Rodriguez & Sons v Queensland Bulk Water Supply authority t/as Seqwater

Supreme Court of NSW|2018-06-18|Before: Adamson J, Beech-Jones J

Solicitors: Maurice Blackburn Pty Ltd (Plaintiff) King & Woods Mallesons (Defendant) File Number(s): 2014/200854

Introduction

By notice to produce filed on 13 April 2018, Rodriguez & Sons Pty Ltd (the plaintiff) sought production of documents from Queensland Bulk Water Supply Authority trading as Seqwater, the first defendant (Seqwater). Seqwater has claimed client legal privilege in respect of a number of the documents which fall within the notice to produce. John Tibaldi, an employee of Seqwater, has also claimed privilege in respect of some documents.
The claims for privilege made by Seqwater and Mr Tibaldi arise in the context of the plaintiff's claim for damages in negligence against the defendants, including Seqwater. Relevantly, the plaintiff alleges that two flood engineers, Mr Tibaldi and Terry Malone, who was also employed by Seqwater, were negligent with respect to their operation of two dams, the Somerset and Wivenhoe Dams in Queensland (the Dams), during the flood which occurred in the area in January 2011 (the Flood). Although neither individual has been named as a defendant, the plaintiff has alleged that each personally owed and breached a duty of care, and that Seqwater is vicariously liable for the individuals' negligence (paragraph [363]-[364] of the Fifth Amended Statement of Claim filed on 11 August 2017 (the Pleading)). The proceedings are currently being heard by Beech-Jones J.

Relevant statutory provisions

It was common ground that the claims for privilege fell to be determined under the Evidence Act 1995 (NSW) and that it was not necessary to consider the position at common law, which, it was accepted, would not produce a different result. The two principal provisions of relevance are ss 118 and 122 of the Evidence Act. No reliance was placed on s 119 of the Evidence Act (confidential communications given for the dominant purpose of providing professional legal services relating to anticipated legal proceedings). However, reliance was placed on the prospect of litigation as part of the general context, as well as for the purposes of s 122(5)(c) of the Evidence Act. The relevant parts of ss 117, 118 and 122 are set out below. "Division 1 Client Legal 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, . . . 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 an Australian lawyer, a foreign lawyer, or an employee or agent of either of them. party includes the following: (a) an employee or agent of a party, . . . (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 . . . (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. . . . 122 Loss of client legal privilege: consent and related matters . . . (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118. . . (3) Without limiting subsection (2), a client or party is taken to have so acted if: (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or (b) the substance of the evidence has been disclosed with the express or implied consent of the client or party. (4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure. (5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because: (a) the substance of the evidence has been disclosed: (i) in the course of making a confidential communication or preparing a confidential document, or . . . (b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or (c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court. . . ."

