Duncan as Liquidator of WDR Iron Ore Pty Ltd (in Liquidation) v SMA Industries Pty Ltd (No 3)

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
DUNCAN AS LIQUIDATOR OF WDR IRON ORE PTY LTD (IN LIQUIDATION) v SMA INDUSTRIES PTY LTD (No 3)
[2021] SASC 94
Judgment of the Honourable Justice Blue

EVIDENCE - ADMISSIBILITY - EXCLUSIONS: PRIVILEGES - CLIENT LEGAL PRIVILEGE - GENERAL PRINCIPLES - POWERS OF COURT
EVIDENCE - ADMISSIBILITY - EXCLUSIONS: PRIVILEGES - CLIENT LEGAL PRIVILEGE - LOSS OF PRIVILEGE
Judgment was previously entered in favour of the applicant against SMA Industries Pty Ltd for $1,186,114.31 plus costs of action. The applicant has sought a non-party costs order against SMA’s holding company, Smithbridge Group Pty Ltd, and its director and shareholder Albert Smith.
On 22 June 2021 the solicitors for Smithbridge Group and Mr Smith filed and served an affidavit sworn by their principal solicitor Shane Williamson on 21 June 2021 which exhibited a chain of emails comprising communications between solicitor and client between 27 April and 9 May 2018.
Smithbridge Group and Mr Smith seek orders for the uplifting and return of the exhibited emails which they contend were inadvertently exhibited to the affidavit.
The applicant contends that, as a result of Mr Williamson exhibiting the email exchange, there has been an imputed waiver of legal professional privilege; in the alternative there has been an imputed waiver of privilege as a result of the waiver of privilege in an earlier privileged email sent on 23 April 2018; and in the alternative the Court in the exercise of its discretion ought to refuse the relief sought.
Held (granting the application):
1There was no implied or imputed waiver of privilege in the email chain (at [75] and [79]).
2There has been no imputed waiver of privilege in the email chain as a result of the waiver of privilege in the earlier privileged email sent on 23 April 2018 (at [100]).
3The Court in the exercise of its discretion ought to grant the relief sought (at [115]).

Attorney-General (NT) v Maurice (1986) 161 CLR 475; Benecke v National Australia Bank (1993) 35 NSWLR 110; Bradford v Devlot 17 Pty Ltd [2020] VSC 792; Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; Mann v Carnell (1999) 201 CLR 1; Marshall v Prescott [2013] NSWCA 152; Viterra Malt Pty Ltd v Cargill Australia Ltd (2018) 58 VR 333, considered.

DUNCAN AS LIQUIDATOR OF WDR IRON ORE PTY LTD (IN LIQUIDATION) v SMA INDUSTRIES PTY LTD (No 3)
[2021] SASC 94
Civil

BLUE J: These reasons address an application by Smithbridge Group Pty Ltd (Smithbridge) and its director and shareholder Albert Smith for the uplifting and return of an affidavit sworn by their solicitor Shane Williamson on 21 June 2021 which they contend inadvertently exhibited an email exchange the subject of legal professional privilege.
Mr Duncan contends that, as a result of Mr Williamson exhibiting the email exchange, there has been an imputed waiver of legal professional privilege; in the alternative there has been an imputed waiver as a result of the waiver of privilege in an earlier privileged email sent on 23 April 2018; and in the alternative the Court in the exercise of its discretion ought to refuse the relief sought by Smithbridge and Mr Smith.
Background
In 2017 the first applicant Stephen Duncan as liquidator of WDR Iron Ore Pty Ltd (In Liquidation) (WDRIO) instituted this proceeding against six unrelated respondents seeking to recover what he claimed were unfair preference payments. One of those respondents was SMA Industries Pty Ltd (SMA). Lipman Karas act as Mr Duncan’s solicitors in the proceeding. David Colovic is the principal solicitor acting for Mr Duncan.
SMA was a wholly owned subsidiary of Smithbridge. Mr Smith was the sole shareholder and director of Smithbridge. SMA instructed solicitors in Queensland, ClarkeKann Lawyers, to act for it in the proceeding. Shane Williamson was the principal solicitor acting for SMA, assisted by a senior associate, Adam Khan.
On 23 April 2018 a mediation took place in relation to Mr Duncan’s preference claims (the mediation). The Smithbridge group’s Chief Operations Officer, Oliver Martin, together with Mr Khan attended the mediation on behalf of SMA. Mr Duncan’s claim against SMA was not resolved.
On 23 April 2018 at 9.36 pm Mr Martin sent an email to Mr Williamson, Mr Khan, Mr Smith and Mr Toigo (chairman of ClarkeKann) referring, amongst other things, to what transpired at the mediation. It is common ground that this email was originally the subject of legal professional privilege and that this privilege has recently been waived.
On 27 April 2018 Mr Khan sent an email to Mr Smith, Mr Martin and others, to which Mr Smith responded. On 1 May Mr Khan sent an email to Mr Smith, Mr Martin and others, to which Mr Martin responded on 2 May, to which in turn Mr Khan responded. On 3 May Mr Khan sent an email to Mr Smith, Mr Martin and others, to which Mr Martin responded on 4 May. On 4 May Mr Smith sent an email to Mr Toigo and others, to which Mr Toigo responded, to which in turn Mr Smith responded (the 4 May email exchange). Altogether, there were four email exchanges between 27 April and 4 May 2018 but, rather than sending a new email at the beginning of each such exchange, the author of the first email in each exchange sent the email by way of reply to the last email in the previous exchange. Accordingly, by 4 May 2018 there were ten emails in one email chain (the 27 April-4 May email chain). It is common ground that this email chain was the subject of legal professional privilege. It is this email chain that is the subject of the application by Smithbridge and Mr Smith.
On 8 May 2018 at 11.29 am Mr Duncan’s solicitors, Lipman Karas, sent by email a letter signed by Mr Colovic to ClarkeKann to the attention of Mr Khan. The letter foreshadowed an intention to seek a non-party costs order against Mr Smith if Mr Duncan were to recover judgment against SMA on the ground that Mr Duncan had reason to believe that SMA had ceased trading, would be unable to satisfy any costs order from its own resources, was impecunious and was prosecuting the defence for collateral purposes.
On 9 May 2018 at 3.44 pm ClarkeKann sent by email a letter signed by Mr Khan in response. The letter said in the fourth paragraph:
The propositions made in paragraphs 1 to 3 on page 2 of your letter dated 8 May 2018 are incorrect. SMA has not ceased trading. SMA retains employees and is a party to ongoing contracts. SMA is not impecunious.
Although unknown to Lipman Karas at the time, Mr Khan had sent an email to Mr Smith and others at 2.54 pm attaching Mr Colovic’s letter together with a draft letter that he said ClarkeKann were sending that afternoon (inviting Mr Smith to telephone him if he would like to discuss it) and at 5.11 pm Mr Smith sent an email to Mr Khan in response saying that he agreed with Mr Khan’s response. Although the 9 May email exchange was not related to the 4 May email exchange, rather than sending a new email on 9 May, Mr Khan sent the email by way of reply to the last email in the 4 May email exchange. It is common ground that the 2.54 pm and 5.11 pm emails (the 9 May email exchange) were originally the subject of legal professional privilege and that this privilege was waived in respect of them on 21 June 2021.
