E and E Sterling Enterprises Pty Ltd v Watpac Construction (Vic) Pty Ltd
[2012] VCC 806
•18 July 2012
| IN THE COUNTY COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
BUILDING CASES DIVISION
Case No. CI-11-02265
| E & E STERLING ENTERPRISES PTY LTD (AS TRUSTEE FOR THE STERLING FAMILY SUPERANNUATION FUND) | Plaintiff |
| v | |
| WATPAC CONSTRUCTION (VIC) PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE GINNANE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13-14 June 2012 | |
DATE OF JUDGMENT: | 18 July 2012 | |
CASE MAY BE CITED AS: | E & E Sterling Enterprises Pty Ltd v Watpac Construction (Vic) Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 806 | |
REASONS FOR JUDGMENT
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Catchwords: EVIDENCE - legal professional privilege - dominant purpose of creation of the document – documents communicated to third party- whether privilege waived - whether common interest- Evidence Act 2008 (Vic) ss 117.118.119,122
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A. P. Downie | Middletons |
| For the Defendant | Mr A. Bell | Piper Alderman |
HIS HONOUR:
1 This judgment concerns whether legal professional privilege attaches to two documents in the possession of the plaintiff and eleven documents produced by the defendant’s insurance broker pursuant to a subpoena issued by the plaintiff.
2 The proceeding was commenced on 20 May 2011. In summary, it concerns the following circumstances. The defendant (Watpac) entered into a written contract with the plaintiff (Sterling) to construct a warehouse and factory at Heidelberg West. Under the contract the parties agreed that Mr Paul Vincent of Associated Project Control Pty Ltd was the Superintendent. Clause 20 of the Contract states:
“Except where the Superintendent is required to act as independent certifier, valuer or assessor under the Contract, the Superintendent may act as agent of the Principal. In acting as agent of the Principal, the Superintendent is not required to act reasonably and in good faith and no such act will cause the Principal to be in breach of the Contract.”
3 By August 2010, Mr Darren Noble of Noble Lawyers had been engaged by the Superintendent to advise him regarding his functions.
4 After practical completion, the premises were let to Westaflex (Australia) Pty Ltd. Sterling alleges that the concrete floor slabs were defective. An issue is the amount of economic loss claimed to have been suffered by Westaflex. Watpac has a counterclaim, which includes claims for payments for work performed, which are said to have been certified by the Superintendent, claims for variations, delay cost claims and a security of payment claim.
Sterling’s claim for legal professional privilege in respect of documents 383 and 386
5 On 27 January 2012, Mr Paul Sterling, a director of Sterling, swore its affidavit of documents.
6 Schedule 1 to that affidavit described 407 documents that Sterling had in its possession, custody or power. A dispute exists about two of them. They are:
Number Date To From Subject 383 16/8/2010, 5:34pm Darren@Noble Lawyers.com.au Nathan Abbott Westaflex
& Watpac386 17/8/2010, 10:54am Darren@Noble Lawyers.com.au Nathan Abbott Westaflex
& Watpac
7 Watpac seeks the right to inspect one document, among a number of documents, which were attached to both emails. It is a two page email dated 2 March 2010 from Mr Vincent to Mr Nathan Abbott, a partner of the solicitors for Sterling. The email was copied to Mr Sterling.
8 In his second affidavit, Mr Abbott, states that he received the email of 2 March 2010, because around that time, Mr Vincent and Sterling arranged to meet with him concerning the dispute between Sterling and Watpac. Mr Vincent sent him the email as part of a brief of documents, to brief him about the dispute. After he received the email he provided Sterling with legal advice about the matters in dispute.
9 In his first affidavit, Mr Abbott states that on 16 August 2010, he was informed by Mr Noble that he had been engaged by the Superintendent to advise him, including on the exercise of his functions, in particular his assessment and certification of claims by Watpac for extensions of time under the contract. Mr Noble asked him to assist him to familiarise himself quickly with the matter by sending him copies of critical documents, including the brief of documents which had been forwarded to him by his (Mr Noble’s) client, the Superintendent, regarding the dispute. The Superintendent had requested that Mr Noble, in turn, request that brief from him. It is unclear why the Superintendent did not send the brief directly to Mr Noble. Mr Abbott states that the two page email pre-dates by several months the issues which have become the subject of Watpac’s counterclaim.
10 In his second affidavit, Mr Abbott also states that around August 2010, Mr Vincent asked him to send to Mr Noble, the email that Mr Vincent had sent to him. Mr Abbott states that given that the Superintendent, as agent for Sterling, sent the email to him in the first place, which (in his view) resulted in the email being subject to legal professional privilege, he considered that the re-sending of the information back to the Superintendent’s solicitor, Mr Noble, to have the same level of confidentiality and legal professional privilege as though he was sending it back to the Superintendent.
