Galati v Deans

[2019] NSWSC 1548

Supreme Court

New South Wales

Medium Neutral Citation:	Galati v Deans [2019] NSWSC 1548
Hearing dates:	24 October 2019
Date of orders:	08 November 2019
Decision date:	08 November 2019
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	(1)   Refuse the cross-claimants’ application for general access in respect of documents produced on subpoena on 28 June 2019 by Norton Rose Fulbright. (2)   Grant access to the cross-claimants to so much of the documents produced on subpoena as fall within the schedule of documents prepared by the tenth cross-defendant and put forward in its solicitors’ letter dated 27 September 2019 (but reading the words “tending to prove” where appearing in the fourth column of that schedule as “tending to prove or disprove or tending to prove whether or not”), without prejudice to the cross-claimants’ ability later to seek access to further documents if it is claimed that there has been an implied waiver having regard to these reasons. (3)   Direct the tenth cross-defendant to provide to the Associate to Ward CJ in Eq, in a sealed envelope marked “Privileged”, within seven days the “Project Magoo” document (item 105 in the schedule prepared by the cross-claimants) for a ruling on that document in due course. (4)   Direct the parties to exchange brief written submissions as to costs within seven days with a view to dealing with the issue of the costs of the notice of motion filed 8 October 2019 being dealt with on the papers.
Catchwords:	CIVIL PROCEDURE — Subpoenas — application by defendants for access to documents produced on subpoena by tenth cross-defendant’s former solicitors – legal professional privilege claimed – whether implied waiver of privilege – orders made for access to certain documents on basis that affidavits filed in the proceedings by tenth cross-defendant disclose communications giving rise to implied waiver
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 56 Evidence Act 1995 (NSW), s 22 Uniform Civil Procedure Rules 2005 (NSW), r 33.2
Cases Cited:	Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 Attorney-General (NT) v Maurice (1986) 161 CLR 475; [1986] HCA 80 Bennett v Chief Executive Officer of the Australian Customs Service (2004) 140 FCR 101; [2004] FCAFC 237 Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86 Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 Expense Reduction Analysts Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 Galati v Deans [2018] NSWSC 1600 Gloucester Shire Council v Fitch Ratings, Inc (No 2) [2017] FCA 248 Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corp (No 2) [1981] Comm LR 138 Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No. 2) [2016] NSWSC 829 Traderight (NSW) Pty Ltd (ACN 108 880 968) v Bank of Queensland Limited (ACN 009 656 740) (No 14) and 13 related matters [2013] NSWSC 211
Category:	Procedural and other rulings
Parties:	Robert Paton Deans (First Defendant/First Cross-Claimant) Fishbank Development Corporation Pty Limited (Second Defendant/Second Cross-Claimant) EJC Pyrmont Pty Ltd (Tenth Cross-Defendant)
Representation:	Counsel: P Barham (Applicants/Defendants/Cross-claimants) C Withers (Respondent/Tenth Cross-defendant)   Solicitors: Johnson Winter & Slattery (Respondent/Tenth Cross-defendant) FCB Workplace Law (Applicants/Cross-claimants)
File Number(s):	2016/00360462
Publication restriction:	Nil

Judgment

1. HER HONOUR: By notice of motion filed on 8 October 2019, an application was made by the first and second defendants/cross-claimants, Mr Robert Deans (Deans) and his associated entity, Fishbank Development Corporation Pty Limited (FDC) (collectively, the cross-claimants), for general access in respect of documents produced on subpoena on 28 June 2019 by a firm of lawyers, Norton Rose Fulbright (NRF) (that firm having merged with Henry Davis York, the solicitors acting on behalf of the tenth cross-defendant, EJC Pyrmont Pty Limited (EJC) in respect of the transactions the subject of dispute in the present proceedings).

2. EJC opposes such an order. It has asserted a claim of legal professional privilege in respect of certain of the documents contained within the production on the basis that each of those ‘‘discloses a confidential communication made, or a confidential document prepared, for the dominant purpose of Henry Davis York providing legal advice to EJC with respect to the purchase and management of land at 31-35 Bank Street, Pyrmont in the State of New South Wales’”. In support of its claim for privilege, EJC has served a copy of an affidavit sworn by its solicitor (Mr Andreas Peter Piesiewicz) on 29 August 2019, to which I will refer in due course (the Piesiewicz Affidavit).

3. Other than in respect of one document (an email chain referred to as the “Project Magoo” document) no issue is now taken by the cross-claimants as to the documents being privileged; rather, the question is as to whether EJC has waived that privilege in respect of some or all of those documents.

4. The cross-claimants contend that, in relation to some 127 documents listed in a revised privilege schedule, EJC has acted inconsistently with the maintenance of privilege over the documents and has thus waived privilege in respect of them. EJC disputes this and contends that there has been no waiver other than in respect of those privileged documents that have been exhibited to the affidavits filed by EJC in respect of the cross-claimants’ claim. The affidavits in question are: the affidavit affirmed 4 April 2019 by Ms Penny Lee Dixon (the Dixon Affidavit) and the affidavit sworn 4 April 2019 of Mr John Phillip Vassallo (the Vassallo Affidavit). In particular, EJC maintains that it has not laid open to scrutiny the content of any of the privileged communications to which the cross-claimants now seek access.

Background

5. The background to the present dispute and the issues underlying these proceedings have been summarised in an earlier decision in these proceedings (Galati v Deans [2018] NSWSC 1600 at [1]-[19]).

