Eastmark Holdings Pty Limited v Kabraji (No 3)
[2012] NSWSC 1463
•03 December 2012
Supreme Court
New South Wales
Medium Neutral Citation: Eastmark Holdings Pty Limited v Kabraji (No 3) [2012] NSWSC 1463 Hearing dates: 6 November 2012 Decision date: 03 December 2012 Jurisdiction: Equity Division Before: Hallen J Decision: 1. Order that the third Defendant's notice of motion, so far as it relates to the documents referred to as the Schedule 1 documents 1-21, 23, 25, 30-34 and the Schedule 2, documents 3-19 is dismissed and that the Plaintiff is entitled to inspect these documents.
2. Order the third Defendant to pay the Plaintiff's costs of the notice of motion.
Catchwords: PRACTICE AND PROCEDURE - Subpoena for document production - Documents produced - Legal advice privilege claimed - Common interest privilege "as a sword" - PRIVILEGE WAIVER - Whether documents produced give rise to waiver Legislation Cited: Civil Procedure Act 2005
Evidence Act 1995
Strata Schemes Management Act 1996
Uniform Civil Procedure Rules 2005Cases Cited: Aerva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd (No 2) [2008] WASC 10
Ainsworth v Wilding (No 2) [1900] 2 Ch 315; Allen Allen & Hemsley v Deputy Commissioner of Taxation (New South Wales) (1989) 86 ALR 597
Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405
Australian Securities and Investments Commission v Mercorella (No 3) [2006] FCA 772
AWB v Cole (No 5) (2006) 155 FCR 30
Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52
Balabel v Air India [1988] Ch 317, 330
Bennett v Chief Executive Officer of the Australian Customs Service (2004) 140 FCR 101
Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal (No 7) [2012] FCA 1185
Buttes Gas and Oil Co v Hammer (No 3) [1981] QB 223
Carey v Korda [2012] WASCA 228
Carre v Owners Corporation - SP 53020 [2003] NSWSC 397
CIA Barca de Panama SA v George Wimpey & Co. Limited [1980] 1 Lloyd's Law Rep 598
Cole v Dyer [1999] SASC 272
Commercial Union Assurance Co PLC v Mander [1996] 2 Lloyd's Rep 640
Cook v Pasminco Ltd (No 2) (2000) 107 FCR 44
Czerwinski v Syrena Royal Pty Ltd (No 1) [2000] VSC 125
Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325
Daniels Corporations International Pty Ltd v Australian Competition & Consumer Commission (2002) 213 CLR 543
Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2011] VSC 477
Eastmark Holdings Pty Limited v Kabraji [2012] NSWSC 802
Eastmark Holdings Pty Limited v Kabraji (No 2) [2012] NSWSC 1255
Edman v Ross (1922) 22 SR (NSW) 351
Edman v Ross; Re Claremont Petroleum NL (1990) 2 Qd R 31
Esso Australia Resources v The Commissioner of Taxation (1999) 201 CLR 49
Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601
Federal Cmr of Taxation v Spotless Services Ltd (1996) 186 CLR 404
Foss v Harbottle [1843] EngR 478
General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84
Grant v Downs (1976) 135 CLR 674
Gray v BNY Trust Company of Australia Ltd, (2009) 76 NSWLR 586
Hanks v Admiralty Resources NL (No 2) [2011] FCA 1464
Johns v Australian Securities Commission (1993) 178 CLR 408
Mann v Carnell (1999) 201 CLR 1
Melrose Cranes and Rigging Pty Ltd v Manitowoc Crane Group Australia Pty Ltd [2012] NSWSC 904
Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332
Nea Karteria Maritime Company Limited v Atlantic & Great Lakes Steamship Corporation (No 2) [1981] Commercial Law Reports 138
New South Wales v Betfair Pty Ltd [2009] FCAFC 160; (2009) 180 FCR 543
Nurcombe v Nurcombe [1985] 1 WLR 370
O'Reilly v State Bank of Victoria (1983) 153 CLR 1
R v Manchester Crown Court; Ex parte Rogers [1999] 4 All ER 35
R v Merchant Tailors' Company (1831) 2 B & Ad 115; (1831) 109 ER 1086
Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234
Rowland v Meudon Pty Limited [2008] NSWSC 381
Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365
Schreuder v Murray (No 2) (2009) 41 WAR 169
Seven Network Limited v News Limited (No 12) [2006] FCA 348
Singla v Stockler & Stockler Brunton (a firm) [2012] EWHC 1176
Singtel Optus Pty Ltd v Weston [2011] NSWSC 1083
Smartec Capital Pty Limited v Centro Properties Limited (2011) 83 ACSR 461 State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60
Svenska Handelsbanken v Sun Alliance and London Insurance PLC [1995] 2 Lloyd's Rep 84
Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47
Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48; [2005] 1 AC 610
Trevorrow v State of South Australia (No 4) (2006) 94 SASR 64
Waugh v British Railways Board [1980] AC 521
Winterthur Swiss Insurance Company & Anor v AG (Manchester) Ltd & Ors [2006] EWHC 839
Yunghanns v Elfic Pty Ltd (No. 2) [2000] 1 VR 92Texts Cited: M N Howard, Peter Crane and Daniel A Hochberg Phipson on Evidence, Sweet & Maxwell, 14th edition, 1990
Thanki B (ed), The Law of Privilege (2006)Category: Procedural and other rulings Parties: Eastmark Holdings Pty Limited (Plaintiff)
Eddie Kabraji (first Defendant)
hendersenhayes Pty Ltd
(second Defendant)
The Owners Strata Plan No 74602
(third Defendant)
Kris Bruckner (fourth Defendant)Representation: Counsel:
Mr P W Gray SC; Ms B Oliak (Plaintiff)
Ms C Amato (third Defendant)
Solicitors:
Swaab Attorneys (Plaintiff)
Minter Ellison (third Defendant)
File Number(s): 2011/328524
Judgment
The Claim
HIS HONOUR: In late June 2012, I had listed before me for hearing, three notices of motion, two of which were determined in July 2012. The medium neutral citation of the reasons for judgment dealing with those two notices of motion is Eastmark Holdings Pty Limited v Kabraji [2012] NSWSC 802.
Following the determination of the two notices of motion, the parties were unable to reach any agreement on costs and I determined the costs dispute in reasons for judgment, the medium neutral citation of which is Eastmark Holdings Pty Limited v Kabraji (No 2) [2012] NSWSC 1255.
The third notice of motion that was listed before me, in June 2012, was one filed on 7 June 2012, by the third Defendant, in which it sought an order that general access to inspect certain identified documents (by reference to an identified packet marked "Privilege"), that had been produced by solicitors, Holding Redlich, pursuant to a subpoena issued on 20 March 2012, at the request of the Plaintiff, should be restricted.
There was no dispute that at certain times, Holding Redlich had been the firm of solicitors acting for the third Defendant.
These reasons deal with the third notice of motion. Although agreement has been reached on inspection of some documents in respect of which privilege had previously been claimed, there remains an issue about others.
Once again, so that these reasons may be understood, it is necessary to record that the Plaintiff, Eastmark Holdings Pty Limited is, and was, the registered proprietor of nine Lots in a strata plan relating to a large strata scheme in a residential tower building in Berry Street North Sydney. There are 242 Lots in the strata scheme. The first Defendant, Eddie Kabraji ("Mr Kabraji") is, and was, the sole director and shareholder of the second Defendant (hendersenhayes Pty Limited ("hendersenhayes") and, at relevant times, a member and the Chairperson of the Executive Committee of the third Defendant, The Owners - Strata Plan No 7460 ("the Owners Corporation"). The fourth Defendant, Kris Bruckner ("Mr Bruckner") is, and was, at relevant times, a member of the Executive Committee of the Owners Corporation.
