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[2025] NSWSC 673
Supreme Court of NSW
2025-06-27
Payne JA
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Sweeten v Haggerty [2025] NSWSC 673
Hearing dates: 17 June 2025
Date of orders: 27 June 2025
Decision date: 27 June 2025
Jurisdiction: Common Law
Before: Payne JA
Decision: (1) Leave to appeal out of time under s 89(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) refused.
(2) Plaintiffs to pay the defendants costs of the applications for leave to appeal.
Catchwords: EVIDENCE — Privileges — Client legal privilege — Litigation — inadvertent disclosure of email communication — where privileged communication accessed via Dropbox link with specialist IT assistance — whether privilege waived — whether there was knowing and voluntary disclosure — whether there was deliberate abuse of power — no waiver established
APPEAL — costs — costs assessment — appeal from Review Panel — s 89(1) Legal Profession Uniform Law Application Act 2014 (NSW) — whether Review Panel erred in fact or law in determining the amount payable by the plaintiffs — where proceedings conducted without reference to the email communication — no error of fact or law established
CIVIL PROCEDURE — Jurisdiction — Monetary limits — leave required under s 89(1)(b) Legal Profession Uniform Law Application Act 2014 (NSW) — leave refused
CIVIL PROCEDURE — Time — Extension of time — Leave required under r 50.3 UCPR — approximately three months out of time — leave refused
Legislation Cited: Civil Procedure Act 2005 (NSW) Part 6
Evidence Act 1995 (NSW) ss 118, 119, 122, 125
Legal Profession Uniform Law Application Act 2014 (NSW) ss 85, 89
Uniform Civil Procedure Rules r 50.3
Cases Cited: Amirbeaggi v EB [2023] NSWCA 108
Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12
Bailey v Department of Land and Water Conservation (2009) 74 NSWLR 333; [2009] NSWCA 100
Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501; [1997] HCA 3
Director of Public Prosecutions (NSW) v Stanizzo [2019] NSWCA 12
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; [2013] HCA 46
Gazecki v McCabes Lawyers Pty Ltd (2020) 102 NSWLR 259; [2020] NSWCA 98
Ghamrawi & v GIO General Ltd [2005] NSWCA 467
Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2020] NSWCA 114
Haggerty v Sweeten [2023] NSWSC 850
Jingalong Pty Ltd v Todd [2014] NSWCA 330
Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 75 FCR 511; [1997] FCA 545
New South Wales v Betfair Pty Ltd (2009) 180 FCR 543; [2009] FCAFC 160
New South Wales v Jackson [2007] NSWCA 279
Smith v Madden (1946) 73 CLR 129
Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369
Van Der Lee v New South Wales [2002] NSWCA 286
Category: Principal judgment
Parties: Benjamin Michael Sweeten (First Plaintiff)
Varvara Angelique Sellies (Second Plaintiff)
Margaret Haggerty (First Defendant)
Patricia Anne Hume (Second Defendant)
Francis William Johnson (Third Defendant))
Representation: Counsel:
Faraz Maghami (Plaintiffs)
Michelle Castle (Defendants)
Solicitors:
Eden King Lawyers (Plaintiffs)
Fahey Rosenblum Lawyers & Mediators (Defendants)
File Number(s): 2025/94379
Publication restriction: None
This is a case about costs. The plaintiffs, Mr Ben Sweeten and Ms Varvara Sellies, seek leave to appeal to this Court out of time and in respect of a dispute about an amount of assessed costs which has not been shown to be greater than $100,000. The application for leave to appeal is brought under s 89(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) (“LPULA Act”) from a decision of a Review Panel conducting a costs assessment review under s 85 of the LPULA Act.
The defendants are the trustees of a testamentary trust, established by the will of the late Catherine Brown (“Clare’s Trust”). The sole beneficiary of Clare’s Trust is Catherine’s daughter, Clare Brown. Clare’s father was Christopher Brown, also now deceased. The first plaintiff, Mr Sweeten, is Clare’s cousin and the first defendant’s nephew. The second plaintiff is Mr Sweeten’s partner. Catherine’s will granted Christopher a right of residence to a property owned by Catherine in Darling Point, New South Wales. Under the terms of the will the Darling Point property became an asset of Clare’s Trust (the “Trust Property”). Whilst Christopher was alive, he allowed Mr Sweeten and Ms Sellies to live in the Darling Point property. After Christopher’s death, Mr Sweeten and Ms Sellies refused to vacate the premises, despite demands to do so by the trustees of Clare’s Trust.
On 29 March 2022, the trustees of Clare’s Trust commenced proceedings in the Supreme Court against Mr Sweeten and Ms Sellies (“possession proceedings”). In the possession proceedings, the trustees sought possession of the Trust Property. On 9 June 2022, Mr Sweeten and Ms Sellies filed a cross claim asserting rights to occupy the Darling Point property based on an alleged promissory estoppel and the existence of a lease. They also sought damages. Mr Sweeten and Ms Sellies alleged they had made considerable improvements to the Trust Property, and had paid for works and renovations.
