Alan Hickinbotham P/L v The Australian Kidney Foundation
[2017] SASC 108
•18 July 2017
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ALAN HICKINBOTHAM P/L v THE AUSTRALIAN KIDNEY FOUNDATION
[2017] SASC 108
Judgment of Judge Roder a Master of the Supreme Court
18 July 2017
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION - CLIENT LEGAL PRIVILEGE - WAIVER OF PRIVILEGE
This is an application by the defendant for the plaintiff to disclose documents that the plaintiff claims legal privilege - the defendant submitted that the pleadings put the plaintiff’s state of mind into issue - the plaintiff maintained that the documents were subject to privilege.
Held: there was nothing in the pleadings that is inconsistent with the plaintiff maintaining privilege.
Cantor v Audi Australia Pty Ltd [2016] FCA 1391; DSE (Holdings) Pty Ltd v Intertan Inc & Anor (2003) 127 FCR 499; Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117, applied.
BrisConnections Finance Pty Limited (Receivers and Managers appointed) v Arup Pty Limited [2016] FCA 438; Elders Forestry Ltd v Bosi Security Services Ltd & Ors (No 2) [2010] SASC 226; Equuscorp Pty Ltd v Kamisha Corp Ltd [1999] ATPR 41-697 at 42,894; John Tanner Holdings v Mortgage Management (2001) 182 ALR 201; Liquorland (Australia) Pty Ltd & Anor v Anghie & Ors [2003] VSC 73; Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117; Mann v Carnell (1999) 201 CLR 1; Mobis Parts Australia Pty Ltd v XL Insurance Company SE [2016] NSWSC 1599; Telstra Corporation Ltd & Anor v BT Australasia Pty Ltd & Anor (1998) 85 FCR 152, discussed.
ALAN HICKINBOTHAM P/L v THE AUSTRALIAN KIDNEY FOUNDATION
[2017] SASC 108JUDGE RODER:
I have now heard three arguments in this matter. This is a ruling on another claim[1] in respect of privilege. Neither party pressed me to inspect the documents in question – but both accepted that I could. In this case I agreed that the matter should be dealt with as a matter of principle. I did not inspect the documents.
[1] Blue J reversed part of an earlier ruling in respect of different documents on 18 May 2017.
In this action the plaintiff claims that:
1The parties entered into a binding lease in respect of certain commercial premises.
2That lease is enforceable in equity.
3There was an enforceable agreement to enter into a lease.
4The defendant is estopped from denying the lease or, in the alternative, the agreement to lease.
5Misleading and deceptive conduct.[2]
Those claims are advanced in the alternative.
[2] It appears that there may be a typographical error in paragraph 25 of the Statement of Claim.
By FDN27 the plaintiff filed a Third List of Documents. The documents disclosed are set out in Annexure 1 to that list. The plaintiff has claimed privilege in respect of all of those documents. By FDN32 the defendant challenges the claims to privilege.
The defendant says that the pleadings put the state of mind of the plaintiff into issue and that:
·the legal advice sought by and given to the plaintiff is relevant to that issue, and
·maintenance of the privilege is, when one is informed by notions of fairness, inconsistent with the plaintiff having put its state of mind into issue.
Mr Bullock for the defendant put the matter more eloquently than I have.
I accept Mr Belperio’s submission that the only respect in which a state of mind is relevant to the pleadings is that raised by paragraph 23 of the Statement of Claim:
23. By reason of the matters pleaded at paragraphs 5 to 15 above:
23.1. the Defendant represented to the Plaintiff that it had entered into the New Lease or, in the alternative, an Agreement to Enter into Lease;
23.2. an estoppel by convention arose through the parties acting on the basis that the New Lease or, alternatively, the Agreement to Enter into Lease, had been entered into; and
23.3. the Plaintiff relied on these representations and convention to its detriment.
It is said by the defendant that the plaintiff’s state of mind is highly relevant. That may be correct. Relevance is not, however, the test.[3] The fact of relevance does not determine any question of waiver.