6. Broadly speaking, the dispute relates to a proposed redevelopment of the Sydney Fish Markets. The cross-claim against EJC is in respect of a transaction involving the acquisition of certain option rights in respect of land (the Bank Street Property, also known as the Bidvest Land) which was to form part of the proposed redevelopment. The cross-claimants allege that EJC acted in concert with the plaintiffs (Trading Australia Pty Ltd (Trading Australia), a company associated with a business partner of the cross-claimants, Mr Dominic Galati) to deliver a “secret commission” to Trading Australia on the transaction.

7. By their fourth amended statement of cross-claim filed 7 November 2018 (the cross-claim), the cross-claimants make allegations against Mr Galati and Trading Australia of misleading or deceptive conduct, unconscionable conduct and breaches of contractual and fiduciary duties relating to the proposed redevelopment and, in particular, to the acquisition of the Bank Street Property. The cross-claim includes a claim as to the receipt by Mr Galati and Trading Australia of a substantial secret commission which it is alleged EJC caused to be paid to them shortly after acquiring the rights to purchase the Bank Street Property in November 2015 (see the cross-claim at [107], [118], [123(t)]).

8. Separate claims in relation to the secret commission are made against EJC and against the eighth cross-defendant, Wealth Shift Pty Limited (Wealth Shift) and the ninth cross-defendant, Ms Caroline Pritchard.

9. The cross-claimants say that the key issues in these proceedings surround what occurred with regard to the negotiation of a deed made on 20 November 2015 between, inter alia, FDC and EJC (the Nomination Agreement) pursuant to which EJC obtained, from FDC and Trading Australia, the right to exercise an option that, prior to November 2015, FDC and Trading Australia had together acquired to purchase the Bank Street Property from another entity, Dahua Fish Market No. 1 Pty Limited.

10. The cross-claimants allege that, on 8 December 2015, EJC caused the sum of $2,279,820.95 to be paid to Wealth Shift and that, on 10 December 2015, Wealth Shift then paid the sum of $1,799,820.95 to Trading Australia; and that those payments were made without the knowledge of the cross-claimants. It is alleged that those payments were made in contravention both of the terms of the Nomination Agreement and of express representations made prior to the signing of the Nomination Agreement (see the cross-claim at [150]ff).

11. The cross-claimants here identify the key issues in the substantive dispute involving EJC that arise from the amended statement of claim and the cross-claim (without purporting to be exhaustive) as follows:

(a)   Did Galati and Trading Australia engage in deceit in or about November 2015 with respect to dealings with Wealth Shift and Ms Pritchard and EJC to secretly divert [sic] a portion of the purchase price in respect of the Nomination Agreement from the acquisition of the Bank Street Property to the benefit of Galati and Trading Australia? (Cross-Claim at [136-141]);

(b)   Did Galati and Trading Australia and EJC, on 20 November 2015, represent to the Cross-Claimants that there would be no side payments to any third parties besides what was documented in the Nomination Agreement? If so, was that representation misleading and deceptive and/or a false or misleading representation as to the price payable for the Bank Street Property, and did the Cross-Claimants rely on that representation thereby causing loss and damage? (Cross-Claim at [150]);

(c)   Did EJC, on 20 November 2015, represent to the Cross-Claimants that the real estate agency, Deans Property Pty Ltd, had introduced EJC to the Bank Street Property and that no commission would be claimable or payable to any third party?

The NRF subpoena

12. On 21 June 2019, the cross-claimants caused a subpoena to produce to be issued to “the partnership of N.J. Abrahams & others trading as Norton Rose Fulbright” (the NRF Subpoena) pursuant to r 33.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). The NRF Subpoena called, in very broad terms, for the production by NRF of the complete file(s) or copies of the file(s) identified by particular internal reference numbers used by Henry Davis York (HDY). That firm (now merged into the firm NRF) acted for EJC in respect of the transactions the subject of this dispute. As I understand it, the file references listed in the NRF Subpoena relate to the files formerly held by by HDY in respect of the negotiation of the Nomination Agreement, the purchase of the Bank Street Property by EJC pursuant to the rights acquired under the Nomination Agreement and the associated transactions that took place in respect of the Nomination Agreement.

13. Production of documents into court under the NRF Subpoena occurred on 28 June 2019 and a regime was co-operatively agreed between EJC and the cross-claimants whereby EJC obtained first access to the documents produced in order to determine whether (as one would think inevitable when a subpoena is issued for the whole of a law firm’s file(s) in relation to legal transactions in which the firm is acting for a client or clients) any claim for privilege might arise. Orders were made by consent, which, inter alia, required EJC to substantiate any claim for privilege by 12 July 2019.

14. Ultimately, various schedules were prepared by EJC identifying the documents over which legal professional privilege was claimed (the latest being the Revised Privilege Schedule).

15. Mr Piesiewicz has deposed (at [16] of his affidavit) that HDY negotiated and advised upon the terms of the Nomination Agreement and the subsequent acquisition of the Bank Street Property and related rights; that those negotiations concerned the rights and obligations of EJC and that Ms Dixon, formerly a solicitor at HDY, acted for the Baiada Group (which includes EJC) in respect of the subject transaction (at [17]). Mr Piesiewicz has also deposed that, while a solicitor at HDY, Ms Dixon understood that she was acting on behalf of EJC in relation to the negotiation of the Nomination Agreement and the purchase and management of the Bank Street Property (at [19]); and that she was provided with instructions by Mr Vassallo, of EJC, in relation to the Nomination Agreement and the Bank Street Property (at [19]).