On 16 May 2018 at 1.38 pm Mr Khan sent an email to Mr Colovic making an offer of settlement (the 16 May email). The email included a statement that, based on the books and records of SMA, there were no possible avenues of recovery open to a liquidator if Mr Duncan obtained judgment against SMA. It also said that the shareholder of SMA had set aside $100,000 to defend the matter and thereafter ongoing support would be withdrawn. It is common ground that this email was the subject of settlement privilege and that this privilege has been waived by agreement.
The matter did not resolve and in due course proceeded to trial.
In May 2020 I found that Mr Duncan as liquidator of WDRIO was entitled to judgment against SMA for $996,274.39 plus interest.[1] Judgment was subsequently entered in favour of Mr Duncan as liquidator of WDRIO against SMA for $996,274.39 plus interest fixed at $189,839.92.
[1] Duncan as Liquidator of WDR Iron Ore Pty Ltd (In Liquidation) v SMA Industries Pty Ltd [2020] SASC 88.
In July 2020 I ordered that, except in respect of costs in relation to the insolvency issue, SMA pay 90 per cent of Mr Duncan’ costs of the action as against SMA (costs in relation to insolvency being governed by a consent order made on 21 May 2018 under which SMA was ordered to pay 20 per cent of those costs up to 15 May 2018 and 50 per cent of those costs from 16 to 18 May 2018).[2] The ability of Mr Duncan to seek a non-party costs order was reserved.
[2] Duncan as Liquidator of WDR Iron Ore Pty Ltd (In Liquidation) v SMA Industries Pty Ltd (No 2) [2020] SASC 127.
In February 2021 SMA was placed into liquidation.
In March 2021, Mr Duncan filed an interlocutory application, supported by an affidavit sworn by Mr Colovic on 11 March 2021 (Mr Colovic’s affidavit), seeking a non-party costs order against Smithbridge and Mr Smith in respect of the costs payable by SMA to Mr Duncan. Smithbridge and Mr Smith were subsequently joined as respondents in the proceeding for this purpose.
Mr Colovic’s affidavit addressed, amongst other things, his and Mr Duncan’s states of mind in 2018 in relation to SMA’s pecuniosity.
In March 2021 I ordered that Mr Duncan file a statement of claim pleading the basis of his claim to entitlement to an order for non-party costs and that Smithbridge and Mr Smith file a defence.
In April 2021 Mr Duncan filed a statement of claim in which he pleaded, amongst other things, that Smithbridge and Mr Smith funded the defence of Mr Duncan’s preference recovery action against SMA in their own self-interest and for purposes collateral or ulterior to the interests of SMA. At paragraphs 35(b) and 36(a), Mr Duncan pleaded that:
35bOn 9 May 2018 Khan sent a letter to [Mr Duncan’s solicitors] stating that [SMA] had not ceased trading, retains employees, is party to on-going contracts and is not impecunious… The contents of that letter were untrue…
36It is to be inferred from the falsity of the Khan correspondence referred to [at 35b] and the fact that the letter was intentionally untrue … that [Smithbridge and/or Mr Smith] instructed [SMA’s] solicitor to lie to the applicant as relates to [SMA’s] circumstances…
On 2 June 2021 Mr Duncan swore an affidavit (Mr Duncan’s affidavit). Mr Duncan’s affidavit addressed his state of mind in 2018 in relation to SMA’s pecuniosity.
On 21 June 2021 Mr Williamson swore an affidavit (the 21 June affidavit). After introductory matters, in paragraphs 10 to 19 he addressed the fourth paragraph of the 9 May letter extracted at [9] above. At paragraphs 18 and 19 he referred to the 9 May 2.54 pm email and Mr Smith’s responding 5.11 pm email. He said that a true copy of the email was contained at pages 23 to 31 of the exhibits to his affidavit. Unbeknown to Mr Williamson, pages 23 to 31 contained not only the emails exchanged on 9 May 2018 (to which he referred in the body of his affidavit) but also emails exchanged between 27 April and 4 May 2018, being the earlier emails forming part of the same email chain.
On 21 June 2021 Mr Khan swore an affidavit (Mr Khan’s affidavit). The affidavit referred to the mediation on 23 April 2018. He exhibited, in a sealed envelope marked only to be opened by a Judge of this Court, the 23 April email and said that it accurately summarised what transpired at the mediation. He also exhibited, in a sealed envelope, the 16 May email sent to Mr Colovic.
On 22 June 2021 Mr Williamson’s 21 June affidavit and Mr Khan’s affidavit (and a third affidavit by Mr Martin) were filed. They were served on Mr Duncan’s solicitors at 4.27 pm.
As a result of seeing the 4 May email exchange, Mr Duncan’s lawyers drafted an amended statement of claim in which they pleaded that SMA, Smithbridge and Mr Smith were parties to a plan (defined as the Litigation Strategy), formulated by no later than 30 April or in the alternative 4 May 2018, to have Smithbridge fund the defence of Mr Duncan’s claim against SMA to avoid the inconvenience of SMA’s liquidation to Smithbridge and Mr Smith and to terminate any support and place SMA into liquidation in the event of an adverse outcome in the litigation. Particulars were given that the Litigation Strategy was recorded or evidenced by emails exchanged on 4 May 2018.
On the afternoon of 24 June 2021 Mr Duncan’s solicitors filed the amended statement of claim. They served it on the solicitors for Smithbridge and Mr Smith at 4.53 pm. The solicitors for Smithbridge and Mr Smith responded later on that same day by sending a letter contending that the 27 April-4 May email chain was the subject of legal professional privilege and had been inadvertently and unintentionally disclosed by Mr Williamson.
On 9 July 2021 Smithbridge and Mr Smith filed an interlocutory application, supported by an affidavit by Mr Williamson sworn on that date (the 9 July affidavit), seeking orders for the uplifting from the Court, and return by Mr Duncan and his lawyers of copies, of Mr Williamson’s 21 June affidavit and substitution of a replacement affidavit omitting the 27 April-4 May email chain. Mr Williamson deposed that he had collated the documents he intended to become the exhibit to his 21 June affidavit, which included only the 9 May email exchange; his assistant subsequently collated the documents that became the exhibit to his affidavit; his assistant must have included the whole of the email chain from 27 April to 9 May 2018; and he did not notice when he swore his affidavit that the whole chain was included in the exhibit.
Evidence
At the hearing, Smithbridge and Mr Smith tendered Mr Williamson’s 21 June and 9 July affidavits together with a further affidavit sworn on 15 July 2021 in which he deposed that, as at 21 June 2021, he did not act for SMA or its liquidator and had no instructions from them to waive privilege in the 27 April-4 May email chain.
I granted leave to Mr Duncan to cross-examine Mr Williamson in relation to the preparation of his 21 June affidavit and its exhibits. Although Mr Williamson was cross-examined with a view to establishing that he consciously intended to include the 27 April-4 May email chain in the exhibit to his affidavit, ultimately Mr Duncan does not seek such a finding and accepts that subjectively Mr Williamson was not aware that the 27 April-4 May email chain was included in the exhibit to his affidavit. Mr Duncan does, however, make submissions concerning the objective intention manifested by the inclusion of the whole email chain which I address below.