The relevant factual background

In order to determine the claims for privilege it is necessary to consider the context in which the claims have been made. A short summary of the background facts is set out below for that purpose. Detail is included, where necessary, to provide context to the claims for privilege. These facts are largely derived from the affidavit of Rebecca Gilsenan affirmed 13 June 2018, which was read on behalf of the plaintiff in support of its application.
I understood it to be admitted on the Pleading that the senior flood engineers on duty on 10 and 11 January 2011 were: John Ruffini and Rob Ayre from 7pm on 9 January 2011 to 7am on 10 January 2011; Mr Malone and Mr Tibaldi from 7am to 7pm on 10 January 2011; Mr Ruffini and Mr Ayre from 7pm on 10 January 2011 to 7am on 11 January 2011; Mr Malone and Mr Tibaldi from 7am to 7pm on 11 January 2011; and Mr Ruffini and Mr Ayre from 7pm on 11 January 2011 to 7am on 12 January 2011. As referred to above, Mr Malone and Mr Tibaldi were employed by Seqwater. Mr Ruffini was employed by the State of Queensland (the third defendant). Mr Ayre was employed by SunWater Limited (the second defendant).
The management of the Dams was to be governed by a manual, entitled "Manual of Operational Procedures for Flood Mitigation at the Wivenhoe Dam and Somerset Dam" (the Manual). The Manual required a flood event report to be provided to the relevant government department, the Department of Environment and Resource Management, subsequently the Department of Energy and Water Supply (the Department) within six weeks of the completion of the flood event. Section 2.9 of the Manual required the report to contain "details of the procedures used, the reasons therefor and other pertinent information".
On 17 January 2011 the Premier of Queensland announced that there would be a Commission of Inquiry into the Flood (the Commission). In about January or February 2011 Seqwater notified its insurers, for whom Curwoods acted, that the Flood related to its policy. On 20 January 2011 Seqwater retained Allens to advise, including as to the risks of a class action being brought against it by those who had suffered loss as a result of the Flood (the First Allens Retainer).
On 2 March 2011 Seqwater provided a report entitled: "January 2011 Flood Event - Report on the Operation of Somerset Dam and Wivenhoe Dam" (the Flood Event Report) to the Department. This report was the subject of evidence before the Commission. The Commission held public hearings between 11 April and 27 May 2011, following which it published an interim report. Further public hearings were conducted between 19 September and 11 November 2011 and 2 and 10 February 2012. Lawyers from the firm Maurice Blackman appeared at the public hearings and cross-examined witnesses, including Mr Tibaldi and Mr Malone.
In February 2012 Maurice Blackman announced that it was investigating a potential class action against the operators of the dam, including Seqwater.
On 16 March 2012 the Commission published its final report. It found that the dams had not been operated in accordance with the Manual, in that the flood operations engineers had not properly taken into account forecast rainfall to determine the appropriate release strategy and had not actively and consciously chosen one of the release strategies in the Manual.
Of present relevance, the Commission recommended that there be an investigation into whether persons, including Messrs Tibaldi, Malone and Ayr were guilty of a criminal offence. It also recommended: "16.3 The Department of Environment and Resource Management should ensure that an independent and appropriately qualified person immediately starts the task of reviewing the March flood event report to ensure that the review is completed before the start of the 2012/2013 wet season."
In June 2012 Mr Jerrard QC was appointed to advise the Crime and Misconduct Commission (CMC) on the first of the two recommendations referred to above. Also in June 2012 Maurice Blackman held public meetings regarding the proposed class actions. In the same month, Seqwater retained King & Wood Mallesons to advise it regarding potential class actions.
By agreement dated 18 July 2012, the Queensland Government retained the US Bureau of Reclamation & US Army Corps of Engineers (USACE) to conduct an independent review of the Flood Event Report.
On 27 July 2012 Peter Borrows, the Chief Executive Officer of Seqwater sent an email to Messrs Tibaldi and Malone concerning recommendation 16.3 (see above), which read, in part: "John & Terry - FYI. Please see Seqwater and you will be able to make submissions at appropriate stages and in response to their draft. You will know what we are saying to them."
The plaintiff relied on this email to demonstrate that Mr Tibaldi and Mr Malone were both made aware that they each had an independent right (from each other and from Seqwater) to make submissions to USACE and that their communications ought be read in light of this right and seen as their purported exercise of that right.
On 3 August 2012, the Queensland Government formally commissioned USACE to conduct an independent review. The Department was to co-ordinate communications between interested parties and the USACE.
The terms of reference of the review noted at paragraph 17 that in its Flood Event Report Seqwater concluded that the dams were operated in accordance with the Manual. However, the Commission had found that this was not correct. The Commission found that the engineers did not take into account rainfall forecast in determining the appropriate release strategy and that the flood engineers had not actively and consciously chosen a release strategy in accordance with the Manual. I was informed that these matters are in issue in the principal proceedings in this case.
The Reviewer's report was, according to the terms of reference, required to address questions which included the following: "Question 5: Specifically and in addition to any other matters above, does the March flood event report and/or objective data disclose issues of concern or possible improvements from the perspective of: (a) dam safety (including the relevant dam safety conditions) (b) operational procedures (c) gate operations (including impacts of the auxiliary spillways / fuse plugs) (d) communications flood forecasting (e) flood modelling? Question 6: Based on the objective data, what and when were the key decision points for the release rates from the dams, with particular reference to: (a) Wivenhoe Dam: W1, W2, W3 and W4 (including sub-strategies) (b) Somerset Dam: S1, S2 and S3 (including sub-strategies) (c) the lake level (including predicted lake level) (d) each of the primary objectives of the flood mitigation manual (see part 1.1 of the flood mitigation manual)."
The terms of reference of the review included an important limitation on the ambit of the review. Paragraph 22 of the terms of reference said in part: "The focus of the review is an examination of the operation and performance of the dams during the flood event based on the objective data contained in the March flood event report. It will involve an examination of how the flood engineers exercised their powers, but it should not consider the application of strategy labels by the flood operations engineers or issues about their credibility, as these matters have been addressed by the Commission of Inquiry and are now the subject of a separate investigation by the Crime and Misconduct Commission (Queensland)." [Emphasis added.]
It appeared to be common ground in the application before me that the review did not involve an interrogation of the flood engineers or an investigation into what was in their minds at the relevant time. Rather, the review was to have regard to objective data (as specifically referred to in the passage set out above).
After USACE was commissioned to undertake the review, it communicated, including by email, with the engineers, including Mr Malone and Mr Tibaldi. Such communications were conducted through the Department as intermediary.
Under the terms of reference USACE was to provide a draft report, followed by a final report. The terms of reference provided: "Deliverables 26. The Reviewer must prepare a draft report that can be provided to relevant stakeholders, including Seqwater and the flood operations engineers, for submissions prior to finalisation. The draft report is to be provided to the Regulator by Monday 10 September 2012. 27. The Reviewer must take relevant the submissions into account and submit a final report to the Regulator by 24 September 2012."
The effect of the terms of reference was, relevantly, that Seqwater and the flood operations engineers (which included Mr Tibaldi and Mr Malone) were required to be given the opportunity to respond to the draft review, although they were not obliged to respond. Mr Yezerski, who appeared with Mr Olivier for the plaintiff, placed emphasis on this paragraph in support of the contention that when Mr Tibaldi and Mr Malone communicated regarding a response to the draft they were doing so as part of their own independent entitlement under the terms of reference to make submissions and not for the dominant purpose of providing material so that Seqwater could obtain legal advice from Allens.
Mr Malone and Mr Tibaldi each retained solicitors. Some time prior to 31 July 2012 Mr Tibaldi retained Jennifer Crowther of Dibbs Barker.
On or about 21 August 2012 Mr Jerrard announced that the CMC had not discovered any evidence of criminal or official misconduct against any of the persons in respect of whose conduct he had been asked to investigate.
On 22 August 2012 Allens sent another letter of retainer (the Second Allens Retainer) to Toni Lake, Seqwater's then in-house counsel. According to the Second Allens Retainer, Allens' role was as follows: "Allens will be acting for Seqwater and Peter Burrows [Seqwater's Chief Executive Officer], Jim Pruss [Executive General Manager, Water Delivery at Seqwater] and you [Toni Lake] will instruct us in this matter. The work we are to do is provide advice and assistance (as may be requested) with activities undertaken by Seqwater to implement recommendations of the Queensland Floods Commission of Inquiry. The scope of the work may expand beyond this at your request."
Shortly before receipt of the draft report, Mr Ayre sent an email at 9.03am on 10 September 2012 to Mr Tibaldi, Mr Malone and Mr Ruffini, who was also a senior flood engineer in which he said: "If you hear anything about the draft review by the [USACE] can you please let me know? Visa-versa [sic], as soon as Holding Redlich [Mr Ayre's solicitors] advise, I will pass on the information."
That same day Mr Malone sent an email to Mr Ayre, which was copied to Messrs Tibaldi and Ruffini: "We're not expecting to hear anything before tomorrow morning (10th US time). I wonder where there should be a consolidated response back through Seqwater rather than separate responses???"
Paul Walsh, who was the relevant officer of the Department who facilitated the communication between USACE and the parties who had a right to respond to the draft review (including the flood engineers and Seqwater), prepared a draft email under cover of which he was to send the draft USACE. In his list of recipients, he noted the following: "Seqwater and current flood engineers [Mr Tibaldi and Mr Malone] (via Allens as requested) Robert Ayre (former flood engineer and vie Holding Redlich - Toby Boys) John Ruffini (former flood engineer, direct email) . . ."
Ultimately, on 17 September 2012 at 3.39pm, Michael Ilott, a partner at Allens, sent to Mr Walsh, for forwarding to USACE, "Seqwater's submission" to the draft reports prepared by USACE. There was no evidence of any independent response having been provided to USACE by either Mr Tibaldi or Mr Malone.
On 18 September 2012 Mr Ilott sent a further email to Mr Walsh for forwarding to USACE which identified a factual error in the draft report relating to the plotting of the Wivenhoe catchment area and suggested that it be corrected.
USACE's final review was sent on 22 September 2012 (US time) and received in Australia on 21 September 2012.

