By notice of motion filed on 27 May 2022 the First Defendant, the Australian Turf Club Ltd ("ATC"), seeks three alternative orders. The first is that the Plaintiff, William Inglis & Son Ltd ("WISL"), produce unredacted copies of certain documents, over which it claimed legal professional privilege. The application has been conducted on the basis, assumed by both parties, that those documents were originally the subject of a proper claim for legal professional privilege, and the question which arises in this case is whether there has been an express or implied waiver of privilege in respect of them.
The second order sought was general access in respect of four documents produced under subpoena by a firm of solicitors, Norton Rose Fulbright Australia, who acted for and continue to act for WISL.
A third order, in the alternative, seeks production of unredacted copies of documents within a narrower category, directed to legal advice as to the scope and content of contamination assessments conducted in respect of a property at issue in the proceedings, including documents as to which WISL has previously asserted a common or partial claim for privilege. It is common ground between counsel that production, as contemplated by the third order, would correspond to production of documents within a category of discovery which extended, broadly, to the scope of contamination assessments of the property and legal advice concerning contamination reports in respect of the property.
I will first refer to the nature of the issues in the proceedings, and the evidence in the application, before turning to the relevant legal principles and reaching a determination. Mr Pike, with whom Ms Trahanas appears for ATC, draws attention to the nature of the claim brought by WISL in the proceedings. The proceedings relate to WISL's purchase of land which is alleged to have been contaminated to a greater extent than WISL appreciated. WISL, in its statement of the nature of dispute in its Commercial List Statement, refers to a contamination assessment which was undertaken in respect of the land, and to its later discovery, after completing the purchase of the land, that there was significant contamination which it contends had not been previously disclosed to it or identified by, relevantly, ATC or its predecessor ("AJC") or the Second Defendant ("SMEC") which is an expert in respect of contamination.
In the more detailed contentions identified in its Commercial List Statement, WISL refers to a report, described as the "EI Report", which was obtained in respect of the land and to ATC's provision of that report to WISL, and to further reports which had then been obtained from SMEC. WISL contends, in its Commercial List Statement, that, when the AJC provided a copy of the SMEC report to WISL, it expressly or impliedly represented certain matters to WISL, as to the scope of the contamination on the land. It pleads the discovery of further contamination on the land and refers to the costs of additional remediation. In paragraphs 64ff, WISL pleads a misleading and deceptive conduct case, on the basis that the AJC knew certain matters including, relevantly, that a contamination assessment had not been conducted in respect of all of the land, or had not extended to identifying or ascertaining whether all contaminants on lot 1 of the land had been identified before that lot was sold to WISL, and that the AJC had not engaged SMEC properly to assess all of the land being sold to WISL or determine whether all contaminants on the land required remediation.
WISL also alleges a non-disclosure of the relevant matters to it and that it would not have gone forward with the purchase of land had it known of those matters. WISL contends the failure to disclose those matters was misleading or deceptive conduct. Mr Zahra, with whom Mr Anderson appears for WISL, fairly accepts that that pleading necessarily conveys a claim that WISL did not in fact know the relevant matters, although that claim is not expressly put, since the proposition that the non-disclosure of those matters to WISL was misleading or deceptive would otherwise not be sustainable.
[3]
The evidence in support of the application
Turning now to the evidence in support of the application, ATC relies on an affidavit of its solicitor, Mr Woodhouse, dated 27 May 2022. That affidavit exhibits a bundle of documents on which ATC relies to establish, first, a claim for express waiver and, second, a claim for implied waiver in respect of the documents for which legal professional privilege has been claimed by WISL. That exhibit in turn includes an affidavit dated 6 November 2019 of Mr Webster, who is the managing director of WISL, who gives evidence on which WISL relies to establish its claim in the substantive proceedings. It is common ground that there is no express reference in that affidavit to WISL having taken legal advice in respect of the relevant transaction, and, in particular, no reference to legal advice is affirmatively deployed by WISL to establish the proposition that it was misled. However, it is also apparent that, including from the basis on which legal professional privilege has been claimed, WISL did take legal advice, apparently in respect of the scope and content of the contamination reports, during the period which is addressed by Mr Webster's affidavit.