Mr Colovic swore an affidavit on 14 July 2021 in which he deposed to, and exhibited, email correspondence between Mr Williamson and himself in relation to cross-examination of Mr Williamson at the hearing. I granted leave to Smithbridge and Mr Smith to cross-examine Mr Colovic on his state of mind in relation to the question whether Mr Williamson’s disclosure of the 27 April-4 May email chain was deliberate or inadvertent.
I subsequently granted leave to Smithbridge and Mr Smith to call Kevin Simpson, the solicitor currently having the conduct of the matter for Mr Duncan under the supervision of Mr Colovic. Mr Simpson gave evidence in chief and was cross-examined by counsel for Smithbridge and Mr Smith.
Legal principles
Waiver of privilege
The terminology and taxonomy associated with each of legal professional privilege and waiver is beset with ambiguity and inconsistent usage.
Although the 27 April-4 May email chain occurred in the context of litigation by Mr Duncan against SMA, legal professional privilege arose in May 2018 in respect of it because the emails comprised confidential communications between lawyer and client for the purpose of providing instructions by the client and advice by the solicitors. For ease of reference, I treat the privilege (the original existence of which is not contested by Mr Duncan) as advice privilege rather than litigation privilege. For the same reason, I address only privileged communications, although privilege can attach to confidential information or documents other than communications.
It is an essential element of the existence of legal professional privilege in respect of a communication between solicitor and client that the communication is intended to be confidential.[3] Thus, for example, if a solicitor and client have a conversation in public in which the client seeks and the solicitor gives advice where they can plainly be overheard, the requisite intended confidentiality is absent and no privilege arises.[4] On the other hand, if a third party surreptitiously listens to a private conversation using a surveillance device, the privilege will still arise because the communication is intended to be confidential.
[3] Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 487 per Mason and Brennan JJ, 490 per Deane J and 496 per Dawson J; Mann v Carnell [1999] HCA 66, (1999) 201 CLR 1 at [19] and [28] per Gleeson CJ, Gaudron, Gummow and Callinan JJ.
[4] See for example R v Braham and Mason [1976] VR 547 at 549 per Lush J.
A private communication is not non-confidential merely because another person is present or a party to it: it depends on whether that person is themself within the ambit of the confidentiality (the confidentiality circle). For example, the mere fact that advice might be given by a lawyer to a respondent to a proceeding in the presence of a co-respondent who has a common interest in defending the proceeding will not prevent the privilege arising if the participants intend the communication to be kept within the confidentiality circle. Thus, in Marshall v Prescott,[5] Barrett JA (with whom McColl and Ward JJA agreed) said in the context of waiver:
If a document in which legal professional privilege subsists is given to someone else so that the content ceases to be confidential, the privilege is usually lost. This is because the act of giving is, in the particular circumstances, inconsistent with any continuing intention to maintain confidentiality. An exception operates, however, where the person entitled to the privilege and the person to whom the content of the document is made known have such a commonality of interest in relation to the subject matter of the privilege that sharing of the content is consistent, rather than inconsistent, with an ongoing intention to preserve confidentiality and privilege.[6]
[5] [2013] NSWCA 152.
[6] At [57]. (Citation omitted)
I use the term express waiver to describe the situation in which the person entitled to the protection of the privilege expressly states that they waive the privilege. In this situation, the privilege will be lost because there is no longer the requisite intention that the communication in question be kept confidential. However, if the so-called waiver is limited to disclosure to a particular person or for a particular purpose, the privilege may not be lost on the basis that there is a continuing intention that the communication be kept within a confidential circle (the person to whom it is to be disclosed being obliged to keep it confidential and/or use it only for a specific purpose).[7]
[7] See for example Goldberg v Ng Hango Holdings Pty Ltd (1995) 185 CLR 83 at 95 per Deane, Dawson and Gaudron JJ.
I use the term implied waiver to describe the situation in which the privilege holder intentionally discloses the confidential communication in public or at least to a person outside the confidentiality circle. Provided that the disclosure of the communication in public or to a person outside the confidentiality circle is intentional, it does not matter if subjectively the privilege holder does not intend to lose it.[8] As in the case of express waiver, if the disclosure is limited to a particular person or for a particular purpose, the privilege may not be lost on the basis that there is a continuing intention that the communication be kept within a confidential circle (the person to whom it is to be disclosed being obliged to keep it confidential and/or use it only for a specific purpose).
[8] See for example Benecke v National Australia Bank (1993) 35 NSWLR 110 where Mrs Benecke intentionally disclosed confidential communications with her barrister in the course of giving evidence in open court without subjectively intending to waive the privilege.

I use the term imputed waiver to describe the situation in which the privilege holder acts in a manner inconsistent with maintenance of confidentiality in the privileged communication. In this situation, the privilege holder does not disclose, or intend to waive privilege in, the communication in question as such. Typically, the privilege holder discloses part of the communication or its substance or effect without disclosing the (entire) communication or the person engages in conduct (such as suing their lawyer) that necessarily requires disclosure of the communication.
In Mann v Carnell[9] Gleeson CJ, Gaudron, Gummow and Callinan JJ said:
At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received.
Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. … What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.
In Goldberg v Ng this Court considered a case in which there was disclosure of a privileged communication to a third party, for a limited and specific purpose, and upon terms that the third party would treat the information disclosed as confidential. The Court was divided upon whether, in the circumstances of the case, privilege was waived. However, the reasoning of all members of the Court was inconsistent with the proposition that any voluntary disclosure to a third party necessarily waives privilege.[10]
[9] (1999) 201 CLR 1.
[10] At [28]-[30]. (Footnotes omitted)
Protection of privilege
Legal professional privilege is an immunity as opposed to an actionable right.[11] Equity will grant injunctive relief to restrain a disclosure in breach of confidence, including a confidential communication the subject of legal professional privilege, including by a third party if their conscience is affected.[12]
[11] Glencore International AG v Commissioner of Taxation [2019] HCA 26, (2019) 265 CLR 646 at [21]-[26] per Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ.
[12] Glencore International AG v Commissioner of Taxation (2019) 265 CLR 646 at [6] per Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ.
In addition to the potential availability of equitable relief, this Court has power to grant relief in respect of the inadvertent and unintentional disclosure of a privileged communication as part of its case management role.[13] The grant of such a relief is discretionary.[14] Without being exhaustive, factors relevant to the exercise of the discretion include the circumstances in which the inadvertent disclosure is made, the state of mind of the person making inadvertent disclosure, any delay by the privilege holder in acting after the mistake is discovered, any prejudice to the other party as a result of action taken by the other party on the basis of the disclosure, and the state of mind of the other party as to whether the disclosure was or might have been inadvertent.[15]
[13] Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46, (2013) 250 CLR 303 at [7], [42] and [51]-[58] per French CJ, Kiefel, Bell, Gageler and Keane JJ.
[14] Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303 at [49] per French CJ, Kiefel, Bell, Gageler and Keane JJ.
