S. J. Hallahan
First & Second Defendants: B. DeBuse
Source
Original judgment source is linked above.
Catchwords
S. J. Hallahan
First & Second Defendants: B. DeBuse
Judgment (2 paragraphs)
[1]
Judgment
This is the Court's second judgment in these proceedings. The Court's first judgment dealt with an issue of alleged waiver of client legal privilege claimed by the first and second defendants over three groups of documents: Secure Logic Pty Limited v Paul William Noble [2019] NSWSC 991. This judgment should be read with the Court's first judgment, where the relevant background to the issues in contest is to be found. Events, persons and matters are referred to in the same way in both judgments.
This judgment also relates to an alleged waiver of client legal privilege. The background to the issue may be shortly stated. Before the hearing of the proceedings commenced, the plaintiffs waived privilege over a communication dated 29 March 2016, between the plaintiffs' solicitor at McCabes Lawyers, Mr Humphries, and the principal of the plaintiffs, Mr Santosh Deveraj. In this email Mr Humphries suggested a form of words that Mr Devaraj could use to write to Mr Paul Noble about obtaining a copy of a trust deed Mr Noble had asked Mr Devaraj to witness. The 29 March 2016 email (with the suggested text of the email to Mr Noble in italics) was as follows:
"Santosh
I suggest an email from you to Paul along these lines:
Hi Paul,
Just a reminder to send me a copy of your family trust deed you asked me to witness your signature on today. You only showed me the signing page and as discussed I'd like to have a copy of the whole document I was witnessing for my records. I understand it's a trust deed so it's sensitive and I will of course keep it confidential. A scanned copy will be fine.
Thanks, Santosh
Hope that helps.
Steve"
Mr Deveraj was cross-examined on this document on 6 August 2019. In the course of cross-examination, at one point he said he had forwarded emails to Mr Humphries in order for Mr Humphries to have "some background" to advise in relation to what became the communication of 29 March 2016. But Mr Deveraj denied receiving any advice from his solicitors about Mr Noble's employment contract prior to 29 March 2016. The following short passage is the cross-examination on this subject:
"DEBUSE:
Q. By 29 March 2016 you clearly understood that Mr Noble was pressuring you to issue or transfer shares to him in Secure Logic company?
A. That's correct.
Q. As a result the question of whether or not he would be entitled to shares under his employment contract was a matter of concern to you?
A. No. It was not a concern to me.
Q. Mr Noble asked you to witness his family trust deed and you were concerned that that may help establish some fact in relation to his claim for shares in Secure Logic?
A. No.
Q. You spoke to Mr Humphries because of that concern?
A. No, that's not correct.
Q. Mr Humphries could only have known that this issue related to Paul's employment contract if you had told him?
A. That's correct.
Q. You were concerned that by witnessing a trust deed that may have some effect on Paul's employment contract?
A. That's not correct.
HIS HONOUR:
Q. Why was Mr Humphries writing to you, as you understood it, under the heading "Paul's Employment Contract", to suggest sending this email to Paul?
A. What would have happened is I was ‑ actually when he came to my office, he pulled the last page off something in front of me, which I believe it was a trust deed. I actually didn't read any of those. He said, "Can you please witness this?". Like, "What is this? What am I witnessing?"."It's just a family trust I'm establishing". I said, "Why do you want me to? Or there's people there?", or, you know, Paul, we work together, so why would I witness it, so I didn't want to say no. Because it was a witness, I signed, and I got ‑ because I did not actually read anything because he didn't have the whole date in front of me, I called Mr Humphry and said, like, this is what's happened and he said, "Send me some background", and I forwarded him probably the email that I would have sent him which was in relation to some of this conversation that we were having before, and that's the ‑ that's in reference to that, the subject probably would have come up there. It had nothing to do with worrying about the contracts and whatnot, but Mr Humphry could not ‑ did not understand what it's all related to. He wanted some background.
Q. So Paul's employment contract is just picking up a prior email chain because it's convenient for Mr Humphries to use it?
A. He's probably replied to one of those I would have sent him in reference to ‑ because he was a bit surprised as well, why would somebody come and ask for a witness signature, and then following his advice, I wrote that email and wanted to make sure whatever I witnessed, I have a record of that.
DEBUSE:
Q. Prior to this email you were already in discussions, you say, with your solicitors about Paul's employment contract?
A. No, I was not.
Q. You just said that you had given him some background and that would have included emails and would have included facts about Paul's employment contract.
A. Sorry, you asked me prior to this. I'm saying not prior to this. During that situation I had to give him enough context for him to advise me of.
Q. When you say you had to give him enough context for him to advise you, are you talking about an email or a telephone conversation?
A. I called him first and then he said, "Send me some emails to understand the background of who this person is and what is happening for him to give me a particular advice on the situation".
DEBUSE: I call for those emails."
Secure Logic Pty Limited v Paul William Noble [2019] NSWSC 1057 | Case summary | Zoe
Once this part of the cross-examination concluded, counsel for the first and second defendants called for the earlier emails. In response to the call three earlier emails were produced, dated respectively 21, 23 and 27 March.
When they were produced the first and second defendants filed an affidavit supporting their claim for client legal privilege over the 21, 23 and 27 March emails on the basis that they are confidential communications between lawyer and client for the dominant purpose of the lawyer providing legal advice to the client: Evidence Act, s 118.