Mr Webster refers in that affidavit to a quote provided by SMEC in respect of a review of contamination. He refers to the receipt of a stage 1 environmental assessment prepared by another environmental consultant, the EI Report, to which I referred above. He refers to reading that report, and to noting that a fee estimate had been sought for a stage 2 environmental report. He does not deal with intervening steps between that point and mid-December 2009, when there were further negotiations as to the terms of a put and call option deed which would be the mechanism for WISL's acquisition of the property. However, those intervening steps are apparent from documents which are also exhibited to Mr Woodhouse's affidavit. In particular, on about 29 October 2009, an issues list was prepared by legal advisors to WISL, and it appears it was then edited so as to make it suitable for provision to ATC. That issue list addressed, in particular, the termination mechanism in respect of environmental issues concerning the land. On 17 November 2009, a representative of the AJC sent a proposal for stage 2 contamination and geotechnical testing to Mr Webster, and Mr Webster had in turn forwarded that to the firm of solicitors that was representing WISL. On the same date, Mr Webster sent those solicitors a copy of the stage 1 contamination report, to which I referred above. The list of privileged documents then records further exchanges between Mr Webster and the solicitors in the period to mid-November 2009 and, on 25 November 2009, an exchange occurred between the AJC and WISL on which ATC relies to support a claim for express waiver of legal professional privilege. The AJC then sought confirmation that WISL had received the proposal for stage 2 contamination and geotechnical testing, which it had sent previously, and sought confirmation of WISL's acceptance of the proposal. Mr Webster responded that:
"All of docs are with our lawyers. I've had feedback today on phase 2 of the contamination assessment. In summary, the proposed approach and is are [sic] acceptable, but we request the AJC instruct SMEC to assess the contamination and any remediation required against a specific standard, namely the recreational open space standard. Please proceed with phase 2."
WISL continued to consult its solicitors in respect of the relevant matters, including taking advice on 3 December 2009 as to the extent to which the existing contractual arrangements would protect it against "unexpected contamination" if contracts were exchanged. Its solicitors responded, in short, that the existing contractual arrangements would not provide such protection.
Mr Webster also refers to his receipt, in mid-November 2009, of the SMEC geotechnical and contamination assessment report, and to the matters which he had understood from that report but, as I noted above, does not there deploy, or address, any legal advice that he obtained as a source of that understanding.
[4]
Whether an express waiver is established
Turning now to the bases on which ATC's claim for waiver of privilege is pressed, the first basis is a claim for express waiver of legal professional privilege, which I can deal with briefly. Mr Pike, in submissions, outlines the sequence of correspondence and refers to the email dated 17 November 2009 from Mr Webster, to which I referred above, referring to the documents being with WISL's lawyers, the receipt of feedback today on phase 2, and to the summary position.
It seems to me that it is an available inference that the "feedback" referred to in that email is feedback from WISL's solicitors as to phase 2 of the contamination assessment, although it may be an open question whether one could reach that conclusion on the balance of probabilities. It is not necessary to determine that matter for present purposes. In order to establish an express waiver of privilege, ATC had to go further, to read the third sentence that I have quoted above from that email, referring to the summary position, as a disclosure of the content of legal advice. It seems to me that that reading of that sentence is not tenable, where, at best, that sentence indicates the summary of the position that WISL had reached, likely by reference to any legal advice which it had received, but quite possibly also by reference also to commercial considerations. There seems to me that no reason to read that sentence, to the extent that it summarises WISL's position after obtaining legal advice, as a summary of that legal advice.
For that reason, on a factual basis, it seems to me that no express waiver of legal professional privilege is established.
[5]
Whether an implied waiver is established
The next question is whether an implied waiver of legal professional privilege is established. I first address the relevant case law.
Earlier cases took a somewhat robust view as to the circumstances in which a pleading of reliance might amount to an implied waiver of legal professional privilege. I reviewed the relevant authorities in Parkview Qld Pty Ltd v Commonwealth Bank of Australia [2012] NSWSC 1599 ("Parkview"), to which the parties did not refer. I note that decision here only in order to avoid the need to review those earlier authorities, commencing with Mann v Carnell (1999) 201 CLR 1, including Telstra Corporation Ltd v BT Australasia (1998) 85 FCR 152, and then continuing to the development of a possibly narrower view of the circumstances in which an implied waiver would be established in cases including New South Wales Bar Association v Archer [2008] NSWCA 164. I adopt without repeating the review of those authorities in Parkview.