[3] DSE (Holdings) Pty Ltd v Intertan Inc & Anor (2003) 127 FCR 499 at [97]; Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117 at [37].
Mr Belperio’s submission that the defendant’s argument would require that any legal advice in any case based on a state of mind must be disclosed is, I think, going too far. However, in this case I have no doubt that he is correct.
The plaintiff was, of course, entitled to have legal advice during the course of the – to use a neutral word – discussions it had with the defendant. Such advice may well have had an effect on the state of mind of the plaintiff. That is the purpose of advice. That advice is protected by legal professional privilege unless the privilege is waived.
In Telstra Corporation Ltd & Anor v BT Australasia Pty Ltd & Anor[4] BT Australasia (“BTA”) sued for misleading and deceptive conduct. BTA claimed to have been misled by information in a request for a tender. BTA won the tender and entered into contractual arrangements. It suffered losses which it claimed were caused by the representations on which it had relied. Production of the legal advice provided to BTA on the question of whether it could rely on the representations was applied for. A majority of the Full Federal Court (Branson and Lehane JJ) said:[5]
Where, as in this case, a party pleads that he or she undertook certain action "in reliance on" a particular representation made by another, he or she opens up as an element of his or her cause of action, the issue of his or her state of mind at the time that he or she undertook such action. The court will be required to determine what was the factor, or what were factors, which influenced the mind of the party so as to induce him or her to act in that way. That is, the party puts in issue in the proceeding a matter which can not fairly be assessed without examination of relevant legal advice, if any, received by that party. In such circumstances, the party, by putting in contest the issue of his or her reliance, is to be taken as having consented to the use of relevant privileged material, or to put it another way, to have waived reliance on the privilege which such material would otherwise attract.
[4] (1998) 85 FCR 152.
[5] Telstra Corporation Ltd & Anor v BT Australasia Pty Ltd & Anor (1998) 85 FCR 152 at 166-167.
The relevant state of mind of the plaintiff in this case must be similar – it is based upon an allegation of “reliance”.
In DSE (Holdings) Allsop J (as his Honour then was) observed that the enunciation of principle in Telstra might be seen, at the very least, as having been overtaken by the decision of the High Court in Mann v Carnell.[6] In Mann the plurality[7] had explained that:[8]
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.
[6] (2003) 127 FCR 499 at [95].
[7] Gleeson CJ, Gaudron, Gummow and Callinan JJ.
[8] (1999) 201 CLR 1 at [29].
Justice Allsop would have rejected the majority view in Telstra if he had not considered himself bound.[9] Other judges had already rejected that view – Heerey J in Equuscorp Pty Ltd v Kamisha Corp Ltd,[10] Conti J in John Tanner Holdings v Mortgage Management[11] and Byrne J in Liquorland (Australia) Pty Ltd & Anor v Anghie & Ors.[12]
[9] (2003) 127 FCR 499 at [98]-[99].
[10] [1999] ATPR 41-697 at 42,894.
[11] (2001) 182 ALR 201 at 206.
[12] [2003] VSC 73 at [41].
It does now appear that the law has moved on. In Elders Forestry Ltd v Bosi Security Services Ltd & Ors (No 2)[13] Kourakis J (as his Honour then was) considered a case of a plea of an assumption in the context of a claim that legal advice had been, by that plea, waived. His Honour said:[14]
I am not satisfied that the pleadings in this case implicate the legal advice received by BOSI to the extent which is necessary to constitute a waiver. The advice may well be relevant to the question of whether BOSI did in fact make the assumption pleaded in [26] of its defence. However, the plea does not expressly or impliedly assert that its assumption was based on that advice. Nor in all of the circumstances does the pleading of the assumption impugn, or raise as an issue, the content or nature of that advice.
[13] [2010] SASC 226 at [23].
[14] Elders Forestry Ltd v Bosi Security Services Ltd & Ors (No 2) [2010] SASC 226 at [23].
