Ashfield Municipal Council v RTA

[2004] NSWSC 917

CITATION:	Ashfield Municipal Council v RTA [2004] NSWSC 917
HEARING DATE(S):	01/10/04
JUDGMENT DATE:	6 October 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Order for discovery
CATCHWORDS:	PROCEDURE - discovery - legal professional privilege - conclusion stated in counsel's opinion quoted in client's letter to opposing party - whether privilege waived - whether production of opinion will serve legitimate forensic purpose
LEGISLATION CITED:	Roads Act 1993, s.138
CASES CITED:	Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 Attorney-General of the Northern Territory v Maurice (1986) 161 CLR 475 Australian Unity Health Ltd v Private Health Insurance Administration [1999] FCA 1770 Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd [2002] FCA 501 Garratt's Ltd v Thanga Thangathurai [2002] NSWSC 39 Mann v Carnell (1999) 201 CLR 1 Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925 Singapore Airlines Ltd v Sydney Airports Corporation Ltd [2004] NSWSC 380 Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152
PARTIES :	Ashfield Municipal Council - Plaintiff Roads and Traffic Authority of NSW - First Defendant Connell Wagner - Second efendant
FILE NUMBER(S):	SC 5287/04
COUNSEL:	Mr J Lazarus - Plaintiff Mr J B Simpkins SC/Mr R P L Lancaster - Defendant
SOLICITORS:	Pike Pike & Fenwick - Plaintiff Deacons - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

WEDNESDAY, 6 OCTOBER 2004

5287/04 – ASHFIELD MUNICIPAL COUNCIL v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES & ANOR

JUDGMENT

1 These proceedings were commenced by summons filed on 28 September 2004 and have been fixed for hearing by Palmer J on 13 and 14 October 2004. By its summons, the plaintiff, a local government authority (which I shall call “the Council”), seeks a declaration that certain activities that the defendants (the Roads and Traffic Authority, or “RTA”, and Connell Wagner, a firm of consulting engineers retained by the RTA) propose to conduct upon land in the Municipality of Ashfield will contravene s.138 of the Roads Act 1993 unless the consent of the Council is first obtained. There is also a claim to related injunctive relief. By a cross claim filed on 1 October 2004, the RTA claims an order that the Council determine any application made by the RTA under s.138 of the Roads Act with respect to the proposed activities of the RTA and a declaration as to matters relevant to determination of such an application.

2 The activities in question involve geotechnical investigation with a view to assessing the suitability of certain sites within the Municipality of Ashfield for subterranean development by way of extension of the M4 East tunnel for motor traffic.

3 The court noted on 28 September 2004 the agreement of the parties on a procedure for informal production of documents without any order for discovery. An aspect of that process caused the RTA to approach the court on 1 October 2004. On that occasion, the RTA was given leave to file a notice of motion which I then proceeded to hear. By that notice of motion, the RTA sought either of two orders calculated to compel the production of a particular document by the Council. The document is the “legal advice” referred to in two letters from the Council to the RTA both apparently sent on or about 22 September 2004 (although carrying dates earlier than that) and the “detailed opinion of Mr T F Robertson SC” referred to in a letter of 23 September 2004 from the Council to the RTA. Correspondence between the solicitors that has been put into evidence makes it clear that all these references are to a single document, being a written opinion of Mr Robertson SC. The claims in the notice of motion are based on Part 23 rule 4 or alternatively Part 36 rule 12(1)(c) of the Supreme Court Rules.

4 The fact that the RTA relies on these provisions in advancing the claims in its notice of motion has a bearing on the approach that should be taken to one of the Council’s grounds for resisting those claims, that ground being that legal professional privilege or client legal privilege subsists in the documents sought and should operate to deny those claims. The matter was argued before me on the footing that it is the privilege at general law that is relevant, rather than the statutory version of it created by Division 1 of Part 3.10 of the Evidence Act 1995. But that may not be so where, as here, the compulsion to produce is sought to be obtained through Part 23 rule 4 or Part 36 rule 12(1)(c), each of which imports, by specific reference, the statutory version: see the paragraph (a) of definition of “privileged document” in Part 23 rule 1 and the provisions of part 36 rule 13. As will be seen, however, I am of the opinion that, in the end, nothing turns on this distinction in this case.

5 It is accepted by the parties to the notice of motion that privilege of either variety subsists in the document in respect of which the RTA’s claims are advanced, unless that privilege has been waived. It is to the question of waiver that the parties’ main dispute relates. If that question is resolved in favour of the RTA (so that the privilege is no longer attracted), the second argument of the Council becomes relevant. That argument involves the question whether production of the document concerned will serve any forensic purpose making them relevant to the proceedings.

