CMA Assets Pty Ltd v John Holland Pty Ltd [No 3]

[2012] WASC 501

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   CMA ASSETS PTY LTD Formerly Known as CMA Contracting Pty Ltd -v- JOHN HOLLAND PTY LTD [No 3] [2012] WASC 501

CORAM:   LE MIERE J

HEARD:   13 DECEMBER 2012

DELIVERED          :   21 DECEMBER 2012

FILE NO/S:   CIV 1297 of 2008

BETWEEN:   CMA ASSETS PTY LTD Formerly Known as CMA Contracting Pty Ltd

Plaintiff

AND

JOHN HOLLAND PTY LTD
Defendant

Catchwords:

Evidence - Privilege - Legal professional privilege - Whether sufficient basis to claim legal professional privilege over documents - Turns on own facts

Legislation:

Nil

Result:

Claim for legal professional privilege upheld in part

Category:    B

Representation:

Counsel:

Plaintiff:     Mr J C Giles

Defendant:     Ms K F Banks-Smith

Solicitors:

Plaintiff:     Minter Ellison

Defendant:     Corrs Chambers Westgarth

Case(s) referred to in judgment(s):

Carey v Korda [2012] WASCA 228

Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67; (1999) 201 CLR 49

Trade Practices Commission v Sterling (1979) 36 FLR 244

1. LE MIERE J:  The plaintiff has applied for orders that the defendant produce a large number of documents for inspection.  The defendant objects to producing some of the documents and has redacted parts of the other documents on the ground that they are subject to legal professional privilege.

2. The defendant, John Holland, was engaged by BHP Billiton Iron Ore Pty Ltd (BHPBIO) to upgrade and extend an iron ore loading wharf at Finucane Island, Port Hedland.  The work included demolition of the existing wharf including the berthing dolphins, mooring dolphins and berth C.  The work also included deepening by dredging the berthing pocket adjacent to the old wharf to allow larger iron ore carriers to be berthed and loaded at the new wharf.  John Holland engaged the plaintiff, CMA, to demolish the existing wharf, including the mooring and berthing dolphins.  CMA and John Holland fell into dispute.  John Holland refused to pay CMA over $5.5 million.  John Holland cross‑claims against CMA for about $16 million.

3. A number of disputes or differences arose between John Holland and BHPBIO in relation to the works.  John Holland made claims exceeding $23 million.  John Holland and BHPBIO agreed to settle the disputes and differences between them on the terms set out in a settlement and release deed dated 30 April 2008.

Legal principles concerning claim for legal professional privilege

1. Legal professional privilege may take two forms - advice privilege or litigation privilege.  Legal advice privilege covers communications between a lawyer in his professional capacity and his client if they are confidential and for the dominant purpose of seeking or giving legal advice.  Litigation privilege covers confidential communications made, after litigation is commenced or contemplated, between a lawyer and his client, or third parties for the dominant purpose of such litigation, and includes seeking or giving advice in relation to it and obtaining information for the purposes of the litigation.  There are two preliminary matters I wish to address before turning to the issues arising in this application.  The first concerns in house lawyers.  The second concerns common interest privilege or communications from or between associated entities.

2. Legal professional privilege applies to in house lawyers as it does to those in private practice although the communications must qualify in the usual way as involving the giving or seeking of legal advice or as communications in relation to litigation and with a sufficient degree of independence.  There are two in house lawyers involved in this matter.  The first is Mr Burton.  The plaintiff does not dispute Mr Burton's status as a lawyer for the purposes of legal professional privilege.  The second is Mr Renouf.  The evidence of Mr How is that Mr Renouf was engaged in the matter as in house counsel and had no role other than to provide legal advice and assistance.  I am satisfied that Mr Renouf is a lawyer for the purposes of legal professional privilege and the rule applies to communications with him if the communications qualify in the usual way as involving the giving or seeking of legal advice or communications in relation to litigation.

3. The second preliminary matter concerns other entities associated with John Holland.  John Holland was in a joint venture relationship with Leighton Asia, part of the Leightons Group.  Some of the relevant communications were between the employees of Leightons as well as John Holland.  The plaintiff accepts that Leightons and John Holland should be treated as one person for the purposes of this application.  Hence, it is not necessary to consider this issue further.

