Sharjade Pty Ltd v RAAF Landings

Supreme Court of NSW|2008-02-28|Before: Rein AJ, Young J, McColl JA

CITATION : Sharjade Pty Ltd v RAAF Landings [2008] NSWSC 151

CATCHWORDS : Claim of privilege for legal advice for portions of goverment departmental communication - whether made out, and whether waived.

AWB Ltd v Cole (2006) 155 FCR 30 General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84 Balabel v Air India [1988] Ch 317 Grant v Downs (1976) 135 CLR 674 Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2006) 225 ALR 266 Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 Waterford v Commonwealth (1987) 163 CLR 54 Grofam Pty Ltd v Australia New Zealand Banking Group Ltd (1993) 43 FCR 408 Nine Films & Television Pty Ltd v Ninox Television Ltd (2005) 65 IPR 442 Rich v Harrington [2007] FCA 1987 CASES CITED : Re Doran Constructions Pty Ltd (in liq) (2002) 194 ALR 101 Ashfield Municipal Council v RTA [2004] NSWSC 917 French v Polar Technologies International Pty Ltd [2006] NSWSC 1260 New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 Mann v Carnell (1999) 201 CLR 1 Southland Coal Pty Ltd (rec and mgrs apptd)(in liq) [2006] NSWSC 899 Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 Manly Council v Byrne [2004] NSWCA 123 Ordukaya v Hicks [2000] NSWCA 180 Papakosmas v The Queen (1999) 196 CLR 297

TEXTS CITED : Uniform Evidence Law (Odgers, 7th edn)

PARTIES : Sharjade Pty Ltd RAAF Landings (formerly Darwinia Estate Pty Ltd)

COUNSEL : Mr Nicholls (Plaintiff) Mr Speakman SC, Mr Moujalli (Defendant)

1 HIS HONOUR: This motion is brought by the plaintiff (for whom Mr Nicholls of counsel appears) seeking inspection of a document discovered by the second defendant (the Commonwealth of Australia) for whom Mr Speakman SC appears together with Mr Moujalli. The second defendant claims privilege in respect of three portions of the document. The document described in the second defendant's List of Documents (dated 1 March 2007) as 53.1 is, with the portions for which a claim for privilege is made obscured, Annexure "A" to the affidavit of Hayden Carlisle Fox of 21 December 2007. A further affidavit of Mr Fox of 14 February 2008 was also relied on by the second defendant. Mr Nicholls objected to paragraphs 6, 7 and 8 of the first affidavit of Mr Fox and paragraph 5 of the second affidavit. I admitted the paragraphs of Mr Fox's first affidavit to which objection was taken, but indicated that I would hear further argument from Mr Nicholls on their admissibility and weight. I ruled that paragraph 5 of Mr Fox's second affidavit was admissible and indicated I would give reasons for that decision in this judgment. Mr Nicholls renewed his attack on that paragraph in his written submissions as well. 2 At the request of Mr Speakman and with the agreement of Mr Nicholls I examined the unexpurgated version of the document. I have had that document marked MFI 1 and placed in an envelope noting the claim for privilege. I received detailed written submissions from Mr Nicholls and Mr Speakman. I also heard oral argument.

