Cottage Holdings Pty Ltd v Town of East Fremantle

[2003] WASC 77

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   COTTAGE HOLDINGS PTY LTD -v- TOWN OF EAST FREMANTLE & ANOR [2003] WASC 77

CORAM:   MASTER SANDERSON

HEARD:   7 & 19 MARCH 2003

DELIVERED          :   10 APRIL 2003

FILE NO/S:   CIV 2173 of 1998

BETWEEN:   COTTAGE HOLDINGS PTY LTD

Plaintiff

AND

TOWN OF EAST FREMANTLE
First Defendant

MCLEOD & CO (A FIRM)
Second Defendant

Catchwords:

Practice and procedure - Application for inspection of documents subject to a claim for privilege - Application for further and better answers to interrogatories - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr P A Kyle

First Defendant             :     Mr P Van Der Zanden & Mr M J Feutrill

Second Defendant         :     Mr A Chai

Solicitors:

Plaintiff:     Kyle & Co

First Defendant             :     Minter Ellison

Second Defendant         :     Blake Dawson Waldron

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

Cottage Holdings Pty Ltd v Town of East Fremantle & Anor [1999] WASC 215

Grant v Downs (1976) 135 CLR 674

Pegrum & Anor v Fatharly (1996) 14 WAR 92

Telstra Corporation Ltd & Anor v BT Australasia Pty Ltd & Anor (1998) 85 FCR 152

Case(s) also cited:

Health & Life Care Ltd v Price Waterhouse (1997) 69 SASR 362

Kelly v Commonwealth of Australia (1980) 29 ACTR 11

Sharpe v Smail (1975) 49 ALJR 130

Ugle v State of Western Australia [2002] WASCA 117

Wardrope v Dunn [1996] 1 Qd R 224

1. MASTER SANDERSON:  By this application the plaintiff challenges the right of the defendants to claim legal professional privilege in relation to certain discovered documents.  The way in which the application has proceeded is somewhat unusual and has a bearing on its determination.

2. When the action was commenced by the plaintiff the present first defendant was the sole defendant.  The claim related to a deed which was drawn up to implement a conservation plan which was required as part of a subdivisional approval of certain property within the municipality which constitutes the first defendant.  Without going into detail, it is enough if I say that the plaintiff alleges that the deed which was drawn up did not accurately reflect the agreement between the parties.  The plaintiff claimed rectification for the deed and damages for breach of contract and in negligence.  Damages were also sought under the provisions of the Fair Trading Act 1987 (WA).  The claim is a good deal more complex than this brief summary indicates but for present purposes, no further detail is required. 

3. On 17 May 1999 I gave leave to the defendant to issue a third party notice against the present second defendant.  The second defendant acting on instructions from the first defendant drew up the deed the subject of the dispute.  The first defendant (then the sole defendant) provided discovery verified by affidavit on 13 April 1999.  In part 2 of the first schedule the first defendant listed 85 documents over which it claimed privilege.  Seventy‑five of these documents were said to be privileged on the basis of legal professional privilege.  In broad terms these were documents which passed between the first defendant as client and the second defendant (then the third party) as its solicitors in relation to the preparation of the deed.  By summons dated 16 August 1999 the plaintiff challenged the first defendant's claim to privilege and sought the right to inspect the documents over which privilege had been claimed.  The matter came on for hearing before Master Bredmeyer on 21 October 1999 and the learned Master delivered his reasons for decision on 5 November 1999:  see Cottage Holdings Pty Ltd v Town of East Fremantle & Anor [1999] WASC 215. According to the learned Master's reasons, the plaintiff's case was put on a number of different grounds. First, it was said, that this was a case where the documents which were available for inspection would give a misleading impression unless they were read with documents over which privilege was claimed. On that basis, it was said, the privileged documents ought be made available for inspection. Master Bredmeyer rejected that submission. He said (at par 6):

   "I have inspected documents for which privilege is claimed as I am entitled to under O 26 r 10.  Having done so, I do not consider that any of them are so related to the documents which proceed and follow them, and for which privilege is claimed, that fairness requires that those other documents be disclosed also.  I do not consider that any of the disclosed documents produce an unfair picture which could be rectified if surrounding circumstances, for which privilege is claimed, were revealed."

4. The plaintiff's second argument was that the first defendant had waived its legal professional privilege by issuing third party proceedings against the present second defendant.  The learned Master rejected that submission.  He noted that third party directions had been made by Registrar Powell on 15 June 1999 with the effect that the third party was at liberty to appear at the trial and take such part as the Judge should direct, and that the question of liability of the third party to the defendant was to be tried at or immediately after the trial of the action.  The Master then said (at par 11):

   "I do not consider that the issuing of the third party proceedings in the light of those directions amounts to a waiver by the defendant of its right to claim legal professional privilege.  If the trial Judge ordered that the trial of the third party action should take place at the same time as the trial of the main action, then I consider the defendant would have waived its legal professional privilege and the documents for which inspection is now sought would be admissible in both trials.  But in the absence of such an order from the trial Judge, I do not consider it is unfair or improper for the defendant to maintain privilege in the main action, although it will not be able to do so in the third party action."