[15] Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303 at [33] [45]-[49], [61]-[62], [65] per French CJ, Kiefel, Bell, Gageler and Keane JJ.
Findings
It is clear from Mr Williamson’s 21 June affidavit, and I find, that Mr Williamson prepared that affidavit in the context of two separate matters. First, the pleading in paragraphs 35b and 36a of the statement of claim alleging that Mr Smith instructed Mr Khan to lie in the fourth paragraph of the 9 May 2018 letter by falsely denying that SMA was impecunious. Secondly, Mr Colovic’s affidavit and Mr Duncan’s affidavit referred to Mr Duncan’s state of mind in relation to SMA’s pecuniosity as at 2018 with a particular emphasis on April-May 2018.
I find that both the actual and apparent purpose of Mr Williamson’s 21 June affidavit was twofold. First, to defend Mr Khan and Mr Smith against the accusation that they had intentionally lied about SMA’s impecuniosity in the 9 May letter (by stating that Mr Williamson drafted the fourth paragraph of that letter and Mr Khan had no involvement in it and that Mr Smith did not give instructions to send the letter before it was sent). This was addressed by paragraphs 10 to 19 of Mr Williamson’s affidavit. Secondly, to contend that Mr Colovic’s affidavit and Mr Duncan’s affidavit were potentially misleading as to their state of mind in relation to SMA’s pecuniosity. This was addressed by paragraphs 20 to 23 of Mr Williamson’s affidavit.
Mr Williamson gave evidence, and I find, that he began preparation a few days before 21 June 2021 for drafting his affidavit by compiling, or having compiled, hard copies of emails from his firm’s electronic records over a time period that he does not specifically recall but centred on early May 2018. Mr Williamson does not now recall, and I cannot make a finding, whether he himself printed copies from the electronic records or whether he asked his assistant to print copies of communications over a defined time period.
Although Mr Williamson cannot recall whether the printed copy documents included the entirety of the 27 April-9 May email chain (9 pages) or merely the first page containing the 9 May email exchange (being the last page chronologically), he accepted that it was more likely that it was the former and I find on the balance of probabilities that this was the case.
Mr Williamson gave evidence, and I find, that out of the initial set of printed copy documents that he examined, he placed in one pile those pages that he intended to become exhibits to his affidavit and placed in another pile those pages that he intended to discard and that he in fact discarded. I find that the selected pile included the first page of the 27 April-9 May email chain and the discard pile included all of the other pages. The first page contains the 9 May email exchange in reverse chronological order and at the bottom the From and Sent lines only of Mr Smith’s last 4 May 2018 email.
Mr Williamson gave evidence, and I find, that he then dictated his affidavit and instructed his assistant to type it. This was still a few days before 21 June.
Mr Williamson gave evidence, and I find, that early on 21 June 2021 he asked his assistant to prepare an execution copy of his affidavit. He checked the selected pile of documents and gave it to his assistant with instructions to compile it into an exhibit to his affidavit. He then made some minor changes to the body of his affidavit which did not affect the exhibits. He again asked his assistant to compile the selected pile of documents into an exhibit to the affidavit.
Mr Williamson gave evidence, and I find, that on the morning of 21 June 2021 his assistant gave to him the final version of his affidavit together with a bundle of pages comprising the exhibit to that affidavit. His assistant had paginated the pages contained in the exhibit. Mr Williamson did not check that the pages in the exhibit were the pages in the selected pile of documents that he had given to her but relied on her to have done this correctly. She had 40 years’ experience and had not previously made a mistake in this respect. Unbeknown to Mr Williamson, his assistant had included the entire 27 April-9 May email chain in the exhibit rather than just the 9 May email exchange. I find on the balance of probabilities that Mr Williamson’s assistant reprinted that email chain in the course of preparing the exhibit.
The body of Mr Williamson’s 21 June affidavit comprises 23 paragraphs over two pages (pages 2 and 3) with the execution clause on page 4. There is an exhibit frontsheet on page 6 containing the words “This is the exhibit SW-1 to the Affidavit of Shane Russell Williamson made on 21 June 2021”, below which appears the signature of Mr Williamson and the attesting witness. After various other documents appearing between pages 7 and 22, the 27 April-9 May email chain appears at pages 23 to 31 of the affidavit.
I find that Mr Williamson did not intend to exhibit to his affidavit, or disclose, the 27 April-9 May email chain but intended only to exhibit and disclose the 9 May email exchange. As observed above, although Mr Williamson was cross-examined with a view to challenging his evidence to this effect, ultimately Mr Duncan accepts that this was Mr Williamson’s subjective intention and in any event I so find.
Mr Simpson gave evidence that, although he quickly scanned Mr Williamson’s and Mr Khan’s 21 June affidavits (as well as Mr Martin’s affidavit) in the late afternoon of 22 June 2021, he did not read them until the late afternoon of 23 June 2021. Although he does not now recall, by reference to his usual practice he believes that he read the 27 April-9 May email chain in chronological order. He formed the view that it was possible that Mr Williamson had only intended to include the 9 May email exchange and that the 27 April-4 May email chain had been inadvertently included and disclosed. He did not identify any purpose that Mr Williamson may have had in disclosing the 27 April-4 May email chain. He then had a conversation with Mr Colovic, in which he said to Mr Colovic “What do you think? This is clearly ordinarily privileged, but we're in a different ball park here, do you think it's been a mistake?” Mr Colovic said words to the effect “No, there's some angle here, I don't know what it is, but there is a purpose in this”. I accept Mr Simpson’s evidence in this respect.
Mr Simpson gave evidence, and I find, that the amendments to the statement of claim were drafted over the 24 hour period between the late afternoon of 23 June and the late afternoon of 24 June 2021.
Mr Simpson gave evidence that, after the discussion with Mr Colovic, he did not believe that the 27 April-4 May email chain had been disclosed by mistake. He formed the view that it must have been part of a strategy of getting everything out in the open, albeit this was not an obvious strategy.
Mr Colovic gave evidence that was generally consistent with the evidence of Mr Simpson. Mr Colovic gave evidence that he did not believe that the 27 April-4 May email chain had been disclosed by mistake and believed that it was intentional, although he did not identify a specific purpose in waiving legal professional privilege in that email exchange.
Smithbridge and Mr Smith invite me to find that Mr Colovic and Mr Simpson were quite prepared to take advantage of the disclosure of the 27 April-4 May email chain which they must have known was likely inadvertent. In light of their denial on oath, I do not make that finding. I find that, after the discussion between them, they did not believe that the disclosure was inadvertent or probably inadvertent. I find that they did not intend to take advantage of an inadvertent disclosure.
Turning from the subjective state of mind of Mr Colovic and Mr Simpson to an objective test, I find that a reasonable solicitor in receipt of Mr Williamson’s 21 June affidavit would have believed that it was likely that the disclosure of the 27 April-4 May email chain was inadvertent.
