Dyno Nobel Asia Pacific Ltd v Sunny Shore Shipping Finance Inc
[1997] FCA 1114
•24 OCTOBER 1997
FEDERAL COURT OF AUSTRALIA
DISCOVERY AND INTERROGATORIES - discovery and inspection of documents - client legal privilege - whether documents brought into existence for the dominant purpose of providing legal advice or for use in legal proceedings.
Evidence Act 1995 (Cth), ss 118, 119, 126
Sellers Fabrics Pty Ltd v Hapag-Lloyd AG (unreported, Supreme Court of New South Wales, 11 September 1997), distinguished
DYNO NOBEL ASIA PACIFIC LIMITED v
SUNNY SHORE SHIPPING FINANCE INC
NG 309 of 1997
TAMBERLIN J
SYDNEY
24 OCTOBER 1997
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
IN ADMIRALTY
NG 309 of 1997
BETWEEN:
DYNO NOBEL ASIA PACIFIC LIMITED
PLAINTIFFAND:
SUNNY SHORE SHIPPING FINANCE INC
DEFENDANTJUDGE:
TAMBERLIN J
DATE OF ORDER:
24 OCTOBER 1997
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The application is granted in part.
Documents 17 and 18 in the defendant’s List of Documents and the photographs in Captain Ginty’s report be produced for inspection.
Costs of this application be costs in the principal proceedings.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 309 of 1997
IN ADMIRALTY
BETWEEN:
DYNO NOBEL ASIA PACIFIC LIMITED
PLAINTIFFAND:
SUNNY SHORE SHIPPING FINANCE INC
DEFENDANT
JUDGE:
TAMBERLIN J
DATE:
24 OCTOBER 1997
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is a dispute about whether documents referred to in discovery are privileged from production.
Privilege is claimed on the basis that the documents are communications of a confidential nature between the defendant and its legal advisers in that capacity, and counsel or other independent experts instructed or retained by the defendant; or, that they are documents which were brought into existence by or on the suggestion of the defendant’s legal advisers acting in that capacity for the purpose of defending the action or of advising the defendant.
The particular documents are listed in the defendant’s List of Documents as follows:
“17.26.07.1996 Letter from Michell Sillar (“MS”) to Captain W Ginty.
18.31.07.1996 Letter from Port-Al Marine Services (Captain W Ginty) to MS.
19.03.12.1996 Facsimile from Patrick Sleigh Shipping Agencies Pty Limited to MS.
20.02.07.1996 Survey Report of Chris Tanner Pty Limited
21.26.07.1996 Survey Report of Chris Tanner Pty Limited
22.Two pages of photographs.
23.Correspondence passing between Michell Sillar and Chris Tanner Pty Limited.
24.Correspondence passing between Fleet Management Limited and Scottish Shipowners and Managers Pty Limited.
25.Survey report of Avdall & Bozier Pty Limited dated 5 September 1996, and all correspondents, notes, memoranda and other documents passing between MS and Avdall & Bozier Pty Limited and other third parties for the purpose of obtaining independent experts’ reports.
...”
The plaintiff, Dyno Nobel Asia Pacific Ltd (“Dyno”), submits that none of the documents are privileged.
The circumstances which give rise to the dispute are that Dyno was the consignee named in a bill of lading and was entitled to delivery of a cargo comprising 1,990 bags of 1,000 kilograms each of Ammonium Nitrate HDE (‘the cargo”) shipped on board the vessel “Lady Emily” at Bayonne, France on 30 April 1996 for carriage to Port Alma, Queensland. Dyno alleges a breach of duty by the defendant in that the defendant delivered the cargo in a damaged state with 731 bags contaminated by water.
The evidence indicates that the owner of the vessel is the defendant, Sunny Shore Shipping Finance Inc (“Sunny Shore”), and that it employed a technical manager, namely Fleet Management Ltd of Hong Kong (“Fleet Management”). Sunny Shore also employed a commercial manager, Scottish Ship Owners and Managers Pty Ltd of Sydney (“Scottish”). The vessel is entered for P & I risks with the Steamship Mutual Underwriting Association Bermuda Ltd of Bermuda (“Steamship Mutual”). Patrick Sleigh Shipping Agency Pty Ltd (“Patrick Sleigh”) was appointed by Scottish to act as port agent for the call at Port Alma on 26 and 27 June 1996. I am satisfied for the purpose of this application, on the present state of the evidence and having regard to the pleadings, that Scottish, at all material times, was acting as agent for Sunny Shore. It is common ground on the pleadings that the bill of lading was issued on behalf of Sunny Shore. The bill of lading expressly incorporates all the terms of the charter party of 3 April 1996.