16. Mr Piesiewicz has set out in his affidavit a summary of the contents of the NRF documents (at [20]-[21]) and a revised schedule of documents over which privilege is claimed has been prepared (at [37]-[39]) (the Revised Privilege Schedule to which I have referred above). Mr Piesiewicz identifies (at [40]) four different categories of documents in the Revised Privilege Schedule; namely, documents concerning legal advice sought and provided in relation to: the negotiation of the Nomination Agreement (Advice Type 1); the purchase of the Bank Street Property pursuant to the option rights acquired under the Nomination Agreement (Advice Type 2); leasing and tenant and other general property issues which arose from time to time in respect of the Bank Street Property (Advice Type 3); and negotiations regarding the possible development of the Bank Street Property (Advice Type 4).

17. On the present application, the only issue is as to the documents falling within the Advice Type 1 and/or Advice Type 2 categories (the Disputed Documents).

The affidavit evidence of Mr Vassallo and Ms Dixon

18. In defence of the substantive claims in the proceedings, EJC has filed the Dixon Affidavit and the Vassallo Affidavit.

19. Mr Vassallo is the Chief Executive Officer of EJ Cooper & Son Pty Ltd, which holds all of the shares in EJC. He describes in his affidavit the background to the execution of the Nomination Agreement and his interactions with Mr Galati, of Trading Australia, and Mr Deans, of FDC; the negotiation and agreement as to price for the Bank Street Property (at [38]-[46]); and the negotiation and execution of the Nomination Agreement (at [47]-[68]).

20. Ms Dixon, who, as noted above, was a solicitor at HDY at the relevant time, describes her role in advising EJC in connection with the negotiation and execution of the Nomination Agreement in her affidavit (see at [18]-[50]). Most of her affidavit concerns her interactions with the vendors in the transaction. Ms Dixon deposes to what her specific instructions were in relation to an aspect of the transaction (the request by Trading Australia and FDC for a 10% equity share in the development of the property) and she exhibits a file note of those instructions (see at [35]). Ms Dixon also deposes (at [58]) to her instructions to propose certain changes to the Nomination Agreement after it was executed. At [60], Ms Dixon deposes to a conversation she had with Mr Vassallo about certain amendments to the Nomination Agreement that were being discussed between the parties after its execution. These, and two other paragraphs of her affidavit ([68], [71]), record certain communications between Ms Dixon and Mr Vassallo that took place after the execution of the Nomination Agreement.

Relevant legal principles regarding implied waiver of legal professional privilege

21. The principles governing waiver of legal professional privilege are well established and were not here in dispute.

22. In Attorney-General (NT) v Maurice (1986) 161 CLR 475; [1986] HCA 80 (Attorney-General v Maurice), Mason and Brennan JJ said (at 487):

The limiting effect of legal professional privilege on the availability of evidence otherwise relevant is confined, inter alia, by the doctrine of waiver. 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. Professor Wigmore explains:

“[W]hen his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder.”

(Wigmore, Evidence in Trials at Common Law (1961) vol.8, 2821, at p.636).

In order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of a protected communication should result in waiver as to the rest of the communication on that subject matter: see Great Atlantic Insurance Co. v. Home Insurance [(1981) 1 WLR 529; (1981) 2 AUER 485].

23. In Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66, the plurality (Gleeson CJ, Gaudron, Gummow and Callinan JJ) stated the principle as follows (at [29] and [34]):

Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is “imputed by operation of law”. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister’s version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. 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.

…

… Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client’s actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency. The reasoning of the majority in Goldberg illustrates this.

[footnotes omitted]

24. Reference was also made in the course of submissions to the statements of principle contained in BennettvChief Executive Officer of the Australian Customs Service (2004) 140 FCR 101; [2004] FCAFC 237 per Tamberlin J (at [13] and [14]); and per Gyles J at [65]; Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corp (No 2) [1981] Comm LR 138 (at 139) per Mustill J; Ampolex Ltd v Perpetual Co (Canberra) Ltd (1996) 40 NSWLR 12 per Rolfe J (at 19); Adelaide Steamship Co LtdvSpalvins (1998) 152 ALR 418 at 431; and Expense Reduction Analysts Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 (Expense Reduction) in the decision of the plurality (French CJ, Kiefel J, as her Honour then was, Bell, Gageler and Keane JJ) (at [30]).

25. Section 122 of the Evidence Act 1995 (NSW) relevantly provides:

122   Loss of client legal privilege: consent and related matters

…

(2)   Subject to subsection (5) [not here relevant], this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. [my emphasis]

26. In Expense Reduction, the plurality (per French CJ, Kiefel, Bell, Gageler and Keane JJ) stated at [32]:

Those considerations, articulated in relation to waiver at common law, apply with equal force in relation to the statutory question posed by s 122(2) of the Evidence Act, and made applicable by s 131A of that Act to the determination of a question of waiver of client legal privilege arising in the context of pre-trial discovery. That question is whether the client or party concerned “has acted in a way that is inconsistent with the client or party objecting to” the production of a document.

27. See also Traderight (NSW) Pty Ltd (ACN 108 880 968) v Bank of Queensland Limited (ACN 009 656 740) (No 14) and 13 related matters [2013] NSWSC 211 per Ball J at [10] and [12], and Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No. 2) [2016] NSWSC 829 at [15]. In Commissioner of TaxationvRio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86, the Full Court of the Federal Court, after reviewing a number of authorities, said (at [52]):

These authorities show that, where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication.

