Shoal Bay Developments Pty Ltd v Port Stephens Council

The Notices to Produce

1. The notices to produce were dated 13 November 2014 and 24 January 2015. Those aspects of the notices that are the subject of this application concern documents falling into the following summarised categories:

• hydrological and/or hydrogeological reports relating to the modification application;
• documents concerning the Council's drainage system that controls stormwater within the catchment area, including specifications and drawings of the installed drainage works and hydrological and/or hydrogeological reports on its expected and actual performance; and
• all data, readings, recordings, measurements and monitoring of water levels from the water sensor that monitors the amount of stormwater entering the Lagoons Estate from 2009 to 2011 under the new system.

1. No application was made to have the notices to produce or parts of the notices set aside. Rather, the documents the subject of this dispute were lodged with the Court and marked as privileged. The applicants now seek access to inspect that material. The respondent objects to access being granted on the basis, firstly, of relevance and, secondly, on the basis of legal professional privilege.

Relevance

1. Notices to produce issued pursuant to Part 21 of the UCPR are subject to a narrower test of relevance and validity than that to which subpoenas and notices to produce to the Court (issued pursuant to Part 34) are subject. Part 21 r 10(1) provides: (1) Party A may, by notice served on party B, require party B to produce for inspection by party A: (a) any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, and (b) any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue
2. This therefore requires that the documents sought be ones that have been referred to in the listed documents filed in the proceedings, or be a "specific document" or "clearly notified" and relevant to a fact in issue. A notice to produce issued pursuant to this rule is liable to be set aside on the basis that the documents sought are not clearly identified or are not relevant to a fact in issue.
3. However, the question before me is not whether the notices to produce ought be set aside. Rather, the question arises as to whether I ought grant access to the material produced. On this question, the distinction made is outlined in Waind v Hill & National Employers' Mutual [1978] NSWLR 372 at 381, and referred to in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 574: Indeed on a correct view there are three steps: the first is obeying the subpoena by the witness bringing the documents to the court and handing them to the judge. This step involves the determination of any objections by the witness to the subpoena, or to the production of the documents to the Court pursuant to the subpoena. The second step is the decision of the judge concerning preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents. The third step is the admission into evidence of the document in whole or in part; or the use of it in the process of evidence being put before the Court by cross-examination or otherwise.
4. The applicants submit that I ought take a broad approach in determining the question of relevance as it relates to access to the documents. I accept such an approach is appropriate. In considering the broad question, I find that Craig J's approach in [21] of Azar Building and Construction Services Pty Ltd v Transport Infrastructure Development Corporation [2010] NSWLEC 110 to be helpful: The principle was extensively discussed in ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd. Tobias JA (in whose judgment Basten JA and Handley AJA agreed) considered at [22] the requirement for it to be shown that it is "likely" that the documentation sought will materially assist on an identified issue or the alternative requirement that there be a reasonable basis beyond speculation that it is likely the documentation will so assist was not relevantly different to a requirement that it be "on the cards" that the documents would materially assist on an identified issue. Importantly, all the tests, however stated, require identification of an issue or issues in the proceedings with some modicum of particularity which then becomes the measure against which the forensic purpose of the documents can be determined.
5. The applicants submit that the documents the subject of this application are relevant to the question raised in the proceedings concerning the reduction of stormwater on the subject land as a result of the Council's drainage works. Further, one of the contentions raised by the Council in relation to the modification application is insufficient information. In its Statement of Facts and Contentions, the Council says that in order to properly assess the application, the applicant should provide, amongst other things, groundwater monitoring results and detailed predictions of future groundwater based on the monitoring data. The applicants submit that the data that is contained in the documents that are the subject of this application provide the data that the Council is alleging the applicants need to provide as additional information. That is, the applicants submit that the Council has in its custody the very information that it alleges is inadequate about the applicants' modification application.
6. The respondent, on the other hand, submits that the documents cannot be relevant because they do not report on the drainage works that are on the applicants' land, which is the subject of these proceedings. Further, the respondent submits that the applicants have not put in issue whether Council has complied with the orders of the Court of Appeal. Rather, the respondent says that in its Statement of Facts and Contentions the applicants have agreed that the Council has complied with those orders. The respondent submits that, given that the reports and peer review relate to the Council's compliance with the orders, there can be no issue to which the documents are relevant.
7. The respondent goes further to say that, on the evidence filed in the substantive proceedings, the applicants have accepted that the stormwater has been diverted. This assumption is made in the reports filed by the applicants in the substantive proceedings, including the report of Environmental Earth Sciences dated 3 February 2010. The respondent therefore submits that the evidence in the proceedings needs to concern the effectiveness of the applicants' drainage system on their land, not the effectiveness of any other system regarding the diversion of water. Given that the documents the subject of this application concern the latter, the respondent submits that they cannot be seen to materially assist on any issue in the proceedings.
8. I am of the view that the documents are relevant in that they will materially assist on the question of whether the conditions of consent that are sought to be deleted or modified were made redundant as a result of the work that has been carried out by the Council. This question has clearly been put in issue by the Statement of Facts and Contentions in Reply, and is specifically set out at paragraph 19(b). Therefore it cannot be said that the documents the subject of this application are not relevant to these proceedings.

