Sharjade Pty Ltd v Darwinia Estate Pty Ltd

CATCHWORDS : [PRIVILEGE] - [WAIVER] - Documents produced in answer to Notice to Produce - agreement that access to documents limited to legal representatives - further agreement that access no longer restricted - whether privilege waived - whether plaintiff entitled to use documents at trial

CASES CITED : Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538

Sharjade Pty Ltd (Plainitff) PARTIES : Darwinia Estate Pty Ltd (First Defendant) The Commonwealth of Australia (second defendant)

M Akbarian (director) (Plaintiff) (18 April 2008 and 30 May 2008) COUNSEL : J Sheller (Plaintiff) (9 May 2008) M Speakman SC/D Moujalli (Second Defendant)

SOLICITORS : Gadens (First Defendant) Blake Dawson (Second Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50024/06 SHARJADE PTY LIMITED v DARWINIA ESTATE PTY LIMITED (NOW KNOWN AS RAAF (LANDINGS) EX-SERVICEMEN CHARITABLE FUND PTY LIMITED) & ANOR JUDGMENT 1 The plaintiff, Sharjade Pty Limited seeks damages against Darwinia Estate Pty Limited (now known as RAAF (Landings) Ex-Servicemen Charitable Fund Pty Limited) (Darwinia) for alleged breaches of a contract pursuant to which Darwinia would acquire and the plaintiff would develop, land owned by the second defendant, the Commonwealth of Australia (the Commonwealth) at the rear of Lady Davidson Hospital at Bobbin Head Road, North Turramurra, New South Wales. There are various claims against the defendants including a claim against the Commonwealth that it knowingly induced Darwinia's breach of contract with the plaintiff. 2 The trial is listed for hearing for two weeks commencing on 7 July 2008. On 14 April 2008 the Commonwealth filed a Notice of Motion seeking to strike out certain paragraphs of the plaintiff's Amended Commercial List Statement and for dismissal of the plaintiff's claim against the Commonwealth. That Motion came before the Court on 18 April 2008 when Mr M Speakman appeared for the Commonwealth and a director of the plaintiff, Mr M Akbarian, appeared 'for' the plaintiff/respondent to the Motion. There was no objection to Mr Akbarian appearing. In support of its application the Commonwealth read the affidavits of Hayden Carlisle Fox sworn respectively on 3 December 2007 and 14 April 2008. An exhibit to the second affidavit, known as "HCF-2", was tendered. The Commonwealth sought to tender only a redacted version of HCF-2 and that was objected to by Mr Akbarian. At that stage the controversy focused upon claims for privilege over the documents in HCF-2 that had been masked. The documents in HCF 2 that were masked were documents that Mr Akbarian had attached to a letter to the solicitors for the Commonwealth (Blake Dawson) dated 26 March 2008. That letter was said to be a "substantive response" to Blake Dawson's letter of 24 July 2007. 3 During the hearing on 18 April 2008 Mr Speakman advised the Court that his client was not sure how Mr Akbarian came into possession of the documents that had been attached to his letter of 26 March 2008. Mr Akbarian advised that the Commonwealth had provided the documents to him. Mr Speakman sought an adjournment of the Motion so that Mr Akbarian's claims could be investigated. 4 The matter was next before the Court on 9 May 2008 when Mr JC Sheller of counsel appeared for the plaintiff. Ms SA Immens, solicitor, appeared for Darwinia and Mr Speakman SC, leading Mr Moujalli, of counsel, appeared for the Commonwealth. On this occasion the Commonwealth read further affidavits of Hayden Carlisle Fox sworn 29 April 2008, 1 May 2008 and 8 May 2008. Mr Fox sought to give evidence of what had actually occurred in relation to the provision of documents to the plaintiff although he was not directly involved with the matter at that time. He sought to give evidence on information and belief from Mr Michael Murray, solicitor, who was employed by the Australian Government Solicitor and had the carriage of the matter at the relevant time. That evidence was rejected and Mr Murray, was contacted and attended Court at short notice and gave evidence. 5 The plaintiff served a Notice to Produce on the Commonwealth dated 21 April 2006 which required documents to be produced by 28 April 2006. Mr Murray assessed the documents as to whether they were within the timeframe and relevant terms of the Notice to Produce. He recalled that there were a large number of documents which had to be produced in a short timeframe. His evidence included the following (tr 13): I would have gone through the documents with a view to making that initial assessment as to time and relevance but also with a view to identifying documents to extract from that bundle that were the subject of privilege. So that didn't necessarily mean that I would have read every single document. 6 Mr Murray's recollection was that there was no formal calling on the Notice to Produce and recalled that it may have been the subject of a suggestion made by the Court to produce the documents informally. On 21 April 2006 the Court noted the following: It is noted that the parties will engage in some preliminary inspection on a confidential basis limited to legal representatives for the purpose of deciding whether the Notice of Motion and the call on the Notice to Produce is to proceed on 28 April 2006. The matter was then stood over to 28 April 2006 in the Motions List. 7 On 26 April 2006, Mr Murray wrote to the plaintiff's solicitors in the following terms: 1. We refer to the directions of the Court on 21 April and to the notice to produce of that date. The Commonwealth is extracting its files in response to the notice. However, the notice calls for documents up to June 2002, well beyond the period we anticipated from the orders sought in the notice of motion (which in effect ended at May 2000) and for which certain files have been retrieved. We in fact query the relevance of the documents requested to the extent of two years beyond the time when the alleged possible claim against the Commonwealth arose, in so far as we can understand that claim from your limited evidence. 2. In any event, the purpose of this letter is to alert you to the fact that there are now additional files which the Commonwealth has located and which are being sent to me. The Commonwealth will not be in a position to respond within the timetable. I will advise before Friday by when we are in a position to do so. 8 On 27 April 2006, Mr Murray wrote again to the plaintiff's solicitors in terms that included the following: 2. As we discussed by phone, we have available the Commonwealth's documents in response to the notice to produce. The logistics are that if we were to have these copied and delivered to you, there would be some further delay, apart from issues of cost. We suggest that we make available to you the originals of these files, on the terms of confidentiality of the Court's order of 21 April 2006. You may inspect these at our offices, or, on appropriate undertakings as to security and return, at your offices of counsel's chambers. If copies are required, you may arrange that. 3. Please advise.