Evidence regarding the privileged communications

The defendant read the affidavits of Justin McDonnell sworn 13 June 2018 and William Harpham affirmed 13 June 2018. Mr Harpham was first employed by Seqwater in January 2013 and is its Manager General Counsel. Mr Harpham principally exhibited relevant documents to his affidavit. Mr McDonnell is a partner at King & Wood Mallesons, the solicitor on the record for Seqwater. He is also instructed on behalf of Mr Tibaldi in relation to the privilege application.
Mr McDonnell exhibited to his affidavit two confidential exhibits, A and B. Confidential exhibit A contains documents 43, 52, 53 and 62. The plaintiff does not challenge the claim for privilege in respect of these documents. Confidential exhibit B comprises four volumes and contains all the documents in respect of which the plaintiff challenges the claims for privilege. Volume 4 contains the documents in respect of which Mr Tibaldi claims privilege (45, 46, 47, 48, 49, 50, 51, 58, 59, 60, 61, 64 and 65 as well as document 38 over which Seqwater claims privilege. Volumes 1-3 contain the documents in respect of which Seqwater claims privilege. I note the undertaking by King & Wood Mallesons, given by Mr Pomerenke QC, who appears with Mr Piggott on behalf of Seqwater and Mr Tibaldi, to retain the originals of the Confidential Exhibits and produce them to the Court if required by further order.
There are two schedules exhibited to Mr McDonnell's affidavit. Schedule A contains a list of the documents in respect of which the claim for privilege is challenged. Schedule B contains a list of documents in respect of which the claim for privilege is not challenged. Each schedule identifies the document; its date and, where applicable, the time it was sent; the identity of the sender and recipient and any persons to whom it was copied; as well as a short description of the nature of the document. In these reasons I will refer to the documents by their numbers in the schedules.
In addition to exhibiting relevant documents to his affidavit, Mr McDonnell deposed, on information and belief, to what he was told by Mr Malone, Mr Tibaldi, Mr Pruss, Robert Drury (Seqwater's Dam Operations Manager, Water Delivery), Barton Maher (Seqwater's Program Director - Dams and Weirs) and Ms Lake, and what was apparent to him from a review of the documents. Because of the hearsay form of this evidence, it is not possible for the plaintiff to test it by cross-examination. I accord the hearsay evidence limited weight for this reason. Apart from hearsay evidence, there is no direct evidence as to the purpose of any of the documents in respect of which the claim for privilege is challenged.
Direct evidence is, however, not necessary for a claim for privilege to be upheld since the question whether a communication is privileged can be determined by inference, drawn from the content of the communication in the context of the objective circumstances. The subjective intention of the author of a communication, although relevant, is not determinative: see Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796 at [32] (Beach J). In the present case, I have determined the claims for privilege largely by reference to an examination of the documents themselves, the identity and role of their authors and recipients and objective circumstances as evident from the chronology set out above, as well as argument and submissions from the parties. This process is consistent with the principles summarised by Young J in AWB Limited v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234 at [44(1)] and [44(2)]. The objective, circumstantial evidence is, by and large, consistent with the subjective intentions recorded (on information and belief) by Mr McDonnell in his affidavit.

