Priceline Pty Ltd v JHY Nominees Pty Ltd & Ors [2010] VSCA 129

2 The issue determined below related to 'client legal privilege' within the meaning of Division 1 of Part 3.10 of the Evidence Act 2008 (Vic) ('the Act'), it being common ground that the application was a 'preliminary proceeding' within the meaning of s 131A of the Act.

3 The applicant is a tenant of commercial premises at 592 Burke Road, Camberwell owned by the first respondent. The second and third respondents are agents of the first respondent charged with the management of the premises.

4 The following appears from the pleadings. The premises were the subject of a lease dated 31 October 1995 from the Boroondara City Council (the first respondent's predecessor in title) to the applicant. The lease was for a term of five years commencing on 19 May 1995 and contained two option terms each of five years. The terms of the original lease were varied to extend the initial term to 13 years expiring on 18 May 2008. The applicant alleges but the respondents deny that an agreement was made on or about 14 May 2008 to renew the original lease for a further term of five years on the terms of the original lease. The applicant alleges that, on 14 July 2008, one or more of the respondents represented ('the Representation') to the applicant that the option to renew had been exercised out of time, that the original lease had not therefore been renewed and that there was no lease or agreement for lease on foot. The applicant then pleads that, on 3 February 2009, the applicant entered into an agreement to lease the premises on terms which were different from the original lease and which in particular contained no terms capping the rent in the manner that it was capped under the original lease. The applicant alleges that when it entered this agreement it mistakenly believed that the original lease had not been renewed and it was unaware of its right under the original lease, as renewed, to a cap on any rent increase.

5 The applicant pleads that it entered this new lease under a mistake known to the respondents, further and alternatively, in reliance upon the Representation.

6 The applicant then alleges that the Representation was 'false and untrue in that as at 14 May 2008 the Original Lease had been renewed for a term of five years'. The applicant alleges therefore that each of the respondents engaged in misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth).

7 The applicant claims, inter alia, various declarations and orders avoiding or setting aside the new lease, alternatively damages in relation to the higher rental paid or otherwise payable.

8 The alleged representation was contained in a letter from the second or third respondents on behalf of the first respondent, to the applicant, dated 14 July 2008 containing the following statement:

We have discussed the matter with the Lessor and sought advice from their solicitors. Putting the argument with respect to the notice regarding the response to the rent review to one side for the moment, the option was exercised out of time, and the Lease cannot be renewed in any event.

9 The following appears from the judge's reasons for judgment.[1]

10 The applicant sought production for inspection of two documents from the first respondent and six documents from the second and third respondents. The respondents resisted production on the ground that these documents were protected by client legal privilege in that, inter alia, they were obtained or otherwise brought into existence for the dominant purpose of giving legal advice to or for the benefit of the first respondent. The applicant contended that any privilege that may have existed in those documents was waived by or on behalf of the first respondent, having regard to the statement in the letter dated 14 July 2008 set out above. It was argued below by the applicant that the statement amounted to a disclosure or dissemination of the legal advice inconsistent with the maintenance of the privilege and that this was so was confirmed by an amended defence of the second and third respondents which stated that the letter of 14 July 2008 'on its face, passed on information of the opinion of the first [respondent] based on the first [respondent's] legal advice.' It was further contended below that the gist of the legal advice had been deployed for forensic or commercial purposes and that this was also inconsistent with the maintenance of the privilege.

11 On the other hand, the respondents primarily contended below that the first respondent or other party concerned had not acted in a way that was inconsistent with maintenance of the privilege[2] and had not 'knowingly and voluntarily disclosed the substance' of the legal advice.[3]

12 The judge referred to some of the authorities at common law and the relevant statutory provisions. The judge indicated a preference for the view that the second and third respondents were acting as agents of the first respondent and were therefore within the definition of 'client' contained in s 117 of the Act. I interpolate here that on the application before this Court it was accepted that the judge's said view on that point was correct.

13 The judge held that neither the 14 July 2008 letter nor the amended defence of the second and third respondents constituted acting in a way that was inconsistent with maintenance of the privilege. The judge further held, in relation to the relevant paragraph of the 14 July 2008 letter as follows:[4]

In relation to the 14 July 2008 letter, I am of the opinion that a careful reading of paragraph two, ... indicates that it does not approach the extent of the disclosure contained in the critical correspondence referred to by Tamberlin J in Bennett.[5] Rather, the critical paragraph in the 14 July 2008 letter is analogous to the contents of the Attorney-General's press release which was considered in Osland.[6] Nonetheless, the critical paragraph of the 14 July 2008 letter does not even go so far as the extent of the disclosure in Osland, because a conclusion with respect to the legal advice is never stated. Again, this is in marked contrast to the critical nature of the 'conclusion' expressed in the correspondence referred to by Tamberlin J in Bennett.

