Verde Terra Pty Ltd v Central Coast Council; Central Coast Council v Verde Terra Pty Ltd

956] HCA 27; (1956) 95 CLR 235 Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305; (2016) 339 ALR 635 Hebei Jikai Industrial Group Co Ltd v Martin [2015] FCA 228; (2015) 324 ALR 268 I Limited & Chester [2010] FamCAFC 251 In the matter of Mulsanne Resources Pty Ltd [2013] NSWSC 358 In the matter of Petrolink Pty Ltd; Smith v Bone [2014] FCA 1024 Kirkpatrick v Kotis [2004] NSWSC 1265; (2004) 62 NSWLR 567 Legal Services Commission v JHW [2012] SASCFC 47; (2012) 223 A Crim R 534 Liu v Fairfax Media Publications Pty Ltd [2012] NSWSC 1352; (2012) 84 NSWLR 547 Liu v Fairfax Media Publications Pty Ltd [2012] NSWSC 900, (2012) 91 ACSR 158 Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) [2017] FCA 1306 Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 Marshall v Prescott [2013] NSWCA 152 Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209 Pittwater Council v Martoriati [2012] NSWLEC 131 Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 Re Southland Coal Pty Ltd (recs & mgrs apptd) (in liq) [2006] NSWSC 899; (2006) 203 FLR 1 REW08 Projects Pty Limited v PNC Lifestyle Investments Pty Limited [2017] NSWCA 269; (2017) 95 NSWLR 458 Seven Network Limited v News Limited [2006] FCA 343; (2006) 151 FCR 450 Singtel Optus Pty Ltd v Weston [2011] NSWSC 1083; (2011) 81 NSWLR 526 State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 SWV Pty Ltd v Spiroc Pty Ltd [2006] NSWSC 668; (2006) 201 FLR 238 Teoh v Greenway [2015] ACTSC 133; (2015) 297 FLR 398 The Owners of Strata Plan No 57164 v Yau [2017] NSWCA 341; (2017) 96 NSWLR 587 Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 Tiffany & Co (Australia) Pty Limited v Sydney Metro [2019] NSWLEC 147 Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44; (2016) 259 CLR 212 Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; (2015) 256 CLR 507 UBS AG v Tyne [2018] HCA 45; (2018) 92 ALJR 968 Universal Roofing & Accessories Pty Ltd v Singh [2004] NSWSC 32 Van Der Lee v State of New South Wales [2002] NSWCA 286 Verde Terra Ltd v Central Coast Council [2019] NSWLEC 166 Verde Terra Pty Ltd v Environment Protection Authority (No 1) [2018] NSWLEC 159 Verde Terra Pty Ltd v Environment Protection Authority (No 3) [2018] NSWLEC 161 Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 Willams v Spautz [1992] HCA 34; (1992) 174 CLR 509 Yokogawa Aust Pty Ltd v Alstom Power Ltd [2009] SASC 377; (2009) 262 ALR 738 Texts Cited: Dr Ronald J Desiatnik, Legal Professional Privilege in Australia (LexisNexis Butterworths, 3rd ed, 2017)

Dr Ronald J Desiatnik, Without Prejudice Privilege in Australia (LexisNexis Butterworths, 2010) Category: Principal judgment Parties: Proceedings 2019/101279 Verde Terra Pty Ltd (Applicant/First Cross Respondent) Central Coast Council (Respondent/Cross Claimant) Mangrove Mountain Landfill Pty Ltd (Second Cross Respondent) Mangrove Properties (NSW) Pty Ltd (Third Cross Respondent)

Proceedings 2019/203552 Central Coast Council (Applicant) Verde Terra Pty Ltd (First Respondent) Environment Protection Authority (Second Respondent) Representation: Counsel:

Proceedings 2019/101279 P Larkin SC with J Stuckey-Clarke and G Tsang (Applicant) T Howard SC with M Astill (Respondent/Cross Applicant) P Larkin SC with J Stuckey-Clarke and G Tsang (First, Second and Third Cross Respondents)

Proceedings 2019/203552 T Howard SC with M Astill (Applicant) P Larkin SC with J Stuckey-Clarke and G Tsang (First Respondent) H El-Hage (Second Respondent)

Proceedings 2019/101279 Ashurst (Applicant/First, Second and Third Cross Respondents) MBM Legal (Respondent/Cross Applicant)

Proceedings 2019/203552 MBM Legal (Applicant) Ashurst (First Respondent) Environment Protection Authority (Second Respondent) File Number(s): 2019/101279 and 2019/203552

table of contents The Council Objects to the Production and Admissibility of Documents on the Grounds of Privilege - paragraph 1 The Council Seeks to Set Aside Consent Orders Entered Into by the Parties in 2014 - paragraph 10 The 1998 Consent and its Modification - paragraph 15 Environment Protection Licence History - paragraph 23 The 2012 Proceedings and the 2014 Consent Order - paragraph 27 Subsequent Litigation - paragraph 34 Issues Raised by the Pleadings Relevant to the Voir Dire - paragraph 49 The Council Claims Privilege Over the Documents Produced by It and Donnellan and Sought to be Tendered by the Verde Terra Parties - paragraph 55 Does the Common Law or the Evidence Act Apply to the Claims for Privilege? - paragraph 63 Legal Privilege - paragraph 68 At Common Law - paragraph 69 Under the Evidence Act - paragraph 73 Negotiation Privilege At Common Law - paragraph 77 Under the Evidence Act - paragraph 81 The Privileges Prima Facie Apply - paragraph 84 The Verde Terra Parties Submit that the Privileges Have Been Waived or Lost at Common Law and/or Under the Evidence Act - paragraph 86 Waiver of Legal Privilege - paragraph 93 Loss of Negotiation Privilege Under the Evidence Act - paragraph 99 Illegality - paragraph 102 Section 11(2) Abuse of Process - paragraph 103 The Privileges Have Not Been Lost or Waived by the Council There Has Been No Implied Waiver of Legal Privilege - paragraph 104 There is No Common Law Illegality - paragraph 119 The Statutory Exclusions to the Negotiation Privilege in s 131(2) of the Evidence Act Do Not Apply Section 131(2)(f) of the Evidence Act - paragraph 125 Section 131(2)(i) of the Evidence Act - paragraph 140 Section 11(2) Abuse of Process - paragraph 165 The Documents and Communications the Subject of the Notice to Produce, the Donnellan Subpoena and Annexure 'A' Are Privileged - paragraph 178

The Council Objects to the Production and Admissibility of Documents on the Grounds of Privilege

