Raymond Boutros Azizi v Council of the City of Ryde

Background facts

1. The land to which the Proceedings relate was acquired by the Council on 24 August 2018.
2. The VG is not a party to the Proceedings. The role of the VG, as it relates to the subject matter of the Proceedings, is that the VG was required to determine the amount of the compensation offered by the acquiring authority: s 47 JT Act. The acquiring authority was required to make an offer in that amount: s 42 JT Act. The Applicant has in the Proceedings objected to the amount of compensation offered by the acquiring authority: s 66 JT Act.
3. The VG made determinations as to the amount of compensation. The Council brought judicial review proceedings challenging the determination of the amount of compensation. In Council of the City of Ryde v Azizi [2019] NSWSC 1605 Payne J set aside the determinations of the VG.
4. After the first determinations were set aside, the VG made fresh determinations of the amount of compensation, and it is the quantum of these determinations that the Applicant has objected to in the Proceedings.

Nature of claims for privilege

1. The VG claims privilege over 731 documents. During the course of the hearing of the Notice of Motion, the Council advised that it no longer sought access to 181 of the documents to which privilege was claimed. The VG maintains the claim for privilege over the remaining 550 (approx) documents on the basis that the documents are either the subject of the privilege conferred by ss 118(a) or 118(c) and ss 119(a) or 119(b) of the Evidence Act 1995 which provide: 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 … (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.
2. The terms referred to in those provisions are relevantly defined in s 117 and include: 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, … 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.
3. The VG has identified by way of various categories of documents the particular privilege that is contended to relate to that document. The VG, for the purposes of establishing that privilege, identified specific documents that were said to be the exemplars of each category, an examination of which would be sufficient to determine the submission put in respect of the whole category of documents to which the claim related.
4. The identified categories were: Section 119(a): 1. Category A: communications between the VG and lawyers from Department of Finance, Services and Innovation (DFSI), Department of Planning, Industry and Environment (DPIE), Crown Solicitor's Office (CSO), Norton Rose Fulbright (NRF), counsel. This includes internal communications between employees of the VG which relate to, or would reveal the content of, the communications with the VG's lawyers; 2. Category B: internal email chains between employees of the VG where no privilege is claimed over the lead email (and occasionally the second), but where privilege is claimed over the balance of the email chain which comprises communication between the VG and its lawyers; 3. Category C: email chains between employees of the VG and employees of DFSI in Governance, Risk & Opportunity Management and/or employees of DFSI in Government & Corporate Services and/or employees of iCare. Privilege is claimed only over the portions that duplicate a request for legal advice from the VG to DFSI; 4. Category E: communications with Mr Le Bas and Turnbull Planning relating to his expert report and whether any suit against him is covered by DFSI's insurance on the basis of common interest privilege; Section 118(a): 1. Category F: email communications between the VG and his legal advisors - advice prepared by NRF; Sections 118(c) and 119(b): 1. Category D: draft correspondence and expert instructions sent for legal review; 2. Category D: draft submissions, pleadings, and orders used in the 2019 judicial review proceedings.

Is the VG entitled to claim privilege at all?

1. The primary submission put by the Council with respect to the totality of the documents over which the VG claimed privilege was that the nature of the VG's task under s 41 of the JT Act is inconsistent with any obligation of confidence or any assertion of privilege. It was put at [6(i)] of the Council's written submissions that: The task is to determine just compensation and justice cannot be served in secret.

The Council's submissions

1. The Council submitted that the VG had no occasion for an expectation of privilege in the present circumstances as the task of the VG is central to the task of determining the statutory object of providing compensation to dispossessed owners on just terms. Section 41(3) of the JT Act requires: 41 Valuer-General's determination of amount of compensation … (3) The Valuer-General is to provide a copy of the determination of the amount of compensation (together with any report on the value of the land prepared by or for the Valuer-General) to - (a) the authority of the State concerned, and (b) the former owner to whom the compensation is payable.
2. The obligation to provide the report to which s 41(3) refers indicates a statutory intention to require the VG to disclose any report, document or communication that related to the creation and consideration of a report prepared by or for the VG that informs the determination of the value.
3. In Grant v Downs (1976) 135 CLR 674 at 685 the majority of the High Court set out the rationale for legal professional privilege in the following terms: The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision. None the less there are powerful considerations which suggest that the privilege should be confined within strict limits.
4. As the VG has no interest in the process and acts as an independent authority charged with determining the amount of compensation the necessary element of confidentiality to which legal professional privilege is directed does not arise.