14 As I read it, the judge is saying that the relevant paragraph in the letter did not disclose 'the substance' of the legal advice within the meaning of s 122(3) of the Act.

15 The judge inspected the documents and held that they were either primary advice documents or related documents and accordingly dismissed the applicant's summons.

16 For reasons that will become apparent, it is important to emphasise the established principles relating to the grant of leave to appeal from an interlocutory order.

17 In Darrel Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd,[7] the Full Court (Winneke CJ, Pape and Starke JJ) referred to the principles that had been enunciated by the Full Court in Perry v Smith[8] and to what had been said by Williams J in Perry v Smith:[9]

Parliament evidently desired to cut down these appeals from interlocutory orders as much as possible, and with that object, have made this provision ... We think that the object which Parliament had should be recognised by this court in a liberal manner, and not begrudgingly. The cases cited to us seem to show that the onus lies on the party who applies for ... leave to satisfy the Court of Appeal that the decision of the primary judge was wrong, and in addition to that he has to satisfy the Court that substantial injustice will be done by leaving that erroneous decision unreversed.

18 The Court in Darrel Lea went on to say:[10]

We regard ourselves as bound by that decision and by the principles there stated. It is, of course, a decision of this Court of considerable antiquity ... The decision, indeed, if we may say so with respect, is easy to understand. It is plain, as Williams, J, said from the terms of the section that the legislature was expressing an intention in the words used that appeals from interlocutory orders should not be permitted except in special circumstances. If on the facts of any particular case a plain injustice has been done by the making of a wrong order, then undoubtedly the Full Court would intervene and grant leave. It is not difficult to imagine plain cases; for instance, if a wrong order were made on a summons for final judgment, whether for the plaintiff or the defendant, such a case might well occur. Indeed, even in proceedings seeking further answers to interrogatories, if it appeared that an answer sought by one party and refused was vital to the proof of his case, then again it may well be that a plain case of injustice would be made out, which would motivate the Court to act in granting leave to appeal.

19 These principles were reiterated in the often-cited case of Niemann v Electronic Industries Ltd[11] in which Murphy J (with whom Gillard and McInerney JJ agreed) approved what was said in Perry v Smith and in the Darrel Lea case save that he said that in using the word 'wrong' the Full Court must have used it in a sense which included decisions 'attended with sufficient doubt', from which decisions substantial injustice flowed. Niemann involved an application for leave to appeal from a decision refusing applications for the dismissal of the plaintiffs' actions for want of prosecution, as to which Murphy J said:[12]

I am myself not satisfied in the present case that it has been shown that substantial injustice flows from the order dismissing the summonses ... The order does not finally dispose of the action. No substantive rights are taken away. The status quo is maintained. ...

I am not convinced that this order, of itself, works a substantial injustice ...

20 In BHP Petroleum Pty Ltd v Oil Basins Ltd,[13] King J said[14] that the tenor of the judgments in Niemann was to the effect that even if the judgment appealed from was clearly wrong, this was not alone sufficient to support a grant of leave to appeal. The judgment appealed from had to be shown, in addition, to effect a substantial injustice by its operation.

21 In X v DPP,[15] the accused sought leave to appeal from an order of a Supreme Court judge that a witness give evidence in a committal proceeding by video link. Brooking JA (with whom Charles JA agreed), after referring to the practice that in general applications for leave to appeal were disposed of in Victoria without the giving of detailed reasons, refused leave to appeal on the grounds that the applicant had failed to show that the correctness of the order appealed from was attended with sufficient doubt and had failed to show that substantial injustice would be caused to him if the order stood. Callaway JA said[16] that, the order being interlocutory, the applicant had to show that the decision below was attended with sufficient doubt to warrant its being reconsidered on appeal and that substantial injustice would be caused if the order made were allowed to stand. Callaway JA went on to say:[17]

Counsel for the appellant submitted that the importance of the question of law raised by a proposed appeal would make it easier to conclude that a decision was attended with sufficient doubt, in all the circumstances, to warrant its being reconsidered. I agree that the question whether a decision is attended with sufficient doubt to justify the grant of leave poses a flexible test and that the importance of the legal issues raised by a proposed appeal is one of the matters that may properly be taken into account. See, for example, Commissioner for Corporate Affairs v X and Y. As Fullagar J explained in BHP Petroleum Pty Ltd v Oil Basins Ltd, the requirement to show substantial injustice also has a flexible quality. It is a guideline for the exercise of a broad discretion to grant or withhold leave to appeal. What amounts to substantial injustice depends upon all the circumstances of the case.