The parties here referred to later authorities, which are helpful in summarising the present position. In Archer Capital 4A Pty Ltd as trustee for the Archer Capital Trust 4A v Sage Group plc (No 3) (2013) 306 ALR 414; [2013] FCA 1160 ("Archer Capital"), Wigney J undertook a relatively detailed review of the authorities at [6]ff. His Honour there noted that, as is the case here, the pleadings did not expressly or impliedly make an assertion about the content of privileged communications, and held that an implied waiver of privilege was not established in that case.
In Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117 ("Arup"), the Full Court of the Federal Court dealt with a position where misleading and deceptive conduct was alleged, by reason of incomplete statements or silence. The Court there observed that:
"Where a case merely involved an allegation of reliance, the documents for which privilege had been claimed were relevant to the proceedings, but their relevance was not sufficient to give rise to an implied waiver. Again, implied waiver was not established in that case."
The parties also draw attention to Viterra Malt Pty Ltd v Cargill Australia Ltd (2018) 58 VR 333; [2018] VSCA 118 ("Viterra Malt"), which again involved an allegation of non-disclosure of material information said to give rise to misleading or deceptive conduct. The Court of Appeal of the Supreme Court of Victoria there observed (at [78]) that the nature of the pleadings did not there make it inconsistent to withhold privileged communications about the transaction, notwithstanding that those communications might reveal something of a relevant parties' state of mind. The Court observed that:
"It is entirely to be expected that a party pleading a misleading or deceptive conduct case arising from a commercial transaction will have received legal advice regarding the transaction before its consummation."
The Court held that that was not sufficient to give rise to an implied waiver and that "something more was required". The Court also held that that "something more" was not established in that case, where the relevant legal communications have not been shown to extend to "legal advice material to the formation of" the parties' state of mind in respect of the matters alleged not to have been disclosed, and referred to a similarity with the position in Arup in that regard. In that case, the waiver of privilege alleged to have been implied appears to have extended to legal advice in respect of the transaction generally, and that proposition was not accepted by the Court. There was not, in that case, any close nexus between the nature of the legal advice and the conduct said to have been undertaken as a result of the non-disclosure.
The final case to which the parties refer is the Court of Appeal's decision in GR Capital Group Pty Ltd v Xinfeng Australia International Investment Pty Ltd [2020] NSWCA 266 ("GR Capital"). In that case, the applicant sought to set aside consent orders on the basis that it was unaware that the relevant transaction was illegal and had made a unilateral mistake. The respondent issued a subpoena to the applicant's former solicitors seeking production of documents containing legal advice, and a question arose as to the extent to which there had been an implied waiver of that legal advice. On appeal, the applicant contended that it had waived legal professional privilege only to a limited extent, as to documents that contained legal advice as to the legality or illegality of the underlying transaction or agreement.
Although a waiver to that extent was there conceded, Macfarlan JA (with whom McCallum JA and Simpson AJA agreed) addressed that issue on the merits. His Honour undertook a full review of the case law (at [21]ff) referring, inter alia, to Archer Capital, Arup, and Viterra Malt, to which I have referred above. His Honour summarised the relevant principles (at [57]), observing that the test was one of inconsistency between a privilege holder's conduct and in its maintenance of the privilege, not one of general fairness or of relevance; identifying that, if the privilege holder was asserting something about the contents of the communications, then it was a short step to conclude that it would be inconsistent for it to prevent their contents being scrutinised; noting that mere relevance of the documents was not enough to give rise to a waiver of privilege, and something more was needed, and then observing that:
"The determination of whether there has been an express or implied assertion about the contents of privileged communications giving rise to a relevant inconsistency is an evaluative decision to be made after consideration of the whole of the circumstances of the case. No hard and fast rules can be formulated. Those circumstances will include the degree of relevance of any advice to the issues in the proceedings, the centrality of the relevant issues in the proceedings and the likelihood of advice having been given, informed, as the High Court said in Mann v Carnell, by considerations of fairness.
Having considered all those circumstances, the Court must decide whether it would be inconsistent with the privilege holder's conduct for it to maintain privilege. The line between relevance to an issue and inconsistency in this context may be very fine and therefore one on which views might well differ."