11 Mr Abbott states that later on 16 August 2010, he sent an email to Mr Noble with an attachment, which were the copy documents that Mr Noble requested. The email was document 383. It stated:
“Darren,
Copy herewith of much of the material you requested this afternoon.
Best regards,
Nathan Abbott, Partner, Middletons.”
12 On 17 August 2010, Mr Abbott sent a second email to Mr Noble, which is the document described as document 386. It stated:
“Darren,
Copy herewith of much of the material you requested yesterday afternoon. I tried to send it to you yesterday but it bounced back because I had scanned some coloured dividers which we’ve now replaced.
Best regards,
Nathan Abbott, Partner, Middletons
13 Mr Abbott states that the purpose of the 17 August email (document 386) was to resend the attachment to the 16 August email (document 383), but with the dark dividing pages replaced with white dividing pages to reduce the size of the email.
14 Mr Abbott states that attached to both emails were a number of documents, which in fact totalled 24 documents, the last of which Mr Abbott describes as “a privileged 2 page covering email from the Superintendent to me dated 2 March 2010, which was sent with the above attachments when they were forwarded to me on that date”.
15 I was informed that the other 23 documents, attached to the emails of 16 and 17 August 2010, have been discovered.
16 One issue argued by the parties, and considered below, is whether the attachments to the email were to be treated as part of documents 383 and 386.
17 Part 2 of Schedule 1 to Mr Sterling’s affidavit of documents lists the document for which privilege is claimed and which Sterling objects to produce. The affidavit states that those documents are privileged on the grounds:
(a) as to document numbered 408, that they constitute, contain or record confidential and professional communications passing between the Plaintiff and its solicitors and counsel for the dominant purpose of obtaining and providing legal advice generally or conducting actual or contemplated litigation, including this litigation;
(b) as to document numbered 409, that they constitute, contain or record confidential and professional communications passing between the Plaintiff and third parties made or prepared when litigation was anticipated or commenced for the dominant purpose of the litigation with a view to obtaining advice as to the litigation, evidence to be used in it or information that could result in the obtaining of such evidence.
18 The documents in paragraph 408 of Part 2 of Mr Sterling’s affidavit of documents are described as “correspondence passing between the Plaintiff and its solicitors and counsel”. The documents referred to in paragraph 409 are described as “bundles of papers containing electronic messages, notes, correspondence, instructions and draft instructions, proofs and draft proofs of witnesses, reports, communications and memoranda and other papers”.
19 Mr Abbott states that the two emails listed as documents 383 and 386 are the covering emails and do not include the attachments to those emails.
20 Watpac seeks copies of the two page covering email dated 2 March 2010.
Submissions of the parties
21 Sterling argues that the affidavit of documents discovered the emails without any attachments. The attachments, or at least the email of 2 March 2010, was the subject of a claim for privilege in paragraphs 408 and 409 in Part 2 of Mr Sterling’s affidavit of documents. Mr Abbott states that he sent the email, amongst other documents, to Mr Vincent’s solicitor, Mr Noble and that in doing so, he did not waive privilege as the email was not sent to a third party on an open basis. Rather it was sent to Mr Noble, the solicitor for Mr Vincent, who was the author of the document. Mr Noble was bound by the usual duty of confidence to his client.
22 Mr Abbott made a second affidavit and Mr Sterling made an affidavit, both of which state that it was not their intention to waive any privilege in the email from Mr Vincent to Mr Abbott dated 2 March 2010, as it contained confidential instructions from the Superintendent, as agent for Sterling, which were sent to Sterling’s solicitors. They both state, that if the inclusion of the Noble emails dated 16 and 17 August 2010 in the affidavit of documents, being documents 383 and 386, could have the effect of waiving privilege in the email from Mr Vincent to Mr Abbott of 2 March 2010, they did not intend that, it was a mistake and they request the court to amend the affidavit of documents, or in reality seek leave to amend it.
23 Sterling submitted that the email contained instructions from the Superintendent, as its agent, to its solicitor, Mr Abbott, concerning the dispute was therefore subject to legal professional privilege (see ss.118 and 131A of the Evidence Act 2008). It was a confidential communication between Sterling and its lawyer.
24 Confidential communication is defined in s 117(1) of the Evidence Act to mean:
“A communication made in such circumstances that, when it was made –
(a) the person who made it; or
(b) the person to whom it was made –
was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.”
25 The Superintendent provided the email as Sterling’s agent to its solicitor and the Superintendent therefore falls within the definition of client under s.117. That definition includes an employee or agent of a client (see s.117(1)(b)).
26 The email was sent by Mr Vincent for the dominant purpose of Mr Abbott, or his firm, at a later point, providing advice to Sterling.
