Sheffield v Brambles Australia Ltd and Anor

LEGISLATION CITED : Evidence Act 1995 Industrial Relations Act 1996 Telstra Corporation Ltd and Anor v BT Australasia Pty Ltd and Anor (1998) 85 FCR 152. CASES CITED : Gough & Gilmour Holdings Pty Limited and Ors v Caterpillar of Australia Limited [2001] NSWIRComm 73, 9 April 2001 Perpetual Trustees (WA) Ltd v Equuscorp Pty Limited [1999] FCA 925 Mann v Carnell (1999) 168 ALR 86 at 94 HEARING DATES: 05/01/2001 DATE OF JUDGMENT: 09/27/2001

APPLICANT Mr M J Kimber SC with Mr A R Moses of counsel

SOLICITOR Abbott Tout SYDNEY. LEGAL REPRESENTATIVES: RESPONDENT Mr H J Dixon SC

SOLICITOR Corrs Chambers Westgarth SYDNEY.

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

LINDSAY JOHN SHEFFIELD v BRAMBLES AUSTRALIA LIMITED AND ANOR.

Application under s106 of the Industrial Relations Act 1996.

1 This matter involves an application under s106 of the Industrial Relations Act 1996 which seeks to have declared void a contract of employment and certain collateral contracts and order arrangements relating to share options between the applicant and respondents. Included in the relief sought is a money claim in respect of share options which lapsed upon the termination of the applicant's employment.

2 On 1 May 2001 Mr D R Corben was called to be cross-examined upon an affidavit filed and served. Mr Corben is the Company Secretary of the second respondent, Brambles Industries Limited ('Brambles'), the company which controls the first respondent. During the course of the cross-examination senior counsel for the applicant renewed a call for a written legal advice which had been presented to a board meeting. In that meeting Brambles had decided to decline the applicant's request that the Board accelerate the exercise date of share options earlier granted to him but not vested at the date of his termination. That call was resisted by senior counsel for Brambles on the ground of legal professional privilege. It was agreed that written submissions would be filed and the matter would be ruled upon in due course pending the further hearing of the case.

3 The issue arose this way. Paragraph 29 of Mr Corben's affidavit contained the following: After Brambles terminated the Applicant's employment, the directors of Brambles Industries Limited had deferred the lapsing of the Applicant's options. On 1 July 1999, the directors of Brambles Industries Limited considered the Applicant's request and refused it. The directors considered the Applicant's request and decided that as he was not a long serving executive who was retiring and as he had been terminated by the company, they would not accelerate the exercise date of his options and his options would lapse at that time.

4 It will be seen that no reference was made in that passage to any legal advice received by Brambles. At p.392 of the transcript of 1 May 2001 senior counsel for the applicant, in the course of cross-examining Mr Corben, put before him an extract from the minutes of the board meeting to which Mr Corben's affidavit referred, the minutes having been obtained by the applicant by summons. It contained the following: The Chairman referred Directors to the request received from Mr L J Sheffield for the Board to exercise its discretion and allow him to exercise the Premium Options he held under the Brambles Option Incentive Plan. Following comment by the Company Secretary and Chief Executive and after consideration of the legal advice received from Corrs Chambers Westgarth, it was unanimously Resolved:

1. THAT the action taken by Directors on 29 June to extend the exercise period of Mr Sheffield's Premium Options held under the Brambles Option Incentive Plan until 1 July 1999 be and is hereby ratified;

2. THAT Mr L J Sheffield be advised that his request for the Board to exercise its discretion and allow him to exercise his Premium Options was refused.

5 In the course of that cross-examination the following exchange occurred: Mr Kimber: Q. Dealing first with your comments, what did you say bearing upon the issue? Mr Corben: A. I think I gave the background to the number of options and those that would fall over, from memory, in terms of their benchmarks.

Q. What do you recall the chief executive officer then said at the meeting? A. Roughly he said that he was not of the character of the earlier people, he was not a senior executive who was retiring from the workforce and in fact he had been sacked from the company.

Q. Just whilst I think of it, was it common for the purposes of consideration these applications (sic) to ask the executive in question to put in a submission as to why they thought it was appropriate? A. No, I think Lindsay Sheffield was the only case where some formal document had come from the employee.

Q. Do you know whether his letter was put before the board? A. Yes, his letter to me was put before the board.

Q. Then there is also reference of legal advice that had been received from Corrs Chambers Westgarth. Firstly, can you indicate to me whether that advice was in writing? A. Yes, it was in writing.

Q. From the minute that is produced there, Exhibit 29, did the contents of that advice, was that the subject of discussion before the resolution was put? A. I just can't recall having discussion or that being discussed, but it could have been, I just can't recall.

Q. Was that circulated to the board members there present? A. That was part of the board papers.

Q. And it was there for them to consider when they voted? A. Yes.

KIMBER: We renew the call for the legal advice that was presented to that board meeting. Your Honour might recall that on day one of this trial we indicated we would not press for the production of that legal advice. We now do press for that and ask for it to be produced.

DIXON: We resist production on the ground of legal professional privilege, . . . (Transcript, p.392)

6 After discussion with counsel as to how the question of privilege might be dealt with, the cross-examination continued: Q. And they had a copy of the legal advice from Corrs, is that right? A. Yes.

Q. Any other documents which were provided as far as you know? A. There might have been just a note, a couple of lines from myself saying those documents are attached.