Importantly, his Honour there found that that there would be an inconsistency between the applicant asserting its ignorance of an illegality defence and maintaining legal professional privilege in respect of legal advice concerning the existence of that defence. I pause to note that that was not a case in which the applicant itself put the legal advice in issue as distinct from putting in issue its knowledge (or lack of knowledge) as to the illegality of the transaction, as to which it was likely that legal advice would have been obtained. The implied waiver in that case does not arise from the applicant's deploying the legal advice in the proceedings, which it had not done, but instead from the contextual matters to which Macfarlan JA referred in the passage that I have quoted above. Mr Zahra seeks to distinguish that decision from the present case on the basis that there the question was a legal question only, but that is plainly a question of degree.
Returning to the position here, and with the aid of that factual background and that review of the relevant authorities, Mr Pike for ATC submits that an implied waiver arises, by reason of WISL's assertion that it did not know of the relevant matters, as to the scope of the environmental investigations that were undertaken, and would have made different decisions had it known of those matters. He also refers to Mr Webster's evidence that seeks to establish that WISL would not have proceeded with the transaction, had it known of those matters, and to the indications, to which I have referred above, that WISL had obtained legal advice as to the environmental assessments that were completed, at the relevant time.
Mr Zahra responds that WISL's case involves an element of reliance, and that raises questions of its state of mind, but the mere fact that the pleadings raise an issue as to its state of mind does not give rise to an implied waiver of legal professional privilege. That proposition is uncontroversial, but that, of course, is not the basis on which ATC contends that there is an implied waiver here. Mr Zahra also submits that the relevance of documents, as a matter on which ATC relies, is not relevant to determining whether there is an implied waiver of privilege, and refers to Arup in that respect. That is a proposition which I plainly cannot accept, by reason of appellate authority that binds me, since Macfarlan JA, with whom two judges of the Court of Appeal had agreed, plainly treated the relevance of advice to the issues in the proceedings and the centrality of those issues as one of the matters that was relevant to determining whether there had been an implied assertion about the content of those documents in GR Capital at [57]. Mr Zahra also submits that, to the extent there has been an implied waiver over the relevant documents, it does not extend as far as ATC contends. He invited the Court to inspect the relevant documents, but it has emerged that an alternative proposal, accepted by both parties, would address that issue by providing for WISL's solicitors to review the documents, having regard to the extent of any implied waiver found by the Court.
Matters of this kind involve complex judgments as to which minds may differ, as Macfarlan JA recognised in GR Capital. This is not a case where an implied waiver arises by reference to legal advice in the pleadings, or any affirmative step taken by WISL to deploy legal advice whether by way of pleadings or by way of Mr Webster's evidence. However, here, Mr Webster gives evidence as to what he understood as to the scope of the contamination reports, within a relatively confined period. WISL was obtaining legal advice in that period, for which legal professional privilege has been claimed, and which WISL categorises within category 3 in the discovery categories as directed to the scope of the contamination reports and their content. In these circumstances, having regard both to the factors identified in GR Capital and to the outcome in GR Capital, it must be accepted that an implied waiver arises from the relevance of advice, as to the particular issue of the scope or content of the contamination reports, to the question what Mr Webster understood as to those matters, the significance of that issue in the proceedings where that is a pleaded aspect of the non-disclosure case; and the fact that advice was given that was directed to those matters, as is apparent from the identification of the discovery category within which WISL has placed it.
It seems to me that it would be inconsistent with WISL's conduct for it to maintain a claim for legal professional privilege in advices to that matter, on the same basis that it was inconsistent for the applicant in GR Capital, to advance a claim as to its lack of knowledge of illegality of the transaction, and at the same time prevent access to legal advice in respect of that matter. The close link here between the legal advice, as to contamination reports, and Mr Webster's evidence and WISL's case as to a non-disclosure, distinguishes the position from the other cases to which I have referred above, in which a pleading of reliance does not itself give rise to such an inconsistency.
[6]
Orders
This conclusion does not support the wider relief sought by ATC in paragraphs 1 and 2 of the notice of motion. However, it is common ground that, if I held, as I do, that there is an implied waiver of legal professional privilege as to documents falling within category 3 of the discovery categories, then an order in the form of paragraph 3 of the notice of motion should be made. That paragraph will need to be adjusted to provide, for example, a timing for the relevant review of documents and production to occur. I direct the parties to submit agreed orders to give effect to this judgment to my Associate, by 4pm today. Costs should follow the event, and accordingly WISL must pay ATC's costs of an incidental to the notice of motion. That matter can also be addressed in the agreed form of orders.
[7]
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Decision last updated: 27 June 2022