Indeed the risk of substantial injustice affects the degree of doubt that is sufficient to satisfy the first requirement. The question does not arise if the decision below was plainly right but, in other cases, the greater the potential injustice, the more likely it is that a doubt attending the decision will warrant its being reconsidered on appeal. The critical point, and the ratio decidendi of Niemann's case, is that the requirements are cumulative. Even if the decision below was wrong, it will be allowed to stand if there is no risk of substantial injustice. To take a different view would be to disregard the legislative policy of discouraging interlocutory appeals except where they are necessary in the interests of justice, cf Darrel Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd.

Although the Full Court sometimes gave detailed reasons for the refusal of leave, its usual practice was not to do so. I would adopt the same practice. It is important to remember that, even where leave is refused because a decision is not attended with sufficient doubt, the Court of Appeal does not thereby affirm the decision, nor does it acquire the precedential status of a decision of this court. The reasons for that are, first, that the question is whether leave should be granted as opposed to the correctness of the decision and, secondly, that argument may be limited accordingly. Although we had the benefit of a well researched argument in the present case, I think it sufficient to say that, in my opinion, the appellant will not suffer substantial injustice if the order is allowed to stand. In preferring that ground I cast no doubt on the correctness of the reasons given by the learned primary judge.

22 It is to be noted that Callaway JA applied the conventional tests but in the passage quoted above he also referred to 'the risk of substantial injustice' and 'the greater the potential injustice' and he said that, even if the decision below was wrong, it would be allowed to stand 'if there is no risk of substantial injustice'. I do not think that these expressions should be taken to be suggesting that the requirement that an applicant must show that he will suffer substantial injustice if the decision is unreversed should be watered down to a requirement whereby it is sufficient for an applicant to establish that there is a 'risk' of substantial injustice. It may be that a probability of harm to the substantive rights of an applicant will be caused if the decision is unreversed would be such that substantial injustice is demonstrated but it cannot be the case that a mere possibility of such harm or the mere 'risk' of injustice would be sufficient to satisfy the test. Of course each case will depend on its particular facts and, as was stated by Fullagar J as quoted in the passage above, the requirement to show substantial injustice has a flexible quality, it is a guideline for the exercise of a broad discretion and what amounts to substantial injustice depends upon all the circumstances of the case.

23 In Livingspring Pty Ltd v Kliger Partners,[18] the Court of Appeal (Maxwell P and Buchanan JA) reiterated the established tests for leave to appeal from interlocutory decisions. They said, referring to Niemann, Darrel Lea and Perry v Smith, that there was a clear legislative policy against interlocutory appeals and that the requirements were 'stringent'.

24 I turn to the submissions of the parties and will first summarise their written outlines.

25 In support of its application for leave to appeal, the applicant contended that the decision below was attended with sufficient doubt to justify a grant of leave. The applicant submitted that the 14 July 2008 letter discloses 'the substance' of the legal advice received by the respondents (or one or other of them). The applicant submitted that the ordinary and natural interpretation of the relevant paragraph in the letter is that the substance of the advice was being conveyed in the second sentence - otherwise there would have been no point in mentioning the advice in the first sentence. The applicant added that this is the construction of the letter adopted by the second and third respondents in paragraph 9 of their amended defence. The applicant further submitted that the reference to advice was deployed on behalf of the first respondent for a commercial advantage and was therefore an act inconsistent with the maintenance of the privilege.

26 The applicant submitted that it 'might' suffer substantial injustice if leave were refused because the relevant documents sought to be inspected 'may be critical at trial to the determination of whether the [respondents] knew that the [applicant] had rights with respect to the original lease or the alleged renewal thereof of which it was ignorant or mistaken'.

27 On the other hand, the respondents submitted that the Court should start with a strong presumption in favour of the correctness of the decision below because it related to a matter of practice and procedure. The respondents submitted that the judge correctly stated the applicable principles of law, took into account all relevant considerations and did not take into account any irrelevant matter. The respondents submitted that, in any event, the judge's conclusion was correct because the 14 July 2008 letter did not state that anything was 'advice', let alone disclose the substance of the documents sought to be inspected. Further, the amended defence of the second and third respondents alleged that what was 'passed on' by the 14 July 2008 letter was the first respondent's 'opinion' not any legal advice.

28 The respondents further submitted that no substantial injustice will be caused by a refusal of leave to appeal. The respondents noted that the applicant said that the privileged documents 'may' be critical to one issue in the proceeding, namely whether the respondents knew that the applicant was mistaken about its rights in the way pleaded. The respondents said that the applicant can conduct its case in this regard without the documents and referred to the particulars under paragraph 15 of the further amended statement of claim by which the applicant alleges that the knowledge of the respondents is to be inferred from the course of conduct and correspondence and the facts there set out.

29 In oral argument the applicant relied upon a number of authorities to establish the proposition that it would be inconsistent for the respondents to retain privilege in the legal advice when the substance of the advice had been deployed by them for commercial or forensic gain. The applicant also relied upon authorities in support of the proposition that the voluntary disclosure of the gist or conclusion of the legal advice amounted to a waiver in respect of the whole of the advice.

