1 HIS HONOUR: The plaintiffs in these proceedings, to whom it is convenient to refer collectively as "Waugh", were interested in buying a number of hotels from various vendors. Waugh required finance to achieve that purpose. It approached the defendant (Merrill Lynch) in about February 2003 for assistance. Waugh says that Merrill Lynch proposed something called a "whole business securitisation of the hotel portfolio" as a means of raising the necessary funds. In short, Waugh's claim is that Merrill Lynch breached the agreements made between them and that Waugh suffered significant damage.
2 Pursuant to orders of the Court (as varied from time to time) for the parties to file the whole of their lay evidence, Merrill Lynch filed a written statement by a Mr A J Stutchbury. Mr Stutchbury was, at the relevant time, an employee of Merrill Lynch and apparently involved in the relevant transaction. In paragraphs 26 to 28 of the statement, Mr Stutchbury refers to the question of title to the assets that were being sold: not merely the real estate, but intangible property such as gaming licences. It appears that Merrill Lynch obtained independent legal advice from a firm of lawyers, Back Schwartz Vaughan, in relation to due diligence. In paragraph 28, Mr Stutchbury says that as at the beginning of November 2003, the issue of good title had still not been resolved to his satisfaction. It is suggested, and I am prepared to infer (both from what Mr Stutchbury says in paragraph 28 and from certain documents referred to by him in paragraphs 27 and 28) that, by the beginning of November 2003, Merrill Lynch had received independent legal advice from Back Schwartz Vaughan for what Mr Stutchbury states as the relevant purpose: "to assist with its due diligence on title relating to the relevant gaming permits".
3 In those circumstances, Waugh caused a subpoena to be issued and served on Back Schwartz Vaughan requiring the production of that firm's relevant files. The documents have been produced, but a claim of privilege has been made. By notice of motion filed on 2 March 2010, Waugh seeks access to the documents produced by Back Schwartz Vaughan. Merrill Lynch opposes that access.
4 The submissions for Waugh, at least those put in writing prior to the hearing of the notice of motion, suggested that the question to be resolved was what it is convenient (although not strictly accurate) to call "waiver of privilege": a shorthand reference to s 122 of the Evidence Act 1995 (NSW). Waugh submitted that s 122 was applicable through the mechanism of s 131A and UCPR r 1.9. However, as Mr Scotting of counsel, for Waugh, developed his submissions, it appeared to be put that there was really no question to go to s 122.
5 Ms Gleeson of counsel, for Merrill Lynch, submitted that if the question were to be addressed under s 122, then there was no inconsistency because of s 122(5). That sub-section says, in essence, that someone is not taken to have acted inconsistently with the maintenance of a privilege (the situation contemplated by sub-s (2)) simply because the person has acted under compulsion of law (see s 122(5)(a)(iii)).
6 Further, Ms Gleeson submitted, if the position were governed by the common law, the outcome would be the same.
7 I return to the fact that we are concerned with the question of access to documents produced on subpoena by a third party. Brereton J was confronted with such a situation in Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151. As his Honour pointed out at [10], the process of complying with the subpoena involves three steps. The first is production to the Court in answer to the subpoena. The second is interim use - for example, access for inspection or copying. The third (which may never arise) is the tender of the document. That process was identified by the Court of Appeal in National Employers' Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372. There is no doubt that it continues to apply, subject to such modifications as may have been effected by r 1.9, today.
8 Further, Brereton J said, it was only the first of those three steps that was governed by r 1.9. His Honour said at [11] that "neither the [Evidence] Act nor the Rules apply to the second stage, and it follows that the common law continues to apply to the second stage".
9 Section 131A of the Evidence Act applies where a party to litigation is required by a "disclosure requirement" to give information or produce documents. Where the person objects to giving information or providing documents, for example on the grounds of privilege, the objection is to be determined by applying the relevant provisions of Division 1A of Chapter 3 of the Evidence Act "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".
10 Further, by sub-s (2) a "disclosure requirement" is defined to mean a court process or order that requires the disclosure of information or a document, and includes a subpoena to produce documents.
11 Accordingly, I agree with Brereton J that the focus of r 1.9 (which is the rule that deals with objections to production of documents) and s 131A applies at the stage of production. It does not, as it seems to me, apply at the stage of subsequent use. Of course, it is not at the first stage (production), but at the second (interim use, such as access or photocopying), where questions of privilege are raised.
12 I therefore think that the better view is that the question ought to be dealt with in accordance with the relevant principles of the common law. But that does not seem to me to matter because, as I shall indicate, the same answer is to be given whether the situation is dealt with under the common law, or pursuant to the Evidence Act.
13 If the position is to be dealt with at common law, the relevant framework for analysis is (insofar as the question of waiver is relevant) that Mr Stutchbury's statement was produced pursuant to a requirement of the Court, or produced under compulsion. It is also necessary to bear in mind that the documents to which access are sought are not the pages of the statement itself, or documents explicitly referred to in it, but underlying documents that are said to inform a state of mind that is said to appear from the relevant paragraphs of the statement.
14 The position at common law was examined by Powell JA in Sevic v Roarty (1998) 44 NSWLR 287. In that case, pursuant to the direction given by the Court, the defendant filed its expert reports with the Court. One of those reports was given by a Dr Robert Tinning. His report started by acknowledging receipt of a letter of instructions "and the documents concerning this claim in a well indexed folder". The plaintiff sought an order that the defendant produce the letter of instructions and supporting documents.
15 The majority of the Court (Sheller JA, with whom Fitzgerald AJA agreed) concluded that the matter should be dealt with under the Evidence Act, and that the relevant material was privileged. Powell JA agreed that the material was privileged, but got to that point by application of what his Honour saw as the relevant principles of the common law. His Honour's view is, I think, sufficiently summarised at 301, where he said that, the documents being in the normal course subject to legal professional privilege and there being no question of express waiver, the question was whether waiver should be implied from the reference in Dr Tinning's report to the "well indexed folder". His Honour said that the current position:
...would seem now to be that waiver is not to be implied or imputed where the document the delivery of which is relied upon to found the implication, or to support the imputation, of waiver was delivered whether to the other party to the litigation or to a third party - pursuant to an order of a court or otherwise under compulsion of law unless the documents be later tendered in evidence on the hearing of the proceedings...or otherwise used in such a way on the hearing of those proceedings as would make it unfair to the other party not to treat the privilege as having been waived.