Amaca Pty Limited v CSR Limited (Re Fisher) (No. 1)

[2019] NSWDDT 9

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:

Amaca Pty Limited v CSR Limited (Re Fisher) (No. 1) [2019] NSWDDT 9

Hearing dates:

4 October 2019

Date of orders:

10 October 2019

Decision date:

10 October 2019

Before:

Russell SC DCJ

Decision:

(1)   Adjourn the hearing of this matter to a date to be fixed.
(2)   Order the plaintiff to pay the defendant’s costs thrown away by reason of the adjournment of the hearing set down for 4 October 2019.
(3)   Refuse leave to the defendant to inspect the documents produced pursuant to paragraph 1 of the Notice to Produce dated 25 September 2019; the documents produced are to be returned to the plaintiff.
(4)   Grant leave to the defendant to inspect the documents produced pursuant to paragraph 2 of the Notice to Produce dated 25 September 2019.
(5)   Note that further invoices will be produced by the plaintiff in response to paragraph 3 of the Notice to Produce and that there will be no opposition to inspection of those further documents by the defendant.
(6)   Order each party pay its own costs of the argument in relation to the Notice to Produce.

Catchwords:

EVIDENCE – Notice to produce – application for leave to inspect – resisted on grounds of client legal privilege and lack of legitimate forensic purpose

 

EVIDENCE – whether judge should inspect documents produced to determine privilege claim – whether party claiming privilege has acted inconsistently with the production of the documents

 

EVIDENCE – leave granted to inspect costs agreements where plaintiff claimed against a tortfeasor for contribution towards reasonable defence costs – plaintiff had acted inconsistently in seeking to tender tax invoices but claiming privilege over costs agreements which founded the tax invoices

  EVIDENCE – whether there was legitimate forensic purpose – issues to be discerned from pleadings – no such purpose in seeking inspection of confidential legal advices where defendant had not put reasonableness of settlement in dispute in Defence

Legislation Cited:

Dust Diseases Tribunal Act 1989 (NSW)
Dust Diseases Tribunal Regulation 2013 (NSW)
Dust Diseases Tribunal Rules 2019 (NSW)
Evidence Act 1995 (NSW)
Law Reform (Miscellaneous Provisions) Act 1946 (NSW)
Legal Profession Uniform Law (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Ahmed v Ahmed [2013] NSWSC 1814
Bitumen and Oil Refineries (Australia) Limited v Commissioner for Government Transport [1955] HCA 1; (1954-1955) 92 CLR 200
Kimberley Mineral Holdings Limited (in liq) v McEwan [1980] 1 NSWLR 210
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1
National Employers’ Mutual General Association Limited v Waind [1978] 1 NSWLR 372
Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 100
SingTel Optus Pty Limited v Weston [2011] NSWSC 1083 at [21]; (2011) 81 NSWLR 526
Spencer Motors Pty Limited v LNC Industries Limited [1982] 2 NSWLR 921
Tavcol Pty Limited v Valbeet Pty Limited [2016] NSWSC 1002

Texts Cited:

Report 102 of the Australian Law Reform Commission
Uniform Evidence Law, 14th Edition, Thomson Reuters

Category:

Procedural and other rulings

Parties:

Amaca Pty Limited (Plaintiff)
CSR Limited (Defendant)

Representation:

Counsel:
J Sheller SC (Plaintiff)
B Ilkovski (Defendant)

  Solicitors:
Mills Oakley (Plaintiff)
Colin Biggers & Paisley Pty Ltd (Defendant)

File Number(s):

DDT 122/2019

Judgment

Background

1. In proceedings DDT 111/2011 brought in this Tribunal in 2011 Mr Kenneth Brian Fisher sued BHP Billiton Limited (BHP), Bluescope Steel (AIS) Pty Limited (Bluescope) and three former employers. Mr Fisher alleged that he worked for those various employers between 1963 and 2006 as a refractory bricklayer’s labourer at BHP’s steelworks at Newcastle and Whyalla, and Bluescope’s steelworks at Port Kembla. Mr Fisher contracted mesothelioma as a result of that work.

2. In 2011 Bluescope brought a cross-claim against Amaca Pty Limited (Amaca) and four other cross-defendants. That cross-claim sought contribution from Amaca as a tortfeasor which, if sued, would have been liable to Mr Fisher.