28. Similarly in Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 (NSW Bar Association v Archer), Hodgson JA said (at [48]):

… What would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. In this respect, it may be sufficient that the client is making assertions about the client’s state of mind, in circumstances where there were confidential communications likely to have affected that state of mind.

29. As to implied waiver arising where state of mind has been put in issue, in Gloucester Shire Council v Fitch Ratings, Inc (No 2) [2017] FCA 248 (at [109]), Wigney J said:

… The mere fact that a privileged document might be relevant to the state of mind of the person claiming privilege does not alone necessarily result in a waiver of privilege: Macquarie Bank Ltd v Arup Pty Ltd [2016] FCAFC 117 at [37]; Archer Capital 4A Pty Ltd (as trustee for the Archer Capital Trust 4A) v Sage Group pic (No 3) [2013] FCA 1160; (2013) 306 ALR 414 at [24]. The position might be different if the contents of the privileged document, and not merely its existence, was specifically put in issue by the privilege holder relying on the contents of the document to vindicate a claimed state of mind: Ferella v Official Trustee in Bankruptcy (2010) 188 FCR 68 at [65].

30. Finally, I note that in DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384, Allsop J (as the Chief Justice then was) referred to the situation where (at [58]):

… the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication. …

31. Relevantly, the party entitled to privilege does not waive privilege only where there has been a communication of the substance or contents of the privileged communication. Waiver can also occur by that party laying open the confidential communication to scrutiny in some way. The question here is whether EJC has acted inconsistently with the maintenance of a claim of privilege over the NRF documents; and whether such conduct, informed by considerations of fairness, requires the cross-claimants to be given access to the Disputed Documents.

Cross-claimants’ submissions

32. As already noted, the cross-claimants maintain that EJC has acted inconsistently with the maintenance of a claim for legal professional privilege in respect of the Disputed Documents, and hence has waived any claim for privilege in respect of the Disputed Documents, by reference to the disclosures made in the Dixon and Vassallo affidavits which were served on 4 April 2019 (being EJC’s evidence in relation to the cross-claim).

33. The cross-claimants say that the disclosures have been made consciously and voluntarily in EJC’s defence of the cross-claim; and on the basis of a forensic decision so to do. It is said that the disclosures that EJC has made involve a substantial number of the documents over which privilege has been claimed, including email communications, file notes and handwritten comments. The cross-claimants dispute the proposition that the implied waiver is limited to the materials exhibited to the Vassallo Affidavit and the Dixon Affidavit.

34. The cross-claimants submit that the implied waiver goes further and applies in respect of all of the Disputed Documents. It is submitted that it is both inconsistent and unfair for EJC “to choose to disclose only selected documents on which to rely in its defence to the litigation” but also to maintain a claim for legal professional privilege in respect of those documents in circumstances where the Disputed Documents all relate to a single transaction “which came together and was finalised in a very short period of time”.

35. The cross-claimants contend that “on any reasonable view of the limited information that is available” the disclosures made by EJC in serving the Dixon Affidavit and the Vassallo Affidavit concern the same issue and the same transaction as those communications that fall within the Advice Type 1 and/or Advice Type 2 categories.

36. As to the Advice Type 1 category of documents (being legal advice sought by, and legal advice given to, ETC in relation to the negotiation of the Nomination Agreement), the cross claimants say that the following paragraphs of the Dixon Affidavit contain relevant disclosures: [14]; [15], which sets out instructions given by the client and advice to the client concerning the subject transaction, and the proposed purchase price, together with the file note that appears at page 15 of the exhibit; [16], which sets out instructions given by the client and advice to the client concerning the subject transaction, together with the email chain at pages 16 to 17 of the exhibit; [17]; [19], which sets out instructions given by the client and advice to the client concerning the subject transaction and concerning the purchase/sale methodology together with the file notes that appear at page 18 of the exhibit; [22], together with the file note at pages 74 and 75 of the exhibit; [27], together with the file note at page 98 of the exhibit; [28], where Ms Dixon puts in issue not having disclosed anything concerning the working relationship between Mr Galati and Mr Deans to the client; [29], which follows immediately upon the issue of the alleged non-communication of concerns about the working relationship between Mr Galati and Mr Deans following the conversation with Mr Fraser; [31], insofar as Ms Dixon states that her recollection is that “at this time, whether or not this substantial change in commercial terms would be agreed was under consideration by my client”; [32], together with the file note at page 124 of the exhibit; [35], which sets out instructions given by the client and advice to the client concerning the subject transaction, together with the file note at page 215 of the exhibit; [42], together with the file note at page 124 of the exhibit; [50], which sets out instructions given by the client and advice to the client concerning the subject transaction; [57], where Ms Dixon puts in issue the state of her knowledge concerning any additional payments to be made by EJC concerning the subject transaction and any aggregation of payments concerning the same; [58], which is said to be relevant to [60]; and [60], which sets out instructions given by the client concerning the subject transaction, together with the file note at page 278 of the exhibit.

37. As to the Vassallo Affidavit, the disclosures said to be relevant to the Advice Type 1 category are at [64] and [91], the former being where Mr Vassallo states that his lawyer, Ms Dixon, did not inform him that Mr Deans had any concern that there was not to be any payment to any third party and that he was not made aware of the substance or effect of the conversation alleged in [173] of Mr Dean’s affidavit.

38. As to the Advice Type 2 documents (being legal advice sought by, and legal advice given to, EJC in relation to the purchase of the Bank Street Property pursuant to the option rights acquired under the Nomination Agreement), the cross-claimants identify disclosures by EJC at [54] of the Dixon Affidavit, together with the file note at page 278 of the exhibit to that affidavit.