The solicitor for Sunny Shore, Mr Thompson of Michell Sillar, received instructions in the proceedings from Fleet Management, Scottish and Steamship Mutual. He reports to each of these entities.
The damaged cargo was discharged at Port Alma, Queensland on 26 and 27 June 1996.
Mr Thompson received initial instructions on 27 June 1996 by telephone call from Captain Aurora, who was then an employee of Scottish. He was informed that Captain Ginty had been appointed to attend the vessel at Port Alma and conduct a survey on behalf of Sunny Shore.
On 28 June 1996, Mr Thompson had a telephone conversation with Captain Ginty and was informed that the latter had a retainer from Dyno to inspect all vessels which deliver cargo for it at Port Alma. The upshot of the discussion was that Captain Ginty conducted his survey on behalf of both parties and prepared a report of his findings for both parties.
On 28 June 1996, Dyno sent a facsimile to the owners of the vessel stating that approximately 680 bags of the cargo had arrived in a water damaged condition and that Dyno would hold the owners and master of the vessel responsible for the damage and product loss. The letter sought information as to how it was proposed to handle “this claim” and what further information was required.
In a facsimile sent on 28 June 1996, Mrs Moorhouse of Withnell & Co, solicitors for Dyno, informed Mr Thompson that her firm had been instructed in the matter and requested an indication whether Steamship Mutual, the P & I Club, would be prepared to guarantee to meet any “judgment” awarded against the owner and/or demise charterer of the vessel. This foreshadows legal proceedings against the owner.
On 28 June 1996 when Mr Thompson reported to Captain Aurora, he received instructions by facsimile to appoint an alternate surveyor, having regard to Captain Ginty’s position. He then proceeded to instruct Captain Tanner to attend at Port Alma to conduct a further survey on behalf of Sunny Shore. Captain Tanner in turn prepared two reports, dated 2 and 26 July 1996.
On 23 July 1996, Mr Thompson received a copy of Captain Ginty’s report and noted that the report included the results of a chemical analysis, undertaken by HLA-Envirosciences Pty Ltd, of a water sample said to have been drawn from the cargo holds of the vessel.
In order to resolve the privilege question I considered it appropriate to examine the disputed documents. In reaching my conclusions I have considered the evidence, the submissions and the contents and form of the documents. I now turn to the principles and the specific documents in dispute.
Principles
In the circumstances of this case the controlling principles relating to client legal privilege are those set out in Part 3.10 of the Evidence Act 1995 (Cth) (“the Act”), particularly in ss 118 and 119. Those sections apply the test of dominant purpose in relation to confidential communications directed to the provision of legal advice or use of advice in anticipated legal proceedings. Part 3.10 is also concerned with the privilege attaching to communications made in, or in connection with, settlement negotiation between parties and with the loss of privilege in certain circumstance (ss 122-126).
Documents 17 and 18 - correspondence with Captain Ginty
The evidence of Mr Thompson is that on seeing the water sample analysis he considered it to be of significance in preparing his advice to Sunny Shore and conducting what were then said to be anticipated proceedings on its behalf. Document 17 is a letter which requests information as to the circumstances in which the samples of water were drawn and handled prior to delivery for analysis. Document 18 is the reply giving these particulars.
Mr Thompson states that his only purpose in writing to Captain Ginty and receiving the reply was to form a better understanding of the circumstances giving rise to the damage for the purpose of providing advice to Sunny Shore and representing it in the proceedings which he anticipated would follow.
In my opinion these letters are not privileged. They seek clarification of matters contained in the non-privileged joint report obtained for the purposes of each of the parties. That document was clearly not confidential or privileged as between the joint parties for whom it was obtained. The claim for privilege in respect of clarification of the report, in my view, cannot rise higher than the report itself, which is not confidential, because Mr Thompson’s letter only seeks information in relation to the circumstances in which the samples referred to in the report were taken and provided for analysis. These documents should be produced for inspection.