5. The third argument put by the plaintiff was that the defendant, by its pleading, had put its state of mind in issue and that being the case, it was necessary to know what legal advice it had received.  In making this submission the plaintiff relied on the Federal Court decision in Telstra Corporation Ltd & Anor v BT Australasia Pty Ltd & Anor (1998) 85 FCR 152. Essentially the argument ran this way. The plaintiff says in its statement of claim that prior to the deed being drawn up, the parties had a common continuing intention as to its contents. It is said the deed did not give effect to that common continuing intention and it therefore requires rectification. The first defendant, by its defence, denies any such continuing common intention and denies that rectification of the deed is required. The plaintiff says then that the state of mind of the first defendant, as at the date the deed was drawn up, is an issue between the parties. That being so, the documents over which privilege is claimed, being documents which go to the state of mind of the parties at the relevant time, should be available for inspection. The learned Master rejected that submission. He referred to the pleadings and concluded that the issues between the parties did not require the plaintiff be permitted to inspect the first defendant's privileged documents.

6. The learned Master then went on to consider whether or not privilege could attach to documents brought into existence as a consequence of interaction between client and solicitor in a conveyancing matter.  It is worth noting that the learned Master considered this question with reference to the decision of the High Court in Grant v Downs (1976) 135 CLR 674. In other words, the learned Master was using what was referred to as the "sole purpose" test. Applying that test and having inspected all of the documents, the Master concluded that privilege attached to each and that none of the documents over which privilege was claimed should be available for inspection. There was no appeal against the learned Master's decision.

7. As I have mentioned, the plaintiff has now joined the first defendant's solicitors as second defendant to these proceedings.  As a third party, the present second defendant took no part in the plaintiff's application for inspection before Master Bredmeyer.  On 27 September 2002 the plaintiff issued a chamber summons seeking the following orders:

   (1)The plaintiff have leave to administer interrogatories to the second defendant as contained in the minute of interrogatories filed herein.

   (2)The second defendant have 14 days after service of the interrogatories within which to make and file answers or objections verified by affidavit of Geoffrey Owen to the interrogatories.

   (3)The first defendant make available for inspection by the plaintiff the documents comprising items 3‑37 of part 2 of the first schedule of the first defendant's list of documents dated and filed 8 April 1999.

   (4)The second defendant give discovery of all originals and copies in its possession of documents listed in items 3‑37 of part 2 of the first schedule of the first defendant's list of documents dated and filed 8 April 1999, together with all file notes, memoranda or other documents in its possession relating to the preparation of a deed between the plaintiff and the first defendant dated 24 August 1995.

8. The matter came on for mention in general chambers before Acting Master Chapman on 12 December 2002.  The learned Master made a number of orders, the first two of which are relevant for present purposes.  They were:

   (1)The second defendant answer the interrogatories other than those referred to in par 4(d) of the second defendant's written submissions dated 9 December 2002 on or before 25 January 2003.

   (2)Documents referred to in par 4 of part 2 of the first schedule of the second defendant's discovery be individually enumerated and described by 23 January 2003.

9. In compliance with the first of these orders the second defendant filed an affidavit of Geoffrey Owen sworn 13 January 2003.  Mr Owen either answers or objects to answering each of the interrogatories referred to in par 1 of Acting Master Chapman's orders.  On the same day, Mr Owen also swore an affidavit verifying a supplementary list of documents.  Part 2 of the first schedule to that list refers to 45 documents which are fully described and the date of each is provided.  This list does not match up precisely with the list in part 2 of the second schedule of the first defendant's discovery.  However, it is clear that many documents are common to both lists.  For instance, document 9 in the first defendant's discovery is described as "Letter from McLeod & Co to the Town Clerk of the defendant (plus 3 copies) - 15.07.94".  Document 3 in the supplementary list of the second defendant is described as "File copy of letter from McLeod & Co to the Town Clerk of the Town of East Fremantle - 15/07/94".  Clearly both lists are referring to the same document.  That is hardly surprising.  Given the solicitor/client relationship, it is to be expected that the two lists would be almost identical.

10. It is convenient to deal first with the issues of discovery.  When he made orders in December 2002, Acting Master Chapman, apart from ordering the second defendant to more fully describe the documents over which privilege was claimed, referred the discovery issues raised in par 3 and 4 of the plaintiff's chamber summons to a special appointment.  It was the defendant's position that all the plaintiff was seeking to do by this chamber summons was to relitigate matters which had already been determined against the plaintiff by Master Bredmeyer.  It was said that the plaintiff was mounting a collateral attack on the earlier decision and that should not be permitted.

11. It was the plaintiff's submission that the position had changed since the application before Master Bredmeyer.  The plaintiff now alleged that at all material times the second defendant was acting as its solicitor.  It was said this was an issue between the parties and as a consequence it was entitled to inspect the plaintiff's privileged documents.  It was said that an inspection of those documents might reveal that the second defendant was acting for the plaintiff, as well as the first defendant, and that the interests of justice required inspection be permitted. 