39. Thus, the cross-claimants argue that EJC’s conduct amounts to an implied waiver of privilege in respect of all those documents produced on subpoena that fall within the Advice Type 1 and/or Advice Type 2 categories.

EJC’s submissions

40. EJC’s complaint is that the cross-claimants have not identified specific instances in which evidence has been provided which discloses advice given by HDY which would lead to a broad and general subject matter waiver of privileged communications between HDY and EJC, noting that the cross-claimants have the burden of proving that privilege has been waived. It is submitted that it is incumbent upon the cross-claimants to identify specific conduct by EJC which is inconsistent with the maintenance of the privilege. (This, I interpose to note, the cross-claimants have now largely done in their oral submissions on the present application, which I consider in due course.)

41. EJC argues that the Dixon Affidavit discloses in “a very limited way” Ms Dixon’s instructions on one specific aspect of the transaction prior to the execution of the Nomination Agreement (namely, whether Trading Australia and FDC would have an equity share in the development of the property). It is said that the other instances in which communications between Ms Dixon and Mr Vassallo are disclosed all post-date the execution of the Nomination Agreement and cannot give rise to a waiver of advice given earlier in relation to the negotiation of the Nomination Agreement.

42. In terms of considerations of fairness, EJC says: first, that the cross-claimants make no allegation against EJC in relation to the negotiation of the Nomination Agreement that extends beyond the date of its execution on 20 November 2015 (the relevant allegations being that EJC and Trading Australia and Mr Galati verbally agreed a secret commission be paid to Trading Australia and Mr Galati on 18 November 2015 (see the cross-claim at [175A] and [175B]) and that misleading statements were made by EJC to representatives of FDC and Mr Deans on the date the Nomination Agreement was signed (i.e., 20 November 2015) (see the cross-claim at [150])); and, second, that those aspects of the Dixon Affidavit which disclose Ms Dixon’s instructions have nothing to do with the allegations made by the cross-claimants in this case (namely, that Mr Deans and FDC were misled by Mr Galati, Trading Australia and EJC about the purchase price being paid by EJC for the Bank Street Property and that payment of a commission to Mr Galati and Trading Australia was concealed from Mr Deans and FDC).

43. It is said that the contention has never been raised by the cross-claimants that either the Vassallo Affidavit or the Dixon Affidavit puts in issue a state of mind likely to be affected by confidential communications (see [48] of NSW Bar Association v Archer) but, in any event, that in each case where evidence is given as to state of mind by Mr Vassallo and Ms Dixon this could not support an argument of waiver. By way of example, it is said that where Ms Dixon gives evidence of her “understanding” of certain matters, that understanding is clearly based upon communications with non-client third parties such as the vendors or their solicitors (referring to [23], [28] and [32] of the Dixon Affidavit); and that there is nothing to indicate any privileged communication informed her state of mind.

44. EJC submits that the cross-claimants have not met their burden of proving that there has been a wholesale waiver over the privileged communications contained in the documents produced by NRF. It is submitted that if there has been any waiver, it is limited to the subject matter of the specific communications referred to above.

Proposed resolution of the implied waiver dispute

45. Prior to the hearing of the present application, EJC (without any concession of waiver) proposed a regime whereby it would produce documents falling within 15 categories of documents as set out in a schedule of documents prepared by EJC’s solicitors (and drafted by reference to evidence given by Mr Vassallo and Ms Dixon in their affidavits as to their respective states of mind) (see the letter dated 27 September 2019 from EJC’s solicitors to the cross-claimants’ solicitor). That offer was put on the basis that it would avoid further time and costs being incurred about the matter. The letter did not concede that there had been any waiver but indicated the preparedness of EJC to agree to an order that it provide copies of “Related NRF Documents” (as there defined) if and to the extent that they fell within a description contained in the fourth column of the schedule but “on the basis that such an order will fully and finally dispose of [the cross-claimants]’ asserted rights of access to the NRF Documents”.

46. So, for example, insofar as [23] of the Dixon Affidavit is concerned (where Ms Dixon deposed to an understanding that a solicitor, Mr Fraser, was acting for both Trading Australia and FDC in respect of the negotiation of the terms of the Nomination Agreement (for the reasons set out in the affidavit)), the offer was to produce “[d]ocuments tending to prove that Ms Dixon did not understand that Mr Fraser was acting for both [Trading Australia and FDC]”.

47. That formulation is adopted throughout the fourth column to the schedule – in other words, what is proposed is that, where there is identified to be evidence concerning state of mind, what EJC offered to produce were documents tending to prove to the contrary of what is deposed to in the affidavit(s) as to state of mind. As I understand it, this is so drafted in order to cover the production of documents that would enable the cross-claimants to test that asserted state of mind (or understanding). The categories of documents there identified do not correspond precisely to the paragraphs of the affidavits addressed in the cross-claimants’ submissions but there is a reasonable overlap (the fifteen categories refer to the following paragraphs of the Dixon Affidavit – [23], [28], [32], [49], [50], [52], [53]-[54], [57], [81]; and of the Vassallo affidavit – [62]). EJC also offered to produce all documents recording the deposed conversations (excluding those already exhibited to the affidavit) in the following paragraphs of the Dixon Affidavit ([15], [17], [35], [44] and [60]).