Mr Williamson’s affidavit clearly addressed two topics and had two purposes. The first topic (addressed at paragraphs 10 to 19) was the accusation that Mr Smith instructed Mr Khan to lie in the fourth paragraph of the 9 May 2018 letter by falsely denying that SMA was impecunious. Mr Williamson’s ostensible purpose in addressing this topic was to defend Mr Khan, by saying that he rather than Mr Khan drafted the fourth paragraph of the letter and he did not discuss its wording with Mr Khan, and to defend Mr Smith by saying that Mr Smith did not give any instruction to send the 9 May letter before it was sent. (It may be doubted how effective Mr Williamson’s defence of Mr Smith was given that Mr Smith agreed with the letter shortly after it had been sent but that is by the by.)
The manifest purpose of including the 9 May email exchange was to defend Mr Smith in this way. The earlier 27 April-4 May email chain had no logical connection with the 9 May email exchange and was incapable of defending Smith against the accusation against him. There was no discernible purpose in Mr Williamson including the earlier 27 April-4 May email chain. It is apparent that Mr Khan had simply used the earlier email exchange as a convenient method of sending his 9 May email rather than commencing a new email chain.
It is apparent that the earlier 27 April-4 May email chain comprised evidence of potential value to Mr Duncan in his contention that Smithbridge and Mr Smith funded the defence of the claim against SMA for an ulterior purpose. This is corroborated by the action taken by Mr Duncan’s solicitors in amending the statement of claim to plead a more specific ulterior purpose based solely on the 27 April-4 May email chain.
Given that there was no discernible advantage, and a clear potential disadvantage, in Mr Williamson disclosing the earlier 27 April-4 May email chain, a reasonable solicitor in receipt of Mr Williamson’s 21 June affidavit would have believed that it was likely that the disclosure of the 27 April-4 May email chain was inadvertent.
Waiver
The first issue is whether there was a waiver of legal professional privilege in respect of the 27 April-4 May email chain by reason of Mr Williamson exhibiting it as pages 24 to 31 of the exhibit to his affidavit.
Legal professional privilege belongs to the client rather than the solicitor. However, Smithbridge and Mr Smith make no submission that Mr Williamson was acting outside the scope of his authority from them in swearing, filing and serving his affidavit with the pages exhibited to it such that his conduct was incapable of amounting to a waiver by the privilege holder even if his conduct was intentional in every sense. I therefore treat Mr Williamson’s conduct and state of mind as being the relevant conduct and state of mind of Smithbridge and Mr Smith.
Mr Duncan does not contend that there was an express waiver and that type of waiver can be put aside.
Implied waiver
Although Mr Duncan does not contend that Mr Williamson subjectively intended to disclose the 27 April-4 May email chain or include it in the exhibit to his affidavit, Mr Duncan does contend that his affidavit manifests an intention to exhibit pages 23 to 31 which include that email exchange. Mr Duncan points to three passages in the affidavit.
First, at paragraph 3 Mr Williamson said:
Now shown to me and marked ‘SW1’ is a paginated bundle of materials referred to herein. When I refer to documents in this affidavit it is with reference to the page numbers of SW1.
Secondly, at page 6, after the execution clause of the affidavit, Mr Williamson certified in the exhibit frontsheet:
This is the exhibit SW-1 to the Affidavit of Shane Russell Williamson made on 21 June 2021
Mr Duncan contends that, by the combination of paragraph 3 of his affidavit and the exhibit front sheet certification, Mr Williamson intended that pages 7 to 31 form the exhibit to his affidavit because that is what he expressly said.
Thirdly, at paragraphs 18 and 19 Mr Williamson said:
18Adam sent the draft a letter (amended by me) and the letter from David Colovic to which it responds, to Albert Smith, copied to myself, Oliver Martin and John Toigo at 2.54 pm on 9 May 2018 for his information…[16]
19At 5.11 pm on 9 May 2018, after the letter had been sent by Adam Khan to Mr Colovic, Albert Smith responded to the earlier email from Adam Khan stating ‘Good work Adam. I agree with your response.’ A true copy of that is contained at pages 23 to 31 of SW1.
[16] At this point Mr Williamson interposed reference to the letter having been sent by Mr Khan to Mr Colovic at 3.44 pm without having received a response from Mr Smith or Mr Martin and referred to the letter contained at pages 19 to 22 of the exhibit to his affidavit.
Mr Duncan contends that Mr Williamson intended that pages 23 to 31 form part of the exhibit to his affidavit because that is what he expressly said at paragraph 19 and in fact those pages included the 27 April-4 May email chain.
Although Mr Duncan in his submissions does not adopt the express, implied and imputed terminology that I have adopted above, he effectively submits that there was an implied waiver (as I have defined it) because he contends that the position is analogous to that in Benecke v National Australia Bank[17] referred to at footnote 8 above where Mrs Benecke disclosed confidential communications with her barrister in the course of giving evidence in open court without subjectively intending to waive the privilege.
[17] (1993) 35 NSWLR 110.
Insofar as Mr Duncan contends that there was in this case an implied waiver (as I have defined it), I reject that contention. An implied waiver requires an intention to disclose the privileged communication. Mr Williamson did not intend to disclose, or exhibit to his affidavit, the 27 April-4 May email chain. On the contrary, he only intended to disclose and exhibit to his affidavit the 9 May email exchange. The mere fact that he referred at paragraph 3 and in the exhibit certification to all of the pages of the exhibit and that he referred at paragraph 19 to pages 23 to 31 of the exhibit does not gainsay that fact.
In a sense, Mr Duncan is contending that the test of Mr Williamson’s intention is objective. However, for the purpose of implied waiver (as I have defined it), the test whether the privilege holder intends to disclose the privileged communication is subjective, not objective. In any event, even if I applied an objective test, for the reasons given above, Mr Williamson’s affidavit does not objectively manifest an intention to disclose the 27 April-4 May email chain.
In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited[18] the defendants (the ERA parties) filed and served a list of documents verified on oath, making discovery of approximately 60,000 documents, in an action against them by the plaintiffs (the Armstrong parties). Solicitors within the firm acting for the ERA parties coded each document as privileged or non-privileged (the default). They gave evidence that they mistakenly failed to code 13 privileged documents as privileged. The 13 documents were included in the verified list of documents as non-privileged documents and copies provided to the solicitors for the Armstrong parties. The High Court held that in these circumstances there had been no waiver of privilege. The argument advanced by Mr Duncan in this case could equally have been advanced in that case that, on the face of the list of documents, there was an intention to disclosure the 13 documents in question. However, the High Court held that there was no waiver.
[18] (2013) 250 CLR 303.

Mr Duncan seeks to distinguish the decision in Expense Reduction Analysts Group on the ground that it involved discovery of documents, which is a compulsive process of the court, as opposed to Mr Williamson’s 21 June affidavit which was voluntary. However, while this may be relevant to the exercise of the discretion once it is decided that privilege has not been waived (which I address below), this is irrelevant to the question whether there was an implied (or indeed an imputed) waiver.
There was no implied waiver (as I have defined it) in respect of the 27 April-4 May email chain (or pages 24 to 31 of the exhibit to Mr Williamson’s 21 June affidavit).