The Evidence
To assist in the determination of the notice of motion and as I may not be the trial Judge hearing the substantive proceedings, I was provided with:
(i) a folder of documents marked "Confidential Exhibit PMC 1", being a copy of an email dated 2 August 2012 that Mr Paul Crossley, a solicitor with the third Defendant's solicitors assisting in the conduct of the proceedings, sent to Ms Caroline Chudleigh, of Holding Redlich, and attachments consisting of several documents included in the documents produced to the Court by Holding Redlich pursuant to the subpoena;
(ii) a folder of documents marked "Confidential Exhibit PMC 2", being documents over which the third Defendant currently makes a claim of legal professional privilege. (There are some documents that have been included in "Confidential Exhibit PMC2" that also appear in "Confidential Exhibit PMC 1".)
(iii) A folder of documents marked "Part Privileged Documents (with redactions highlighted)". The folder, simply with redactions, had previously been provided to the Plaintiff.
Each of these folders was marked as a confidential exhibit on the notice of motion. They will be returned to the third Defendant in due course.
On 6 August 2012, the solicitors for the Owners' Corporation wrote to the solicitors for the Plaintiff:
(a) Indicating that privilege over 38 documents was no longer pressed either in whole or in part (and enclosing a copy of those documents in full, or in a redacted, form); and
(b) Providing two schedules setting out a brief description of each document or part of a document said to be privileged. Schedule 1 concerns part privileged documents and Schedule 2 contains wholly privileged documents.
Schedule 1 now contains 34 part privileged documents, in that those parts are said to contain, or constitute, a privileged communication ("the Schedule 1 documents"). Schedule 2 contains 19 wholly privileged documents that are said to contain, or constitute, privileged communications ("the Schedule 2 documents").
The third Defendant submits that the documents to which privilege is said to attach and which are referable to the hendersenhayes Consultancy Agreement ("the Agreement"), are the Schedule 1, documents 1-21, 23, 25, 30-34 and the Schedule 2, documents 3-19.
The third Defendant says, also, that it retained Holding Redlich to provide legal advice on other matters. The documents to which privilege is said to attach, referable to those matters, are Schedule 1, documents 22, 24, 26 to 29, and Schedule 2, documents 1 and 2. They are said not to be relevant to any matters in issue in the current proceedings and are also said to be the subject of a claim for legal professional privilege.
The sole basis for the claim in respect of the documents in dispute (other than those said to be privileged and irrelevant), is set out in paragraph 9(b) of an affidavit, sworn 7 June 2012, by Mr Lin Chern Tan, a solicitor, namely that the disputed documents consist of confidential communications between the third Defendants and its then lawyers, prepared for the dominant purpose of those lawyers providing legal advice to the third Defendant.
Subsequently, two additional affidavits are relied upon in support of the notice of motion, one being of Mr Tan, sworn 18 September 2012, and another, also sworn on 18 September 2012, being of Mr Crossley.
It is accepted that any privilege claimed (about which there is dispute) belongs to the client of Holding Redlich. It is accepted that it was the third Defendant that was the client of Holding Redlich at the time of entry into the Agreement.
The Plaintiff has relied upon four affidavits, being an affidavit of Antonio D'Agostino affirmed 13 June 2012 and another of 26 September 2012; an affidavit of Bong-Sup Shin affirmed 13 June 2012; an affidavit of You-Jin Kim affirmed 13 June 2012.
The Plaintiff opposes the relief being granted on the notice of motion on the following grounds:
(a) As a lot owner, the Plaintiff is entitled, without restriction, to access the disputed documents; and
(b) As some of the disputed documents relating to the advice of Holding Redlich were obtained by the Plaintiff on inspection of the books and records (these being described as the "waiver documents"), there was a waiver of privilege (even if such a privilege otherwise arose) in respect of the whole of the disputed documents.
(The affidavits of You-Jin Kim and the affidavit of Bong-Sup Shin refer to documents, being books and records of the Owners Corporation inspected at the offices of Strata Plus, the former managing agent of the third Defendant. These affidavits go to the waiver issue.)
I was requested to inspect the documents in the two folders, presumably for the purpose of determining the questions. I have perused the documents.
The Substantive Proceedings
The Plaintiff asserts, in the amended Statement of Claim, that it is required, in the interests of justice, to bring proceedings to enforce the rights and duties owed to the third Defendant by the first, second and fourth Defendants.
The Plaintiff alleges, inter alia, a breach by the first Defendant, who was the Chairperson of the Executive Committee of the third Defendant, of his fiduciary duties owed to the third Defendant by causing it to enter into the Agreement with the second Defendant, under which the first Defendant would perform consultancy services to the third Defendant through the second Defendant for which he is the sole director, shareholder and employee.
One of the particulars of the breach identified in paragraph 12(h) of the Amended Statement of Claim is that:
"Certain other proposed terms were excised from the Agreement notwithstanding advice from solicitors for the Owners Corporation that such terms should be included or retained in protection of the interests of the Owners Corporation, namely all or part of clauses formerly numbered 3.7 (as to conflict of interest), 11.5(a)(ii) (as to gross negligence), 11.5(a)(iii) (as to gross negligence) and 13.3(f) (as to power to terminate for breach)."
(This particular is apparently based upon the contents of the waiver documents, provided to the Plaintiff during inspections of the books and records on 22 September 2011 and 12 October 2011.)
The substantive relief sought by the Plaintiff is that the Agreement ought to be set aside. In addition, an order is sought for the taking of an account, subject to just allowances, of all dealings by the second Defendant or its employees and agents, from 1 July 2011, on behalf of the third Defendant, and in respect of all monies received by the second Defendant, or its employees and agents, in connection with the Agreement, following which, if monies are found to be payable, that they be paid to the third Defendant.
It can be seen, therefore, that the relief the Plaintiff seeks is for the benefit of the third Defendant only. Thus, if the proceedings are successful, any recovery accrues to the third Defendant and not to the Plaintiff. The Plaintiff does not seek any relief directly against the third Defendant.
Each of the first, second and fourth Defendants denies Paragraph 12 of the Amended Statement of Claim, with the result that whether there was a breach of fiduciary duty is an issue for determination in the proceedings. (The third Defendant, at the date of the hearing of the notice of motion, despite several previous orders, has not yet filed its defence to the amended Statement of Claim. It has now been directed to do so by 4 December 2012, failing which it will require leave to do so.)
The third Defendant retained Holding Redlich to provide legal services to it in early June 2011. The terms on which Holding Redlich offered to provide such services were set out in a letter dated 2 June 2011, from that firm to "The Owners - Strata Plan No 74602, c/- The Secretary, Strata Plus Pty Limited".
One of the retainers concerned the Agreement, whilst there are other retainers between the third Defendant and Holding Redlich, pursuant to which confidential communications were generated ("the other retainers"). (By way of example, the third Defendant has referred me to document 28 in Schedule 2.)
At the time of the Agreement retainer, and at the time of providing its legal services, the current proceedings had not been commenced or contemplated. As stated previously (in one of the other reasons for judgment), the current proceedings were commenced on 14 October 2011.
On 20 March 2012, the Plaintiff issued a subpoena to Holding Redlich to produce various categories of documents. The third Defendant did not seek to set aside the subpoena on the basis of privilege or otherwise, notwithstanding that its solicitors received a copy of the subpoena by email on 22 March 2012.
Holding Redlich produced documents on 30 March 2012. At the time of production, by consent of the parties, senior deputy Registrar Howard ordered that there would be no access until further order of the Court.
On 30 May 2012, the Court made certain orders, following which the third Defendant filed the current notice of motion. The documents have not been inspected and it has not been possible to deal with the notice of motion because of the other disputes between the parties to which I have earlier referred.
None of the deponents of any affidavit was cross-examined on the notice of motion and it proceeded with written submissions having been served and filed with the court.
