Dr Geoffrey Cocker v Dennis O'Connor Pty Ltd

[2007] NSWDC 4

CITATION:	Dr Geoffrey Cocker v Dennis O'Connor Pty Ltd [2007] NSWDC 4
HEARING DATE(S):	30 January 2007
JUDGMENT DATE:	1 February 2007
JURISDICTION:	Civil
JUDGMENT OF:	Rolfe DCJ
DECISION:	1. The Court refuses the second defendant’s application to inspect documents P19 and P20.; 2. In regard to documents P2 – P18, the Court concludes that these documents are privileged with the exception of that part of P4 dated “26/9/01” referring to a telephone conversation between the plaintiffs’ solicitor and Mr Beames. This portion of P4 should be made available to the second defendant for inspection, but not the remaining portion under the date “27/9/01” and the Court so orders.; 3. Order each party to pay their own costs of the NOM.
CATCHWORDS:	Claim by Plaintiffs against a firm of accountants based on misrepresentations, alleged to have been made by accountant, that the Plaintiffs had an enforceable contract to become part of a Medical Practice - Plaintiffs obtained advice prior to commencement of these proceedings from Senior Counsel about whether they had a cause of action against the Medical Practice - In the course of these proceedings, Senior Counsel's opinion was discovered to the Defendants and privilege over it waived. - Second Defendant applied to have access to documents referred to by Senior Counsel in his opinion on the basis that there was an implied waiver of privilege - Second Defendant submitted that matter ought be dealt with under the Common Law - Held that the matter should be determined under the provisions of Section 122 and Section 126 of the Evidence Act 1995 and not the Common Law - Held that the opinion of Senior Counsel could be understood on its own without the necessity of having to inspect the documents that the Second Defendant sought access to - Held further that no forensic disadvantage would, as a result, be suffered by the Second Defendant - Second Defendant's application for access to the documents therefore refused.
LEGISLATION CITED:	Fair Trading Act 1987 (NSW) Evidence Act 1995 Uniform Civil Procedure Rules
CASES CITED:	Mann v Carnell (1999) 201 CLR 1 Thomas v State of New South Wales SC of NSW 19/5/06 VC 200602979 para 17 Towney v Minister for Land & Water Conversation for the State of NSW Attorney General (NT) v Maurice (1986) 161 CLR 475 Goldberg v Ng (1995) 185 CLR 83 Telstra Corporation Limited v B T Australasia Pty Limited (1998) 85 FCR 152
PARTIES:	Dr Geoffrey Cocker (Plaintiff/Respondent) Dennis O'Connor Pty Ltd (Second Defendant/Applicant)
FILE NUMBER(S):	59/05
COUNSEL:	M Tyson (Plaintiff/Respondent) G M Gregg (2nd Defendant/Applicant)

JUDGMENT

1 The plaintiffs conducted a medical practice at Jindabyne and Berridale until 1999. In the course of doing so they sought accounting, taxation and business advice from O’Connor McNamara Chartered Accountants. The plaintiffs dealt with Mr Peter Beames, whose company, Peter Beames Pty Limited, the second defendant, was part of the O’Connor McNamara business.

2 The plaintiffs allege that O’Connor McNamara was retained between 1 January 1999 and July 1999 to advise them on a proposal for the second plaintiff’s practice to become part of the Nugget’s Crossing Family Practice, also located at Jindabyne, and to negotiate an arrangement on behalf of either the first plaintiff or the second plaintiff for this to occur by the time that the Nugget’s Crossing Family Practice commenced operations.

3 The plaintiffs allege that Mr Beames conducted negotiations with members of the Nugget’s Crossing Family Practice and shortly after 30 June 1999, through Mr Beames, O’Connor McNamara represented to the plaintiffs that the first plaintiff had a verbal contract which would enable him to practise in the Nugget’s Crossing Family Practice, that the contract was enforceable and that “contract was supported by facsimile transmissions”.