27 The email of 2 March 2010 also has litigation legal professional privilege under s119, as its purpose was to enable Mr Abbott to provide professional legal services to Sterling in relation to anticipated proceedings.
28 Sections 118 and 119 provide:
“118 Legal advice
Evidence is not to be adduced if , on objection by a client, the court finds that adducing the evidence would result in disclosure of-
(a) a confidential communication made between the client and a lawyer; or
(b) a confidential communication made between 2 or more lawyers acting for the client; or
(c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person –
for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.
119 Litigation
Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of-
(a) confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made; or
(b) the contents of a confidential document (whether delivered or not) that was prepared –
for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been a party”.
29 Sterling then submitted that Mr Abbott’s action in sending the emails to Mr Noble on 16 and 17 August was not a waiver of privilege. There was not a knowing voluntary disclosure of the substance of the evidence to another person within the meaning of s.122(3), as the person to whom the document was sent was the solicitor of the Superintendent, and he, as agent of Sterling, sent the email of 2 March 2010 in the first place. Even if sending the email to Mr Noble was the disclosure of the substance of the evidence to another person, it was a confidential communication within the meaning of s.122(5)(a)(i). Sterling had not acted in a way inconsistent with its claim that the email was privileged: see s.122(2).
30 The relevant parts of s 122 provide:
(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118,119 or 120.
(3) Without limiting subsection (2), a client or party is taken to have so acted if -
(a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person; or
(b) the substance of the evidence has been disclosed with the express or implied consent of the client or the party.
…
(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because -
(a) the substance of the evidence has been disclosed-
(i) in the course of making a confidential communication or preparing a confidential document; or
….
(c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.
31 Sterling argued that the email of 2 March 2010 had been referred to in the general terms of the description of documents 408 and 409 set out above. The inclusion of the covering email in documents 383 and 386 did not lead to legal professional privilege in the attachments to them being waived. The emails and the attachments are separate documents. The definition of document in the Act, included any part of a document (clause 8 of Part 2) and thus legal professional privilege could be claimed for the email of 2 March 2010, which was attached to the emails of 16 and 17 August.
32 Alternatively, no waiver of privilege was intended. The inclusion of the emails was a mistake. For this added reason, there had not been a disclosure knowingly and voluntarily within the meaning of s.122(3)(a). The question became whether it was fair in all the circumstances to allow the claim of privilege to be maintained. The court could amend the affidavit.[1] The email had not been inspected and its existence was not disclosed in the affidavit of documents. Sterling had claimed privilege since the time when Watpac had first requested to inspect the document and it would suffer substantial prejudice, if it could not rely on the privilege.
[1]See Guinness Peat Ltd v Fitzroy Robinson [1987] 1 WLR 1027
33 Watpac contends that Sterling did not claim privilege over the attachments to the emails of 16 and 17 August, that they were discovered as documents 383 and 386 and that it was entitled to inspect them. Documents 383 and 386 had been intentionally discovered. Without inspection of the attachments, those documents were meaningless. Reliance was placed on s 126.
34 Watpac contended that Sterling had failed to establish that the dominant purpose of the email of 2 March 2010 was for the purpose of providing legal advice (s118), or the provision of professional legal services relating to an anticipated proceeding (s119). There was no evidence as to Mr Vincent’s purpose in sending the email to Mr Abbott. Mr Abbott’s affidavits did not assert that the attachment was produced, or sent to him, at his request.
35 There was no evidence that the Superintendent was acting as Sterling’s agent, under clause 20 of the Contract. The Superintendent was not a party to the Contract and there was no evidence supporting an agency relationship.
36 Alternatively, Watpac contended that legal professional privilege had been waived as Sterling had “knowingly and voluntarily disclosed” the privileged communication to another person. The document had been sent to the solicitor, Mr Noble, who was advising the Superintendent on his independent functions. The interests of the Superintendent and the principal Sterling may well differ in respect of the Superintendent’s functions.
37 Neither document was a confidential communication.
Conclusion concerning documents 383 and 386
38 The parties invited to me inspect the document. I did so, but it did not reveal anything decisive in the determination of the issue.
39 The first question is whether Sterling has established that the email of 2 March 2010 was subject to legal professional privilege, being advice or litigation privilege.
40 Sterling bears the onus of proving that the dominant purpose in the creation of the email of 2 March 2010 was a privileged purpose.[2]
[2] Powercor Australia Ltd v Perry [2011] VSCA 239 at [42]-[43] and Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332
41 That onus may be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its communication. The purpose for which a document is created is a question of fact, to be determined objectively. The evidence of the intention of the document’s maker, or of the person who authorised or procured it, is not necessarily conclusive.[3]
[3]The last two sentences are taken from AWB Ltd v Cole (No 5) (2006) 155 FCR 30 at 44-47
42 Mr Abbott’s affidavits describe, from his perspective, the circumstances in which he received the email of 2 March 2010. After he received the email he provided Sterling with legal advice about the matters in dispute.
