Col Crawford Pty Ltd v Nissan Motor Co (Australia) Pty Ltd

[2020] NSWSC 87

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Col Crawford Pty Ltd v Nissan Motor Co (Australia) Pty Ltd [2020] NSWSC 87
Hearing dates:	7 February 2020; further submissions 12 and 14 February 2020
Date of orders:	19 February 2020
Decision date:	19 February 2020
Jurisdiction:	Equity - Commercial List
Before:	Stevenson J
Decision:	Privilege claim upheld
Catchwords:	EVIDENCE – privileges – client legal privilege – litigation – whether communications from the plaintiff’s solicitor to the plaintiff and copied to the plaintiff’s forensic accountant privileged – whether such privilege waived
Legislation Cited:	Evidence Act 1995 (NSW)
Cases Cited:	Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No 4) [2014] FCA 796 Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86 Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 Fenwick v Wambo Coal Pty Ltd (No 2) [2011] NSWSC 353 Hancock v Rinehart (Privilege) [2016] NSWSC 12 Hastie Group Ltd (in liq) v Moore (2016) 339 ALR 635; [2016] NSWCA 305 Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 Viterra Malt Pty Ltd v Cargill Australia Ltd (2018) 58 VR 333; [2018] VSCA 118
Category:	Procedural and other rulings
Parties:	Col Crawford Pty Ltd (First Plaintiff) Illiad Pty Ltd (Second Plaintiff) Nissan Motor Co (Australia) Pty Ltd (Defendant)
Representation:	Counsel: H Pintos-Lopez (First Plaintiff) D Bongiorno (Defendant)   Solicitors: HWL Ebsworth Lawyers (Plaintiffs) Allens (Defendant)
File Number(s):	2019/110928

Judgment

1. The plaintiff, Col Crawford Pty Ltd, operated a Nissan motor vehicle dealership pursuant to an agreement with the defendant, Nissan Motor Co (Australia) Pty Ltd, entered into on or about 25 August 2016.

2. These proceedings concern a dispute in relation to the circumstances in which that dealership came to an end.

3. Deloitte provided accounting advice to Crawford. Nissan has issued a subpoena to Deloitte to produce documents.

Privilege

4. A dispute has arisen in relation to packet “S-8”.

5. Crawford contends that documents in that packet are subject to client legal privilege in that they repeat or refer to the substance of legal advice given to Crawford by its solicitor HWL Ebsworth.

6. In support of that claim of privilege Crawford’s solicitor, Mr Christian Teese, has sworn a number of affidavits.

7. Mr Bongiorno, who appeared for Nissan, accepted that Mr Teese’s affidavits (to adopt the words of Brereton J in Hancock v Rinehart (Privilege) [2016] NSWSC 12 at [7]) set out the “relevant characteristics of each document” the subject of the claim for privilege and by “admissible direct evidence” has “set out the facts from which the court can see that that the assertion [of privilege] is rightly made”.

8. In those circumstances, Mr Bongiorno and Mr Pintos-Lopez, who appeared for Crawford, invited me to inspect the documents to scrutinise and test Crawford’s claim for privilege: see Hancock at [31].

9. I did so.

10. With one exception, the documents comprise confidential communications between Crawford and HWL Ebsworth made for the dominant purpose of the provision of legal advice in relation to these proceedings.

11. The documents were cc’d to Mr Grant Cameron at Deloitte.

12. Obviously, to the extent that the documents comprise such communications between HWL Ebsworth and Crawford, they are privileged.

13. I do not think that the mere fact that the documents were cc’d to Mr Cameron means that the documents ceased to be privileged.

14. Generally speaking, a claim that communications between a client and a third party adviser that is not its lawyer should be “carefully scrutinised”: Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No 4) [2014] FCA 796 at [22] (Beach J).

15. This is especially so where, as was the case in Asahi, “the documents in question do not involve direct lawyer-client communications, but are rather third party adviser internal documents or communications between a third party adviser and [the client]”: Asahi at [37] (Beach J).