12. At the outset, I should say that I have approached this application with a great deal of caution.  It is only subtly different to the application which was before Master Bredmeyer and which was determined by him against the plaintiff.  Having said that, I acknowledge that the pleadings now raise an issue which was not live when the application for inspection was heard by the Master.  The question then is whether the claim that the second defendant acted as the plaintiff's solicitor sufficiently alters the position to justify an order that the plaintiff be allowed to inspect the privileged documents.

13. The plaintiff was able to point to some evidence that the second defendant acted as its solicitor.  While acknowledging that there was no formal engagement, it was said that formalities were not necessary and it was a question of whether the second defendant acted de facto as the plaintiff's solicitor:  see Pegrum & Anor v Fatharly (1996) 14 WAR 92 per Ipp J at 95. The plaintiff was able to point to the fact that it paid for the preparation of the deed. Reference was also made to a note prepared by a solicitor in the employ of the second defendant, addressed to the Department of Land Administration which, it was said, could be construed as confirming the second defendant was acting for the plaintiff: this note appears as annexure 6 to the interrogatories. Of course it is not for me to determine whether or not the second defendant was acting as a solicitor for the plaintiff. That is an issue for trial. However, I would accept, for the purposes of this case, that the plaintiff has an arguable case on this issue.

14. As a starting point, it must be accepted that legal professional privilege attaches to all of the documents for which the claim is made both by the first defendant and the second defendant.  That, I think, is the consequence of the decision of Master Bredmeyer.  Furthermore, the privilege claimed by the second defendant is, in fact, the first defendant's privilege.  At the very least there must be joint privilege as between the defendants.  That being so, the question is whether the plea made by the plaintiff against the second defendant strips away the first defendant's privilege. 

15. If it is to do so, it can only be on the basis of what might be called the fairness test - that is to say, it is not in the interests of justice that privilege be maintained.  There can be no suggestion of an express waiver nor, in my view, can there be any suggestion of an implied waiver.  The learned Master concluded that there was nothing in the privileged documents, when put against the documents available for inspection, that would give rise to a misleading impression such as would amount to an implied waiver of privilege as outlined in Attorney General (NT) v Maurice (1986) 161 CLR 475. Nor can it be said that this plea in relation to the second defendant somehow raises an issue of the state of mind of the first defendant, such as would give rise to a requirement that the documents be available for inspection. This case is not of that ilk.

16. Reduced to its essentials, the plaintiff's argument can be summarised in this way.  There is an issue between the parties as to whether or not the second defendant was acting as the plaintiff's solicitor.  There may be documents over which privilege is claimed which shed light on that issue.  It would be unfair if the plaintiff were denied access to those documents.  With respect, this submission confuses the way in which "unfairness" arises in relation to claims for privilege.  If documents are discovered and made available for inspection which, when read without additional documents over which privilege is claimed, would lead to a misleading impression, then that is unfair.  The Court will, accordingly, imply a waiver of privilege.  But there is no general esoteric notion of "unfairness" which, of itself, does away with a claim for privilege.  In my view there is no basis in this case for allowing inspection. 

17. The second way in which the plaintiff framed its case was as follows.  It was said that instructions given by a party to its solicitors will only be privileged when there is an element of advice associated with the giving of and receiving the instructions.  On that basis, it was said, the plaintiff should be entitled to inspect documents which were characterised as instructions but not advice.  About this, two things can be said.  First, that argument appears to have been run before and rejected by Master Bredmeyer in the earlier decision:  see par 17 and 18.  Second, I can see no basis upon which the decision of Master Bredmeyer is affected by the plaintiff adding the second defendant.  It does not in any way affect or impact upon the arguments put at the original hearing.  In my view this does not provide a basis for allowing inspection of the privileged documents.

18. There remains then the question of the answers to interrogatories.  The nature of the objections taken by the second defendant can be illustrated by reference to interrogatory 1.19.  This interrogatory refers to interrogatory 1.18.  That interrogatory asked whether Owen (the solicitor employed by the second defendant who drew the deed) received any instructions from the first defendant regarding the preparation of the deed.  The answer to that question was yes.    Question 1.19(a) then asked what was the substance of the instructions.  The second defendant declined to answer.  In my view the refusal to answer the interrogatory is entirely appropriate. 

19. In reaching that conclusion I am again mindful of the decision of Master Bredmeyer.  The learned Master held that the documents over which privilege was claimed included those documents which might be characterised as instructions from the first defendant to the second defendant.  To be consistent the second defendant should not be required to answer an interrogatory which reveals the substance of the instructions.  Furthermore, Mr Owen, no doubt properly advised, has claimed that to answer the interrogatory would compromise the privilege claimed by the first defendant.  There is no reason to doubt his sworn statement on that point.  To go behind a claim for privilege, whether it be privilege claimed in a discovery affidavit or in answers to interrogatories, it is necessary for the party attacking the privilege to establish some basis on which it can be said that privilege is either waived or does not apply.  In this case the plaintiff has not established any such basis. 

20. I would dismiss this application.  I will hear the parties as to costs.