3. In 2011 BHP brought a cross-claim against Amaca and others for contribution in similar terms.

4. In September 2011 a Contributions Assessment Determination apportioned liability among BHP, Bluescope, the three former employers, Amaca, and another asbestos supplier.

5. On 16 December 2011 Mr Fisher’s claim was settled by a Consent Judgment. Orders for payment were made against the parties to the Contributions Assessment Determination, which included Amaca. Amaca paid in accordance with that judgment.

6. Amaca challenged the apportionment found against it in the Contributions Assessment Determination. That led to litigation of the BHP and Bluescope cross-claims against Amaca. Those cross-claims were eventually settled by a Consent Judgment in favour of BHP and Bluescope against Amaca on 1 August 2017. Amaca achieved a reduction in the amount payable to the cross-claimants, and received a partial reimbursement from them.

7. In these proceedings Amaca filed a Statement of Claim on 2 April 2019 against CSR Limited (CSR) as the sole defendant, seeking contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

8. Between 1964 and 1974 Amaca and CSR were in partnership in the manufacture of asbestos insulation products. The partnership was known as the Hardie-BI Company (HBI). The claim brought by Amaca against CSR alleged that part of the exposure of Mr Fisher which led to the development of mesothelioma arose from exposure to partnership products.

9. In its Statement of Claim against CSR, Amaca sought not only contribution towards the payments which it had made to BHP and Bluescope, but it also sought contribution towards Amaca’s defence costs which had been incurred in defending the BHP and Bluescope cross-claims.

10. In these proceedings a Contributions Assessment Determination was delivered on 31 May 2019. On 22 July 2019 the parties appeared before me and orders were made under cl 56 of the Dust Diseases Tribunal Regulation 2013 (NSW) for the payment of $19,998.90 by CSR to Amaca, to reflect the percentages found by the Contributions Assessor.

11. On 22 July 2019 the following further orders were made:

1. Defendant to file its Defence by 5 August 2019.

2. Plaintiff to serve any evidence upon which it seeks to rely by 19 August 2019.

3. Defendant to serve any evidence upon which it seeks to rely by 2 September 2019.

4. Liberty to apply.

5. Matter listed for hearing before me on 4 October 2019.

Application for Adjournment by Amaca

12. In spite of the direction that Amaca was to serve its evidence by 19 August 2019 and in spite of the grant of liberty to apply, when the hearing commenced on 4 October 2019 Senior Counsel for Amaca indicated to the court that a considerable volume of material had been served after the due date, and indeed just before the hearing. Counsel for the defendant indicated that he opposed the tender of that late served material. In those circumstances, Senior Counsel for the plaintiff sought an adjournment of the hearing. After hearing submissions from both parties, I indicated my preliminary view that the matter should be adjourned, with a costs order to protect the defendant. Because the matter raises important issues concerning the need for parties to comply with directions made by the Tribunal for the service of evidence, and because there are wider issues between the two parties to these proceedings, I reserved my decision on the application for the adjournment. My decision and my reasons are set out below.

13. Amaca provided a proposed Tender Bundle of 660 pages. This bundle was served late on the afternoon before the hearing and only came to the notice of the legal representatives for the defendant on the morning of the hearing. Understandably, counsel for the defendant was not in a position to deal with the late served material in that bundle.

14. Pages 1-242 of the Bundle comprise selected pleadings from the original Fisher proceedings. Pages 243-277 are pleadings from the present proceedings. At pp 278-279 is a notice pursuant to s 25(3) of the Dust Diseases Tribunal Act 1989 (NSW), listing evidence from previous cases upon which the plaintiff proposes to rely in these proceedings.

15. The Bundle contains copies of such evidence between pp 280-429. None of this material was served upon the defendant until 30 September 2019 i.e. four days before the hearing was due to commence.

16. Pages 432-500 in the Bundle are a large number of HBI invoices to various customers. Some of them bear little or no relationship to the issues in this case, as they record supply of HBI products to entities other than BHP, Bluescope, or the three previous employers. That material was also served only days before the hearing.

17. Pages 501-660 in the Bundle are documents concerning legal work done for the plaintiff by its lawyers in defence of the BHP and Bluescope cross-claims. Senior Counsel for the plaintiff indicated that it was not a complete set of that material. Missing are documents from 2011 and the start of 2012. A search was still being made for these documents. It was indicated to the Tribunal that the material had been served back in July 2019, with the exception of some summary documents at pp 501, 502 and 583.