43 I consider that, even in the absence of an affidavit from Mr Vincent, Mr Abbott’s affidavits establish that the dominant purpose of the communication contained in the email of 2 March 2010, was both to enable Mr Abbott to provide legal advice to Sterling and also to enable him to provide Sterling with professional legal services relating to an anticipated Australian legal proceeding.
44 The debate between the parties, in the first instance, was about whether the email sent by Mr Vincent on 2 March 2010 to Mr Abbott was privileged. The parties did not suggest that the copy of the email sent to Mr Noble had to be created for a dominant purpose recognized by s118 or s119. Rather they focused on whether that communication constituted a waiver of any privilege, that already existed in the email of 2 March 2010.
45 I find that the email of 2 March 2010 was a confidential communication. When Mr Vincent sent the email to Mr Abbott and when he, in turn sent it to Mr Noble, they were both under an implied obligation not to disclose its contents. Mr Vincent was acting as Superintendent, and communicating with Sterling in confidential circumstances and Mr Abbott was acting as Sterling’s lawyer.
46 Subject to the question discussed next, the email of 2 March 2010 attracts both advice and litigation privilege.
47 The next question is whether that legal professional privilege has been waived. This in turn calls for the application of s.122 of the Act, the relevant parts of which are set out above.
48 I do not consider that the description of documents 383 and 386 in the affidavit of documents is a listing of, or discovery of, all of the attachments to the email. The description is of emails sent at particular times on 16 and 17 August 2010. That description makes no reference to the many documents attached to the emails.
49 Mr Abbott describes all those attachments in his first affidavit. They are many documents of different dates. The fact that the documents are referred to as attachments, obviously means that there is a document to which they are attached. The email merely states that the documents (material), which were attached, were being forwarded. It conveys that meaning and no reference to the attachments is required to understand that message. The fact that the emails do not describe in detail what is being attached, does not mean that the message in the emails is unclear, or can only be understood by reading the attachments.
50 If I had reached the conclusion that the description of documents 383 and 386 did include the attachments, I would have given Sterling leave to amend its affidavit of documents to claim privilege for the email of 2 March 2010. In reaching that alternative conclusion, I would have had regard to the inconsistency, considered in terms of fairness, between including the documents in the affidavit and then claiming privilege[4]. However, the affidavit evidence to which I have referred, establishes that Sterling never intended to include the attachments, or at least the email of 2 March 2010, in its discovery of documents 383 and 386. Sterling has maintained that position since inspection of the documents was first sought. The documents have not been provided to Watpac. There is no relevant prejudice to Watpac, where the email is otherwise privileged, in not being able to inspect it.
[4] Mann v Carnell (1999) 201 CLR 1 at 13 and GT Corporation Pty Ltd v Amare [2007] VSC 123
51 Whether or not the Superintendent was acting in a different capacity when he asked Mr Abbott to send the documents to Mr Noble, I do not consider that Mr Abbott’s action in responding to that request, constitutes the knowing and voluntary disclosure of the substance of the evidence of the contents of the email to another person. Mr Abbott received the document dated 2 March 2010 from Mr Vincent and he sent it back to Mr Vincent’s solicitors. I do not consider that s.122(3)(a) applies in such circumstances.
52 In addition, I consider that Mr Abbott in resending the email to Mr Noble was making a confidential communication within the meaning of s.122(5)(a) of the Evidence Act.[5] In essence, he was returning a document, which had in the first place been sent, by the Superintendent, on behalf of a person, Sterling, to its solicitor.
[5]See Carnell v Mann (1998) 159 ALR 647 at 659
53 Sterling has established that the email of 2 March 2010 is the subject of legal professional privilege.
The Jardine Lloyd Thompson Pty Ltd documents
54 The second matter argued by the parties was Watpac’s objections to Sterling being granted the right to inspect documents produced by Jardine Lloyd Thompson Pty Ltd (JLT) pursuant to a subpoena issued by Sterling. JLT was Watpac’s insurance broker.
55 Pursuant to order of the court, these documents were produced to the Court and Watpac given an opportunity to object to Sterling being able to inspect them.