Both matters (the possession proceedings and the myriad claims made by cross-claim) were fixed for a four day hearing to commence on 7 March 2023. Mr Sweeten and Ms Sellies capitulated on the morning of the hearing and sought to discontinue the cross-claim but did not accept they were liable to pay costs. On 20 July 2023, Rothman J made an order that Mr Sweeten and Ms Sellies pay the trustees of Clare’s trust the costs of the cross-claim: Haggerty v Sweeten [2023] NSWSC 850. Those orders were:
(1) The cross-claimants shall pay the cross-defendants their costs of the Cross-Claim on the ordinary basis;
(2) All other claims for costs are dismissed with no further order;
(3) Proceedings dismissed.
We refer to the above matter and the Costs Orders made on 20 July 2023.
We enclose under separate cover the Cross Defendants’ application for Costs Assessment and supporting material. The total costs claimed by the Cross Defendant is $181,519.70 GST inc.
However, to settle the matter we are instructed to accept payment of $120,000.00 in full and final settlement.
This offer is open for acceptance till 18 September 2023. Failing acceptance, we shall proceed with the costs assessment.
Subject: Re: Haggerty v Sweeten (2022/00090030) – Costs
Hi Mr Fahey
I think you’ve made a mistake.
The judgment from His Honour Justice Rothman stated that costs were for the cross claim only. You must have accidentally put the costs for your claim in there too,
We would like to formally oppose the costs order and have them assessed.
Thank you
Benjamin Sweeten and Varvara Sellies
I have set out the terms of this offer and its rejection because the case before me turns, almost entirely, upon inferences I am invited by Mr Sweeten and Ms Sellies to draw based on a privileged document mistakenly disclosed to Mr Sweeten which on no view bears the meaning he ascribes to it. As I will explain, the document is inadmissible in these proceedings. Even if it were admissible, it is an entirely commonplace communication between solicitor and client setting out some rough and tentative calculations about costs for the purposes of obtaining the instructions of the trustees about making an offer to settle the cross-claim costs issue. Such an offer was made a few days later. The email does not evidence the “true” amount of the trustees’ costs of defending the cross-claim and is not inconsistent with the evidence acted upon by the Costs Assessor or the Review Panel. To the contrary, the email on its face is incomplete and inchoate. Acting properly, solicitors for the trustees were making a rough estimate of costs properly recoverable under Rothman J’s order for the purpose of getting instructions to make what was, on the face of what has transpired, a very reasonable offer of settlement. As I will explain, Mr Sweeten’s attempt to deploy the document has been unsuccessful.
The point I am presently making, however, is that even if I were wrong, and Mr Sweeten was entitled to deploy the document, the email does not assist his case. This is because the tentative and incomplete information in the email was plainly part of the process of obtaining instructions to make the offer of settlement. It formed no part of the lengthy process of preparation of a detailed bill in assessable form prepared for the trustees of Clare’s Trust by an expert in cost assessment, Ms Morson.
Ms Morson was retained by the trustees in September 2023. She apparently spent some time preparing an Application for Assessment of Costs. For present purposes the critical part of that application was a schedule which itemised each item of costs claimed by the trustees, with a detailed description of the work performed and a column categorising the item as one claimed as relating only to the cross-claim, one relating to both the claim and the cross-claim or one relating to costs.
On 2 February 2024, the trustees filed an Application for Assessment of Costs under the LPULA Act claiming the defendants’ costs of the cross-claim. The claimed amount was $193,465.35 including the costs of the assessment. In relation to the three categories of claimed costs identified immediately above, the trustees claimed:
a. “Costs only of Cross Claim” – i.e. work relating only to the Cross Claim, the Reimbursement Issue, or this costs assessment – this work is claimed at 100%;
b. “Costs of both Claims – i.e. work relating to the proceedings generally, or – this work is claimed at 75%; and
c. “Costs Argument” – work relating to the claim for costs incl. submissions put before the judge – this work is claimed at 50%.
The Application was referred to a Costs Assessor. On 25 March 2024, the plaintiffs filed a notice of objection. Mr Sweeten and Ms Sellies employed a solicitor expert in costs assessment, Ms Sharon Drew from Blue Ribbon Legal, to prepare the notice of objection. Comments were added to many of the claimed costs by Blue Ribbon. A separate column was added to the schedule of costs identifying the amount of particular item of the claimed cost which was disputed and why.
Although there were many disputes of detail which are no longer in issue, the critical difference between the experts was the percentage recoverable by the trustees under the terms of Rothman J’s orders in respect of costs incurred in relation to both the claim and the cross-claim. It was common ground between the parties before the Costs Assessor and the Review Panel that the costs incurred in relation to both the claim and the cross-claim should be apportioned. The trustees claimed that 75% of the costs relating to the claim and the cross-claim should be attributed to the costs of the cross-claim. Mr Sweeten and Ms Sellie claimed that 25% of the costs relating to the claim and the cross-claim should be attributed to the cross-claim.
