Farriss v Axford (No 2)
[2021] NSWSC 1055
•10 August 2021
|
New South Wales |
Case Name: | Farriss v Axford (No 2) |
Medium Neutral Citation: | [2021] NSWSC 1055 |
Hearing Date(s): | 10 August 2021 |
Date of Orders: | 10 August 2021 |
Decision Date: | 10 August 2021 |
Jurisdiction: | Common Law |
Before: | Cavanagh J |
Decision: | (1) The Notice of Motion filed by the plaintiffs on 2 December 2020 is dismissed. |
Catchwords: | CIVIL PROCEDURE – Subpoenas – Application to set aside – Relevance |
Legislation Cited: | Competition and Consumer Act 2010 (Cth) |
Cases Cited: | Attorney-General (NT) v Maurice (1986) 161 CLR 475; [1986] HCA 80 |
Category: | Procedural rulings |
Parties: | Timothy William Farriss (First Plaintiff) |
Representation: | Counsel: |
File Number(s): | 2018/23640 |
Publication Restriction: | None |
REVISED EX TEMPORE Judgment
This matter is listed for hearing before me for 7 days commencing 30 August 2021. The matter comes before me today for the purposes of determination of three issues arising between the parties as part of the preparation of the hearing being:
(1)a Notice of Motion filed on 2 December 2020 by the plaintiffs seeking to challenge the defendants' claim for privilege in respect of statements annexed to investigators' reports obtained by the defendants;
(2)a Notice of Motion filed on 4 August 2021 by the defendants seeking to set aside three subpoenas for production served by the plaintiffs; and
(3)an issue as to a Notice to Produce served by the defendants on the plaintiffs.
The first plaintiff alleges that he sustained severe injuries to several fingers of his left hand as a result of an accident on a boat on 24 January 2015. The accident occurred when the first plaintiff's fingers became caught in the anchor chain of the boat which he had chartered from the third defendant. The first and second defendants were the owners of the boat.
By way of an Amended Statement of Claim filed on 28 August 2019, the plaintiffs pursue causes of action in negligence against the defendants as well as a claim under the Competition and Consumer Act 2010 (Cth) Sch 2 - Australian Consumer Law.
The basis of the claims is that the defendants should have provided proper instruction to the first plaintiff as to the use of the anchor chain and parts of the boat which caused the chain to work, as well as a warning as to the propensity of the chain to jam. Further, the plaintiffs allege that the anchor chain and gypsy were defective and had not been properly maintained prior to the accident.
The first plaintiff says that as a result of the accident, he is now unable to play the guitar and has suffered significant losses consequent upon the injury to his fingers. Both liability and damages are in issue.
Adrian Williams appeared on behalf of the plaintiffs. John Turnbull SC appeared with James Sleight on behalf of the defendants.
The plaintiff’s motion challenging privilege
As part of the preparation of the matter, the plaintiffs served a subpoena on the third defendant, being the charter company, seeking access to various documents including all records, correspondence, insurance claim forms, reports, witness statements and other documents the subject of the claim and accident in which the plaintiff was involved. Documents were produced but the third defendant maintains that two statements of a director of the third defendant, Mr Niels Storaker, are privileged and that the plaintiffs are not entitled to access to those statements.
By their motion, the plaintiffs seek to challenge the claim for privilege. In accordance with directions of the Court, the parties have served affidavits on which they intend to rely. The defendants have served two affidavits from Mr Storaker dated 24 May 2019 and 10 January 2020.
The defendants have not produced for inspection two statements which have previously been made by Mr Storaker being statements of 16 February 2015 and 25 August 2015. It is common ground that those statements were attached to investigators' reports which the solicitors appearing on the record for the defendants, McInnes Wilson Lawyers, obtained on instructions from the defendants' insurer, Club Marine.
As will be apparent from the date of the statements, the first statement was obtained very shortly after the accident and the second statement was obtained within 9 months of the accident.
The plaintiffs submit that:
(1)the onus is on the defendants to prove that the documents are privileged and the defendants have not done so; and
(2)in any event, the defendants have waived privilege.
The plaintiffs rely on an affidavit of their solicitor, Lindsay Graham Parker dated 2 December 2020. The defendants rely on an affidavit of a solicitor in the employ of the solicitor for the defendants, Nancy Barakat, dated 16 February 2021.
The defendants submit that the statements of Mr Storaker which are sought by the plaintiffs, were obtained for the dominant purpose of either providing legal advice (within the meaning of s 118 of the Evidence Act 1995 (NSW)) or for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding, or anticipated or pending Australian proceedings in which the client is, or may be, or was or might have been a party (within the meaning of s 119).
Are the documents privileged?