56 These documents were described by Watpac’s solicitor as follows:
3.1 Internal file notes for claim ref 42754 dated 2 August 2011 – 16 January 2012;
3.2 Chain of emails ending with email from Ian West to Valerie Brooks cc: Geoffrey Emmett and Meagan Calder dated 16 January 2012;
3.3 Chain of emails ending with email from Valerie Brooks to Ian West dated 11 January 2012 (this chain of emails is a sub-set of the chain of emails described at 3.2 above);
3.4 Chain of emails ending with email from Ian West to Valerie Brooks dated 24 August 2011 at 2:34pm;
3.5 Chain of emails ending with email from Ian West to Valerie Brooks dated 24 August 2011 at 2:31pm and attachments thereto;
3.6 Chain of emails ending with email from Ian West to Valerie Brooks dated 23 August 2011 and attachments thereto;
3.7 Chain of emails ending with email from Valerie Brooks to Jason Prentice as forwarded to herself dated 5 August 2011;
3.8 Minutes of Meeting dated 13 August 2010;
3.9 Minutes of Meting dated 21 May 2010;
3.10 Chain of emails ending with email from Steve Bellows to Valerie Brooks cc: Adrian Artico, Tamara Johnson and Nick Pavlovic dated 10 May 2010;
3.11 Without prejudice summary of economic loss of Westaflex Aust Pty Ltd with handwritten notes made by defendant dated 27 April 2010 (in duplicate).
57 Watpac claims:
(a) legal professional privilege;
(b) without prejudice privilege (in the case of documents 3.4, 3.5 and 3.11 only);
(c) common interest privilege based on the common interest it and JLT shared in defending these proceedings.[6]
[6]Affidavit of Megan Lisbeth Calder of 30 May 2012 paragraph 4.8
58 In support of that application, Watpac’s solicitor, Ms Meagan Calder, made an affidavit stating the following. In or about September 2009, practical completion of the construction project was reached. Sterling contended that the floor works were defective and required rectification. On 27 April 2010 Westaflex, the tenant, provided to Watpac a “without prejudice” summary of its economic losses (a copy of which, containing further handwritten notes, is document 3.11). Ms Calder states that that she was informed by Mr Steve Bellows of Watpac, the author of the initial communication with JLT, and verily believes that:
(a) by April 2010, litigation between the defendant and the plaintiff was anticipated;
(b) around this time, Watpac engaged legal advisers;
(c) shortly after, the defendant confidentially contacted JLT, its insurance broker. The purpose of the confidential communication with JLT was to inform it of the plaintiff’s claims and Watpac’s legal position so that JLT could determine if Watpac was able to make a late notice claim on its policy such that JLT would take part in any proceedings.
59 Ms Calder states that she is informed by Ian West of Watpac and believes that communications between Watpac and its insurance broker are treated as, and are expected to remain, confidential. There were a number of confidential communications made between Watpac and JLT for the common purpose of defending Sterling’s claim. All those communications were made at a time when litigation between Sterling and Watpac was reasonably anticipated and, in fact, considered a real possibility by Watpac and JLT.
60 Ms Calder states that in the course of these confidential communications Watpac forwarded to JLT:
(a) communications between itself and its solicitors including a draft position paper for a without prejudice communication (in the case of documents 3.4, 3.5 and 3.11);
(b) its comments and notes on the plaintiff’s claims prepared for the purpose of defending those claims.
61 Mr Stephen Bellows, the commercial manager of Watpac, made an affidavit stating that in around September 2009 he first became aware of problems with the project and that by April 2010, he considered that litigation was likely and retained legal advisers to act on behalf of Watpac. Following receipt of a claim for economic loss from Sterling[7] on 27 April 2010, he contacted JLT, two days later, to inform it of Sterling’s claim and to see if Watpac’s insurer would respond to the claim by taking part in any proceedings in the event that Watpac was sued. He referred to document 3.10, which he described as an email chain between Valerie Brooks and Tamara Johnson of JLT, and him, beginning on 29 April 2010 and ending on 10 May 2010. Mr Bellows stated that he contacted JLT for the purposes of getting Watpac’s lawyers to review the overall position Watpac was in, so that its lawyers, who were then Norton Rose, could give Watpac advice about those matters.
[7]There were differences between Watpac’s affidavits about whether this document came from Westaflex or Sterling. Nothing turns on this point.
62 Mr Bellows states that document 3.11 is a duplicate copy of a claim for economic loss received from the plaintiff on 27 April 2010. The notes on it are his and he prepared them, and forwarded a copy of that document to JLT by about 29 April 2010 for the same purpose as “my email referred to above”. This appears to be a reference to the email of 29 April 2010.
63 Mr Ian West, the National Commercial Manager Construction, for Watpac, made an affidavit in which he states that on or about 27 April 2010 Watpac received a claim for economic loss from Sterling. In May 2011, Sterling commenced proceedings against Watpac. In August 2011 a mediation occurred, but was unsuccessful. He then asked Mr Jason Prentice, the Commercial Manager, who reported to him, to make enquiries of Watpac’s insurer for the purposes of obtaining legal advice in respect of defending Sterling’s claims. Mr Prentice did so. Mr West forwarded Mr Prentice’s email with his comments, and other emails of his own, to Valerie Brooks at JLT. He identified these documents as documents 3.2, 3.3, 3.4, 3.5 and 3.6.