The Valuer-General's submissions

1. Legal professional privilege is not a law of evidence but a fundamental common law right. In that regard, the right is not to be abrogated unless there are clear words or necessary intendment. This proposition is to be found in the decision of the majority of the High Court in The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [11]: Legal professional privilege is not merely a rule of substantive law. It is an important common law right or, perhaps, more accurately, an important common law immunity. It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect….
2. There is no express abrogation of the right to legal professional privilege in the terms of the JT Act, nor any necessary intendment to be derived from the terms of that legislative provision.
3. The reference in s 41(3) of the JT Act is a limited provision to a nominated type of report prepared for a specific purpose. The limiting language makes it clear that the obligation is not extended to an undefined broader class of documents that may include documents that would be otherwise privileged.
4. In addition, there are sound policy reasons why the Council's construction of the legislative provisions and the VG's role should not be accepted. As was identified in Waterford v Commonwealth (1987) 163 CLR 54 per Brennan J at 74-75: In any event, I should think that the public interest is truly served by according legal professional privilege to communications brought into existence by a government department for the purpose of seeking or giving legal advice as to the nature, extent and the manner in which the powers, functions and duties of government officers are required to be exercised or performed. If the repository of a power does not know the nature or extent of the power or if he does not appreciate the legal restraints on the manner in which he is required to exercise it, there is a significant risk that a purported exercise of the power will miscarry. The same may be said of the performance of functions and duties. … there is no reason why it should not be the subject of legal professional privilege.
5. Further, the majority expressly rejected the contention that "the nature of the administrative process in government does not call for any confidentiality to attach…[because] a government officer has nothing to hide": at 62-63. The submissions of the Council in this case that "the VG has no interest in the process" or that "justice cannot be served in secret" should be rejected for the same reasons.

Findings as to whether the VG is entitled to claim legal professional privilege

1. The protection afforded to a person by way of legal professional privilege is a protection that extends to the VG. In order for that protection to be removed it must be done by clear and express language or necessary intendment. It is apparent that the JT Act has expressly required the VG to provide the material specified in s 41(3) but it does not expressly require the provision of any other document including one that may be the subject to a claim for privilege.
2. Nor does the legislative language, or the requirement to provide the specified document, evince a necessary intendment that the legal professional privilege that may be available to the VG in the ordinary course is to be removed. The legislative scheme recognises the VG's task and that a person that is the recipient of a determination (the acquiring authority and dispossessed owner) must be able to understand the basis of that determination in order to decide whether to judicially review the determination or accept or reject the quantum of compensation. The express requirement to serve the report as required by s 41(3) is what the legislature has determined is sufficient to meet that requirement. The limitation in the statutory language to the report is an indication of the limit of the removal of any privilege to that report and the report only. If it was intended that the privilege was to be removed for all documents and communications relating to the creation and consideration of the report the statutory language would have said so.
3. As outlined in Waterford there are sound policy reasons why a person carrying out an administrative function should be entitled to seek advice from a legal professional and that such advice (where it falls within the confines of a claim for legal professional privilege) should be protected. The mere fact that the function is administrative and that the administrator has no "interest" in the outcome of the performance of the function does not indicate that the common law protection is not intended to extend to legal advice sought to facilitate that function being performed.
4. Accordingly, the VG, as a general proposition, is entitled to the protection afforded by the common law claim for legal professional privilege. It is then a matter of determining whether the privilege claimed in this case can be said to properly fall within the scope of that protection.