The first and second defendants contended that client privilege had been waived in three of the pre-29 March emails. This waiver was said to be on the basis of one or other of two main arguments. The first argument was that because the pre-29 March emails had been sent to Mr Humphries, so he could advise in relation to the 29 March communication, it followed that the deliberate waiver of privilege over the 29 March communication required waiver over anything used by the solicitor to give that advice. The second argument was that Mr Deveraj gave incorrect answers in cross-examination by denying that any advice about Mr Noble's employment contract was given prior to 29 March. The call shows there are emails on that subject before that date and the cross-examiner should be able to test that denial by access to the documents.
Exercising its powers under Evidence Act 1995, s 133, the Court decided to inspect the documents over which client privilege was claimed, in order to determine the claim. The Court's power to do is also well established at common law: Grant v Downs (1976) 135 CLR 674 at 677, 688-9. Inspection is discretionary but the Court "should not be hesitant to exercise" its power to examine documents: Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49; (1999) 168 ALR 123; [1999] HCA 67, (at [52]).
As to the first and second defendants' first argument, disclosure of the 29 March communication does not imply that the pre 29 March emails also be disclosed. It is evident from the Court's inspection that all four emails are headed "Paul's Employment Contract". Secure Logic sought advice under that heading in the period 21 and 23 March. The Court's inspection shows Secure Logic sought other qualitatively different advice on 27 and 29 March. Without revealing the contents of these emails, it can be said that it is not obvious that the advice given on 29 March was connected in any way with the advice given on the earlier dates.
A fair reading of the email chain strongly suggests the conclusion that Mr Devaraj was at that time simply using an existing email chain as a convenient vehicle to communicate again with Mr Humphries between 27 and 29 March. The later emails do not contain the slightest internal suggestion that: Mr Humphries should reread the earlier emails in order to give the later advice, or that the prior emails were a necessary part of the advice given on 29 March. Indeed the subject matter of the disclosed advice on 29 March does not appear to overlap with the subject matter of the earlier communications, except at a high level that it is about the same employee.
This is not a case where disclosure of one email leads to disclosure of earlier emails in the same email chain. It was not obviously necessary for Mr Humphries to refer to the earlier emails to give the advice that he did. They were not put before him for the purposes of giving that advice. Nor is partial disclosure inconsistent here with the maintenance of confidentiality over more material: Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380. Nor is it necessary to give wider disclosure because that is "reasonably necessary to enable a proper understanding" of the later email, because they stand alone: Evidence Act, s 126.
The defendants' first argument is complicated by the fact that Mr Deveraj's answers in cross-examination may possibly be interpreted as saying that he did send emails to Mr Humphries to give Mr Humphries background, so he could advise on 29 March. His evidence is open to other interpretations, particularly, in his answers to the Court's questions. But despite what Mr Deveraj said, the actual correspondence does not bear that construction. Mr Deveraj seems to have been in error. That is not entirely surprising, as he did not have an opportunity to look at the documents (which he may not have seen for three years) before he was asked questions about them.
Errors of reference to documents under cross examination, where any claim for client legal privilege over the documents in question has not been expressly abandoned, will often just be treated as acts of inadvertence where no privilege is waived but the exact outcome will very much depend on all the circumstances: see Divall v Mifsud [2005] NSWCA 447 and Sovereign Motor Inns Pty Ltd v Bevillesta Pty Ltd [2000] NSWSC 521 (at [23]), per Austin J. Here it is clear Mr Deraraj was struggling to remember something that he had not had an opportunity to check and anything he said that contradicted the actual documents would fall into the category of inadvertent error that in my view would not lead to a waiver of client privilege on his part.
The first and second defendants' second argument also fails. The simple answer "no" to a question "did you receive legal advice before a certain date" followed by a call for documents that shows there were indeed communications between solicitor and client before the date in question, and an affidavit which shows that client privilege is claimed over the documents before the date in question on the grounds that legal advice was given, does not lead to a waiver of privilege in respect of the earlier communications.
First, it does not amount to an "issue waiver". Mr Deveraj's answers in cross-examination do not consciously propound any issue based upon the pre-29 March emails: see Evidence Act, s 122(1) and Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 (at [41]).
Nor is this a case of what is traditionally described as "disclosure waiver", where the substance of the advice is knowingly and voluntarily disclosed, thereby waiving privilege on the underlying advice: see Evidence Act, s 122(2) and Divall v Mifsud [2005] NSWCA 447. At no stage in the cross-examination did Mr Deveraj reveal the contents of the pre-29 March advice. He was only asked quite carefully whether or not there was such advice, not what the advice said.
And analysed from the perspective of general principle, there is no other basis to infer waiver of privilege here. The common law principle is that a party cannot maintain confidentiality in a document where the maintenance of that claim would be inconsistent with the party's own conduct: Evidence Act, s 122(1) and Mann v Carnell (1999) 201 CLR 1; (1999) 168 ALR 86; [1999] HCA 66.
Here the relevant conduct of the party is Mr Devaraj's incorrect denial in cross examination of the existence of pre-29 March legal advice. That conduct is not inconsistent with the continued maintenance of privilege over the pre-29 March legal advice. The call for documents shows that there was indeed pre-29 March legal advice. The wrong denial by the witness can still be directly challenged. Avoiding conduct inconsistent with this claimed privilege requires no more than disclosure of the fact of the advice and that has now been disclosed. The witness has not sought to rely upon the contents of the advice.
And fairness is satisfied. The cross-examiner has the ability to challenge the incorrect denial of any pre-March 29 advice based upon the affidavit claiming privilege. Fairness simply requires that the cross-examiner be put in a position to challenge the truth of the negative assertion. The first and second defendants are in that position. Fairness does not also require the waiver of privilege on the advice itself.
The Court concludes there is no waiver of client privilege on either of these grounds.
[2]
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Decision last updated: 20 August 2019