In Mobis Parts Australia Pty Ltd v XL Insurance Company SE[15] Beech-Jones J considered a similar question. His Honour said:[16]
The question of waiver is not resolved by simply asking whether the holder of the privilege puts their state of mind in issue. Instead it requires consideration as to whether they have put the contents of the otherwise privileged information in issue … it is only the conduct of the holder that is relevant and a waiver cannot be forced upon them by a mere assertion of their state of mind.
[15] [2016] NSWSC 1599.
[16] Mobis Parts Australia Pty Ltd v XL Insurance Company SE [2016] NSWSC 1599 at [41]-[42].
The question was squarely raised in the Federal Court in BrisConnections Finance Pty Limited (Receivers and Managers appointed) v Arup Pty Limited.[17]That was a claim of misleading and deceptive conduct. There was an express plea of reliance on the alleged misleading or deceptive conduct. Flick J reviewed the pleadings and said[18] that the relevant pleading did no more than plead reliance and the fact that such reliance occasioned loss.[19] His Honour continued:[20]
Those paragraphs do not contain any express reference to any legal advice that may have been received; nor do those paragraphs contain any implicit assertion as to whether or not legal advice had been received. Nor do those paragraphs contain any express or implied assertion about the content of any legal advice that Arup may have received. Any legal advice that Arup may have received as to whether the Engagement Agreement was or was not binding on the Applicants may well be relevant to resolving its pleading of reliance. But mere relevance is not of itself sufficient to found a waiver. … On the facts of the present case, Arup, by pleading reliance, has not engaged in any conduct inconsistent with maintaining the legal professional privilege of any advice it may have received which is relevant to the question of reliance.
[17] [2016] FCA 438.
[18] BrisConnections Finance Pty Limited (Receivers and Managers appointed) v Arup Pty Limited [2016] FCA 438 at [34].
[19] The same is true in this case.
[20] BrisConnections Finance Pty Limited (Receivers and Managers appointed) v Arup Pty Limited [2016] FCA 438 at [34].
That case went on appeal. On appeal it is Macquarie Bank Ltd v Arup Pty Ltd.[21]The Full Federal Court unanimously upheld Flick J.
[21] [2016] FCAFC 117.
The Full Court accepted that the claim in misleading or deceptive conduct put Arup’s state of mind into issue. The Full Court continued:[22]
However, it cannot be said that the question of reliance must have been informed by or addressed in the legal advice that Arup received. Arup’s descriptions of the basis for its claims for legal professional privilege do not indicate such … There is no other evidence to indicate the extent of the legal advice; and certainly no evidence that the legal advice was likely to necessarily related to any question of reliance as pleaded in the Cross-Claim. It cannot be said that Arup necessarily ‘la[id] … open to scrutiny’ the advice that it received in relation to that matter, in the manner contemplated by Allsop J in DSE.
[22] Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117 at [35].
The same appears to be true in this case. The plea of reliance in paragraph 23 of the Statement of Claim does involve putting the state of mind of the plaintiff into issue. However, there is nothing in the plea that asserts that that reliance was – or might have been – informed by or addressed in legal advice. There is nothing in the plea, or in any evidence before me, to suggest that any advice has been laid open to scrutiny by the pleading.[23]
[23] The onus of establishing that is on the defendant – Cantor v Audi Australia Pty Ltd [2016] FCA 1391 at [81].
The dispute presently before me seems to involve the pleading by the plaintiff of reliance and its disclosure in the Third List of Documents of documents for which privilege is claimed. There appears to be no more. That cannot constitute waiver. As the Full Court said in Macquarie:[24]
If it were, then as the primary judge observed, this would ‘come perilously close to, if not amount to, a proposition that a mere pleading of reliance would itself be sufficient to constitute a waiver of privilege’.
[24] Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117 at [41].
In my opinion there is nothing in the pleading that is inconsistent with the plaintiff maintaining the privilege in respect of the documents referred to in FDN27. That is not to say that the privilege may not be waived at a later stage of the proceedings. However, that has not yet occurred.
I will dismiss FDN32.
Costs should follow the event. Should the defendant seek a different order, an interlocutory application should be made, supported by affidavit, within seven days.
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