1. The relevant factual and procedural background to this lengthy voir dire (which took over three days and resulted in eight sets of written submissions) is set out in Verde Terra Ltd v Central Coast Council [2019] NSWLEC 166 (at [1] - [61]). For the sake of clarity, where necessary, it is repeated in this judgment.
2. In this long running and increasingly complex dispute between the applicant/respondent to two sets of Class 4 proceedings, Verde Terra Pty Ltd ("VT") (and related parties) ("Verde Terra parties"), and the respondent/applicant, the Central Coast Council ("the Council"), VT issued a subpoena on 9 October 2019 to P J Donnellan & Co Pty Limited ("Donnellan") and a notice to produce to the Council.
3. Donnellan, a firm of solicitors, acted for Gosford City Council ("Gosford CC") in Class 4 proceedings 2012/40900 between 2012 and 2014 ("the 2012 proceedings").
4. The subpoena and the notice to produce are relevantly in the same form. For example, the notice to produce to the Council sought production of: 1 All Documents, including all: a. correspondence, advice, record or other document exchanged between Gosford City Council and any of the Verde Terra Group; b. minutes of meeting or notes of meetings or telephone conversations between Gosford City Council and any of the Verde Terra Group; and c. emails (including any attachments thereto), files, file notes, notes of conversations or deliberations, and any other records or documents, created between 3 September 2012 to 10 November 2014, referring to or evidencing communications concerning: i. the actual or prospective Sale of the Land; ii. the negotiation, preparation and/or making of the Heads of Agreement; or iii. the negotiation, preparation and/or making of the 2014 Orders.
5. Documents were produced both in respect of the subpoena issued to Donnellan and the notice to produce.
6. An application by the Council to have the subpoena and notice to produce set aside on various grounds, including oppression, a lack of legitimate forensic purpose, and because the documents were privileged was refused by the Court (Verde Terra). In so doing, the Court rejected an argument raised by the Council but not seriously argued that production of the documents ought to be refused on the basis of the privileges claimed in this voir dire (Verde Terra at [95]).

The Council Seeks to Set Aside Consent Orders Entered Into by the Parties in 2014

1. The facts outlined below are contained in a statement of agreed facts filed by the parties in the proceedings. It is necessary to traverse them in order to understand the context within which the issues raised for determination on the voir dire arise.
2. On 3 July 1973 Gosford CC resolved to grant consent under Pt XIIA of the Local Government Act 1919 ("the LGA"), subject to conditions, for the construction of an 18 hole golf course, club house, access roads and parking, together with associated amenities, on Lots 581 and 582 DP 517322.
3. On 4 September 1973 Gosford CC resolved to grant consent under Pt XIIA of the LGA to amended plans for the construction of an 18 hole golf course, club house, access roads and parking, together with associated amenities, on Lots 581 and 582 DP 517322, again subject to conditions.
4. On 21 October 1992 G & H Todd Pty Ltd ("G & H Todd") lodged development application DA 16452 with Gosford CC seeking development consent for development described on the development application form as the "Reconstruction of Existing Golf Club to Upgrade to 18 Hole Golf Course" ("the 1992 DA"). The 1992 DA described the existing development on the land as a "9 hole golf course".
5. On 8 August 1995 Gosford CC resolved to grant a deferred commencement consent to the 1992 DA subject to conditions. And on 5 September 1995, Gosford CC issued a notice of determination of deferred commencement consent in respect of the 1992 DA.

The 1998 Consent and its Modification

1. On 16 March 1998 G & H Todd lodged development application DA 23042/1998 with Gosford CC ("the 1998 DA").
2. The 1998 DA, under the heading "Description of Proposed Work", identified the "Type of Work" as being "Alteration" and "Other (specify): Remodelling Golf Course". The "Description of Proposed Development" was described as the "Reconstruction of existing Golf Course to upgrade to 18 hole Golf Course".
3. The 1998 DA was accompanied by an Environmental Impact Statement ("EIS") prepared by TGT Consulting Services Pty Ltd, dated 14 October 1992, entitled "Mangrove Mountain RSL Sub-Branch Environmental Impact Statement for the Reconstruction of the Mangrove Mountain Memorial Golf Course, Central Mangrove".
4. On 6 October 1998 Gosford CC resolved to grant consent to DA 23042 subject to conditions ("1998 consent"). A notice of determination was issued on 14 October 1998.
5. The development the subject of the 1998 consent was designated development within the meaning of the Environmental Planning and Assessment Act 1979 ("EPAA").
6. On 19 September 2002 Planet Earth Support Company Pty Ltd ("Planet Earth") lodged an application to modify the 1998 consent with Gosford CC ("the 2002 modification application"). The 2002 modification application described the development allowed by the 1998 consent as "Remodelling of Golf Course".
7. On 25 February 2003 Gosford CC resolved to approve the 2002 modification application. And on 11 March 2003 it issued a notice of determination in respect of the 2002 modification application.
8. Subsequently, on 6 May 2008 Central Mangrove Waste lodged an application to modify the 1998 consent with Gosford CC ("the 2008 modification application"). On 1 May 2009 Gosford CC approved the 2008 modification application as amended.

Environment Protection Licence History

1. On 2 March 2001 Planet Earth applied to the Environment Protection Authority ("EPA") under the Protection of the Environment Operations Act 1997 ("POEOA") for an environment protection licence ("EPL") ("the 2001 EPL application"). On 21 November 2001 the EPA determined the 2001 EPL application and issued EPL 11395. From 21 November 2001 to 31 October 2007, Planet Earth was the holder of EPL 11395.
2. On 26 July 2002 Planet Earth made an application to the EPA to vary EPL 11395 (the "2002 EPL variation application") and on 11 July 2003 the EPA determined the 2002 EPL variation application and issued Notice of Variation of Licence 11395. The EPL 11395 was further varied by the EPA on 5 April 2002, 9 September 2004, and 27 April 2006.
3. Subsequently, on 4 February 2008, the EPA approved a transfer of EPL 11395 from Planet Earth to VT, retrospectively coming into effect on 1 November 2007. On 19 June 2008 the EPA issued Notice of Variation of Licence 11395, which recorded, amongst other things, the EPA's approval of the transfer of EPL 11395 to VT.
4. Between 3 October 2008 and 3 May 2012, the EPA issued various Notices of Variation of EPL 11395.

The 2012 Proceedings and the 2014 Consent Order

1. On 3 September 2012 Gosford CC commenced the 2012 proceedings in this Court against VT. The EPA was not a party to those proceedings.
2. On 20 September 2013 Gosford CC and VT agreed to settle their dispute and recorded in Heads of Agreement the bases for the agreement and the intention that the details of each of the bases would be settled and that the Court's sanction of the parties' settlement would be sought by the making and giving effect to consent orders ("the 2014 agreement").
3. On 16 July 2014 Donnellan wrote to Bowen Legal (the solicitors acting for the former landowner, R S L Custodian Pty Ltd) in relation to the 2012 proceedings and relevantly said the following: We refer to the above and to your letter of 11 July 2014 in which you indicate that your client would object to the proposed orders to the extent that they bind the landowner and provide entitlements to Verde Terra Pty Limited and comment that this should "come as no surprise to the parties". … We are of the view that there is no necessity to bring an application under s96 for modification of the development consent at the same time as proceedings are before the Court in which the Court is being asked to exercise its powers to remediate a site under circumstances where there has been a breach of the Act. Each of the orders being sought is reasonably necessary to achieve that objective. The outcome, as the Council sees it, of the proposed consent orders will be to achieve an acceptable remediation of the site with: a. a completed 18 hole golf course within a reasonable period of 10 years; b. a specified design for the golf course; c. a specified volume of space able to be filled with waste material; d. appropriate controls and monitoring during the course of the construction of the golf course to minimise risk of environmental harm through an appropriate Landfill Environmental Management Plan and Leachate Management Plan; e. the lining and filling to industry best practice standards of the excavations referred to as Cells W, X, Y and Z; and f. the lowering of the mound of fill in the part of the site referred to as Area B to a more acceptable height. All of the above will serve to improve the quality and value of the land to the landowner's benefit while at the same time mitigating the existing environmental impacts and risks which have been brought about by breaches of the conditions of the original consent over a period of many years. … The orders sought will bind Verde Terra Pty Ltd and/or any future operator of the waste facility on the site to carry out works on the site to complete the golf course in accordance with the consent orders, the conditions of consent and the new LEMP and LMP. We see nothing objectionable in that outcome.