4 The plaintiffs say that as a consequence of this representation, the second plaintiff moved its practice into the Nugget’s Crossing Family Practice and the first plaintiff sold some premises in Jindabyne in November 1999.

5 The plaintiffs allege that, in fact, they did not have a verbal contract that could be enforced, that no enforceable contract had been finalised by 30 June 1999 and that the first plaintiff has not been permitted to practise from the Nugget’s Crossing Family Practice since the 1999 winter ski season came to an end.

6 The plaintiffs’ claims against O’Connor McNamara have been pleaded as a contravention of s 42 of the Fair Trading Act 1987 (NSW) and in the alternative, in negligence in making the representation. Alternatively, the plaintiffs allege that O’Connor McNamara had a duty of care to advise them to obtain legal advice as to whether the first plaintiff had an enforceable right to practise in the Nugget’s Crossing Family Practice. The plaintiffs say that O’Connor McNamara failed to give such advice. Alternatively, the plaintiffs say that O’Connor McNamara owed a duty of care not to give them legal advice by reason of C.3 of the Code of Professional Conduct of the Institute of Chartered Accountants, that they breached this code and were thereby negligent because they advised the plaintiffs that the first plaintiff had a verbal contract which could be enforced and which “contract was supported by facsimile transmissions”.

7 The plaintiffs’ claim in negligence based on the retainer is also pleaded in the alternative as a breach of contract.

8 The second defendant has moved the Court by a Notice of Motion filed on 27 September 2006 seeking an order that the defendants be granted leave to inspect documents which have been produced to the Court in answer to subpoenas by Bradley Allen Lawyers and Gillespie Jones and Co. The documents in question have been assembled and were handed to my associate and marked MFI 1. It was agreed between counsel that the Court should examine the documents in order to determine whether or not to make the orders sought by the second defendant.

9 The plaintiffs claim privilege in relation to the documents in MFI 1. In that respect, in accordance with the plaintiffs’ obligations under the rules to provide discovery, the documents in MFI 1 are identified as items P2-P20 in part 1 of the plaintiffs’ supplementary list of documents served on the second defendant’s solicitors on 10 November 2006.

10 In support of the claim for privilege the plaintiffs rely, in particular, on the material contained in the affidavit of Mr Wijesinghe, the solicitor who has carriage of the matter on their behalf. In his affidavit sworn on 29 January 2007 Mr Wijesinghe says he spoke to Mr Flint of Bradley Allen and Mr Nesbitt of Gillespie Jones, both of whom told him that the documents were created for the purpose of giving the first plaintiff legal advice as to whether or not he had a claim against the Nugget’s Crossing Medical Practice.

11 The plaintiffs’ supplementary list of documents included a written opinion from Mr A J Meagher SC dated 13 July 2001. It was document number 195 in part 1 of the supplementary list and privilege was not claimed in relation to it. However, the observations provided to Mr Meagher SC are still the subject of a claim for privilege, as well as a statement of the first plaintiff. These documents are P19 and P20 in MFI 1.

12 Mr Gregg appeared for the second defendant. He handed the Court a summary of the issues relating to the order sought in the Notice of Motion. Mr Gregg submitted that, with regard to P19 and P20, because the plaintiffs had expressly waived a claim for privilege in relation to Mr Meagher SC’s opinion, that they had impliedly waived privilege over documents P 19 and P20. He relied on Mann v Carnell (1999) 201 CLR 1, Thomas v State of New South Wales, McClellan CJ at CL, Supreme Court of NSW 19/5/06 BC 200602979 at para 17, and Towney v Minister for Land and Water Conservation for the State of NSW (1997) 76 FCR 401.

13 Mr Tyson appeared for the plaintiffs and his written submissions are dated 30 January 2007. In summary, Mr Tyson submitted that Mr Meagher SC advised the plaintiffs about their claim against the Nugget’s Crossing Family Practice. He also submitted, with regard to P19 and P20 as follows:

“26 The key issue and most of the case law which analyses whether there has been a loss of privilege in an associated material concerns the forensic use made by the party looking to maintain privilege in the associated material of the communication that refers to the associated material.”