4. Please note that we have extracted from these files documents over which a claim of legal professional privilege is made. In that regard, you will be aware that your client was raising potential legal claims against the Commonwealth in 2000, on which legal advice was then sought. Documents concerning that advice are not included in the documents we are offering to produce. If the documents we do produce happen to contain privileged material, the Commonwealth is not thereby waiving privilege in light of the order for confidentiality order made by the Court. We ask you to acknowledge this. 9 By a shorter letter of 27 April 2006, Mr Murray provided the documents to the plaintiff's solicitors, Cowley Hearne. 10 On 28 April 2006 and 1 May 2006 the matter was the subject of further directions and on 4 May 2006, Einstein J made orders including the following: 4. Orders that the plaintiff and its legal representatives be released from the condition upon which the Commonwealth agreed to deliver documents to the plaintiff's solicitors in answer to the notice to produce dated 21 April 2006 served by the plaintiff on the Commonwealth (as noted by Bergin J on 21 April 2006) namely that the documents produced in answer to the said notice to produce be inspected only by the legal representatives of the plaintiff. 11 Mr Murray was asked about the provision of the documents and his letter of 27 April 2006 (tr 14): Q. When, under the cover of the shorter of the two letters of 27 April 2006, you forwarded documents to Cowley Hearne, did you have a view as to whether any of those documents were the subject of a claim of legal professional privilege? A. Well, I am reminding myself by virtue of what I said in both letters and I am saying in the first letter apparently of 27 April that I have extracted documents over which a claim of privilege is made but in the event that I missed any, the Commonwealth was not thereby waiving, by virtue of those documents having been nevertheless produced. Q. Did you see some necessity in including that statement in the letter? A. Thinking about how I operated as a solicitor, for better or worse, in circumstances such as a prompt production, as appeared to be the case in this instance - sorry I have lost my train of thought there. Could I ask you to ask that question again. Q. It may not be identical. Did you have any view as to the necessity of including a statement in one of the letters - - A. Yes.