18. Thus the position of the plaintiff when the matter was called on for hearing was:

1. It had failed to comply with the direction to serve its evidence by 5 August 2019, such direction being made on 22 July 2019.

2. The material which it had available for tender was not yet complete.

3. The 220 pages of evidence concerning exposure of Mr Fisher to HBI products were only served a few days before the hearing.

Consideration of the adjournment application

19. Amaca offered no excuse or apology for its failure to comply with a direction made so that the matter would be ready to proceed on 4 October 2019.

20. In those circumstances, there was much force in the submission made by counsel for the defendant that the matter should simply proceed on the material which had been served in accordance with the direction. This would have left Amaca with no evidence at all on exposure, and its claim would have failed.

21. However, there are wider issues at play which have led me to the view that, subject to protecting the defendant on costs, the adjournment should be granted.

22. Contribution claims arising out of the HBI partnership are numerous. This is the first claim in which Amaca has sought not only contribution towards the damages it has had to pay, but also contribution towards its defence costs, where that matter is disputed by CSR and is to be litigated. The resolution of this issue will affect many more cross-claims which are pending between Amaca and CSR.

23. Another factor to be taken into account is that there is no particular urgency in this claim. It is not like a claim brought by a plaintiff who is terminally ill. If a similar situation had occurred in a claim brought by a person with mesothelioma, the Tribunal may well decide that the matter should proceed only on the evidence which has been properly served in accordance with the court’s directions. In the present case, there is prejudice to the defendant if I grant the plaintiff’s adjournment, but it is a prejudice which can be cured by a costs order.

24. The final factor to be taken into account arises from the similarity between this case and a matter listed for hearing before me on 21 October 2019 arising out of a claim brought by Mr Zanesko. That hearing is a cross-claim between Amaca and CSR, and it too includes a claim for a contribution towards defence costs. I was informed by Senior Counsel for the plaintiff that both Mr Fisher and Mr Zanesko worked in the blast furnace at the Port Kembla steelworks, and thus had exposure to HBI products. Indeed, in the present proceedings pp 280-287, 346-386 and 387-398 of the proposed Amaca Tender Bundle are statements from Mr Zanesko’s case.

25. If I refuse the adjournment and force Amaca to proceed without the evidence from previous cases, including the three Zanesko statements, but I then hear the Zanesko cross-claim on 21 October 2019 and reach a different result, the administration of justice could be brought into disrepute. There could be seemingly inconsistent verdicts. Of course, such an unfortunate result would only have arisen because of Amaca’s failure to comply with directions previously made, and its failure to exercise liberty to apply to approach the court to obtain an extension of time for service of its evidence.

26. Because of the additional factors recited above, which relate to matters wider than the limited issues in the present proceedings, I propose to grant the adjournment sought by Amaca. There will be an order that Amaca pay CSR’s costs thrown away by reason of the adjournment. The formal orders are set out at the conclusion of this judgment.

Notice to Produce served by CSR

27. The defendant served upon the plaintiff a Notice to Produce dated 25 September 2019. While the Notice to Produce did not have a return date, it was treated as returnable at the hearing on 4 October 2019. Amaca opposed production of the documents sought by the Notice, firstly on the grounds of client legal privilege, and secondly because it was submitted that there was no legitimate forensic purpose in seeking the documents.

28. Paragraph 1 of the Notice to Produce required production of all legal advices, including those of counsel, provided to Amaca in relation to the claim brought by Mr Fisher, and the BHP and Bluescope cross-claims.

29. Paragraph 2 of the Notice to Produce sought production of all fee agreements and costs agreement between Amaca and its lawyers in relation to those same proceedings.

30. Paragraph 3 of the Notice to Produce required production of all invoices for legal services provided to Amaca, and timesheets relevant to those invoices, in relation to the same proceedings. Counsel for the defendant abandoned the request for production of timesheets as set out in para 3 of the Notice to Produce. He pursued the balance of the Notice.

31. Senior Counsel for the plaintiff produced to the court documents in answer to paras 1 and 2 of the Notice. He opposed inspection of those documents by the defendant on the two grounds referred to above. There was no objection to production of invoices sought in para 3 of the Notice, and indeed a large volume of invoices (160 pages) were already in Amaca’s proposed Tender Bundle. Senior Counsel for the plaintiff indicated that a further search was being made for the invoices from 2011 and early 2012, and that they would be produced to the court and could be inspected by the defendant without objection. Indeed, Amaca wanted to find those invoices as they would form part of the evidence on its claim for a contribution to defence costs.