Subsequent Litigation

1. On 23 September 2015 VT made an application to vary EPL 11395 ("the 2015 EPL variation application").
2. The EPA had not determined the 2015 EPL variation application as at 31 May 2018, and therefore, VT filed a Class 1 appeal in the Court on that day appealing the deemed refusal of the 2015 EPL variation application.
3. On 9 October 2018 Moore J dismissed the appeal, holding that the proceedings were commenced outside of the period within which an appeal from a deemed refusal could be brought (Verde Terra Pty Ltd v Environment Protection Authority (No 1) [2018] NSWLEC 159).
4. Meanwhile, on 2 August 2018 VT made another application to vary EPL 11395 ("the 2018 EPL variation application").
5. The 2018 EPL variation application was in materially similar terms to the 2015 EPL variation application. The EPA refused the 2018 EPL variation application on 9 August 2018.
6. VT filed a Class 1 appeal in respect of the EPA's refusal of the 2018 EPL variation application on 10 August 2018 ("the 2018 Class 1 appeal").
7. On 18 October 2018 Moore J delivered a judgment joining the Council (now amalgamated, incorporating Gosford CC) as the second respondent to the 2018 Class 1 appeal (Verde Terra Pty Ltd v Environment Protection Authority (No 3) [2018] NSWLEC 161).
8. On 22 November 2018 the Council filed an Amended Statement of Facts and Contentions in Reply contending, among other things, that the EPA, and the Court on appeal, lacked the power to approve the 2018 EPL variation application absent further development consent to carry out the works proposed by it.
9. Then on 21 December 2018 VT lodged development application 5862/2018 with the Council ("the 2018 DA").
10. Because the Council had not determined the 2018 DA by 1 April 2019, VT filed a Class 1 application with the Court on the same day, appealing the deemed refusal of the 2018 DA ("the 2019 Class 1 appeal").
11. VT also commenced Class 4 proceedings by way of summons filed on 1 April 2019 ("the 2019 VT Class 4 proceedings"), relevantly seeking declaratory relief to the effect that no further development consent was required "to carry out the Mangrove Mountain Landfill & Golf Course", and that the development described in the 2018 DA constituted development "involving alterations or additions", or was ancillary to development for which consent had already been granted.

Issues Raised by the Pleadings Relevant to the Voir Dire

1. The pleadings filed by the parties in the two sets of Class 4 proceedings are voluminous and complex. An agreed list of the real issues for determination in the proceedings seeking to synthesise all of the pleadings filed to date relevantly states as follows ("the List of Issues"): The 2014 orders 1. The proper construction and effect of the orders made by consent by the Land and Environment Court on 29 August 2014 in LEC proceedings 40900 of 2012 (2014 orders), including: a) what development did the 2014 orders require and/or permit? b) whether the 2014 orders are properly to be construed as ordering the development set out therein to be carried out subject to an implied condition that any requisite development consent (and any other necessary statutory approval), be first obtained; and c) if the 2014 orders, properly construed, impose a requirement that the development therein to be carried out without any implied condition to first obtain any requisite development consent, whether the agreement of the parties to procure the 2014 orders is void for illegality or irregularity or by reason of being contrary to public policy; and d) whether the 2014 orders are void or unenforceable or incapable of being performed in the absence of requisite development consent to carry out the development described therein. Estoppel and related doctrines 2. Whether the doctrines of estoppel or related doctrines preclude the Council from contending that any further development consent is required to carry out the development referred to in the 2014 orders. 3. Whether the doctrines of estoppel or related doctrines preclude the Council from advancing the case that the provisions of the EPA&A Act require development consent for designated development must first be obtained as a pre-requisite to the lawful construction and operation of the waste facility that Verde Terra proposes to construct and operate on the subject land. 4. Whether the principles of estoppel and related doctrines have any relevant application in these proceedings. Development consent 5. Whether: (i) any requisite development consent is in force; and/or (ii) any further development consent is required, under the Environmental Planning and Assessment Act 1979 (EP&A Act) to permit the carrying out of development comprising the construction and operation of a waste facility/landfill on the subject land: a) as described by the 2014 orders; and/or b) that Verde Terra proposes to construct and operate on the subject land over a projected operational life of about 10 years. 6. Whether the development that the Verde Terra parties claim they are entitled to carry out on the subject land without further development consent, as pleaded in Prayer 1 of the Verde Terra parties Summons in LEC 2019/101279, is capable of being adequately defined, and, if so, whether that development has been adequately defined. The 1998 Consent 7. The proper construction and effect of the 1998 Consent, including: a) whether the 1998 Consent permits the construction and operation of the waste facility: i. as described by the 2014 orders; and/or ii. that Verde Terra proposes to construct and operate on the subject land over a projected operational life of about 10 years b) the purpose(s), nature and scope of the development approved by the 1998 Consent; c) the meaning and effect of Conditions 1 and 2 of the 1998 Consent, including: i. whether either or both of those conditions purport to permit variations to the nature and scope of landform modification and waste emplacement permitted under the 1998 Consent by means of a revised Landfill Environmental Management Plan (LEMP) subsequently promulgated by the beneficiary of the consent and without the need for the 1998 Consent to be modified under Part 4 of the EP&A Act and if so, to what extent; ii. whether either of those conditions purports to permit variations to the nature and scope of landform modification and waste emplacement under the 1998 Consent by reason of the operation of the environment protection licence under the Protection of the Environment Operations Act (PEO Act) that applies to the land that was granted and varied by the EPA from time to time and if so, to what extent; and iii. if, and to the extent that, either of those conditions purports to have any such effect, whether the condition is, to that extent, legally invalid and of no effect. … Discretion 16. Whether in the exercise of the Court's discretion, the Council should be denied relief and if so to what extent.