3 There was agreement between the parties that the following principles apply in relation to a claim for privilege and waiver (I take this exposition from the written submissions of Mr Speakman and Mr Moujalli): (a) Section 118 protects confidential communications and the contents of confidential documents made or prepared for the dominant purpose of a lawyer providing legal advice to a client. In this context, "the concept of legal advice is fairly wide": AWB Ltd v Cole (2006) 155 FCR 30 at [44(7)] per Young J. In General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84 at [77]-[78], McColl JA quoted, with apparent approval, the observation of Taylor LJ in Balabel v Air India [1988] Ch 317 at 330, that "legal 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 legal context". To qualify as legal advice, the lawyer must make the communication in the professional capacity of a lawyer: at [90]. (b) The dominant purpose of a communication must be determined objectively, having regard to the evidence, the nature of the document and the parties' submissions: Grant v Downs (1976) 135 CLR 674 at 677 per Barwick CJ, 689 per Stephen, Mason and Murphy JJ; Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2006) 225 ALR 266 at [30(3)] per Kenny J; Southland at [14(h)]. (c) Where the relevant communication is recorded in a document, the court has power to examine the document for itself to determine a contested privilege claim: s 133 of the Act; Grant v Downs (1976) 135 CLR 674 at 677 per Barwick CJ, 689 per Stephen, Mason and Murphy JJ. The purpose for which a communication is made is often clear and obvious from an inspection of the relevant document, as indicated in the approach taken by Austin J in Southland. Thus as put in Southland at [37]: "… it will often be unnecessary for [a] deponent to reveal the source for his assertion that the document is a subsequent communication revealing the contents of confidential legal advice, if in the circumstances it is obvious that the source is perusal of the document itself". d) Section 118 of the Act prevents not only disclosure of a document prepared for a privileged purpose, but any evidence which would result in disclosure of a privileged "confidential communication". As Austin J said in Southland at [14(e)]: "The question is whether what is disclosed by adducing the evidence explicitly reveals the confidential communication or the contents of the confidential document, or supports an inference of fact as to the content of the confidential communication or document, which has a definite and reasonable foundation". This is consistent with the common law, under which "privilege extends to any document prepared by a lawyer or client from which might be inferred the nature of the advice sought or given": Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 569 per Gummow J. This is simply a corollary of the proposition that privilege protects communications and not documents per se: Propend , Dawson J at 515, Toohey J at 525, Gaudron J at 543, McHugh J at 552 and Gummow J at 569. It therefore attaches not only to documents which constitute a privileged communication but any documents from which a privileged communication might be disclosed or inferred. (e) Severance (or the withholding of part of a document) is permitted by the doctrine of privilege where only part of the document would disclose, or allow an inference to be drawn as to the nature of, a privileged communication: Waterford v Commonwealth (1987) 163 CLR 54 at 66 per Mason and Wilson JJ, 85 per Deane J and 103 per Dawson J; Grofam Pty Ltd v Australia New Zealand Banking Group Ltd (1993) 43 FCR 408. (f) The party claiming privilege bears the onus of establishing the basis of the claim. In Grant v Downs , Stephen, Mason and Murphy JJ said at 689: "It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence". See also Southland at [14(c)]; Commissioner of Taxation v Pratt Holdings [2005] FCA 1247at [30(1)]. (g) However the facts need only be established on the balance of probabilities: s 142 of the Act; Southland at [14(c)]. (h) The party claiming privilege does not bear the onus of excluding waiver of the privilege. Where it is alleged that privilege has been waived, the party alleging waiver carries the onus of establishing waiver: eg Nine Films & Television Pty Ltd v Ninox Television Ltd (2005) 65 IPR 442 at [21], Rich v Harrington [2007] FCA 1987 at [8]. As Campbell J said in Re Doran Constructions Pty Ltd (in liq) (2002) 194 ALR 101 at [117]: "It is the party who asserts that there has been a waiver who bears the onus of satisfying the court about each of the elements in s 122(2)". (i) Issues as to the implied waiver of privilege are to be determined in accordance with sub-section 122(2) of the Act. The Evidence Act provisions are to be interpreted in accordance with the common law approach to implied waiver: Ashfield Municipal Council v RTA [2004] NSWSC 917 at [14] per Barrett J. It is "settled" for New South Wales trial judges ( French v Polar Technologies International Pty Ltd [2006] NSWSC 1260 at [13]) and "firmly established" ( New Cap Reinsurance Corporation Ltd (In Liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 at [44]) by the decision of the Court of Appeal in Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 that principles of implied waiver at common law are largely translated to "consent" under section 122 of the Evidence Act. (j) As to those common law principles, in Mann v Carnell (1999) 201 CLR 1 at [29], Gleeson CJ, Gaudron, Gummow and Callinan JJ stated: "What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large". It was noted that whilst some of the decisions deal with the general law and care needs to be taken in considering the Evidence Act, the courts continue to be guided by those earlier decisions in determining privilege under the Evidence Act: Re Southland; Ashfield Municipal Council v RTA [2004] NSWSC 917.