30 I raised with counsel for the applicant the question whether it was sufficient to satisfy the second limb of the test for leave to appeal to show that there 'may' be substantial injustice if the order appealed from was not reversed. Counsel for the applicant said that it was sufficient to show that there 'may' be substantial injustice when the applicant was 'blind to what the actual contents of the material are'. At that point, I enquired of the parties whether they agreed that the Court was entitled to look at the documents to determine any relevant question on the application and, in particular, the question of whether substantial injustice was shown. The parties agreed that the Court might look at the documents for these purposes. However, counsel for the applicant said that, although the Court might look at the documents, it was unsatisfactory for the Court to adjudicate whether there was anything in those documents that might promote the applicant's case or lead the applicant on a relevant train of inquiry.

31 Counsel for the applicant further submitted that the applicant had a 'right' to discovery and inspection of the disputed documents and that substantial injustice was demonstrated by denial of that right. He added that an inspection of the documents, in addition to possibly directly supporting the applicant's case about the respondents having knowledge of the alleged mistake, might provide evidence as to the belief or state of mind of the respondents as to whether there had been an agreement to renew the lease and that, in turn, was relevant to the question whether they knew that the applicant was labouring under such mistake.

32 Counsel for the first respondent (whose arguments were adopted by counsel for the second and third respondents) submitted that legal privilege had not been waived and expanded on the written outline in that regard. He further submitted that it was insufficient for the applicant to contend that the order 'may' be productive of substantial injustice, if not reversed. He accepted that, if there were something in the documents that was helpful to the applicant's case or might put it on a train of inquiry, then substantial injustice might be shown but if there was nothing in the documents the non-reversal of the order could not be productive of injustice.

33 In my opinion, it is strongly arguable that the letter to the applicant dated 14 July 2008, on a fair reading thereof, disclosed the substance of the legal advice given by the first respondent's solicitors. I therefore consider that it is strongly arguable that, by virtue of s 122(3)(a) of the Act, the respondents are to be taken as having acted in a way that is inconsistent with them relying upon client legal privilege in respect of the letter of advice (and possibly other related documents). In other words, I think that the decision in respect of which leave to appeal is sought is attended with sufficient doubt as to justify a grant of leave to appeal. Indeed, I am prepared to say that the decision was probably wrong.

34 However the question arises whether the applicant has demonstrated that it will be productive of substantial injustice if the decision is not reversed. The authorities to which I have earlier referred show, I think, that this must be demonstrated and that it is insufficient simply to say that the decision 'may' be productive of such injustice. It is true that this puts the applicant in a difficult position because it is unaware of the contents of the documents but I do not think that the denial of its 'right' to inspect the documents is of itself a substantial injustice. It is a procedural and not a substantive right. The example given in the Darrel Lea

case of a refusal to answer interrogatories depended for establishing injustice upon showing that the answer was vital to the proof of the case of the applicant for leave to appeal. In the present case, the applicant cannot show that but, admittedly, it has not seen the documents.

35 However, the Court has inspected the documents. I have carefully considered their contents and I am satisfied that there is nothing in them which would assist the applicant's case in any of the ways outlined by its counsel. I am further satisfied that there is nothing in them that would put the applicant on a relevant train of inquiry. I accept, as the applicant submitted, that the party concerned is best able to assess these matters but, as it seems to me, it is quite clear that the documents are innocuous.

36 I am therefore constrained to conclude that the applicant has failed to demonstrate that the order will be productive of substantial injustice if not reversed. Accordingly, I would refuse leave to appeal.

[1] [2010] VSC 61.

[2] See s 122(2) of the Act.

[3] See s 122(3) of the Act.

[4] [2010] VSC 61, [39].

[5] Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237; (2004) 140 FCR 101, 119.

[6] Osland v Secretary, Department of Justice (2008) 234 CLR 275.

[7] [1969] VicRp 50; [1969] VR 401.

[8] (1901) 27 VLR 66.

[9] (1901) 27 VLR 66, 68.

[10] [1969] VicRp 50; [1969] VR 401, 408.

[11] [1978] VicRp 44; [1978] VR 431.

[12] [1978] VicRp 44; [1978] VR 431, 442.

[13] [1985] VicRp 72; [1985] VR 756.

[14] [1985] VicRp 72; [1985] VR 756, 764. See also, in the same case, Fullagar J, 758.

[15] [1995] VICSC 195; [1995] 2 VR 622.

[16] [1995] VICSC 195; [1995] 2 VR 622, 626.

[17] [1995] VICSC 195; [1995] 2 VR 622, 626-627 (citations omitted).

[18] [2008] VSCA 93; (2008) 66 ACSR 455.