Before me, Mr Sweeten and Ms Sellies sought to agitate the question of whether it was appropriate to apportion costs common to the claim and cross-claim on any basis. This was not the way they had conducted the claim before the assessor and the Review Panel. It was not, even arguably, an error of fact or law by the Costs Assessor or the Review Panel to fail to do something they were not asked to do.
On 18 May 2024, the Costs Assessor determined the application and issued two certificates of determination: one in the amount of $164,275.08 for the assessed costs under the costs order plus interest, and one in the amount of $7.810 for the Assessor’s costs. In determining so, the Costs Assessor rejected the trustees’ claim for the “costs of both claims” at 75% and substituted 50% for those items.
On 25 June 2024, the plaintiffs filed an Application for Review under the LPULA Act. The plaintiffs continued to contend that 25%, was the correct apportionment of “costs of both claims”.
On 13 November 2024, the Review Panel affirmed the determination of the Costs Assessor and ordered that the Mr Sweeten and Ms Sellies also pay the costs of the costs assessment. The total costs payable by Mr Sweeten and Ms Sellies amounted to $185,225.28.
INTERIM RELIEF
- Grant leave to the Plaintiffs to appeal the review certificate dated 4 November 2024.
2. Stay any enforcement of the review certificate dated 4 November 2024 and cost determination dated 16 May 2024 pending further order of the court.
3. Any other or further order the court thinks fit.
FINAL RELIEF
4. Set aside the review certificate dated 4 November 2024.
5. Set aside the cost determination dated 16 May 2024.
6. An order that the defendants pay the costs of the review panel and the cost assessor in proceeding 2024/00044733.
7. An order that the defendants pay the costs of the plaintiffs pertaining to proceedings 2024/00044 733.
8. Any order that the defendants file a fresh application for cost assessment limited to costs of the cross claim of proceeding 2022/00090030 within 28 days of these orders.
9. Interest at the full rate pursuant to section 100 of the Civil Procedure Act 2005.
10. Further or other relief.
11. Costs including interest on Costs.
89 Appeal on matters of law and fact
(1) A party to a costs assessment that has been the subject of a review under this Part may appeal against a decision of the review panel concerned to—
(a) the District Court, in accordance with the rules of the District Court, but only with the leave of the Court if the amount of costs in dispute is less than $25,000, or
(b) the Supreme Court, in accordance with the rules of the Supreme Court, but only with the leave of the Court if the amount of costs in dispute is less than $100,000.
(2) The District Court or the Supreme Court (as the case requires) has all the functions of the review panel.
(3) The Supreme Court may, on the hearing of an appeal or application for leave to appeal under this section, remit the matter to the District Court for determination by that Court in accordance with any decision of the Supreme Court and may make such other order in relation to the appeal as the Supreme Court thinks fit.
(3A) The Supreme Court may, before the conclusion of any appeal or application for leave to appeal under this section in the District Court, order that the proceedings be removed into the Supreme Court.
(4) An appeal is to be by way of a rehearing, and fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor may, with the leave of the Court, be given on the appeal.
[7] The nature of an appeal by way of rehearing is described in Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 at [23] (Gaudron, Gummow, McHugh and Hayne JJ) by reference to the characteristics which distinguish it from a hearing de novo and an appeal in the strict sense:
For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error. At least that is so unless, in the case of an appeal by way of rehearing, there is some statutory provision which indicates that the powers may be exercised whether or not there was error at first instance. And the critical distinction, for present purposes, between an appeal by way of rehearing and an appeal in the strict sense is that, unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance whereas, on an appeal by way of rehearing, an appellate court can substitute its own decision based on the facts and the law as they then stand.
[8] The following passage from the judgment of Gageler J in Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [31] makes clear that while it remains necessary to identify an error in the decision appealed from, in an appeal by way of rehearing that requirement may be satisfied by reason of further evidence adduced in the appeal or a change in the law which has the result that looked at in retrospect the decision appealed from was in one or more respects incorrect:
For practical purposes, the difference between correction of error on an appeal in the strict sense and correction of error on an appeal by way of rehearing lies in the temporal perspective that the appellate court is required to adopt in examining the correctness of the judgment under appeal. An appellate court determining an appeal in the strict sense is required to determine the correctness of the judgment under appeal at the time that judgment was given: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial and on the law as it then stood. An appellate court determining an appeal by way of rehearing, in contrast, is required to determine the correctness of the judgment under appeal in retrospect: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial supplemented by any further evidence that the appellate court may allow to be adduced on the appeal, and on the law as it stands when the appellate court gives judgment on the appeal.
