Southern Cross Airports Corporation Pty Ltd v Chief Commissioner of State Revenue

Disclosure waiver 5I was taken to p 5 of the letter of 27 July 2001 from Freehills to the Chief Commissioner in which reference is made to advice. What was said was this: "although the Commonwealth has taken advice and considers that a sale to a holding company now is not a requirement of current law, and of course the law could be changed in the future, if the Commonwealth Parliament considered that appropriate". 6That passage was in parenthesis in the letter. 7It is submitted that that disclosure is sufficient to identify the nature of the advice with the consequence that that advice is no longer the subject of legal professional privilege. 8In Osland v Secretary, Department of Justice [2008] HCA 37; (2008) 234 CLR 275 under a freedom of information application, what was sought was a joint advice identified by the Attorney-General in a press release which stated that he had obtained a joint advice from three Queen's Counsel which recommended that a petition by a convicted murderer for mercy should be denied and the Governor had denied the petition. 9While the application was made under the Freedom of Information Act 1982 (Vic) it was concerned with s 32(1) which exempted from disclosure documents which would be privileged from production in legal proceedings on the ground of legal professional privilege. 10It seems to me that what the High Court held did not amount to a waiver of privilege in Osland was far more dramatic than p 5 of the letter of 27 July 2001. 11It was submitted that the difference is that in the instant circumstances the solicitors were seeking to have the Chief Commissioner take a certain stand based on the advice. That does not seem to me to be a distinction that relegates Osland to irrelevance so far as the current application is concerned. 12In my judgment privilege was not waived by the parenthetical remark in Freehills' letter of 27 July 2001.

Commercial categories 13Under the Consultancy Agreement between the Commonwealth and Freehills, Freehills as consultant was to provide legal advisory services in Phase 1 and, if required, legal advisory services in Phase 2. 14Phase 2 occurred and Freehills was bound by the requirements with respect to Phase 2 consultancy services set out at par 1.3 (b) in Sch A to the Consultancy Agreement. 15That required Freehills to provide legal advice and services in relation to all aspects of the sale including, but not necessarily limited to, and there followed a series of matters including such broad commercial categories as advertising, public communications, marketing and logistics issues and negotiations with preferred trade sale bidders. 16In AWB v Cole (No.5) [2006] FCA 1234; (2006) 155 FCR 30 at [44]; 44-47 Young J summarised the relevant principles. One of the summaries at (7) was that the concept of legal advice was fairly wide. It extended to professional advice as to what a party should prudently or sensibly do in the relevant legal context. But it did not extend to advice that was purely commercial or of a public relations character and reference was made to Balabel v Air India [1988] Ch 317 at 323, 330 amongst other cases. 17In my view, documents that fall into purely commercial categories or public relations categories within par 1.3(b) in Sch A to the Consultancy Agreement are not the subject of legal professional privilege and ought, if any such documents exist, to be discovered.

File notes 18I revisit what I have said with respect to file notes. 19As I have indicated, a file note may well be privileged even though it records a conversation that was not privileged, the authority for which is Sugden . 20It was submitted, however, that the recording of a non-confidential discussion in a file note would not result in the disclosure of the contents of a confidential document prepared by the client, lawyer or other person or disclosure of a confidential communication made between the client and lawyer or a confidential communication made between two or more lawyers acting for the client. 21It seems to me, however, that the analysis fails to take account of the argument that if a file note is brought into existence for the dominant purpose of providing legal advice and the file note is a confidential communication in itself, the fact that it records a non-confidential communication is beside the point.

