews v SPI Electricity Pty Ltd & Ors [2012] VSC 33, [72].

[23] SPI written submission dated 21 January 2013, [21].

[24] Civil Procedure Act 2010 (Vic) ss 7(1) and 8(1)(a).

[25] [2001] VSC 181 per Harper J (as he then was) at [8], [9], [20], [22] & [23].