4. At this point it is convenient to refer to two further points.  First, the legal onus of proving that documents are privileged is on the party claiming privilege, but an evidential onus may be cast upon the party seeking inspection if the claim for privilege is 'apparently proper'.  In Carey v Korda [2012] WASCA 228 Murphy JA, with whom Martin CJ and Newnes JA agreed, said:

   In Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 41 WAR 169, Buss JA (McLure JA concurring) said [60] - [62]:

   'The person claiming legal professional privilege must prove that the information or documents in question are privileged.  See Grant v Downs [1976] HCA 63; (1976) 135 CLR 674, 689 (Stephen, Mason & Murphy JJ).

   A claim of legal professional privilege is not established conclusively by the use of a verbal formula.  See Esso [52]. A court may examine documents where there is a disputed claim. It should not be hesitant to exercise the power ...

   However, a party who claims legal professional privilege must properly identify the basis on which the privilege is claimed.  It is not appropriate for the party merely to assert the existence of the privilege, deliver the documents to the presiding judicial officer and request him or her to analyse them and determine whether there is a proper basis for the claim …'

   Whilst the ultimate legal onus remains on the party claiming privilege, an evidential onus may be cast upon the party seeking inspection if the claim for privilege is 'apparently proper':  CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19; (2000) 22 WAR 48 [33] - [34]. In that case the party claiming the privilege had, in affidavits, 'clearly address[ed] all the issues required for such a claim'. The court is not confined to considering a contentious affidavit of the party seeking inspection, and is entitled to look at any evidence before the court which may be capable of raising doubts as to the authenticity of the privilege claim: CTC v Australian Stock Exchange [39]. 

   What is required, for the purposes of establishing a privilege claim, will vary depending on the nature of the document and the particular ground on which privilege is claimed:  Kadlunga Proprietors v Electricity Trust of South Australia (1985) 39 SASR 410, 415. Thus, for example, if in an affidavit claiming privilege, a document were described as a confidential communication from the lawyer to the client, it would be readily capable of sustaining a claim for legal professional privilege on the ground that it was made for the dominant purpose of giving legal advice. On the other hand, eg, a claim would not, generally, be apparently proper if it involved a bare assertion of a protected dominant purpose, in relation to a document which, by the description given to it in the affidavit, had no apparent connection with giving or receiving legal advice or actual or anticipated litigation. Each claim will need to be considered on its merits. Also, the sufficiency of the evidence relied on by a party disputing the claim for privilege for the purpose of meeting its evidential onus will no doubt vary according to the ground of privilege claimed and the description of the document given [69] - [71].

5. The second point is that in cases where there is a disputed claim, the court has power to examine the documents and it should not be hesitant to exercise such a power:  Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67; (1999) 201 CLR 49 [52] (Gleeson CJ, Gaudron and Gummow JJ).

Category 1 documents

1. In its second further amended summons dated 7 December 2012, the plaintiff divides the documents which it seeks to inspect into three classes or categories. 

2. The first category of documents are those numbered 1 ‑ 46 in pt 1A of annexure DVH1 to the affidavit of David Victor How sworn on 11 October 2012 (the category 1 documents).  The documents were described by the defendant as the Leightons' documents.  All of the documents are emails between employees of John Holland and Leightons, except for document 1, which is an email between employees of John Holland.   In addition, a partner or employee of John Holland's solicitors, Corrs Chambers Westgarth (Corrs), was a recipient of documents 24, 30, 43 and 44.  In addition, a Corrs' solicitor was the author of document 42.  In addition, documents 22, 23, 24, 29, 30, 42, 43 and 44 were copied to Corrs' solicitors.