[42] … the court is not given specific powers, but rather is said to have “all the functions of the review panel.” The effect of this provision is by no means clear. The functions of the review panel are set out in s 85 of the Application Act, and involve reviewing “the determination of a costs assessor”: s 85(1). For that purpose, the review panel has “all the functions of a costs assessor … and is to determine the application … in the manner that a costs assessor would be required to determine an application for costs assessment”: s 85(2). The review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit: s 85(3). There is a degree of awkwardness in conferring on a court required to determine an appeal against a decision of a review panel all the functions of the review panel, which involve review of the decision of a costs assessor. That language may affect what is meant in s 89(4) by an appeal “by way of a rehearing”.
[43] No submissions were made in this Court on the scope and operation of s 89; accordingly, it is both unnecessary and inappropriate for the Court to resolve these questions in this case. What is clear, however, is that courts exercising jurisdiction under this provision must pay close attention to the terms of the statutory power and should not adopt statements from earlier cases dealing with different powers, unless persuaded that they remain applicable. Although the distinction between appeals on matters of law and appeals from the final determination of a costs assessment have been removed, it may, nevertheless, be appropriate to adopt different standards of scrutiny with respect to each. Thus, questions of law are inherently liable to review according to a correctness standard; a lower standard of scrutiny may well be applicable to an assessment of what costs are fair and reasonable in the circumstances of the particular case. Particularly is that so where a specific body of costs assessors, appointed solely for that function, reach evaluative judgments. Furthermore, costs assessors are expected to ensure consistency of approach, being a standard which cannot readily be applied by a reviewing court with limited experience of such matters.”
(Emphasis added)
[20] There was a second issue upon which the respondents relied, both before the primary judge and in this Court. The submission was that an amount could not be determined for the professional costs of the applicant because no amount had been sought by him either before the costs assessor, or before the Review Panel. Accordingly, no amount was included in the certificate issued by the Review Panel. The scope of the appeal given by s 89(1) was limited to an appeal “against a decision of the review panel”. It followed that an issue which had not been raised before the Review Panel could not be raised in the District Court. If the respondents succeed on the first issue, this second issue does not arise.
I have concluded that the plaintiffs required leave to appeal out of time and leave to appeal pursuant to s 89(1) of the LPULA Act.
In relation to the first matter, r 50.3 of the UCPR provides that a summons commencing an appeal must be filed within 28 days after the material date (subsection (1)(a)). The material date in these proceedings is 13 November 2024, where the Review Panel affirmed the determination of the Costs Assessor. The last date for filing the appeal was 11 December 2024. The summons was not filed until 10 March 2025, approximately three months after the last filing date. The plaintiffs acknowledged the lengthy delay.
The legal principles governing the discretion to extend time for the filing of a notice of appeal were outlined in Jingalong Pty Ltd v Todd [2014] NSWCA 330 where McColl JA identified the four primary considerations in determining such an application, being the length of the delay, the reason for the delay, whether the applicant has a fairly arguable case and the extent to which the respondents have suffered any prejudice.
In Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 at [58], Basten JA emphasised that the “danger in placing too much emphasis on the prospects of success: to do so invites the parties to treat the application as a dress rehearsal for the full appeal: see Jackamarra at [9]”. It is not necessary, or appropriate, for the applicant to do more than demonstrate a fairly arguable case. It was not necessary nor appropriate to demonstrate in any detail the prospects of success.
In the same case, Hodgson JA (agreeing substantially with Basten JA and with whom Ipp JA agreed) discussed the circumstances where it might be appropriate to go further into the merits of the case, especially when the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice:
[14] In my opinion, there may be circumstances where it is appropriate to go further into the merits of the case of a person seeking an indulgence such as this, than to ask whether or not the case is fairly arguable. If such a person has a reasonable explanation of delay and the opponent does not have a strong case of prejudice, then a fairly arguable case is sufficient. However, if the explanation for the delay is less than satisfactory, or if the opponent has a substantial case of prejudice, then it may be relevant that the person seeking the indulgence shows that his or her case has more substantial merit than merely being fairly arguable.
In the present case the length of the delay, three months, was significant. I find that there was no persuasive explanation for the delay in commencing proceedings in this Court. The assertion offered by Mr Sweeten, a lack of funds, rose no higher than mere assertion and on all of the evidence I am not persuaded the assertion was correct. As to prejudice, I accept the submission of the trustees that prejudice was demonstrated in that they are acting as trustees of a trust and are personally liable for the debts of the trust. As to the merits of the case, as I will explain in detail, there is no arguable error of fact or law which has been demonstrated.
In relation to the second matter, the plaintiffs required leave to appeal pursuant to s 89(1) of the LPULA Act because the monetary threshold was not met. As s 89(1)(b) makes clear, an appeal to this court only lies by leave if the amount of costs in dispute is less than $100,000. Making every assumption favourable to the plaintiffs, it is clear that less than $100,000 is involved in this case. The plaintiffs’ contention at its highest was crystallised in the following exchange before me:
HIS HONOUR: … How do I come up with a number and how could I be satisfied that there is more than $100,000 likely to be involved in this.