The Council Claims Privilege Over the Documents Produced by It and Donnellan and Sought to be Tendered by the Verde Terra Parties

1. At issue on the voir dire is whether documents that the Verde Terra parties propose to tender during the course of the proceedings and material that they seek access to produced in answer to the Donnellan subpoena and the notice to produce to the Council, are protected by various privileges claimed by the Council.
2. The privileges relied upon by the Council are ("the privileges"): 1. client legal privilege pursuant to ss 118 and 119 of the Evidence Act and legal professional privilege under the common law ("legal privilege"); and 2. settlement or negotiation privilege pursuant to s 131(1) of the Evidence Act and at common law ("negotiation privilege").
3. In support of its claim the Council relies on the affidavit of Mr Martin Ball sworn 29 November 2019 ("the Ball affidavit"). Mr Ball is the solicitor on the record for the Council. Exhibited to the Ball affidavit are, among other things, two schedules listing the documents produced pursuant to the subpoena and the notice to produce which Mr Ball has deposed are, in his opinion, the subject of the privileges (Exhibits A and B, comprising 1228 documents in total).
4. Because of the large volume of documents over which the privileges are claimed, for the purpose of permitting the Court to determine whether the claims are maintainable (which would ordinarily necessitate the Court examining each document), it was agreed that in addition to the documents identified in annexure 'A', a random sample of the documents produced in respect of both the subpoena and the notice to produce would be provided to the Court on the voir dire. The Court has examined the three lever arch folders containing these documents (Exhibits C, D and E).
5. The Verde Terra parties claim, first, that the privileges do not apply, and second, that even if they do, they have been waived and/or any entitlement to them has been lost by the Council: 1. in relation to the legal privilege, in addition to the operation of the common law, by reason of s 122(2) of the Evidence Act; 2. in relation to the negotiation privilege, again, in addition to the operation of the common law, by reason of s 131(2)(f) and (i) of the Evidence Act; and 3. in relation to both by reason of s11(2) of the Evidence Act.

Does the Common Law or the Evidence Act Apply to the Claims for Privilege?

1. As was described by the Court in Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie [2017] NSWLEC 88, it is important to identify the various stages at which the Council's claim for privilege arises (at [12]-[15]): 12 At the outset, it is important to identify the stage at which the prosecutor's claim for privilege arises. As Brereton J observed in Carbotech - Australia Pty Ltd v Yates [2008] NSWSC 1151 at [10], it had been recognised at least since National Employers' Mutual General Association v Waind and Hill [1978] 1 NSWLR 372 that there are three steps in the process of complying with a subpoena: "first, the production of the document to the Court in answer to the subpoena; secondly, the interim use which might be made of the document, such as the granting of access for the purposes of inspection, at which stage typically any questions of privilege are agitated and, thirdly, the tender of the document into evidence." 13 The third stage of tendering the documents into evidence is governed by the provisions of the Evidence Act. Section 118 of the Evidence Act creates a privilege for confidential communications made, and confidential documents prepared, for the dominant purpose of a lawyer providing legal advice (advice privilege). Section 119 creates a privilege for confidential communications made, and confidential documents prepared, for the dominant purpose of a lawyer providing legal services relating to litigation (litigation privilege). The provisions prevent the adducing of evidence which would result in disclosure of the privileged communication or document. The High Court held in Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49; [1999] HCA 67, that the Evidence Act applies only to the adducing of evidence in the course of a hearing, and not to ancillary processes such as discovery. As Brereton J held in Carbotech - Australia Pty Ltd v Yates at [7], "[it] must follow that the Act does not apply, of its own force, to claims for privilege in respect of the production and inspection of documents on subpoena." 14 The first stage of producing the documents on subpoena is governed by r 1.9 of the UCPR, which authorises an objection on the ground of a claim for privilege to production of a document. As Brereton J noted in Carbotech - Australia Pty Ltd v Yates at [8]: "UCPR, r 1.9, provides a procedure by which objection may be taken to the production of documents required to be produced inter alia by a subpoena upon grounds that the documents are 'privileged documents', again defined by reference to the Evidence Act. But this rule relates to the production of documents, and not the inspection of documents already produced. As Mr Kirk has already pointed out in the course of argument, r 1.9(3) - providing, as it does, that a person may object to producing a document - is addressed only to an objection by the person required to produce the document, and not an objection or claim for privilege by someone else in respect of a document so produced." 15 However, neither the Evidence Act nor UCPR, r 1.9 apply to the second stage of inspecting the documents already produced. The Evidence Act does not apply, of its own force, because evidence is not being adduced in the course of a hearing. UCPR, r 1.9 does not apply, and does not apply the Evidence Act, because the claim for privilege and objection to inspection of the documents produced on subpoena is not made by the person who produced the documents, but by someone else. Instead, the claim for privilege and objection to inspection is governed by the common law: Carbotech - Australia Pty Ltd v Yates at [11] and Tavcol Pty Ltd v Valbeet Pty Ltd [2016] NSWSC 1002 at [10].

Legal Privilege

1. Both at common law and under the Evidence Act, in civil and criminal cases the communications passing between a client and a legal adviser need not be given in evidence or otherwise disclosed by the client or the client's legal adviser without the prior consent of the client if made either to enable the client to obtain or receive legal advice or assistance, or in contemplation of litigation (for a detailed examination of the definition and application of legal privilege see Dr Ronald Desiatnik, Legal Professional Privilege in Australia (LexisNexis Butterworths, 3rd ed, 2017) Ch 3, pp 25-82).

At Common Law

1. The position at common law was summarised in Marshall v Prescott [2013] NSWCA 152 (at [41]-[43]): 41 The relevant species of common law privilege is that referred to by Deane J in Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 at 114 (in terms approved by Gleeson CJ, Gaudron and Gummow JJ in Esso Australia Resources v Commissioner of Taxation [1999] HCA 67; 201 CLR 49 at [35]): "[A] person should be entitled to seek and obtain legal advice in the conduct of his affairs and legal assistance in and for the purposes of the conduct of actual or anticipated litigation without the apprehension of being thereby prejudiced." 42 In Mann v Carnell [1999] HCA 66; 201 CLR 1, Gleeson CJ, Gaudron, Gummow and Callinan JJ noted at [19] that the common law privilege "extends generally to confidential communications of a professional nature between a person and his lawyer made for the purpose of obtaining or giving legal advice". 43 A composite description of what are sometimes referred to as advice privilege and litigation privilege was given by Gleeson CJ, Gaudron, Gummow, and Hayne JJ in The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; 213 CLR 543 at [9], as follows: "It is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings." (Citations omitted)
2. The privilege is a substantive, and not merely procedural, right or immunity. In Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83 it was described as "a rule of law, the best explanation of which is that it affords a practical guarantee of fundamental rights" (at 121). A similar sentiment was expressed by McHugh J in Carter v Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121 (at 161), where his Honour opined that "the best explanation of the doctrine is that it is a practical guarantee of fundamental, constitutional or human rights". In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 the privilege was described as "substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings" (at [9] per Gleeson CJ, Gaudron, Gummow and Hayne JJ and see also at [44] per McHugh J).

Under the Evidence Act

1. Sections 118 and 119 of the Evidence Act provide that: 118 Legal advice 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, lawyer or another person, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client. 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.
2. The terms "confidential communication" and "confidential document" are defined in s 117 of the Evidence Act: confidential communication means a communication made in such circumstances that, when it was made: (a) the person who made it, or (b) the person to whom it was made, was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. confidential document means a document prepared in such circumstances that, when it was prepared: (a) the person who prepared it, or (b) the person for whom it was prepared, was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.
3. In Newcastle Port Corporation Robson J lucidly described the relationship between ss 118 and 119 in the following way (at [33]): 33 Section 118 of the Evidence Act relates to privilege for confidential communications made, and confidential documents prepared, for the dominant purpose of a lawyer providing legal advice. Section 119 relates to privilege for confidential communications made, and confidential documents prepared, for the dominant purpose of a lawyer providing legal services relating to litigation. The provisions prevent the adducing of evidence which would result in disclosure of the privileged communication or document.

