Absolute Analogue Inc v Sundance Resources Ltd [No 2]

[2011] WASC 243

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   ABSOLUTE ANALOGUE INC -v- SUNDANCE RESOURCES LTD [No 2] [2011] WASC 243

CORAM:   LE MIERE J

HEARD:   10 AUGUST 2011

DELIVERED          :   10 AUGUST 2011

PUBLISHED           :  12 SEPTEMBER 2011

FILE NO/S:   CIV 1773 of 2007

BETWEEN:   ABSOLUTE ANALOGUE INC

First Plaintiff

DAVID PORTER
Second Plaintiff

AND

SUNDANCE RESOURCES LTD
Defendant

Catchwords:

Practice and procedure - Discovery and inspection of documents - Legal professional privilege - Waiver - Legal principles - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 26

Result:

Orders made

Category:    B

Representation:

Counsel:

First Plaintiff                :     Mr M J Feutrill

Second Plaintiff            :     Mr M J Feutrill

Defendant:     Ms S E Russell

Solicitors:

First Plaintiff                :     Tottle Partners

Second Plaintiff            :     Tottle Partners

Defendant:     Allens Arthur Robinson

Case(s) referred to in judgment(s):

Artistic Builders Pty Ltd v Nash [2009] NSWSC 102

AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co Ltd (1882) 11 QBD 55

Fulham Leisure Holdings Ltd v Nicholson Graham & Jones [2006] EWHC 158 (Ch)

Mann v Carnell (1999) 201 CLR 1

Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corp (No 2) [1981] Com LR 138

Paragon Finance Plc v Freshfields [1999] 1 WLR 1183

R v Secretary of State for Transport; Ex parte Factortame (1997) 9 Admin LR 591

Schulman v Abbott Tout Lawyers [2010] FCA 308

1. LE MIERE J:  On 10 August 2011 I heard three applications.  The first was an application by the defendant that the second plaintiff give discovery of his passport or passports for the period between 1 February 2006 and 31 May 2007 and make the passports available for inspection.

2. The second matter is the plaintiffs' application that the plaintiffs have leave to inspect certain documents produced by Steinepreis Paganin, the defendant's former solicitors, pursuant to a subpoena and to which the defendant has claimed legal professional privilege. 

3. The third matter is the application of the plaintiffs for leave to inspect documents numbered 7 and 17 in pt 2 of the first schedule of the defendant's list of documents attached to and verified by the affidavit of Peter Damian Canterbury sworn 10 June 2008.

4. On 10 August 2011 I ordered that the second defendant give discovery of his passports and make them available for inspection.  I further determined that the subpoenaed documents and discovered documents to which the defendant claimed legal professional privilege are the subject of legal professional privilege and reserved the question of whether or not the defendant had waived the privilege.  These are my reasons for determining each of those matters.

Defendant's application for discovery of passports

1. By chamber summons filed on 30 June 2011, the defendant seeks orders that the second plaintiff give discovery of his passport or passports for the period between 1 February 2006 to 31 May 2007 and that the passport or passports be made available for inspection.  The two matters of which I need to be satisfied are, first, that I am reasonably sure or certain that the passport exists and, secondly, that it is relevant to a matter in issue between the parties within the relevant test required by the Rules of the Supreme Court 1971 (WA) O 26.

2. It is common ground between the parties that the second plaintiff has in his possession, custody or power the passport or passports concerned.  The issue between the parties is whether or not the passport or passports are relevant to any matter in issue between the parties.  In my view, there is a lack of clarity in the pleadings as to the issues between the parties concerning the services provided by the second plaintiff to the defendant.  However, the plaintiffs submit on this application that the issues between the parties extend at least to whether or not the second plaintiff was engaged substantially full-time in working on or in relation to the defendant's project in Cameroon in at least the period between 1 February 2006 and 31 May 2007.