4 Mr Nicholls agreed with these principles but placed emphasis on: (1) [72] of Workcover Authority (NSW) (General Manager) v Law Society of New South Wales (2006) 65 NSWLR 502, in which McColl JA noted that legal professional privilege would only apply if the legal practitioner received or created the relevant communication, in that capacity, for the purpose of the client obtaining professional legal advice. (2) [83] - [85] of Workcover , where reference was made to practical emphasis on the purpose of the solicitor's retainer.

5 Mr Nicholls sets out detailed argument highlighting the deficiencies in Mr Fox's first affidavit, pointing out that Mr Fox admitted in cross examination that he was not the solicitor for the second defendant or even with the firm at the time MFI 1 was written, but also highlighting that Mr Fox gives no description of the circumstances in which the confidential communications referred to in MFI 1 were created, or even identifying the client.

6 In Southland Coal Pty Ltd (rec and mgrs apptd)(in liq) [2006] NSWSC 899 at [28] Austin J said: "In my opinion, evidence by a lawyer on information and belief about his or her client's motivation in causing a communication to occur, if allowed, will not of itself be sufficient to establish that the dominant purpose of the communication attracts legal advice or litigation privilege. But the lawyer may be in a position to give admissible evidence about the circumstances surrounding the communication, which will suffice, perhaps together with inferences from the document itself, to establish the privilege."

7 I think that Mr Nicholls is correct in submitting that Mr Fox in paragraphs 6, 7 and 8 of his first affidavit is not there giving admissible evidence about the circumstances surrounding the communication, but rather giving his own view of what the document contains. The second defendant proposed that the Court inspect MFI 1 and hence I have been able to view the material myself. In forming a view about the portions for which a claim for privilege is made, which I shall refer to as "the masked portions", I pay no regard to Mr Fox's characterisation and treat the paragraphs objected to rather as a statement of how the claim for privilege is framed. 8 Mr Nicholls pointed to the absence of any evidence as to the retainer of Blake Dawson Waldron (as they were known at the time). He asserted that the absence of any evidence about that retainer and as to what the solicitors and counsel were asked to advise is a fatal flaw in the discharge of the burden of proof. He made a similar point about the absence of evidence by the author of any document or communication constituting the advice, arguing that the purpose for which the document (i.e. the document containing the alleged advice to which reference is made in MFI 1) is a question of fact to be determined objectively and which cannot be determined if there is no evidence in connection with it.

9 Mr Nicholls also highlighted that the test for "dominant purpose" has been accepted as meaning a clearly paramount purpose so that the purpose of giving advice must be the "ruling prevailing or most influential purpose" per Spigelman CJ (with whom Campbell AJA and Sheller JA concurred) in Sydney Airports Corporation v Singapore Airlines citing Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404, 416. 10 Workcover was a case in which the party claiming privilege did not agree to inspection by the Tribunal and the terms of the retainer suggested non-legal advice was being sought. Here the Court was invited to inspect the document and the purpose of the communication can be clearly discerned. I do not regard Workcover as mandating the production of documents constituting the retainer pursuant to which the advice was given. 11 Mr Nicholls made a further point, which is that "although the relevant communication in question may have contained legal advice, the communication may not have been created for the dominant purpose of providing legal advice". The communication in each case, he submitted, may have been created for other purposes such as "the policy objective of providing housing for veterans".

12 Mr Nicholls argued that the Court should infer that MFI 1 was provided to the Senate Finance and Public Administration Committee. I reject that contention. The fact that the document (see Annexure "A" to Mr Fox's first affidavit) makes reference to that Senate Committee and to the date of the meeting does not support the contention that it was intended to be (and hence was) provided to the Committee. There are (leaving aside the masked portions) a number of indications in the document itself that it was not so intended: (1) The style of the document, including its use of the words "Estimates Brief" and "Hot issues" in the heading (2) The introduction, which states "Issue: possible sensitivities re retirement housing for veterans." (3) The use of the phrase "suggested response" (4) The provision of information under the heading "Background" after setting out the material under "Suggested Response". (5) Its lack of a named addressee (6) Its reference to "Version 1"