3. In the defendant's list of documents each of the emails is identified by date, title, from whom and to whom it was sent, and to whom it was copied.  In the list the defendant says that it objects to producing the documents on the following grounds:

   Each of the documents is subject to a claim of legal professional privilege on the ground that each of the documents contains confidential communications between the defendant (or its agents, employees or advisors) and its solicitors (or its in‑house counsel), or confidential communications between the defendant's agents, employees and advisors, for the dominant purpose of:

   (a)Giving or obtaining legal advice in connection with matters not in issue in proceedings number CIV 1297 of 2008; and

   (b)The defendant being provided with professional legal services relating to anticipated proceedings against BHPBIO as explained in paragraphs 6 to 17 of my affidavit sworn 3 November 2011 in these proceedings.

4. In [6] to [17] of his affidavit sworn 3 November 2011, Mr How referred to the contract between John Holland and BHPBIO and claims under that contract made by John Holland.  Mr How says that most of those claims were rejected and, although he was not directly involved in all aspects of the ensuing negotiation with BHPBIO, he was aware of the negotiation from persons directly involved.  Mr How then describes the negotiation process leading to the compromise agreement that was recorded in the settlement deed dated 30 April 2008.

5. Counsel for CMA submitted that the principal issue on this application concerns the evidence required to establish a claim for legal professional privilege.  The plaintiff says that the plaintiff has not properly identified the basis on which the privilege is claimed.  The plaintiff says that the defendant has merely asserted the existence of the privilege by the use of a verbal formula.  The plaintiff points to a number of alleged deficiencies in the claim for privilege.  First, the claim is made on alternative bases.  The claim is that the documents are communications between the defendant or its agents, employees or advisors and its solicitors or its in house counsel or communications between the defendant's agents, employees and advisors.  Further, the communications are claimed to be for the dominant purpose of giving or obtaining legal advice in connection with matters not in issue in these proceedings and the defendant being provided with professional legal services relating to anticipated proceedings against BHPBIO.

6. The plaintiff further says that the author of only one document, document 40, is a lawyer or in house lawyer.  In Carey v Korda, Murphy JA observed that if in an affidavit claiming privilege, a document were described as a confidential communication from the lawyer to the client, it would be readily capable of sustaining a claim for legal professional privilege on the ground that it was made for the dominant purpose of giving legal advice; but on the other hand, a claim could not, generally, be apparently proper if it involved a bare assertion of a protected dominant purpose, in relation to a document which, by the description given to it in the affidavit, had no apparent connection with giving or receiving legal advice or actual or anticipated litigation.

7. A Corrs' solicitor or solicitors is or are the author of document 42, one of the recipients of documents 24, 30 and 44, the sole recipient of document 43 and one of the persons to whom documents 22, 23, 24, 29, 30, 42, 43 and 44 are copied.

8. Document 42, an email from a Corrs' solicitor to employees of John Holland and Leightons, would be prima facie privileged and the subject of a proper claim for privilege if the person claiming privilege had sworn that it was a confidential communication for the dominant purpose of giving legal advice.  Document 43 is an email sent to a Corrs solicitor.  It would be the subject of a proper claim for privilege and prima facie privileged if there was evidence that it was a confidential communication to the Corrs solicitor for the purpose of obtaining legal advice.  Document 40 is an email from Mr Burton to employees of John Holland and Leightons.  It would be the subject of a proper claim for privilege and prima facie privileged if there was evidence that it was a confidential communication for the dominant purpose of giving legal advice.  However, the evidence does not establish that any of those documents are the subject of a proper claim for privilege or prima facie privileged because of the form in which the claim for privilege has been made.  That is, a collective claim for privilege has been made by Mr How in relation to all 46 documents and Mr How has not said which documents are communications for the dominant purpose of:

   1.giving legal advice in connection with matter not in issue in proceedings CIV 1297 of 2008;

   2.obtaining legal advice in connection with matters not in issue in proceedings CIV 1297 of 2008; or

   3.the defendant being provided with professional legal services relating to anticipated proceedings against BHPBIO.