MAGHAMI: The short answer is the bill presented by the defendants was to the tune of $193,000 plus change. And whilst there is no crisp answer to this, I may be boxing at shadows here, but if one was to divvy the file between the cross claim and the main claim, I am using the terms used in that email, it would not necessarily be a fifty-fifty split. If it were a fifty-fifty split then your Honour would be dealing with a sort of cost that is less than $100,000. If it were not and, as the defendant put it, most of costs were in fact for the cross claim as opposed to the main claim
HIS HONOUR: Well that's what they put. They said 75 percent; you said 25 percent. The Costs Assessor said 50 percent. That is what I am taking up with you. Let's assume we are starting with a lower number. And 50 percent of the lower number is still going to be way under $100,000.
MAGHAMI: Then I would be in trouble, yeah.
HIS HONOUR: It is not a trick question.
MAGHAMI: Your Honour can still grant leave.
The evidence before me comprised:
Affidavit of Benjamin Sweeten dated 10 March 2025;
Affidavit of Benjamin Sweeten dated 27 May 2025;
Affidavit of Claudette Gazi, the plaintiffs’ solicitor, dated 10 June 2025;
Affidavit of Margaret Haggerty dated 15 May 2025; and
Affidavit of Kathy Dufty dated 2 June 2025.
Together with exhibits, these affidavits comprised 5 lever arch folders of documents which I marked “Exhibit A”. I otherwise did not interfere with the internal pagination and Exhibit markings in Exhibit A.
Extensive objections to admissibility were made by both parties. Draft rulings (which I marked MFI1 and MFI2), were distributed in advance of the hearing. After hearing from the parties, all of those draft rulings were confirmed by me at the as final rulings save that I reserved on the question of the admissibility of the email of 23 August 2023, Exhibit BS 16. For reasons that follow, I find that client legal privilege in the email of 23 August 2023 was not waived and that BS 16 was not admissible.
HIS HONOUR: Just to be clear, you don’t advance any of these submissions if I were to rule the document to be privileged?
MAGHAMI: I don't think I can, your Honour, no.
The email of 23 August 2023, on its face, was a communication between the trustees and their legal representatives concerning what was at that stage some rough and tentative estimates of the total costs of the cross-claim the subject of Rothman J’s costs orders. The email appeared to have attached a draft email to Mr Sweeten which proposed a settlement sum.
The plaintiffs accepted that the email was a privileged communication under s 119 of the Evidence Act 1995 (NSW). They were correct to do so. That section provides:
119 Litigation
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 between the client and another person, or between a lawyer acting for the client and another person, that was made, or
(b) the contents of a confidential document (whether delivered or not) that was prepared,
for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.
The email was dated 23 August 2023 and was a confidential communication made by the defendants’ solicitors to the defendants seeking instructions about making a costs offer of settlement to the plaintiffs. That communication was made for the dominant purpose of the defendants being provided with professional legal services relating to an Australian proceeding, in this case the proceeding in relation to a costs assessment under the LPULA Act. There was a “real prospect” of litigation when the communication was prepared by the defendants’ solicitors: New South Wales v Jackson [2007] NSWCA 279 at [66]–[69]. The exchange of communication between the defendants’ solicitors and Mr Sweeten at the time and subsequent to the making of the communication underscored this likelihood. Even if not protected by litigation privilege the email is protected by advice privilege under s 118 of the Evidence Act.
The email communication was made against the backdrop of the trustees and their solicitors discussing a proposed settlement offer to be made to the plaintiffs about costs, and to obtain instructions to prepare for a costs assessment if agreement could not be reached.
On 29 August 2023, (as set out above) the defendants’ solicitors sent a letter by email to Mr Sweeten containing an offer of settlement in the amount of $120,000. The letter identified the costs claimed by the plaintiffs the subject of the order as $181,519.70. As I have said, I find that the 23 August 2023 email was part of the process of obtaining instructions in making this settlement offer.
On 29 August 2023, Mr Sweeten rejected the settlement offer and stated that the plaintiffs required the costs to be assessed.
On 30 August 2023, another email was also sent by Mr Sweeten requesting copies of the application documents as he claimed to not be able to open an earlier PDF attachment. The defendants’ solicitors then sent Mr Sweeten a hyperlink to a Dropbox folder. The email of 23 August 2023 was apparently added in error to the Dropbox folder by Mr Fahey, the defendants’ solicitor. As far as the evidence before me reveals, Mr Sweeten was able to open a number of things in the Dropbox folder which he was intended to see, but could not open the email of 23 August 2023. Mr Sweeten did not complain to the trustees then, or at any time, about his inability to open the email of 23 August 2023.
On 13 September 2023, the defendants instructed their solicitors to engage Ms Morson, solicitor of Legal Costs Consultants, to prepare a bill of costs for the application for costs assessment.
In circumstances to which I will return, in January 2025 Mr Sweeten eventually was able to open email of 23 August 2023 after obtaining specialist IT consulting assistance.