Imputed waiver
Mr Duncan contends that there was an imputed waiver in respect of the 27 April-4 May email chain. As observed above, and as reiterated by the High Court in Expense Reduction Analysts Group,[19] an imputed waiver arises “where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect”. Mr Duncan contends that the inclusion by Mr Williamson of the 27 April-4 May email chain in the pages of the exhibit to his affidavit was plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.
[19] (2013) 250 CLR 303 at [30] per French CJ, Kiefel, Bell, Gageler and Keane JJ. (Citation omitted)
I reject Mr Duncan’s contention. In one sense, any disclosure to the opposition of a privileged material is inconsistent with maintenance of confidentiality. However, it is critical to determine whether the disclosure is intentional or inadvertent. If the disclosure is inadvertent, at least absent additional circumstances (such as the party making the disclosure acquiescing in the opponent retaining the document after becoming aware of the disclosure), it cannot be said that the party’s conduct is inconsistent with maintenance of confidentiality because the party does not intend to disclose the confidential material.
Again, if Mr Duncan’s contention were correct, it would follow that in the case of Expense Reduction Analysts Group there was an imputed waiver because there was a disclosure of the 13 documents that were subject of legal professional privilege and indeed the list of documents was verified on oath. However, the High Court held not only that there was no imputed waiver but also that the issue of waiver should never even have been raised by the Armstrong parties. Although Mr Duncan seeks to distinguish the decision in Expense Reduction Analysts Group on the ground that it involved discovery of documents, this is not a valid ground of distinction on the issue of imputed waiver (as opposed to the exercise of the discretion).
There was no imputed waiver (as I have defined it) in respect of the 27 April-4 May email chain (or pages 24 to 31 of the exhibits to Mr Williamson’s 21 June affidavit).
Discretion
Mr Duncan contends that, if (as I have concluded) there was no waiver of privilege, I should not exercise my discretion to grant relief in favour of Smithbridge or Mr Smith due to a combination of four factors:
1The extent of the fault of Mr Williamson as solicitor and agent for Smithbridge and Mr Smith.
2Prejudice that would be occasioned to Mr Duncan by the grant of relief entailing that it is now too late to grant relief.
3There is no utility in granting relief because the waiver of privilege in the 23 April email has resulted in an imputed waiver of privilege in the 27 April-4 May email chain and in the alternative the 23 April and 16 May emails prove the requisite ulterior purpose.
4There was nothing improper about Mr Duncan's solicitors’ conduct.
In relation to the first aspect of the third factor, Smithbridge and Mr Smith contend that is not appropriate for Mr Duncan to advance this as relevant to discretion in the absence of a proper application on notice by Mr Duncan raising the issue of imputed waiver by reason of disclosure of the 23 April email. However, the issue having been raised, it is necessary for me to decide it. I turn to address that issue before returning to discretion.
Imputed waiver by reason of waiver of privilege in 23 April email
As observed above, the criterion for imputed waiver is whether “the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect”[20] and in Mann v Carnell[21] Gleeson CJ, Gaudron, Gummow and Callinan JJ said:
What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.[22]
[20] Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303 at [30].
[21] (1999) 201 CLR 1.
[22] At [29].
Without being exhaustive, the issue of imputed waiver most commonly arises in five circumstances (which can overlap):
1A person discloses some details of legal advice (or other privileged material) and it is contended that there is an imputed waiver in respect of the legal advice (or other privileged material).[23]
2A person discloses part of a single privileged communication or document and it is contended that there is an imputed waiver in respect of the balance.[24]
3A person discloses the whole of a single privileged communication or document and it is contended that there is an imputed waiver in respect of associated material.[25]
4A client sues their lawyer for negligence and it is contended that there is an imputed waiver in respect of the dealings between lawyer and client the subject of the case.[26]
5A party raises as an issue in an action their state of mind which was potentially affected by legal advice (or other privileged material) and it is contended that there is an imputed waiver in respect of that legal advice (or other privileged material).[27]
[23] An example is Attorney-General (SA) v Seven Network Operations Ltd [2019] SASCFC 36, (2019) 132 SASR 469.
[24] See the discussion by the Full Court in Attorney-General (SA) v Seven Network Operations Ltd (2019) 132 SASR 469 at [97]-[111] per Tate, Kyrou and Niall AJJ.
[25] See the discussion by the High Court in Attorney-General (NT) v Maurice (1986) 161 CLR 475.
[26] An example is Lillicrap v Nalder & Son (a firm) [1993] 1 All ER 724.
[27] See the discussion by the Full Court in Yokogawa Aust Pty Ltd v Alstom Power Ltd [2009] SASC 377 at [38]-[59] per Duggan J (with whom Sulan and Kourakis JJ agreed).
Courts have from time to time formulated more specific criteria for the requisite inconsistency than merely that the actions of the party are inconsistent with the maintenance of confidentiality. In Bradford v Devlot 17 Pty Ltd[28] Kennedy J summarised four such formulations in the following terms:
In considering the scope of waiver in a practical context the Courts have also proffered various other tests for consideration, for example:
·whether the disclosure of a document, or the giving of evidence, without the disclosure of associated material, would give a ‘partial or misleading picture’, or would otherwise prejudice or embarrass the appellant in the conduct of the case;[29]
·that the holder of the privilege should not be able to abuse it by using it to create an ‘inaccurate perception’ of the protected communication;[30]
·whether the material that the party has chosen to release represents the whole of the material relevant to ‘the same issue or subject matter’;[31]
·that where a party chooses to deploy evidence which would otherwise be privileged the Court and the opposition must, in relation to the issue in question, be given the opportunity to satisfy themselves that they have the whole of the material and ‘not merely a fragment.’[32]
[28] [2020] VSC 792 at [73].
[29] Attorney-General for the Northern Territory vMaurice (1986) 161 CLR 475, 484 (Gibbs CJ).
[30] Ibid 488 (Mason and Brennan JJ).
[31] AWB Ltd v Cole (No 5) (2006) 155 FCR 30, 76 [164].
[32] Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation (No 2) [1981] ComLR 138, 139, quoted in Attorney-General for the Northern Territory vMaurice (1986) 161 CLR 475, 498 (Dawson J). See also ACCC v Prysmian Cavi E Sistemi Energia SRL (No 10) (2015) 235 FCR 593, 598-9 [14].
However, in Viterra Malt Pty Ltd v Cargill Australia Ltd[33] the Victorian Court of Appeal cautioned that:
… there is no settled list of kinds of action which, by their very nature, give rise to implied waiver: each case must depend upon its own facts and circumstances and drawing generalisations from other cases may be dangerous.[34]
[33] [2018] VSCA 118, (2018) 58 VR 333.
[34] At [44] per Whelan, Kyrou and McLeish JJA. (Footnote omitted)
Ultimately the test to be applied is the inconsistency test propounded by the High Court.
The present case involves the third set of circumstances listed at [83] above. Mr Duncan contends that, because Smithbridge and Mr Smith disclosed the 23 April email containing what he contends are instructions to ClarkeKann seeking legal advice, they have waived privilege in all subsequent privileged communications leading to and including advice given in response to the instructions.