3. In the circumstances of this case, where the second plaintiff was resident in South Africa, the project was situated in Cameroon and it appears that the second plaintiff undertook travel for the purposes of and relating to the project, the second plaintiff's passport is, within the test in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co Ltd (1882) 11 QBD 55, relevant to an issue in these proceedings; that issue is whether or not the second plaintiff was substantially engaged full time or to a substantial extent on the project in the relevant period.

4. Counsel for the plaintiffs submits that it was not a condition of the agreement that the second plaintiff should be in Cameroon or at any particular location in order to carry out work in relation to the project.  That appears to be so.  However, the location of the second plaintiff and his travel during this period is at least relevant to a train of inquiry in relation to what matters the second plaintiff was engaged upon during this period.  Accordingly, I ordered that the second plaintiff give discovery of the passport or passports as requested and that he give inspection of the passport or passports as sought in the chamber summons.

Are the subpoena and discovered documents privileged?

1. The plaintiffs have applied for an order that the defendant make available for inspection documents it has discovered and in relation to which it has claimed legal professional privilege and that the plaintiffs be permitted to inspect documents produced by Steinepreis Paganin in response to the subpoena issued by the plaintiffs and in relation to which the defendant claims legal professional privilege.  There are two questions which arise.  The first is whether the documents are the subject of legal professional privilege.  The second is if that is so, then has privilege been waived, so as to make them liable to inspection.

2. The discovered documents are contained in the defendant's supplementary list of documents attached to the affidavit of Peter Damien Canterbury sworn 10 June 2008.  The documents in question are those numbered 7 and 17 in pt 2 of the list.  Document numbered 7 is an email from Roger Steinepreis to John Corr, 're:  Agreements and Announcement', sent at 3.45 pm on 28 February 2006.  The document numbered 17 is an email from Alec Pismiris to Mark Paganin, 'Employment Agreements Cameroon' sent at 2.52 pm on 22 December 2006.  In each case, the defendant states that the ground on which privilege is claimed is as follows:

   They consist of or evidence professional communications of a confidential nature passing between the officers, servants or agents of Sundance Resources Ltd, related corporations of Sundance Resources Ltd and the legal advisers of Sundance Resources Ltd which have been brought into existence or have been made for the dominant purpose of obtaining legal advice and assistance from Sundance Resources Ltd's legal advisers and memoranda and notes made to or by Sundance Resources Ltd of such communications.

3. I find that that is a sufficient claim of legal professional privilege and that the claim of privilege is properly made.  It is deposed to that the documents in question are confidential communications for the purpose of giving instructions and obtaining legal advice.  In each case the documents are particularised.  This is not a case in which there is a formulaic claim of privilege.

4. So far as the documents the subject of the subpoena to Steinepreis Paganin are concerned, the dispute now relates to those described in [6(a)], [6(b)] and [6(d)] of Mr Kelly's affidavit affirmed on 28 July 2011.  The documents are described by Steinepreis Paganin as follows:

   (a)one page of notes made by Roger Steinepreis (undated);

   (b)draft ASX Announcement for the acquisition of CAM IRON (SA) (undated) with handwritten notations; and

   (d)one page of notes headed 'Notice of meeting' made by Roger Steinepreis (undated).

5. I find that the circumstances in which the documents were generated and the nature of the documents is sufficiently provided to establish that they are confidential communications for the purpose of giving instructions and obtaining legal advice.  I find that each of those documents are the subject of legal professional privilege.

Waiver - the issue

1. The question that remains is whether privilege has been waived in relation to each of the documents discovered and produced on subpoena to which I have referred.

2. Ms Bullock, a solicitor employed by Steinepreis Paganin and then acting for the defendant, sent an email to Alec Pismiris, a director of the defendant, which stated:

   Attached is the consultancy agreement for [the second plaintiff] amended pursuant to the handwritten comments we received from you.

   Please note that [the second plaintiff] only needs to give a 2 month notice period whereby [the defendant] must give a 6 month notice period for termination.  Do you want us to amend the agreement in this regard so that the termination periods are equal?