At Common Law

1. At common law bona fide statements made during the course of negotiation, or in an attempt to settle a dispute, are protected from admission into evidence. In Field v Commissioner for Railways (NSW) [1957] HCA 92; (1957) 99 CLR 285 the High Court made the following observation (at 291 per Dixon CJ, Webb, Kitto and Taylor JJ): As a matter of policy the law has long excluded from evidence admissions by words or conduct made by parties in the course of negotiations to settle litigation. The purpose is to enable parties engaged in an attempt to compromise litigation to communicate with one another freely and without embarrassment which the liability of their communications to be put in evidence subsequently might impose upon them. The law relieves them of this embarrassment so that their negotiations to avoid litigation or to settle it may go on unhampered.
2. It is necessary that the negotiations be conducted to settle existing litigation or that litigation will take place if the dispute is not resolved (Glengallan Investments Pty Ltd v Andersen [2001] QCA 115; ([2002] 1 Qd R 233 at [28]). This is because it is in the public interest that disputes are settled and that litigation is minimised. The public policy embodied in the privilege was articulated in Galafassi v Kelly [2014] NSWCA 190; (2014) 87 NSWLR 119 (at [116] per Gleeson JA. That the case concerned the application of s 131 of the Evidence Act does not matter): 116 Each of these requirements of s 131(1) is to be considered having regard to the purpose and policy objectives of this provision of the Evidence Act. As Mansfield J explained in Silver Fox Co Pty Ltd v Lenard's Pty Ltd (No 3) (2004) 214 ALR 621 at [36], the purpose of s 131(1), subject to its exceptions, is to "give effect to the policy of ensuring the course of negotiations - whether private or by mediation - are not adduced into evidence for the purpose of influencing the outcome on the primary matters in issue". This is because it is in the public interest that disputes be quelled or resolved and that negotiations should not be inhibited by the risk of such negotiations influencing the outcome on those primary issues: see also Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) (Barrett Property) [2011] FCA 276; 193 FCR 479 at [32]-[33] (Bromberg J). This was also the position at common law: Field v Commissioner for Railways (NSW) [1957] HCA 92; 99 CLR 285 at 292.

Under the Evidence Act

1. Section 131(1) of the Evidence Act mandates that evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
2. Again, the onus of establishing any entitlement to the privilege rests on the party claiming it (Ultraceuticals at [20]). That party must demonstrate the facts from which the Court can determine that the privilege is capable of being asserted (Re Southland Coal Pty Ltd (recs & mgrs apptd) (in liq) [2006] NSWSC 899; (2006) 203 FLR 1 at [14(c)]). The "connection" referred to in s 131(1)(a) and (b) of the Evidence Act must be direct; a tenuous connection is not sufficient (GPI Leisure Corporation Ltd (in liq) v Yuill (1997) 42 NSWLR 225 at 226 and Seven Network Limited v News Limited [2006] FCA 343; (2006) 151 FCR 450 at [50]).
3. In addition to the evidence contained in the Ball affidavit, the Court is permitted to inspect the documents to determine if the claim is self-evident (Seven Network at [24]).

The Privileges Prima Facie Apply

1. The Verde Terra parties appeared to accept that, prima facie, both privileges attached to the Donnellan documents, the documents produced by the Council in answer to the notice to produce, and the documents the Verde Terra parties proposed to tender at Annexure 'A'.
2. Having inspected those documents for this purpose, I find that they were correct to do so. That is, subject to any applicable exception or waiver, the documents are protected by the privileges claimed by the Council.

The Verde Terra Parties Submit that the Privileges Have Been Waived or Lost at Common Law and/or Under the Evidence Act

1. The gravamen of the voir dire was whether, as the Verde Terra parties asserted, the privileges have either been waived by the Council, or alternatively, were subject to exceptions that meant that any prima facie entitlement to them was lost or did not exist in the first place.
2. In determining this question the Court has not, consistent with the request of the Council, inspected the privileged material for the purpose of determining whether or not the privilege has been waived or lost unless it was otherwise permitted by law to do so (Legal Services Commission v JHW [2012] SASCFC 47; (2012) 223 A Crim R 534 at [60], [75] and [81]).
3. The authorities indicate that the same approach to the question of waiver applies both at common law and under s 122(2) of the Evidence Act (Expense Reduction at [32] and Domino's Pizza at [11]).
4. For present purposes, the test for waiver of legal privilege under the Evidence Act is set out in s 122(2) of that Act: (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.
5. The Verde Terra parties also relied upon the exceptions contained in s 121(2) and (3) of the Evidence Act: (2) This Division does not prevent the adducing of evidence if, were the evidence not adduced, the court would be prevented, or it could reasonably be expected that the court would be prevented, from enforcing an order of an Australian court. (3) This Division does not prevent the adducing of evidence of a communication or document that affects a right of a person.
6. And on the related communication and documents provision in s 126 if legal privilege was lost or waived: 126 Loss of client legal privilege: related communications and documents If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document.

Waiver of Legal Privilege

1. At common law waiver of legal privilege occurs when the conduct of the party seeking to maintain the privilege is inconsistent with the maintenance of confidentiality (Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at [28]-[29]). The applicable legal principles were summarised by Leeming JA in Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305; (2016) 339 ALR 635 (at [48] -[53]): 48 Both parties accepted that the overarching principle was that stated in Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 as follows: "[28] … Legal professional privilege exists to protect the confidentiality of communications between lawyer and client … It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication … [29] Waiver may be express or implied …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." (citations omitted) 49 In DSE (Holdings) v Intertan Inc Allsop J extensively reviewed and analysed the authorities on implied waiver in both the UK and Australia. In doing so, his Honour expressed the view, at [61], that privilege would be waived where a confidential communication had been laid open to: "… necessary scrutiny, and by so doing (that is by expressly or impliedly making an assertion about the contents of the communication or laying the communication open to scrutiny) the inconsistency enunciated by Mann v Carnell is brought about. But it is the existence of that inconsistency that is important." 50 In stating this view, Allsop J observed, at [62], that he did not consider he was expressing any fundamentally different view from that expressed by Hodgson J in Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87 at 94-95, where his Honour had stated: "If a party, by pleadings or evidence, expressly or impliedly makes an assertion about the content of confidential communications between that party and a legal adviser, then fairness to the other party may mean that this assertion has to be taken as a waiver of any privilege attaching to the communication." 51 In Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86, the Court observed, at [47], that the cases that have considered "issue waiver" are of limited utility, each turning on its own particular facts. The Court had pointed out, at [45], that in order to determine whether there had been an implied waiver of client legal privilege the Court was bound to analyse the acts or omissions of the privilege holder that were said to be inconsistent with the maintenance of the privilege. 52 After referring to Allsop J's decision in DSE (Holdings) v Intertan and reviewing certain of the earlier authorities that had been relied upon by the parties, the Court in Commissioner of Taxation v Rio Tinto Ltd stated, at [52]: "These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication." 53 These, and other, authorities indicate that waiver ordinarily only occurs where the contents of privileged documents are relied upon (see in particular Council of the NSW Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 at [47] and [48] per Hodgson JA, with Campbell JA and Handley AJA concurring; Bailey v Director General Department of Land and Water Conservation (2009) 74 NSWLR 333; [2009] NSWCA 100 at [4] per Allsop P (as his Honour then was) with the concurrence of Hodgson JA). Mere reference to the existence of a document will not suffice. Nor, as Hodgson JA made clear in Archer at [48], is it sufficient that "the content of the privileged communications could, as a reasonable possibility, be relevant and of assistance to the other party". His Honour added a caveat about cases in which the client's state of mind is in issue but the present is not such a case.