Q. - that there was no waiver of privilege? A. It was a precaution on my part in the circumstances in which these documents were produced. Although, as a matter of practice, it was something I might have, as I recall, adopted in other instances where there was a large volume and there might have been some time constraint. Q. Why did you take that precaution? A. In the event that, despite my best endeavours in extracting privilege documents, I may have inadvertently missed some. Q. And when you forwarded the documentation under the cover of the shorter of the two letters of 27 April, did you have a belief as to whether there were potentially privileged documents among those documents? A. I think it follows from what I have been saying that I thought there was no privilege documents but I had some concern - maybe that is putting it too highly - but some feeling there may well be some that I missed and that was a precaution that I took. 12 Mr Sheller cross-examined Mr Murray in respect of an earlier threat of litigation against the Commonwealth in 2000. This was the subject of comment in the letter of 27 April 2006, extracted above. Mr Sheller's cross-examination included the following (tr 16): Q. It was the case that during those discussions you were told that earlier on there had been a threat of litigation against the Commonwealth on this matter? A. I don't know if I can say I do recall that but as you asked the question, putting it in the vernacular if I may, it sort of rings a bell in terms of what the client told me occurred back in 2000.

Q. Can I suggest that that ringing of the bell alerted you to the potential need to claim legal professional privilege in relation to the documents you were going to review? A. Well, that might have been one issue that alerted me to a legal professional privilege issue being necessary to address, yes. 13 Mr Sheller sought to establish that haste was not a factor in the production of the documents, the subject of the claim for privilege. His cross-examination was as follows (tr 18): Q. Can I suggest to you that you had sufficient time in that 7-day period to consider all of the documents, both in terms of relevance and privilege to your satisfaction? A. Yes.

Q. And notwithstanding the volume of the documents, there was not any undue rushing by you in the process of your undertaking, was there? A. Well, there was a timetable I had to meet. I don't know what "undue rushing" means. 14 Mr Sheller then took Mr Murray to paragraph 4 of the letter of 27 April 2006 extracted above. The following cross-examination occurred (tr 19): 1. … 2. Q. Could I ask you to have a look at paragraph 4, on the first page of the 2-page letter. And you were asked some questions about this letter by my friend and as I recall your evidence you suggested that what paragraph 4 was designed to achieve, from your perspective, was to protect the Commonwealth in the event of some documents having been produced being privileged? A. Yes.

Q. Is that what you say the purpose was? A. Yes.

Q. You took the view by reference to the second last sentence in paragraph 4 that there had not been a waiver of any privilege of any documents that had been produced in light of the order for confidentiality. Those were your words, weren't they? A. These are my words, yes.