Disputed categories

The plaintiff has divided the documents where the claim for privilege is disputed into categories based on the description given to them by Mr McDonnell in his affidavit. In the written submissions, Mr Pomerenke and Mr Piggott have grouped the disputed documents in a different way, which I have found to be more helpful. Accordingly, I propose to address the documents by reference to these written submissions, which also reflects the way argument proceeded at the hearing of the application.

Documents 45, 46, 47, 48, 49, 50, 51, 58, 59, 60 and 61

The first category, which affects Mr Tibaldi, comprises documents 45, 46, 47, 48, 49, 50, 51, 58, 59, 60 and 61 in volume 4 of Confidential Exhibit B. These documents were, in substance, emails, with attachments, which Mr Tibaldi sent to himself (or, in the case of documents 48, 49 and 50 to himself and his wife) to a home email address. The plaintiff did not contend that any privilege had been waived merely by the disclosure to Mr Tibaldi's wife. However, Mr Yezerski contended that the fact that Mr Tibaldi disclosed the draft to his wife might shed some light on the purpose for which the document was created, such that a different conclusion as to the dominant purpose could be drawn with respect to those three documents.
In considering whether the documents are privileged I have also had regard to the documents in Confidential Exhibit A (documents 43, 52, 53 and 62) which provide the relevant context. The following narrative is largely taken from Seqwater's submissions and Mr McDonnell's affidavit and accords with my examination of the documents. On 31 July 2012, Mr Tibaldi obtained legal advice from Ms Crowther in respect of an initial draft of a document he was considering providing to USACE at the commencement of the review process (document 43). On 1 August 2012, Mr Tibaldi sent a further draft (also in document 43) to Ms Crowther. The claim for privilege in respect of this document is not challenged. I assume, accordingly, that it is not disputed that the document was sent to Ms Crowther for the dominant purpose of Mr Tibaldi's obtaining legal advice in respect of that draft. This assumption is borne out by my inspection of the document. On 8 August 2012, Mr Tibaldi sent a further draft to Ms Crowther for the dominant purpose of obtaining legal advice in respect of that draft (document 52). On 8 August 2012, Mr Tibaldi obtained legal advice from Ms Crowther in respect of his latest draft (document 53). On 10 August 2012, Mr Tibaldi sent a further draft to Ms Crowther for the dominant purpose of obtaining legal advice in respect of that draft (document 62).
Between 1 and 12 August 2012, Mr Tibaldi made changes to his draft document and emailed updated drafts to himself on 1, 2, 8 and 9 August 2012 (documents 45, 46, 47, 48, 49, 50, 51, 58, 59, 60 and 61). The plaintiff challenges Mr Tibaldi's privilege claims in respect of these drafts and emails. Although there are differences between these drafts, they are similar to the various drafts provided to Ms Crowther.
Mr Yezerski submitted that, even if one of Mr Tibaldi's purposes in creating the draft documents was to obtain legal advice, another purpose was for him to make a submission to USACE before it had commenced its review and, in any event, prior to USACE's provision of its draft review to parties, including Mr Tibaldi. He submitted, accordingly, that it ought not be concluded that Mr Tibaldi's dominant purpose in creating the documents and sending them to himself was to obtain legal advice, since there was at least one other obvious purpose.
I am satisfied that, although documents 45, 46, 47, 48, 49, 50, 51, 58, 59, 60 and 61 were not provided to Ms Crowther, Mr Tibaldi nonetheless prepared each of them for the dominant purpose of seeking legal advice on whether any such document ought be sent to USACE and, if so, what the contents of any such document ought be. They are, accordingly, privileged within the meaning of s 118(c) of the Evidence Act. Further, disclosure of these drafts would tend to reveal the contents of other privileged documents, being the drafts which were provided to Ms Crowther. Documents 48, 49 and 50 are potentially in a separate category as Mr Tibaldi emailed them to his wife as well as to himself. As referred to above, the plaintiff accepted that this did not result in a loss of privilege of itself. However, Mr Yezerski submitted that it may cause me to come to a different conclusion as to the dominant purpose of the creation of such communications. I do not regard the terms of the communication to Mr Tibaldi's wife as altering the dominant purpose for which these documents were created, namely to seek legal advice from Ms Crowther.

