Ciesielski v Broadway Shopping Centre Sydney Pty Ltd

[2000] NSWADT 25

CITATION:	Ciesielski -v- Broadway Shopping Centre Sydney Pty Ltd [2000] NSWADT 25
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Carolyn Ciesielski RESPONDENT Broadway Shopping Centre Sydney Pty Ltd
FILE NUMBER:	995010
HEARING DATES:	08/03/00
SUBMISSIONS CLOSED:	03/08/2000
DATE OF DECISION:	03/17/2000
BEFORE:	Hennessy N (Deputy President)
APPLICATION:	Evidence - relevance - Privilege - legal professional privilege - Privilege - without prejudice privilege
MATTER FOR DECISION:	Application by respondent not to produce documents on the grounds of privilege and relevance
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Esso Australia Resources Ltd v The Commissioner of Taxation [1999] HCA 67 Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, 522 ACCC v Australian Safeway Stores Pty Ltd (1998) 81FCR 526 Nichmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 Lawrenson v Wellington City Corp [1927] NZLR 510 Biala Pty Ltd v Mallina Holdings Ltd [1990] WAR 174 National Employers' Mutual General Association Ltd v Waind and Hill [1978] NSWLR 372
REPRESENTATION:	R Horsley, barrister M White, barrister
ORDERS:	1. The respondent’s claim for legal professional privilege is upheld in relation to Documents 7 - 11.; 2. The respondent’s claim for without prejudice privilege is upheld in relation to Documents 14 - 25.; 3. All other documents not produced to the applicant in response to the Notice to Produce should be produced.; 4. No order as to costs.

Introduction

1 On 23 November 1999 the applicant in these proceedings issued a Notice to Produce Documents to the respondent. The respondent relied on three grounds for not producing some of the documents specified in the Notice to Produce. These grounds are: legal professional privilege; without prejudice privilege and relevance. The applicant seeks costs in relation to these claims.

2 Briefly, the substantive claim relates to an allegation by the applicant, a tenant in a shopping centre owned by the respondent, that the respondent breached the lease. She alleges that this breach resulted in a repudiation of the lease which she accepted. Damages are claimed in relation to flooding which occurred on 9 April 1998 and also in relation to other losses relating to things such as access, electricity, cleaning and signage.

Legal professional privilege

3 The parties agreed that in relation to interlocutory proceedings such as these, any claim for privilege is governed by the common law. A statement of the law in this area is set out in McNicol, Law of Privilege, (Law Book Company Ltd 1992) at p 44:

It is a substantive principle of the common law that, in civil and criminal cases, a person is entitled to preserve the confidentiality of statements and other materials which have been made or brought into existence for the sole purpose of seeking or being furnished with legal advice by a practising lawyer, or for the sole purpose of preparing for existing or contemplated judicial or quasi-judicial proceedings.

4 The High Court has modified this test by replacing the “sole purpose test” with the “dominant purpose test.” (See Esso Australia Resources Ltd v The Commissioner of Taxation [1999] HCA 67 (Gleeson CJ, Gaudron and Gummow JJ [13]; McHugh J [64]; Kirby J [91] and Callinan J [144-150].)

5 Using McNicol’s analysis (at p 44), the rule is most commonly applied to communications between a client and lawyer. However it also covers:

a) Communications between the client’s lawyer and an agent of the client if made for the dominant purpose of enabling or obtaining legal advice or for the purpose of obtaining information necessary for actual or contemplated litigation;
b) Communications between the client’s lawyer and third parties if made for the purpose of actual or contemplated litigation; and
c) Communications between the client and third parties if made for the purpose of obtaining information for the client’s lawyer in order for the client to obtain advice on actual or contemplated litigation.