I am grateful to the legal representatives of each of the Plaintiff and the third Defendant for providing detailed written submissions, the originals of which are to remain with the Court file.
The Submissions
As stated, the third Defendant submits that the nature of the privilege said to attach to the communications in Schedules 1 and 2 is "legal advice privilege". It accepts that an objection to inspect the documents produced under subpoena on the grounds of privilege is to be determined according to the common law and not the Evidence Act 1995 when the person taking the objection is someone other than the person to whom the subpoena was directed: Singtel Optus Pty Ltd v Weston [2011] NSWSC 1083, per White J, at [25] - [28]; State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60, per Allsop P, (Sackville AJA and Hodgson JA agreeing) at [26] - [32].
It then submits that a document will attract privilege if it was brought into existence for the dominant purpose of giving, or obtaining, legal advice: Esso Australia Resources Ltd v Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49 at 64-65; Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 213 CLR 543, at 552.
It also submits that the documents speak for themselves and an objective analysis is all that is required to be satisfied that the privilege that is claimed subsists. It acknowledges three qualifications, namely, that there are four handwritten documents requiring further explanation as to provenance. Those documents appear at tabs 6, 7, 10 and 17 of Schedule 2. It says, however, that the circumstances giving rise to the creation of those documents and a brief explanation as to the identity of the author are outlined in Mr Crossley's affidavit sworn 18 September 2012 following a telephone discussion between him and Ms Carolyn Chudleigh, partner at Holding Redlich; secondly, a number of documents contained in Schedule 1 comprise emails with only the subject line redacted. The email itself appears to concern communications surrounding the Agreement. The subject line has been redacted as it reveals the topic of advice sought by the third Defendant from Holding Redlich and which was outside the retainer relating to the Agreement; and thirdly, in some cases, privilege is claimed over an email rather than the attachment because the attachment had been subsequently disclosed to a third party but the confidential communication recorded in the email had not.
The Plaintiff submits, first, that the documents are not privileged at all. It says that for a document or communication to attract legal professional privilege, the essential first requirement is that it must be "confidential". The very nature of an owners corporation, constituted by the proprietors of the various lots in a strata scheme from time to time (s 11 of the Strata Schemes Management Act 1996), the obligation of an owners corporation to administer the strata scheme "for the benefit of the owners" (s 61 of the Strata Schemes Management Act) and the nature of the relationship between a lot owner and the owners corporation, which is expressly described in the legislation as one of agent and principal, and which has been authoritatively held to be analogous to that between trustee and beneficiary, results in the documents not being confidential.
In addition, it submits that the documents are not confidential since the Plaintiff, as a lot owner, has an unqualified right to inspect, and obtain a copy of, the documents referred to in s 108 of the Strata Schemes Management Act.
In the alternative, it submits, if, contrary to the foregoing, any or all of the documents were to be regarded as, prima facie, privileged, there are two recognised exceptions to legal professional privilege, namely what is described as "the fiduciary/trustee exception", and "the common interest exception". Both of these exceptions recognise a party which has acted inimically to the interests of persons whom it has undertaken to protect should not be allowed to invoke privilege against such persons.
In relation to the "fiduciary/trust exception", the Plaintiff relies, by way of example, upon Trevorrow v State Of South Australia (No 2) [2005] SASC 369; [2005] 94 SASR 1, at [74] to [89], especially at [75], [82] and [89].
In relation to the "common interest exception", the Plaintiff says that privilege does not attach to communications between a solicitor and client as against persons sharing a "joint interest" with the client in the subject matter of the communications. It refers to Yunghanns v Elfic Pty Ltd (No. 2) [2000] VSC 113; [2000] 1 VR 92, at [21] - [42], especially at [35] - [38].
It submits that the Plaintiff shared a joint interest with the third Defendant as the subject matter of the documents relates to the Agreement between the Owners Corporation and the second Defendant, in relation to which:
(a) the third Defendant must, and can only, act "for the benefit of" the lot owners including the Plaintiff: s 61 of the Strata Schemes Management Act; and
(b) as a lot owner, the Plaintiff is obliged to contribute its proportion of the money that, ultimately, the second Defendant will receive.
Finally, the Plaintiff submits that by disclosing the documents that it has, which were provided to the Plaintiff during inspections of the books and records on 22 September 2011 and 12 October 2011, the third Defendant has waived privilege. It says that the documents inspected generally consisted of correspondence to, and from, Holding Redlich, members of the Executive Committee of the Owners Corporation, the Strata Manager (Mr Derwent) and Mr Kabraji himself, and that in one email in particular, Holding Redlich advised against excluding liability by Mr Kabraji for gross negligence, and against excluding a right by the third Defendant to terminate if the first Defendant failed to rectify a breach of the Agreement. Yet the third Defendant rejected that advice - a step that was plainly in the interests of the first Defendant and against those of the third Defendant.
It also submits that the documents were made available without reservation and that, on their face, they revealed the existence of the related documents now the subject of the claim for privilege. In these circumstances, any privilege that might otherwise have been able to be claimed was waived. The Plaintiff relies upon Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1, at [27] - [29]; Seven Network Limited v News Limited (No 12) [2006] FCA 348, at [12] - [18].
The Plaintiff also relies upon a letter, dated 16 March 2012, from the third Defendant's solicitors, which is in the following terms:
"The Courts have consistently held that parties are entitled to the benefit of their agreements, and it is unlikely that the court will set aside the Agreement. This is particularly relevant in the current circumstances where the Owners were advised by Holding Redlich in relation to negotiating the terms of the Agreement and have resolved to enter into the Agreement at two separate Extraordinary General Meetings." (My emphasis)
The third Defendant submits, in reply, that s 108 does not apply and that its effect cannot be to override the operation of legal professional privilege. It relies upon the proposition that a legislative provision cannot abrogate the fundamental right to claim legal professional privilege absent clear words or necessary implication: Daniels Corporation International v Australian Competition and Consumer Commission, at 553 and 559.
In relation to the waiver argument, the third Defendant submits that the Plaintiff asserts but does not articulate the way in which the documents provided "are said to reveal the existence of the disputed documents" and that "even if they did, it is not at all clear that this would be fatal to a claim for privilege over them, without more".
Therefore, the issues that now fall for determination, are:
(a) Whether the documents referred to in Schedules 1 and 2 contain privileged communications;
(b) Whether s 108 of the Strata Schemes Management Act enables the inspection of the documents claimed by the Plaintiff; and
(c) If the communications are privileged, whether permitting inspection of certain documents by the Plaintiff, in the course of exercising its rights under the Strata Schemes Management Act, leads to a waiver over the remainder of the documents listed in Schedules 1 and 2, over which privilege is claimed.
Determination
In this case, the third Defendant has produced the documents in the two folders but has objected to their inspection by the Plaintiff.
Based upon the authorities to which the third Defendant has referred, I respectfully agree that the questions pertaining to privilege in circumstances where there has been production of documents to the Court, in answer to a subpoena to produce, are to be resolved according to the common law rather than according to the Evidence Act 1995.
I will approach the matter by considering:
(a) The nature of the privilege on which the third Defendant relies;
(b) Whether the common interest, as between the owners corporation and the lot owners, means that the former cannot assert privilege against the latter in respect of the documents in question;
(c) Whether the advice is not confidential as against members of the owners corporation;
(d) If the documents are privileged, whether privilege has been waived.
In my view, the argument that the fiduciary/trustee exception applies is misplaced, because the statute sets out the obligations owed by the owners corporation to its members. I will not consider it in detail.
(a) The nature of the privilege
As stated, the third Defendant relies upon legal advice privilege, which is a rule of substantive law that enables a person to resist the production of documents to a third party which would reveal confidential communications between the person and his, her, or its, lawyer, made for the dominant purpose of giving or obtaining legal advice or the provision of legal services: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (per Gleeson CJ, Gaudron, Gummow and Hayne JJ at [9]).
In Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia, at [35], Gleeson CJ, Gaudron and Gummow JJ said:
"Legal professional privilege (or client legal privilege) protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court. In the ordinary course of events, citizens engage in many confidential communications, including communications with professional advisers, which are not protected from compulsory disclosure. The rationale of the privilege has been explained in a number of cases, including Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52, and Grant v Downs itself. The privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers. In Waterford v The Commonwealth ((1987) [1987] HCA 25; 163 CLR 54 at 64 - 65. See also Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 128, per Brennan J; at 134, per Deane J; at 147, per Toohey J; at 163, per McHugh J) Mason and Wilson JJ explained that legal professional privilege is itself the product of a balancing exercise between competing public interests and that, given the application of the privilege, no further balancing exercise is required. As Deane J expressed it in Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 at 114, a person should be entitled to seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communication. The obvious tension between this policy and the desirability, in the interests of justice, of obtaining the fullest possible access to the facts relevant to the issues in a case lies at the heart of the problem of the scope of the privilege. Where the privilege applies, it inhibits or prevents access to potentially relevant information. The party denied access might be an opposing litigant, a prosecutor, an accused in a criminal trial, or an investigating authority. For the law, in the interests of the administration of justice, to deny access to relevant information, involves a balancing of competing considerations."
Anderson J in Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325, at 333, said of the nature and scope of the protected communications:
"What is protected, of course, is that which is communicated between solicitor and client. It is the communication that is privileged. But this is not to say that material that is not literally a communication or manifestly the record of a communication is never protected. There are many instances of protection being extended to such material. The examples of the draft letter that never leaves the solicitor's office, the draft agreement and the draft statement of claim have already been referred to. The reason why such material is protected is often stated to be that disclosure of it will, or will tend to, reveal the privileged communication: see Attorney-General (NT) v Maurice, per Dawson J (at 496). Thus a note made by a solicitor of a conference with his client will be privileged in so far as it is a record of the communication from the client (that communication being privileged) but also in so far as it might contain notes of the solicitor's own thoughts in regard to the matters communicated to him. Protection is afforded in the latter case on the ground that disclosure of that material might tend to reveal what had been communicated to the solicitor."
To qualify, the usual criteria are that the communication must be: (a) confidential; (b) of a professional nature; and (c) made with the dominant purpose of obtaining or giving legal advice: McCormick on Evidence (6th ed, 2006) § 88; Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52, 115-116.
The concept of advice is fairly wide. Such advice may include advice as to what should, or should not, be done in a "relevant legal context": Balabel v Air India [1988] Ch 317, 330, per Taylor LJ; General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84, at [77], per Handley, Hodgson and McColl JJA. "[L]egal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context": Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48; [2005] 1 AC 610.
In AWB v Cole (No 5) (2006) 155 FCR 30, at [46], Young J noted:
"[46] In recognition of the fact that legal professional privilege is a fundamental common law right, the courts have eschewed an overly narrow or technical approach to the identification of communications or documents that fall within the scope of legal advice privilege. As I said in AWB v Cole at [127]-[133], the legal advice limb of the privilege extends beyond material that is literally a communication, or a record of a communication, of legal advice or instructions. In Propend at 569, Gummow J said that the privilege extends to any document prepared by a lawyer or client from which one might infer the nature of the advice sought or given. The principle extends to internal documents or parts of documents of the client, or of the lawyer, reproducing or otherwise revealing communications which would be covered by privilege: Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd [1992] 2 Lloyd's Rep 540 at 540 per Saville LJ."
A letter of engagement between a solicitor and a client is not privileged except to the extent that it records legal advice or material touching upon legal advice to be given: Cook v Pasminco Ltd (No 2) (2000) 107 FCR 44, at [45]-[48]; Australian Securities and Investments Commission v Mercorella (No 3) [2006] FCA 772, at [22].
However, by way of other example, a bill of costs will be privileged if it records the progress of legal advice or its nature, but documents of that nature which do not disclose the nature or content of privileged material are not: Ainsworth v Wilding (No 2) [1900] 2 Ch 315; Allen Allen & Hemsley v Deputy Commissioner of Taxation (New South Wales) (1989) 86 ALR 597; R v Manchester Crown Court; Ex parte Rogers [1999] 4 All ER 35; Australian Securities and Investments Commission v Mercorella (No 3), at [22].
There may also be a separate category of document that is privileged because it has the purpose of providing legal assistance, for example, draft conveyances and the like: Dalleagles Pty Ltd v Australian Securities Commission, at 333; Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal (No 7) [2012] FCA 1185, at [5].
To qualify as the dominant purpose, the relevant purpose must be the ruling, prevailing or most influential purpose: Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332, at 336, [10]; Federal Cmr of Taxation v Spotless Services Ltd [1996] HCA 34; (1996) 186 CLR 404, at 416. It is not sufficient that the purpose is the primary purpose or even a substantial purpose: Grant v Downs [1976] HCA 63; (1976) 135 CLR 674, at 678 per Barwick CJ. The test is one of "clear paramountcy": Waugh v British Railways Board [1980] AC 521, at 543; Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47, at [7]; Melrose Cranes and Rigging Pty Ltd v Manitowoc Crane Group Australia Pty Ltd [2012] NSWSC 904, per S G Campbell J, at [15].
Mason J also emphasised the need for confidentiality in O'Reilly v State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1, at 22-23:
"But if communications in written form are to be privileged they must still be confidential communications between solicitor and client made for the purpose of advice or for the purpose of use in existing or anticipated litigation."
A "confidential communication" includes a communication from, or to, a person, who when it was made or prepared, or received, was under an obligation not to disclose its contents, whether or not such an obligation arose under law. Or as Dawson J put it in Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408, at 436, "communications made in confidence by one person to another".
In Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234 Bergin J (as her Honour then was) said, at [33], that:
"... matters relevant in assessing whether a confidential obligation is implied in relationships or circumstances outside that of solicitor/client include the nature of the relationship in question and the circumstances, including conduct and/or conversations, surrounding the communications or documents in question. It is also permissible to have regard to the nature of the documents in question and the purpose and context of their communication: see Bulk Materials (Coal Handling) Services Pty Ltd v Coal and Allied Operations Pty Ltd (1998) 13 NSWLR 689 at 695E."
The obligation must exist at the time when the communication was made or prepared.
Common interest privilege
In Schreuder v Murray (No 2) [2009] WASCA 145; (2009) 41 WAR 169, Pullin JA, at [86], refers to a statement in Thanki B (ed), The Law of Privilege (2006), in which an analysis of various communications which are not protected by legal professional privilege, even though they appear to satisfy the relevant requirements is undertaken. The exceptions to privilege which are enumerated include relationships where a joint interest may arise:
"There exist relationships within which the parties will be unable to claim privilege in certain communications as against each other. More specifically, privilege cannot be claimed in circumstances where the parties to the relationship have a joint interest in the subject matter of the communication at the time that it comes into existence ... Examples of relationships where a joint interest may arise are between: trustee and beneficiary (Talbot v Marshfield (1865) 2 Dr & Sm 549; Re Mason (1883) 22 Ch D 609; Postlethwaite v Rickman (1887) 35 Ch D 722. See also O'Rourke v Darbishire [1919] 1 Ch 320, CA; affirmed [1920] AC 581) [4.71]."
In the present case, it is the nature of the relationship that existed between lot owners and owners corporation as well as the purpose of the communication between the third Defendant and Holding Redlich that is said to give rise to the Plaintiff's claim to enable inspection of the documents the subject of the claim for privilege on the ground that there is a "common interest privilege". Using the nomenclature of this case, the principle is that as the lot owners, of which the Plaintiff is one, have a sufficiently common interest in communications that are held by the owners corporation, the Plaintiff can obtain disclosure of those communications from the owners corporation even though, as against third parties, the communications would be privileged from production.