Q. And it was your view that if that order for confidentiality was discharged, that there no longer would be a claim for privilege over any documents which had been produced. That's right isn't it? A. I don't think I would have had that view. I mean I see confidentiality and privilege as being quite separate issues. Q. You saw them as being connected when you wrote paragraph 4 of your letter, didn't you? A. Yes, I don't say that paragraph is necessarily correct, in hindsight. 15 Mr Sheller referred Mr Murray to the release of the confidentiality condition by the order on 4 May 2006 and suggested to Mr Murray that by that time he had no concerns about any privilege claims in respect of the documents. Mr Murray disagreed with that suggestion (tr 21). 16 At the conclusion of the evidence on 9 May 2008, the matter was further adjourned for the parties to give some consideration to settling their differences in relation to the claims made for privilege over the documents. Agreement was not reached and the matter was further argued on 30 May 2008, when other aspects of the pleading were clarified. As the application developed Mr Speakman sought to restrict use of the documents that had been provided to the plaintiff. It was submitted that the documents should not be deployed in the trial. Although there was no separate Motion in relation to such an order the parties proceeded on the basis that I would decide this issue. 17 This case is distinguishable from the facts in Hooker Corporation Ltd v Darling Harbour Authority & Ors (1987) 9 NSWLR 538. In that case the acts relied upon in support of a claim of waiver, were consequent upon and occurred during a period when the Crown Solicitor, the claimant in respect of the privilege, had operated under the "erroneous impression" that no document the subject of legal professional privilege had been discovered, inspected or copied (at 540). In the present case, albeit in a way that seems to me to be a little confused, the Australian Government Solicitor sought to protect the Commonwealth from any mistaken production of privileged documents by utilising a confidentiality regime and claiming that any documents that were privileged in such a regime were not intended to be the subject of a waiver of privilege. 18 Paragraph 4 of the letter of 27 April 2006 specifically tied the lack of waiver to the confidentiality regime. It seems to me that when Mr Murray gave evidence in this application he saw the error of his ways and suggested that he understood that confidentiality and privilege were two separate issues. As can be seen from the evidence extracted above he also suggested that the paragraph may have been put rather inaccurately. Mr Murray was in a difficult position in giving evidence. He had left the employ of the Australian Government Solicitor some time ago. He had not had access to the whole of the file and he came up to Court at very short notice after the Commonwealth's lawyers contacted him. He gave oral evidence without having sworn an affidavit. Two years after the relevant events and with the benefit of retrospectivity Mr Murray saw the position differently. However his actions at the time (agreeing to lift the confidentiality regime) seem to me to be wholly inconsistent with the maintenance of the claim that privilege had not been waived. 19 Even if the Commonwealth were able to protect itself against a claim of waiver of privilege by reason of the existence of the confidentiality regime, that protection was specifically and expressly removed when the parties, by consent, requested the Court to make the order on 4 May 2006. Prior to that order removing the confidentiality regime, Mr Akbarian was unable to access the documents. Access was previously restricted to the legal representatives of the respective parties. I am satisfied that the Commonwealth's consent to that order was wholly inconsistent with maintaining the claim that it had not waived privilege. I am satisfied that the Commonwealth waived any claim for privilege at this time. Even if the Commonwealth were able to protect itself against a claim of waiver of privilege by reason of the existence of the confidentiality regime, that protection was specifically and expressly removed when the parties, by consent, requested the Court to make the order on 4 May 2006. Prior to that order removing the confidentiality regime, Mr Akbarian was unable to access the documents. Access was previously restricted to the legal representatives of the respective parties. I am satisfied that the Commonwealth's consent to that order was wholly inconsistent with maintaining the claim that it had not waived privilege. I am satisfied that the Commonwealth waived any claim for privilege at this time. 20 Mr Akbarian made a further point in relation to the letter of 27 April 2006. He submitted that on a reasonable reading of that paragraph the only claim for privilege related to the legal advice sought in respect of the plaintiff's claim against the Commonwealth in 2000. It was not, he submitted, a general claim for privilege over any category of documents. There is force in that submission but I do not need to decide whether it is correct because of my finding above. 21 The processes of providing discovery and answering Notices to Produce cast burdens upon legal practitioners to ensure that the clients' privileges are protected. Although it was submitted that the time frame within which the Commonwealth's lawyers had to attend to the production of documents in answer to the Notice to Produce was tight, it is clear that further time was afforded the Commonwealth to consider the documents by the use of the confidentiality regime. It was only after that additional time that the Commonwealth agreed to allow access to the documents without any restriction. I am satisfied that on 4 May 2006 any privilege that may have attached to the documents was waived by the Commonwealth. 22 The documents that were provided to the plaintiff which are the subject of a claim for privilege in HCF-2 are able to be used by the plaintiff in the trial commencing on 7 July 2008.

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