The proceedings were commenced by way of the filing of a Statement of Claim on 23 January 2018. A defence was filed on 19 March 2018. According to Ms Barakat, on 30 January 2015, McInnes Wilson Lawyers were engaged by Club Marine in relation to the accident. At that time, they were engaged directly on behalf of Club Marine only. On 2 February 2015 Dean Newell, a principal at McInnes Wilson Lawyers, appointed an investigator to conduct an investigation into the accident. On 16 February 2015, Mr Newell received a copy of the investigation report which contained as an attachment, Mr Storaker's statement dated 16 February 2015.
On 25 February 2015, McInnes Wilson Lawyers commenced acting for the first and second defendants only. Further investigations were then commissioned by Mr Newell on 17 June 2015, and on 31 August 2015, he received a copy of the investigators' report containing as an attachment, Mr Storaker's second statement dated 25 August 2015.
The defendants submit that Mr Storaker's statements form part of the investigation report commissioned by McInnes Wilson for the benefit of Club Marine and the first and second defendants, and as such, was for the benefit of providing legal advice to Club Marine and/or the defendants and/or in anticipation of litigation.
The plaintiffs' submission in response is that, as the defendants did not adduce evidence from either Mr Storaker or the investigator, the defendants have not proved the purpose for which the documents were obtained. The plaintiffs did seek leave to cross-examine Ms Barakat on her affidavit, but I declined leave on the basis that it would not be permissible for Ms Barakat to be asked questions about what was in the mind of another person, being Mr Storaker, or whether Mr Storaker refreshed his memory from the statements the subject of the claim for privilege.
Mr Williams wished to ask questions as to whether McInnes Wilson had provided copies of those privileged statements to Mr Storaker prior to the completion of the affidavits relied on for the purposes of these proceedings, but it did not seem to me that obtaining an answer to that question would take the matter very far.
The plaintiffs' position is thus that the defendants have not demonstrated that the documents are privileged. I do not agree with that submission.
Whilst it may be that there was no evidence from Mr Storaker or from the investigator, it is plain from the chronology that the third defendant has made a claim on its insurance policy with Club Marine and that Club Marine has appointed McInnes Wilson to provide advice to it. McInnes Wilson has instructed investigators, no doubt, on the instructions of Club Marine.
The policy under which the third defendant would be entitled to coverage would, at least in part, be a liability policy. That is, the indemnity which would be sought would be in respect of a liability to pay damages to a third party. It is not a first party insurance policy under which an insured person makes a claim in respect of damage to his goods.
I can think of no reason why Mr Storaker would have been preparing a statement which happens to coincide with the date of the investigators' report other than as part of the investigation into the circumstances of the accident for the purposes of these proceedings. It may be that no-one has expressly said that but the only inference available from the evidence before me is that both the first and second statements were obtained as part of the investigation by the investigators appointed by McInnes Wilson for the dominant purpose of either providing legal advice or for the dominant purpose of the client being provided with professional legal services in relation to these proceedings. The fact that, at the date of the initial statement, McInnes Wilson had not actually commenced to act for the defendants does not detract from that proposition.
Has privilege been waived?
The second matter relied upon by the plaintiffs is a waiver of privilege. As set out in s 122 Evidence Act, privilege may be waived when a client or party has acted in a way which is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of the kind referred to in ss 118 or 119. However, as set out in s 122(5), the client or party is not taken to have acted in an inconsistent manner if the substance of the evidence has been disclosed under compulsion of law.
The plaintiffs submit that the privilege has been lost because the privilege holder has acted in a manner inconsistent with the maintenance of privilege. In particular, the plaintiffs submit that the first affidavit of Mr Storaker contains seven assertions that he cannot recall certain relevant information. Whilst the defendants dispute that there are seven assertions, there is no dispute that Mr Storaker says on more than one occasion that he cannot recall certain information.
The plaintiffs submit that, if Mr Storaker's statements were used as source material, then privilege has been waived because access to the source document is reasonably necessary to enable the proper understanding of the non-privileged statement.
Further, the plaintiffs submit that if the earlier statements were not used to prepare the affidavits, then the defendants have been attempting to approbate and reprobate by:
(1)on the one hand, relying on an assertion that he cannot recall certain events; and
(2)on the other hand, withholding contemporaneous statements that would likely shed light on what he actually recalled.
Waiver looks to the conduct and position of the person who is said to have waived privilege in order to see whether he has approbated so as to prevent him reprobating.[1]
[1] Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing (2013) 250 CLR 303; [2013] HCA 46 at [31] (French CJ, Kiefel, Bell, Gageler and Keane JJ).
Further as was observed in Mann v Carnell[2], there may be a waiver of legal professional privilege when there is inconsistency between the conduct of the person entitled to the benefit of the confidentiality of a communication between lawyer and client and maintenance of that confidentiality.
[2] (1999) 201 CLR 1; [1999] HCA 66 at [29] (Gleeson CJ, Gaudron, Gummow and Callinan JJ).
Legal professional privilege exists to protect the confidentiality of communications between a lawyer and client. The client is entitled to the benefit of such confidentiality but may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which affects the waiver of the privilege.
