WCX M4-M5 Link AT Pty Ltd in its personal capacity and its capacity as trustee of the WCX M4-M5 Link Asset Trust v Acciona Infrastructure Projects Australia Pty Ltd

Facts

1. On 25 February 2022, these proceedings were commenced by Summons supported inter alia by an affidavit of the plaintiffs' solicitor, Hamish Macpherson, who described the contractual regime between the parties, in particular: 1. the WestConnex M4-M5 Link Project Deed between Transport for NSW and inter alia the first plaintiff; and 2. the M4-M5 Link Main Tunnel Works Design and Construction Deed (D&C Deed) between the plaintiffs and the Contractor, and a dispute between the parties as to whether the Notices of Dispute issued by the Contractor are "Linked Disputes" such that the determination of a right, entitlement or obligation under the D&C Deed applies to the Project Deed and vice versa.
2. On 27 February 2022, the Contractor filed the motion seeking a stay of the proceedings. On 4 March 2022, the plaintiffs filed a Technology and Construction List Statement which pleaded, inter alia, that on 16 December 2020, an expert determination had been delivered, interpreting clause 11.10(e)(i) of the Project Deed such that the plaintiffs were responsible for a contamination issue which had arisen in respect of the construction of the M4-M5 Link. As this was a "Linked Dispute" under the D&C Deed, the Contractor was bound by the expert determination such that any direction or instruction to the Contractor under the D&C Deed to undertake design and construction works to address the contamination issue was not a "Change" under the D&C Deed.
3. On 10 March 2022, the Contractor filed a Technology and Construction List Response, contending that it was not bound by the expert determination as an exception to the binding nature of the determination of a Linked Dispute applied: the plaintiffs had made a "concession" to Transport for NSW in respect of the Linked Dispute "without first obtaining the prior written consent of the Contractor to such … concession (such consent not to be unreasonably withheld or delayed)": clause 3.3(g)(ii)(B), D&C Deed.
4. On 15 March 2022, the plaintiffs filed a Reply. As to the suggestion that a concession had been made without consent, the plaintiffs referred to a preliminary conference on 8 October 2020 held for the purpose of making directions for the conduct of the expert determination. During a break in the conference, a telephone conversation was said to have occurred between the plaintiffs' solicitors and counsel (Michael Christie SC and David Hume) and Peter Wood of MinterEllison regarding a proposal to make a concession, during which Mr Wood agreed the concession should be made. The precise terms of the concession were then crafted by counsel and circulated by email, including to Mr Wood, accepted by the plaintiffs' solicitor, proposed to Transport for NSW's solicitor and counsel and accepted. The expert was then informed that the concession had been agreed between the parties and made directions accordingly. The next day, a draft of the directions made by the expert, including the concession, was circulated, including to Mr Wood, who confirmed that he agreed that the documents could be provided to the expert. The plaintiffs contended that these matters, whether alone or in combination, constituted prior written consent on the part of the Contractor within the meaning of clause 3.3(g)(ii)(B).
5. On 16 March 2022, the Contractor's project director, Andrew Marsonet, affirmed an affidavit which, as ultimately read, deposed: To the best of my knowledge, there was no written consent provided by [the Contractor] in relation to the Concession prior to the Concession being made.
6. Later that evening, Mr Macpherson swore a further affidavit describing a "Linked Disputes Protocol" agreed between representatives of the plaintiffs and the Contractor, which applied to various disputes including the expert determination in question. Further, Mr Macpherson described what was said at the preliminary conference held on 8 October 2020. Mr Macpherson also stated that Mr Christie SC and Mr Hume were "counsel chosen and retained by the Contractor".
7. On 18 March 2022, the plaintiffs filed a motion seeking leave to amend their Technology and Construction List Statement, adding a plea of estoppel that, by the Contractor proposing and drafting, through its counsel, the concession, the Contractor conducted itself on the basis that the expert determination of the contamination dispute would be binding on the Contractor. Further, the Contractor knew that the plaintiffs assumed that the Contractor considered the dispute would be binding on the Contractor, such knowledge to be inferred from the terms of the Linked Disputes Protocol and that the Contractor, through its counsel, proposed and drafted the concession. Had the plaintiffs apprehended that the Contractor did not consider itself so bound, the plaintiffs would not have made the concession. The plaintiffs also sought leave to amend their Reply to add that, by reason of events as already particularised in the Reply, clause 3.3(g)(ii)(B) did not apply "because the Concession was proposed by the Contractor, not by the [plaintiffs]".