Notices to Produce – Principles Applicable

32. The Dust Diseases Tribunal Rules 2019 deal with subpoenas but not with Notices to Produce. Part 34 of the Uniform Civil Procedure Rules 2005 (NSW) applies to such notices. Rule 34.1 provides that a party may, by notice served on another party, require the other party to produce to the court any specified document or thing. Rule 34.2 provides as follows:

“(1) Unless the court orders otherwise, the other party must produce the document or thing in accordance with the Notice to Produce, without the need for any subpoena for production, if the document or thing is in his or her possession.

(2) [Repealed].

(3) Except by leave of the court, a party may not search for, or inspect, any document or thing that has been produced by another party under this rule but not admitted into evidence.”

33. Counsel for the defendant made a call upon the Notice to Produce, which had the effect of seeking the leave of the court for the defendant to inspect documents produced by the plaintiff under the Notice.

34. The principles applicable generally to Notices to Produce are as follows:

1. On an application to be relieved from any requirement to comply with the Notice to Produce the court generally applies the principles that govern an application to set aside a subpoena – Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 100 at [33].

2. The documents sought must be of apparent relevance to the issues in the proceedings – National Employers’ Mutual General Association Limited v Waind [1978] 1 NSWLR 372 at 385.

3. The documents must be reasonably likely to add in some way or other to the relevant evidence in the case – Spencer Motors Pty Limited v LNC Industries Limited [1982] 2 NSWLR 921 at 927.

4. It is sufficient if the documents could “possibly throw light on” the issues in the substantive proceedings, or it appears “on the cards” that they will do so – Ahmed v Ahmed [2013] NSWSC 1814 at [21].

5. The issues in the substantive proceedings are gleaned from the pleadings, the affidavits and the legal principles which govern the claim for relief in the substantive proceedings – SingTel Optus Pty Limited v Weston [2011] NSWSC 1083 at [21]; (2011) 81 NSWLR 526.

6. Documents produced to the court in answer to a Notice to Produce are in the control of the court, as they would be if produced on subpoena; access by a party will ordinarily be allowed by the court if there is a legitimate forensic purpose for it, even if the documents are not admissible as evidence in the proceedings – Waind at 382-386.

7. A party who inspects documents obtained on a Notice to Produce has an obligation not to use them for any improper purpose. Knowledge acquired from inspection of them can be used only for purposes connected with the proceedings – Kimberley Mineral Holdings Limited (in liq) v McEwan [1980] 1 NSWLR 210.

Should the Tribunal read the documents produced?

35. Senior Counsel for the plaintiff, having produced documents in response to paras 1 and 2 of the Notice to Produce, submitted that the court should read the documents in order to consider the argument for client legal privilege. Counsel for the defendant opposed the court reading the documents.

36. This issue was considered by Justice Brereton in Hancock v Rinehart (Privilege) [2016] NSWSC 12. The following principles appear from paras [29] to [35]:

1. In the absence of a rule of court enabling the court to inspect privileged documents (such as UCPR r 1.9(5)(c)) the court has no more entitlement than anyone else to inspect a privileged document.

2. References to the ability of the court to inspect the documents usually appear in the context of scrutinizing a claim at the request of the party seeking production.

3. The preferable explanation of the court's power to inspect the documents is that it exists not to facilitate proof by a claimant of the facts required to sustain the claim, but to provide a means of enabling a claim to be scrutinized and tested.

4. A party is not entitled to insist on the court inspecting the documents, it being a matter for the discretion of the judge, who will only do so if there is good reason.

5. That principle applies where the claimant, having adduced insufficient evidence otherwise to sustain the claim, requests the court to inspect the documents, to the exclusion of the applicant.

6. As determination of privilege involves ascertaining the purpose of a person, the best direct evidence will be that given by the person whose purpose is in question.

7. While purpose may be inferred from the document, direct evidence of purpose can be given by the person whose purpose it is.

8. To allow the privileged documents to be used as evidence - let alone the sole evidence - in support of a claim for privilege, would be contrary to well-established practice.

9. It would also be grossly unfair to the other party if the only evidence of purpose is to be inferred from the document itself, and the party seeking access is deprived of any opportunity to test the asserted purpose; this would defeat rather than promote the intent of enabling claims to be tested and scrutinized.

