(1984) 156 CLR 532
Archer Capital 4A Pty Ltd v Sage Group plc (No 3) [2013] FCA 1160
(2013) 306 ALR 414
Asciak v Australian Secured and Managed Mortgages Pty Ltd [2008] FCA 753
(2008) 66 ACSR 298
Attorney General for the Northern Territory of Australia v Kearney [1985] HCA 60
(1985) 158 CLR 500
C G Maloney Pty Ltd v Noon [2011] NSWCA 397
Cando Management and Maintenance Pty Ltd v Cumberland Council [2019] NSWCA 26
Source
Original judgment source is linked above.
Catchwords
(1984) 156 CLR 532
Archer Capital 4A Pty Ltd v Sage Group plc (No 3) [2013] FCA 1160(2013) 306 ALR 414
Asciak v Australian Secured and Managed Mortgages Pty Ltd [2008] FCA 753(2008) 66 ACSR 298
Attorney General for the Northern Territory of Australia v Kearney [1985] HCA 60(1985) 158 CLR 500
C G Maloney Pty Ltd v Noon [2011] NSWCA 397
Cando Management and Maintenance Pty Ltd v Cumberland Council [2019] NSWCA 26(2019) 237 LGERA 128
Carter v Northmore Hale Davy & Leake [1995] HCA 33(1995) 183 CLR 121
Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86(2006) 151 FCR 341
Commonwealth v Temwood Holdings Pty Ltd [2002] WASC 107
Council of the New South Wales Bar Association v Archer [2008] NSWCA 164(2008) 72 NSWLR 236
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49(2016) 93 NSWLR 155
DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384(2003) FCR 499
Environment Protection Authority v Grafil Pty Ltd(2013) 250 CLR 303
Fermiscan Limited v James [2009] NSWSC 462
Field v Commissioner for Railways (NSW) [1957] HCA 92(1957) 99 CLR 285
Galafassi v Kelly [2014] NSWCA 19093 ALJR 967
Glengallan Investments Pty Ltd v Andersen [2001] QCA 115
([2002] 1 Qd R 233
Goldberg v Ng [1995] HCA 39
(1995) 185 CLR 83
GPI Leisure Corporation Ltd (in liq) v Yuill (1997) 42 NSWLR 225
Harvey v Phillips [1956] 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
Smith v Bone [2014] FCA 1024
Kirkpatrick v Kotis [2004] NSWSC 1265
(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)
Judgment (37 paragraphs)
[1]
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)
[2]
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)
[3]
Proceedings 2019/203552
Central Coast Council (Applicant)
Verde Terra Pty Ltd (First Respondent)
Environment Protection Authority (Second Respondent)
Representation: Counsel:
[4]
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)
[5]
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)
[6]
Proceedings 2019/101279
Ashurst (Applicant/First, Second and Third Cross Respondents)
MBM Legal (Respondent/Cross Applicant)
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
[9]
The Council Objects to the Production and Admissibility of Documents on the Grounds of Privilege
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.
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.
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").
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.
Documents were produced both in respect of the subpoena issued to Donnellan and the notice to produce.
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]).
[10]
The Council Seeks to Set Aside Consent Orders Entered Into by the Parties in 2014
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.
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.
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.
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".
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.
[11]
The 1998 Consent and its Modification
On 16 March 1998 G & H Todd lodged development application DA 23042/1998 with Gosford CC ("the 1998 DA").
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".
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".
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.
The development the subject of the 1998 consent was designated development within the meaning of the Environmental Planning and Assessment Act 1979 ("EPAA").
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".
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.
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.
[12]
Environment Protection Licence History
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.
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.
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.
Between 3 October 2008 and 3 May 2012, the EPA issued various Notices of Variation of EPL 11395.
[13]
The 2012 Proceedings and the 2014 Consent Order
On 3 September 2012 Gosford CC commenced the 2012 proceedings in this Court against VT. The EPA was not a party to those proceedings.
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").
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.
[14]
Subsequent Litigation
On 23 September 2015 VT made an application to vary EPL 11395 ("the 2015 EPL variation application").
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.
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).
Meanwhile, on 2 August 2018 VT made another application to vary EPL 11395 ("the 2018 EPL variation application").
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.
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").
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).
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.
Then on 21 December 2018 VT lodged development application 5862/2018 with the Council ("the 2018 DA").
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").
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.
[15]
Issues Raised by the Pleadings Relevant to the Voir Dire
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.
[16]
The Council Claims Privilege Over the Documents Produced by It and Donnellan and Sought to be Tendered by the Verde Terra Parties
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.
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").
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).
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).
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.
[17]
Does the Common Law or the Evidence Act Apply to the Claims for Privilege?
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].
[18]
Legal Privilege
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).
[19]
At Common Law
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)
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).
[20]
Under the Evidence Act
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.
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.
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.
[21]
At Common Law
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.
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.
[22]
Under the Evidence Act
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.
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]).
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]).
[23]
The Privileges Prima Facie Apply
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'.
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.
[24]
The Verde Terra Parties Submit that the Privileges Have Been Waived or Lost at Common Law and/or Under the Evidence Act
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.
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]).
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]).
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.
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.
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.
[25]
Waiver of Legal Privilege
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.
[26]
Loss of Negotiation Privilege Under the Evidence Act
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…
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.
During the course of the hearing the Verde Terra parties resiled from any reliance on s 131(2)(e) and (g) (T681:29-46).
[27]
Illegality
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".
[28]
Section 11(2) Abuse of Process
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.
[29]
The Privileges Have Not Been Lost or Waived by the Council
[30]
There Has Been No Implied Waiver of Legal Privilege
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.
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.
[31]
There is No Common Law Illegality
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]).
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).
[32]
The Statutory Exclusions to the Negotiation Privilege in s 131(2) of the Evidence Act Do Not Apply
[33]
Section 131(2)(f) of the Evidence Act
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]).
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.
[34]
Section 131(2)(i) of the Evidence Act
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).
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"...
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...
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.
[35]
Section 11(2) Abuse of Process
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.
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).
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.
[36]
The Documents and Communications the Subject of the Notice to Produce, the Donnellan Subpoena and Annexure 'A' Are Privileged
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.
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).
The exhibits are to be returned.
[37]
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
While the Court in Verde Terra went on to make some premature observations about the possible application of common law and statutory exceptions to the claims for privilege by the Council, these remarks were made in the context of the application to set aside the subpoena and the notice to produce and were not the subject of any developed argument by the parties (as noted in Verde Terra at [103]). They are not determinative for the purpose of this voir dire, as the parties have accepted.
The voir dire concerns the entitlement of the Council to claim privilege over the documents and communications produced pursuant to the notice to produce and the Donnellan subpoena, and over documents proposed to be tendered by the Verde Terra parties (as identified by the Council: see annexure 'A' to this judgment) contained in the evidence book.
In my opinion, the privileges asserted by the Council are maintainable. They have been neither waived nor lost by reason of the exceptions relied upon by the Verde Terra parties at common law and under the Evidence Act 1995.
On 29 August 2014 Gosford CC, VT and Mangrove Mountain Landfill Pty Ltd ("Mangrove Mountain") (another respondent to 2012 proceedings) signed draft consent orders.
On that day, legal representatives of Gosford CC, VT and Mangrove Mountain provided "Submissions by the Applicant and First and Third Respondents for consent orders on 29 August 2014" to, and appeared before, the Court.
Later that day, the Court made orders in accordance with the agreed consent orders on the application of Gosford CC, VT and Mangrove Mountain ("the 2014 consent orders"). The other respondents to the 2012 proceedings did not oppose the making of the 2014 consent orders.
The terms of the 2014 consent orders (made on 29 August 2014 by the Court and entered on 10 November 2014) were as follows:
TERMS OF ORDER MADE BY THE COURT
Development Consent DA23042/1998 for the landfill and proposed remodelling of the Mangrove Mountain Golf Course on Lot 584 DP809570, Wiseman's Ferry Road, Mangrove Mountain shall be carried out in accordance with the following and pursuant to s.124 of the Environment Planning & Assessment Act 1979 (as amended):
1. The first and third respondents are to comply with the terms of the Amended Landfill Environmental Management Plan 2013 prepared by Consulting Earth Scientists (CES110703-VDT-AR) ("the Amended LEMP 2013") subject to order 4 below.
2. The first and third respondents are to comply with the terms of the Leachate Management Plan 2013 prepared by Consulting Earth Scientists (CES110703-VDT-60) ("the LMP 2013") subject to order 4 below.
3. The Amended LEMP 2013 and the LMP 2013 referred to in orders 1 and 2 cannot be further altered except to:
(a) amend the documents to reflect the consequences for a 6m reduction in the Mound on Area B in lieu of a 7.4m reduction, and
(b) subject to subparagraph (a), any future amendment will only occur with the consent of Gosford City Council pursuant to operation of the statutory process available under the Environmental Planning and Assessment Act 1979 (or any equivalent replacement statutory scheme in the future);
4. Works to be carried out on the subject land in accordance with the Amended LEMP 2013 and the LMP 2013 be as follows, and subject to the following conditions and timeframes:
4.1 6 metres of waste from the fill mound on Area B be moved to Cell W and a 2.4 metre thick permanent final capping be placed thereon to result in a maximum height for the final landform in Area B of RL341.4;
4.2 The removal of waste and capping of the mound on Area B as set out in subparagraph 4.1 shall be completed no later than 31 August 2017 and otherwise in accordance with the Amended LEMP 2013;
4.3 The time for completion of the golf course and closure of the landfill operation will be 10 years from the date of approval of the lining of Cell W by the Environment Protection Authority of NSW, and the granting of an amended Environment Protection Licence No, 11395 to reflect the content of the Amended LEMP 2013 and LMP 2013, whichever last occurs.
4.4 The contours for the finished level of closure of the landfill and the golf course are set out in the golf course design by McKay & Sons Pty Limited which is Appendix III to the Amended LEMP 2013. The tolerance to the finished levels are plus 0.5 metres and minus 1.5 metres to enable best practice for the golf course design and are to be adjusted to reduce the Mound in Area B by 6m not 7.4m as shown, such plans to be delivered to all parties;
4.5 The total amount of VENM and ENM to be placed over the whole of the land outside the Regulated Area to construct the golf course referred to in 4.4 is 1,137,614m3. The operator of the landfill, and constructor of the golf course, shall deliver a survey of the whole of the land to Council and the EPA of NSW every six months until the golf course is completed when a final survey shall be delivered which demonstrates that there is 1,137,614m3 or less of VENM or ENM on the golf course outside the Regulated Area in situ.
4.6 The number of truck movements permitted in connection with the landfill operation and construction of the golf course will be 55 per day on average, and the operator of the landfill shall report quarterly to Council, on the periods ending 31 March, 30 June, 30 September and 31 December during the operation of the landfill and the construction of the golf course on the number of trucks transporting waste, VENM and ENM on a daily basis;
4.7 The total volume of waste material imported to the site to achieve the approved golf course design in the 10 years from the date of approval of the lining of Cell W and approval of the amended EPL 11395 will not exceed the volume required to fill 1,317,503 m3 of space available for filling with waste, whether that space comprises void space created by excavations or whether it comprises air space between the existing ground level and finished ground levels (excluding capping) in the Regulated Area in accordance with the approved golf course design;
4.8 VENM and ENM can be imported to the site for the construction of the golf course to achieve the approved golf course design;
4.9 No VENM or ENM can be exported off the site.
4.10 The surveys to be given to the EPA pursuant to EPL no. 11395 shall be delivered to the Council within 7 days of delivery of the survey to the EPA.
5. All previous orders as to costs in favour of the first and third respondents are set aside, but any costs orders made in favour of the 2nd, 4th and 5th respondents stand.
6. Otherwise, all parties will pay their own costs of the proceedings.
7. The Consent Orders hearing set down for 17 October 2014 be vacated.
The Court notes the following:
1. The space available for filling with imported waste material referred to in Order 4.7 is to be within the area regulated by the Environment Protection Authority in accordance with the Environment Protection Licence no 11395 ("the Regulated Area").
2. VENM and ENM will be excavated in the Regulated Area, and used both within and outside the Regulated Area to build the golf course in accordance with Order 4.4 above.
3. The estimated waste to be imported to the Regulated Area over the 10 year period is 1,029,299 tonnes. This estimate has been derived from the average compaction rate of one tonne to 1.28 cubic metres calculated over the 10 year period at the Mangrove Mountain Landfill from 2003 to 2013.
4. It is estimated that the lining of Cell W will be completed by 30 April 2015.
On 1 July 2019 the Council filed a Statement of Facts and Contentions in the 2019 Class 1 appeal contending that the 2018 DA sought consent for designated development and for alterations and additions for a use of the land for which there was no development consent as required.
That same day, the Council commenced related Class 4 proceedings by way of summons against the Verde Terra parties and the EPA, seeking orders that the variations of EPL 11395 by the EPA be set aside on the basis that they authorised development which required development consent and that no relevant consent had been granted ("the 2019 Council Class 4 proceedings").
Finally, on 26 July 2019 the Council filed a cross-summons to the 2019 VT Class 4 proceedings. The Council seeks, among other things, declaratory relief to the effect that it was an implied condition that development consent be obtained for the development referred to in the 2014 consent orders, and an order that the 2014 consent orders be set aside on the basis that they were outside the ambit of orders that could properly be made pursuant to s 124 (now s 9.46) of the EPAA.
In points of defence filed 5 September 2019, the Verde Terra parties plead that the Council is estopped from impugning the 1998 consent and 2014 consent orders, including by asserting that development consent is required to carry out the development referred to in the 2014 consent orders. It also pleads that the Council is statute barred from filing its cross-summons pursuant to r 59.10 of the Uniform Civil Procedure Rules 2005 ("UCPR").
Relevantly, in its points of claim to its cross-summons to the 2019 VT Class 4 proceedings, the Council pleads that in the alternative to its construction of the 2014 consent orders impliedly requiring that all statutory approvals necessary to carry out the works referred to in those orders be obtained (the 2014 consent orders are not capable of modifying the 1998 consent), the 2014 consent orders were made illegally and/or irregularly:
The Consent Orders Agreement otherwise void for illegality and unenforceable
40. In the alternative to paragraph 39 above, the Consent Orders Agreement was made in contravention of the EP&A Act in consequence whereof the Consent Orders Agreement was illegal, void and unenforceable.
Particulars
(a) The Consent Orders required the ongoing use of the land for the disposal of waste
(b) Development consent was required to carry out the development the subject of the Consent Orders;
Particulars of (b) above
Work not approved by the 1998 Consent included:
a. The importation of a further 1,317,503 cubic metres of waste material to be disposed of in the Regulated area.
b. The placement of 1,137,614 cubic metres of waste having the classification of VENM or ENM on the Land, both imported and generated by unlawful excavation of the Land
c. The contours of the final landform to be in accordance with Drawing Number 1014 by McKay & Sons which was Appendix III to the Amended LEMP 2013, adjusted to reduce the Mound in Area B by 6 metres, not 7.4 metres;
d. The complete redesign of the golf course, in accordance with Drawing Number 1014 by McKay & Sons which was Appendix III to the LEMP annexed to the Consent Orders, adjusted to reduce the Mound in Area B by 6 metres, not 7.4 metres;
e. By reason of compliance with Figure 4 in LMP 2013, the excavation of a series of landfill cells outside Area B to a depth of up to approximately 38 metres below natural ground level.
f. An increase in the number of truck movements from 35 per day in accordance with condition 43 of the 2009 Modification to 55 per day "on average".
g. The importation of 5,000 tonnes per annum of the waste described in paragraph 27(b) above.
(c) The 1998 Consent was not a development consent authorising the carrying out of the development the subject of the Consent Orders;
(d) The Council had no power to authorise by way of an agreement the expansion of the area on the Land which was to be used for waste disposal;
(e) The Consent Orders Agreement was an agreement to procure from the Court orders which were not orders to remedy or restrain a breach or threatened apprehended breach of the EP&A Act which had been committed or to restrain a breach of the EP&A Act
Particulars of (e) above
The Consent Orders required the First Cross Respondent to carry out each of the works listed in paragraph 26 above, none of which was authorised by the 1998 Consent and none of which was referrable to a breach or threatened or apprehended breach of the EP&A Act.
Without limiting the foregoing, the Consent Orders were not orders remedying or restraining a breach or apprehended breach of the EP&A Act constituted by the construction of the landfill mound in Area B not in conformity with the final landform approved by the 1998 Consent.
41. Further and in the alternative to paragraph 46 [sic] above, the Consent Orders Agreement was void and unenforceable as being against public policy.
Particulars
(a) the Consent Orders Agreement purported to authorise development to be carried out in contravention of the EP&A Act and the Consent Orders Agreement was impliedly prohibited by the EP&A Act;
(b) the objects of the EP&A Act were defeated by reason of the illegal agreement, by avoiding the environmental impact assessment and public participation processes contained within the development control provisions of Part 4 (as it then was) of the EP&A Act.
(c) There were no articulated breach of the EP&A Act which would have been remedied or restrained by the making of the Consent Orders
42. By reason of the Consent Orders Agreement being illegal and or contrary to public policy, the Consent Orders were made illegally and/or irregularly.
Section 124 of the EPAA conferred specific power on the Court to make such order or orders as it thinks fit to remedy or restrain any breach of the Act:
124 Orders of the Court
(1) Where the Court is satisfied that a breach of this Act has been committed or that a breach of this Act will, unless restrained by order of the Court, be committed, it may make such order as it thinks fit to remedy or restrain the breach.
(2) Without limiting the powers of the Court under subsection (1), an order made under that subsection may:
(a) where the breach of this Act comprises a use of any building, work or land - restrain that use,
(b) where the breach of this Act comprises the erection of a building or the carrying out of a work - require the demolition or removal of that building or work, or
(c) where the breach of this Act has the effect of altering the condition or state of any building, work or land - require the reinstatement, so far as is practicable, of that building, work or land to the condition or state the building, work or land was in immediately before the breach was committed.
(3) Where a breach of this Act would not have been committed but for the failure to obtain a consent under Part 4, the Court, upon application being made by the defendant, may:
(a) adjourn the proceedings to enable a development application to be made under Part 4 to obtain that consent, and
(b) in its discretion, by interlocutory order, restrain the continuance of the commission of the breach while the proceedings are adjourned.
(4) The functions of the Court under this Division are in addition to and not in derogation from any other functions of the Court.
(5) Nothing in this section affects the provisions of Division 3 of Part 3 of the Land and Environment Court Act 1979.
The Council submits that while there is no question that the powers of the Court under s 124 of the EPAA extend to an order to carry out rectification works (Cando Management and Maintenance Pty Ltd v Cumberland Council [2019] NSWCA 26; (2019) 237 LGERA 128 at [128] per White JA), any orders made in Class 4 of the Court's jurisdiction - such as the 2014 consent orders made pursuant to the 2014 agreement - cannot validly have the effect of ordering development to be carried out absent all necessary statutory approvals having first been obtained. It relies on the following passages from Cando (at [129]-[138], emphasis added, cf Pittwater Council v Martoriati [2012] NSWLEC 131 at [86]-[87] per Preston J):
129 In the present case if Cando were to carry out the works in Annexure A to the Agreed Statement of Facts without first obtaining a construction certificate and appointing a principal certifying authority it would commit further breaches of the Act.
130 In Grace v Thomas Street Cafe Pty Ltd [2007] NSWCA 359; 159 LGERA 57, Beazley JA (as her Honour then was) with the concurrence of Spigelman CJ and McClellan CJ at CL, held that the discretion to refuse relief under s 124(1) could be exercised on terms (at [139] and [157]).
131 This is clearly correct. It is not the relief sought by Cando.
132 By the orders sought in its Notice of Appeal Cando did not merely propose that there be no injunction against the use or occupation of the site on condition that the works in Annexure A to the Statement of Agreed Facts be carried out. It sought a declaration that on the carrying out of those works, if certified by an independent expert, the site could be occupied without an occupation certificate (at [70]).
133 Section 109M of the EPA Act provides that a person must not commence occupation or use of the whole or any part of a new building unless an occupation certificate has been issued in relation to the building or part thereof (s 109M(1)). That prohibition does not apply to the occupation or use of a new building after the expiration of 12 months after the date on which the building was first occupied or used (s 109M(2)(b)).
134 Section 109H(2) (now s 6.9) provides than an occupation certificate must not be issued unless preconditions to the issue of the certificate specified in the development consent had been met. Neither an interim occupation certificate, nor a final occupation certificate, can be issued to authorise a person to commence to occupy or use a new building or part thereof, unless, in the case of a building erected pursuant to a development consent, a construction certificate has been issued with respect to the plans and specifications for the building (s 109H(3)(b) and (5)(b)).
135 When questioned as to how orders permitting occupation of the townhouses could be made in the absence of an occupation certificate, counsel for Cando frankly pointed to the qualification in s 109M(2)(b) that the prohibition did not apply if the building had been occupied for a year. As I understood the submission, it was that the court should endorse illegal occupation for a year so that the townhouses could then be lawfully occupied. Cando submitted that if the orders it sought were made, they would displace the statutory prohibitions.
136 In the absence of a construction certificate no occupation certificate could be issued and use or occupation of the building would be prohibited by s 109M(1). The orders sought in the Notice of Appeal, like the orders sought in the cross-claim that were pressed before the primary judge, if made, would have purportedly sanctioned and authorised breaches of the Act. Such orders would be antithetical to the power conferred by s 124(1) for the Court to make orders restraining or remedying a breach of the Act. They could not be justified on the ground that the Court has a wide discretion in deciding whether or not to grant injunctive relief under s 124, nor in imposing conditions on which injunctive relief might be refused.
137 The orders ultimately sought as set out at [71] above sought to avoid this problem by restraining Cando from using the premises or permitting occupation of the premises on conditions, the conditions being that Cando carry out the works in Annexure A to the Agreed Statement of Facts within six months, and that an independent expert certify that the works had been properly carried out.
138 For the Court to direct Cando to carry out the works in Annexure A to the Agreed Statement of Facts when Cando does not have a construction certificate that it requires in order lawfully to carry out the works and has not appointed a principal certifying authority would be to direct Cando to carry out work in breach of s 81A(1) and (2) of the EPA Act. It is one thing for a court to exercise its discretion not to grant injunctive relief to restrain a breach of the Act. It is altogether a different thing for a court to order parties to carry out work in breach of the Act. The latter course is not authorised by s 124.
Accordingly, if the Court rejects the Council's construction of the 2014 consent orders, then the alternative position of the Council is that the orders were made in breach of the EPAA and are beyond power, and are contrary to public policy (because their effect is an attempt to circumnavigate the operation of the EPAA) and must be set aside. By parity of reasoning the 2014 agreement giving rise to the 2014 consent orders is similarly defective and is therefore void or voidable (citing, in particular, A v Hayden (No 2) [1984] HCA 67; (1984) 156 CLR 532 at 543 per Gibbs CJ, 553 and 556-558 per Mason J, 563 per Murphy J, 571 per Wilson and Dawson JJ and 586 per Brennan J).
By way of response in its points of defence to the first cross-summons, the Verde Terra parties have relevantly pleaded that:
38 The cross-respondents:
(a) deny that any further development consent is required to carry out works which are the subject of the 2014 Orders and the Signed Proposed Orders;
(b) rely upon the matters pleaded in paragraphs 38.1 to 38.4 below;
(c) say further or in the alternative that, to the extent that any development consent is required to carry out the development referred to in the 2014 Orders and the Signed Proposed Orders, it has already been obtained and is in force; and
(d) otherwise deny the paragraph.
38.1 [Issue estoppel] In further answer to paragraph 38, the cross‑respondents say that the cross-applicant is estopped from asserting that development consent was and is required to carry out the development referred to in the 2014 Orders and the Signed Proposed Orders and the Heads of Agreement because:
(a) the issue of whether development consent was required to carry out the development referred to in the Heads of Agreement and the 2014 Orders and the Signed Proposed Orders was an issue that was fundamental to, and therefore determined by, the Court's decision to make the 2014 Orders; and
(b) the cross-respondents rely upon the matters pleaded at paragraph 34 above.
38.2 [Anshun estoppel] In further answer to paragraph 38, the cross‑respondents say that the cross-applicant is estopped from asserting that development consent was and is required to carry out the development referred to in the 2014 Orders, the Signed Proposed Orders and the Heads of Agreement because:
(a) at all material times in the Class 4 Proceedings, the Council sought inter alia, the following relief against the first and second cross-respondents:
i. the relief in paragraph 2 of the summons and further amended summons, being declaratory relief that the first and second cross-respondents had breached the EPA Act by carrying out development otherwise than in accordance with the conditions of the Consent; and
ii. the relief in paragraph 7 of the summons and further amended summons, being injunctive relief in the form of an order that (emphasis added):
a. subject to c. below, cease to threaten or carry out work that is not in accordance with the [Consent] without having obtained prior development consent according to law; ...
b. do or cause to be done all things and works necessary to comply with the [Consent]; and
c. do or cause to be done all things and works necessary to remove the stockpiled material and grade the land, restoring it to the finished land levels in accordance with the Consent to prepare it for its approved use as a golf course in accordance with the [Consent] ("the Works").
…
(b) prior to the making of the 2014 Orders, the Council represented to the Court and/or to the first and second cross-respondents that no development consent was required to carry out the development referred to in the Heads of Agreement and the Signed Proposed Orders by engaging in at least the following conduct, each considered alone or in combination:
i. entering into the Heads of Agreement on about 20 September 2013;
ii. the sending of correspondence from its then solicitors PJ Donnellan & Co to the first and second cross-respondents' solicitors Hunt & Hunt including for example the letters dated 28 November 2013, 12 March 2014 and 26 June 2014;
iii. endorsing to the Court the Joint Oral Submissions on 29 August 2014;
iv. signing the Joint Written Submissions on about 28 August 2014;
v. permitting the Joint Written Submissions to be provided to the Court on 29 August 2014;
vi. signing the Signed Proposed Orders on about 29 August 2014;
vii. permitting the Signed Proposed Orders to be provided to the Court on 29 August 2014;
(c) in reliance on the Council's various representations:
i. the first and second cross-respondents signed the Signed Proposed Orders, made the Joint Oral Submissions and made the Joint Written Submissions;
ii. the third cross-respondent entered into and completed a contract of sale pursuant to which it became on 12 September 2014 the registered owner of Lot 582 of DP 1123656 in consideration for $750,000, which purchase was conditional upon consent orders being entered in the Class 4 Proceedings substantially in accordance with the Heads of Agreement;
iii. the first, second and third cross-respondents have each incurred significant liabilities or expenses;
(d) further:
i. as a result of the Council's various representations, the cross- respondents were encouraged and/or induced to assume that the development referred to in the Heads of Agreement and the 2014 Orders and the Signed Proposed Orders could be carried out on the Land without development consent;
ii. it was incumbent on the Council to dispel the cross-respondents' assumption that the development referred to in the Heads of Agreement and 2014 Orders and Signed Proposed Orders could be carried out on the Land without development consent; and/or
iii. in the circumstances, it would be unconscionable for the cross- applicant to now depart from the assumption that it induced, encouraged and/or allowed the cross-respondents to rely upon, at significant expense and liability and/or potential liability;
(e) the positions of the first, second and third cross-respondents would each be altered to their detriment if, contrary to the Council's various representations and/or the cross-respondents' assumptions resulting from the Council's various representations, development consent was required to carry out the development referred to in the Heads of Agreement and 2014 Orders and Signed Proposed Orders;
(f) by reason of the matters pleaded at paragraphs (a) to (e) above, and each of them, the issue of whether development consent was required to carry out the development referred to in the Heads of Agreement and 2014 Orders and Signed Proposed Orders was an issue that:
i. was not, but could have been raised with the Court by the Council prior to the making of the 2014 Orders; and
ii. was so relevant to the subject matter of the Class 4 Proceedings that it was unreasonable for the Council not to raise it with the Court prior to the making of the 2014 Orders: and
(g) the cross-respondents rely upon matters pleaded at paragraph 34 above.
38.3 [Abuse of process] In further answer to paragraph 38, the cross-respondents say that the making of the allegation in paragraph 38 constitutes an abuse of process having regard to:
(a) the matters pleaded at paragraphs 38.1 and 38.2 above;
(b) that, in the circumstances, the use of the Court's procedures to seek the declaratory relief corresponding to paragraph 38 would be unjustifiably oppressive to the cross-respondents; and/or
(c) that, in the circumstances, the use of the Court's procedures to seek the declaratory relief corresponding to paragraph 38 would bring the administration of justice into disrepute.
38.4 [Estoppel] In further answer to paragraph 38, by reason of the matters pleaded in paragraphs 34, 38.2(a), 38.2(b), 38.2(c), 38.2(d), 38.2 (e) and 38.2(f), and each of them, the cross-applicant is estopped from asserting that development consent was and is required to carry out the development referred to in the 2014 Orders, the Signed Proposed Orders or the Heads of Agreement.
In this two-step process of determining access and admissibility, the onus lies on the party asserting an entitlement to a privilege - the Council (Dowling v Ultraceuticals Pty Ltd Pty Ltd [2016] NSWSC 386; (2016) 93 NSWLR 155 at [20] and Tiffany & Co (Australia) Pty Limited v Sydney Metro [2019] NSWLEC 147 at [8(a)]) - whereas the burden of demonstrating that the privilege has been waived or lost lies on the party making that claim - the Verde Terra parties (Environment Protection Authority v Newcastle Port Corporation [2019] NSWLEC 92 at [56]).
In each instance, the onus is discharged on the balance of probabilities (for claims under the Evidence Act see s 142(1) of the Evidence Act and Newcastle Port Corporation at [31]).
It is convenient to briefly discuss the scope of the privileges claimed. However, as an anterior step it is necessary to determine which law, that is, the common law or statute, applies at which stage to the claims for privilege.
In the earlier decision of Singtel Optus Pty Ltd v Weston [2011] NSWSC 1083; (2011) 81 NSWLR 526 the same conclusion was reached by White J (at [28], referring to the decision in the Court of Appeal in State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60):
28 However, as Allsop P held in State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 at [32] and as the terms of s 131A clearly provide, the section only applies where the person objecting to disclosure on the ground of privilege is the same person who was required to produce the document. The section does not apply when a claim for privilege is made by persons other than the person required to produce the documents. In such cases the common law applies.
Section 131A of the Evidence Act states that:
131A Application of Part to preliminary proceedings of courts
(1) If:
(a) a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A, 1C or 3, and
(b) the person objects to giving that information or providing that document,
the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence.
(2) In this section, disclosure requirement means a process or order of a court that requires the disclosure of information or a document and includes the following:
(a) a summons or subpoena to produce documents or give evidence,
(b) pre-trial discovery,
(c) non-party discovery,
(d) interrogatories,
(e) a notice to produce,
(f) a request to produce a document under Division 1 of Part 4.6.
In the result, the somewhat unsatisfactory position in the context of this application is that with respect to the notice to produce to the Council the Evidence Act applies to all stages of the claimed privileges, however, with respect to the subpoena to Donnellan, the common law governs the claimed privileges at the second stage, namely, access for the purpose of inspection by the Verde Terra parties, whereas the Evidence Act applies to the privileges claimed at the third stage, namely, the tendering of any documents produced by Donnellan.
In relation to the documents proposed to be tendered by the Verde Terra parties in Annexure 'A', the Evidence Act applies.
More recently, the privilege has been held to be an 'immunity' rather than a 'right' (Glencore International AG v Commissioner of Taxation of the Commonwealth of Australia [2019] HCA 26; 93 ALJR 967 at [12]). In Glencore the High Court of Australia stated as follows (at [21]-[25], footnotes omitted):
21 Legal professional privilege has been described as a right which is fundamental to persons and to our legal system. It has also been described as "a practical guarantee of fundamental, constitutional or human rights". Such descriptions point up the importance of the privilege. They serve to show that it is not merely an aspect of curial procedure or a mere rule of evidence but a substantive right founded upon a matter of public interest. The same distinction has been drawn in New Zealand and the United Kingdom.
22 What cannot be discerned from these cases is that the "right" spoken of in connection with the privilege is an actionable right. If one asks what this "right" gives to a person, the answer could be stated as "a right to resist the compulsory disclosure of information" or "the right to decline to disclose or to allow to be disclosed the confidential communication or document in question", as the Privy Council and the House of Lords respectively have held. So understood it is a freedom from the exercise of legal power or control, which is to say an immunity, and that is what Daniels Corporation held its true character to be.
23 In Daniels Corporation Gleeson CJ, Gaudron, Gummow and Hayne JJ, having observed that it is now settled that legal professional privilege is a rule of substantive law and not merely a rule of evidence, made the statement referred to earlier in these reasons that:
"It is an important common law right or, perhaps more accurately, an important common law immunity."
24 McHugh J likewise described it as "a person's immunity from compulsion to produce documents that evidence confidential communications about legal matters" between lawyers and clients.
25 Contrary to the plaintiffs' submissions, there is nothing tentative in their Honours' characterisation of the privilege as an immunity provided by the common law. In the manner stated it is a considered correction of a possible misunderstanding arising from the description of it as a common law right. There can be little doubt that the joint judgment was drawing a clear distinction, for the context of the statement was the application of the principle of legality to the construction of statutes which may have the effect of abrogating "important common law rights, privileges and immunities". Their Honours' characterisation of the privilege as an immunity is consistent with its history.
The High Court went on to discuss the policy behind the privilege and emphasised the paramountcy afforded to the public interest underpinning it, which, because of the adverse consequences that can result by reason of its application, mean that the privilege is not plenary in its application (at [30]):
30 The paramountcy afforded to the public interest which the privilege supports can have serious consequences. By way of example, an accused person can be denied access to documents which might assist his or her defence. Because of the significance of the effect of the privilege on the conduct of litigation, and the other considerations identified in Grant v Downs, it was there said that the privilege "should be confined within strict limits". That note of caution was to be repeated in subsequent cases.
The principles to be applied in determining whether the statutory privileges exist were recently usefully summarised by Duggan J in Tiffany, which I respectfully adopt (at [8] - [9]):
8 The parties were generally agreed on the principles that I am required to apply, and these principles can be summarised as follows:
(a) The Applicant bears the onus of establishing each of the claims for privilege, including each factual element necessary to establish the requisite dominant purpose. In that respect, focused and specific evidence is required in respect of each communication, rather than mere generalised assertion let alone opaque and repetitious verbal formulae: Asahi Holdings (Australia) Pty Ltd v Equity Partners Pty Limited (No 4) [2014] FCA 796 at [29].
(b) Privilege can attach to a document where it is created for the dominant purpose of using it or its contents to obtain legal advice, even if the document is not in fact later used in an actual communication: Commissioner of Australia Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501.
(c) The Court has the power to examine the documents over which privilege is claimed "and should not be reticent in exercising that power": Asahi at [36]; Morton v Bolinda Publishing Pty Limited [2017] FCA 187 at [62].
(d) Claims in respect of each of the 4 categories identified require a determination as to whether the "dominant purpose" of the confidential communication was for the giving of legal advice or relating to legal proceedings (pending or in anticipation of).
Dominant purpose
9 Critical to a successful claim for privilege pursuant to either s 118 or s 119 of the Evidence Act is that the communication was made for the "dominant purpose" as described in those sections. The question of what comprises a dominant purpose was generally agreed between the parties to require the application of the principles outlined in paragraphs [8]-[11] of the Applicant's submissions which stated:
8. Privilege can attach to a document where it is created for the dominant purpose of using it or its content to obtain legal advice, even if the document is not in fact later used in an actual communication (Commissioner of Australia Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501).
9. The purpose is 'the reason why the document was brought into existence' (Waterford v Commonwealth (1987) 163 CLR 54, 66) and the 'dominant purpose' must be the 'ruling, prevailing or most influence purpose' or 'one that predominates over the other purposes' (AWB v Cole (2006) 152 FCR 382).
10. Ascertaining the purpose of a communication is a question of fact (AWB v Cole (2006) 152 FCR 382).
11. The purpose is to be determined objectively having regard to the circumstances that existed at the time the communication was made or the document was created (Song v Commissioner of Taxation [2018] FCA 840 at [5].) The subjective purpose of the maker or creator is relevant to, but no determinative of, the question of purpose (Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49, 172 (per Callinan J)).
The privilege may be availed upon to resist, as in the present case, the disclosure of evidence of negotiations or settlement attempts in a second dispute if that party had a reasonable expectation that the material would not be used against it in the later dispute (Dowling at [37]).
Relevantly for present purposes, the privilege applies not only to negotiations leading to a settlement, but to communication during the drafting of documents to give effect to the settlement (Yokogawa Aust Pty Ltd v Alstom Power Ltd [2009] SASC 377; (2009) 262 ALR 738 at [103]). Further, it can also apply to communications which are reasonably incidental to negotiations but are internal to one party (Yokogawa at [104]).
Although initially the subject of submissions, the Verde Terra parties expressly eschewed reliance upon the exception contained in s 125(1)(a) of the Evidence Act (dealing with loss of the privilege due to misconduct. See T580:11 and T584:50). In the absence of any pleaded actual dishonesty on the part of the Council, this was an appropriate concession (Van Der Lee v State of New South Wales [2002] NSWCA 286 at [61]).
The test has been stated and applied more recently in this Court in Newcastle Port Corporation (at [55]).
The party asserting waiver (the Verde Terra parties) bears the onus of establishing that the privilege has been waived (Grafil at [41] and Newcastle Port Corporation at [56]).
As stated in Mann, assessment of the inconsistency is informed by considerations of fairness, but not by some overriding principle of fairness operating at large (Mann at [29] and Newcastle Port Corporation at [61]-[62]).
Whether express or implied, waiver is an intentional act done with knowledge. In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46; (2013) 250 CLR 303 (at [30]) the plurality of the High Court stated the following (footnotes omitted):
30 According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege). It may be express or implied. In most cases concerning waiver, the area of dispute is whether it is to be implied. In some cases waiver will be imputed by the law with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.
In Domino's Pizza Enterprises Limited v Precision Tracking Pty Ltd (No 3) [2017] FCA 1063, Griffith J helpfully summarised the applicable principles for waiver at common law as follows (at [10]):
10 It is convenient to repeat the summary of the relevant legal principles concerning both the subsistence of a claim for privilege and implied waiver which were set out in College of Law Limited v Australian National University [2013] FCA 492 at [23] and [24]:
23 The parties were generally agreed on the relevant principles to apply in determining both the subsistence of a claim for privilege and implied waiver. Reference was made to various authorities, including Mann v Carnell (1999) 201 CLR 1 (Carnell); Bennett v Chief Executive Officer, Australian Customs Service (2004) 140 FCR 101; AWB Limited v Cole (No 5) (2006) 155 FCR 30 (Cole); Osland v Secretary, Department of Justice (2008) 234 CLR 275 (Osland); British American Tobacco Australia Ltd v Secretary, Department of Health and Ageing (2011) 195 FCR 123 (BATA) and Cooper v Hobbs [2013] NSWCA 70. Drawing on those authorities, the relevant principles concerning the subsistence of privilege may be summarised as follows:
(a) privilege attaches to communications between legal adviser and client for the dominant purpose of giving or obtaining legal advice, where the communications are confidential and the legal advisor is acting in his or her professional capacity;
(b) the party claiming privilege bears the onus of establishing the facts necessary to establish the claim. The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation, but might also be discharged by reference to the nature of the documents supported by argument or submissions;
(c) the existence of privilege is not established merely by using verbal formula, or by asserting that privilege applies to particular communications, or that communications are undertaken for the purpose of obtaining or giving "legal advice";
(d) …;
(e) although the concept of legal advice is reasonably broad, it does not extend to advice that is purely commercial or of a public relations character;
(f) subject to meeting the dominant purpose test, privilege extends to notes, memoranda or other documents made by officers or employees of the client that relate to information sought by the client's legal adviser to enable him or her to advise; and
(g) the Court has power to examine a document over which privilege is claimed and, where there is a disputed claim, the High Court has said that the Court should not be hesitant to exercise such a power (see Grant v Downs (1976) 135 CLR 674 at 689). The essential purpose of such an inspection is to determine whether, on its face, the nature and contents of the document support the claim for privilege.
24 These authorities also establish the following relevant principles concerning implied waiver of privilege (noting that it is common ground here that the common law principles apply at this stage of the proceedings and not Part 3.10 of the Evidence Act 1995 (Cth)):
(a) privilege will be waived where the conduct of the person claiming it is inconsistent with the maintenance of the confidentiality in the relevant communication which the privilege is intended to protect;
(b) the test for implied waiver is objective, thus where such inconsistency is found, privilege will be waived regardless of the subjective intention of the party claiming the privilege;
(c) whether there is inconsistency is to be determined in the context and circumstances of the case and in the light of any considerations of fairness arising from that context and those circumstances;
(d) the question of implied waivers raise matters of fact and degree;
(e) disclosure of the gist, conclusion, substance or effect of a privileged communication does not necessarily effect a waiver of legal professional privilege in respect of the advice as a whole. Whether it does or not in a particular case depends on whether, in the circumstances of that case, the requisite inconsistency exists between the disclosure on the one hand and the maintenance of confidentiality on the other;
(f) the context includes such matters as the nature of the matter in respect of which the advice was received, the evident purpose of the person making the disclosure, and the legal and practical consequences of limited, rather than complete, disclosure; and
(g) where the party claiming privilege has disclosed or deployed the relevant information in order to achieve some forensic or other advantage for itself, or to disadvantage another person in a similar way, this may amount to conduct which is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. Accordingly, the purpose for which the partial disclosure was made is important.
Accordingly, by its conduct, the Verde Terra parties contend that the Council has waived the privilege in respect of all documents that:
(1) record communications made, or
(2) were themselves made,
for the purpose of
(3) procuring the making of the Consent Orders Agreement;
(4) procuring the making of the 2014 Orders.
Including:
a. technical advice (contemplated, requested and/or received) relating to the appropriateness (or otherwise) of the Agreed Works contemplated by the 2014 Orders as set out in paragraph 1(a) above;
b. legal advice relating to
i. the making of the Consent Orders Agreement;
ii. the making of the 2014 Orders; and
iii. the practical (under planning law) consequences of the Consent Orders Agreement and/or the 2014 Orders;
c. other communications made or documents prepared in furtherance of, or for the purpose of, carrying out the intention expressed in the chapeau to the Heads of Agreement dated 20 September 2013 that the parties "as quickly as possible" settle "the details of each of the bases for that settlement";
d. any other matter considered by the Council for the purposes of procuring the Consent Orders Agreement and/or the 2014 Orders, such as:
i. any need for a further or modified development consent;
ii. any need to undergo any other processes of assessment, notification, exhibition, public participation, agency assessment;
iii. the interests of third parties.
The applicable legal principles in relation to implied waiver discussed earlier in this judgment "are, at least now, relatively easy to state. They are not, however, always so easy to apply" (Archer Capital 4A Pty Ltd v Sage Group plc (No 3) [2013] FCA 1160; (2013) 306 ALR 414 at [6] per Wigney J).
Generally, merely pleading a matter does not, of itself, waive privilege. However, a proposition to the contrary arose in Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 (at 358-359 per Jordan CJ). A detailed analysis of Thomason was cogently conducted by Allsop J (as he then was) in DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384; (2003) FCR 499. Relevantly, his Honour opined as follows (at [44] and [53]-[56]):
44 Jordan CJ's reasoning expressed at 358-59 was as follows:
[I]t was necessary under the second plea for the defendant to prove, if it could, what knowledge the plaintiff had as to her legal rights; and this was knowledge which she was not likely to possess unless she derived it from a legal adviser. Hence, in effect, one of the issues in the case was what advice if any the plaintiff had received from her legal advisers as to her alternative legal rights. In these circumstances, since the fact and nature of the advice is an issue in the case, I am of opinion that privilege cannot be raised to prevent the proof of the advice. The position is analogous to that which arises in a suit in Equity to set aside a transaction on the ground of undue influence. In such a suit, it has always been the practice for the defendant to cross-examine the plaintiff with a view to proving that the plaintiff had competent legal advice when he entered into the transaction, and to call and examine the legal adviser if he is available; and I have never known it to be suggested that such evidence is inadmissible on the ground of the plaintiff's privilege: cf. In re Coomber [1911] 1 Ch. 723 at 725; Inche Noriah v Shaik Allie Bin Omar [1929] A.C. 127 at 130-1.
[emphasis added]
…
53 The problem was, if I may say so, lucidly and shortly dealt with by McLelland J (as his Honour then was) in United States Surgical Corp v Hospital Products International Pty Limited (unreported 11 October 1981, Equity Division No 2094/81 - see Ritchie's Supreme Court Practice (NSW) Vol 2 Practice Decisions [13,023] at pp 8545-47). There his Honour was faced with a very similar argument to that put to me by the applicant here about the consequence of the respondent's denials of the applicant's pleading of knowledge. The context of the dispute is best expressed in McLelland J's own words:
The defendants submit that the state of knowledge from time to time of the plaintiff and its legal advisers of the activities of the defendants relied upon to support the plaintiff's claim to relief, and the legal advice given to the plaintiff from time to time as to its rights in relation to those activities are matters in issue by virtue of the defence of laches pleaded by all defendants. The defendants rely in this regard on what was said in the Thomason case, supra, at 358-9. …
[emphasis added]
54 McLelland J, after setting out the passage from the judgment of Jordan CJ in Thomason at 358-9, said the following:
Jordan CJ cannot have intended to lay down as a proposition of general application that whenever the making or contents of a privileged communication becomes an issue in proceedings, privilege cannot be successfully claimed for the purpose of those proceedings, as this would be inconsistent with his Honour's discussion (at 353 of the same judgment) of what was said by Lord Atkin in Minter v Priest [1930] AC 558 even if the proposition were limited to proceedings to which the person entitled to privilege was a party.
The key to the proper limits of the principle propounded by Jordan CJ is I think to be found in the judgment of Asprey J (with whose reasons on this aspect of the case Walsh J agreed) in Barilla v James (1964) 81 WN (NSW) (Pt 1) 457. In that case the question arose whether the validity of a certificate given by a solicitor under s 5A(1)(d)(v)(c) and s 5A(2) of the Landlord and Tenant (Amendment) Act 1948 could be challenged on the ground that the matters so certified did not in fact occur.
55 McLelland J then set out the extract from Asprey J's judgment referred to at [51] above, and continued:
In the Thomason case, the plaintiff was asserting a right to claim damages in a statutory context which rendered it implicit in such an assertion that the plaintiff had not effectively exercised her option to take the alternative course, notwithstanding that on the pleadings, the onus of proving the effective exercise by the plaintiff of that option, and in an evidentiary sense the onus of proving the plaintiff's knowledge of her legal rights, in each case rested on the defendant. So that it may be that the criterion that the otherwise privileged party must have himself raised the fact and nature of the advice as an issue in the case is too rigidly stated. Nevertheless, before the privilege can be said to have been lost on this principle, one must at least be able to identify some element or feature of the claim made, or the evidence adduced, by the party otherwise entitled to the privilege, which would render reliance on the privilege unjust.
There is in my opinion no such element or feature in the present case as things stand at the moment.
[emphasis added]
56 I respectfully agree with his Honour's distillation of Thomason. As to his Honour's statement of principle, it is now, in the light of Mann v Carnell, necessary to express the principle in terms of inconsistency, in the sense earlier referred to, not merely injustice.
Accordingly, in a case concerning undue influence (such as Thomason) what is required to waive legal privilege is an assertion or case which is either about the contents of the confidential communication or "which necessarily lays open the confidential communication to scrutiny" (DSE at [58]). It is by such conduct that an inconsistency arises between the act and the maintenance of the confidence, "informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication" (DSE at [58]).
In DSE, after surveying the authorities since Thomason, Allsop J further stated that (at [116]):
116 None of Ampolex, Telstra and Fort Dodge dealt with circumstances other than a positive case being raised by the holder of the privilege. Thomason and the undue influence cases are to be understood in the way I have set out above, and in the way elucidated more succinctly than I by McLelland J in United States Surgical. To the extent that Data Access or Wardrope v Dunne or BP Australia Ltd v Stallwood [2000] WASC 75 or Ideas Plus Investments v National Australia Bank Ltd [2002] WASC 167 might be seen to sanction the loss of privilege merely from issues raised by the other side in litigation being put in issue that view is unsupported by authority and not conformable with the need for an inconsistency between an act of the holder of the privilege and the maintenance of the confidentiality and privilege. To the extent that Data Access, Wardrope v Dunne, BP Australia v Stallwood and Ideas Plus Investments rely, or might be seen to rely, upon Thomason for that conclusion, I think that such reliance is misplaced. Thomason is not authority for the proposition that mere joinder of issue on an assertion by the other side raising state of mind waives privilege.
His Honour concluded by adopting the reasoning in Commonwealth v Temwood Holdings Pty Ltd [2002] WASC 107 (per Wheeler J at [10]) (DSE at [121]:
121 My views in this respect are in conformity with those of Wheeler J in Commonwealth of Australia v Temwood Holdings Pty Ltd [2002] WASC 107 at [10] where her Honour said:
…On the other hand, a party may necessarily put its state of mind in issue in the proceedings by, for example, pleading reliance upon some representation or other or by seeking rectification of the contract for mistake; or a state of mind may be put in issue by some evidentiary assertion which is clearly relevant to the issues between the parties. In these latter types of case, fairness clearly requires the waiver of the privilege in relation to legal advice which may have contributed to that state of mind. It is to be noted, however, that it is the conduct of the party who possesses the privilege which is capable of waiving it. It is not apparently open to another party to litigation to force waiver of a party's legal professional privilege by making assertions about, or seeking to put in issue, that party's state of mind.
In DSE Allsop J applied his analysis of the authorities to hold that the mere act of denial by the respondents to an assertion by the applicant that all parties to a share acquisition agreement held a common intention, did not put the respondents' state of mind in issue so as to waive legal professional privilege attaching to the legal advice upon which the respondents had formed their state of mind. There had been no act by the respondents inconsistent with the maintenance of the confidentiality.
Similar reasoning to that in DSE was employed in Council of the New South Wales Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236 by Hodgson JA (at [46]-[48], emphasis added):
46 In Mann v Carnell [1999] HCA 66; 201 CLR 1 at [29], Gleeson CJ, Gaudron, Gummow and Callinan JJ explained implied waiver of the kind discussed in Maurice as follows:
[29] ….. 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.
47 Previously, in Standard Chartered Bank of Australia Limited v Antico (1993) 36 NSWLR 87 at 93-95, I had discussed in some detail the effect of Maurice and the somewhat similar principle expressed in Thomason v Municipality of Campbelltown (1939) 39 SR (NSW) 347, and the relationship of these principles to the decision of the House of Lords in Wentworth v Lloyd (1864) 10 HL Cas 589; 11 ER 1154:
Turning to the other matter argued, the question of waiver and/or fairness, it seems to me that since Attorney-General for the Northern Territory v Maurice it is clear that fairness is central to the question of whether the conduct of a client is to be taken as waiving legal professional privilege. It also seems to me that, in considering the question of fairness, it is relevant to take into account the principle stated in Wentworth v Lloyd, to the effect that the court cannot draw adverse inferences from the claim of privilege. So it seems convenient to start this consideration by briefly considering what this principle in Wentworth v Lloyd means.
In Wentworth v Lloyd itself, a claim of privilege was made, and the Master of the Rolls, in deciding the case, stated that if the client chose to adopt this course he must be subject to the rule in Armory v Delamirie (1722) 1 Stra 505; 93 ER 664, where keeping back of evidence must be taken most strongly against the person who does so; and the Master of the Rolls said that legal professional privilege was different in this respect from privilege against self-incrimination. The House of Lords dismissed the appeal from the Master of the Rolls on the merits, but Lord Chelmsford, while concurring that the appeal should be dismissed on the merits, very forcefully disapproved of the Master of the Rolls' application of Armory v Delamirie.
Since then the case has been taken as authority against the drawing of any adverse inference from the claim of legal professional privilege, and is also specifically authority against applying Armory v Delamirie or the similar principle in Jones v Dunkel (1959) 101 CLR 298 to such a case. However, it seems to me clear that if there is other evidence from which the court may draw an inference as to the content of legal advice (or as to the commission of an offence in the case of the privilege against self-incrimination), the court may be able to draw that inference on the balance of probabilities in the absence of contrary evidence from the person claiming the privilege. What the court cannot do is to gain extra assistance in drawing that inference from the Armory v Delamirie or Jones v Dunkel principle. A fortiori, the court cannot draw an adverse conclusion if there is no other evidence supporting the conclusion. Most particularly, the court must not draw any adverse inference sub silentio without referring to it.
The fact that no adverse inference can be drawn from the claim of privilege does not mean that the claim can never have an impact on the party's position in a case. It seems to me that it might contribute to clarifying issues, in a way in which I will elaborate after considering the question of waiver and fairness. In Thomason's case (at 358-359; 111), Sir Frederick Jordan appears to suggest that if one of the issues in a case is what advice, if any, a client has received from his or her legal advisers, the client cannot claim legal professional privilege; and he gives as an example of this situation a suit in equity to set aside a transaction on the ground of undue influence.
I am inclined to think that statement is a little too broad. If a party claims to set aside a transaction, on which the party has had legal advice, for undue influence, but makes no assertion whatsoever that there was any inadequacy in the legal advice about the transaction or in the party's relevant legal understanding of the transaction, it seems to me that the mere fact that some other element of undue influence is alleged would not necessarily mean that legal professional privilege is waived. Indeed, the case of Wentworth v Lloyd itself was a case in which W C Wentworth sought to set aside the sale of property on the ground of unfairness, and the successful claim of privilege related to communications between Mr Wentworth and his solicitor concerning this transaction.
I think it would be consistent with Attorney-General for the Northern Territory v Maurice to formulate the principle in Thomason in this way. 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.
In considering the question of fairness, it is relevant to take into account the principle in Wentworth v Lloyd that no adverse inference can be drawn from a claim of privilege. However, as foreshadowed at the end of my discussion of Wentworth v Lloyd, it seems to me that a claim of privilege may clarify issues or lead to a clarification of issues. If the pleadings and the evidence up to the time when the claim is made do not make it 100 per cent clear whether a party is or is not making some assertion about the content of confidential communications, then it seems to me that the party cannot pursue the claim of privilege without making it completely clear whether or not such an assertion is made.
48 In my opinion, this exposition is consistent with both Maurice and Mann, subject to the need to look for inconsistency: cf Bayliss v Cassidy (No 2) [2000] 1 Qd R 404; SQMB v Minister for Immigration and Multicultural Affairs [2004] FCA 241; (2004) 205 ALR 392 at [30]-[44], Corkhill and Selwyn, "Evolution of the common law principle of 'issue waiver'" (2008) 82 ALJ 338. It is not enough to bring about a waiver of client legal privilege that the client is bringing proceedings in which the content of the privileged communications could, as a reasonable possibility, be relevant and of assistance to the other party. For the client to do this is not inconsistent with the maintenance of the privilege, and does not give rise to unfairness of the type in question. What would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. In this respect, it may be sufficient that the client is making assertions about the client's state of mind, in circumstances where there were confidential communications likely to have affected that state of mind.
As stated above, in the present case, the Council alleges that either the 2014 consent orders should be construed as containing an implied condition that further development consent is required to carry out the works described therein, or in the alternative, that the 2014 consent orders were made beyond power, and that therefore, both the orders and the anterior 2014 agreement obtaining those orders are unlawful and amenable to be set aside.
Without deciding the issue at this stage of the proceedings, it suffices to note two matters. First, that generally when construing a consent order, such as the 2014 consent orders, regard may be had to the surrounding circumstances, but not to the actual intention of the parties or their legal representative (I Limited & Chester [2010] FamCAFC 251 at [173] and the authorities cited thereat, including Kirkpatrick v Kotis [2004] NSWSC 1265; (2004) 62 NSWLR 567 at [38]-[45] per Campbell J).
Second, that a power to set aside consent orders is engaged if there is a proper basis for setting aside the agreement to procure them (The Owners of Strata Plan No 57164 v Yau [2017] NSWCA 341; (2017) 96 NSWLR 587 at [57]-[82] per Beazley P). The grounds upon which an agreement to settle proceedings may be set aside do not differ from those applicable to other contracts (Harvey v Phillips [1956] HCA 27; (1956) 95 CLR 235 at 242-244 and Yau at [72]-[77] per Beazley P and [215] per Emmett AJA and the authorities cited thereat). These include that where a contract cannot be formed otherwise than illegally, the contract may be treated as unenforceable irrespective of the intention and knowledge of the parties (REW08 Projects Pty Limited v PNC Lifestyle Investments Pty Limited [2017] NSWCA 269; (2017) 95 NSWLR 458 at [14]-[18], with whom Beazley P and Gleeson JA agreed, and the authorities cited thereat).
The Council does not plead that the parties to the 2014 agreement entered into it with the object of knowingly committing, or conspiring to commit, an illegal act. Nor has it pleaded any reliance on advice, legal or otherwise, in the entering into the 2014 agreement or 2014 consent orders. Rather, the issue that is joined by its cross-summons is that either there is an implied term or condition of the 2014 agreement and 2014 consent orders in the manner described above, or that by operation of law, namely, the proper construction and scope of the power contained in s 124 of the EPAA, the agreement, and therefore, the 2014 consent orders, are unlawful. Having regard to the authorities surveyed above, because the Council does not put in issue either its state of mind or that of the parties to the making of the 2014 agreement or the 2014 consent orders (although even this does not necessarily give rise to waiver: see Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341 at [67] and [71], Archer Capital at [24], and Legal Professional Privilege in Australia at pp 256-258 and the authorities referred to therein), and nor does it make express or implied assertions about the content of the privileged communications while at the same time seeking to maintain the privilege, it does not lay open the content of any confidential communication to scrutiny and it has not acted in a manner inconsistent with its claim for legal privilege. Therefore, the Council has not waived its claim to the privilege.
While the boundaries of this exception have not been fixed, after reviewing the authorities, Besanko J distilled the applicable legal principles as follows (at [74] and [75], emphasis added):
74 My conclusions from these authorities are as follows. The outer boundaries of the crime and fraud exception have not been authoritatively determined. Certainly, criminal conduct, illegal conduct, fraud, a fraud on justice and frustrating the processes of the law are included. An improper purpose is probably sufficient, although there is a question as to what is meant by improper. A breach of contract without more is not sufficient. All of the grounds involve a level of moral obloquy or, at least, a serious departure from right and proper conduct. A mere breach of contract does not have these characteristics, although having said that, the facts of a particular case may often throw up something more (one way or another) than a mere breach of contract.
75 The level of proof required is a prima facie case or prima facie evidence. It is not necessary to prove the allegations. In my opinion, a reasonable level of satisfaction must be attained and, I think, in determining whether that has been attained, the Court is entitled to, and indeed should, take into account the seriousness of the allegations.
The circumstances giving rise to these proceedings are distinguishable from Kearney, a decision upon which the Verde Terra parties placed considerable reliance. Kearney concerned an intended exercise of statutory power conferred on the Administrator of the Northern Territory to make regulations that would have the effect of making substantial areas of land near Darwin and Katherine part of those cities, and therefore, not eligible to be claimed as Aboriginal land. The validity of the regulations was challenged by the Northern Land Council ("the Land Council"). When discovery was ordered, the Northern Territory claimed privilege over documents described as communications between officers of the Territory government and its legal officers for the purpose of obtaining and giving legal advice relating to the making of the regulations. The Land Council established a prima facie case that the communications came into existence as part of a scheme to defeat the land claims (at 509). It was therefore held that the privilege could not be used to protect communications "made to further a deliberate abuse of statutory power" (at 515).
In the context of this voir dire, while the outer boundaries of the illegality exception have not been authoritatively determined and "an improper purpose is probably sufficient" (Lock at [74]), in my view, the Verde Terra parties have not made out any prima facie case (that is, there is nothing "to give colour to the charge": Kearney at 515) of any deliberate action, scheme, or moral obloquy on the part of the Council that would warrant the exception applying. Moreover, whether or not the 2014 consent orders were beyond power is determinable upon the proper construction of the orders on their face and the proper construction of s 124 of the EPAA.
The illegality exception not having been established by the Verde Terra parties, the documents remain privileged unless some other exception applies.
Given the particular emphasis on Fermiscan and Pihiga by the Verde Terra parties, an examination of these two cases is warranted.
Fermiscan concerned a group of claims relating to a deed of release made between the plaintiffs and the defendant. The recitals of the deed made it clear that the deed was intended to settle certain proceedings commenced by the plaintiffs against the defendant. The defendant sought to read an affidavit sworn by the solicitor who acted for her, which deposed to certain discussion that had taken place between the parties' solicitors. The plaintiffs objected, arguing that to do so would be a contravention of s 131(1) of the Evidence Act. In response, the defendant relied on s 131(2)(f). In finding for the defendant, McDougall J opined that (at [7]-[11]):
7 Mr Wells of counsel, for the plaintiffs, submits that para (f) does not apply. He submits that it applies only where there is a question as to whether an agreement to settle the dispute was made. In support of that submission, he referred to the decision of Goldberg J in Asciak v Australian Secured and Managed Mortgages Pty Limited (2008) 66 ACSR 298.
8 Asciak concerned an agreement to resolve proceedings in the Family Court. Effect was given to that agreement. The plaintiff sought to set aside the consent orders giving effect to it. He wished to say that his consent had been procured on the basis of misrepresentations. In the course of the case, the question arose as to whether evidence of settlement negotiations was admissible. Goldberg J said at 304 [31] that for the paragraph to apply, "the proceeding which the plaintiff proposes to bring in the Family Court must be a proceeding to enforce the settlement agreement between Ms Asciak and himself or a proceeding in which the making of the settlement agreement is in issue". I respectfully agree. His Honour then said that the plaintiff was not seeking to enforce or put in issue the making of the settlement agreement; on the contrary, he was seeking to set it aside. Thus, his Honour held, para (f) was of no relevance.
9 If I may say so, I respectfully agree with his Honour's analysis. However, I do not agree with Mr Wells that it has any relevance to the present case. In contrast to the proceeding with which Goldberg J was concerned, this is a proceeding in which, as I have sought to show, the relief claimed by the plaintiffs includes relief that can only be described as enforcement of certain of the provisions of the deed. That includes primary enforcement (injunctive relief and an order for the payment of money) and secondary enforcement (an order for the payment of damages).
10 In my view, the present case falls within s 131(2)(f).
11 I add that quite strange results would follow if the paragraph were to be given the narrow construction for which Mr Wells contended. It is well settled that, in construing an agreement, the court is entitled to have regard to what is often called the factual matrix. The effect of Mr Wells' submission would be to deny such evidence to the court in any dispute that concerned the construction of an agreement made to settle litigation. I do not accept that the legislature intended to bring about this strange consequence.
In Pihiga the parties had entered into a settlement deed following mediation of their dispute. In the substantive proceedings (which included a cross-claim) the applicants sought an order declaring that the deed was void and an order setting aside or rescinding the deed on the grounds of misleading and deceptive conduct. The respondents sought specific performance of the deed and, in one instance, damages for the applicants' failure to comply with it. An issue of negotiation privilege under s 131(1) of the Evidence Act arose because prior to the commencement of the trial, the respondents sought orders restraining the applicants from relying on any documents brought into existence for the purpose of the mediation, or that discussed the events occurring at the mediation. In response, the applicants argued that s 131(2)(f), (i) and (j) were engaged.
Lander J upheld the claim that s 131(2)(f) applied. This was because (at [120]-[124]):
120 The respondents argued that s 131(2)(f) was not engaged because the applicants' proceeding was not a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the makings of such an agreement is in issue. They argued that a proceeding for a declaration that a settlement agreement is void or should be rescinded is not a proceeding to enforce an agreement between the persons in dispute. I think that argument is right.
121 In Asciak v Australian Secured and Managed Mortgages Pty Ltd (2008) 66 ACSR 298 at 304, Goldberg J said at [31]:
In order for paragraph (f) to apply, the proceeding which the plaintiff proposes to bring in the Family Court must be a proceeding to enforce the settlement agreement between Ms Asciak and himself or a proceeding in which the making of the settlement agreement is in issue. The plaintiff proposes to bring a proceeding to have the consent orders made by the Family Court on 30 August 2006 set aside. To the extent to which those consent orders are based on an agreement reached between the parties, the plaintiff is seeking to set aside that agreement; he is not seeking to enforce it or put in issue the making of it. Accordingly subparagraph (f) is of no assistance to the plaintiff.
122 That decision was followed in Fermiscan Ltd v James [2009] NSWSC 462. I think the applicants are not entitled to rely upon s 131(2)(f) for the proposition that s 131(1) does not apply. However, that does not mean the paragraph is not engaged because the respondents' claim is for specific performance of the settlement agreement. In those circumstances, it seems to me, s 131(2)(f) applies in relation to the cross-claim because the cross-claim is a proceeding to enforce an agreement between the persons in dispute to settle the dispute. The question is whether the only evidence which can be adduced in relation to the cross-claim is that which is tendered by the respondents. The respondents contended that only they were entitled to the benefit of s 131(2)(f) and only they could adduce evidence of documents and communications that were otherwise protected by s 131(1).
123 In my opinion, that argument must be rejected for two reasons. First, because s 131(2)(f) is not limited in the way contended for by the respondents. Section 131(2) provides exception to the general rule in s 131(1). Insofar as paragraph (f) of subsection (2) applies, it applies to "the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons". If the proceeding is of a kind in s 131(2)(f), then s 131(1) does not apply to the proceeding and, in those circumstances, would not apply to whichever parties wished to tender the evidence of the kind otherwise prescribed in s 131(1). Secondly, in the proceeding to which paragraph (f) of subsection (2) applies the applicants in their defence to the cross-claim assert that the settlement deed is void ab initio or liable to be rescinded. That directly raises the issue of the enforceability of the agreement. Mr Sullivan's argument would not allow the respondents to be heard on their defence. Further, on an application for specific performance, the Courts are reluctant to make the order if the consequence is undue hardship or undue unfairness to the respondent: Norton v Angus (1926) 38 CLR 523. The Court could not properly decide how it ought to exercise its discretion if one side of the transaction was not entitled to adduce evidence of the factual matrix which led to the settlement contract.
124 What if the terms of the settlement contract which was sought to be enforced were ambiguous? On the respondents' argument, only one party could lead evidence of the factual matrix which would be relevant for a determination of the objective intention of the parties.
The Verde Terra parties submit that Pihiga is authority for the proposition that where one party alleges an agreement is void or liable to be rescinded this constitutes proceedings to enforce an agreement engaging s 131(2)(f).
As the Council argued, correctly in my opinion, the paragraphs quoted above must be understood in the context of the decision read as a whole. In particular, Lander J agreed with the proposition that a proceeding for a declaration that a settlement deed is void or should be rescinded is not a proceeding to "enforce an agreement" between the persons in dispute (at [120]). This finding has direct application to the voir dire. Having regard to Fermiscan and Asciak v Australian Secured and Managed Mortgages Pty Ltd [2008] FCA 753; (2008) 66 ACSR 298, his Honour determined that the applicants could not rely on s 131(2)(f). In other words, the applicants' claim that the settlement deed was void did not fall within the scope of the exception.
With respect to the cross-claim, however, Lander J held that because the claim was for specific performance of the settlement deed, s 131(2)(f) applied. The respondents contended that only they could take the benefit of s 131(2)(f) and adduce evidence of privileged settlement negotiations. This was rejected by Lander J (at [123]).
I agree with the submission of the Council that the 2019 VT Class 4 proceedings, as pleaded, are neither in form nor in substance proceedings to enforce a settlement agreement. Prayer 1 in the Verde Terra parties' amended summons does not state this. And paragraph 75 of the their amended points of claim says that by reason of the matters pleaded above no further development consent under the EPAA is necessary prior to the carrying out of the development the subject of the consent and/or required to be carried out "in conformity with the 2014 Orders". That the 2019 VT Class 4 proceedings are not proceedings to enforce a settlement agreement is consistent with the List of Issues filed by the parties (see above at [49]). There is no reference in that List to an issue concerning the construction of the 2014 agreement or an order for specific performance. Put another way, the 2019 VT Class 4 proceedings cannot be properly characterised as proceedings in which they are seeking to enforce the 2014 agreement thereby attracting the operation of s 131(2)(f) of the Evidence Act.
A similar argument with respect to the Council's cross-claim must also be rejected. Prayers 3, 4 and 8 of the Council's cross-summons (relied upon by the Verde Terra parties) seek the following relief:
3 A DECLARATION that it was an implied condition of the Consent Orders, that a development consent under Part 4 of the EP&A Act be obtained in respect of the development referred to in orders 1-4 of the Consent Orders.
4 Further and in the alternative to paragraphs 2 and 3 above a DECLARATION that the agreement made between Gosford City Council and Verde Terra Pty Ltd which was the basis for the Consent Orders ("the Agreement") is void for illegality.
…
8 An ORDER restraining the First Cross Respondent from carrying out any further development in reliance on the Consent Orders unless and until authorised by a development consent issued under the EP&A Act.
None of these prayers seek to enforce a settlement agreement or put into issue the making of such an agreement. It is not in dispute that the 2014 agreement was made. The documents sought to be inspected and tendered by the Verde Terra parties cannot therefore be for the purpose of evidencing that a settlement agreement was in fact reached. It was.
Furthermore, the documents cannot be inspected and tendered by the Verde Terra parties for the purpose of enforcing the 2014 agreement because that agreement has been fully performed insofar as the parties procured the making of the 2014 consent orders. There is no more work for the 2014 agreement to do.
As Goldberg J observed in Asciak (at [31]):
31 In order for subpar (f) to apply, the proceeding which the plaintiff proposes to bring in the Family Court must be a proceeding to enforce the settlement agreement between Ms Asciak and himself or a proceeding in which the making of the settlement agreement is in issue. The plaintiff proposes to bring a proceeding to have the consent orders made by the Family Court on 30 August 2006 set aside. To the extent to which those consent orders are based on an agreement reached between the parties, the plaintiff is seeking to set aside that agreement; he is not seeking to enforce it or put in issue the making of it. Accordingly subpar (f) is of no assistance to the plaintiff.
In these circumstances, the exception contained in s 131(2)(f) of the Evidence Act does not apply and the protection afforded by s 131(1) of that Act remains.
The Verde Terra parties submit that the settlement communications and documents affect its right to rely on Anshun estoppel, and therefore, s 131(2)(i) of the Evidence Act is engaged.
In this respect, the Verde Terra parties argue that the Council's allegation that the 2014 consent orders contained an implied condition that a further consent would be obtained before carrying out development was a matter so relevant to the 2012 proceedings that it was unreasonable for the Council not to rely upon it in the earlier proceedings. Because the essential question concerns the reasonableness of the manner in which the litigation was conducted, any evidence that bears upon that reasonableness is relevant. This includes the communications and documents that were prepared in connection with the attempts to settle the dispute the subject of the 2012 proceedings. It is an assessment of this material, when considered as a whole that, they submit, will inform the Court's evaluation of the reasonableness of the Council's conduct in not raising the issues that it now prays in relief in its cross-summons, and therefore, the Verde Terra parties' ability to rely upon the doctrine of Anshun estoppel.
In Universal Roofing & Accessories Pty Ltd v Singh [2004] NSWSC 32, Young CJ in Eq held that s 131(2)(i) applies where arguments of estoppel or election are made (at [11]-[12]):
11 There was also an evidentiary point involved in this case. After the alleged exercise of option there were a series of "without prejudice" correspondence between the tenants legal representatives and the landlord's legal representatives. Miss Oakley for the landlord said that these would not have been written had the tenant exercised the option because the tenant already would have had an equitable lease.
12 Mr Sahade took the objection under s 131 of the Evidence Act to the admissibility of these without prejudice letters. I admitted them under the exception in s 131(2)(i) on the basis that they were the making of a communication which affected the right of a person, and it seemed to me that this material which was being put forward as grounding an argument of estoppel or election was in the same plight as many of the examples cited in Mr Odgers useful book on the annotated Evidence Act. However, because no prima facie case has been made out, this matter had no significance in the ultimate. Accordingly I decline to grant the interlocutory injunction. The injunction accordingly will expire at 5 pm tonight as granted by the duty judge during vacation.
Examples given by the Verde Terra parties of the documents and communications that would be captured by s 131(2)(i) were as follows:
(a) what was said by/on behalf of the Council to procure the Signed Consent Orders and the making of the 2014 Orders; and
(b) what the Council knew about Verde Terra's understanding of the agreement the subject of the Signed Consent Orders and the 2014 Orders;
(c) what the Council knew about the financial expenditure that would likely be incurred by Verde Terra or Mangrove Mountain Landfill Pty Ltd in complying with the 2014 Orders;
(d) what was considered by the Council when deciding to procure the Signed Consent Orders and the making of the 2014 Orders. In particular, whether the Council in fact considered raising the allegations of the want of development consent illegality before seeking to procure the making of the Signed Consent Orders and the 2014 Orders, and what it considered about the appropriateness of the environmental consequences of the making of the 2014 Orders.
The Council submitted that in order to determine whether or not the exception applied it was necessary for the Court to decide on the voir dire whether or not Anshun estoppel was available to the Verde Terra parties. While opening submissions were made by the parties on this and other topics, the evidence has not concluded and much of the documentary evidence is yet to be tendered. To determine to finality such a central issue at this stage of the proceedings on a voir dire would be premature and, in any event, is not necessary. Even assuming that the claim were maintainable, given the manner in which the Anshun estoppel is pleaded by the Verde Terra parties, and applying the authorities referred to below, s 131(2)(i) does not apply.
In his textbook, Without Prejudice Privilege in Australia (2010), the learned author, Dr Ronald Desiatnik, describes s 131(2)(i) of the Evidence Act as the "amorphous exception" (p 162). The description is apt. Dr Desiatnick went on to observe that (p 163):
Such is the wording of s 131(2)(i) of the Evidence Act, which creates an exception unknown to the common law. More like a riddle than a clear exposition of the law, its potential to weaken the very structure of the privilege is breathtaking. It would be hard to imagine a settlement negotiation which does not centre around the right of one party or the other; the capacity of a document or communication to 'affect' is virtually limitless, depending on whether the effect called for is direct or indirect and the extent of the effect; and the right so affected can be the right of any person. Interpreted in a number of ways, the provision could almost always be used to prevent without prejudice privilege from applying.
It is fair to say that the decisions concerning the proper construction and scope of s 131(2)(i) of the Evidence Act are not easily reconciled. In Glass v Demarco [1999] FCA 482, in the context of an application by a debtor in bankruptcy proceedings to rely on an open offer of compromise made to him by a third party in other proceedings in order to demonstrate that he was solvent, Emmett J stated, in refusing to admit the letter, that (at [10]):
10 Alternatively, the debtor relied on s131(2)(i). The contention, as I understand it, is that a right of the debtor is affected by the offer because the debtor, by reason of the offer, has a right to accept it and thereby create a contract of compromise. I consider that the reference to a right in s131(2)(i) is to an existing right and it is not satisfied by reason of a right coming into existence upon the making of an offer. If it were given such a construction, para(i) would constitute a most significant exception to the operation of s131(1). I do not consider that s131(2)(i) affords the debtor any assistance in this case.
Glass was followed by Goldberg J in Asciak who said (at [33]-[34]):
33 In Glass v Demarco [1999] FCA 482, a bankruptcy petition was before the court. The debtor filed an affidavit in which he gave evidence about an offer of compromise in another court proceeding. Objection was taken by the petitioning creditor to the admissibility of that evidence who relied on s 131(1) of the Evidence Act. The debtor relied on s 131(2)(i) of the Evidence Act. At par [10] Emmett J said:
"… The contention, as I understand it, is that a right of the debtor is affected by the offer because the debtor, by reason of the offer, has a right to accept it and thereby create a contract of compromise. I consider that the reference to a right in s131(2)(i) is to an existing right and it is not satisfied by reason of a right coming into existence upon the making of an offer."
Although it might be said that the plaintiff had at the date of the conciliation conference rights by virtue of his position as a director of the defendants, that right was not affected by the making of the communications in respect of which the plaintiff wishes to adduce evidence.
34 In Talbot v NRMA Limited [2000] NSWSC 602, Hodgson CJ in Eq said at par [3]:
"Mr Shand has referred me to s 121(3) of the Evidence Act, which states that privilege would not prevent the producing of evidence of a communication or document which affects the rights of a person. In my opinion, that cannot mean a communication or document that is relevant to a right of a person because that would virtually eliminate the legal professional privilege as a ground for non‑admission of evidence. In my opinion, that must mean a communication or document that affects in some fairly direct way what are the actual rights and perhaps also duties of a person."
I consider that these observations apply equally to the communications in respect of which the plaintiff wishes to adduce evidence. They do not affect in any direct way the actual rights of the plaintiff.
In Liu v Fairfax Media Publications Pty Ltd [2012] NSWSC 1352; (2012) 84 NSWLR 547, Beech-Jones J, after referring to the history of this exception, rejected a claim that s 131(2)(i) operated to preclude a plaintiff from claiming privilege over correspondence passing between himself and a corporate regulator in defamation proceedings against a newspaper which had published articles imputing that he was the subject of criminal charges brought against him by the regulator. The newspaper had pleaded defences of justification and contextual truth. His Honour concluded as follows (at [123]-[127]):
123 In my view, there is a clear distinction reflected in s 131(2)(i) between communications which, according to Brereton J, "of themselves have legal consequences for the rights of parties", and communications which only constitute evidence which are relevant to the establishment or denial of the rights of the parties. In broad terms, the former potentially fall within the exception created by s 131(2)(i), whereas the latter do not.
124 In Talbot v NRMA Ltd [2000] NSWSC 602 at [3], Hodgson CJ in Eq rejected a submission that the exception in s 121(3) of the Evidence Act was satisfied, stating:
"Mr Shand has referred me to s121(3) of the Evidence Act, which states that privilege would not prevent the producing of evidence of a communication or document which affects the rights of a person. In my opinion, that cannot mean a communication or document that is relevant to a right of a person because that would virtually eliminate the legal professional privilege as a ground for non-admission of evidence. In my opinion, that must mean a communication or document that affects in some fairly direct way what are the actual rights and perhaps also duties of a person."
125 Section 121(3) provides that Div 1 of Pt 3.10 of the Evidence Act, which concerns client legal privilege, "does not prevent the adducing of evidence of a communication or document that affects a right of a person". If anything, the exception provided for in s 131(2)(i) is even more restrictive in that it only concerns the circumstance where the "making the communication" or "preparing the document" affects a right of a person (cf Green v AMP Life Ltd [2005] NSWSC 95 at [29] per Campbell J). These words can be readily adapted to give effect to the statement made in ALRC 26 at [891] concerning acts of bankruptcy, defamatory statements, illegal threats, etc. For example, in the case of a defamatory statement, the making of such a communication affects a right of a person, namely the right of the person defamed to the enjoyment of their reputation. In contrast, communications passing between parties who are conducting settlement negotiations which only provide valuable evidence to vindicate or disprove the existence of a person's rights do not "affect" any of their rights in the sense that they do not alter, vary or interfere with them.
126 The context in which any consideration of s 131 arises is that the material that is sought to be adduced (or produced) must be first relevant in some sense to the determination of the rights of parties to litigation. Thus in a wide sense the material "affects" the parties' rights. However, as stated by Hodgson CJ in Talbot in the context of s 121(3), if the only link between the relevant communication or document and the rights of a person is evidentiary, then the exception created by s 131(2)(i) would swallow the rule created by s 131(1).
127 In [56] to [57] of her Honour's judgment, her Honour saw no distinction between the exclusion of a defamatory statement by the operation of s 131(2)(i) and the attempt by Mr Liu to invoke the protection of s 131(1) "to prevent the production of material which directly affects the defendant's right to defend that claim". Her Honour interpreted the "affects" in s 31(2)(i) as including evidentiary impacts. Mr Liu is said to be preventing the "production of material" which would assist, in an evidentiary sense, Fairfax's defence to his claim. This misstates the form of affectation that is being considered by s 131(2)(i) and the form of "right" that is being adverted to in s 131(2)(i). It is not referring to procedural rights, but is instead referring to substantive rights such as the right to enjoyment of a reputation or not to be subjected to tortious statements etc.
Galafassi v Kelly [2014] NSWCA 190; (2014) 87 NSWLR 119 concerned the termination of a contract of sale by the vendor. Emails passed between the vendor and the purchasers wherein the purchasers advised the vendor that they did not have sufficient funds to complete the sale and, after the vendor instituted proceedings for specific performance, that the purchasers were financially unable to purchase the property but that they hoped that the claim could be resolved without litigation. The purchasers claimed privilege over the emails.
Although the trial judge concluded (correctly: at [133]) that the emails did not attract the privilege contained in s 131(1) of the Evidence Act, Gleeson JA nevertheless went onto consider the application of s 131(2)(i) of that Act. He held that had it been necessary to decide the issue, the email communications were admissible by reason of the exception provided in s 131(2)(i) because, as the communications evinced an intention not to be bound by the contract for sale, the emails affected the right of the vendor to elect between terminating the contract or insisting on specific performance. His Honour relevantly stated (at [144]-[146]):
144 Section 131(2)(i) applies where making the communication or preparing the document affects the right of a person. There is conflicting authority concerning whether the relevant "right" is limited to existing rights at the time of the communication or preparation of the document: Glass v Demarco [1999] FCA 482 at [10] (Emmett J), or extends to a right coming into existence upon the making of the communication or document itself: Pihiga Pty Ltd v Roche [2011] FCA 240; 278 ALR 209 at [126]-[127] (Lander J).
145 In J D Heydon, Cross on Evidence (Online Australian edition, LexisNexis) at [25,395] the learned author expresses the view that s 131(2)(i) refers to the equivalent doctrine at common law pursuant to which "without prejudice" communications can be referred to if they reveal, for example, an act of bankruptcy or the exercise of an option: see for example Tenstat Pty Ltd Permanent Trustee Australia Ltd (1992) 28 NSWLR 625 at 633 where McLelland J (as his Honour then was) held that without prejudice privilege did not extend to preclude the proof of communications or statements relied on as an objective act having legal consequences, such as a notice of exercise of option. Although this decision was prior to the Evidence Act, the principle underlying it is applicable to s 131(2)(i). A communication relating to the exercise of an option may be properly viewed as affecting the right of the grantee of the option.
146 Here the disputed communications relate to the Vendor's contractual right to terminate for repudiatory conduct after the institution of the proceedings. Counsel for the Vendor put the matter shortly - one cannot repudiate "without prejudice". I agree. A communication or document evincing an intention no longer to be bound by a contract affects the right of the promisee to elect between accepting the repudiation and terminating the contract (strictly, its further obligations to perform) or affirming the contract and insisting on further performance.
By contrast, in Teoh v Greenway [2015] ACTSC 133; (2015) 297 FLR 398, after a detailed consideration of the both common law and statutory authorities (at [7]-[34]), Burns J held that the term "right" should not be given an expansive construction such that it included the right to a remedy or a remedy of a particular type or quantum (at [37]-[39]):
37 It may be accepted that, without doing violence to the language, it is possible to speak of a right to a remedy. But is this the type of right contemplated by s 131 (2) (i)? It is clear from the cases to which I have referred that the common law exceptions to the exclusion of evidence of negotiations do not extend to the admission of material that only affects a right to a remedy: see Ofulue v Bossert. To interpret s 131 (2) (i) in the manner accepted by the Master would involve a significant extension of the exceptions to the exclusionary rule recognised by the common law. If the exception found in s 131 (2) (i) is expansively interpreted as extending beyond those exceptions generally recognised at common law, the exception would potentially swallow the rule and the very important policy considerations underlying s 131 (1) would be largely negated. Any admission made in settlement negotiations may be said to affect a right of a party if the meaning of the term "right" is given an expansive interpretation inclusive of the right to a remedy or a remedy of a particular type or quantum. Furthermore, if an admission in negotiations is available to be used as an acknowledgment of a cause of action for the purpose of a "secondary right", then, a fortiori, it must be available for the purposes of establishing or vindicating a "primary right", for example by way of proving the plaintiff's cause of action. I respectfully agree with the majority of the House of Lords in Ofulue v Bossert that no meaningful distinction can, for this purpose, be drawn between an admission and an acknowledgment. In my opinion, the fact that the appellant had previously admitted liability for the accident does not materially alter this analysis. This is not a case where the justice of the case requires that evidence of the offer made by the appellant be admitted. The commencement of proceedings was always the responsibility of the respondent, and it has not been suggested that there was any impediment to the respondent commencing proceedings within the limitation period. There is no suggestion that the appellant represented to the respondent that he would not plead the limitation period if the respondent did not commence proceedings in time, or that the appellant conducted himself in such a way that he should not now be allowed to plead the expiration of the limitation period.
38 In my opinion, the exception in s 131 (2) (i) is to be interpreted as extending no further than the common law exceptions to the exclusionary rule. My reasons for reaching this conclusion are:
(a) this approach accords with the very significant and well-recognised policy considerations underlying the common law exclusionary rule and s 131 (1);
(b) this approach is consistent with the ALRC reports and their recommendations which preceded the Uniform Evidence Laws; and
(c) it is consistent with previous authorities to which I have referred concerning the ambit of s 131 (2) (i).
39 It is not possible to authoritatively catalogue the circumstances in which the exception in s 131 (2) (i) will operate, any more than it is possible to catalogue the circumstances in which the common law will recognise an exception to the general prohibition on adducing evidence of negotiations. Circumstances relevant to determining whether the exception in s 131 (2) (i) is engaged will include the extent to which the common law would, in like circumstances, recognise an exception to the prohibition, the extent to which engaging the exception erodes the policy rationale behind s 131 (1) and the demands of justice in the particular case. In the present case, to interpret s 131 (2) (i) as extending to allowing the admission of the offer of settlement as evidence of acknowledgment or confirmation of the respondent's cause of action would significantly erode the policy considerations underlying s 131 (1). It would also extend beyond the exception recognised by the common law. Finally, there is no compelling reason why the interests of justice requires the provisions of s 131 (2) (i) to be interpreted so as to allow the admission of the evidence.
Accordingly, evidence of an offer made by a defendant to settle a personal injury claim arising out of a motor vehicle accident in circumstances where the defendant asserted that the claim was statute barred was held not to be admissible pursuant to s 131(2)(i). It had been conceded by the defendant that if evidence of the offer of settlement was admissible, it would constitute a confirmation of the plaintiff's cause of action and no limitation issue would arise. Evidence of the offer of settlement was held not to be admissible because "it did not create, alter, vary or interfere with any relevant right of the" plaintiff (at [40]). As a consequence, the plaintiff's claim was statute barred (at [41]).
Notwithstanding the conflicting state of the authorities, in my opinion, as stated above, s 131(2)(i) of the Evidence Act is not enlivened in the present case. The proposition put by the Verde Terra parties that any facts that bear upon reasonableness are relevant for the purpose of Anshun estoppel, and therefore, admissible pursuant to s 131(2)(i), is stated too broadly. What is required is that the making of the communication or document must "affect a right of a person" and the Verde Terra parties have not demonstrated this.
First, having regard to the decisions above, an assertion of Anshun estoppel is not a "right" within the meaning of s 131(2)(i) of the Evidence Act. Anshun estoppel is not an independent cause of action or right, rather it is a plea in defence to a cause of action. Section 131(2)(i) does not encompass a right to a remedy. Were it otherwise, as Burns J in Teoh observes (at [37]), little would remain of the statutory privilege conferred by s 131(1) of the Evidence Act.
Second, if s 131(2)(i) is construed narrowly to include only existing rights, then the exception cannot be engaged. This is because the communications and documents created in connection with the settlement negotiations came into existence prior to the point at which the Verde Terra parties assert that their Anshun estoppel entitlement crystallised (that is, when the Council's cross-summons was filed).
Third, even if it is accepted that the exception is broad enough to include both existing rights and rights created on the documents or by the communications made at the time of settlement, this does not assist the Verde Terra parties.
True it is that in Pihiga Lander J held that (at [126]-[127]):
126 The applicants also asserted that they were entitled to rely upon the exception in s 131(2)(i) because the communication which was made in an attempt to negotiate a settlement and the document which had been prepared affects the applicants' rights. The applicants contended that they had a right, whilst engaged in negotiations with the respondents, not to have representations made to them which were false which would amount to misleading and deceptive conduct and, as a result, cause them damage by entering into the settlement deed. The respondents on the other hand contended that paragraph (i) only applied to an existing right at the time of the communication or preparation of the document: Glass v Demarco [1999] FCA 482.
127 In my opinion, the applicants' contention is to be preferred. Paragraph (i) of subsection (2) does not in its terms refer to an existing right but is engaged if the communication at the time of the negotiations or the document which is prepared in an attempt to negotiate a settlement affects a right of a person. In my opinion, that would include the type of right to which the applicant refers. I think that paragraph applies and that is a further reason why s 131(1) does not apply.
However, the timing of the making or creation of the communications and documents is important. For it is at that moment that the communication or document over which privilege is claimed must affect a right. This will vary given the amorphous nature of settlement negotiations. The Verde Terra parties do not plead that at the time a particular communication or document came into existence during the course of the negotiations which resulted in the making of the 2014 consent orders, that any right to rely on an Anshun estoppel arose or, if it did arise, was affected by that document or communication.
Fourth, there is authority for the proposition that s 131(2)(i) does not extend to communications or documents that merely constitute evidence that could be used to deny or establish the existence of a right, rather than "affect a right" (see, for example, Lui at [124]-[127] quoted above). The Verde Terra parties have made it plain that they seek to use the settlement communications for precisely this reason. That is, as evidence as to reasonableness of the former Gosford CC's conduct, or put another way, as evidence establishing an Anshun estoppel.
I therefore find that the documents and communications over which privilege is claimed pursuant to s 131(1) of the Evidence Act is not displaced by the operation of s 131(2)(i).
The effect of s 11(2) of the Evidence Act is to preserve the Court's power to admit evidence of an abuse of process, even if it is otherwise privileged (either by reason of legal privilege or negotiation privilege). In Van Der Lee Hodgson JA (with whom Mason P and Santow JA agreed) held (at [62]):
62 However, it is not necessary to determine that question in this case. I think s.11(2) does have the effect that, when evidence is tendered that could be evidence of an abuse of process, albeit evidence of without prejudice settlement negotiations, the Court may receive that evidence on the voir dire; and then, if that evidence does either by itself or in combination with other evidence establish an abuse of process, the Court may rule the evidence admissible and make appropriate orders to deal with that abuse of process. In my opinion, the powers of a court with respect to abuse of process include its powers to receive evidence, and in my opinion the authorities relied on by the claimants show that, at common law, communications evidencing abuse of process will not be protected by without prejudice privilege. I do not think that s.131 provides otherwise, either expressly or by necessary intendment, particularly if s.132(2)(k) does not apply in cases of abuse of process.
Thus the Verde Terra parties contend that by operation of s 11(2) of the Evidence Act, neither privilege can be relied upon by the Council to prevent the inspection and/or adducing of documents, either alone or in combination with other material, that evidence an abuse of process.
The principles that apply where negotiation privilege is claimed and abuse of process is alleged have also been held to apply to legal privilege (In the matter of Petrolink Pty Ltd; Smith v Bone [2014] FCA 1024 at [39] and the authorities referred to thereat).
The documents that the Verde Terra parties contend would alone, or in combination, comprise evidence of the abuse of process were expansive in scope. They include all documents recording or evidencing any:
[Estoppels]
(1) contentions made by the Council during the 2012 Proceedings, both in Court and inter partes, regarding:
a. the scope of the 1998 Consent, including:
i. the "Permitted Purpose Contention";
ii. the "Independent Use Contention";
iii. the "Area B Contention";
iv. the LEMP "Modification Contention";
b. the legality (or otherwise) of the 2014 Orders;
(2) evidence obtained by the Council for the 2012 Proceedings;
[Illegality/irregularity argument]
(3) consideration given by the Council to the legality (or otherwise) of the Consent Orders Agreement and/or the 2014 Orders; and what the Council said to the Verde Terra Parties or others about those matters;
[public policy argument]
(4) consideration given by the Council to its role as a public authority in entering the Heads of Agreement, entering the Consent Orders Agreement, procuring the making of the 2014 Orders, making the Joint Written Submissions, and/or making the Joint Written Submissions, and/or making the Joint Oral Submissions;
(5) consideration given by the Council about whether the Agreed Works were in accordance with the 1998 development consent for the site;
(6) consideration given by the Council to the interests of any third parties affected by the carrying out of the Agreed Works and/or the making of the 2014 Orders;
(7) consideration given by the Council to the need (or otherwise) for the Agreed Works to be subject to any other processes under planning law;
[Oppression/administration of justice into disrepute]
(8) the Council's awareness of the financial impact on any of the Verde Terra Parties of:
a. the 2012 Proceedings;
b. the Agreed Works - including in particular the importance of fill (waste or VENM/ENM) volumes;
c. the making of the 2014 Orders;
(9) awareness of the Council of the purchase of the Land by Mangrove Properties (NSW) Pty Ltd, and the terms of that purchase;
(10) awareness of the Council of the expected timeframe(s) to commence and/or complete the Agreed Works;
(11) steps taken by the Council and the Verde Terra Parties to carry out the intention expressed in the Heads of Agreement including relevantly:
a. the negotiation and finalisation of the 2013 Amended LEMP and 2013 LMP.
The onus of satisfying the Court that there is an abuse of process lies upon the Verde Terra parties. It is, as the plurality in Willams v Spautz [1992] HCA 34; (1992) 174 CLR 509 stated, a "heavy" one (at 529 per Mason CJ, Dawson, Toohey and McHugh JJ).
A mere allegation of an abuse of process is insufficient to abrogate the protections afforded by the Evidence Act. As Brereton J held in In the matter of Mulsanne Resources Pty Ltd [2013] NSWSC 358 (at [7]-[9], referring to the reasoning of Hodgson JA in Van Der Lee):
7 It seems to me, however, that it cannot be that merely by asserting that there is an abuse of process does any document the subject of a subpoena or notice to produce otherwise the subject of legal professional privilege become open for inspection. It could only be so if, at the least, there were reasonable grounds to suppose that the document in question would evidence an abuse of process.
8 In the words of Hodgson JA in the passage to which I have already referred, the reception of evidence, even on the voir dire, is conditioned on the circumstance that it "could be evidence" of an abuse of process.
9 It seems to me that while not precisely equivalent to the concepts in Evidence Act, s 125, the idea or the notion that "reasonable grounds for finding" that there was an abuse of process provides an equivalent test; in other words, there would have to be at least reasonable grounds for thinking that the document was some evidence of an abuse of process.
The relevant applicable legal principles were helpfully set out by Wigney J in Petrolink (at [12]-[16] and [32]-[35]):
12 The relevant principles in relation to abuse of process are not in dispute between the parties. There is an abuse of process when the predominant purpose of bringing proceedings is not to prosecute them to a conclusion, but to use them as a means of obtaining some advantage for which they are not designed, or some collateral advantage beyond that which the law offers: Williams v Spautz (1992) 174 CLR 509 (Williams v Spautz) at 526-527, 529.
13 The onus of satisfying the Court that a proceeding is an abuse of process is a "heavy one" and the power to grant relief which would prevent a court from exercising its jurisdiction is one to be exercised only in the most exceptional cases: Williams v Spautz at 529.
14 In Williams v Spautz Brennan J drew a distinction between an improper purpose which will amount to an abuse of process and an ulterior motive which will not. His Honour said (at 535):
There is no impropriety of purpose (whatever may be said of motive) when a plaintiff commences or maintains a proceeding desiring to obtain a result within the scope of the remedy, even though the plaintiff has an ulterior purpose - or motive - which will be fulfilled in consequence of obtaining the legal remedy which the proceeding is intended to produce. To amount to an abuse process, the commencement or maintenance of the proceeding must be for a purpose which does not include - at least to any substantial extent - the obtaining of relief within the scope of the remedy.
15 A similar point was made by Bridge LJ in Goldsmith v Sperrings Ltd [1977] 1 WLR 478 (Goldsmith v Sperrings) at 503:
What if a litigant with a genuine cause of action, which he would wish to pursue in any event, can be shown also to have an ulterior purpose in view as a desired byproduct of the litigation? Can he on that ground be debarred from proceeding? I very much doubt it.
16 An allegation of abuse of process is a serious allegation. Whilst the standard of proof is the civil standard of balance of probabilities, by dint of s 140(2) of the Evidence Act 1995 (Cth) (Evidence Act), in deciding whether that standard has been satisfied, the Court must take into account the nature of the cause of action, the nature of the subject matter of the proceeding and the gravity of the matters alleged. The Court must accordingly be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 (CEPU v ACCC) at [30]. Ordinarily, the more serious the allegations or consequences, the more the Court will require clear, cogent or strict proof: CEPU v ACCC at [30]; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 450; Ashby v Slipper (2014) 219 FCR 322 at [64]-[66] (Ashby). Where serious allegations are made, inexact proofs, indefinite testimony or indirect inferences are not sufficient: Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Ashby at [70]-[71].
…
32 Section 11(2) of the Evidence Act, provides, in effect, that the powers of a court with respect to abuse of process in a proceeding are not affected by the Evidence Act.
33 At the hearing, Mr Boné agreed that it would be appropriate for the Court to adopt the Van Der Lee procedure. The relevant documents were accordingly tendered on the voir dire. The parties agreed that the Court could appropriately consider the documents and rule on their admissibility in the final judgment.
34 It should be noted that, in addition to s 11(2) of the Evidence Act, s 131(2)(k) of the Evidence Act provides that s 131(1) does not apply when one of the persons in dispute knew or ought reasonably to have known that the communication was made "in furtherance of a deliberate abuse of power". Section 131(4) provides that, for the purposes of s 131(2)(k), if the abuse of power is a fact in issue and there are reasonable grounds for finding that a communication was made in furtherance of the abuse of power, "the court may find that the communication was so made". The balance of authority is that the reference to "power" in s 131(2)(k) includes a power to make an application to a court: Van Der Lee at [68] (Santow JA) and [24] (Mason P); Ryder v Frohlich [2006] NSWSC 1324 at [11]; Re Mulsanne Resources Pty Ltd (in liq) [2013] NSWSC 358 (Mulsanne Resources) at [5].
35 It follows that, if there are reasonable grounds for finding that the relevant correspondence here was made in furtherance of the alleged abuse of power, the letters can be admitted despite s 131(1) of the Act.
Having inspected the documents in Exhibits C, D and E, together with those identified as the subject of proposed tender by the Verde Terra parties in Annexure 'A', it is immediately apparent, at this stage of the proceedings at least, that the documents do not support reasonable grounds for finding that they were made or prepared in furtherance of the alleged abuse of process. For example, a contention that the allegations made by the Council in the 2019 Council Class 4 Proceedings are contrary to the approach taken by Gosford CC in negotiating and procuring the 2014 consent orders and amount to an abuse of process is not maintainable. The validity of EPL 11395 was not in issue in the 2012 proceedings. The Court repeats and emphasises the reasoning and findings above (at [116]-[118], [123], [134]-[136] and [162]) concerning the allegations pleaded by the Council.
In arriving at this conclusion, the Court is cognisant of the observation made by Wigney J in Petrolink (at [38]):
38 It does not follow from the admission of the letters into evidence pursuant to either s 11(2) and s 131(2)(k) that the alleged abuse of process has been made out. As appears to have been accepted by the Court of Appeal in Van Der Lee, the exception in s 131(2)(k) can apply, and s 11(2) can operate to allow the admission of evidence that would otherwise be excluded by s 131(1) even if, ultimately, the abuse of process is not made out. It would be a curious result indeed if evidence that did tend to prove an abuse of process was nevertheless excluded because, ultimately, on the whole of the evidence, the abuse of process could not be made out.
In any event, as Brereton J noted in Mulsanne, his preliminary view was based upon the facts as they were then known, which would "not preclude the question from being raised at a later stage, when more material is available to the Court" (at [11]). Given that the evidence in these proceedings is not yet settled and that much of the documentary evidence remains to be tendered, it may be that the question of the admissibility of the privileged documents pursuant to s 11(2) of the Evidence Act is revisited.