Legal Professional Privilege

1. In determining whether legal professional privilege applies to the documents produced, it is important to note that the effect of s 38 of the Land and Environment Court Act 1979 is that the Evidence Act 1995 does not apply to these proceedings. The common law principles of legal professional privilege apply (Jacobson v Ballina Shire Council [2006] NSWLEC 111 at [18]).
2. In order to determine the question of legal professional privilege, two tests have been alternatively considered as being appropriate at various times by the courts - the dominant purpose test and the sole purpose test (see Grant v Downs (1976) 135 CLR 674 and Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49). The Court, in Esso Australia v Commissioner of Taxation, considers that the "dominant purpose" test is preferred in considering the common law doctrine of legal professional privilege. Therefore the question that arises is whether the documents the subject of the claim for privilege were created for the dominant purpose of obtaining legal services for the purpose of legal proceedings or anticipated legal proceedings (ACCC v Australian Safeway Stores (1998) 81 FCR 526).
3. The applicants submit that the only plausible dominant purpose for the documents is to ensure that Council complies effectively with its obligations as the operator of the drainage system to ensure that it is operating within the statutory constraints. The applicants submit that this is a pre-existing obligation that arises due to Council's responsibility as the owner and operator of the drainage system. Further, the applicants submit that in determining whether the documents were created for the purpose of legal proceedings, I ought to have regard to whether the litigation was a real possibility and not just a mere possibility. The applicants also submit that there is a lack of an evidentiary basis for the claim for privilege. That is, the affidavit of Mr Pickup, on which the respondent relies, does not provide sufficient detail to accept that the documents were created for the sole or dominant purpose of legal proceedings. Further, the applicants submit that the Council cannot use the threats of legal action over a short period of time to create a privilege over data obtained through monitoring that has occurred over a long period of time. Finally, the applicants submit that any raw data ought not be protected by a claim for privilege, consistent with the principles outlined in Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd (No 2) (1998) 83 FCR 397.
4. The respondent submits that it is clear from the evidence that the sole purpose of the peer review and the monitoring was for the purpose of furnishing material to the Council's legal advisers pending potential proceedings. It was submitted on behalf of the Council that it would not have monitored the drainage of its own accord. This submission is supported by paragraph 10 of the affidavit of Mr Pickup, in which it is asserted that: It is apparent from my review of the Council files and the instructions that I have received, that the Peer Review Report and the monitoring was commissioned solely for the purposes of, or at least for the dominant purpose of, the threatened contempt proceedings. This assertion is not supported by any documents showing the Council's terms of engagement, or engagement by legal representatives of the Council, of experts for the purpose of obtaining advice or preparing documents in anticipation of legal proceedings. The applicants did not seek to cross-examine Mr Pickup on this point. However, I am of the view that Mr Pickup's evidence on this point is opinion only and that I should form my own view as a result of the correspondence annexed to the affidavit and the content of the documents marked as privileged.
5. Having considered the evidence, and having regard to the content of the documents produced, I am of the opinion that the privilege claim can be maintained in relation to some of the documents only. I consider that the documents fall into two categories. Within the first category are two reports of 2007: the peer review of August 2007 and the draft report of GHD of December 2007. These reports relate to the drainage system proposed by the Council. The second category of documents are reports on the monitoring methods put in place, the data obtained from that monitoring, and reports on the success of the works based on that data.
6. In relation to the first category, the two reports, I accept that these were written for the dominant purpose of threatened legal proceedings. The evidence shows that Mr Cornwell, on at least three occasions, indicated he would take action in the Supreme Court seeking orders for a review of the drainage system proposed by the Council. The substance of these threats was as follows:

• On 8 February 2007, in an e-mail to the a council officer "…if I do not have confirmation that your 'final solution' complies as per your assurances to Council and the public I will seek urgent orders in the Equity Court for a peer revue [sic] of your solution".
• On 20 February 2007, in an e-mail to a council officer "If I haven't heard from you by Friday I will assume you are not prepared to consent to a peer review and I will go to the Equity Court and seek appropriate Orders."
• On 19 March 2007, in an e-mail to the same council officer "I will assume that if I have not heard from you in the next 48 hours that you are unwilling to participate in a voluntary peer review and I will issue instructions to seek urgent orders for a mandatory review."

1. The Peer Review Report was then prepared and is dated August 2007, and the report of GHD is dated December 2007. Each of the reports refers specifically to considering proposed drainage works in light of the Court of Appeal orders. Other than being prompted to do so by the threats of possible legal proceedings, there was no other reason why Council might have had any obligation to obtain those reports. Therefore, I accept the submission made on behalf of the Council and the opinion of Mr Pickup contained in his affidavit that those documents were commissioned for the sole or dominant purpose of the threat of the commencement of legal proceedings against the Council.
2. However, I do not accept that the same principles apply to the second category of documents. The order of the Court of Appeal was to grant an injunction "restraining the Respondent from continuing to discharge upon the Appellant's land stormwater in excess of the natural flow that would flow upon the land". This order, by its very nature, required the Council to conduct monitoring to determine what the natural flow of stormwater on the land is, and whether it was discharging stormwater in excess of the natural flow on the land.
3. The requirement for the Council to monitor the stormwater and the results of its drainage works preceded any express or implied threat of contempt of court proceedings. That is, a pre-existing obligation was created as a result of the terms of the orders of the Court of Appeal. The Council was required to collect and monitor the data in order to ensure that it complied with the order. The fact that the Council was motivated to comply with that pre-existing obligation as a result of threatened legal proceedings for contempt of court does not then mean that the subsequent monitoring and evaluation occurred only for the purpose of the threatened legal proceedings. In other words, the fact that they did not initially carry out the monitoring until they received threats of legal proceedings does not mean that the purpose of the monitoring data has been converted from the original pre-existing obligation to the purpose of defending possible contempt proceedings.
4. Furthermore, I cannot accept that there was any real threat made that contempt of court proceedings would actually be commenced. Whilst references to contempt of court were made in a number of communications, there is no evidence of any actual threat that such proceedings would be commenced if the Council failed to do something by a certain date. One such example is contained in a letter from Mr Cornwell to the Council, stating: It would be regrettable if we were required to petition the Court over Council's continuing breaches in the circumstances. Such a statement is a mere assertion, and consistent with the test outlined in ACCC v Australian Safeway Stores (1998) 81 FCR 526, cannot be seen to create real prospects of there being litigation for contempt of court.
5. For these two reasons, I cannot conclude that the documents that record the steps taken to monitor the stormwater drainage, the documents that record the data obtained through that monitoring, and the documents that evaluate that data were created for the dominant purpose of possible or impending legal proceedings. They were created to ensure that the Council met its obligations under the orders of the Court of Appeal, given the terms of the order itself. For that reason I cannot accept that these documents are protected by legal professional privilege and I am therefore prepared to make an order granting access to them. List of amendments: Citation added: Paragraph 3 (9 February 2015) Typographical error: Paragraph 21 (9 February 2015) Correction to reasons: Paragraphs 18, 22, 27 (11 February 2015) Typographical errors: various paragraphs (6 January 2016)

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