3. Mr Pismiris forwarded the email to the second plaintiff with the statement, 'For your review and comments'.  The plaintiffs submit that disclosure of the email and attachment by Mr Pismiris to the second plaintiff is inconsistent with the defendant maintaining the confidentiality of the instructions given to Steinepreis Paganin to draw the consultancy agreement.  Accordingly, the plaintiffs submit that the defendant should be ordered to produce those instructions and any notes of its solicitors that record those instructions and the plaintiffs should be permitted to inspect them.

Waiver - legal principles

1. The common law test in respect of imputed waiver by disclosure is stated by the High Court in Mann v Carnell (1999) 201 CLR 1. A client, otherwise entitled to maintain legal professional privilege in respect of a communication, waives privilege where the conduct of that client is inconsistent with the maintenance of the privilege. Gleeson CJ, Gaudron, Gummow and Callinan JJ observed:

   Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is 'imputed by operation of law'. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege [29].

2. The test is not formulated in terms of fairness.  However, considerations of fairness may be taken to account in informing the court of inconsistency.  The defendant accepts, as it must, that in disclosing to the second plaintiff Ms Bullock's email to Mr Pismiris and the attached consultancy agreement, the defendant has waived privilege in the email and the attached consultancy agreement.  The question in this case is the scope of the imputed waiver.

3. A voluntary disclosure of privileged documents can result in a waiver of privilege over those documents and associated material:  AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 [164]. In AWB v Cole Young J said:

   The test applied to determine the scope of any waiver of associated material is whether the material that the party has chosen to release from privilege represents the whole of the material relevant to the same issue or subject matter [164].

4. In Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corp (No 2) [1981] Com LR 138, a lawyer gave evidence that he had conducted an interview on the basis of a list of questions prepared by the plaintiff's lawyers.  While privilege was waived with respect to the witness' answers, the plaintiff sought to maintain privilege with respect to the list of questions.  Mustill J held that privilege over the list of questions had been waived by implication but drew a distinction between the instructions to the lawyer who carried out the questioning and the questions themselves.  The instructions did not play a part in the meeting, did not form part of the body of events upon which the court had to reach conclusions of fact, and were merely part of the prior history of those events.

5. In R v Secretary of State for Transport; Ex parte Factortame (1997) 9 Admin LR 591, it was argued that the UK Government's contravention of the Treaty of Rome in enacting the Merchant Shipping Act 1988 was deliberate or reckless and the issue before the court was whether, by waiving privilege in respect of legal advice which it received before the enactment of the relevant section of the Act, it had also waived privilege in respect of subsequent legal advice.  Auld LJ said:

   Much depends on whether the party making partial disclosure seeks to represent by so doing that the disclosed documents go to part or the whole of an 'issue in question', the expression used by Mustill J in the passage from his judgment in Nea Karteria that I have cited.  The issue may be confined to what was said or done in a single transaction or it may be more complex than that and extend over a series of connected events or transactions.  In each case the question for the court is whether the matters in issue and the document or documents in respect of which partial disclosure has been made are respectively severable so that the partially disclosed material clearly does not bear on matters in issue in respect of which material is withheld.  The more confined the issue, for example as to the content of a single document or conversation, the more difficult it is likely to be to withhold, by severance, part of the document or other documents relevant to the document or conversation (599).

6. In Fulham Leisure Holdings Ltd v Nicholson Graham & Jones [2006] EWHC 158 (Ch), it was argued that by waiving privilege over certain legal advice, the claimant had waived privilege over other legal advice. Mann J emphasised that there was no rule to the effect that a party who waived privilege in relation to one communication is taken to waive privilege in relation to all and considered how the 'transaction' or 'issue' in respect of which privilege was being waived was to be identified in any case. The first step was to identify a transaction or act in respect of which disclosure was being made, such as the giving of advice on a particular occasion. The first step was to ensure that proper disclosure was given in relation to that act. It was then necessary to determine whether that transaction or act was part of a bigger picture, in which case consideration had to be given as to whether fairness required a wider disclosure. The purpose for which the disclosure was made was material to the conclusions which the court would reach.