Principles for the determination of whether legal professional privilege arises

1. The relevant principles relating to whether legal professional privilege arises was not disputed.
2. As was outlined by the VG in their written submissions in chief at [12]-[21]: 12. The applicable principles to determine whether a document is privileged are summarised as follows. 13. A communication or document will be privileged if it was made or brought into existence for the dominant purpose of obtaining or providing legal advice, or to conduct or aid in the conduct of litigation in reasonable prospect: Esso Australia Resources Ltd v Federal Cmr of Taxation (1999) 201 CLR 49 at 73 [61]; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 552 [9]. 14. Privilege can attach to a document where it is created for the dominant purpose of using it or its content to obtain legal advice, even if the document is not in fact later used in an actual communication: Commissioner of Australia Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501. 15. The purpose is 'the reason why the document was brought into existence': Waterford v Commonwealth (1987) 163 CLR 54, 66. The 'dominant purpose' must be the 'ruling, prevailing or most influential purpose' or 'one that predominates over the other purposes': AWB v Cole (2006) 152 FCR 382. 16. Ascertaining the purpose of a communication is a question of fact: AWB v Cole (2006) 152 FCR 382. 17. The purpose is to be determined objectively having regard to the circumstances that existed at the time the communication was made or the document was created: Song v Commissioner of Taxation [2018] FCA 840 at [5]. The subjective purpose of the maker or creator is relevant to, but not determinative of, the question of purpose (Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 172). 18. The party claiming privilege bears the onus of proof to establish the facts that provide the basis for the claim: see, eg. Grant v Downs (1976) 135 CLR 674 at 689. 19. However, where communications take place between a client and independent legal advisers, or between a client's in-house lawyers and those legal advisers, it may be appropriate to assume that legitimate legal advice was being sought, absent any contrary indications: see, eg, AWB Ltd v Cole at 45 [44(4)] (Young J); Kennedy v Wallace 208 ALR 424 at 442 at [65], affirmed on appeal in Kennedy v Wallace (2004) 142 FCR 185 at ([23]-[27]). 20. Legal professional privilege protects communications rather than documents, and legal professional privilege can attach to copies of non-privileged documents if the purpose of bringing the copy into existence satisfies the dominant purpose test: see Cmr of Australia Federal Police v Propend Finance Ltd (1997) 188 CLR 501 as modified by Esso Australia Resources Ltd v Federal Cmr of Taxation (1999) 201 CLR 49. 21. The dominant purpose test also includes advice that goes beyond formal advice as to the state of the law to include 'advice as to what should prudently and sensibly be done in the relevant legal framework': DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 1191 at [45].
3. It is then necessary to consider the claim for privilege for each of the nominated categories of documents in the context of these principles.
4. For the purposes of the VG submissions representative documents were identified by reference to the exhibit "PMS-2" to the affidavit of Mr Schumak that became exhibit 2 in the Notice of Motion hearing. The document numbers are the numbers attributed to each document in that exhibit.

CATEGORY A

1. The Category A documents were contended by the VG to be communications to which the privilege referred to at s 119(a) of the Evidence Act attached. The VG contended that the communications were for the dominant purpose of the VG being provided with professional legal services relating to an Australian proceeding, namely the proceedings that became those in Council of the City of Ryde v Azizi [2019] NSWSC 1605. The professional legal services were provided by legal advisors within government departments and the VG's external legal advisors.
2. Having considered the representative documents and the submissions made by the VG I am satisfied that the communications were confidential communications and confidential documents given to or prepared by a lawyer for the dominant purpose of providing legal advice to the VG and the consideration of that advice by the VG and his advisors and are the subject of the legal advice privilege conferred by ss 118(a) and 118(c) of the Evidence Act.
3. To the extent that the documents relate in time to the claims made by the lawyers for the dispossessed owner (and by Senior Counsel) that advice given to the VG by consultant advisors was "misleading" and arguably "legally and factually flawed", I do not consider that such comments would render the communication and document the subject of the litigation privilege as the claims made were against a third party advisor to the VG and not the VG. To that end, whilst the privilege in respect of this category of documents may not arise by virtue of s 119 of the Evidence Act, as agreed by the VG, they are otherwise protected by the legal advice privilege for the reasons outlined above.

CATEGORY B

1. This category of documents are emails that attach or reproduce in part or whole advice or communications that would otherwise be the subject of the claim for privilege and be protected on the same basis as is outlined in connection with the Category A documents. The VG is not objecting to the production of the document in a redacted form (a copy of which was provided to me at the hearing).
2. Having considered the representative documents and the submissions made by the VG and the proposed redactions I am satisfied that the claim for privilege for the parts of those documents referred to in the Schedule as requiring redaction are protected under s 118 of the Evidence Act as legal advice privilege and the documents, with the exception of the redacted portions (as redacted in the manner proposed by the VG), should be produced.

CATEGORY C

1. The Category C documents relate to advice being sought as to "the insurance issue", being an issue relating to the potential liability of the VG and its third party advisors in respect of the assertions made by the dispossessed owner (referred to at [33] above). Again, the VG only objects to the production of those parts of the documents to which legal advice was sought or communicated. The proposed redactions were also provided to the Court at the hearing.
2. Having considered the representative documents and the submissions made by the VG and the proposed redactions I am satisfied that the claim for privilege for the parts of those documents referred to in the Schedule as requiring redaction are protected under s 118 of the Evidence Act as legal advice privilege and the documents, with the exception of the redacted portions (as redacted in the manner proposed by the VG), should be produced.