It may be somewhat of a misnomer to refer to this as "common interest privilege". It may really be that as between persons with a "common interest", there is no confidentiality with respect to the communications concerning that interest, and that privilege may not be asserted by one against the other to resist a legitimate claim for access to the documents.
This type of common interest privilege has been described as using common interest privilege "as a sword" rather than as a shield: Phipson on Evidence, 16th Ed, (2005) Ch 24 - 03 at 649.
In CIA Barca de Panama SA v George Wimpey & Co. Limited [1980] 1 Lloyd's Law Rep 598, At 614 Stephenson LJ said:
"So here, it seems to me, however you define the relationship which their joint interest creates, it is enough to entitle the plaintiffs (Barka) whether as beneficiaries, cestui que trust, or as partners in a joint venture or as principals, to the same inspection of documents relating to the Aramco claims as the defendants themselves had."
At 615, Bridge LJ described the privilege this way:
"As regards the claim for legal, professional privilege, .... If A. and B. have a common interest in litigation against C. and if at that point there is no dispute between A. and B. then if subsequently A. and B. fall out and litigate between themselves and the litigation against C. is relevant to the disputes between A. and B. then in the litigation between A. and B. neither A. nor B. can claim legal professional privilege for documents which came into existence in relation to the earlier litigation against C."
In Svenska Handelsbanken v Sun Alliance and London Insurance PLC [1995] 2 Lloyd's Rep 84, at 88, Rix J (as his Honour then was) held that "common interest privilege as a sword" could be asserted in relation to both "legal advice" privilege and "litigation" privilege.
In Commercial Union Assurance Co PLC v Mander [1996] 2 Lloyd's Rep 640 Moore-Bick J, at 645-646, observed:
"[T]he right to obtain disclosure of documents in this context depends upon their having been obtained by one party in furtherance of a joint interest, and in that sense on behalf of all those who share it. In a case where the documents contain legal advice that joint interest must exist at the time the advice is sought..."
Aikens J agreed with the view expressed by Rix J in Winterthur Swiss Insurance Company & Anor v AG (Manchester) Ltd & Ors [2006] EWHC 839, at [79]. His Honour added, at [80] - [81]:
"The questions of what type of relationship between the two parties can give rise to a "common interest" in the communication concerned has been considered in a number of cases. Amongst the types of relationship that can give rise to a "common interest" are those of insured and insurer and insurer/reinsured and reinsurer. The cases have refused to be prescriptive about the circumstances in which the two parties will have a sufficient "common interest" in the particular communications concerned. The issue has to be decided on the facts of the individual case.
Two cases deal with the time at which the common interest in the privileged communication must exist in order to permit the exercise of "common interest privilege as a sword". In Cia Barca v Wimpey, Bridge LJ formulated the principle on the basis that the two parties ... have a common interest in the communication at the time the relevant communication was created. It will not matter that, subsequently, the two parties ... fall out. That analysis was followed by Moore-Bick J (as he then was) in Commercial Union v Mander. It therefore appears to follow that, at least in cases of "common interest as a sword", once a communication is subject to common interest privilege , then it will always remain so."
In Surjit Kumar Singla v Stockler & Stockler Brunton (a firm) [2012] EWHC 1176 (Ch), Briggs J referred to the concept of "common interest privilege as a sword". His Honour said, at [14]:
"The editors of Phipson on Evidence at chapter 24 describe the circumstances to which I have referred above as permitting the use of common interest privilege as a sword rather than as a shield. At paragraph 24-15 they suggest that the true rationalisation of cases such as Barka v Wimpey requires the court to consider whether a claim for privilege between the relevant parties is consistent with the underlying contractual relationship. Earlier, at paragraph 24-14, they acknowledge that the relevant relationship may be otherwise than contractual. In my judgment the concept of using common interest privilege as a sword is less than ideal for present purposes. First, the question at issue is not privilege but confidence. A party may be entitled to require the recipient of confidential information to keep it confidential although this confidence may be overridden by the obligation to give disclosure in legal proceedings. In those circumstances the existence of the requisite common interest may disable the litigant otherwise obliged to give disclosure from refusing inspection on the grounds of privilege. Secondly, the concept suggests that in all circumstances where, as between two persons, there exists common interest privilege, such as to enable them to communicate with each other but claim privilege for those communications against the rest of the world, there can by the same token be no obligations of confidence owed by a common solicitor to both of them, in respect of the subject matter of the common interest. This might originally have been so, when the existence of a common interest depended upon the parties' interests being so closely aligned that they could both have used the same solicitor for the pursuit or defence of them. But the law on common interest privilege has, at least arguably, moved on so as to embrace circumstances where that stringent test is not satisfied: see generally Phipson (op. cit.) at paragraphs 24-05 and 06."
In Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601, the NSW Court of Appeal considered a claim of privilege by A over documents that had been disclosed to a third party by B, in circumstances where A claimed a joint privilege with B over the documents. Sheller JA (Waddell AJA agreeing), said, at 608:
"Two or more persons may join in communicating with a legal advisor for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is a joint privilege. So it is also if one of the group of persons in a formal legal relationship communicates with a legal advisor about a matter in which the members of the group share an interest. Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples. Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of the communication. But the parties together are entitled to maintain the privilege "against the rest of the world": Phipson, par 20-28 and par 20-29.5 ...
Separate from circumstances giving rise to joint privilege are those where parties have a shared or similar interest in the subject of communications between one or more of them and a legal adviser."
Sheller JA noted the distinction between joint interest privilege - where parties jointly obtain legal advice, and the privilege is shared jointly and can only be waived jointly - and common interest privilege - where parties with a common interest, usually in litigation, exchange information but, due to their common interest, can maintain privilege against third parties (citing Buttes Gas and Oil Co v Hammer (No 3) [1981] QB 223 for the last proposition). This case, however, concerned the use of common interest privilege as a shield.
In Yunghanns v Elfic Pty Ltd (No 2), Warren J (as her Honour then was), considered a claim to inspect documents over which the defendants claimed legal privilege. Her Honour characterised the plaintiff's argument as drawing "upon the concept of common interest to establish joint privilege", because there was some doubt as to whether the parties had jointly retained the legal advisors. Her Honour decided that there was a joint retainer (at [32]), so her observations on "common interest" as a basis for obtaining access to documents, as opposed to restraining it, are obiter.
Considering this argument, her Honour cited, at [35], the following passage from M N Howard, Peter Crane and Daniel A Hochberg Phipson on Evidence, Sweet & Maxwell, 14th edition, 1990, 515 at [20] - [28]:
"No privilege attaches to communications between solicitor and client as against persons sharing a joint interest with the client in the subject-matter of the communication, eg as between partners; a company and its shareholders; trustee and cestui que trust; lord and tenants of a manor as to customs of manor; a lessor and lessee as to production of the lease; reversioner and tenant for life as to common title; two persons stating a case for their joint benefit; or a husband and wife who are not genuinely, but collusively, in contest. Nor does any privilege attach as between joint claimants under the same client - eg between claimants under a testator as to communications between the latter and his solicitor.
Thus where two persons agree to divide the profits made by one of them on contracts made with third parties, the person who does not make the contracts is entitled to production from the person who does of, for example, the opinions of counsel relating to litigation between the contractor and a third party.
But where the communications relate to matters outside the joint interest, they are privileged even as against a person bearing the expense of the communications - eg communications between a plaintiff corporation and its solicitors, against a defendant ratepayer as to matters not connected with rates; or between a company and its solicitors consisting of confidential advice to the former in an action against a shareholder; or between a trustee and his solicitor as against the cestui que trust, where the communication is not made for the former's guidance in the trust, but to enable him to resist litigation by the latter; or where it concerns his character, not as trustee, but as mortgagee of the client."