6 It is necessary to sketch some facts none of which, as I understand it, is controversial. On 1 June 2004, the RTA’s consulting engineers (the second defendant) wrote to the Council seeking permission to sink boreholes at certain places in the Municipality of Ashfield. Each such place was described as being in a park or other open area or on a road. By letter dated 9 June 2004, an officer of the Council informed the RTA’s engineers that, at a meeting on 8 June 2004, the Council had supported a notice of motion that permission not be given for any drilling to take place and resolved not to grant permission for the drilling of any boreholes for investigation into the construction of a tunnel. This followed a paragraph stating:

“As you may be aware, Ashfield Council has previously resolved not to support the construction of any of the tunnel options proposed by the RTA.”

7 Correspondence between the Council and the RTA ensued over several weeks. In a letter apparently sent to the RTA on 22 September 2003 (although carrying, in error, an earlier date), the Council said:

“Based on legal advice, it is Council’s view that Connell Wagner cannot enter and carry out work at the locations referred to in your letter of 7 September 2004, because it needs the consent of Council as roads authority under s.138 of the Roads Act 1993.”

A corresponding statement was made in a letter from the Council to the RTA’s engineers apparently sent on the same day as the letter to the RTA itself.

8 On 22 September 2004, the RTA replied to the Council disputing the proposition of law, based on the Roads Act, stated in the Council’s letter and referring to other sections of that Act which, it was said, the Council had failed to address. A response from the Council dated 23 September 2004 read in part as follows:

“I can assure you that my Council has treated this matter very seriously and has considered in detail the matters raised in your letter of the 14th September. For your information Council has obtained a detailed opinion from Mr T F Robertson SC. His opinion concludes as follows:
‘If the land in question is a public road for which Council is the appropriate roads authority, the RTA’s contractor cannot dig up or disturb the road without Council’s consent under s.138 of the Roads Act . If the RTA proposes to do that work, then it too must obtain a consent from Council, but only where it proposes to do work on classified roads.’
In making reference to the above quote Council is not waving [sic] the legal professional privilege attached to Robertson’s advice.
I will however ask Mr Robertson to further consider your last letter.”

9 It is also relevant to record that, on 27 September 2004, the Council rescinded its resolution of 8 June 2004 but did not then or thereafter take any further action to consider the application submitted by the RTA’s engineers on 1 June 2004.

10 I deal first with the question whether the written opinion of Mr Robertson SC continues to enjoy legal professional privilege or client legal privilege or whether that privilege has been waived. Although the RTA, in argument, relied upon the two letters apparently sent on 22 September 2004, Mr Simpkins SC made it clear that the contention that privilege had been waived was based mainly on the letter of 23 September 2004 which purports to quote verbatim the conclusion stated by Mr Robertson in his opinion.

11 If the applicable principles are those of the general law, the waiver issue turns on the question whether there has been conduct by the client (being the beneficiary of the privilege) that is inconsistent with any continuing assertion by the client that the privileged material continues to be of a confidential quality as between the client and the client’s lawyer. Disclosure is the most obvious form of such conduct. As Gleeson CJ, Gaudron, Gummow and Callinan JJ observed in Mann v Carnell (1999) 201 CLR 1 at [34]:

“Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client’s actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect.”

12 The joint judgment also refers (at [29]) to established principle recognising that such consent need not be express:

“Waiver may be express or implied. 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’ eg, Goldberg v Ng (1995) 185 CLR 83 at 95. 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. Thus, in Benecke v National Australia Bank (1993) 35 NSWLR 110, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. 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.”

13 There is reference in the passage I have just quoted to the need for an objective inquiry into the nature of the consent, with subjective intentions put to one side and with the inquiry “informed by considerations of fairness” where necessary.

14 If the matter is to be determined by reference to the Evidence Act provisions imported into the Supreme Court Rules, the relevant question is that posed by s.122(2), namely, whether the client “has knowingly and voluntarily disclosed to another person the substance of the evidence”. (I leave to one side as irrelevant to the present case the several qualifications included in s.122(2) and the qualifications based on s.122(3) and (5)). For reasons recently explained by McDougall J in Singapore Airlines Ltd v Sydney Airports Corporation Ltd [2004] NSWSC 380 (7 May 2004), discussion in earlier cases (including Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360, Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152, Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925, Garratt’s Ltd v Thanga Thangathurai [2002] NSWSC 39 and Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd [2002] FCA 501) of the way in which the Evidence Act provisions should be interpreted in light of the general law principles justifies the conclusion that the consent with which s.122 is concerned includes implied consent and that general law approaches are applicable in deciding whether there has been implied consent.

15 It is obvious that the Council consented to communication to the RTA of the passage from Mr Robertson’s written opinion actually set out in the Council’s own letter to the RTA dated 23 September 2004. The question for decision is accordingly whether there was implied consent in respect of the remainder of Mr Robertson’s opinion or, at least, the parts of it dealing with the matter the subject of the quoted passage, assuming that it dealt with more than one matter. That is the pertinent question whether it is general law principle or the Evidence Act provision that governs the present case.

16 It was submitted by Mr Simpkins SC on behalf of the RTA that this question is to be addressed, in a case such as this, by reference to principles discussed in the recent decision of the Full Federal Court in Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 (25 August 2004) and that application of those principles leads to the conclusion that the Council’s privilege has been lost.

17 Bennett’s case involved a situation very similar to that currently before me. Proceedings were on foot between Mr Bennett, president of the Customs Officers Association, and the Customs Service. The Australian Government Solicitor (“AGS”), acting for the Customs Service, sent a letter to Mr Bennett’s solicitors containing a proposal for settlement of the litigation. The letter said, among other things:

“AGS has now advised Customs that Public Service Regulation 7(13) does not prohibit all public comment by an officer on matters of public administration. Rather, the subregulation must be construed or ‘read down’ so as not to apply to public comment on matters of administration which are already on the public record.
…
AGS has advised Customs that your client is not correct in asserting that he is not subject to the Act and Regulations if he makes public statements about Customs-related matters in his capacity as President of the COA.”

18 The question before the Full Federal Court in relation to these passages was whether, in terms of s.42(1) of the Freedom of Information Act 1982 (Cth), the document containing the advice of AGS referred to in the letter was “of such a nature that it would be privileged from production in legal proceedings on the grounds of legal professional privilege”. Gyles J, approving a statement by Goldberg J in Australian Unity Health Ltd v Private Health Insurance Administration [1999] FCA 1770, said (at [65]):

“The voluntary disclosure of the gist or conclusion of the legal advice amounts to waiver in respect of the whole of the advice to which reference is made including the reasons for the conclusion. The primary judge was in error in drawing a distinction between conclusion and reasoning in the context of such a disclosure.”

19 Referring to Mann v Carnell (above), his Honour said (at [68]):

“The test looks to inconsistency between the disclosure that has been made by the client on the one hand and the purpose of confidentiality that underpins legal professional privilege on the other. It is not a matter simply of applying general notions of fairness as assessed by the individual judge. The authorities to which I have referred show that it is well established that for a client to deploy the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege.”

20 Tamberlin J agreed with the reasons of Gyles J and added observations of his own. He referred to the distinction drawn (particularly by Deane J in Attorney-General of the Northern Territory v Maurice (1986) 161 CLR 475) between disclosure of the existence of legal advice which is stated to form the basis of a particular attitude or stance and disclosure of part of its content. Having set out the extracts from the AGS’s letter to Mr Bennett’s solicitors, his Honour said (at [6]):

“The above extracts express the substance of the advice that was given by the Australian Government Solicitor in each of the paragraphs. In my view, it would be inconsistent and unfair, having disclosed and used the substance of the advice in this way, to now seek to maintain privilege in respect of the relevant parts of that advice which pertain to the expressed conclusion. It may perhaps have been different if it had been simply asserted that the client has taken legal advice and that the position which was adopted having considered the advice, is that certain action will be taken or not taken. In those circumstances, the substance of the advice is not disclosed but merely the fact that there was some advice and that it was considered. However, once the conclusion in the advice is stated, together with the effect of it, then in my view, there is imputed waiver of the privilege. The whole point of an advice is the final conclusion. This is the situation in this case.”

21 The third member of the court, Emmett J, agreed as to the applicable principles but concluded that, in the particular procedural context (appeal on a question of law from the Administrative Appeals Tribunal), the question of fairness involved in the waiver issue was a question of judgment for the Tribunal.

22 In the present case, the Council disclosed to the RTA the existence of Mr Robertson’s opinion. But it went further, first, by stating in the letters sent on 22 September 2004 the substance of the advice as to the need for consent under s.138 of the Roads Act and, second, by actually quoting from the opinion a passage containing the conclusion conveyed by it as to the need for that consent. The principles discussed in Bennett’s case lead to the conclusion that the Council thereby waived privilege. It became inconsistent for the Council to continue to rely on the confidentiality of the opinion while at the same time using a statement of its substance and of the conclusion it expressed as a positive means of reinforcing to the RTA a position it asserted in the ongoing dialogue about drilling on land in the Municipality of Ashfield. The inconsistency became the source of an implied consent. It is true that, in the letter of 23 September 2004, the verbatim statement of the conclusion expressed by Mr Robertson was accompanied by a purported preservation of privilege (“In making reference to the above quote Council is not waving [sic] the legal professional privilege attached to Robertson’s advice”). But as the joint judgment in Mann v Carnell emphasises (see paragraph [12] above), an intentional act inconsistent with the maintenance of confidentiality does not lose its significance or assume some different character just because there was a subjective intention not to compromise the privilege. The implied consent was such that it would be unfair to the RTA not to recognise and give effect to the objective consequences of that consent.