Extent of waiver by disclosure of email

1. By disclosing Ms Bullock's email and the attached consultancy agreement, the defendant waived privilege in relation to the attached consultancy agreement and the handwritten comments Steinepreis Paganin received from Mr Pismiris referred to in the email.  The transaction or issue over which privilege is waived extends to the attached consultancy agreement and the handwritten instructions given by Mr Pismiris to Steinepreis Paganin in accordance with which the consultancy agreement was amended.  The waiver does not extend to instructions given by the defendant to Steinepreis Paganin on previous or subsequent occasions.  The email and attachment do not purport to represent the whole of the instructions given by the defendant in relation to the consultancy agreement or advice given by Steinepreis Paganin to the defendant in relation to the consultancy agreement.  Those other instructions or advice are not necessary to put the email, attached consultancy agreement or handwritten comments in context or to ensure that the disclosure of the email and attached consultancy agreement is not misleading.

Extent of waiver by asserting different agreement

1. The plaintiffs submit that a party may not maintain the confidentiality of a communication in circumstances where the person entitled to claim the privilege has expressly or impliedly made an assertion about the contents of the communication (such as an assertion about a party's state of mind that may have been influenced by legal advice) for the purpose of mounting a case or substantiating a defence.  A party's state of mind may be put in issue in this manner not only by a direct assertion concerning the state of mind, but also by an evidentiary assertion which is relevant to the issue between the parties.  The plaintiffs submit that the defendant denies the existence of the agreement upon which the plaintiffs sue and also plead (and assert) the existence of an agreement on different terms.  In each case, the pleaded agreements are of an informal nature.  The plaintiffs submit that it follows that when considering what agreement was made and on what terms, it will be necessary for the court to have regard to the party's words and conduct and the evidence as a whole.  The plaintiffs submit that the resolution of the matters in issue will involve a consideration of the conduct of the defendant that led to the preparation and delivery of the consultancy agreement in terms that reflect the agreement upon which the plaintiffs sue.  The defendant's denial of that agreement and its assertion of an agreement on different terms has put its conduct regarding the preparation of the consultancy agreement, the instructions it gave its solicitors and the reasons for that conduct and those instructions, that is, its state of mind, in issue.  The plaintiffs say that the defendant asserts a case that is inconsistent with the document produced by its solicitors and provided to the second plaintiff, that is, the consultancy agreement emailed by Ms Bullock to Mr Pismiris and forwarded by Mr Pismiris to the second plaintiff.  Hence, the plaintiffs submit that the defendant's version of the relevant events cannot be examined and tested properly without the production of the defendant's instructions to its solicitors, Steinepreis Paganin.

2. It is contended by the plaintiffs that the defence is such that the defendant has put in issue the instructions it gave to its solicitors, Steinepreis Paganin, and the advice it received.  However, the defendant has not expressly referred to or made any statement inconsistent with maintaining the privilege otherwise attaching to the instructions it gave to Steinepreis Paganin and the advice it received.  Nor has the defendant impliedly acted in a manner inconsistent with maintaining that privilege.

3. The decision of the Court of Appeal of England and Wales in Paragon Finance Plc v Freshfields [1999] 1 WLR 1183 is a decision relevant to the law in Australia and provides some assistance: see Artistic Builders Pty Ltd v Nash [2009] NSWSC 102 [61]; Schulman v Abbott Tout Lawyers [2010] FCA 308.