13 These same matters would have lead me to conclude, without any further evidence, on the balance of probabilities that the document was prepared for internal use within a department of government. 14 It appears from the evidence of Mr Fox that Ms Tate left the employ of the Commonwealth some time ago (the memorandum is dated 15 May 2000) and no doubt she would have been able to more clearly advise for whom the document was prepared and to whom it was given but I do not accept that any Jones v Dunkel inference arises against the Commonwealth in such circumstances, and as the second defendant's submissions point out, Jones v Dunkel inferences cannot be used to create evidence: see Manly Council v Byrne [2004] NSWCA 123. In any event, in oral submissions, Mr Nicholls accepted that the document was prepared for the Minister for Finance at the time. The evidence of Mr Fox as to what he was told by Ms Campbell confirms that the document was of a type that was prepared for the purpose of briefing the Minister of Finance in respect of an issue that may arise in the Senate Committee, and was confidential to the Minister's office and his department. 15 I do not accept the proposition that the Court has to have evidence of who within a government department asked for the legal advice to which reference is made or to see the documents (assuming there were documents) containing the advice as originally given. The masked portions of MFI 1 by their form make clear, on the balance of probabilities, that lawyers retained by the Commonwealth gave advice to the Commonwealth (in the case of the first and third masked paragraphs) and were to be asked for further advice (in the case of the second masked paragraph) through the personnel employed in the Property Group, which group, given the author's email address, i.e. janette.tate@dofa.gov.au, I infer was part of the Department of Finance and Administration.

16 Mr Nicholls submits that the second defendant has failed to prove that the relevant communications were created for the dominant purpose of Blake Dawson providing legal advice. What is clear from the very words used in the first and third masked portions is that they set out the advice that the solicitors and counsel gave and the second portion sets out a matter that it is proposed will be discussed with the solicitors. I am satisfied from the words used that the dominant purpose of the advice recorded as given in the first and third masked paragraphs, was legal advice, and in the case of the second masked paragraph, proposed to be sought, was either legal advice or legal advice coupled with commercial advice in a contractual context: see [3(a), (b), (c)] above. There is nothing in the masked portions which suggests that that which is set out was provided or to be sought for purposes of a non-legal nature of the kind that Mr Nicholls referred to in his submissions or otherwise.

17 The relevant question here is will disclosure of the masked contents reveal the content of the advice given or sought (or to be sought in the case of the second masked paragraph): see Commissioner of Australian Federal Police v Propend (1997) 188 CLR 501, 569 per Gummow J; and AWB Ltd v Cole supra per Young CJ in Equity at [46], and Pratt supra [31(10)], and in my view it will do so. In my view the first and third of the obscured paragraphs clearly set out advice that the Commonwealth had received from solicitors and Counsel and the adducing of that evidence would result in disclosure of a confidential communication made between the client and lawyer and hence is privileged: see s.118(a) of the Evidence Act. The second obscured paragraph sets out what it is proposed to canvass with the Commonwealth's lawyers and although at that point it was only a future discussion that is referred to nevertheless the adducing of that evidence would result in disclosure of a confidential communication that it was intended would occur in the near future.

Waiver 18 Mr Fox deposed to the fact that he had been informed by Ms Kathryn Jane Campbell, the Deputy Secretary of the Department of Finance and Administration (as it was until recently known) that the document headed Annexure "B" is a document prepared for a Minister attending before a Senate Estimates Committee and as to its confidential nature.

19 That evidence was objected to on the basis that (1) It was hearsay and to admit the evidence in this form would be to preclude the plaintiff from cross examining Ms Campbell, and hence ought be rejected on a discretionary basis, see s.135 of the Act. (2) It contravened the principles referred to in [28] of Southland (3) It was not relevant evidence because Ms Campbell was not describing this particular document but a class of document.

20 As Southland makes clear, a contested privilege claim is an interlocutory hearing. The rule is that hearsay evidence is permitted on interlocutory applications, see s.75 of the Act, although s.135 of the Act permits the Court to refuse to admit evidence "if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party; or (b) be misleading or confusing; or (c) cause or result in undue waste time."