Documents 64 and 65

Document 64 is an email chain, the first email in which is legal advice from Ms Crowther to Mr Tibaldi. The second is an email from Mr Tibaldi to Mr Malone, forwarding Ms Crowther's advice to Mr Malone. Document 65 is Mr Malone's response to Mr Tibaldi. Disclosure of the communications would reveal the contents of Ms Crowther's confidential legal advice, which is accepted to be privileged. The fact that Mr Tibaldi emailed a copy of the advice to Mr Malone does not result in a loss of the privilege. I am satisfied that Mr Tibaldi intended his communication to be confidential and that Mr Malone understood the communication to be confidential. Although there is no evidence of any agreement that the communication be kept confidential, I am satisfied on the basis of the content of the communications and the surrounding circumstances that there was an unspoken obligation between the two men to keep the communications confidential: see New South Wales v Jackson [2007] NSWCA 279 at [41] (Giles JA, Mason P and Beazley JA agreeing). The documents are therefore privileged by reason of s 122(5)(a) of the Evidence Act.
Mr Tibaldi also relied on there being a common interest between him and Mr Malone relating to an anticipated proceeding. In response, the plaintiff contended that there was no relevant common interest since, although both Mr Tibaldi and Mr Malone were in jeopardy of being sued, they did not have a common interest in that it may have been in Mr Tibaldi's interest that fault be laid at Mr Malone's feet or vice versa.
I am satisfied that the two men, relevantly, had a common interest in the advice given by Ms Crowther, which was the subject of their communications. While their interests generally were not identical since they were potentially both tortfeasors whose contribution to the harm suffered by any putative plaintiff could well be different, their interest in the advice which Ms Crowther gave, which was the subject of the communication, was relevantly the same. As such, the privilege, which Mr Tibaldi was entitled to assert, was not lost by the communication to Mr Malone: Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 at 609-611 (Sheller JA, Waddell AJA agreeing). I am satisfied that documents 64 and 65 are privileged: s 122 (5)(a)(i) and (c). I have also considered whether it would be possible to redact the documents in some way to conceal the privileged part of them. In my view, there would be no utility in so doing since all that would be left would be what is revealed in any event by the schedules prepared on behalf of Mr Tibaldi and Seqwater. Accordingly, I do not propose to require production of a redacted version.

Documents 2, 3, 4, 5, 6, 10, 11, 13, 14, 15, 18, 24, 28 and 30 (Category 1)

This category of documents is grouped together on the basis that Seqwater submitted that the documents contain legal advice as to how best to respond to the independent review (by USACE) and associated instructions. There is an overlap between some of the documents in Category 1 and those in the following category (Category 2) addressed below. Seqwater divided category 1 into various sub-categories, the first of which is said to be confidential legal advice provided by Allens to Seqwater as to how Seqwater could best respond to the review by USACE (Category 1(a)).
Category 1(a) was divided, in turn, into two sub-sets: 1. Draft submissions prepared by Allens to be provided to USACE (documents 10, 11, 13, 18 and 24); 2. Draft correspondence prepared by Allens to be sent to the Department (an email within the chains in documents 2, 3, 4, 5 and 6, being an email dated 23 August 2012 at 9.21am).
Category 1(b) was said to comprise confidential instructions from Seqwater to Allens as to material for possible inclusion in the submission and seeking Allens' advice as to whether, and if so what, material should be included (documents 14, 15, 28 and 30).

Documents 7, 12, 36 and 40 (Category 2)

Category 2 was said to comprise other confidential communications from Allens to Seqwater which, although not themselves containing legal advice, were made for the dominant purpose of Allens providing legal advice to Seqwater (documents 7, 12, 36 and 40). The documents were also said to constitute confidential communications between a client and a lawyer within the meaning of s 118(a) of the Evidence Act.

Documents 2, 3, 4, 5, 6, 8, 9, 17, 20, 21, 26, 27, 37 and 38 (category 3)