Loss of Negotiation Privilege Under the Evidence Act

1. In relation to the Council's reliance on s 131(1) of the Evidence Act, the Verde Terra parties contended that subsection (1) did not apply by reason of s 131(2)(f) and (i) of the Evidence Act: (2) Subsection (1) does not apply if: … (f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue, or … (i) making the communication, or preparing the document, affects a right of a person, or…
2. In respect of s 131(2)(i), that provision, having no common law equivalent, can only have application to the documents produced by the Council in answer to the notice to produce and the annexure 'A' documents.
3. During the course of the hearing the Verde Terra parties resiled from any reliance on s 131(2)(e) and (g) (T681:29-46).

Illegality

1. At common law both legal privilege and negotiation privilege are subject to an exception in respect of communications made to further an illegal or improper purpose. In Attorney General for the Northern Territory of Australia v Kearney [1985] HCA 60; (1985) 158 CLR 500, Gibbs CJ described the exception as follows (at 514-515, footnotes omitted); However, the leading authority for present purposes is the decision of this Court in Reg. v. Bell; Ex parte Lees. In that case, after an order had been made giving custody of a child to a husband, the wife disappeared taking the child with her. Later she instructed a solicitor to take steps to protect her interest in the matrimonial home, and gave him her address, asking that it be kept secret. It was held that her communication to her solicitor was not privileged. Stephen J. said that the principle revealed in such cases as Russell v. Jackson pointed the answer to the question before the Court. He continued: "It is true that the quite limited professional assistance sought by [the wife] from the applicant was not itself to be used by her so as to further any illegal purpose. But there was absent from her relationship with the applicant that reposing of professional confidence of which Stephen J. spoke in Reg. v. Cox and Railton." He concluded by saying: "One thing is clear. It is that privilege for an address cannot be claimed when its confidentiality was sought, as here, in order to frustrate the processes of law." Wilson J. (with whom Aickin J. agreed) said that "it would be odd if the privilege extended to protect communications which were directed against the public interest". He held that to extend the privilege to such a communication as that made by the wife in that case "enables the continuance of a contempt of court, and bears on its face the taint of illegality". I considered that the privilege would not apply when the communication was made in furtherance of an illegal object, but doubted whether the case came within that exception because the wife did not communicate her address to the solicitor for any illegal or improper purpose. However, I considered that the case came within another exception, which might possibly be regarded as an extension of the rule which excludes privilege in the case of crime or fraud, but which I inclined to think rested upon an independent foundation. I added: "The privilege, which arises only because the public interest requires it, does not exist when it is seen that it would be contrary to a higher public interest to give effect to it." Murphy J. said that "it would be curious if the child's welfare were not paramount over legal professional privilege in circumstances such as those in this case". The case is authority for the view that legal professional privilege will be denied to a communication which is made for the purpose of frustrating the processes of the law itself, even though no crime or fraud is contemplated. In my opinion the present case comes within the principle which forms the basis of the rule that denies privilege to communications made to further an illegal purpose. It would be contrary to the public interest which the privilege is designed to secure - the better administration of justice - to allow it to be used to protect communications made to further a deliberate abuse of statutory power and by that abuse to prevent others from exercising their rights under the law. It would shake public confidence in the law if there was reasonable ground for believing that a regulation had been enacted for an unauthorized purpose and with the intent of frustrating legitimate claims, and yet the law protected from disclosure the communications made to seek and give advice in carrying out that purpose. It is unnecessary to consider whether the decision in Crescent Farm (Sidcup) Sports Ltd. v. Sterling Offices Ltd. was too restrictive, or whether the view expressed in the modern United States cases that the principle extends to communications made for the purpose of committing a tort is too wide. The law strikes a balance between securing proper representation by encouraging full disclosure on the one hand, and requiring the production of all relevant evidence on the other, but the balance more readily inclines in favour of disclosure where privilege from disclosure might conceal an abuse of delegated powers to enact legislation, and thus obstruct a proper challenge to the validity of part of the law itself. The basis of the privilege is not endangered if it is held that it does not protect communications made by a public authority for the purpose of obtaining advice or assistance to exceed its statutory powers. The privilege is of course not displaced by making a mere charge of crime or fraud or, as in the present case, a charge that powers have been exercised for an ulterior purpose. This was made clear in Bullivant v. Attorney-General (Vict.) and in O'Rourke v. Darbishire. As Viscount Finlay said in the latter case, "there must be something to give colour to the charge".

Section 11(2) Abuse of Process

1. Finally, the Verde Terra parties relied on s 11(2) of the Evidence Act in respect of both privileges to argue that even if the privileges have not been waived or lost, they cannot be relied upon to prevent the inspection and adducing of material that is evidence of an abuse of process. This is because s 11(2) expressly preserves the power of the Court to deal with abuse of process. As s 11 provides: 11 General powers of a court (1) The power of a court to control the conduct of a proceeding is not affected by this Act, except so far as this Act provides otherwise expressly or by necessary intendment. (2) In particular, the powers of a court with respect to abuse of process in a proceeding are not affected.

The Privileges Have Not Been Lost or Waived by the Council

There Has Been No Implied Waiver of Legal Privilege

1. The Verde Terra parties submit that the Council has conducted itself in a manner inconsistent with the maintenance of the confidentiality claimed in the communications because: 1. the Council has alleged that the 2014 agreement and 2014 consent orders are illegal, the logical corollary of which is that the communications made to procure the agreement and the orders were to further an illegal purpose, and therefore, cannot be privileged; 2. the subjective intention of the Council is irrelevant. That is, the inconsistency is manifested on the objective and uncontested facts outlined above in this judgment; 3. the Council's allegation that the 2014 agreement and the 2014 consent orders, both of which it actively procured and agreed to be bound by, were made illegally arises in response to the Verde Terra parties' contention that it has obtained the benefit of those orders and that it is permitted to carry out the works referred to in them without the need to obtain any further approvals. Thus the Council is engaging in inconsistent conduct by, on the one hand, asserting that the 2014 agreement and the 2014 consent orders have no effect because they are unlawful or illegal, and on the other hand, resisting the conclusion that as a consequence of its assertion, the Council was itself involved in illegal conduct by being an active participant in the creation of the 2014 agreement and in signing the 2014 consent orders; 4. although any issue of implied waiver raises matters of fact and degree, because the inconsistent conduct arises by reason of the Council's pleadings and on the objective and uncontested facts referred to above, no such matters arise; and 5. the assertion of illegality has been made for the forensic purpose of benefiting the Council and disadvantaging the Verde Terra parties.
2. The Verde Terra parties described the Council's actions in filing the cross-summons and alleging illegality in the making of the 2014 agreement and the signing of the 2014 consent orders as a "desperate" attempt to avoid the Verde Terra parties enforcing the 2014 consent orders in the 2019 VT Class 4 proceedings, thereby implicating itself in the alleged illegal enterprise. In so doing it has, the Verde Terra parties submitted, "destroyed the public interest foundation" of the privilege while inconsistently claiming to be entitled to the protection of the very same privilege.