48. As adverted to above, that offer was not accepted – apparently on the basis that it included the condition that this “fully and finally” dispose of the asserted rights to access and was only “if and to the extent” that such documents fell within the fourth column description (see the letter dated 27 September 2019 from the cross-claimants’ solicitor to EJC’s solicitor).

49. In the course of argument on the present application, I expressed some views as to the prospect that agreement might be able to be reached on some amended version of the proposed schedule. The parties were given an opportunity to see if agreement could be reached on wording of those categories; however, no such agreement was reached. The position of the cross-claimants appeared to be one of suspicion that the “tending to prove” formulation was (intentionally or otherwise) unduly restrictive (and concern that it had been intimated in the correspondence that there might be nothing or little to produce if agreement to that formulation were to be given). The cross-claimants sought a far broader description (using the familiar “referring or relating to” terminology that I had used during the course of debate). EJC was not prepared to broaden the wording of the fourth column to that extent (and emphasised the cost that had been incurred to date in the document production exercise). So be it.

Determination

50. As a first observation, the cross-claimants’ claim for general access to all the subpoenaed documents based on an implied waiver cannot succeed (and, indeed, that was not what was pressed on the hearing of the notice of motion). The subpoena itself was extremely broad – calling for the entirety of the solicitors’ files in relation to the transactions. It must have been obvious that the production of such a file would include legally privileged material (though I accept it would seem unlikely that the whole of the file would be privileged); but, more relevantly, it cannot, in my opinion, be said that EJC, by the disclosures made in the two affidavits, has impliedly waived privilege in the whole of the legal files relating to the transactions in question.

51. What is required is to focus on the particular disclosures and how it is said that those disclosures have communicated something about the contents of legally privileged communication or otherwise laid open those communications in a way that is inconsistent with the maintenance of privilege in the communications and unfair to the cross-claimants. Before turning to that exercise, I should address the so-called “Project Magoo document”. The description of that document in the Revised Privilege Schedule is that it is Advice Type 2 and it is an electronic email sent 22 December 2015 from an email address obviously linked to Baiada Corp and to three recipients (two of whom have addresses at offices at Baiada Corp). The subject is “PROJECT MAGOO --- Fw: 31-35 Bank St Pyrmont – cheques”.

52. The cross-claimants do not accept that EJC has established a claim for privilege in relation to this document (which it is said appears to be a communication between non-lawyers). It is impossible to tell from the description in the schedule prepared by EJC (or the broad description of the claim for privilege in the supporting affidavit). It is for EJC to establish privilege in the first place, before any question of implied waiver arises. However, since EJC had understood that privilege was not in issue on the present occasion (only waiver), it was not in a position to deal with that question on the hearing before me (and the subpoenaed documents were not in court to enable me to review the document to satisfy myself as to the basis of the claim for privilege). I consider that the most expeditious way to deal with this is for the “Project Magoo” document to be reviewed by me so that the question of privilege and waiver can be dealt with (hopefully, without the need for further argument) having regard to the conclusions I have reached in relation to the balance of the documents.

50. As to the question of implied waiver, the nub of the submission for the cross-claimants (going through the various paragraphs of the respective affidavits in which it was said that disclosures had been made that amounted to a waiver) was that the disclosure of instructions taken, or of an understanding or state of mind held by the deponent, throws open the content of what was discussed so that one could test it; particularly when some file notes are deployed in the evidence and not others.

51. Working through the particular paragraphs of the Dixon Affidavit in respect of which relevant disclosures implicitly waiving privilege are said to have been made (by reference to the schedule of documents prepared by EJC and put forward in its solicitors’ letter dated 27 September 2019, the transcript from the hearing and the cross-claimants’ submissions), they are as follows.

52. At [14], Ms Dixon deposes that on 19 November 2015 she received a telephone call from Mr Vassallo with whom she had dealt previously in matters for the Baiada Group. There is nothing there disclosed that would waive privilege. (As I understand it, the reference to this paragraph is made by the cross-claimants to set the context for later paragraphs but, of itself there, is nothing that waives privilege in this paragraph.)

53. At [15], Ms Dixon deposes as to something that Mr Vassallo tells her in that conversation as to his negotiation for an assignment of an option for land and the price; she exhibits her file note to the affidavit; and she deposes to what Mr Vassallo also said to her in a subsequent discussion on that topic. At [16], Ms Dixon refers to and exhibits a copy of an email forwarded to her by Mr Vassallo in relation thereto. Clearly, Ms Dixon is here disclosing the content of instructions received from Mr Vassallo on that occasion and in a subsequent discussion. If there are other documents that record those instructions or the subsequent discussion to which Ms Dixon refers, then in my opinion privilege in those documents has been waived. (However, I do not accept that this amounts to a waiver of all email communications between Ms Dixon or HDY and Mr Vassallo or EJC in relation to the negotiation about which Ms Dixon there deposed she had received instructions.)

54. At [17], Ms Dixon deposes to another telephone conversation with Mr Vassallo the same evening. Ms Dixon deposes that he asked her to conduct some due diligence on the property overnight and that she provided advice to Mr Vassallo “on a number of matters” at approximately 9am the following morning. There is no disclosure of the nature of those matters or the content of that advice; one would simply infer that, having received instructions to conduct some due diligence on the property overnight, the advice related to the outcome of that due diligence. I do not consider that there is any implied waiver of privilege arising from this disclosure.

55. At [18], Ms Dixon deposes to a telephone conversation with Mr Kym Lennox (who she says told her he was working with Mr Galati “on the Pyrmont option” and who she deposes told her some information in relation to the Nomination Agreement). At [19], Ms Dixon then deposes that she called Mr Vassallo and relayed to him her discussion with Mr Lennox. Ms Dixon deposes that she told Mr Vassallo that she thought it was unusual for the rescission, rather than the completion, of a share sale agreement to be a condition precedent. She exhibits a copy of her file note of the discussions with Mr Vassallo and Mr Lennox to the affidavit. Clearly, there is a waiver of privilege in relation to the communications with Mr Vassallo in relation to those discussions but again that does not give rise to a blanket waiver of privilege in relation to all communications in relation to the proposed Nomination Agreement or the methodology by which the transaction might ultimately have been effected. True it is, as the cross-claimants contend, that there is a waiver of otherwise privileged documents in the form of the file notes exhibited to the affidavit. If those are not a complete record of the file notes of the discussions then I would accept there is a waiver as to the balance but there is no suggestion that this is the case.

56. At [22], Ms Dixon deposes to a telephone conversation with the lawyer noted in the Nomination Agreement as acting for Trading Australia and FDC (Mr Fraser). Ms Dixon deposes that “we discussed a number of matters with respect to the transaction, including the amount of the Nomination Payment, how the options would be exercised, and the parent company guarantee required under clause 10 of the draft Nomination Agreement”. She attaches a copy of her file note of that discussion (and later a file note of another conversation with Mr Lennox). Privilege is clearly waived in relation to the notes made of those discussions (but it is not clear that any of the Disputed Documents relate to those discussions).

57. At [23], Ms Dixon deposes to her understanding (in the telephone conversation referred to above and all subsequent communications with Mr Fraser) that he was acting for both Trading Australia and FDC in respect of the negotiation of the terms of the Nomination Agreement and as to why she had this understanding, including because Mr Fraser never said to her that he was acting for FDC only. Insofar as state of mind (her understanding based on “all subsequent communications”) is in issue, that would seem to lay open to scrutiny all the subsequent communications with Mr Fraser to which reference is there made. It is not clear whether any of the Disputed Documents fall within that category.

58. At [27], Ms Dixon deposes to a telephone conversation that she had with Mr Fraser on 20 November 2015, concluding with her informing Mr Fraser that she will “get instructions”. A file note of that conversation is exhibited to the affidavit. The cross-claimants want to explore from whom Ms Dixon obtained those instructions and what those instructions were. In the conversation to which Ms Dixon deposes, it is said that “[t]he payment of that 10% [of profit from the development of the property] is to be paid to [FDC] and Trading Australia only. There’s to be no other payments to Trading Australia or any party associated with Trading Australia”. The difficulty with this is that a statement that Ms Dixon proposed to obtain instructions says nothing as to the making, or outcome, of any such enquiry. I do not consider this to involve any implied waiver.

59. At [28], Ms Dixon deposes that she understood from the above conversation that each of Mr Galati and Mr Deans wanted to protect their profit share in the development if it eventuated and to have full transparency on how the development profit was to be calculated. Ms Dixon deposes that she did not view that request with any suspicion. She deposes that:

I do not recall being made aware by Mr Fraser of any distrust or basis for distrust between Mr Galati and Mr Deans. I did not have any detailed background about their relationship. Given that Mr Fraser continued to represent both of them in the transaction I considered that Mr Galati and Mr Deans had a working relationship and, to the best of my recollection, I never suggested otherwise to Mr Vassallo.

63. The cross-claimants say that Ms Dixon has there put in issue her understanding of the working relationship between the two (which I accept is the case) and that the substance of the statement that, to the best of her recollection, she “never suggested otherwise to Mr Vassallo” is that Ms Dixon is there conveying that she did not tell Mr Vassallo anything as to her knowledge or understanding (see T 11.38) (the cross-claimants noting that at [61]-[62] of the Vassallo Affidavit, Mr Vassallo has deposed to his belief as to Mr Galati speaking on behalf of himself, Mr Deans, Trading Australia and FDC and that at no point in the negotiations did he form any view that Mr Galati was not authorised to give instructions on behalf of both Trading Australia and FDC nor that there was any conflict or tension between Mr Galati and Mr Deans).

64. As I understand it, what is here submitted is that the statement that Ms Dixon ‘did not suggest otherwise’ (i.e., did not suggest something to the contrary of her statement that she considered Mr Galati and Mr Deans had a working relationship) not only throws open the content of what was discussed so that one could test that statement (T 11.50-12.4) but that it also amounts to an implied waiver because reliance is being placed by Mr Vassallo (in his affidavit) on what Ms Dixon did not say to him as vindicating his state of mind (see T 12.21). It is submitted that the substance of communication (following on from the conversation with Mr Fraser) to which Ms Dixon has deposed at [27] is that she gave no legal advice about it (i.e., about any concern as to the relationship between the two), and that this therefore puts in issue the legal advice that was given.

65. I accept that a statement by Ms Dixon that she never suggested something to Mr Vassallo may be said to put in issue the content of the advice or the discussions that she had with Mr Vassallo so that one could test whether that suggestion had been conveyed. However, as I raised with Counsel in submissions on the present application, that could only be in relation to that particular issue (the nature of the working relationship between the two) and would not be inconsistent with the maintenance of privilege in relation to conversations with Mr Vassallo that dealt with other issues even if those conversations did relate to the same property transaction. There would not be any inconsistency in maintaining privilege over discussions that dealt with other topics in relation to the transaction and which did not relate to the understanding to which Ms Dixon there deposed.