CATEGORY D

1. These documents are said to be confidential documents being draft documents (correspondence, instructions to experts, submissions and pleadings in Court proceedings) which comprise either standalone documents or as attachments to emails. These documents are said to have been forwarded to legal advisors for legal review.
2. Having considered the representative documents and the submissions made by the VG and the proposed redactions I am satisfied that the claim for privilege are protected under s 118 of the Evidence Act as legal advice privilege and, with respect to some of the documents, litigation privilege under s 119. I accept the submission of the VG that the drafts of the documents were forwarded for comment or advice by the lawyer for the dominant purpose of the giving of legal advice and are, therefore, subject to privilege: see New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 at [34]-[37]. This category of documents is therefore protected from production.

Waiver of privilege

1. The Council submitted that in the event that the VG could claim privilege with respect to the documents, the VG had impliedly waived that privilege by relying on the contents of the reports of the third party advisors for the purpose of making the determination of compensation.
2. Further, the reports had been widely shared within and outside the office of the VG.
3. The VG submitted that there had been no waiver implied or otherwise. In order to establish waiver (the onus of such establishment resting with the Council) requires a finding that the conduct of the client is inconsistent with the maintenance of the confidentiality: Mann v Carnell (1999) 201 CLR 1 at [29]
4. Reliance upon an expert report does not amount to conduct inconsistent with the maintenance of confidentiality of material not forming part of the report. The position of the Council is inconsistent with the established principles in relation to waiver under the Evidence Act, in particular, the principle as described by Brereton J in ML Ubase Holdings Co Ltd v Trigem Computer Inc (2007) 69 NSWLR 577 at [45]: … In my opinion, service and tender of an expert witness' report in proceedings does not constitute a waiver of the privilege which attaches to communications between the expert and the solicitors who instructed him or her, save to the extent that those communications are associated documents reasonably necessary to an understanding of the report. "Proper understanding" of a document or communication will sometimes, but not always require that documents to which it responds or refers be available. It may very likely be so when the primary document contains a summary or excerpt from an earlier communication, or responds to questions which are not themselves restated in it. But I do not accept that "a proper understanding of the communication or document" involves an appreciation of the manner in which the opinions contained in the document have been formed over time, or the iterations and evolutions through which they have passed. The test is concerned with the comprehensibility of the primary communication or document: if it can be completely or thoroughly understood without more, then access to the related communications or documents is not reasonably necessary. And in New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 at [53] per White J: The question is not merely whether it could be said that the privileged materials were used in such a way that they could be said to influence the content of the report, but whether it could be said that they influenced the content of the report in such a way that the use or service of the report would be inconsistent with maintaining the privilege in those materials, such as, where it would be unfair for the party to rely on the report without disclosure of those materials. Where an expert's report is submitted to a party's legal advisers so as to be put into a form which will ensure that it is admissible, it can be said that the privileged communications between the expert and the lawyers have influenced the content of the report, in the sense of its form, although not in the sense of the formulation of the substantive opinions expressed by the expert. Likewise, privileged communications between an expert and the party's lawyers whereby material information is provided to the expert in the form of assumptions or documents may well influence the content of the report. However, an expert's report is required to state what material and assumptions are relied on. Use of a final report, which refers to such materials and assumptions, is not inconsistent with maintaining confidentiality in the communications which produced the final product.
5. I reject the Council's submission that the VG impliedly waived the privilege claimed with respect to the documents sought. The production of the report was required by operation of s 41(3) of the JT Act. The production of the report does not impliedly waive the privilege as a matter of course. It may, in some circumstances, where the report is unclear or the conduct of the provision of the report is inconsistent with the retention of the confidentiality. In this case the Council bore the onus of establishing waiver of the privilege. The submissions made by it are not persuasive. The provision of the report in accordance with the obligation under the Act was not conduct inconsistent with the maintenance of the privilege claimed with respect to the documents to which the Subpoena related.

Conclusion and Orders

1. 45 For the foregoing reasons, I decline to grant access to the documents sought in the Notice of Motion filed by the Council on 28 August 2020. The documents are properly the subject of a claim for privilege by the VG in respect to those documents (in whole or in part) identified in exhibit PMS-2 to Mr Schumak's affidavit.
2. 46 The Court orders that: 1. The Notice of Motion dated 28 August 2020 (with the exception of order 2) is dismissed; 2. The Council is to pay the Valuer-General's costs of the Notice of Motion; and 3. The exhibits are returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 December 2020