Her Honour then wrote, at [36]:
"In the 15th edition of Phipson on Evidence (2000) p 548 - p 549, para 21-08 to para 21-09 the authors expressed the view that common interest privilege will apply where parties have a joint interest in the advice or evidence which is the basis of the privilege. The authors observe, further, that common interest privilege may apply in cases of joint ventures. They went on to observe:
"The use of common interest privilege as a sword is well established in cases where the joint or common interest of the parties in the privileged documents was such that one party could not claim privilege against the other, even though privilege could be claimed against the rest of the world. It does not follow that the sword and the shield are opposite sides of the same coin; it does not follow that common interest privilege will permit a refusal to give disclosure to third parties in the same circumstances as will permit an application based on the use of common interest privilege as a sword. In many cases, they will be opposite sides of the same coin, but because in the shield case the focus is on the third party and in the sword case it is on the parties themselves, it may produce different results. If there is a common interest between two parties, there may be no confidence between them in documents which are supplied by one to the other so that one cannot claim privilege for those documents against the other even though they are privileged against the rest of the world. But it does not follow from that [that] one can necessarily claim to be entitled to disclosure of other documents which have not passed between them but came into existence in similar circumstances."
Warren J also referred to Commercial Union Assurance Co PLC & Ors v Mander, saying, at [37]:
"In Commercial Union Assurance Co PLC & Ors v Mander (1996) 2 Lloyd's Rep 640 Moore-Bick J sitting in the Commercial Court of the Queen's Bench Division was concerned with an application by a defendant underwriter for the production for inspection of documents for which privilege was claimed in an action by a plaintiff insurer against the defendant claiming to recover under the re-insurance with the defendant the plaintiffs' share of sums paid to the plaintiffs' insured under a settlement agreement. Moore-Bick J was of the view (at 645-646) " ... that the right to obtain disclosure of documents in this context depends on their having been obtained by one party in furtherance of a joint interest, and in that sense on behalf of all those who share it. In a case where the documents contain legal advice that joint interest must exist at the time the advice is sought, and if it exists at that time it is not lost simply because the parties subsequently fall out ... The fact that the interests of two parties are potentially in conflict does not in my view prevent their having a sufficient joint interest in the subject matter of the advice at the time it is sought to bring this principle into operation". In forming this view the learned judge cited with approval the observations of the authors in the 14th edition of Phipson on Evidence set out above. At 648 Moore-Bick J expressed the view that as a matter of principle and authority it is right to say:
'... that it is not enough that the person seeking disclosure of confidential documents can show that he has an interest in the subject matter which would be sufficient to give rise to common interest privilege if the documents had been disclosed to him; he must be able to establish a right to obtain access to them by reason of a common interest in their subject matter which existed at the time the advice was sought or the documents were obtained.'"
Her Honour concluded (at [38]):
"Privilege does not attach to communications against a person having a joint interest. The joint interest will encompass relationships falling in a special category including as between partners and between a trustee and cestui que trust. A joint venture is in the nature of a partnership in some respects. It involves the sharing of profits and the division of responsibilities within a relationship. The nature of the arrangement of a joint venture also involves special characteristics of trust and good faith analogous to that of a trust. If privilege does not attach to communications against a person having a joint interest where the relationship is one of partnership or trust then logically the attachment cannot arise where the relationship constitutes a joint venture. Where a joint venture exists the joint venturers have duties and obligations towards one another of a contractual and fiduciary type. It is the nature of the joint venture relationship that gives rise to the right of each joint venturer to obtain access to documents that are otherwise privileged against the world (emphasis added)."
In Gray v BNY Trust Company of Australia Ltd [2009] NSWSC 789; (2009) 76 NSWLR 586, Bergin CJ (in Eq) applied a similar distinction to deny a beneficiary a right to inspect documents containing legal advice provided to the trustee. The critical reason for denying the inspection, and the upholding of the privilege, was the nature of the relationship between the plaintiff beneficiary and defendant trustee. Her Honour, at 601, said:
"... It is necessary to focus on the relationship at the time the documents were created. There is no doubt that at the time the documents were created in relation to the main proceedings in which the plaintiff was suing the defendant the communications were privileged."
In Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2011] VSC 477, Macaulay J, referring to some of these cases, noted at [19]:
"As can be seen, the cases distinguish the situation in which the advice is sought and obtained by a trustee in the discharge of its obligation to properly administer the trust from that in which it seeks advice in its personal capacity. The same distinction was important in Krok's case. Judd J answered the question in favour of the beneficiary seeking production of the documents from the trustee "... because the advice sought and obtained by the trustee was in discharge of its obligation to administer the trust, and not for its own personal benefit."'
By analogy, in the present case, what is put is that the advice sought and obtained from Holding Redlich by the third Defendant was in discharge of its duties as the owners corporation, and its obligations and responsibilities under s 61 of the Strata Schemes Management Act to the lot owners.
Is the advice confidential as against members of the owners corporation?
The Plaintiff argues that because the third Defendant, the owners corporation, is made up of the owners of the lots, from time to time, in a strata scheme, and that it is those lot owners who constitute a body corporate under the name "The Owners-Strata Plan No X" (X being the registered number of the strata plan to which that strata scheme relates) [s 11 Strata Schemes Management Act], there is no confidentiality between them with respect to matters where the owners corporation is exercising, or purporting to exercise, its powers on behalf of the lot owners.
The Plaintiff points to Strata Schemes Management Act, s 108, which provides:
"(1) Who may inspect records? An owner, mortgagee or covenant chargee of a lot, or a person authorised by the owner, mortgagee or covenant chargee, may request the owners corporation to allow an inspection to be carried out under this section.
(2) Form of request The request must be in writing and be accompanied by the fee prescribed by the regulations.
(3) Items to be made available for inspection The owners corporation must make the following items available for inspection by the person who makes the request or the person's agent:
(a) the strata roll,
(b) any records or documents required to be kept under Division 2,
(c) the plans, specifications, certificates, diagrams and other documents required to be delivered to the owners corporation at its first annual general meeting by the original owner or lessor,
(d) if in its custody or under its control, the certificate of title comprising the common property or, in the case of a leasehold strata scheme, the certificate of title for the lease of the common property,
(e) the last financial statements prepared,
(f) every current policy of insurance taken out by the owners corporation and the receipt for the premium last paid for each such policy,
(g) any other record or document in the custody or under the control of the owners corporation,
(h) if the duties of the owners corporation under this subsection have been delegated to a strata managing agent, such other records (including records of the strata managing agent) relating to the strata scheme as may be prescribed by the regulations,
(i) if a caretaker agreement is in force or has been entered into but has not yet commenced, a copy of the caretaker agreement.
Maximum penalty: 2 penalty units.
(4) Inspection to take place at agreed place and time The inspection is to take place at such time and place as may be agreed on and, failing agreement, at the parcel at a time and on a date fixed by the owners corporation under subsection (5).
(5) Time and place of inspection if agreement not reached If an applicant and the owners corporation fail to reach an agreement within 3 days after the owners corporation receives the application, the owners corporation must immediately send by post to the applicant a notice fixing a specified time (between 9 am and 8 pm) on a specified date (not later than 10 days after the owners corporation receives the application).
(6) Copies of documents may be taken A person entitled to inspect a document under this section may take extracts from, or make a copy of, the document but must not, without the consent of the owners corporation, remove the document from the custody of the owners corporation."
The Plaintiff particularly points to s 108(1)(g) - which permits inspection of "any other ... document in the custody or under the control of the owners corporation" - as demonstrating that there is no confidentiality between the owners corporation and its members. "Document" is not defined in the Strata Titles Management Act. There is nothing to suggest, however, that it would not include any record of information, including anything on which there is writing.
The wide category of documents to which s 108(1)(g) provides a right of inspection and copying does suggest that as between an owners corporation and its members, such documents are not to be regarded as confidential, at least so far as an owner, mortgagee or covenant chargee of a lot is concerned.