21 To a large degree the issue of admissibility of paragraph 5 becomes rather academic because Mr Nicholls agreed in oral submissions that MFI 1 was prepared for the relevant Minister (the Minister of Finance), but in my view it would not be "unfairly prejudicial", in the sense in which those words are used in s.135 see decision of Ordukaya v Hicks [2000] NSWCA 180 and see Papakosmas v The Queen (1999) 196 CLR 297, per McHugh J, discussed in Odgers' Uniform Evidence Law at para 13.145560, to receive the evidence of Ms Campbell, having regard to: (a) the nature of the evidence which was of a general and limited nature (b) the interlocutory nature of the application and the fact that hearsay evidence is normally accepted: see Southland [26] (c) the absence of any evidence which contradicted it or even suggested that her evidence was incorrect (d) the fact that she was based in Canberra and holding a senior position within the government department and notwithstanding the fact that Ms Campbell could not be cross-examined.

22 Nor did receipt of the hearsay evidence infringe anything found in [28] of Southland. On the question of relevance, it is true that the evidence lead was limited but it was some evidence from which the Court could infer that the document was prepared for a Minister, a fact now conceded as I have noted.

23 As noted earlier, the party asserting that privilege has been waived (or in the language of s.122 of the Act that 'consent' has been given) has the onus of proof. The cases on waiver have been treated as relevant to the question of 'consent' in s.122: see [3(i)] above.

24 Leaving aside the hearsay evidence to which objection was taken, there is nothing which establishes or even suggests that the privileged material was disclosed to persons outside the department, or consent given to the communication to third parties of the privileged material. The document was produced by the Commonwealth in its discovery as a document in its possession, it has not been produced by a third party. Its style and format have the appearance of an internal document. There can be no loss of privilege because an employee tells another employee (or the relevant Minister) about the contents of legal advice received or to be sough in respect of a matter.

25 In the absence of any evidence that the document was provided to a third party I am not satisfied that the document has been circulated to any third party.

26 The plaintiff relied on an affidavit of Ms Joanne Chaina of 15 February 2008 which annexed information about the Senate Finance and Public Administration Legislation Committee. Mr Nicholls submitted that since the Committee has a number of purposes, particularly to inquire and report upon matters referred to (in s.25(2) and (4)), which include matters referred to them by the Senate, estimates of expenditure, bills and draft bills, annual reports and matters which may have been referred to their predecessor committees and not finalised by those committees, MFI 1 may have been disclosed to the Committee and that would be inconsistent with a claim for privilege.

27 I have no information as to whether a Senate Committee can compel disclosure of such matters and I leave aside the question of whether disclosure to a Committee of that kind would constitute consent sufficient to enliven s.122(1) or (2) of the Act but I do not accept that the possibility that a privileged communication could have been revealed is sufficient to constitute a consent or knowing and voluntary disclosure for the purpose of s.122 of the Act. No authority was provided in support of such a proposition. The mere possibility that material might be provided does not support the conclusion that consent should be deemed or imputed, and as a matter of principle the submission seeks to expand the notion of consent and voluntary disclosure to an impermissible degree. Further, the evidence of Ms Campbell through Mr Fox is that she provided a copy of MFI 1 to the Minister's office and to the Secretary of the Department and that she took a copy in her bag to the Senate Committee hearing in case a question was asked germane to the matters dealt with in MFI 1 but no such question was asked by the Committee. 28 Mr Nicholls also argued that it must have been Ms Tate's intention as author of MFI 1 "to disclose or to relate that information to the Committee if an enquiry had been made about its subject matter - the fact that it did not occur does not matter". That again seems to represent a very extensive and unjustifiable expansion of the notion of consent or voluntary disclosure. The author clearly intended to provide information to the Minister - its confidential quality was at that stage not lost or impugned and I do not think that it can be inferred that Ms Tate, because she did not include within the document some warning or restriction on the dissemination of the privileged material, or otherwise, intended that all of its contents would be disclosed to anyone outside the Department by the Minister, or in such a way as would be inconsistent with the maintenance of privilege in respect of legal advice obtained by the Department. 29 In my view the plaintiff has failed to establish any conduct on the part of the second defendant which would render it inconsistent to now assert and maintain a claim for legal privilege. Conclusion 30 It follows that in my view the second defendant has made out its claim for privilege and the plaintiff has failed to establish that the privilege has been lost. The plaintiff's motion ought be dismissed. I will hear the parties on the question of costs.

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.

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Judgment (28 paragraphs)

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