9. In relation to the remainder of the documents, John Holland has not established facts from which the court can make an informed judgment on whether legal professional privilege is available.  The documents, other than those sent or received by Corrs' solicitors or Mr Burton, are communications between employees of John Holland and Leightons.  Those communications may be privileged on a number of bases including:

   (a)they were prepared with a view to being used to obtain legal advice or assistance;

   (b)they record communications which are themselves privileged, or contain a record of those communications, or relate to information sought by the client's legal advisors to enable them to advise the client or to conduct litigation on its behalf;

   (c)they were made with reference to litigation either anticipated or commenced, and at the request or suggestion of the party's solicitor; or, even without any such request or suggestion, if they are made for the purpose of being put before the solicitor with the object of obtaining his advice or enabling him to prosecute or defend an action; and

   (d)they contain or record knowledge, information or belief of the client derived from privileged communications made to him by his solicitor or agent:  see eg Trade Practices Commission v Sterling (1979) 36 FLR 244, 245 ‑ 246 (Lockhart J).

   However, the evidence adduced by John Holland fails to condescend to particulars as to the basis on which each of the relevant documents is privileged.

10. John Holland has led some evidence from Mr How concerning the role and identity of some of the authors or recipients of the emails.  In his affidavit of 12 December 2012, Sang Whan Cho swore that a specialised team was formed called the Claims Team to deal with disputes and formulation of claims relating to the project the subject of this proceeding.  The members of the team included Darren Sargeson, John Renouf, Kieran Murphy, Nicholas Dee, David Court and Chris Ryder, Bronwyn Campbell and Stacy Gardner who were solicitors with Corrs.  John Rolfe was, in September 2007, appointed as project manager for the Claims Team.  Nevertheless, it is not apparent to me from that and the other evidence that the documents reveal confidential communications made for the dominant purpose of giving or receiving legal advice or for use in litigation.

11. I am satisfied that there is sufficient doubt about the claim of legal professional privilege to justify the court inspecting the documents itself.

12. I have undertaken a preliminary examination of the documents for the purpose of determining whether or not legal professional privilege applies to them.  My examination disclosed that privilege does not on the face of it apply to some of the documents.  For example, document 3 is an email from Ray Hodgson, Executive General Manager Leighton to John Rolfe Contracts Manager Leighton, which is copied to Pat Doyle, Executive General Manager Major Projects John Holland, Darren Sargeson, Regional Commercial Manager John Holland and Kieran Murphy, Senior Contracts Advisor Leighton.  The subject of the email is Mr Rolfe's appointment as project manager for the RGP3 Claims Team.  It refers to Mr Rolfe's reporting obligations, other members of the Claims Team and a process for starting the team's work.  The email does not appear to be for the purpose of obtaining or giving legal advice or for the purpose of litigation and does not reveal any such instructions or advice.

13. Document 42 is an email of 7 March 2008 from Spencer Flay of Corrs to Mr Murphy and others in which Mr Flay refers to a draft statement of claim.  The email reveals some of the contents of the draft statement of claim and expressly seeks instructions and gives advice in relation to specific matters.  The document is privileged.

14. There are many documents which may or may not be privileged having regard to the author, the recipients and the contents.  Most, if not all, of the emails attach a chain of emails authored by, sent to or copied to other people.  The chain of emails do not expressly refer to any legal advice or request legal advice.  Some of the emails refer to Corrs, the defendant's solicitors.  However, not every communication to or from or which refers to a solicitor is privileged.  It is not readily apparent to me that the emails reveal confidential communications made for the dominant purpose of giving or receiving legal advice or for use in litigation.  Some further explanation of the content, context and circumstances of the communications is required to determine whether or not they are privileged.

15. At the hearing of this application counsel for the defendant tendered an affidavit of Sang Whan Cho sworn 13 December 2012 which counsel submitted explained the text and context of the relevant documents, and circumstances which demonstrate that they reveal confidential communications made for the dominant purpose of giving or receiving legal advice or for use in litigation.  The tender was made on the basis that the affidavit would not be available to the plaintiff or its legal representatives.  I rejected the tender on that basis.

16. The court has a discretion to give the party claiming privilege an opportunity of adducing further evidence in support of its claim.  Counsel for CMA submitted that the claim for privilege should be determined on the material presently before the court and John Holland should be given no further opportunity to put forward further material relating to the claim for privilege.  That is because CMA have previously informed John Holland of the deficiencies in its claim for privilege and John Holland has had, but failed to take, the opportunity to put forward further evidence.  Also, the matter is progressing to trial in the near future.