16. But here the documents do not have this character. They are privileged lawyer-client communications cc’d to the third party adviser.

17. Secondary material, such as the emails by which the privileged communications were copied to Mr Cameron, are also privileged because those communications disclose the privileged communication: for example Fenwick v Wambo Coal Pty Ltd (No 2) [2011] NSWSC 353 at [30] (White J).

18. Accordingly, during argument, I indicated that, with one exception (Document 24 in Ex B), the documents were on the face of it privileged.

19. During argument, Mr Pintos-Lopez indicated that privilege was no longer asserted in respect of Documents 2, 11, 12, 33, 49, 50, 55, 83, 84 and 99 in Ex B.

Waiver of privilege

20. Mr Bongiorno submitted that, by reason of the allegations and evidence deployed by Crawford in the proceedings, there had been a waiver of privilege over particular communications.

21. To understand that argument it is necessary to set out the nature of Crawford’s case.

22. On 25 August 2016, Crawford and Nissan entered into a dealer agreement which gave Crawford the Nissan dealer franchise for the Brookvale prime market area until 1 September 2018.

23. On 27 November 2017, Nissan gave Crawford notice that the franchise would not be renewed. Crawford then, as it was entitled to do under the dealer agreement, sought to find a purchaser for the franchise.

24. Crawford contends that Nissan said that its “preferred partner” to purchase the Brookvale dealership was CKD Automotive Pty Ltd, a company associated with a Mr Chad Davies.

25. In its List Statement, Crawford alleges (referring to itself as “Col Crawford”):

“[14]    On a date or dates not presently known to Col Crawford but at least by 19 April 2018, Nissan had informed [Mr] Davies that:

a.    Nissan would not renew its dealership agreement with Col Crawford;

b.    Nissan’s dealership agreement with Col Crawford would cease on or about 31 August 2018;

c.    [Mr] Davies and/or CKD Automotive was Nissan’s preferred dealer in the Brookvale PMA [i.e. prime market area];

d.    Nissan would only appoint or consent to [Mr] Davies and/or CKD Automotive as the Nissan dealer in the Brookvale PMA.

…

[15]   On a date or dates not presently known to Col Crawford but at least by about 30 April 2018, Nissan had informed potential purchasers other than Davies and CKD Automotive that Davies and/or CKD Automotive was Nissan’s preferred partner for the Brookvale PMA and that they were not to engage in negotiations to acquire the Brookvale PMA dealer franchise.

…

[16]   On or about 22 June 2018, CKD Automotive made an offer to purchase Col Crawford’s dealer franchise for $1.1 million … which was significantly less than its market value.”

26. In an affidavit he swore on 5 August 2019 in these proceedings, the sole director and shareholder of Crawford, Mr Stephen Crawford deposed that on 25 June 2018 he sought advice from Mr Cameron about the following matters:

1. “to comment on the value of $1.1m for goodwill offered”;

2. “whether the position on car inventory was normal”;

3. “whether the pressure applied by the tight deadline set by [Mr Davies] was fair and reasonable”.

27. Mr Crawford deposed that on 28 June 2018 he received the following advice from Mr Cameron in relation to CKD Automotive’s offer to purchase the dealership:

“In summary my view is:

1.    The goodwill offer is below market – up to $1,600,000 below market[.]

2.    The vehicle stock, fixed assets and spare parts offer does not give you the opportunity to recover costs. As such, this is below a market value sale. You should work to quantify this amount asap to build in the your [sic] consideration in accepting the deal[.]”

28. The allegations in the List Statement continue:

“[17]    On or about 12 July 2018, Col Crawford rejected CKD Automotive’s offer pleaded in paragraph 16 above and invited CKD Automotive to make an improved offer.

[18]   On or about 12 July 2018, CKD Automotive declined Col Crawford’s invitation to make an improved offer and stated that there would be no further negotiations.