8. On 28 March 2022, Mr Macpherson swore an affidavit in support of the estoppel claim, advising that he was informed by the General Counsel of his client that he proceeded on the assumption now proposed to be pleaded in making the concession in the expert determination and would have proceeded otherwise if he understood that the Contractor did not consider itself bound by the expert determination. Also on 28 March 2022, the plaintiffs' filed a motion seeking leave to issue a subpoena to produce and give evidence to Mr Wood. Ball J made orders for short service of the subpoena on Mr Wood and, on 30 March 2022, made orders for access to the documents produced in answer to the subpoena and directions for submissions in respect of any privilege claims, standing over the determination of such claims to the hearing before me.
9. Also on 28 March 2022, the Contractor provided reply submissions. The plaintiffs' written submissions of 23 March 2022 had described the role of Mr Christie SC and Mr Hume in some detail, including that both counsel had been engaged by the Contractor's solicitor, MinterEllison. Further, according to the Linked Dispute Protocol, whilst the counsel would appear for the plaintiffs, they would, in effect, be instructed by the Contractor. In the reply submissions, the Contractor's counsel submitted that the plaintiffs' submissions mischaracterised the facts as Mr Christie SC and Mr Hume were appearing in the preliminary conference on behalf of the plaintiffs and instructed by the plaintiffs' solicitors. At paragraph 17: (emphasis added) As such, it will be the Contractor's position (and it was the fact) that Mr Hume was appearing for the Asset Trustee during the Expert Determination and at preliminary conferences as part of the Expert Determination, on instructions from King & Wood Mallesons.
10. Further, at paragraph 19 and 21: (emphasis added) 19 The Concession made at the Directons Hearing on 8 October 2020 was significant; it effectively shut out any opportunity for the Contractor to argue for cost relief on the basis of an answer to a separate question. That Concession was made by Mr Hume on instructions from Mr Macpherson (KWM) at the directions hearing on 8 October 2020. … 21 Shortly after Mr Wood said that he needed final instructions, Mr Macpherson wrote to Mr Hume at 5:59pm on 8 October 2020 "Thank you Michael and David, you have instructions to make that statement to the Expert and to counsel for TfNSW." There is no evidence that the Contractor or anyone on behalf of the Contractor provided those instructions. It follows that the instruction to make the Concession came directly from the M4-M5 Link Group, via its solicitor Mr Macpherson.
11. In addition, the Contractor's reply submission, as ultimately put in paragraph 22 was: The M4-M5 Link Group's case is that, if Mr Hume did not provide the necessary prior consent, then Mr Wood did so when he sent the email on 9 October 2020 at 11:31am. However, this communication was provided, in any event, after the Concession had been made on 8 October 2020.
12. There is an abundance of documents before the Court which make plain that MinterEllison acted for the Contractor and had briefed Mr Christie SC and Mr Hume. As the Contractor had no right to appear at the preliminary conference, it was agreed between the solicitors for the plaintiffs and the Contractor that the plaintiffs' solicitor would instruct counsel at the preliminary conference, to which the Contractor agreed. The Linked Dispute Protocol, however, also made plain that the Contractor would instruct counsel and prepare written communications in relation to the Linked Disputes. Indeed, Mr Christie SC formally confirmed that he was briefed by the plaintiffs' solicitor "but that I will not charge KWM". The subtleties of the capacity in which counsel were appearing at the preliminary conference were communicated to the legal representatives for Transport for NSW.
13. Also in evidence are documents produced in answer to the subpoena to MinterEllison over which no claim for privilege is made, including counsels' fee agreements and fee notes. These make plain that both counsel were retained by the Contractor's solicitor and rendered fee notes from time to time, including in relation to the preliminary conference. Some of those conferences did not include the plaintiffs' legal representatives. Thus, whilst counsel were formally instructed by the plaintiffs' solicitors at the preliminary conference, the Contractor's solicitors were also separately providing instructions to counsel.