1. I will give John Holland an opportunity to put forward further evidence in support of its claim for privilege.  I do so for two principal reasons.  First, there is a relatively large number of documents to be considered.  Whilst each is described as an email, most consist of a chain of emails.  It would take considerable time, and therefore considerable court resources, to analyse each document with the care required to determine whether or not it is privileged.  That is not an efficient use of court resources.  Even if that exercise is undertaken, it is difficult, if not impossible, to determine whether or not each document is privileged without further information concerning the content, context and circumstances of the document.  Legal professional privilege is a substantive right.  A party claiming that right should not be deprived of that right on the basis of incomplete evidence where no substantial injustice is done to the opposing party by permitting the party claiming privilege to put on further evidence in support of its claim.  Secondly, John Holland sought to tender further evidence at the hearing of this application.  As I have said, I declined to receive the evidence because it was tendered on the basis that it would not be available to CMA or its legal representatives.

2. John Holland should put on further evidence concerning its claim for privilege.  John Holland should put forward facts from which the court may make an informed judgment on whether legal professional privilege is available in relation to each document in respect of which privilege is claimed.  The evidence should establish the facts in relation to each document, or a class of documents to which privilege applies on the same basis.  The evidence must address the elements of privilege in relation to each document or class of document.  For example, it should establish that each document, or class of documents, is a confidential communication.  Secondly, it should identify whether the dominant purpose of the communication is to give legal advice or obtain legal advice or both, or for the purposes of the litigation or whether the communication reveals legal advice.  If it is claimed that the communication is for the purposes of litigation then sufficient facts should be given to enable the court to make an informed judgment whether or not the privilege is available.  It is not sufficient to refer to a number of documents and say that they are privileged on a number of alternative grounds without stating which ground applies to which document.  For example, it is not sufficient to refer to a number of documents and say that each of them is for the purpose of giving or obtaining legal advice.  If the communication is not for the dominant purpose of giving or obtaining legal advice but reveals confidential legal advice then the evidence should establish that fact.  If privilege is claimed on the grounds of litigation privilege then sufficient facts should be stated to enable the court to make an informed judgment whether or not the document is privileged.  If the identity of the author or recipient of the document is relevant then that fact should be stated.

3. The defendant will have to adduce the evidence in a form, and if necessary confer with the plaintiff, that accords procedural fairness to the plaintiff without destroying the confidentiality of the documents.

Category 3 ‑ WPP documents

1. These documents are those falling within [3] of CMA's second further amended summons being documents numbered 39, 136, 192, 193, 196 and 213 in the list which is annexure DPH1 to the affidavit of David How sworn 7 November 2012 which is described as 'list of WPP documents to be produced in whole or in part'.  I will refer to each document.

2. Document 39 is an email of 10 July 2007 from Mark Taylor to Darren Sargeson and copied to others.  Privilege is claimed in relation to redacted parts of the email on the ground that it is an 'internal communication disclosing the nature and/or content of legal advice from the defendant's solicitors and for the purpose of obtaining further legal advice'.  It may be argued that a document is not privileged because it discloses the 'nature' rather than the content of legal advice and is for the purpose of obtaining further legal advice.  Furthermore, it may be objected that there is some ambiguity in a claim for privilege on the ground that it discloses 'the nature and or content' of legal advice.  However, I find that the claim for privilege is a proper claim, that is, there is sufficient evidence to enable the court to make an informed judgment as to the availability of privilege.  A communication which states the subject matter of legal advice rather than disclosing the legal advice is not privileged.  However, a statement that a communication discloses the nature and/or content of legal advice is a statement that the communication discloses legal advice rather than the subject matter of the legal advice, albeit not the whole of the legal advice given by the solicitors on the particular subject matter.  A statement that a communication discloses legal advice and is for the purpose of obtaining further legal advice is a statement that the document discloses legal advice and that the communication is also for the purpose of obtaining further legal advice.  The communication is privileged on both grounds.  I uphold the claim to privilege in relation to document 39.

3. It is not necessary to consider document 136.  John Holland no longer maintains its claim for privilege in relation to that document.