6 The applicant conveniently highlighted certain aspects of the law relating to legal professional privilege in a submission to the Tribunal:

The privilege attaches to communications, not documents. ( Esso Australia Resources Ltd v Commissioner of Taxation [1999] HCA 67 at [36]; per Gleeson CJ, Gaudron and Gummow JJ: “privilege, where it applies, attaches to communications and not to documents”. At [89] per Kirby J: “in practical terms . . . claims for the privilege usually concern documents. However, the privilege actually attaches to communications”. Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, 522 per McHugh J: “Legal professional privilege is concerned with communications, either oral, written or recorded, and not with documents per se”.) Where the document is not itself a communication, but is a record of a communication, the question is whether the communication, which came to be recorded meets the test for the privilege, not whether the record of the communication meets the test.
When privilege is claimed for a document, it is because it records or constitutes a communication prepared, given or received for the purpose of obtaining legal advice or assistance. [I]t is the purpose of the communication that is decisive, not the purpose in making the document (for example, to have a record) or any copies of the document.

Where the privilege is claimed on the ground that the document was created for the purpose of use in actual or contemplated legal proceedings-
The question whether litigation was reasonably contemplated at the relevant time is one of fact; it is to be determined by reference to objective criteria, and statements of personal belief by participants in the information gathering of litigation preparing process are not conclusive. ( ACCC v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 558; see also Nichmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44) It must be more probable than not that the proceedings will be commenced, ( ACCC v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 at 559) so that a vague apprehension of litigation will not suffice ( Lawrenson v Wellington City Corp [1927] NZLR 510 at 511) though it is not necessary that there be a high probability approaching certainty, nor that there be a decision to commence proceedings.” (Heydon, Cross on Evidence 6th Aust ed par [23235] at p 711)

Documents 7-11 and 29

7 Documents 7-11 of the respondent’s schedule of documents are: draft letters from the respondent’s solicitors; a draft lease; a draft agreement for lease; and a draft licence agreement provided by the respondent’s solicitors. The applicant conceded that these documents are “likely to be privileged”.

8 Documents 7 and 8 are draft letters from Blake Dawson Waldron and Mallesons Stephen Jaques, to other firms of solicitors representing tenants within the shopping complex. It appears from the schedule that the draft letters were provided to the respondent for their approval or comment. In these circumstances I am satisfied that they are communications between a solicitor and their client made for the dominant purpose of furnishing legal advice.

9 Documents 9, 10 and 11 are draft documents (a lease, an agreement for a lease and a licence agreement) provided to the respondent by their solicitors. I am satisfied that these documents were brought into existence for the dominant purpose of furnishing legal advice to the respondent.

10 Legal professional privilege is also claimed over Document 29 which is a letter from Mallesons Stephen Jaques to a tenant of the shopping complex. The respondent claims that it is a letter to the respondent, but it is not a draft for their comment, but a copy of the letter presumably sent to the tenant. On the basis of the evidence I have, it is not a communication between solicitor and client (or an agent of either) nor is it made for the dominant purpose of obtaining or furnishing advice in relation to actual or contemplated litigation. It may fall within the without prejudice privilege category and will be considered again below.

Documents 1-6

11 Documents 1-6 are internal file notes of the respondent. The respondent conceded that these communications were not made between solicitor and client but submitted that they were made for the dominant purpose of preparing for contemplated legal proceedings. Solicitors apparently became involved on 5 May 1998.

12 The applicant submitted that since the privilege attaches to the communication, not to the document itself, and since none of the communications between the respondent are privileged, the record of those communications cannot be privileged. In addition the applicant submitted that they were not made for the dominant purpose of obtaining legal advice or assistance.

13 Documents 1 and 2 are file notes written by Andrea Morris, an officer of the respondent. Document 1 is an unsigned version and Document 2 is a signed version. These documents are not communications between solicitor and client (or their agents). The file note records, rather than constitutes, a communication. I agree with the applicant’s submission that the test is whether the communications are privileged. There is nothing to suggest that they are. There is no evidence that they were made for the dominant purpose of obtaining legal advice or prepared in contemplation of litigation. These notes do not enjoy the protection of legal professional privilege and should be produced.