There is No Common Law Illegality

1. The Verde Terra parties accepted that in some circumstances a contract is unenforceable by reason of it having a tendency to obstruct, pervert, adversely affect, or otherwise be incompatible with the administration of justice (see the reference to Hayden (No 2) above). However, they further submitted that because it is the Council that is relying upon this proposition to contend that the 2014 agreement and the concomitant 2014 consent orders are against public policy insofar as they: 1. would permit the Verde Terra parties to develop and operate a waste facility that would be "immune from the obligations otherwise imposed by the planning laws in respect of the making of an appropriate application supported by an EIS, subject to consultation, public participation and approval" under the EPAA (T145:49-146:04); 2. deny third party appeal rights (T146:04-06); and 3. remove the jurisdiction of the EPA pursuant to s 50(2) of the POEOA to refuse to grant or vary a licence absent development consent having been granted for controlled development (T146:06-10), this amounted to conduct that fell "squarely within the 'illegality' exception" to any privilege as described in Kearney (see above at [102]).
2. A succinct summary of Kearney, together with an equally succinct review of the leading authorities was provided by Besanko J in Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) [2017] FCA 1306, where his Honour said (at [65]-[73]): 65 In The Attorney-General for the Northern Territory of Australia v Kearney (1985) 158 CLR 500 (Kearney), Gibbs CJ discussed the exception to legal professional privilege where communications by a client were for the purpose of being guided or helped in the commission of a crime or fraud. The Chief Justice considered whether the exception went beyond the commission of a crime or fraud. His Honour referred to the judgment of Goff J (as his Lordship then was) in Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553 (Crescent Farm) where Goff J held that communications made between solicitor and client for the purpose of committing a breach of contract or furthering a conspiracy to commit a breach of contract did not cease to be privileged. The Chief Justice referred to authorities which suggested that the exception to legal professional privilege was not restricted to the commission of a crime or fraud. He was of the view that the exception extended to communications made for the purpose of carrying out a fraud on justice or to frustrate the processes of the law itself or to further an illegal purpose (at 514-515). The Chief Justice did not find it necessary to decide if the principle stated by Goff J in Crescent Farm was too narrow a statement of the principle or whether the modern United States view that it included the commission of a tort was too wide a statement of the principle. 66 The Chief Justice also addressed the issue of the extent to which the alleged matters must be established in order to engage the exception. He said that the charge must be clearly made and there must be prima facie evidence in support of it. 67 Justices Mason and Brennan agreed with the Chief Justice's conclusion that the exception applied where what was alleged was a deliberate abuse of statutory power with the consequences that others were prevented from exercising their rights under the law. Their Honours referred to a prima facie finding being sufficient (at 515-516). 68 Justice Wilson said that the exception arises where the professional relationship is abused in a manner involving dishonesty that goes to the heart of the relationship (at 524). His Honour spoke of a "prima facie finding" of a matter which would engage the exception (at 525). Justice Dawson did not consider that exercising the power to make regulations with an ulterior purpose in mind involved fraudulent or illegal conduct within the exception (at 530, 534). 69 In Commissioner of Australian Federal Police and Another v Propend Finance Pty Limited and Others (1997) 188 CLR 501, the principal issue considered by the High Court was whether a copy of a document could be the subject of legal professional privilege even though the original of the document was not. There was an allegation in that case that the original documents had been created for or in furtherance of an illegal purpose. Brennan CJ said that it was open to a party resisting a claim for legal professional privilege to show reasonable grounds for believing that the communication effected by the document for which legal professional privilege was claimed was made for some illegal or improper purpose, that is to say, a purpose contrary to the public interest. The Chief Justice said that he put the test in terms of "reasonable grounds for believing" because the test was objective and it was not necessary to prove the ulterior purpose. It was sufficient to establish a prima facie case or something that gave colour to the charge (at 515). 70 Justice Dawson said that it was not necessary to prove that the communication was undertaken to further a crime or fraud in order to exclude the privilege. His Honour said that the threshold for the displacement of the privilege was placed a considerable distance short of proof of the allegation of crime or fraud (at 522). Justice Toohey said that prima facie evidence of an illegal or improper purpose will be sufficient (at 534). Justice Gaudron spoke to similar effect (at 547). Justice McHugh referred to an illegal purpose or fraud and the need to adduce prima facie evidence of that in order to displace the privilege (at 556). Justice Kirby referred to something more than surmise and conjecture on the one hand, and something less than full proof of illegality on the other. 71 In Watson v McLernon Group (Insurances) Pty Ltd [2000] NSWSC 306 at [115], Hodgson CJ in Eq said that a mere breach of contract would not be sufficient to establish an improper purpose and that proof of dishonesty was an essential element. 72 I turn to the authorities which have addressed the third issue. In R v Central Criminal Court, Ex parte Francis & Francis [1989] 1 AC 346 (Francis), the House of Lords held that legal professional privilege was excluded with respect to documents held by a person's solicitors and relating to that person's dealings in particular property where a suspected drug trafficker had the intention by acquiring property for the person to further the criminal purpose of concealing the proceeds of drug trafficking. The person and his solicitors were innocent of any involvement in, or knowledge, of wrongdoing. Nevertheless, the House of Lords held that legal professional privilege had been lost. To some extent, the case must be seen as having been decided in its particular statutory context. Lord Goff of Chievely delivered the leading speech of the majority. There was no doubt that a criminal or fraudulent purpose of the client was sufficient to exclude the privilege even where the solicitor was entirely innocent. The more difficult point was whether the privilege was excluded where the client was also innocent, albeit being used as a tool by a third party. Lord Goff said that the exception applied where the innocent party was being used as an instrument by the third party or was a beneficiary of the third party's conduct because that was consistent with the public interest rationale of the privilege. Such communications should not be protected because that would be injurious to the interests of justice (at 396). Lord Goff said that the type of case he was considering was likely to be most exceptional (at 397). 73 This approach of the House of Lords was applied by North J in Clements, Dunne and Bell Pty Ltd v Commissioner, Australian Federal Police [2001] FCA 1858; (2001) 48 ATR 650, a case concerned with an improper or illegal scheme involving employee benefit schemes. North J held that the exception to legal professional privilege was engaged in the case of schemes which allegedly contravened Part IVA of the Income Tax Assessment Act 1936 (Cth) (at 695). North J referred at length to Lord Goff's speech in Francis and then said that he agreed with Lord Goff that the public interest considerations which lie behind legal professional privilege supported the conclusion that the privilege did not apply where the documents formed part of the implementation of fraudulent conduct by third parties (at 698).