Q. Yours was more formally indicating what the state of play was? A. Yes, the status of Mr Sheffield's letter. (Transcript, p.394)

Legal Professional Privilege 7 The general rule, as embodied in s118 of the Evidence Act 1995 is:

s118. 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

(b) a confidential communication made between 2 or more lawyers acting for the client; or

(c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer;

for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

8 It is obvious that applying s118, without more, to the present circumstances would ensure that the applicant is not entitled to access to the advice. So much is reflected by the applicant's concession in argument. However, Mr Kimber relies upon s122 of that Act which deals (as does s121, but not relevantly) with the loss of client legal privilege. Section 122 allows the adducing of evidence given by consent of the client or party concerned (s122(1)). The reference to "consent" in that subsection has been held to extend to imputed consent (per Branson and Lehane JJ) in Telstra Corporation Ltd and Anor v BT Australasia Pty Ltd and Anor (1998) 85 FCR 152. The relevance of that conclusion goes to the concept of waiving the right to resist the production of a document on the basis of legal professional privilege where express consent is not given but the party by its conduct will have consent imputed to it.

9 In an interlocutory judgment given in relation to a claim of legal professional privilege in the context of discovery and inspection of documents, Boland J in Gough & Gilmour Holdings Pty Limited and Ors v Caterpillar of Australia Limited [2001] NSWIRComm 73, 9 April 2001 said: There appears to be two categories of waiver in the context of legal professional privilege, namely, "disclosure waiver" and "issue waiver".

10 His Honour deals at length with the authorities which bear upon the question of waiver of legal professional privilege both at common law and in the context of the Evidence Act. Accordingly, it is unnecessary that I repeat those references save to the limited extent necessary as a result of the present question before me.

11 It is issue waiver which is relied upon by the applicant in the present matter as justifying access to the legal advice received by Brambles. The submission is that the "court will regard client legal privilege as having been impliedly or imputedly waived in circumstances where, by nature of one or more of the issues arising in the case (whether upon the pleadings or the evidence) it would be unfair for the party claiming the privilege to be able to rely on it". The authority relied upon is that of the majority (Branson and Lehane JJ) in Telstra where their Honours said at p.166-167: Where, as in this case, a party pleads that he or she undertook certain action "in reliance on" a particular representation made by another, he or she opens up as an element of his or her cause of action, the issue of his or her state of mind at the time that he or she undertook such action. The court will be required to determine what was the factor, or what were factors, which influenced the mind of the party so as to induce him or her to act in that way. That is, the party puts in issue in the proceeding a matter which can not fairly be assessed without examination of relevant legal advice, if any, received by that party. In such circumstances, the party, by putting in contest the issue of his or her reliance, is to be taken as having consented to the use of relevant privileged material, or to put it another way, to have waived reliance on the privilege which such material would otherwise attract.

12 While Beaumont J in Telstra took a contrary view, the view of the majority was agreed in by a Full Bench of the Federal Court (Ryan, Carr and Marshall JJ) in Perpetual Trustees (WA) Ltd v Equuscorp Pty Limited [1999] FCA 925. In that matter the Full Bench said: 17 In our view, the facts of the present matter reflect the requisite degree of unfairness. Equus complains that it relied on the specified representations when it executed the security document. It says that the words "letter of credit" appearing in that document do not faithfully record the common intention of the parties and that the words were used under a mutual mistake of fact. There is evidence, that at the relevant time or times, i.e. shortly before executing the security document, Equus sought and obtained legal advice. In our opinion, in those circumstances, it would be relevantly unfair for Equus to be allowed to maintain legal professional privilege. Equus' state of mind is central, at the very least, to its claim for rectification - see Ampolex - a case cited with apparent approval by Beaumont J in his dissenting reasons in Telstra. 13 The unfairness to which the Full Court was there referring is that which the law regards as preventing the maintenance of the privilege once the privilege holder's conduct has created that unfairness. The High Court (Gleeson CJ, Gaudron, Gummow and Callinan JJ) in Mann v Carnell (1999) 168 ALR 86 at 94 said: Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law" (For example, Goldberg v Ng (1995) 185 CLR 83 at 95; 132 ALR 57). . . . 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.

14 How then can those considerations be brought to bear upon the present difficulty? Mr Dixon submits that there has been no express or implied waiver in the circumstances of the matter and I am inclined to agree. This is not a case where the respondent has either pleaded or expressed a reliance upon the advice received from its legal advisers. The court now knows that legal advice was taken prior to the decision being taken by the Board, but not that action was taken in reliance upon that advice. The possibilities are that the decision was contrary to the advice, in conformity with it, or some variant in between. The process by which the Board's final decision was taken is not itself an issue in the proceedings, as one might consider a procedural fairness question. The ultimate question at issue is whether the decision itself may withstand scrutiny under s106 according to the principles which operate in that context. The decision is not strengthened, in that context, by the fact that it was taken after legal advice was received.

15 While this issue appears to have arisen in the cases generally in the context of one party relying upon the representations of another, that does not appear to confine or constrict the scope of issue waiver cases. There seems to be no basis for so restricting the principle. Nevertheless, it appears to me necessary that there be more involved in the question than merely the state of mind of a party. There must be, as the High Court said in Mann v Carnell, conduct of the party which makes it unfair that the privilege be maintained. There is no such conduct here. The fact of the legal advice was only revealed in the proceedings by counsel's having raised the matter in cross-examination.

16 There is no unfairness visited upon the applicant by the respondent's maintenance of the privilege. Further, were access to the advice to be granted to the applicant, it would be tantamount to giving open access wherever legal advice is taken prior to the making of a decision. That is not the law as I understand it. Accordingly, I would uphold the claim of legal professional privilege in relation to the legal advice called for by the applicant.

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