Category 3 (documents 2, 3, 4, 5, 6, 8, 9, 17, 20, 21, 26, 27, 37 and 38) comprises documents which are said to fall within s 118(c) of the Evidence Act because their disclosure would result in disclosure of confidential documents in other categories referred to above. As can be seen from the list, some of the documents in this category are also in categories 1 and 2 above. The documents in category 3 fall into the following sub-categories: 1. emails from Mr Tibaldi or Mr Malone to his own email address attaching documents said to be confidential (documents 8, 9, 27); 2. internal communications within Seqwater attaching or including the content of documents said to be confidential (documents 2, 3, 4, 5, 6, 17, 20, 37). 3. communications between Seqwater's in-house counsel (Ms Lake) and the solicitor for Seqwater's insurer attaching such documents said to be confidential (documents 21, 26, 38).
Before turning to the detail of these categories and the documents within them, I propose to address more generally the context in which these communications had been created and the parties' submissions on whether the claim for privilege ought be upheld.
As the chronology set out above indicates, Seqwater was, in August and September 2012, in jeopardy of being sued. Indeed, by that time proceedings were likely if not inevitable. The Commission had already made adverse findings against it and Maurice Blackburn was gathering potential members for a class action. Anything Seqwater said to USACE would be likely to be used, as an admission or otherwise, against it in any such proceedings. As the employer of two of the senior flood engineers, Mr Tibaldi and Mr Malone, Seqwater was potentially liable for its own negligence and for the negligence of those for whom it was vicariously liable. Having retained Allens to advise it in relation to the Commission, Seqwater engaged Allens afresh pursuant to the Second Allens Retainer to obtain advice regarding the review conducted by USACE.
Mr Yezerski submitted that, having regard to the short time period between circulation of the draft report of USACE on 10 September 2012 and the due date for responses of 17 September 2012, it was possible that Allens was retained because of its capacity to assemble facts and create documents of a high standard in a short time. He submitted that it did not follow from the fact that Allens is a major law firm that clients always approached them for the dominant purpose of obtaining legal advice. Further, it was submitted on behalf of the plaintiff that: "It is to be inferred that Seqwater (and perhaps Mr Tibaldi and Mr Malone) requested that the draft report be routed to Seqwater and the then-current flood engineers (Mr Tibaldi and Mr Malone) through Seqwater's solicitors, Allens Linklaters (Allens). The inference is that this was done in the hope that a claim of privilege could thereafter be maintained in respect of any subsequent correspondence."
Mr Yezerski described Seqwater's claim for privilege in this context as "colourable". In support of this submission he relied on the email from Mr Malone on 10 September 2012 suggesting a consolidated response from Seqwater and Messrs Tibaldi and Malone. He also relied on the circumstance that both men authorised Allens to receive the draft review from USACE on their behalf. He contended that the emails showed that the flood engineers were awaiting the draft and were interested in having their say. He contended that Messrs Malone and Tibaldi were not simply acting as employees assisting Seqwater to formulate a response to USACE, but rather they were availing themselves of the opportunity (guaranteed by the terms of reference) to have their say on the draft. Mr Yezerski contended that that was their purpose in participating and that purpose did not attract privilege.
Further, Mr Yezerski submitted that, in these circumstances, I ought not infer that the purpose of instructing Allens to provide legal advice to Seqwater was the flood engineers' dominant purpose when they communicated with each other and with Allens on the draft review. He contended that when one carefully studies the terms of the Second Allens Retainer it is "entirely unclear that Allens was providing any real legal advice services in relation to the documents at issue" and that the nature of the "additional assistance" was "undefined and unexplained". He submitted that the advice sought from Allens was not merely legal advice, but also related to public relations. Since the findings of USACE in its review did not have any legal consequence, he contended that it ought not be assumed that the dominant purpose of Seqwater obtaining advice and assistance from Allens was to obtain legal advice. Mr Yezerski submitted that the draft submissions prepared by Allens for eventual provision to USACE were in a similar category to the draft contrition letter which was found not to be covered by client legal privilege in AWB Ltd v Cole (2006) 152 FCR 382; [2006] FCA 571.
In response, Mr Pomerenke contended that there was an important distinction to be drawn between purpose and motive and that, although the flood engineers might be motivated to provide their responses to the draft by their desire to "have their say" on the USACE draft, the purpose of their responses was to enable Seqwater to obtain legal advice from Allens on the content of any response to the draft UCAE review. He submitted that there was no appropriate analogy between the present case and the draft contrition letter in AWB Ltd v Cole. Mr Pomerenke contended that, if analogy were to be found in the decided cases, it was provided by the decision of the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 (Three Rivers). In that case, the documents in question related to the preparation of evidence and submissions to an inquiry into the conduct of the Bank of England. Communications of this nature were found by the House of Lords in Three Rivers to attract client legal privilege.
Having considered the documents, in the context of the chronology set out above, I am satisfied that Seqwater's purpose in communicating with Allens in August and September 2012 was to obtain legal advice on the content of its response to USACE's draft review. The documents in this series were created in the period between the receipt of the draft USACE review on 10 September 2012 and the submission by Seqwater of its final response on 17 September 2012. As a corporate entity, Seqwater could be expected to, and was required, as a matter of practical reality, consult those of its human agents who were likely to be in the best position to respond to the contents of the draft review. Such persons plainly included Mr Tibaldi and Mr Malone.
This is not to say that Mr Tibaldi and Mr Malone are solely to be regarded as employees and agents of Seqwater. I accept that each of the two men can be taken to have been motivated to put forward those facts which he considered to be significant. I also accept Mr Yezerski's submission that Mr Tibaldi and Mr Malone were not "mere" employees of Seqwater since they were potentially liable as putative tortfeasors in their own right. Further, they were each separately entitled to respond to the draft USACE review, independently of any response by Seqwater. However, I am not persuaded that this motive meant that the dominant purpose of the communication emanating from each of them was other than to co-operate with others at Seqwater to enable Seqwater to obtain legal advice from Allens about its response to the draft review. I reject the contention that the co-ordination by Allens of the responses from various human agents of Seqwater was intended by Seqwater, or Mr Malone or Mr Tibaldi, to attract privilege in a "colourable way". Rather, I am satisfied that this was done to facilitate the provision of legal advice by Allens to Seqwater in what was, in all the circumstances, a very tight timeframe.
Further, while Allens provided skills and facilities which, in different contexts, might not be purely legal, the communications which it had with Seqwater and its staff and officers falling within category 1 were for the dominant purpose of giving or obtaining legal advice. Factual analysis in a legal context is pre-eminently a legal skill. Although the USACE review was not itself litigation, its findings were bound to have an impact, in some way or other, on the potential liability of Seqwest for damage caused by the Flood. Litigation was, by 2012, both anticipated and expected. The claim for privilege is, in my view, even stronger than it was in Three Rivers because of the potentially litigious context and because adverse findings had already been made against Seqwater by the Commission. As Taylor LJ (Parker LJ and Lord Donaldson MR agreeing) said in Balabel v Air India [1988] Ch 317 at 330: "[L]egal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant context."
In AWB Ltd v Cole, Young J set out, at [92]-[96] the passages from the reasons of the Law Lords in Three Rivers which addressed the question whether communications with Freshfields (the bank's lawyers in that case) were privileged. It is sufficient to set out a shortened version of the passages which I consider particularly apposite to the present case: [93] . . . Lord Scott said (at [44]): "The skills of professional lawyers when advising a client what evidence to place before an inquiry and how to present the client and his story to the inquiry in the most favourable light are, in my opinion, unquestionably legal skills being applied in a relevant legal context." [94] Lord Rodger . . . said (at [60]): "When, however, the [Bank] consulted the lawyers in Freshfields, and through them counsel, about the presentation of their evidence to the inquiry, it was not seeking their comments and assistance as bankers, accountants, rhetoricians or anything else: it was seeking their comments and assistance as lawyers professing expertise in the field. Either expressly or impliedly, the [Bank] was asking them to put on legal spectacles when reading, considering and commenting on the drafts. In other words it was asking them to consider, as lawyers, how the Bank's evidence could be most effectively presented to Bingham LJ, given that he was inquiring into the Bank's discharge of their legal responsibilities under the Banking Acts. Such advice could come in many forms. … What matters is that the [Bank] was instructing the lawyers in Freshfields to carry out a function which necessarily involved the use of their legal skills if it was to be performed properly. The communications between the [Bank] and Freshfields were therefore concerned with obtaining 'legal advice' in the broader sense in which, as Taylor LJ rightly said in Balabel v Air India, that term should be understood for this purpose. It follows that legal advice privilege applies to those communications. The appeal must be allowed."
In collating the responses of Seqwater's human agents and drafting and settling Seqwater's response advising to the draft review, Allens were providing legal advice as to how best Seqwater could protect itself against adverse findings in the USACE review and future liability in litigation which was yet to commence. This is a very different situation from that which was considered in AWB v Cole. The creation of the draft contrition letter in that case was driven by an attempt to protect the reputation of AWB. Dr Sandeman, a "crisis management expert and public relations consultant", was centrally involved in what was essentially a public relations exercise. Although lawyers were involved in advising on the draft contrition letter their involvement was peripheral.

