Walker Corporation Pty Ltd v Director-General of the Department of Environment and Climate Change

FOURTH RESPONDENT: Roberto Pupo

FIFTH RESPONDENT: Greg Stone

KEY ISSUES: EVIDENCE :- whether confidential communications or contents of confidential documents protected by client legal privilege

LEGISLATION CITED: Evidence Act 1995, ss 118, 119 Native Vegetation Act 2003

Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) FCR 526 Baker v Campbell (1983) 153 CLR 52 Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67, (1999) 201 CLR 49 CASES CITED: Grant v Downs (1976) 135 CLR 674 Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 247, (2008) 161 LGERA 86

TEXTS CITED: Odgers, Uniform Evidence Law, (8th ed, 2009)

APPLICANT: Mr J. Ireland QC with Mr M. Hall SOLICITORS Colin Biggers & Paisley LEGAL REPRESENTATIVES: RESPONDENTS: Mr T. Howard SOLICITORS Department of Environment & Climate Change

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

WALKER CORPORATION v DIRECTOR-GENERAL OF THE DEPARTMENT OF ENVIRONMENT AND CLIMATE CHANGE & ORS

JUDGMENT 1 HIS HONOUR: This is a motion by the applicant, Walker Corporation, for an order that the respondents give discovery of eleven documents. The respondents object to production on the ground that the documents are protected by client legal privilege under ss 118 and/or 119 of the Evidence Act 1995. Background 2 In August 2008, the department of Environment and Climate Change received information relating to possible clearing of native vegetation in 2005 and 2006 on land at Appin owned by the applicant, Walker Corporation Pty Ltd. In about September 2008 the department commenced an investigation into the clearing, with a view to determining whether it constituted a contravention of the Native Vegetation Act 2003 and, if so, what, if any, action the department should take in respect of the clearing. In December 2008 officers of the department conducted a site inspection of the land.

3 In April 2009 a department investigation purported to authorise four persons to re-enter the property.

4 Walker commenced these proceedings against the Director-General of the department (now called the Department of Environment, Climate Change and Water) and those four persons claiming orders restraining them for entering or authorising others to enter, the land, a declaration that the authorisation is invalid, and related relief.

5 In the course of the interlocutory process of discovery of documents, the respondents made the privilege claim over certain documents.

Legal Principles 6 Client legal privilege may be claimed in respect of confidential communications between a client and a legal adviser where the communications are made for the dominant purpose of either (a) enabling the client to obtain, or the legal adviser to give, legal advice ("legal advice privilege"); or (b) preparing for litigation actually taking place or that was in contemplation of the client ("litigation privilege"): Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67, 201 CLR 49 at [35], [61], [62], [167]. Sections 118 and 119 of the Evidence Act respectively create the statutory legal advice privilege and litigation privilege, as follows: " 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.

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." 7 Relevant principles include the following:

(a) the onus is on the party claiming privilege to show that the documents for which privilege is claimed are privileged: Grant v Downs (1976) 135 CLR 674 at 689; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 247, 161 LGERA 86; (b) the dominant purpose must exist at the time the document is brought into existence: Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 at [19] per McDougall J. This point did not arise on the unsuccessful appeal: Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47 at [9]; (c) dominant purpose is a question of fact: Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49; Walker at [91]; Sydney Airports Corporation Ltd at [7]. Dominant purpose must be determined objectively having regard to all the circumstances, but the subjective intention of the author and of the person or authority under whose direction the document was prepared is entitled to weight; (d) under s 119, if the document would have been prepared irrespective of the intention to obtain professional legal services, it will not satisfy the test: Grant at 688; Sydney Airports Corporation Ltd at [6]; Walker at [9]; (e) the Court of Appeal has approved the test of "dominant" purpose as clear paramountcy, or as the ruling, prevailing or most influential purpose; yet has observed that a purpose may not be dominant even if it is greater than another purpose or is the most important purpose: Sydney Airports Corporation Ltd at [7], [49] per Spigelman CJ (Sheller JA and M W Campbell AJA agreeing). It has been commented that it is somewhat difficult to reconcile the observation in that case that the most important purpose does not necessarily mean the dominant purpose with the proposition earlier adopted that dominant purpose indicates the most influential purpose: Odgers, Uniform Evidence Law, (8th ed, 2009) 565 fn 72. (f) the Court has power to examine documents in cases where there is a disputed claim, and it should not be hesitant to exercise such a power: Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 at [52], Walker at [15]. (g) for litigation to be reasonably "anticipated", as a general rule there must be at least a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not: Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 (CA) at [20] per Batt JA (Charles and Callaway JJA agreeing); quoted in Singapore Airlines at [44]. Evidence as to privilege 8 The respondents claimed client legal privilege in respect of eleven documents numbered 31 to 41 in its discovery list, described as "Walker Breach Report", various emails all titled "Compliance (Confidential) - Walker Corporation at [a specified address]", notes or reports of a case conference, and an email titled (and attaching) "final maps" of the applicant's land. 9 I have inspected the documents and it is common ground that they are confidential.

10 The documents and the surrounding circumstances were described in the evidence, which I accept, of Erin Joan Shepley, a department senior legal advisor, who has been involved in the matter since April 2009. Her evidence establishes the following.

11 Item 31 in the list of documents is titled "Breach Report Director General of DECC v Walker Corporation Pty Ltd" by David Noble, Compliance Officer, and is undated. Mr Noble has advised that he prepared the breach report after he formed the view that some type of clearing had occurred on the applicant's land and that there was no approval in place for the clearing. A breach report is a confidential communication from the operational section of the department to the legal services branch of the department made for the dominant purpose of seeking legal advice and assistance in relation to potential breaches of legislation administered by the department.

12 When a breach report is being prepared, it is common practice for the report to be sent to other regional officers for their comments in order to settle the communication to the legal branch for the purposes of seeking legal advice. This is what happened in this matter. Items 32 and 32(a) are such communications because they comprise an email dated 9 February 2009 to Mr Noble from Mr Giddins, another operational officer who attended the site inspection with Mr Noble, attaching a revised draft breach report with comments.

13 Once the author has completed the draft breach report, the usual practice is for the breach report to be forwarded for approval through the senior officers of the relevant region. Through that process, further edits or comments will be made to the draft report. These communications are for the purpose of having the breach report sent to the legal services branch so it can provide legal advice and assistance for anticipated litigation. This was the process followed in this matter. Item 33 is an email dated 11 February 2009 from Mr Noble to his supervisor Mr William Dove, head of the regional operations unit, Illawarra region attaching the draft breach report for Mr Dove's review. Item 34 is an email dated 12 February 2009, enclosing Mr Noble's draft breach report, from Mr Dove to Giselle Howard, director of the metropolitan branch, whose role includes approving breach reports from the metropolitan branch before they can be submitted to the manager of litigation. The email contains a communication about the background to the breach report and requests that Ms Howard forward the breach report to the manager of litigation, Gordon Plath, for the purposes of having a solicitor allocated to the matter to provide legal advice and assistance. 14 If a breach report is approved, it will be submitted to the manager of litigation, legal services branch. Item 35(a) is an email dated 23 February 2009 from Ms Howard to Mr Gordon Plath, manager litigation, asking for a solicitor to be allocated to the matter.

15 The manager of litigation considers the breach report and generally allocates a solicitor to work with the operational officers to provide assistance and advice on the breach report. In this matter, this process occurred over the course of several emails. Specifically, item 35 is an email dated 23 February 2009 from Gordon Plath, manager litigation, to Mark Kelly, acting manager litigation, containing a confidential communication about the allocation of the breach report to a solicitor.

16 Following on from that email, items 36(a) to (f) are a string of emails on 25 and 26 February 2009 between Melissa Telford, senior branch coordination officer, Giselle Howard, Gordon Plath, and Mark Kelly containing confidential communications regarding the scanning, attaching and allocation of the breach report to a solicitor.

17 Item 36 is an email of 25 February 2009 between Mr Kelly and Mr Andrew Macdonald, principal legal officer, about the allocation of the breach report to a solicitor. Item 37 is Mr Macdonald's email response of 25 February 2009 to Mr Kelly's email.

18 Once a breach report has been allocated to a solicitor, the manager of litigation will usually email the relevant regional officers to advise which solicitor has been allocated. This occurred in this matter through the email at item 38 dated 25 February 2009 from Mark Kelly to Giselle Howard, William Dove, Erin Shepley, David Noble and Ray Giddins.

19 In addition, there may be confidential communications between the lawyers in the legal services branch about the matter. In this instance, Mr Kelly sent the email contained in item 39 dated 25 February 2009 to Erin Shepley. The email contains a confidential communication between two lawyers employed by the department about the provision of legal advice and assistance on the breach report and the investigation.

20 Based on consideration of the breach report, there will be a flow of communication where legal advice and assistance is sought and received. In this matter, legal advice was sought in anticipation of litigation in emails items 42(a) of 26 February 2009, 43 of 18 March 2009, and 44 of 18 March 2009. Further, legal advice was provided to operational officers in emails at item 40 and 43(a) of 25 February and 12 March 2009.

21 Sometimes in matters, there is also a need to involve additional operational officers. For example, in this matter, item 41 is an email of 25 February 2009 from Mr Dove to Peter Bloem, acting manager Illawarra (and supervisor to Mr Noble while Mr Dove is on long service leave) attaching the breach report for the dominant purpose of seeking legal advice from the legal services branch.

22 Not all matters that are the subject of breach reports result in litigation. However, a breach report is not sent to the legal services branch unless there is a real prospect of litigation. In this matter the investigation has not been finalised and it is not known if there will be litigation. However, there is a real prospect of litigation when the documents sought in the notice of motion were created and there remains a real prospect of litigation.

23 In cross-examination Ms Shepley indicated that, under the common practice, until the senior department officer, Ms Howard, approved a draft breach report, it was uncertain where it would end up, and that once it was approved it would be allocated to a legal officer.