Consideration

1. There is no doubt that the communications in question are privileged. The rationale underlying client legal privilege in a situation such as this was explained by Gleeson CJ in Benecke v National Australia Bank (1993) 35 NSWLR 110 at 111-112: The rule that prevents an unauthorised disclosure of confidential communications between a client and a legal adviser, when such communications are for the purpose of obtaining legal advice, or for use in existing or anticipated litigation, constitutes a restriction upon the capacity of courts to ascertain the truth in certain circumstances. That restriction, however, is regarded as acceptable on the ground that it promotes the public interest, and assists the administration of justice, by facilitating the representation of clients by legal advisers. It does this by encouraging uninhibited communication. Thus, in cases where the rule operates, one aspect of the public interest is preferred against another (discovering the truth).
2. The question is whether the privilege has been waived. As the privileged documents were produced in answer to a subpoena, the common law applies, although senior counsel agreed that there was little to distinguish the common law test with that of section 122(2) of the Evidence Act 1995 (NSW). Drawing on my judgment in In the matter of Northern Energy Corporation Ltd [2020] NSWSC 1073, a person who would otherwise be entitled to the benefit of legal privilege may waive that privilege; "It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege": Mann v Carnell (1991) 201 CLR 1; [1999] HCA 66 at [28] (per Gleeson CJ, Gaudron, Gummow and Callinan JJ). And further, at [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. See likewise Expense Reduction Analysts Group Pty Limited v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; [2013] HCA 46 at [30].
3. In order to determine whether there has been waiver of client legal privilege, the Court is bound to analyse the acts or omissions of the privilege holder that are said to be inconsistent with the maintenance of the privilege: Commissioner of Taxation v Rio Tinto Limited (2006) 151 FCR 341; [2006] FCAFC 86 at [45]. Mere reference to the existence of a privileged communication will not suffice; waiver ordinarily only occurs where the contents of privileged communications are relied upon: Hastie Group Limited (in liq) v Moore (t/as Deloitte Touche Tohmatsu) [2016] NSWCA 305; (2016) 339 ALR 635 at [53] (per Leeming JA). As Allsop J (as his Honour then was) summarised the position in DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151; [2003] FCA 1191 at [61], privilege will be waived where a confidential communication has 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 in Mann v Carnell is brought about. Further, "quite specific inconsistency is necessary to establish waiver. Even reference to legal advice, without more, will not suffice. The inconsistency must be reasonably manifest": Cantor v Audi Australia Pty Ltd [2016] FCA 1391 at [99].
4. A similar situation to the one at hand arose in Benecke, where a client alleged that her barrister had settled proceedings without instructions. The client, however, claimed privilege over what instructions had been given. Gleeson CJ held that the privilege had been waived, at 111: It would be inconsistent with the reason for the existence of the privilege to permit it to operate in the manner for which the appellant contends. But for her own actions, the privilege would have enabled the appellant to insist that nobody should be able to give evidence of the confidential communications between the appellant and her senior counsel about the settlement of the first proceedings, without the consent of the appellant. However, it did not enable the appellant to make public her version of those communications and, at the same time, to enforce silence on the part of others who disagreed with that version. The law permits the search for the truth in legal proceedings to yield, in certain circumstances, to the public interest in preserving the secrecy of communications between lawyer and client. In the present case, however, the appellant herself lifted the veil of secrecy by giving her version of the communications. Thereafter, there was no reason in principle why the pursuit of the truth should not take its course, or why the court should be inhibited in seeking to ascertain the true facts concerning those communications.
5. Likewise, Clarke JA observed at 116: The appellant, in making her assertions that her lawyers compromised the proceedings without her consent, opened up the question of the authority of the lawyers to act as they did and thereby waived her privilege. I take this to be clear as a matter of legal principle on grounds of basic fairness. … in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475, reference was made to the passage in Wigmore, Evidence in Trials at Common Law (1961) vol 8, par 2327 at 636, to this effect: "… (W)hen his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder."
6. Here, the pleadings put in issue the extent to which Mr Christie SC and Mr Hume were proposing, drafting and making the concession on the instructions of, and with the authority of, the plaintiffs alone or also the Contractor. In determining this issue, the Contractor was entitled to maintain privilege over communications with its then solicitor, MinterEllison, which might have assisted the Court to establish the true position.
7. However, fairly read, the Contractor's position as contained in its reply submissions was that counsels' instructions and authority, when making the concession, came from the plaintiffs' solicitors alone. Thus, the proposition sought to be advanced by the Contractor, both by the Technology and Commercial List Response and as elaborated upon in the Contractor's reply submissions is that the instructions to give the concession were given by the plaintiffs' solicitor alone where the counsel giving effect to those instructions were, in fact, retained by - and, in large part, instructed by - the Contractor.
8. I consider that there is an inconsistency between advancement of a positive case by the Contractor - that the counsel were instructed by the plaintiffs alone - and maintaining privilege over any instructions which, in fact, the Contractor also gave to counsel which formed the basis, or part of the basis, of the instructions on which they acted in giving the Concession. For these reasons, I consider that privilege has been waived.

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: 01 April 2022