14 In this case the communication was Mr Meagher SC’s opinion and the associated material was P19 and P20.

15 Mr Tyson relied on Attorney General (NT) v Maurice (1986) 161 CLR 475, Goldberg v Ng (1995) 185 CLR 83, Telstra Corporation Limited v B T Australasia Pty Limited (1998) 85 FCR 152 and Towney v Minister for Land and Water Conservation for the State of NSW (1997) 76 FCR 401.

16 Mr Tyson submitted the plaintiffs had not made any forensic use of Mr Meagher SC’s opinion , nor had they foreshadowed doing so. In this respect, Mr Tyson informed the Court that the claim for privilege over Mr Meagher SC’s opinion had been waived because the second defendant had a copy of it prior to the proceedings being commenced. Mr Gregg agreed that the second defendant had in its possession an incomplete copy of Mr Meagher SC’s opinion prior to the commencement of the proceedings.

17 Mr Gregg submitted that under the common law the plaintiffs’ actions would be considered inconsistent in that, on the one hand, privilege had been waived in relation to the complete copy of Mr Meagher SC’s opinion, but privilege had been maintained in relation to the associated material Mr Meagher SC relied upon in preparing his advice.

18 On the other hand, Mr Tyson submitted that the matter was governed by the provisions of ss 122 and 126 of the Evidence Act 1995 and not the common law. I accept this submission.

19 In Mann v Carnell the High Court determined that the common law in relation to privilege had not been adapted by derivation to the terms of s 118 and 122 of the Evidence Act and those sections were confined to the adducing of evidence in the course of a hearing in a Court. However, by virtue of the incorporation into the Uniform Civil Procedure Rules of the definition of “privileged document” and “privileged information” in schedule 9 of those rules, I am of the opinion that ss 118 and 122 of the Evidence Act are no longer confined to the adducing of evidence in the course of a hearing in a Court.

20 The matter therefore has to be determined under the provisions of the Evidence Act. In that respect, Mr Tyson submitted that the Court ought only order production of P19 and P20 for inspection by the second defendant if it could be said under s 126 of the Evidence Act that is was reasonably necessary for that to occur so that there could be, objectively, a proper understanding of the opinion of Mr Meagher SC as envisaged by s 126 of the Act. I accept this submission because a party would obviously be at a forensix disadvantage if it was unable to understand a document (in respect of which privilege had been waived) without access to the associated material. In my opinion, this follows from the cases relied on by Mr Tyson.

21 Having read Mr Meagher SC’s opinion and documents P19 and P20, I have concluded that Mr Meagher’s opinion can be understood on its own without the necessity of having to inspect documents P19 and P20. There is, therefore, no forensic disadvantage that could be suffered by the second defendant in this respect. Accordingly, the Court refuses the second defendant’s application in relation to P19 and P20.

22 Counsel for the second defendant informed the Court that leave to inspect documents P2-P18 was sought on the basis of the history of the discovery in this case. He said his client had no confidence that the documents were privileged. Because the Court needed to inspect P19 and P20, counsel for the second defendant requested that the Court also peruse P2-P18. Counsel for the plaintiffs agreed that the Court should do this. Having done so, I have concluded that all these documents are privileged with the exception of that part of P4 dated “26/9/01” referring to a telephone conversation between the plaintiffs’ solicitor and Mr Beames. This portion of P4 should be made available to the second defendant for inspection, but not the remaining portion under the date “27/9/01” and the Court so orders.

23 The parties have informed the Court that the matters raised in paragraphs 2-4 of the second defendant’s Notice of Motion have been resolved. That then leaves costs and I will now hear the parties on that question.

24 I direct that MFI 1 be returned to the plaintiffs’ solicitor.

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