4. Documents 192, 193, 196 and 213 are emails from John Rolfe of John Holland to employees of John Holland and Leightons.  Mr How claims that documents 192 and 193 are privileged on the basis that they are internal discussions disclosing the nature and/or content of legal advice obtained from the defendant's solicitors for the dominant purpose of obtaining further legal advice.  I uphold the claim to privilege in relation to those documents for the same reasons that I uphold the claim to privilege in relation to document 39.

5. Mr How claims that documents 196 and 213 are privileged on the basis that they are internal communications disclosing the nature and/or content of legal advice obtained from the defendant's solicitors.  As with document 39 none of the authors or recipients of the documents are lawyers.  However, that is not necessarily a usual incident of a document which discloses legal advice obtained from solicitors as distinct from being a communication which gives legal advice.  I uphold the claim to privilege in relation to each of those documents. 

Category 2 ‑ John Holland redacted documents

1. Category 2 consists of the documents numbered 1 to 110 in annexure DVH2 to the affidavit of David How sworn on 7 November 2012.  The annexure consists of a list of documents described as 'John Holland's redacted documents discovered in the proceeding'.

2. The description of each of the redacted documents in respect of which privilege is claimed and the basis for the claim of privilege is set out in the affidavit of David How sworn 7 November 2012 and in the relevant columns of annexure DVH2 to that affidavit.  I find that the evidence is insufficient to make an informed judgment on whether the redacted parts of the documents are privileged.  For example, document 1 is described as 'schedule' and titled 'risk and opportunity'.  The basis for the claim of privilege is set out in the comments column as follows:

   Redactions over commentary or information which discloses the nature and/or content of instructions to legal advisors and/or advice from legal advisors, and the information gathered which was to be used for the dominant purpose of obtaining legal advice in connection with disputes with subcontractors.

   So far as I can tell, the evidence does not disclose what the document is a schedule to, who is the author of the document or relevant part of the document and to whom it was provided.  Insofar as the claim for privilege set out in the comments column says that the redactions cover information gathered which was to be used for the dominant purpose of obtaining legal advice in connection with disputes with subcontractors, there is insufficient evidence or information provided in relation to those matters to enable the court to make an informed judgment as to the availability of privilege.  It is not stated how or by what process the information was gathered or at whose instruction it was gathered nor on what basis the author says that the information was to be used for the dominant purpose of obtaining legal advice in connection with the disputes with subcontractors and with which subcontractors. Insofar as the subcontractors are subcontractors other than the plaintiff, there is no evidence that litigation was anticipated in relation to those subcontractors.

3. I am unable to determine whether the redactions of the other category 3 documents are of legally privileged material because of the insuffiency of the evidence in relation to the basis of the claim.  I have exercised the discretion to inspect some of the category 3 documents and carried out a preliminary examination of those documents.  I am unable to determine whether or not they are privileged.  The evidence is insufficient to establish the facts which would enable the court to understand the documents and their context and circumstances to enable the court to make an informed judgment whether they are privileged.

4. I will give John Holland an opportunity to put on further evidence concerning these documents for the same reasons I have stated I will give John Holland an opportunity to put on further evidence in relation to the category 1 documents.  In addition, John Holland was only informed that inspection was sought of documents 54 to 110 on 7 December 2012.

Conclusion

1. I uphold the claim of legal professional privilege in relation to document 42 of the category 1 documents, and documents 39, 192, 193, 196 and 213 of the category 3 documents.  I find that the evidence does not establish sufficient facts from which I can make an informed judgment on whether legal professional privilege applies to the remaining category 1 and 3 documents.  The court has a discretion to examine documents for the purpose of determining whether or not the privilege applies, although it will not do so as a matter of course.  I have carried out a provisional examination of the documents.  In the absence of further evidence concerning or explaining the documents, their contents and circumstances, I remain unable to make an informed judgment on whether legal professional privilege applies.  It is appropriate that John Holland be given an opportunity to put on further evidence.  That evidence should establish facts from which the court can make an informed judgment on whether each document, or similar classes of documents, are privileged.  I will hear from the parties as to the directions should be given to facilitate the further evidence.