The Statutory Exclusions to the Negotiation Privilege in s 131(2) of the Evidence Act Do Not Apply

Section 131(2)(f) of the Evidence Act

1. The onus of excluding the negotiation privilege provided for in s 131(1) of the Evidence Act is on the party raising the exclusion (Liu v Fairfax Media Publications Pty Ltd [2012] NSWSC 900, (2012) 91 ACSR 158 at [38]).
2. The Verde Terra parties' submissions in respect of the exception contained in s 131(2)(f) may be summarised as follows: 1. the provision should not be narrowly construed. In particular, it can encompass proceedings where the interpretation of a settlement agreement is in issue (citing Hebei Jikai Industrial Group Co Ltd v Martin [2015] FCA 228; (2015) 324 ALR 268 at [93] and Fermiscan Limited v James [2009] NSWSC 462 at [11]); 2. where one party alleges in a pleading that the agreement is void or voidable, this directly raises the issue of enforceability of the agreement (citing Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209 at [123]); 3. the exception is not limited to evidence of the particular offer and acceptance that resulted in the agreement (citing SWV Pty Ltd v Spiroc Pty Ltd [2006] NSWSC 668; (2006) 201 FLR 238 at [41]-[45]); and 4. if the proceedings are of a kind attracting s 131(2)(f), then the protection afforded by s 131(1) does not apply to the entire matter and is not limited to the party seeking to tender evidence of the kind otherwise protected by s 131(1) (citing Pihiga at [123]); 5. in the present case, the exception is engaged because on all of the parties' cases, the proceedings are to enforce an agreement, namely, the 2014 agreement (citing Fermiscan at [11]). This is demonstrated by: 1. in the 2019 VT Class 4 proceedings the declaratory relief sought by VT in prayer 1 of its amended summons, namely, that no further development consent is required by them "to carry out the Mangrove Mountain Landfill & Golf Course", is necessary to meet the only impediment to carrying out the works proposed by the 2014 consent orders as contemplated by the 2014 agreement, namely, that such consent is required; 2. in the Council's cross-summons, prayer 8 seeking to restrain VT from carrying out any further development in reliance on the 2014 consent orders unless and until approved under the EPAA; 3. prayer 4 of the Council's cross-summons which seeks a declaration that the 2014 agreement is void for illegality which puts the making of the agreement in issue (citing Pihiga at [123]); and 4. prayer 3 of the Council's cross-summons seeking a declaration confirming the existence of an implied condition in the 2014 consent orders that development consent be obtained prior to the carrying out of the works mandated by those orders.

Section 131(2)(i) of the Evidence Act

1. The reliance by the Verde Terra parties on the exception contained in s 131(2)(i) of the Evidence Act arises in the following way. As set out above (at [49] and [54]), in defence to the Council's cross-summons the Verde Terra parties plead that the Council is estopped from making the allegations it does by reason of estoppel by judgment, including issue estoppel, and estoppel of the type referred to in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 ("Anshun estoppel"). Anshun estoppel arises where a matter relied upon by one party is so relevant to the subject matter of an earlier proceeding that it was unreasonable not to rely upon it in the earlier proceeding (Anshun at 602).
2. In Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44; (2016) 259 CLR 212 the plurality described Anshun estoppel by reference to the touchstone of unreasonableness (at [56], citations omitted, emphasis in original): 56 An Anshun estoppel is not based upon degrees of similarity, which may be a matter of impression. It was made clear in Anshun that there could be no estoppel "unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it"...
3. As to the evidence relevant to establishing an Anshun estoppel, Campbell JA in C G Maloney Pty Ltd v Noon [2011] NSWCA 397 relevantly opined that (at [68]): 68 I agree that the evidence relevant to an Anshun estoppel is wider than the evidence relevant to res judicata or issue estoppel, and that "a broad merit-based judgment" that "takes account of all the facts of the case" would permit the court to receive the submissions of counsel in the First Proceedings. When the essential question in an Anshun estoppel case concerns the reasonableness of the manner in which litigation has been conducted, any facts that bear upon that reasonableness are relevant...
4. In UBS AG v Tyne [2018] HCA 45; (2018) 92 ALJR 968 Gageler J noted the overlap between Anshun estoppel and abuse of process (at [68]-[69], citations omitted): 68 Lord Bingham's acknowledgement that an abuse of process might be established by nothing more than the bringing of a claim in later proceedings which "should" have been brought in earlier proceedings demonstrates the substantial overlap between abuse of process and the form of estoppel recognised in Port of Melbourne Authority v Anshun Pty Ltd. His Lordship's rejection, as "too dogmatic", of the equation of what "should" have been done in earlier proceedings with what "could" have been done in those earlier proceedings accords with the observation in Anshun that Lord Kilbrandon went "too far" when he spoke in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd of it becoming "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings". 69 Lord Bingham's emphasis on the need for a "merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case" correspondingly encompasses, without necessarily being exhausted by, the enquiry mandated by the reasoning in Anshun (as a step in determining the existence of an estoppel) as to whether the claim sought to be brought in the later proceedings was so relevant to the subject matter of the earlier proceedings that it would have been unreasonable not then to have brought the claim so as to have allowed all relevant issues to have been determined in the one proceeding. The ultimate judgment to be made is in each case normative.

Section 11(2) Abuse of Process

1. In addition to the various species of estoppel pleaded by the Verde Terra parties in response to the cross-summons, they plead that the relief sought by the Council constitutes an abuse of process insofar as the Council's use of the Court's processes is unjustifiably oppressive and has the tendency to bring the administration of justice into disrepute. It relies on Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; (2015) 256 CLR 507 where the plurality (French CJ, Bell, Gageler and Keane JJ) stated that (at [25]-[26], citations omitted): 25 Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel. 26 Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.
2. In short, the identified estoppels, "as well as the circumstances of the case" comprising the conduct of the Council "before, during and after it procured the making of the 2014 Orders", is said to give rise to the abuse of process (T621:25). For this purpose, the Verde Terra parties argued that the Court had to find that the claim was "colourable" or "on the cards" (T684:12).
3. In Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 it was noted that (at 392-393 per Mason CJ, Deane and Dawson JJ): The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness.

The Documents and Communications the Subject of the Notice to Produce, the Donnellan Subpoena and Annexure 'A' Are Privileged

1. Having found that the documents and communications the subject of this voir dire are protected by legal privilege and negotiation privilege, and having determined that the privileges have neither been waived nor lost by reason of the exceptions argued by the Verde Terra parties, I find that the documents and communications the subject of the notice to produce, the subpoena to Donnellan, and the documents proposed to be tendered by the Verde Terra parties over which claims of privilege have been made by the Council in annexure 'A', are not amenable to either inspection or tender by the Verde Terra parties. In other words, the privileges are maintained.
2. In light of the reasoning and findings made in this judgment, it follows that ss 121(2) and (3) and 126 of the Evidence Act have no application on the voir dire (as to which, scant attention was paid by the Verde Terra parties in any event: see T587:48-588:07; 588:28-35 and 636:47-48).
3. The exhibits are to be returned.

Annexure A (54.5 KB, pdf) 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: 05 August 2020