Discussion 24 Walker submits that the Court cannot be satisfied on the respondent's evidence that any of documents was created for the dominant purpose referred to in either s 118 or s 119; that, on the evidence, another purpose was consultation between department officers; that it would not be submitted to a lawyer for legal advice unless the senior officer (Ms Howard) gave approval for that to happen; and that the mere fact of communication of a lawyer is insufficient to attract the privilege: Baker v Campbell (1983) 153 CLR 52 at 122 - 123. 25 Walker cites Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) FCR 526. That case was decided under s 119 of the Evidence Act 1995 (Cth). A Commission officer testified that he drafted witness statements for use in legal proceedings that he believed were prospective or reasonably anticipated. However, he did not say that he did so for the dominant purpose of submission to the Commission's solicitors for advice. When the evidence was considered overall, Goldberg J was satisfied that a significant purpose for which the witness statements came into evidence up to a certain date was as part of the investigative process. On the evidence, his Honour was not satisfied that the dominant purpose was for use in prospective or reasonably anticipated legal proceedings. His Honour considered that the submission of the statements to the Commission's solicitor for advice was no more dominant than the carrying out of the investigatory function. Walker places particular reliance on the following passage from his Honour's judgment at 545 - 546: "The process of investigation is logically anterior to, and a precursor to, the point at which it may be said that proceedings are prospective or reasonably anticipated. If evidence is required for proceedings it can be expected that until that evidence gathering process is well advanced, a view will not be able to be formed that proceedings are prospective or reasonably anticipated. That is a reason why it is difficult to ascribe a dominant purpose to the preparation of the anticipated proceedings before the evidence gathering process is well advanced and the evidence has been evaluated."

26 Several comments may be made about that decision. First, it was only concerned with s 119 of the Evidence Act and did not touch on s 118, which the respondents in the present case invoke. Secondly, the decision is capable of being distinguished because it turned on its own fact that the process of investigation was distinct and anterior to the point in time at which proceedings were "anticipated", whereas in many cases there is no necessary distinction between the two processes. In Singapore Airlines at [23] - [25] per McDougall J held: "In some cases, the process of investigation, or of gathering evidence, will be distinct and anterior to the point in time at which it may be said that proceedings are "anticipated". See Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526, 545-546. However, there is no necessary distinction between the two processes and, as Batt JA said in Mitsubishi at 342 [23], '[t]here must be many cases where it can be said that litigation is likely before the evidence gathering process has even begun'." 27 Finally, the decision in Australian Safeway Stores has been disapproved in two respects in subsequent authorities that I propose to follow. First, in Mitsubishi at [23] the Victorian Court of Appeal held that the passage quoted above is too widely stated. Secondly, Goldberg J considered that the concept of anticipated proceedings involves the notion that more probably than not proceedings will be commenced (at 550). It has subsequently been held to the contrary that generally it is sufficient if there is a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not: Mitsubishi at [17], [19]: Singapore Airlines at [44].

28 The strongest privilege claim relates to the final version of the breach report because it was sent by the department to its lawyers for the purpose of obtaining legal advice and assistance. That purpose accounts for the bringing it into existence. On the evidence, it would not have come into existence except for that purpose and that purpose was the dominant purpose, if not the sole purpose. That communication to lawyers is therefore privileged under s 118(a). That being so, disclosure of the very similar earlier drafts to the respondents would result in disclosure of a confidential communication between the client and lawyers for that dominant purpose. Accordingly, in my opinion, the communications in the drafts are also privileged under s 118(a).

29 I am also of the opinion, on the evidence, that the drafts themselves were, within the meaning of s 118(c), confidential documents prepared by the department for the dominant purpose of its lawyers providing legal advice to the department, notwithstanding that they changed a little in the process of being settled through consultation.

30 Further, I am of the opinion that the breach report in its final form is privileged under s 119(a) as a confidential communication between the client and another person (a lawyer) made, and that that report and each draft is privileged under s 119(b) as a confidential document prepared, for the dominant purpose of the department being provided with professional legal services, namely advice, relating to an anticipated proceeding. The first draft was not prepared until after its author had formed the view that some type of unauthorised clearing had occurred. Each draft and the final version was titled a breach report, not an investigation report. Its subject was not merely the fact of clearing but consequential litigation and the evidence to support the litigation. The clearing of native vegetation without authority, as perceived by the author of the report, inherently holds the real prospect, indeed the likelihood, of litigation. The nature of a breach report and its subject matter and the stage when the first draft was created tend to support the conclusion that there was anticipation of litigation, in the sense of a real prospect, at the time each version was created. The evidence of Ms Shepley supports that conclusion, as does my inspection of the documents.

31 It is true that the dominant purposes prescribed by ss 118 and 119 would be thwarted if the responsible senior department officer ultimately decided not to approve the breach report, in which case it would not be seen by the lawyers. However, in my view, that is irrelevant because the dominant purpose of the report and each draft when it was created, and indeed at all times, was for those dominant purposes.

Conclusion 32 For these reasons, I uphold the privilege claim. The orders of the Court are as follows: 1. The applicant's notice of motion filed on 24 July 2009 is dismissed. 2. The costs of the notice of motion are reserved. 3. The exhibits and the bundle of privileged documents may be returned.

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.