…

[22]    By reason of [Nissan’s alleged conduct allegedly in breach of contract]:

a.    the potential purchasers of the Brookvale PMA dealer franchise had been reduced to CKD Automotive who was aware that it was the only potential purchaser;

b.    CKD Automotive’s Offer was less than the market value to acquire the Brookvale PMA dealer franchise which Col Crawford would have accepted;

c.    alternatively, CKD Automotive’s Offer was materially less than the amount that CKD Automotive otherwise would have offered to acquire the Brookvale PMA dealer franchise which Col Crawford would have accepted; and/or

d.    other potential purchasers did not offer to acquire the Brookvale PMA dealer franchise for its market value or for an amount materially greater than CKD Automotive’s Offer which Col Crawford would have accepted.” (Emphasis added.)

29. Mr Bongiorno submitted that, by making the allegations referred to in the preceding paragraph, particularly the allegation that Crawford “would have accepted” a higher offer from CKD Automotive, Crawford has put in issue Crawford’s “disposition” to the prospective sale of the dealer franchise; in particular its disposition to accept offers of a particular type had those offers been made. There would, Mr Bongiorno submitted, be an inconsistency between making that allegation and maintaining privilege over communications with HWL Ebsworth about “that same issue”.

30. As it is Crawford, and not Deloitte (the party required to produce the documents) that asserts the privilege, the question is governed by the common law rather than by the Evidence Act 1995 (NSW) as s 131A is not engaged: for example State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 at [32] (Allsop P, with Hodgson JA and Sackville AJA agreeing). It is common ground that nothing turns on this as there is no material difference between the position at common law and under the Act.

31. Client legal privilege may be waived by conduct of the party enjoying the privilege that is inconsistent with the maintenance of the privilege.

32. Whether such inconsistency exists is informed by consideration of fairness.

33. To make out a waiver, it must generally be shown that the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged document.

34. Ordinarily, waiver only occurs where the contents of the privileged document are relied on by the party enjoying the privilege.

35. Relevant inconsistency and unfairness may arise where a party makes assertions about his or her state of mind where there are confidential documents likely to have affected that state of mind and which are material to the formation of that state of mind and where a party makes an assertion that necessarily lays such confidential documents open to scrutiny.

36. These propositions arise from such cases as: Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 at [28]-[29] (Gleeson CJ, Gaudron, Gummow and Callinan JJ); Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86 at [52]; DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 at [58] (Allsop J); Hastie Group Ltd (in liq) v Moore (2016) 339 ALR 635; [2016] NSWCA 305 at [52]-[53] (Beazley P and Macfarlan JA); and Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 at [48] (Hodgson JA); Viterra Malt Pty Ltd v Cargill Australia Ltd (2018) 58 VR 333; [2018] VSCA 118 at [52] (Whelan, Kyrou and McLeish JJA).

37. During argument, I identified 11 documents, comprising emails in late June and early July 2018 between lawyers at HWL Ebsworth and Mr Crawford, each cc’d to Mr Cameron that, speaking very generally, deal with the offer of $1.1 million made by CKD Automotive.

38. I invited submissions from Mr Pintos-Lopez and Mr Bongiorno about those documents.

39. Having received those submissions, and having reconsidered the documents, including those referred to at [37] in the light of those submissions, I am satisfied that there is no inconsistency between the allegations made by Crawford and the maintenance of the privilege claimed such as would give rise to a waiver.

40. Crawford contends that it would have accepted an offer for the Brookvale franchise if it was made at market value by CKD Automotive or another buyer.

41. Assuming that this allegation puts in issue Mr Crawford’s state of mind about that matter, the short point is that none of the documents in question is directed to that matter. None is a document likely to have affected that state of mind.

Conclusion

42. I order that:

1. Access to the documents produced on subpoena by Deloitte, being Court item 201900110928001-S-8, be restricted to the plaintiffs.

2. The defendant pay the costs of the plaintiff’s notice of motion of 28 November 2019.

3. The parties have liberty to apply in respect of the form of these orders, such liberty is to be exercised by 5 pm on 21 February 2020.

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Amendments

20 February 2020 - Amended [29] to remove “Mr” before Crawford.

Decision last updated: 20 February 2020