64 Mr West then sought advice on 25 August 2011 from Watpac’s legal adviser, Piper Alderman, who it had already engaged to advise it about the dispute, in relation to the contents of the email exchanges with JLT. Piper Alderman continues to advise Watpac about this matter. Mr West stated his belief that the contents of the advice sought, and the advice, are legally privileged.
65 Mr West also stated that communications between Watpac and the insurance broker, JLT, were treated as, and were expected to remain, confidential. This included document 3.2, in which the final email in the email chain was from him to Valerie Brooks at JLT and copied to Mr Geoffrey Emmett and Ms Calder, who are two partners at Piper Alderman.
66 Mr Jason Prentice, the Commercial Manager at Watpac, made an affidavit. He states that he became aware of problems with the project in late November or early December 2010 and that, at that point, the dispute had escalated to the point where litigation was anticipated. Mr West asked him to make enquiries of Watpac’s insurer for the purposes of obtaining legal advice as to the future conduct of the proceedings. He did that on about 2 August 2011 in documents 3.1 and 3.7.
67 Mr Prentice stated that the originating email in the email chains contained in documents 3.2, 3.3 and 3.6, was from him and was prepared pursuant to Mr West’s request for the purpose of obtaining legal advice for Watpac. He stated that he has been shown an email of 25 August 2011 from Mr West to Piper Alderman, forwarding Ms Brooks’ email of the same date to Mr West. That email was part of the chain that appears in documents 3.2 and 3.3. It includes Mr Prentice’s original email and his request for legal advice. He states that that email is confidential and he believes is legally privileged.
Parties’ submissions
68 The essence of Watpac’s case was that the purpose of its communications with JLT was to obtain information to provide to its solicitors for them to provide it with legal advice about its position in the litigation.
69 Watpac relied on Mr West’s evidence, which, as previously stated, was that following the mediation in August 2011, he asked Mr Prentice to make enquiries of Watpac’s insurer for the purposes of obtaining legal advice in respect of defending Sterling’s claim. Mr West then stated that Mr Prentice prepared an email in furtherance of his request. Mr West in turn forwarded that email with his further comments to JLT. Upon obtaining a response from JLT he sought advice from Piper Alderman on 25 August 2011. He swears that the communications between JLT and Watpac were confidential.
70 Mr Prentice stated that documents 3.2, 3.3 and 3.6 are email chains containing an initiating email by him and that each of those emails were prepared pursuant to the above request from Mr West for the purposes of obtaining legal advice to Watpac.
71 Documents 3.1 and 3.7 record further communications between Mr Prentice and JLT. Mr Prentice stated that in those communications he sought information for the purposes of obtaining legal advice.
72 Ms Calder’s affidavit identifies that documents 3.4, 3.5 and 3.11 are “without prejudice” position papers. Documents which have without prejudice status are not discoverable[8], or subject to production by the issuing of a subpoena.
[8]See TPC v Arnotts (1989) 88 ALR 69 at 74-75
73 Watpac submitted that documents 3.10 and 3.11 were prepared to ascertain if JLT was likely to respond to the plaintiff’s claim by taking part in any proceeding and that it did so for the purpose of getting Watpac’s lawyers to review its overall position and to provide it with advice on the matters.
74 The privilege in the documents had not been lost by sending them to JLT, who had a common interest relating to the proceeding or anticipated proceeding: see s 122(5).
75 Document 3.11, which is two copies of a claim for economic loss received from Sterling on 27 April 2010, contains Mr Bellows’ notes and was prepared for the same purpose i.e. for the purpose of obtaining information to be provided to Watpac’s lawyers for the purpose of them providing advice to Watpac..
76 Sterling submitted that Watpac’s description of the purpose of the document meant that the obtaining of legal advice was a subsidiary and minor purpose. To the extent that the email chains contain communications with lawyers, which was not admitted, then they could be redacted provided that they are subject to either advice or litigation privilege.
77 Sterling submitted that Watpac had not established that the dominant purpose for which any of the documents was brought into existence was to obtain legal advice. A communication with an insurance broker was likely to have the dominant purpose of ascertaining whether indemnity would be extended to the insured.
78 The communications were not confidential within the meaning of s 117 of the Evidence Act.
79 Sterling submitted that the necessary common interest, between Watpac and JLT, had not been established as:
(a) there was no common solicitor;
(b) there was no evidence that JLT and Watpac had a common interest;
(c) there was no evidence that insurance cover was, or was likely to be extended to Watpac;
(d) there was no evidence that the communication was made under an obligation of confidence.
80 Again the parties invited me to read the documents. Again, that reading did not add a great deal to the general description of the documents given in the affidavits.
Legal principles
81 Watpac bears the onus of establishing that the documents contained confidential communications created for the dominant purpose of legal advice (s118) or the provision of professional legal services (s119).