Ruling on category 1(a)(1): documents 10, 11, 13, 18 and 24

On this basis, I am satisfied that the draft submissions prepared by Allens, the final version of which was to be provided to USACE (documents 10, 11, 13, 18 and 24) are privileged as they fall within s 118(a) and (c) of the Evidence Act. In each of these communications, Allens was sending the product of their legal advice (the draft submissions) to the client (Seqwater) and its human agents (relevantly Mr Tibaldi and Mr Malone) for its response and further instructions.

Ruling on category 1(a)(2): an email within the chains in documents 2, 3, 4, 5 and 6, being an email dated 23 August 2012 at 9.21am

On 21 August 2012 at 1.18pm Mr Walsh sent an email to Mr Pruss which incorporated various questions and requests for information emanating from USACE for the purposes of its review. It is plain from the documents that Seqwater, through Mr Pruss, sent the request to Bill McCredie, a partner at Allens, for him to draft a response. Mr McCredie provided a draft response by email to Mr Pruss at 9.21am on 23 August 2012. Mr Pruss forwarded the draft response to Mr Drury. Messrs Malone and Tibaldi were both consulted about the draft response prepared by Allens. Mr Malone provided a response.
I am satisfied from the terms of document 2 that Mr Malone's dominant purpose in providing a response to Messrs Drury and Pruss was to enable Seqwater to obtain legal advice from Allens as to how it should respond to the request from USACE made on 21 August 2012. The content of the communications within document 2 indicate that the only real purpose of the communications was so that Mr McCredie could obtain instructions from Seqwater on his draft response with a view to finalising it in Seqwater's interests. Within category 1(a)(2) there are emails which constitute communications between employees of Seqwater which, when viewed in isolation, appear to be solely factual discussions. However, when the email chains are viewed as a whole, I am satisfied that the dominant purpose of these communications was so that Seqwater could obtain legal advice on its response to the Department which would be communicated to USACE. There was no loss of client legal privilege by these communications since, in substance, Seqwater was talking to itself, among its human agents, in order to communicate with its lawyer. In these circumstances, it is not possible to redact the documents to provide anything of utility since all that would be left would be what is disclosed in Schedule A to Mr McDonnell's affidavit.