1. A claim for privilege must be made on sworn direct evidence proving the facts on which the claim is founded, not inadmissible hearsay or opinion.

37. In Tavcol Pty Limited v Valbeet Pty Limited [2016] NSWSC 1002 Justice McDougall agreed with that approach, save that he did not agree with proposition (10) referred to above. His Honour said at [37] that an application to resist production on the basis of legal professional privilege is interlocutory in character and accordingly s 75 of the Evidence Act 1995 (NSW) renders hearsay evidence admissible if there is evidence of the source. With respect to Justice Brereton and his proposition (10) above, I prefer the view of Justice McDougall as to hearsay evidence.

38. In accordance with those decisions, I decline to read the documents produced.

39. In this case no evidence was presented by the plaintiff in support of the claim for legal professional privilege.

40. In spite of the absence of evidence, I find that the documents produced in response to paras 1 and 2 of the Notice to Produce are privileged documents. By their very description in the Notice to Produce, they must be so privileged. Advices, including advices by counsel, provided to a client in relation to litigation are privileged. So are fee agreements and costs agreements created and provided on a confidential basis between lawyer and client. That is not to say that even though they are privileged, they are immune from production and inspection.

Common Law or the Evidence Act?

41. I raised with both counsel the issue of whether resistance to production of privileged documents should be dealt with at common law or pursuant to the provisions of the Evidence Act. Senior Counsel for the plaintiff did not make a submission as to which regime applied. Counsel for the defendant initially referred me to several well-known authorities on the common law principles, but on reflection submitted that the provisions of the Evidence Act applied. I have come to the view that the Evidence Act does apply.

42. Section 131A of the Evidence Act provides as follows:

“Application of Part to Preliminary Proceedings of Courts

(1)   If:

(a) a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A, 1C or 3, and

(b)   the person objects to giving that information or providing that document,

the court must determine the objection by applying the provisions of this Part (other than ss 123 and 128) 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.

(2)   In this section, disclosure requirement means a process or order of the court that requires the disclosure of information or a document and includes the following:

(a)   a summons or subpoena to produce documents or give evidence,

(b)   pre-trial discovery,

(c)   non-party discovery,

(d)   interrogatories,

(e)   a notice to produce,

(f) a requires to produce a document under Division 1 of Part 4.6.”

43. The plaintiff by means of the Notice to Produce served by the defendant is therefore required by a “disclosure requirement” to produce a document which would result in the disclosure of information protected by “client legal privilege” pursuant to Div 1 in Pt 3.10 of the Evidence Act. The plaintiff has objected to providing the privileged documents which means that, pursuant to s 131A(1), the court must determine the objection by applying the provisions of Pt 3.10.

44. Section 118 of the Evidence Act protects legal advice provided by a lawyer to a client. Section 119 of the Evidence Act protects confidential communications between a lawyer and a client for the dominant purpose of legal services in connection with litigation. It is plain that the documents required by paras 1 and 2 of the Notice to Produce fall within these provisions in the Evidence Act and are thus the subject of client legal privilege under the Evidence Act.

45. Section 122 of the Evidence Act provides as follows:

“122 Loss of client legal privilege: consent and related matters

(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.

(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.

(3) Without limiting subsection (2), a client or party is taken to have so acted if:

(a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or

(b) the substance of the evidence has been disclosed with the express or implied consent of the client or party.

(4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.

(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because:

(a) the substance of the evidence has been disclosed:

(i) in the course of making a confidential communication or preparing a confidential document, or

(ii) as a result of duress or deception, or

(iii) under compulsion of law, or

(iv) if the client or party is a body established by, or a person holding an office under, an Australian law—to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or

(b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or

(c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

(6) This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness’s memory about a fact or opinion or has used as mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers).”

46. The documents which are the subject of the Notice to Produce clearly relate to that part of the plaintiff’s claim seeking a contribution towards its defence costs of the BHP and Bluescope cross-claims.

47. Paragraph 26 of the plaintiff’s Statement of Claim pleads as follows:

“In the course of defending BHP’s and Bluescope’s Cross-Claims, Amaca incurred certain legal and associated costs (Defence Costs), which costs were reasonably and properly incurred in verifying and quantifying that claim.

Particulars

Amaca incurred $77,922.27 exclusive of GST in defending BHP’s and Bluescope’s Cross-Claims.”