Document 19 - correspondence with Patrick Sleigh
Mr Thompson asserts that Patrick Sleigh is a sub-agent of Sunny Shore. This is disputed by Dyno. The charter party refers to Patrick Sleigh as the owner’s agent at discharge. The letter in question is dated 3 December 1996. It is written to the solicitors for Sunny Shore. The substance of it is that it attaches a copy of the claim from Dyno, dated 28 November 1996, and seeks advice. In my view, this document is privileged and should not be made available.
Documents 20, 21, 22 and 23 - documents relating to Captain Tanner
These documents cover a period from July 1996 to October 1996. The documents came into being as the result of instructions from Captain Aurora of Scottish to solicitors to appoint an alternate surveyor. The first line of the first report states that it was made at the request of Michell Sillar. I am satisfied that Scottish, in giving such instructions, was acting as agent for Sunny Shore. Mr Thompson testifies that his dominant purpose was to obtain a report concerning the condition of the cargo for the purpose of providing Sunny Shore and its agents with advice as to liability in respect of the cargo damage. It could reasonably have been anticipated at the time when the documents came into existence that legal proceedings were likely.
The precise nature of the proceedings anticipated is not determinative but rather it is the circumstance that the document came into existence in order to obtain legal advice or for use in legal proceedings that is important.
I am satisfied that the documents and photographs, with the exception of photographs used in or for Captain Ginty’s report, are within the ambit of client legal privilege and therefore are protected from disclosure.
Document 24 - correspondence with Fleet Management and Scottish
These documents comprise a facsimile of 25 July 1996 from Captain Aurora, acting for Scottish, to Fleet Management enclosing copies of a surveyor’s report and lab analysis reports in the context of a letter from Michell Sillar seeking confirmation that certain investigations were being made, and seeking additional information. This confirmation was duly furnished by Fleet Management to Captain Aurora by facsimile on 29 July 1996.
The documents are from one agent of Sunny Shore to another. The first fax expressly refers to the fax from the solicitor for Sunny Shore and seeks confirmation of certain matters. Mr Thompson’s evidence was that his communications with Fleet Management and Scottish were to obtain information and to provide advice and reports to the parties for the purpose of initially providing legal advice and subsequently representing them in the proceedings in connection with the claim. This claim was first intimated in late June 1996. In my view, the documents are properly to be characterised having regard to this purpose and the reference in the fax of 25 July 1996 to the letter of Michell Sillar which prompted the inquiry and response. The documents came into existence at a time when it could reasonably be anticipated that legal proceedings were likely.
These documents came into existence for the dominant purpose of advice or use in legal proceedings and are privileged from production. In my view, this privilege has not been waived by reason of s 126 of the Act or otherwise.
Document 25 - survey report
This is a report pursuant to instructions received from Michell Sillar for Steamship Mutual on 5 September 1996. Mr Thompson testifies that he retained Captain Bozier, of Avdall & Bozier Pty Ltd, to prepare a report in order to provide advice to Sunny Shore in respect of the claim and the anticipated litigation. The relevant question is what is to be regarded as the dominant purpose, not whether there is a duality of purpose. In my view that correspondence and the report from Avdall & Bozier is the subject of client legal privilege.
I was referred to and considered the judgment of Giles CJ in Sellers Fabrics Pty Ltd v Hapag-Lloyd AG (unreported, Supreme Court of New South Wales, 11 September 1997). That case was quite different to the present. In that case the Court was not asked to inspect and did not look at the reports in question. In addition, there was no correspondence in that case within a day or so of the incident which referred to, or foreshadowed, a prospective claim or referred to the provision of a guarantee to secure any “judgment”. The timing, context and contents of the correspondence in the present case are of central importance.
Accordingly, with the exception of documents 17 and 18 and any photographs used in or for Captain Ginty’s report, I consider that the documents are privileged. I order that documents 17 and 18 and such photographs be produced for inspection.
I consider that costs of this application should be costs in the principal proceedings.
I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.
Associate:
Dated: 24 October 1997
Counsel for the Plaintiff: Mr P E King Solicitor for the Plaintiff: Withnell & Co Counsel for the Defendant: Dr A S Bell Solicitor for the Defendant: Michell Sillar Date of Hearing: 2 September 1997 Date of Judgment: 24 October 1997
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