State of mind waiver 22The Chief Commissioner seeks discovery of any legal advice received with respect to a letter of 13 August 2001 from the Commissioner under which he accepted the Commonwealth's request that he exercise his discretion under the Duties Act 1999, s 119(3) which exempted an acquisition from land rich duty if the Chief Commissioner was of the view that is was not just and reasonable for the provisions to apply. That submission was contained in a letter of 27 July 2001. 23SCAC's pleading in the Further Amended Statement of Facts Issues and Contentions alleges that based upon the letter of 13 August 2001 it did not give any further consideration to a strategy for mitigating the land rich duty risk involving the obtaining of a formal land valuation. 24It is further alleged that the Commonwealth and SCAC believed that, if the sale process and structure of the bids was not materially different then if and when the process recommenced, the exercise of discretion by the Commissioner would result in an exemption in the same terms as the just and reasonable determination. 25In Bailey v Director-General, Department of Land and Water Conservation [2009] NSWCA 100 at [135] reference was made to the principle in Mann v Carnell that what brings about the waiver of legal professional privilege is the inconsistency which the courts, where necessary informed by considerations of fairness, perceive between the conduct of the client and the maintenance of the confidentiality. 26In the Council of The New South Wales Bar Association v Archer [2008] NSWCA 164, (2008) 72 NSWLR 236 at [48]; 252 Hodgson JA observed that what would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. His Honour said that in that case it might have been sufficient that the client was making assertions about the client's state of mind in the circumstances where there were confidential communications likely to have affected that state of mind. 27In this case, however, it does not seem to me that any case is being made out for a state of mind based on legal advice when the document of 13 August 2001 appears on its face to contain the views of the Commissioner upon which reliance was based. 28In the absence of some indication that the assumed state of mind was partly based upon legal advice there does not seem to me to be a basis for withdrawal of any legal professional privilege with respect to any advice that might have been received. 29If, on the other hand, there was a basis for the assertion that the state of mind was based not only on the letter of 13 August 2001 but also on legal advice appertaining to that letter, then it seems to me that the concept of fairness in Mann would dictate that such advice be disclosed.

Valuation waiver 30In the Further Amended Statement of Facts Issues and Contentions it is asserted that the Chief Commissioner represented that he would approach the land rich assessment of duty on the acquisition of the issued shares in Sydney Airport Corporation Ltd (SACL) by a holding company owned by the winning consortium on a specified basis (Principles Agreement). 31It is asserted that the Principles Agreement was recorded in writing in correspondence between the solicitors for the Commonwealth and the Chief Commissioner of 15 and 16 May 2002. 32It is asserted that on 1 July 2002 the Commonwealth provided to the Chief Commissioner a copy of the full valuation report of the land and buildings at Sydney Airport prepared by Jones Lang LaSalle as at June 2002 (2002 Land Valuation) and that the 2002 Land Valuation was obtained by the Commonwealth and provided to the Commissioner in accordance with the Principles Agreement. 33With respect to this issue in Sch 11 to the Amended Notice of Motion a number of documents are identified as relating to legal advice given with respect to that issue. 34In Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044 Hodgson CJ in Eq said at [12] that: "... the question of whether the advancing of a person's state of mind is to be taken as consenting to the giving of evidence of confidential communication, or as waiving privilege, is a matter of degree in each case." 35His Honour went on to say that relevant factors would include the significance of the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; and the probability or otherwise of the legal advice being relevant to the holding of that belief, or being relevant to its reasonableness. 36It seems to me that in this particular case, it can be inferred from the description of the documents in schedule 11 that legal advice was given in relation to the 2002 Land Valuation. No doubt in instructions to the valuer as to way in which he was to proceed. While there is no pleading of a belief by the Commonwealth or SCAC that the 2002 Land Valuation accorded with the Principles Agreement, that can, I think, be inferred. 37In this case it seems to me that a sufficient basis has been made out for me to infer that the Commonwealth and SCAC believed that the 2002 Land Valuation conformed to the Principles Agreement and that belief was based in part on legal advice and in terms of Mann it would be inconsistent to maintain the legal professional privilege while at the same time asserting, by inference. A state of mind based in part upon the legal advice 38In my view, the documents in schedule 11 are discoverable on the basis that there has been a waiver of the legal professional privilege.

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. Decision last updated: 18 April 2011