4. The plaintiff in Paragon Finance sued its former solicitors (Freshfields), and those solicitors sought access to the legal advice provided by the plaintiff's current solicitors (Slaughter & May).  It was 'common ground' that the documents recording the advice were 'relevant to issues in these proceedings' (1187).  The trial judge had ordered disclosure of the Slaughter & May advice.  The appeal was allowed.  In bringing the proceeding against Freshfields, the plaintiff had thereby exposed to scrutiny the advice given by that firm.  In delivering the judgment of the court, Lord Bingham observed:

   When a client sues a solicitor who has formerly acted for him, complaining that the solicitor has acted negligently, he invites the court to adjudicate on questions directly arising from the confidential relationship which formerly subsisted between them.  Since court proceedings are public, the client brings that formerly confidential relationship into the public domain.  He thereby waives any right to claim the protection of legal professional privilege in relation to any communication between them so far as necessary for the just determination of his claim; or, putting the same proposition in different terms, he releases the solicitor to that extent from the obligation of confidence by which he was formerly bound.  This is an implication of law, the rationale of which is plain.  A party cannot deliberately subject a relationship to public scrutiny and at the same time seek to preserve its confidentiality.  He cannot pick and choose, disclosing such incidents of the relationship as strengthen his claim for damages and concealing from forensic scrutiny such incidents as weaken it.  He cannot attack his former solicitor and deny the solicitor the use of materials relevant to his defence.  But, since the implied waiver applies to communications between client and solicitor, it will cover no communication to which the solicitor was not privy and so will disclose to the solicitor nothing of which he is not already aware (1188).

1. But by bringing that proceeding the plaintiff had not thereby exposed to scrutiny the advice provided by Slaughter & May.  Lord Bingham explained the different result as follows:

   Thus, on the present facts, by bringing these proceedings the plaintiffs impliedly waived any claim to legal professional privilege in relation to confidential communications between them and Freshfields concerning the transactions briefly described above, up to the moment when Freshfields ceased to act.  That is not in issue.  The question is whether the plaintiffs have also impliedly waived any claim to legal professional privilege in relation to confidential communications between them and Slaughter & May relating to the pursuit and settlement of claims arising from those transactions.  Approaching this question as one of pure principle, we conclude that they have not.  The plaintiffs have not sued Slaughter & May.  They have not invited the court to adjudicate on any question arising from their confidential relationship with Slaughter and May, and so have not brought that confidential relationship into the public domain.  They have done nothing to release Slaughter & May from the obligation of confidence by which they are bound.  They have chosen to subject their relationship with Freshfields to public scrutiny, but not their relationship with Slaughter & May.  They are not seeking to pick and choose among the confidential communications passing between themselves and Slaughter & May:  none of them is (so far) in the forensic arena.  It is open to Freshfields, by way of defence, to rely on any communication passing between themselves and the plaintiffs; to hold that the plaintiffs have impliedly waived privilege in relation to confidential communications between themselves and Slaughter & May would be, not to enable Freshfields to rely on communications of which they are already aware, but to disclose to them communications of which they now have no knowledge.  We consider that the plaintiffs are correct in submitting that the judge's conclusion is inconsistent with the principles which govern implied waiver of legal professional privilege (1188 - 1189).

2. By denying the agreement alleged by the plaintiffs and alleging a different agreement, the defendant has exposed to scrutiny the communications between the defendant and the plaintiffs; but by pleading its defence in the way it has, the defendant has not exposed to scrutiny the instructions it gave to, and the advice it received from, Steinepreis Paganin.

3. The court has a discretion to itself inspect the documents in question.  In some circumstances it may be either necessary or otherwise desirable to inspect documents to resolve a claim for privilege, especially where the judge resolving the claim is not the judge entrusted with the resolution of the substantive proceeding.  In this case I am the case manager and likely to be the trial judge.  In those circumstances it is undesirable for the judge to inspect the documents unless it is necessary for the proper resolution of the application.  I find that the present applications are capable of resolution without inspecting the documents.

Conclusion

1. The discovered documents and subpoenaed documents which are the subject of privilege do not fall within the scope of the waiver of privilege effected by the disclosure of the email and attached consultancy agreement.  By pleading its defence, the defendant has not brought into issue the instructions it gave to its former solicitors or the advice it received from them and has not waived privilege in those communications.  The plaintiffs' application to inspect the discovered and subpoenaed documents in question will be dismissed.