82 A communication by a person to a third party for the dominant purpose of the principal obtaining legal advice attracts legal privilege e.g. between a client and an accountant, where the lawyer, as part of giving advice, suggests that the client obtain information from an accountant, which after being provided to the client, is then sent to the lawyer: see Pratt Holdings Pty Ltd v Commissioner of Taxation[9].
[9](2004) 136 FCR 357 and Eric Preston Pty Ltd v Euroz Securities Pty Ltd [2009] FCA 240
83 In Trade Practices Commission v Sterling[10], Lockhart J stated that communications passing between a party and a third person (who is not the agent of the solicitor to receive the communication from the party) if they are made with reference to litigation either anticipated or commenced, and at the request or suggestion of the party’s solicitor; or, even without any such request or suggestion, they are made for the purpose of being put before the solicitor with the object of obtaining his advice or enabling him to prosecute or defend an action are privileged.
[10](1979) 36 FLR 244 at 245
84 Documents sent directly by a party to its insurer notifying it of a claim can be privileged. In Guinness Peat Ltd v Fitzroy Robinson[11]Slade LJ considered that a letter of notification of a claim was privileged in the hands of the insurer:
“…the dominant purpose was to produce a letter of notification which would be used in order to obtain legal advice or to conduct or aid in the conduct of litigation which was at the time of its production in reasonable prospect.”
[11][1987] 1WLR 1027 at 1037
85 Communications that have a without prejudice status are privileged. This includes communications made in the course of a mediation of a proceeding[12].
[12]Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 69 at 74-75 and the cases referred to in Bailey and Arthur, Civil Procedure – Victoria pps 3802.45 and 3802.46
86 The privilege in a communication is not lost by being made to another person, if the maker and the recipient of the communication have a common interest: s122(5)(c).
87 In Bulk Materials (Coal Handling) Services Pty Ltd v Coal and Allied Operations Pty Ltd[13], Giles J considered that, where an underwriter had not yet extended, but was likely to extend, indemnity to a plaintiff/insured and who otherwise had an interest in the litigation identical with that of the plaintiff/insured, there was a common interest between the insured and the underwriter. Where there is a common interest, each of those with the common interest can avail itself of the legal professional privilege enjoyed by the other.
[13](1988) 13 NSWLR 689 at 695
Findings
88 Watpac has established that its purpose in contacting JLT was to gain its view on whether Watpac would be able to make a late claim on its insurance policy, so that it could put that view and information before its lawyers to provide advice about how it should conduct its defence and counterclaim in the proceedings. The ability of a client to claim under an insurance policy is exactly the kind of matter on which legal advice would be sought, as part of the consideration of how the litigation was to be conducted. The views of the insurance broker would be most relevant to the advice that the lawyer might provide. Mr West states that after the email exchanges with JLT, he then sought advice on 25 August 2011 from Watpac’s solicitors in relation to their content.
89 JLT was acting as Watpac’s broker. I do consider that it was under an implied contractual obligation not to disclose the contents of communications from, or, to Watpac.
90 It is necessary to apply those findings to the documents produced by JLT. In doing so, it is necessary to refer to parts of the affidavit material set out above.
Document 3.1
91 Document 3.1, contained Mr Prentice’s communication on 2 August 2011, on behalf of Watpac, with JLT about the possibility of there being a late claim and whether the insurer was likely to accept such a claim. His evidence establishes that the dominant purpose of this communication was to obtain information i.e. whether the insurer would provide cover. This information was to be provided to Watpac’s lawyers to enable them to provide advice about Watpac’s position and its options. This communication is protected by advice privilege.
Documents 3.2,3.3, 3.6 and 3.7
92 Document 3.2 contains an email chain between staff of Watpac and JLT commencing with Mr Prentice’s email of 4 August 2011 to another employee of Watpac. A series of these emails were apparently forwarded to Valerie Brooks at JLT, who then responded to Mr West. The purpose of the emails was to ascertain whether a claim could be made under Watpac’s insurance policy. Watpac has established that the dominant purpose in sending these emails to JLT was to obtain information to be provided to Watpac’s lawyers to advise it. They therefore attract advice privilege.
93 Document 3.3 appears to consist of all, but one, of the emails that comprise Document 3.2 and attracts advice privilege for the same reasons, as apply to document 3.2.
94 Document 3.6 contains a number of the emails, which are contained in documents 3.2 and 3.3, together with three pages of a document with handwritten notes on them. That chain, including the three annotated pages, was sent to JLT to get its view on whether an insurance claim could be made. The document attracts advice privilege for the same reason as document 3.2 does.
95 Document 3.7 is an email exchange between Mr Prentice and Ms Brooks. The affidavit evidence and the terms of Documents 3.2 and 3.3 establish that it had the same purpose as document 3.2 and therefore attracts advice privilege.