Ruling on category (1)(b) (documents 14, 15, 28 and 30)

Having viewed the documents in category (1)(b), I am satisfied that each comprises communications seeking or constituting confidential instructions between Seqwater to Allens as to material for possible inclusion in the submission to USACE and seeking Allens' advice as to whether, and if so what, material should be included (documents 14, 15, 28 and 30).

Ruling on category 2 (documents 7, 12, 36 and 40)

The chain of emails constituting document 7 was created on 10 September 2012, the date on which the draft review from USACE was received. Where a communication between a lawyer and client neither provides or seeks legal advice, it will nonetheless attract the privilege if made for the dominant purpose of providing legal advice because it, for example, is aimed at keeping both informed about matters on which advice has been or can be expected to be sought: Balabel v Air India at 330. In Traderight (NSW) Pty Ltd v Bank of Queensland Limited (No 16) [2013] NSWSC 418 Ball J, ruled that client legal privilege attached to a communication by which the solicitor updated the client on progress in carrying out instructions which had already been given. His Honour said, at [23]: "The fact that the advice itself was not given in the communication does not mean that the communication did not occur for the purpose of [the lawyer] providing legal advice."
I regard the documents in category 2 as falling into this category. Documents 7, 12, 36 and 40 comprise confidential communications from Allens to Seqwater which, although not themselves containing legal advice, were made for the dominant purpose of Allens providing legal advice to Seqwater. The communications were also confidential communications between a client and a lawyer within the meaning of s 118(a) of the Evidence Act.

Ruling on category 3(1) (documents 8, 9 and 27)

Each of the documents in category 3(1) constitutes emails from either Mr Tibaldi or Mr Malone to his own email address attaching documents which are confidential. As such they are protected from disclosure by s 118(a) of the Evidence Act.

Ruling on category 3(2) (documents 2, 3, 4, 5, 6, 17, 20 and 37)

The documents in this category comprise communications internal to Seqwater. All documents, with the exception of document 37, fall within the time period before the Seqwater response was provided to the Department for forwarding to USACE and were, in my view, communications created for the purpose of obtaining legal advice, although they did not, in terms, seek or provide such advice. The last document, document 37, falls within the category of communications referred to by Taylor LJ in Balabel v Air India, the purpose of which was to keep various human agents of a corporate client informed about matters on which advice has been obtained.

Ruling on category 3(3) (documents 21, 26 and 38)

It was accepted by the plaintiff that Seqwater (through its in-house counsel, Ms Lake) and its insurer's solicitor (Ms Hodges of Curwoods) had a common interest within the meaning of s 122(5)(c) of the Evidence Act. I am satisfied that the documents incorporated within communications between Seqwater and its insurer were themselves confidential and otherwise attracted privilege within s 118(a) and (c).

Conclusion

In summary, I am satisfied that Mr Tibaldi's claim for privilege in respect of documents 45, 46, 47, 48, 49, 50, 51, 58, 59, 60 and 61 ought be upheld. I am satisfied that Seqwater's claim for privilege in respect of documents 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 24, 26, 27, 28, 30, 36, 37 and 38 ought be upheld.
I have considered whether it is possible to redact the documents to provide the plaintiff with some part of the documents which is not privileged. However, having regard to the content of the schedules attached to Mr McDonnell's affidavit, all that the plaintiff would have is the date and time of the email chains, the content of which I have found to be privileged. In these circumstances I am not persuaded that there is any redaction which would be of utility and which would not reveal privileged communications or information already disclosed to the plaintiff. A too pedantic approach to the question of client legal privilege tends to create a situation where the party seeking access to the documents can engage in a process of "joining the dots" to speculate what advice might have been given and when. Such an approach would tend to undermine the purpose of client legal privilege, which is an aspect of the administration of justice and is a rule of substantive law: The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49 at [9].

Costs

I have been asked to reserve the question of costs.

Orders

I make the following orders: 1. Uphold the claim for privilege made by Mr Tibaldi in respect of 45, 46, 47, 48, 49, 50, 51, 58, 59, 60, 61, 64 and 65. 2. Uphold the claim for privilege made by the first defendant in respect of documents 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 24, 26, 27, 28, 30, 36, 37, 38 and 40. 3. Reserve costs. 4. Grant liberty to restore for mention before me.

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: 21 June 2018

Evidence Act 1995(NSW)ss 117, 118, 122

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