In Attorney-General (NT) v Maurice[3] Mason and Brennan JJ observed that:
“A litigant can of course waive his privilege directly through intentionally disclosing protected material. He can also lose that protection through a waiver by implication. 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.”
[3] (1986) 161 CLR 475 at 487-488; [1986] HCA 80.
The difficulty for the plaintiffs at this stage is that there is no evidence that Mr Storaker has relied upon or refreshed his memory from those earlier statements in the preparation of the two affidavits on which the defendants rely.
There is no evidence that Mr Storaker has adopted an inconsistent position or that, having used those earlier documents as source material for the purposes of the preparation of his affidavits, he now seeks to withhold them. There is no evidence that in preparing his affidavits, he had before him, read and sought to rephrase, rehash or rely on the content of those two earlier statements. There is no evidence of the type of approbation and reprobation referred to by the plaintiffs.
It might be thought that Mr Storaker would have had regard to his contemporaneous statements in preparing his affidavits for the purposes of these proceedings but, absent evidence to that effect, that is mere speculation. It may be that when and if Mr Storaker comes to give evidence, he will be cross-examined about the content of his affidavits. It may be that he will be asked questions about whether he had regard to his earlier statements.
Indeed, Mr Turnbull acknowledged (without conceding) that if such evidence emerged, the position in terms of waiver may be different.
It is only necessary to say at this stage that I am not satisfied that there has been a waiver of privilege and that the plaintiffs are not now entitled to have access to those documents.
The defendants’ motion
The defendants seek to set aside three Subpoenas to Produce, addressed to the first defendant, Bryce Adrian Statis and Ocean Phase Marine Electrical Solutions Pty Ltd.
Mr Statis and Ocean Phase Marine Electrical Solutions have been involved in the maintenance or repairs in respect of the boat.
The defendants seek to set aside the subpoenas on the basis that the subpoenas call for production of all maintenance records in relation to various components of the boat for the period 30 August 2018 to 15 July 2021, that is well after the accident.
Mr Williams submits that these documents are required by the plaintiffs by way of an update having regard to the reference made by the plaintiffs' expert to earlier maintenance and service records and other similar documents produced by the defendants in answer to earlier subpoena.
As I understand the position, the plaintiffs have already obtained access to the records for the period prior to the accident but now seek access to similar records for the period subsequent to August 2018.
It may be that the documents are sought by way of an update but, based on my understanding of the issues between the parties, I am not satisfied that such documents could have any relevance.
The question of breach of duty of care must be assessed prospectively, having regard to what the defendants knew or ought to have known prior to the accident. Maintenance and service records and records relating to the componentry available to the defendants prior to the accident would thus be relevant.
I do not understand how any maintenance undertaken on the componentry, for example, in 2020, could impact upon the potential liability of the defendants.
The plaintiffs submit that the third parties have already produced these documents but that is not the test.
There is an application to set aside each of the three subpoenas. I am satisfied that the application is properly made as I am not satisfied that the documents sought could have any relevance to the issues between the parties.
The defendants succeed on their motion.
The Notice to Produce
The third issue which arose today is an issue relating to a Notice to Produce served by the defendants on the plaintiffs seeking access to all phone records for 24 January 2015 for a particular phone number. Mr Williams responded to that Notice to Produce by asserting firstly that the defendants were not entitled to serve the Notice at this time but then said that there were no documents to produce. There is nothing for me to decide at this time. If the defendants wish to take that matter further, that will be a matter for them.
Finally, the plaintiffs raised the prospect of obtaining an advance ruling on whether Mr Storaker's statements would remain privileged should certain evidence emerge at the hearing. There is no utility in making such an order because there is no point in predicting what evidence might emerge from Mr Storaker and the plaintiffs would not obtain any benefit from such an advance ruling as they still could not obtain access to Mr Storaker's statements until the evidence emerged from Mr Storaker on the hearing.
Orders
In the circumstances, I make the following orders:
(1)The Notice of Motion filed by the plaintiffs on 2 December 2020 is dismissed;
(2)As sought in the defendants’ motion filed on 4 August 2021 the Subpoenas to Produce addressed to John Axford, Bryce Adrian Statis and Ocean Phase Marine Electrical Solutions Pty Ltd filed on 16 July 2021 are set aside pursuant to r 33.4 Uniform Civil Procedure Rules 2005 (NSW); and
(3)As agreed to by the parties, I order that the documents produced under the subpoenas by Mr Statis and Ocean Phase Marine Electrical Solutions Pty Ltd be returned to them.
Costs
The defendants seek an order for costs on both motions. The defendants were successful on both motions. My ordinary practice in dealing with case management issues is to not make a costs order. It seems to me that when the Court requires parties to come before the Court for the purposes of case management, the costs incurred then are part of the overall costs of the proceedings.
However, this matter came before me today not as part of any case management but on the specific application of the parties for determination of two motions. The defendants were successful in respect of both motions and the defendants are entitled to their costs.
In those circumstances, I order the plaintiffs to pay the costs of both motions.
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