Documents 3.4- 3.5
96 Documents 3.4 and 3.5 are emails between JLT and various staff of Watpac forwarding a document which Ms Calder describes as a “draft position paper for a without prejudice communication.” Ms Calder’s description suggests that the document was not in a final form.
97 Watpac has established that the dominant purpose of the documents was the making of without prejudice statements in the litigation. It does not alter this conclusion that copies of the document were forwarded to JLT and various staff at Watpac.
98 The documents attract litigation privilege and in addition have the status of without prejudice communications.
Documents 3.8 and 3.9
99 Document 3.8 is the minutes of meetings of 13 August 2010.There is nothing said in Watpac’s affidavits about these documents. While there is evidence that litigation was anticipated at that date and that communications with JLT were confidential, that does not establish the dominant purpose of the document. The minutes, for the most part, address a number of issues that have nothing to do with these proceedings.
100 Two lines of document 3.8 bear on this proceeding. The terms of those two lines, even when viewed in the context of the other documents and the matters stated in Watpac’s affidavits, do not establish that the dominant purpose of their creation was privileged. Those two lines and the details of the meeting, contained at the commencement of the document, are not privileged and are able to be inspected by Sterling.
101 Document 3.9 is the minutes of a meeting on 21 May 2010. Five lines of it have some connection with the current proceeding. Watpac received Sterling’s without prejudice claim for economic loss on or about 27 April 2010. As previously stated, Ms Calder states that she has been informed by Mr Bellows, that by April 2010, litigation between Sterling and Watpac was anticipated and around this time Watpac engaged legal advisers. Shortly after, Watpac confidentially communicated with JLT to inform it of Sterling’s claim so that JLT could determine if Watpac was able to make a late notice claim on its policy such that JLT would take part in any proceeding. Mr West has informed her that those communications are treated as, and are expected to remain confidential.
102 It may be that the relevant matters contained in the minutes of the meeting of 21 May 2010 could have been created for the dominant purpose stipulated in s118 or s119 of the Act. However that is not self evident from the documents and no part of any Watpac affidavit, says that the relevant parts were so created. I do not consider that Watpac has established that legal privilege attaches to the relevant parts of document 3.9, which are the five lines to which I have referred, and the details of the meeting at the commencement of the first page of the minutes.
Document3.10
103 Document 3.10 is a chain of three emails in April and May 2010, between JLT and Mr Bellows. As stated above, Mr Bellows maintains in his affidavit that he contacted JLT in these emails for the purpose of getting Watpac’s lawyers to review the overall position that Watpac was in, so that its lawyers could give Watpac advice about “those matters”. At the time of the email chain, Watpac anticipated litigation.
104 Watpac has established that the dominant purpose of the communications in the email chain was to obtain information to provide to its lawyers for the purpose of obtaining legal advice. Document 3.10 is therefore privileged.
Document 3.11
105 Document 3.11 is two copies of the without prejudice, two page summary of Westaflex’s economic loss, which Sterling sent to Watpac on 27 April 2010. It contains a number of handwritten notes, or annotations made by Mr Bellows of Watpac.
106 The statements in Watpac’s affidavits, which are set out above, establish that by the time this summary was received, Watpac anticipated litigation. Mr Bellows notes were prepared and sent to JLT for the same purpose as Document 3.10.
107 Watpac has established that the dominant purpose of document 3.11 was to obtain the response or likely response of the insurer, which in turn it would provide to its solicitors, to obtain legal advice about its position in the proceeding. It therefore attracts advice privilege.
Other matters
108 As stated, I consider that documents 3.1,3.2,3.3,3.6,3.7,3.10 and 3.11 attract advice privilege, I do not consider that Watpac has established that those documents attract litigation privilege. Their dominant purpose was to assist Watpac to obtain legal advice, rather than to assist it in being provided with professional legal services relating to the proceeding, or anticipated proceeding.
109 In addition to the above findings, I consider that Watpac and JLT had a common interest relating to the proceeding for the purpose of s122(5)(c). That interest was to ensure, as far as legally possible, that any legitimate right that Watpac had to have the insurer cover its possible liability, including the costs of the proceeding, to Sterling was pursued. JLT as a broker, was acting as Watpac’s agent and in considering its principal’s insurance options, in connection with the proceeding had a common interest with Watpac. Therefore, because of the operation of s122(5)(c), in providing information to JLT, Watpac was not acting in a manner inconsistent with objecting to the adducing of the evidence.
Conclusion
110 Watpac’s application for inspection of documents 383 and 386 is dismissed.
111 Sterling’s application for inspection of the JLT documents numbered, 3.8 and 3.9, is granted in part. Sterling’s application for inspection of the remaining JLT documents is dismissed.
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