23 My conclusion on this part of the present application is that, probably by reason of the disclosure made voluntarily be the Council in its two letters sent on 22 September 2004 but certainly by reason of the quotation in the letter of 23 September 2004 of the part of the opinion stating the conclusion expressed in it with respect to the question of the need for consent under s.138 of the Roads Act, the opinion of Mr Robertson, in so far as it dealt with that question, ceased to be the subject of legal professional privilege or client legal privilege, that privilege having been waived by the Council.

24 This leads to the next part of the inquiry to be made upon this application, namely, whether the conclusion as to waiver of privilege extends to the whole of the content of the document containing advice from Mr Robertson or whether some part or parts remain privileged despite my finding as to the content regarding the need for consent under s.138. That inquiry must proceed on the basis described by Tamberlin J in Bennett’s case as follows (at [14]):

“Disclosure of one conclusion but not others in an advice does not necessarily amount to waiver in respect of the non-disclosed conclusions. However, if the conclusions and reasoning are so interconnected that they cannot be separated or isolated, then it may be that the whole of the advice on which all those conclusions are based, must be considered to have been waived.”

25 In order to facilitate this inquiry, the parties agreed on a course under which I was given a copy of Mr Robertson’s opinion for the purpose of making my own assessment. For obvious reasons, it has not been possible for the RTA to make submissions on this aspect. For the Council, however, it was submitted by Mr Lazarus of counsel that, if my decision on the waiver question generally was adverse to the Council (as it has been), there are still some parts of Mr Robertson’s opinion that remain privileged because they deal with conclusions other than the conclusion referred to in the letters of 22 and 23 September 2004. It is the contention of the Council that the waiver with which I have dealt will lead to discovery of only so much of the total content of the opinion as has not been masked in a second copy given to me.

26 Mr Robertson’s opinion consists of 20 numbered paragraphs. It begins by referring to the request made by the RTA’s engineers on 1 June 2004 and goes on to outline other background facts. There follows discussion of a number of legal issues arising. There are references to several statutes, including the Roads Act. Section 138 of the Roads Act and its application to the particular circumstances are referred to in paragraphs 15 to 20. It is in paragraph 20 that the passage quoted in the Council’s letter of 23 September 2004 appears. The Council submits, and I accept, that privilege continues to subsist in paragraphs 2 to 14 which are concerned with subjects other than the scope and application of s.138 of the Roads Act. The waiver of privilege affects only paragraphs 1 and 15 to 20. These are the parts left visible in the masked version.

27 It remains to consider the submission made by Mr Lazarus on behalf of the Council that no legitimate forensic purpose will be served by a requirement that the Council discover Mr Robertson’s opinion. Mr Lazarus says that the document has no potential role to play as evidence in the case. He points out that the Council resolution of 8 June 2004 was rescinded on 27 September 2004 and that this occurred after the sending of the letters of 22 and 23 September 2004 expressing the attitude or policy in support of which Mr Robertson’s opinion was called in aid. The response of Mr Simpkins on behalf of the RTA is that, despite the rescission of 27 September 2004, the Council has taken no step to review or reconsider the application of 1 June 2004 and shows no sign of doing so. It is that circumstance that caused the RTA to file its cross claim on 1 October 2004 with a view to obtaining orders intended, in effect, to compel the Council to deal with the application according to law.

28 The RTA places particular reliance on the cross claim and the objective of the cross-claim in arguing that a legitimate forensic purpose will be served by discovery of the non-privileged legal advice relevant to assessment and consideration of the 1 June 2004 application. Comparison of the content of the legal opinion received by the Council and the Council’s actions in relation to the matter with which the opinion deals will (or, at least, may), it is said, throw light on the question whether the Council has taken into account irrelevant considerations or failed to have proper regard to all relevant matters or is acting in a manner deemed unreasonable in an administrative law sense most often associated with Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.

29 I accept the submissions of the RTA in this respect. Having regard to the way in which the proceedings are now constituted, there is a sufficient possibility of a conscientious and responsible attempt by the RTA to introduce the opinion into evidence, as relevant to a matter in dispute, or otherwise to use it in connection with the elucidation of facts in issue in the proceedings to warrant the conclusion that discovery of the opinion at this point serves a genuine forensic purpose.

30 There will accordingly be an order requiring discovery of the masked version of Mr Robertson’s opinion. The order is as follows:

Order that the plaintiff produce for inspection of the first defendant a copy of the document headed “Ashfield Municipal Council re M4 East Project” consisting of a memorandum of advice dated 21 September 2004 signed by T F Robertson SC, being a copy in which the numbered paragraphs 2 to 14 inclusive are masked so as not to be visible.
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Last Modified: 10/07/2004