The first occasion that Mr Sweeten sought to deploy the email of 23 August 2023 was as an annexure to his affidavit dated 10 March 2025 filed in this Court. That became Exhibit BS 16 to that affidavit.
…
We place you on notice that Legal Privilege is claimed over ALL DOCUMENTS that have been accessed without authorisation by Mr Sweeten on his instruction to Junius in February 2025.
…
In this Court, Mr Maghami submitted that I should conclude that the trustees have waived privilege in the email of 23 August 2023 either because the email was knowingly and voluntarily disclosed to Mr Sweeten pursuant to s 122 of the Evidence Act, or because the trustees were engaged in an abuse of power in the making or preparation of the communication pursuant to s 125 of the Evidence Act. I reject both submissions.
Section 122 provides:
122 Loss of client legal privilege: consent and related matters
(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.
(3) Without limiting subsection (2), a client or party is taken to have so acted if—
(a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or
(b) the substance of the evidence has been disclosed with the express or implied consent of the client or party.
(4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.
(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because—
(a) the substance of the evidence has been disclosed—
(i) in the course of making a confidential communication or preparing a confidential document, or
(ii) as a result of duress or deception, or
(iii) under compulsion of law, or
(iv) if the client or party is a body established by, or a person holding an office under, an Australian law—to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or
(b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or
(c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.
(6) This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness’s memory about a fact or opinion or has used as mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers).
The burden of proof lies on the party alleging that the privilege has been lost: Director of Public Prosecutions (NSW) v Stanizzo [2019] NSWCA 12 at [33]; New South Wales v Betfair Pty Ltd (2009) 180 FCR 543; [2009] FCAFC 160 at [54].
For privilege to be lost under s 122, the disclosure must be both “knowing” and “voluntary”. Inadvertent or unauthorised disclosure does not result in the loss of the privilege: Bailey v Department of Land and Water Conservation (2009) 74 NSWLR 333; [2009] NSWCA 100 at [3]-[4]; Ghamrawi & v GIO General Ltd [2005] NSWCA 467 at [23]. A disclosure made under a mistaken belief as to what is being disclosed will not be one made “voluntarily” and will not necessarily result in the loss of privilege: Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12 at 22. Privilege may not be lost if the mistake is “obvious” and should have been appreciated by the party to whom the document is disclosed: Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 75 FCR 511 at 526; [1997] FCA 545 (Goldberg J).
In cases such as the present the decision of the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; [2013] HCA 46 is apposite. In that case there was extensive dispute and evidence in the Equity Division and the Court of Appeal about 13 privileged documents which had mistakenly been disclosed as part of a discovery order. The High Court said:
[7] Proceedings of this kind and length concerning a tangential issue should have been averted. There was no need to resort to an action in the equitable jurisdiction of the Supreme Court to obtain relief. That Court has all the powers necessary to deal with an issue relating to discovery and which required, essentially, that a party be permitted to correct a mistake. Those powers exist by virtue of the Court's role in the supervision of the process of discovery and the express powers given by Pt 6 of the CPA to ensure the "just, quick and cheap resolution of the real issues in the dispute or proceedings." Those powers should have been exercised in relation to each of the 13 privileged documents for the reasons which follow. (footnote omitted)
[34] Whatever doubts Marque Lawyers had about the claims for privilege were dispelled by the letter from Norton Rose of 6 December 2011 advising that some privileged documents had been incorrectly listed as non-privileged. This action by Norton Rose was not identified in the reasons of Campbell JA as relevant, yet it was important to convey the true position of the ERA parties. The letter was sent promptly once Norton Rose became aware that mistakes had been made. It was given before Ms Marshall had fully inspected the documents. The disks containing the documents remained with Mr Armstrong, although they should have been retrieved upon notification of the mistake. It is not evident that he came across the 13 documents in question himself.
[35] These circumstances are not indicative of an inconsistent position being taken by the ERA parties' lawyers such that waiver should be imputed to those parties. The issue of waiver should never have been raised.
[45] Although discovery is an inherently intrusive process, it is not intended that it be allowed to affect a person's entitlement to maintain the confidentiality of documents where the law allows. It follows that where a privileged document is inadvertently disclosed, the court should ordinarily permit the correction of that mistake and order the return of the document, if the party receiving the documents refuses to do so.
[56] The evident intention and the expectation of the CPA is that the court use these broad powers to facilitate the overriding purpose. Parties continue to have the right to bring, pursue and defend proceedings in the court, but the conduct of those proceedings is firmly in the hands of the court. It is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose.
Subject: Costs consultant
Dear Mr Fahey
We have instructed costs consultants to prepare objections to the application for assessment and bill of costs served on 01.12.23. (Noting this was served via email and not opened until late December when your reminder appeared)
Our costs consultants currently anticipate completion of the objections by mid-February and we should be grateful if you would therefore refrain from filing the application for assessment until, say, 23.02.24, to allow time to explore settlement of the costs claimed in the light of those objections prior to further costs being incurred.