48. The response to that pleading appears in para 16 of the defendant’s Defence filed on 30 July 2019 (in accordance with the timetable set down on 22 July 2019). Paragraph 16 reads:

“As to paragraph 26 of the Claim, CSR:

(a)   admits that Amaca defended the Cross-Claims brought by BHP and Bluescope; and

(b)   denies the balance of the paragraph.”

Thus there is a denial that the costs incurred by the plaintiff in defending the cross-claims “were reasonably and properly incurred in verifying and quantifying that claim”.

49. In support of its claim for a contribution to defence costs, Amaca puts forward 160 pages of tax invoices, fee analyses, standard charge and disbursements analyses and remittance advices. There are more documents to come of that nature.

50. The pleading of Amaca set out above recognises that it will not be enough to simply prove that Amaca spent a certain dollar amount on legal costs. As para 26 of the Statement of Claim pleads, such costs must have been “reasonably and properly incurred in verifying and quantifying that claim”. The documents presently served by Amaca establish how much was charged and how much was paid for legal expenses, but without further submissions, it is hard to know why such documents would prove that the legal costs were reasonably and properly incurred. Because these are the only documents which have been served on that topic, one can only assume that Amaca will be asking the Tribunal to infer from entries in the documents that the fees were incurred reasonably and properly.

51. Can it be said, to adopt the words of s 122(2) of the Evidence Act, that Amaca has “acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure” of material which is otherwise the subject of client legal privilege?

52. Section 122 was introduced following on from Report 102 of the Australian Law Reform Commission in order to adopt the common law principles relating to waiver established by the High Court in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 – Uniform Evidence Law, 14th Edition, Thomson Reuters, para EA.122.120. In Mann v Carnell the High Court said at [29]:

“What brings about the waiver is the inconsistency, which the courts, where necessary informed by the consideration of fairness, perceive, between the conduct of the client and the maintenance of confidentiality; not some overriding principle of fairness operating at large.”

53. In the present proceedings the plaintiff will seek to deploy the voluminous documents concerning legal costs in order to show not only that such costs were charged and paid, but to show that such costs were reasonably and properly incurred in verifying and quantifying the BHP and Billiton cross-claims.

Consideration of paragraph 1 of the Notice to Produce

54. The defendant has not put into issue the reasonableness of the settlement reached by Amaca with BHP and Bluescope. Since the claim is one for contribution, CSR would have been entitled to assert that the settlement was not reasonable, in which case Amaca would be obliged to call evidence to show that it was reasonable.

55. Paragraphs 17 and 19 of the Statement of Claim refer to the Consent Judgments against Amaca which resolved the BHP and Bluescope cross-claims. Paragraph 10 of the Defence admits those paragraphs. If there was to be an allegation raised by CSR that the settlements reached were unreasonable, then that would have been a matter for specific pleading, pursuant to r 14.14.2 of the Uniform Civil Procedure Rules.

56. In Bitumen and Oil Refineries (Australia) Limited v Commissioner for Government Transport [1955] HCA 1; (1954-1955) 92 CLR 200 at 212-213 the High Court said:

“A decision that the liability imposed by the previous judgment is a liability which para (c) of sub-section (1) contemplated does not necessarily mean that the tribunal which discharges the responsibility of fixing the amount of contribution under sub-section (2) of s 5 cannot consider whether owing to the fault of the now plaintiff it stands at an excessive figure. No doubt the court under sub-section (2) must accept the assessment as conclusive as to the existence and the amount of the liability of the plaintiff claiming the contribution. The court, however, is required to find that it is just and equitable as an amount of contribution having regard to the extent of the responsibility for the damage of the tortfeasor against whom the claim is made. There does not seem to be any valid reason why that tortfeasor may not say to the tortfeasor making the claim, if he has improvidently agreed to pay too large an amount or by unreasonable or negligent conduct in litigation has incurred or submitted to an excessive verdict, that the excess is due to his fault and not to that of the tortfeasor resisting the claim. It would be a matter for the court to consider under the heading of ‘just and equitable’.”

57. The Defence makes no allegation that Amaca improvidently agreed to pay too large an amount to settle either cross-claim, or was guilty of unreasonable or negligent conduct in litigation, or submitted to an excessive verdict. The very fact that both BHP and Bluescope were willing to accept a reduction in the amounts found due by the Contributions Assessor would provide some support for the opposite conclusion.

58. If the reasonableness of the judgments against Amaca were put in issue on the pleading, then Amaca may have been forced to assert that it was prudently relying upon competent legal advice in coming to the settlements. However, that is not an issue in the case. In those circumstances there is no reason to allow CSR leave to inspect the legal advices provided by Amaca’s lawyers. In no way can it be said that Amaca is acting inconsistently in continuing to assert a claim for client legal privilege in relation to those advices.

59. As part of my final orders, I will decline to grant leave to inspect the documents produced in response to para 1 of the Notice to Produce.

Consideration of Paragraph 2 of the Notice to Produce

60. The various tax invoices all set out what work has been done, by which lawyers, and for how long. The hourly rate charged can only come from the original fee agreements or costs agreements. They have been produced to the court but a claim for the client legal privilege is made over them. They are the foundation documents for the rates charged per hour by Amaca’s lawyers. It is inconsistent of Amaca to maintain a claim for privilege over those documents, while putting forward documents in support of its claim for a contribution to defence costs, which are clearly based upon the fee agreements and costs agreements reached between solicitor and client.

61. Under the Legal Profession Uniform Law (NSW) (Uniform Law) law practices must not charge more than fair and reasonable amounts for legal costs – s 169.

62. Section 172 of the Uniform Law provides as follows:

“172 Legal costs must be fair and reasonable

(1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are—

(a) proportionately and reasonably incurred; and

(b) proportionate and reasonable in amount.

(2) In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect—

(a) the level of skill, experience, specialisation and seniority of the lawyers concerned; and

(b) the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and

(c) the labour and responsibility involved; and

(d) the circumstances in acting on the matter, including (for example) any or all of the following—

(i) the urgency of the matter;

(ii) the time spent on the matter;

(iii) the time when business was transacted in the matter;

(iv) the place where business was transacted in the matter;

(v) the number and importance of any documents involved; and

(e) the quality of the work done; and

(f) the retainer and the instructions (express or implied) given in the matter.

(3) In considering whether legal costs are fair and reasonable, regard must also be had to whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions.

(4) A costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if—

(a) the provisions of Division 3 relating to costs disclosure have been complied with; and

(b) the costs agreement does not contravene, and was not entered into in contravention of, any provision of Division 4.”

63. These provisions in the Uniform Law, and in particular s 172(4), show that there is a necessary interrelationship between a costs agreement and whether costs charged in accordance with that agreement are fair and reasonable. This is an additional reason why, in asserting that the legal fees charged on the invoices were reasonably and properly incurred, Amaca has acted in a way inconsistent with the maintenance of a claim of client legal privilege over the costs agreements which led to the generation of the tax invoices.

64. My finding in relation to para 2 of the Notice to Produce is that leave should be granted to the defendant to inspect those documents, subject to the usual restrictions.

65. There is no need to consider any claim for privilege in relation to para 3 of the Notice to Produce. The claim in relation to production of time sheets was abandoned by counsel for the defendant. Amaca will voluntarily produce all further invoices when it locates them.

Legitimate Forensic Purpose

66. Objection was also taken to producing the documents covered by paras 1 and 2 of the Notice to Produce, on the grounds that there was no legitimate forensic purpose in such documents being produced and inspected. My reasoning above in relation to s 122 is also my reasoning on this issue. The documents covered by para 2 of the Notice to Produce are clearly relevant to the claim for a contribution to defence costs and I find that there is a legitimate forensic purpose in seeking leave to inspect the documents produced in response to para 2 of the Notice to Produce.

67. Given the issues on the pleadings there is no legitimate forensic purpose in seeking the advices referred to in para 1 of the Notice to Produce, and I decline to grant leave to inspect them.

Conclusion and Orders

68. My orders are as follows:

1. Adjourn the hearing of this matter to a date to be fixed.

2. Order the plaintiff to pay the defendant’s costs thrown away by reason of the adjournment of the hearing set down for 4 October 2019.

3. Refuse leave to the defendant to inspect the documents produced pursuant to paragraph 1 of the Notice to Produce dated 25 September 2019; the documents produced are to be returned to the plaintiff.

4. Grant leave to the defendant to inspect the documents produced pursuant to paragraph 2 of the Notice to Produce dated 25 September 2019.

5. Note that further invoices will be produced by the plaintiff in response to paragraph 3 of the Notice to Produce and that there will be no opposition to inspection of those further documents by the defendant.

6. Order each party pay its own costs of the argument in relation to the Notice to Produce.

**********

Decision last updated: 10 October 2019