In Attorney-General (NT) v Maurice[35] traditional Aboriginal owners filed and served a claim book giving particulars of the claim and containing historical, anthropological and ethnological information in support of the claim. The Attorney-General contended that, by disclosing the information contained in the claim book, there was an imputed waiver of legal professional privilege in respect of source materials (field notes and working records) from which that information was sourced. The High Court held that there was no imputed waiver in the source materials. All members formulated the criterion for imputed waiver as fairness. The reasoning of the members of the High Court needs to be approached with caution because the High Court has subsequently held that inconsistency of conduct, and not fairness, is the ultimate criterion for imputed waiver; in some cases fairness will be an important factor in assessing inconsistency; but in other cases it will not. Nevertheless, it has not been suggested that the actual decision in Attorney-General (NT) v Maurice was incorrect.
[35] See the discussion by the High Court in Attorney-General (NT) v Maurice (1986) 161 CLR 475.
Dawson J held that, even if the claim book had been admitted as an exhibit and hence had become evidence in the case, there still would have been no imputed waiver of privilege in the source materials. However, the other members of the High Court considered that, in assessing whether there was an imputed waiver, it was an important factor whether or not the traditional owners relied on the claim book as evidence and the position may well have been different if they had done so.
Gibbs CJ said:
The decisions in which this question has been considered seem to me to be particular applications of the rule that in a case where there is no intentional waiver the question whether a waiver should be implied depends on whether it would be unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with it, is privileged from production…
It is not difficult to see that where a document deals with a single subject-matter it would be unfair to allow a party to use part of the document and claim privilege as to the remainder…
The same test must be applied in deciding whether the use in legal proceedings of one document impliedly waives privilege in associated material. In Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation [No 2] Mustill J. dealt with this question and suggested the following test:
" ... where a party is deploying in court material which would otherwise be privileged, the opposite party and the court must have an opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood."
…
The 1982 Claim Book was a document of a kind that would not be admissible in ordinary proceedings, but if it had been admissible in the proceedings before the Aboriginal Land Commissioner, and if it had in fact been admitted as evidence, the appellant would have been entitled to test its accuracy and weight, and since that could hardly be done unless it was known on what sources it was based, considerations of fairness might have required those sources to have been produced. However it was not unfair or misleading for the claimants to make some reference to the book during the opening of the case before Kearney J. and to put some questions in the course of the examination of two of the witnesses, without making the source materials available.[36]
[36] At 481-483. (Citations omitted)
Mason and Brennan JJ said:
An implied waiver occurs when, by reason of some conduct on the privilege holder's part, it becomes unfair to maintain the privilege. The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication.
…
Hence, the implied waiver inquiry is at bottom focused on the fairness of imputing such a waiver.
…
A claim book is not treated as evidence of the facts alleged in it…
More importantly, the appellant has not been prejudiced by a partial disclosure - i.e., the disclosure of the 1982 Claim Book and non-disclosure of the source materials. Although the Central Land Council tendered the 1982 Claim Book in the first proceeding the book never found its way into evidence. The respondents have not sought to reveal beneficial parts while keeping injurious parts hidden …[37]
[37] At 487-488, 489.
Deane J said:
If the claim book had been actually used as evidence on the prior hearing, a real question would have arisen about whether, by so using it, the Aboriginal claimants had waived any right to assert legal professional privilege in the source materials upon which it was based. It was not, however, prepared for use, or accepted or used, as evidence…
In these circumstances, there is simply no basis in law for a finding that the effect of the preparation, publication, tender of and limited reference to the 1982 Claim Book was that there was to be imputed to the Aboriginal claimants a waiver of their right to rely upon legal professional privilege in relation to documents which neither formed part of nor were expressly referred to in the book. Waiver of legal professional privilege by imputation or implication of law is based on notions of fairness. It occurs in circumstances where a person has used privileged material in such a way that it would be unfair for him to assert that legal professional privilege rendered him immune from procedures pursuant to which he would otherwise be compellable to produce or allow access to the material which he has elected to use to his own advantage.[38]
[38] At 492-493.
Dawson J said:
This is a difficult area of the law, but it is clear enough that an implied waiver may be required by fairness notwithstanding that it was not intended. It would not be fair to allow privilege to be waived with respect to a portion of a document or a conversation without requiring disclosure of the rest of it, at least if the document or conversation dealt with the one subject matter. So much may be obvious, but legal professional privilege is concerned with protecting the confidentiality of a relationship and if that confidentiality is abandoned by a particular disclosure it may be necessary in fairness, whether further disclosure was intended or not, to require disclosure extending beyond the particular communication. The cases are not entirely consistent and perhaps what is fair by way of disclosure must ultimately depend upon the relevant circumstances.[39]
[39] At 497-498. (Citations omitted)
Before turning to the consequences of disclosure of the 23 April email, it is useful to identify the likely principal issues on Mr Duncan’s application for a non-party costs order against Smithbridge and Mr Smith. There are likely to be two principal factual and legal issues which, without intending to be overly precise, can be summarised as follows:
1The factual issue whether Smithbridge and Mr Smith provided financial support to SMA to defend the preference recovery claim against it with the intention of ceasing financial support to it more generally and placing it in liquidation if it was unsuccessful in that action and did so to advance their own interests rather than the interests of SMA coupled with the legal issue whether such conduct affords a reason to make a non-party costs order.
2The factual issue whether or to what extent Mr Duncan knew of impecuniosity of SMA and/or that Smithbridge and Mr Smith were acting in the manner referred to in issue 1 (to the extent that that is established) and the legal issue whether such knowledge affords a reason not to make a non-party costs order.
The 23 April email comprises one and a half pages. The first page comprises a summary of the communications between Mr Duncan and his lawyers, and SMA’s representatives and its lawyers, at the mediation on that day. It refers to a description by the SMA team to the Duncan team of SMA’s financial position and a response by the Duncan team describing this as a bombshell; a reference to offers or negotiating positions of the parties; and a reference to a statement by the Duncan team that they would only contemplate a resolution at a figure of $100,000 if specified documents were disclosed to them relevant to SMA’s financial position. The communications between the parties summarised at the first page of the email are directly relevant to the second issue (Mr Duncan’s knowledge) and it is clear that this is the reason that the email has been disclosed by Smithbridge and Mr Smith. They are also relevant to the first issue.
The second (half) page of the email addressed future strategy. Mr Martin identified one possible strategy being to offer to pay $100,000 in satisfaction of the claim; if rejected to proceed to trial as long as one of the major (unrelated) defendants also proceeded to trial; otherwise place SMA into liquidation; and be upfront with Mr Duncan about that plan. Unlike the first page, the second page of the email is not itself relevant to the second issue. It is, however, relevant to the first issue.
In theory, Smithbridge and Mr Smith might have sought to disclose only the first page of the email, redact the second page and claim that waiver of privilege in respect of the first page did not waive privilege in respect of the second page. However, that would likely have been met with a contention by Mr Duncan that there was an imputed waiver in respect of the second page.
To an extent (without assessing that extent), the strategy identified by Mr Martin summarised above was implemented by the sending of the 16 May email that was also exhibited to Mr Khan’s affidavit. That email contained an offer to pay $100,000 in settlement of the claim against SMA. It also contained statements that:
the shareholder of our client has set aside a maximum of $100,000 to defend this matter. Thereafter ongoing support will be withdrawn.
and
Neither we nor our client are trying to hide anything about the status of SMA or what will be recoverable by any liquidator appointed to that company. From our assessment of the books and records of that company there are no possible avenues of recovery open to any liquidator …
Smithbridge and Mr Smith contend that the second page of the 23 April email does not comprise instructions or a request for legal advice. I reject that contention. Mr Martin was seeking advice in relation to the possible strategy that he identified.

However, there is no inconsistency between the disclosure by Smithbridge and Mr Smith of the second page of the email and their non-disclosure of subsequent advice given by ClarkeKann in relation to the possible strategy identified by Mr Martin or more generally communications between the Smithbridge group and ClarkeKann in relation to that strategy. While waiver of privilege in respect of legal advice may entail an imputed waiver of privilege in respect of the instructions to give that advice (particularly if instructions are required to understand fully the advice), it would be a rare circumstance in which waiver of privilege in respect of instructions entails an imputed waiver of privilege in respect of advice subsequently provided.
Although unfairness is only a potential factor and not the ultimate criterion, there is no unfairness in Smithbridge and Mr Smith disclosing the 23 April email without disclosing subsequent communications between the Smithbridge group and ClarkeKann.
At this stage of the proceeding, Smithbridge and Mr Smith have not tendered the 23 April email on the non-party costs application and it is not known whether they will do so. This is also a relevant factor in determining whether at this stage there is an imputed waiver in relation to subsequent communications.
I note that Smithbridge and Mr Smith contend that there could be no imputed waiver in any event because they contend that SMA, by its liquidator, did not authorise disclosure of the email chain or engage in any conduct capable of being characterised as inconsistent with maintenance of legal professional privilege in respect of the email chain. Given my conclusion above, it is unnecessary to address that contention.
Discretion
I return to the exercise of the discretion whether to grant relief in favour of Smithbridge or Mr Smith.
Smithbridge and Mr Smith acted very promptly in seeking return of the inadvertently disclosed material on the evening of 24 June 2021 within hours of becoming aware of its disclosure. There is no question of undue delay or acquiescence by Smithbridge or Mr Smith after they became aware of the disclosure. In addition, the time between disclosure and request for return of the material was only about 48 hours.
Mr Duncan contends that prejudice would be occasioned to him by the grant of relief because, by the time of the request for return of the material, he had already acted on it by bringing forward his amended statement of claim pleading the Litigation Strategy by reference to the disclosed material.
Mr Duncan relies on the following statement by the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited:[40]
The courts will normally only permit an error to be corrected if a party acts promptly. If the party to whom the documents have been disclosed has been placed in a position, as a result of the disclosure, where it would be unfair to order the return of the privileged documents, relief may be refused. However, in taking such considerations (analogous to equitable considerations) into account, no narrow view is likely to be taken of the ability of a party, or the party's lawyers, to put any knowledge gained to one side. That must be so in the conduct of complex litigation unless the documents assume particular importance.[41]
[40] (2013) 250 CLR 303.
[41] At [49] per French CJ, Kiefel, Bell, Gageler and Keane JJ.
The action by Mr Duncan’s lawyers upon receipt of the disclosed material identified by Mr Duncan in his submission is a relevant factor in the exercise of my discretion but it should not be afforded undue weight for four reasons. First, Mr Duncan is still able to plead the Litigation Strategy by reference to the 23 April email and 16 May email, ignoring the 27 April-4 May email chain. This will require an amendment to the particulars of the pleas in paragraphs 25 and 32 of his statement of claim but this amendment would be quite minor. Secondly, although Smithbridge and Mr Smith seek return of the material, they accept that Mr Duncan and his lawyers cannot expunge their knowledge of it from their minds. Thirdly, although I have not made this finding in respect of Mr Colovic’s and Mr Simpson’s subjective state of mind, I have concluded that a reasonable solicitor in their position would have believed that it was likely that the disclosure of the 27 April-4 May email chain was inadvertent. Fourthly, Mr Duncan’s lawyers only had the material for 48 hours before Smithbridge and Mr Smith requested its return.
Mr Duncan contends that Mr Williamson exhibited a high degree of fault in failing to check the pages of the exhibit to his 21 June affidavit despite his certification that they comprised the exhibit to his affidavit. On the one hand, I accept that Mr Williamson was negligent in not reading those pages before he swore his affidavit. On the other hand, his conduct was not reckless or so egregious that this factor should be elevated to a primary factor.
In the exercise of my discretion, although I have found that Mr Duncan’s solicitors’ conduct was not improper, it is significant that I have concluded that a reasonable solicitor in their position would have believed that it was likely that the disclosure of the 27 April-4 May email chain was inadvertent.
Mr Duncan contends that there is no utility in granting relief because the waiver of privilege in the 23 April email has resulted in an imputed waiver of privilege in the 27 April-4 May email chain. I have rejected that contention above.
Mr Duncan also contends that there is no utility in making the order because the 23 April and 16 May emails are available to him to prove the Litigation Strategy and Smithbridge and Mr Smith will gain little by his not being able to rely on the 27 April-4 May email chain. Of course, there is a tension between this contention and the contention that Mr Duncan will suffer prejudice if relief is granted. However, I accept the contention by Smithbridge and Mr Smith that there is utility in making the order in that, if Mr Duncan is permitted to retain the 27 April-4 May email chain, it is likely that he will contend that this gives rise to an imputed waiver in respect of yet further communications.
In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited,[42] the High Court said:
Although discovery is an inherently intrusive process, it is not intended that it be allowed to affect a person's entitlement to maintain the confidentiality of documents where the law allows. It follows that where a privileged document is inadvertently disclosed, the court should ordinarily permit the correction of that mistake and order the return of the document, if the party receiving the documents refuses to do so.
…
It goes without saying that the courts will not need to be concerned with the correction of error unless there is a dispute. In the case of inadvertent disclosure, this should not often arise.[43]
[42] (2013) 250 CLR 303.
[43] At [45] and [50].
Mr Duncan emphasises that the inadvertent disclosure in that case occurred in the context of discovery, which is a mandatory process; whereas in the present case Mr Williamson’s affidavit was voluntary. Although the second sentence in the first paragraph extracted above may have been in the specific context of discovery, the second paragraph extracted above has more general application. While the context in which the disclosure occurs is a relevant factor, including whether it is in a mandatory or voluntary context, that factor should not be elevated so that it is higher than the factors referred to above.
Weighing all of the relevant factors, this is a clear case in which relief should be granted in respect of the inadvertent disclosure of privileged material.
Conclusion
Smithbridge and Mr Smith have established an entitlement to the relief sought in the exercise of my discretion. That relief will encompass:
1amendment or replacement of Mr Williamson’s 21 June affidavit to remove the 27 April-4 May email chain from the exhibit and references to the pages containing that email exchange;
2return by Mr Duncan and his lawyers of Mr Williamson’s 21 June affidavit; and
3amendments to Mr Duncan’s statement of claim to remove references to the 27 April-4 May email chain.
I will hear the parties on the precise orders to be made.

[2021] SASC 94

4 August 2021