Included in our brief to our costs consultants was an email from you dated 30.08.23 sent at 10:47am. Our costs consultants advise us that that email contains a Dropbox link, purported to contain the attachments to your email sent 29.08.23. However, our costs consultants note that the Dropbox link appears to contain your entire file for the matter. Please confirm whether that was your intention. If not, our costs consultants will delete all documents downloaded from that Dropbox link. (emphasis added)
Yours sincerely
Benjamin Sweeten
Varvara Sellies
Three matters should immediately be noticed. First, Mr Sweeten and Ms Sellies recognise that the “entire file” has apparently been sent. Secondly, Mr Sweeten and Ms Sellies recognise that this is likely a mistake, by seeking confirmation that disclosure of the “entire file” was Mr Fahey’s intention. Thirdly, Mr Sweeten and Ms Sellies say that, absent receiving confirmation that the disclosure was intentional, their consultants would delete all downloaded documents from the Dropbox file.
The 24 January email provided:
Subject: Court Book
Murray as requested earlier,
I need your court book please.
I did the right thing and let you know about you accidentally sending me your file, can you please return the courtesy and reply to my request
Thanks
Benjamin Sweeten
All that needs be said about this email is that it contains an explicit acknowledgment by Mr Sweeten that he understood that Mr Fahey had “accidentally” sent him the file, including the email dated 23 August 2023.
Whilst it is correct that Mr Fahey did not reply to these emails, that matter is insufficient to prove any knowing and voluntary disclosure of the contents of the email communication. To the contrary, the fact that the Dropbox access to which Mr Sweeten was granted did not permit him to open the email tends against any conclusion that it was intended he be granted access to the email. On all of the evidence there was no intent to deploy directly or indirectly the contents of that email by the trustees. I find that there was no knowing and voluntary disclosure of the email communication. The evidence shows that whilst Mr Sweeten could access the email communication, in the sense of being cognisant of the presence of the communication via the Dropbox link he was given, he could not open the email without the specialist IT assistance he ultimately obtained. There was no knowing and voluntary disclosure of the contents of the email communication.
As to s 125 of the Evidence Act, it provides:
125 Loss of client legal privilege: misconduct
(1) This Division does not prevent the adducing of evidence of—
(a) a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or
(b) a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power.
(2) For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that—
(a) the fraud, offence or act, or the abuse of power, was committed, and
(b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power,
the court may find that the communication was so made or the document so prepared.
(3) In this section—
power means a power conferred by or under an Australian law.
In order to displace a claim of client legal privilege on the grounds of misconduct, including on the basis of a “deliberate abuse of a power” under subsection (1)(b) which Mr Maghami has asked me to find, there must be a clear statement of the relevant misconduct and sufficient probative evidence of its apparent occurrence: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 566; [1997] HCA 3. For the purpose of the section, the concepts of “fraud” and “deliberate abuse of power” require some element of dishonesty: Van Der Lee v New South Wales [2002] NSWCA 286 at [61] (Hodgson JA, Mason P and Santow JA agreeing). Furthermore, the communication or the preparation of the document must have occurred “in furtherance” of the impugned purpose of the fraud or an offence.
In Stanizzo, this Court said:
[33] The onus of proof rests with the party alleging that the privilege has been lost. There must be “reasonable grounds” for the Court to find that the fraud, offence or act, or abuse of power was committed and that the communication was made in furtherance of it. To enliven the operation of the section, there must be evidence admitted in the proceeding, not merely an allegation about the fraud, offence or act, or abuse of power. As Dawson J explained in Commissioner of Australian Federal Police v Propend Finance Pty Ltd:
“In O'Rourke v Darbishire, Viscount Finlay said: ‘there must be, in order to get rid of privilege, not merely an allegation … of a fraud, but there must be something to give colour to the charge.’ That test was accepted in Attorney-General (NT) v Kearney (1985) 158 CLR 500 at 516 by Gibbs CJ, with whom Mason and Brennan JJ agreed. Gibbs CJ added the further words of Viscount Finlay:
‘The statement [ie the allegation of fraud] must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact … The Court will exercise its discretion, not merely as to the terms in which the allegation is made, but also as to the surrounding circumstances, for the purpose of seeing whether the charge is made honestly and with sufficient probability of its truth to make it right to disallow the privilege of professional communications.’”
Mr Maghami relied only on s 125(1)(b) in relation to a deliberate abuse of power. In fairness to Mr Maghami, he said very little in support of this ground. This allegation fails at the outset. There was no clear statement of any relevant misconduct and no probative evidence of its apparent occurrence. That is the end of the matter. As the cases have shown, this is a very serious accusation. There was nothing identified approaching a deliberate abuse of power involved in the making or preparation of the 23 August 2023 email. The document is a completely unremarkable and tentative discussion between solicitor and client about the making of a very reasonable offer of settlement. The suggestion that there was abuse of power in the making or preparation of the document is rejected.