The real question is whether the section is intended to permit inspection of documents in respect of which the third Defendant can claim privilege.
As stated, the third Defendant responds that "it is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect": Daniels Corporation v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 at [11]. It says that what follows from this is that s 108 cannot be read as authorising the inspection of legal advice.
In Hanks v Admiralty Resources NL (No 2) [2011] FCA 1464, Gordon J observed that, in its terms, s 247A of the Corporations Act - which provides that a member of a company may apply to a court for an order authorising the applicant to inspect the books of the company - "fails to express any clear words of abrogation of the privilege ... The general words of s 247A of the Corporations Act cannot be read as authorising the production of documents protected by legal professional privilege" (at [20]).
In my view, this reasoning would apply to s 108 of the Strata Titles Management Act.
However, her Honour went on to observe that "[r]ather than abrogating legal professional privilege, s 247A of the Corporations Act permits the court, in the exercise of its discretion, to allow a member of a company to inspect the books of a company, on terms the court may impose". Those terms may include inspection of otherwise privileged documents (at [21]) There is ample authority for this view: Czerwinski v Syrena Royal Pty Ltd (No 1) [2000] VSC 125 at [14] (Warren J, as her Honour then was); Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365 at [86] (Barrett J as his Honour then was); and Aerva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd (No 2) [2008] WASC 10, at [24] (Warren CJ).
Whilst s 247A Corporations Act and s 108 of the Strata Titles Management Act are not identical, the authority on s 247A and the right of shareholders to access corporate documents at common law may assist in ascertaining the approach to confidentiality as between an owners corporation and its members.
At common law, a shareholder has a limited right to inspect the books of a company: Edman v Ross (1922) 22 SR (NSW) 351, at 358 (Street CJ in Eq); R v Merchant Tailors' Company (1831) 2 B & Ad 115; (1831) 109 ER 1086. That right was limited to cases in which the shareholder could show he or she had a particular interest in a particular dispute, and inspection would be limited to documents relevant to that dispute: Edman v Ross; Re Claremont Petroleum NL (1990) 2 Qd R 31, at 33 (which decision was cited with approval by Bryson AJ, as his Honour then was, in Rowland v Meudon Pty Limited [2008] NSWSC 381, at [35]).
In Rowland v Meudon, Bryson AJ considered that s 247A has "made the discretion wider and uncontrolled" (this was cited with approval in Smartec Capital Pty Limited v Centro Properties Limited [2011] NSWSC 495; (2011) 83 ACSR 461; at [65] (per Barrett J, as his Honour then was)). In that case, his Honour gave a member of a company that owned residential premises access to legal advice provided to the company regarding the conduct of, ultimately unsuccessful, litigation. The applicant considered that the litigation may have been entered into without good reason, for an improper purpose or not in good faith.
In Smartec Capital Pty Limited v Centro Properties Limited, Barrett J reviewed the authority on the scope of s 247A (at [64] - [68]), and observed that the "proper purpose" criterion - which is not to be found in s 108 - has been said not to be satisfied where inspection of documents under s 247A is an attempt to outflank an assertion of privilege in other proceedings (Czerwinski v Syrena Royal) or to serve as a substitute for discovery (Rowland v Meudon; Claremont Petroleum; Czerwinski v Syrena Royal). (The present application cannot be characterised in such a way in my view.)
In Carre v Owners Corporation - SP 53020 [2003] NSWSC 397, Barrett J held that the rule in Foss v Harbottle [1843] EngR 478; (1843) 2 Hare 461 applied to an Owners Corporation. It would seem to follow that, at common law, a member of an owners corporation should be in a similar position, with respect to inspection of documents, to that of a shareholder of a corporation now regulated by the Corporations Act.
The terms of s 108 reinforce this view. It is in terms wider than s 247A, as it does not require an order of the court, does not impose good faith and proper purpose criteria on an applicant for inspection, and states that the owners corporation "must make" the documents available.
This also suggests that the legislature considered that the relationship between members of an owners corporation and the owners corporation itself as more proximate, or less in need of judicial supervision, than those in a corporation regulated by the Corporations Act.
Conclusion on the privilege claim
On the issue of whether privilege exists, I am of the view that in circumstances where the owners corporation, by the Executive Committee, was purporting to act on behalf of the lot owners in obtaining legal advice regarding it entering into a contract that affected the interests of all lot owners, that advice was not confidential as between the lot owners and owners corporation when it was obtained. The fact that the Plaintiff and third Defendant are now in dispute as to matters that were the subject of the advice does not alter this.
In these circumstances, the third Defendant cannot assert legal privilege over those documents as against the Plaintiff.
If that conclusion is wrong, the next question to answer is whether the relationship between the third Defendant and the Plaintiff is one that can give rise to a common interest that can found "common interest privilege" to be used as a sword. In my view, the answer must be affirmative. The interests of the Plaintiff and the third Defendant, at the time the documents the subject of the claim for privilege, were created, were not selfish and potentially adverse to each other: Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 410A. The third Defendant was the owners corporation and the Plaintiff was a lot owner. Then, they were not adversaries.
With that conclusion in mind, I must then determine whether there was a sufficient "common interest" as between them at the time that the documents relating to the advice given by Holding Redlich to the third Defendant were created. Again, the answer must be affirmative.
Putting it another way, at the time the advice on the Agreement was given, the third Defendant was in a formal legal relationship with the lot owners and it communicated with its legal advisor about a matter in which the lot owners shared an interest. The third Defendant was required to perform its responsibilities for the benefit of the lot owners, of which the Plaintiff was one.
Furthermore, in practical terms, the third Defendant should want the Plaintiff's claim to succeed if what it asserts against the other Defendants can be established.
Therefore, in my view, the Plaintiff can rely on "common interest privilege as a sword" to have access to the advice documents in the hands of the former solicitors of the third Defendant.
Waiver
In case I am wrong on the conclusions to which I have come, I turn to the question of waiver.
The general rule is that a communication that is protected by the privilege continues to be protected forever, unless the client waives the privilege. It is the client alone who has the right to waive privilege. No one can waive privilege on his, her, or its behalf unless the client's consent has been given to do so. A client can consent to privileged communications being disclosed. Then, the privileged nature of the communications is lost.
In Mann v Carnell, at 13, Gleeson CJ, Gaudron, Gummow and Callinan JJ observed:
"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. ...
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 the 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 Cole v Dyer [1999] SASC 272, Doyle CJ said, at [29] - [30]:
"29 In Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83 the High Court held, applying its decision in Attorney General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475 that whether a limited disclosure of privileged material gives rise to an implied or imputed waiver of legal professional privilege falls to be resolved by reference to the requirements of fairness in all the circumstances of the particular case. Those words are taken from the judgment of Deane, Dawson and Gaudron JJ at 96, but all members of the Court proceeded on the same basis.
30 The High Court's consideration of the question of fairness in the two cases referred to demonstrates that fairness in this context is not to be narrowly conceived. On the other hand, it is not fairness at large that is under consideration. It is fairness in the context of particular litigation, although the consideration of fairness is not confined to events occurring in the very same proceedings in the course of which the privilege is claimed: see Gummow J in Goldberg at 121. The ultimate question is whether the manner in which a party has used or disclosed privileged material requires as a matter of fairness that privilege in relation to that material be treated as having been waived. It is helpful to consider the manner in which the issue was posed by members of the Court in Maurice. Gibbs CJ said (at 481):
'... 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.'
Mason and Brennan JJ said (at 487-488):
'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.'
Deane J said (at 492-493):
'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 to [sic] compellable to produce or allow access to the material which he has elected to use to his own advantage.'"