14 Document 3 is a hand written file note prepared by an officer of the respondent on 8 May 1998. It falls into the same category as documents 1 and 2 and should be produced for the same reasons.

15 Document 4 is a file note dated 18 May 1998 by an officer of the respondent. It is a record of a conversation with the applicant and for the same reasons set out in paragraph 15, it should be produced.

16 Document 5 is a handwritten file note prepared by an officer of the respondent dated 18 May 1998. It records a meeting the respondent had with the applicant. For the same reasons outlined in paragraph 15, it should be produced.

17 Document 6 is a file note dated 22 June 1998 from an officer of the respondent recording a conversation with other tenants of the shopping complex. For the same reasons outlined in paragraph 15 it should be produced.

18 According to McNicol, Law of Privilege, (Law Book Company Ltd 1992) at p 435:

The general rule is that communications between parties which are genuinely aimed at settlement whether oral or in writing, cannot be put in evidence without the consent of both parties in the event of those negotiations for settlement being unsuccessful. The “without prejudice” rule is a rule governing admissibility of evidence and it operates as a joint privilege in excluding from evidence all negotiations, whether they be offers of relief, offers of payment, offers of compromise, or admissions made for the purpose of settling the dispute.

19 The applicant submitted that the privilege does not extend to any agreement arising out of successful without prejudice negotiations. Both parties relied on Biala Pty Ltd v Mallina Holdings Ltd [1990]WAR 174). The relevant passage is at p 180:

Where without prejudice negotiations do not result in a settlement, it is clear that statements made in the course of such negotiations are privileged from production and are inadmissible. It is, however, equally clear that, when such negotiations do result in a concluded settlement, the latter can be proved and be put in evidence. If that were not so, no settlement resulting from without prejudice negotiations could be enforced.

20 The respondent relied on the main public policy objective of this rule (the ability to enforce settlements resulting from without prejudice negotiations) to submit that the rule should not apply in the circumstances of this case because the settlement documents were not sought for the purposes of enforcement. The respondent opposed this view submitting that the rule is expressed in an unqualified manner in Biala’s case and there is no authority which qualifies that rule.

21 I accept the applicant’s submission on this point. The statement of the rule in Biala’s case is unequivocal and the respondent has not been able to point to any authorities to the contrary.

22 These documents are letters between tenants or their agents and the respondent. The following documents attract without prejudice privilege because they are communications between parties which are genuinely aimed at settlement:

• Document 14 - letter from Robertson and Co to the respondent dated 5 June 1998;
• Document 15 - letter from Robertson & Co to the respondent dated 12 June 1998;
• Document 16 - letter from Robertson & Co to the respondent dated 23 July 1998;
• Document 17 - letter from Robertson & Co to the respondent dated 12 August 1998;
• Document 18 - letter from respondent to Robertson & Co dated 24 August 1998;
• Document 19 - letter from Greaves Wannan & Williams to Mallesons Stephen Jaques dated 4 September 1998;
• Document 20 - letter from Robertson & Co to respondent dated 20 October 1998;
• Document 21 - letter from respondent to Robertson & Co dated 3 December 1998;
• Document 22 - letter from Photios Vouroudis to Blake Dawson Waldron dated 1 December 1998;
• Document 23 - letter from Blake Dawson Waldron to Photios Vouroudis dated 5 December 1998;
• Document 24 - letter from Blake Dawson Waldron to Photios Vouroudis dated 15 December 1998 (incorrectly cited as 5/12/98 in respondent’s schedule); and
• Document 25 - letter from Fegan and Associates to the respondent dated 22 April 1999;

23 The following documents record settlements resulting from without prejudice negotiations and are not protected by without prejudice privilege:

• Document 12 - letter from respondent to Broadway Computer World dated 16 July 1999 setting out terms of settlement in relation to an insurance claim. This document is not part of the negotiations because it records the agreement made between the parties.
• Document 13 - letter from respondent to Brothers Neilsen International Pty Ltd dated 28 July 1998 setting out terms of agreement. This document is not part of the negotiations because it records the agreement reached between the parties.
• Document 26 - letter from respondent to Robertson & Co dated 3 May 1999 relating to water damage loss. This document is not part of the negotiations because it records the settlement reached between the parties.
• Document 27 - Agreement dated 22 April 1999 between Kostopolous and the respondent records an agreement reached between parties.
• Document 28 - Deed of Settlement between the respondent and W Angus dated September 1998.
• Document 29 -letter dated 22 September 1998 from the respondent to Mallesons Stephen Jaques records some of the details of the settlement.

24 The respondent objected to the production of another category of documents on the ground of relevance. The respondent relied on National Employers’ Mutual General Association Ltd v Waind and Hill ([1978] NSWLR 372 at 385) in support of the proposition that:

As I understand past practices, where, however, objection is raised by the owner of the documents, the judge examines the documents with some care to ensure there is no abuse of the subpoena, and to determine whether the documents appear relevant in the sense that they relate to the subject matter of the proceedings, in which event he will permit inspection by one or both parties at an appropriate time. . The crucial question in relation to the exercise of the discretion to permit inspection in the second step (that is, when dealing with objections) is whether the documents have apparent relevance to the issues. (Words in brackets added.)

25 It is not necessary that these documents would be admissible in evidence, merely that they are relevant or on the subject matter of the litigation.

26 The respondent divided the documents in this category into documents relating to flooding and damage to premises and documents relating to other issues such as access, electricity, signage etc.

27 The applicant’s submission, in part, was that details of documents relating to flooding and physical damage would assist in determining the extent and timing of the flooding.

28 All the documents argued to be irrelevant relate to disputes between other tenants of the centre and the respondent over flood damage and other issues. In my view it is apparent that these documents are relevant to issues in the proceedings. Even though the applicant’s claim relates to her premises only, correspondence from other tenants is relevant to issues such as the cause, timing and extent of the flooding, the disruption to access as a result of the flooding and other causes, and when the leaks were rectified. Issues not relating to damage to premises are still relevant to other heads of damage claimed by the applicant, including problems with access, signage and electricity.

Orders

29 The respondent’s claim for legal professional privilege is upheld in relation to Documents 7 - 11.

30 The respondent’s claim for without prejudice privilege is upheld in relation to Documents 14 - 25.

31 All other documents not produced to the applicant in response to the Notice to Produce should be produced.

Costs

32 The applicant made an application for costs in relation to the privilege submissions. The Notice to Produce and a chronology setting out the correspondence between the parties from 16 December 1999 to 6 March 2000 was tendered. The applicant’s submission, on the basis of the chronology, was that the respondent’s claim for privilege was not properly considered before being made.

Several mentions in court, and correspondence, were necessary before the respondent properly formulated its claim for privilege, a mater which it is for the respondent to establish. The costs so wasted should be paid by the respondent in any event, and in so far as the respondent’s claims for privilege are defeated, it should pay the necessary costs of the privilege hearing as well.

33 The respondent submitted that documents were produced in response to the Notice on 22 December 1999 and that only two items in the Notice were in dispute. The respondent conceded that they could have responded more quickly, but that they should not be penalised because the solicitor handling the matter did not formulate the claim in the same way that it is currently formulated.

34 Section 88 of the Administrative Decisions Tribunal Act 1997 states that:

Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that there are special circumstances warranting an award of costs.

35 In my view, the Tribunal can award costs in cases where, for example, a party has put the other side to unnecessary expense by inexcusable delay or failed to comply with Tribunal directions. This matter was not been dealt with as expeditiously as it should have been, nor did the respondent provide a comprehensive response to the applicant’s questions until the hearing. However, I do not think the failure of the respondent to consider the question of privilege in a more timely and comprehensive fashion is severe enough to amount to “special circumstances.” There is no order as to costs.