As no submission was advanced by the plaintiffs in support of there being any arguable error of fact or law in the absence of this email communication, the matter may be dismissed on that basis. In those circumstances, leave to appeal should be refused with costs.
If I am wrong in the conclusions that I have reached about the admissibility of Exhibit BS 16 I would nevertheless refuse leave to appeal. This is because, even if Exhibit BS 16 were admissible, no arguable error of fact or law in the decision of the Costs Assessor or the Review Panel was shown.
It is clear the costs assessment and Review Panel proceedings were conducted without reference to the email dated 23 August 2023. The information in the 23 August 2023 email does not reveal the “true” position or one inconsistent with the conclusions of the Costs Assessor or the Review Panel. The 23 August 2023 email was incomplete on its face. It contained cost items “tbc” which I infer meant “to be confirmed”. It was prepared at a time prior to the engagement of the expert costs consultants. It is clear that some costs incurred by the trustees in relation to the cross-claim were paid directly and not by their solicitors. There is also a question about the extent to which work in progress had been identified and captured in the account of fees incurred identified in the 23 August 2023 email.
The Costs Assessor and the Review Panel, on the other hand, acted upon a detailed schedule which identified each item of costs incurred. An expert retained by Mr Sweeten and Ms Sellies made detailed line by line comments and submissions on each of those items which comments and submissions were carefully considered by the Costs Assessor and the Review Panel. The assertion by Mr Sweeten and Ms Sellies that the figures for total costs contained in the 23 August email somehow affected the reliability of this lengthy, detailed, painstaking process engaged in by both parties which arrived at a total figure of costs for the cross-claim, must be rejected.
The plaintiffs’ complaint that the email permitted a case to be run different to that run before the Costs Assessor and the Review Panel must be rejected. The detailed costs schedule was created by the addition of each individual item of costs, whether it be for costs in relation to the cross-claim only or those in relation to both cross-claim and the original claim. As mentioned above, the defendants’ submission to the assessor was that 75% of jointly-incurred costs should be attributed to the cross-claim. Detailed reasons were given for that submission. The plaintiffs’ case below, on the other hand, was that 25% of these jointly-incurred costs should be attributed to the cross-claim. In the result, for reasons which were cogent, the Cost Assessor and the Review Panel assessor attributed 50% of the jointly incurred costs to the cross-claim.
Mr Maghami asserted that the entire assessment process miscarried because the only costs recoverable were those able to be identified as in relation to the cross-claim only. This approach is contrary to principle. In Smith v Madden (1946) 73 CLR 129 at 136 Dixon J said at 137:
…it may be necessary to divide an item of costs in two parts. This will occur when there is a single charge for work but a severable part of that work relates to the claim and the other severable part of the work relates to the counterclaim. It will then be necessary to divide the single charge in accordance with the two classes of work it covers. Division of charges in this way must be distinguished from apportionment, but it is easy to see that, under cover of division, apportionment in the sense of the Chancery practice may really be applied.
In any event, it was simply not open to the plaintiffs in this Court to assert any such error. That was not the plaintiffs’ case below. As I have indicated, their case before the Costs Assessor and the Review Panel was that 25% of the jointly incurred costs should be attributable to the cross-claim. Whilst that figure was rejected, so too was the 75% asserted by the trustees. There is no arguable error of fact or law in the original assessor and the Review Panel failing to do something they were not asked to do.
Much less was there any arguable error of fact or law in the conclusion of the Costs Assessor and the Review Panel having regard to the contents of the email of 23 August 2023 which formed no part of the cost assessment process.
Beyond mere assertion, the plaintiffs did not point to any arguable error of fact or law in the approach of the Costs Assessor or the Review Panel.
Accordingly, even if I am wrong about my principal conclusion concerning the absence of waiver of legal professional privilege in the 23 August 2023 email communication, its admission in these proceedings would not have established any arguable error of fact or law. It follows that leave to appeal would in any event be refused with costs.
Accordingly, I make the following orders:
Leave to appeal out of time under s 89(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) refused.
Plaintiffs to pay the defendants costs of the applications for leave to appeal.
**********
Sweeten
Haggerty [2025] NSWSC 673
(1996) 40 NSWLR 12
(2009) 74 NSWLR 333
(1997) 188 CLR 501
(2013) 250 CLR 303
(2020) 102 NSWLR 259
(1997) 75 FCR 511
(2009) 180 FCR 543
(1946) 73 CLR 129
(2007) 71 NSWLR 61
(2000) 203 CLR 172
(2018) 264 CLR 541
(1985) 158 CLR 500
On 13 March 2025, and almost immediately upon receipt of the affidavit including Exhibit BS 16, (although for reasons unexplained in the evidence the numbering in the affidavit has been changed) Mr Fahey on behalf of the trustees sent Mr Sweeten a letter asserting that privilege was claimed over all documents accessed by the expert (including the email of 23 August 2023) and that privilege was not waived. Relevantly, the letter provides: