Chen v City Convenience Leasing Pty Ltd

The appeal concerned a dispute between a lessor, City Convenience Leasing Pty Ltd, and a lessee, Chen, regarding a lease of a city convenience store. The lessor had sued the lessee for rent, and the lessee had cross-claimed alleging misrepresentation and misleading or deceptive conduct during the lease negotiations. The primary issue on appeal was the admissibility of certain communications and advice provided to the lessee by their solicitor prior to the execution of the lease, which were relevant to the alleged misrepresentations.

The central legal question before the Court of Appeal was whether the lessee had waived client legal privilege over communications and advice received from their solicitor concerning the lease negotiations. Specifically, the court had to determine if the lessee's conduct in pursuing the cross-claim for misrepresentation was inconsistent with the maintenance of confidentiality for that legal advice, and if, in the interests of fairness, privilege ought not to be maintained and waiver should be imputed by operation of law. The court was required to consider the principles of client legal privilege, consent, and waiver, particularly in light of sections 118 and 122 of the *Evidence Act 1995* (NSW).

The Court of Appeal, after an extensive review of authorities including *Telstra Corporation v B T Australasia*, held that the lessee's conduct in bringing the cross-claim was indeed inconsistent with the maintenance of confidentiality regarding the legal advice received. The court reasoned that to allow the lessee to rely on the alleged misrepresentations while simultaneously asserting privilege over the very advice that might have informed them of those misrepresentations would be unfair. Consequently, the court imputed a waiver of client legal privilege by operation of law.

The Court of Appeal ordered a new trial.