Recently, in Carey v Korda [2012] WASCA 228, it was said, at [72]:
"It is inconsistency between the conduct of the client and the maintenance of the confidentiality which effects a waiver of the privilege: Mann v Carnell [28]. The assessment of whether a party has waived privilege is determined by considering whether, viewed objectively, the conduct of the privilege holder is inconsistent with the maintenance of a claim for confidentiality. Waiver is not governed by the subjective intention of the party claiming privilege: Mann v Carnell [29] - [30]. Depending on the circumstances of the case, considerations of fairness may be relevant to a determination of whether, objectively, there is inconsistency: Mann v Carnell [29], [34]; AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30 [130] - [131]. In Mann v Carnell, the circumstances relevant to fairness were that the disclosure of a legal opinion was to a member of the Parliament of the Australian Capital Territory, in relation to litigation involving the Australian Capital Territory, and that access was provided on a confidential basis. Disclosure in those circumstances, and to that person, who was not, relevantly, a 'third party', was not inconsistent with the purpose of maintaining confidentiality as against the prospective plaintiff."
The onus of proof in relation to waiver lies on the person asserting the privilege has been waived: New South Wales v Betfair Pty Ltd [2009] FCAFC 160; (2009) 180 FCR 543; Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal (No 7) [2012] FCA 1185, per Barker J, at [17]. In this case, that is the Plaintiff.
There are two bases relied upon in the present case. The first is that there has been a waiver of privilege by the disclosure of other documents, some of which have been utilised in the proceedings. Reliance is placed on the principle stated in Nea Karteria Maritime Company Limited v Atlantic & Great Lakes Steamship Corporation (No 2) [1981] Commercial Law Reports 138, at 139, where Mustill J said:
"... 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."
Sackville J in Seven Network Limited v News Limited (No 12), referred to the judgment of the Full Court of the Federal Court in Bennett v Chief Executive Officer of the Australian Customs Service (2004) 140 FCR 101, at [14] - [15]:
"[14] Gyles J referred to a number of authorities supporting the proposition that a party who expresses a particular legal conclusion and asserts that it has received legal advice endorsing that view, will be taken to have waived privilege in the legal advice. Gyles J expressed agreement with this reasoning (at [65]):
"The voluntary disclosure of the gist or conclusion of the legal advice amounts to waiver in respect of the whole of the advice to which reference is made including the reasons for the conclusion. The primary judge was in error in drawing a distinction between conclusion and reasoning in the context of such a disclosure."
[15] Gyles J noted that the primary Judge in Bennett v CEO had correctly identified the decision in Mann v Carnell as providing guidance as to the law to be applied. However, Gyles J considered that the test had been misunderstood, at least in part. His Honour said this (at [68]):
"The test looks to inconsistency between the disclosure that has been made by the client on the one hand and the purpose of confidentiality that underpins legal professional privilege on the other. It is not a matter simply of applying general notions of fairness as assessed by the individual judge. The authorities to which I have referred show that it is well established that for a client to deploy the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege.""
The Plaintiff points to three documents - the "waiver documents" - which, it is said, support a conclusion that privilege over the legal advice provided in respect of negotiating the Agreement has been waived.
The first is a letter, dated 16 March 2012, to the Plaintiff's solicitor from Michael Bampton, a partner at Henry Davis York Lawyers, then acting for the first and second Defendants. I have referred to the passage in this letter that is relied upon at [45] above.
The Plaintiffs say it would be unfair to the Plaintiff to allow reliance upon the fact that the third Defendant obtained legal advice while maintaining privilege over the advice.
Of course, in Seven Network Limited, Sackville J made the following observation, again referring to Bennett, at [16]:
"In agreeing with the analysis of Gyles J, Tamberlin J observed (at [6]) that the position in the case before the Full Court may have been different if the legal advisors to Customs had simply asserted that the client had taken legal advice and had adopted a particular position having considered that advice. Tamberlin J pointed out that in these circumstances, the substance of the advice is not disclosed, but only the fact that some advice had been given and had been considered."
In the letter referred to, Mr Bampton, in my view, refers only to the fact that advice had been taken, and considered. He does not advert to the substance of the advice, even by inference. In context, the reference may be read to assert that the Plaintiff's claim is weak because the third Defendant negotiated the terms of the Agreement with the benefit of legal advice. On a fair reading, I do not think that the letter refers to the substance of the advice in a way that would make it unfair to maintain privilege, if privilege otherwise existed.
The second document is annexed to an affidavit of Bong-Sup Shin, a representative of the Plaintiff, affirmed 13 June 2012, in which he states that he attended the offices of Strata Plus, the managing agent for the Owners Corporation, on 12 October 2011, and inspected certain books and records. His evidence is that at his request, certain documents, copies of which are annexed to his affidavit, were photocopied and handed to him by a representative of Strata Plus. His evidence as to how the documents came to be in his possession is unchallenged.
The documents are three email chains containing correspondence between members of the executive committee regarding a draft consultancy agreement forwarded to them by Holding Redlich. These emails reveal the topics on which, inter alia, advice was being given to the members of the executive committee, but does not disclose the substance of the advice by the solicitors. Taking these emails by themselves, I would not find that privilege had been waived.
The third of the three annexed to Mr Bong-Sup's affidavit, however, is a letter from Holding Redlich dated 21 June 2011, the subject of which is "Advice regarding entry into the proposed Consultancy Agreement". The substance of the advice could be described as going to the adoption of the Agreement by the Owners Corporation by way of Extraordinary General Meeting. Were this as far as the disclosure went, I would be inclined to think that any waiver was limited to advice on this issue, and not the substance of the Agreement itself.
The third document relied upon is annexed to an affidavit, affirmed 13 June 2012, of You-Jin Kim, also a representative of the Plaintiff. The deponent's evidence as to how the document annexed came into his possession is the same as that of Mr Bong-Sup, and is also unchallenged. The document annexed is an email from Ms Chudleigh to Luke Derwent of Strata Plus. The email discusses amendments to the Agreement "in accordance with the Executive Committee's instructions which you conveyed to us ...". The amendments to be made to the two clauses of the Agreement, which amendments are the subject of dispute in the principal proceeding, are then detailed.
It is the voluntary disclosure of this document to the representative of the Plaintiff, by the agent of the Owners Corporation, at a time when it had the opportunity to assert the confidentiality of the document because it contained the substance of advice provided to the third Defendant on the terms of the Agreement, that is inconsistent with the maintenance of privilege over such other documents that detailed the advice on the same topic and, in such circumstances, is inconsistent with a claim of confidentiality.
It was not suggested by the third Defendant that the documents had been disclosed by mistake. It was not suggested that the document had been produced for a limited purpose only. Nor has it sought to prevent the use, by the Plaintiff, of the document disclosed.
It follows, in my view, that even if documents relating to the advice from Holding Redlich on the Agreement were privileged, that privilege has been waived and those documents should be made available for inspection. These documents are those to which privilege is said to attach and which are referable to the Agreement being the Schedule 1 documents 1-21, 23, 25, 30-34 and the Schedule 2, documents 3-19.
It follows that the third Defendant's notice of motion so far as it relates to the Schedule 1 documents 1-21, 23, 25, 30-34 and the Schedule 2, documents 3-19 should be dismissed. For the reasons given, the Plaintiff is entitled to inspect these documents.
In relation to the other documents, they do not seem to be relevant to the present claims. They do not relate to the advice given about the Agreement. Accordingly, whilst it may be that they should be made available for inspection for the same reasons, as a matter of discretion, since they are not relevant to the issues for determination, inspection should not be permitted.
The third Defendant has been partly successful, maintaining its claim for privilege on the remaining documents (Schedule 1, documents 22, 24, 26 to 29, and Schedule 2, documents 1 and 2). However, I do not think that any additional time was spent in relation to these.
Accordingly, I order the third Defendant to pay the Plaintiff's costs of the notice of motion.
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Decision last updated: 05 December 2012
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