66. Ms Dixon also deposes (at [29]) that, after her conversation with Mr Fraser, she called Mr Vassallo “to obtain instructions as to the matters raised by him”. That says nothing about the content of those instructions and does not in my opinion amount to an implied waiver of privilege in relation to those instructions.

67. At [31], Ms Dixon deposes to emailing Mr Fraser a revised version of the Nomination Agreement and, relevantly, her recollection that “at this time, whether or not this substantial change in commercial terms would be agreed was under consideration by my client”. Arguably, the understanding that something was “under consideration” by her client might lay open to scrutiny any discussions or communications that caused her to form that view (or it might be that this was simply her conclusion from the fact of seeking instructions and the absence of a response at that time from the client – i.e., an assumption on her part that it was under consideration because it had not been accepted or rejected at that stage). To the extent that this is in issue, I would accept that it should be open to the cross-claimants to test the basis for Ms Dixon’s understanding in this regard.

68. At [32], reference is made by Ms Dixon to a conversation with Mr Fraser as to the share option and in which he referred to the option agreement being “borne out of litigation”. Ms Dixon does not recall if she relayed to Mr Vassallo the context of the request for interest to be added to the purchase price. She exhibits a copy of her file note of the discussion with Mr Fraser, which the cross-claimants note makes reference to “acquisition/holding costs” and that file note includes a note of a telephone conversation “@ on JV” (which the cross-claimants assume was a reference to Mr Vassallo) and “John C” (which the cross-claimants say is a reference to Mr Camilleri, who is also a director of at least one of the companies associated with EJC) and that this was in respect of acquisition and holding costs.

69. The cross-claimants say that this puts Ms Dixon’s understanding again in issue, particularly as to the acquisition/holding costs (that being said to be one of the central elements of the case). The cross-claimants say that what Ms Dixon knew as to the acquisition price is a “very central element of the litigation”.

70. I would accept that [32] discloses Ms Dixon’s understanding that there was “some sort of litigation” between Mr Fraser’s clients and, to the extent that this understanding were to be relevant to the issues in the proceedings (and there seems to me some doubt as to this), it may be said that the cross-claimants are entitled to explore how that understanding was reached, but if so it would be limited in my opinion to documents recording what was conveyed to Ms Dixon by Mr Fraser in that telephone conversation (and the file note is already exhibited to the affidavit). That said, EJC (while not conceding waiver) appears to have been prepared to contemplate the production of documents (if any) tending to disprove this understanding.

71. At [35], Ms Dixon deposes to a telephone conversation with Mr Vassallo “with instructions” regarding the request made by Mr Fraser for Trading Australia and FDC to have a 10% equity share in the development of the property; and to what those instructions were and what she advised Mr Vassallo in that regard. Her file note of the conversation is exhibited to the affidavit. The cross-claimants say that, by exhibiting that file note, privilege has been waived and they are entitled to explore the advice given in relation to this.

72. At [42], Ms Dixon deposes to a telephone conversation with Mr Fraser in which she said words to the effect of “[w]e don’t agree to the changes” while in the same room as Mr Vassallo and Mr Camilleri (though she deposes she did not have her phone on the speaker setting). Following this call, Ms Dixon says there was a telephone conversation between Mr Vassallo and Mr Galati in which Mr Galati said words to the effect “I will sign it and sort it out later”. A copy of Ms Dixon’s file note recording Mr Galati making that statement is exhibited to the affidavit.

73. The cross-claimants also refer to [44] of Ms Dixon’s affidavit in which she deposes that she instructed a junior solicitor at HDY to deliver to Fraser Clancy Lawyers a cheque for the deposit on the purchase shares and to witness the exercise of a share option.

74. The cross-claimants then turn to [49], in which Ms Dixon deposes to her recollection as to the purpose for cl 17 of the Nomination Agreement (i.e., that it was the grantor’s way of giving effect to the telephone conversation with Mr Fraser “during which he said that his clients were concerned to ensure that our profits were not distorted and there were no payments to be made of those profits to third parties associated with [Trading Australia]”). It is submitted that this discloses Ms Dixon’s understanding of the earlier conversation she has had with Mr Fraser (and opens up that area of otherwise privileged communications).

75. At [50], Ms Dixon deposes to her recollection that the inclusion of cl 17 was resisted by EJC and the reason for that resistance. It is submitted that this must have been based on instructions from EJC in relation to the transaction and hence impliedly waives privilege in those instructions. Certainly, although Ms Dixon also goes on to explain what in her experience is the position with companies of that kind in relation to such clauses, the first sentence of [50] is suggestive of there being some form of instruction or communication from EJC as to the reason for resisting the inclusion of cl 17, which would open up that area for exploration by the cross-claimants and would be inconsistent with the maintenance of privilege over those instructions.

76. Reference was also made by the cross-claimants to [52], [53] and [54] of the Dixon Affidavit, which all concern cl 10 of the Nomination Agreement. At [52] Ms Dixon deposes that she does not recall considering the clause in detail at the time the agreement was negotiated and then goes to give her opinion, based on her experience, as to the purpose of clauses of that nature. I do not consider that [52] gives rise to any waiver of privilege – it is no more than the deponent setting out her understanding of how such clauses operate based on her experience in relation to other property sales contracts.

77. At [53], Ms Dixon deposes that to the best of her recollection, as at 20 November 2015 she was not aware of Ms Caroline Pritchard’s involvement in the transaction and at [54] she deposes to the first time that she believes she became aware that Ms Pritchard had any involvement in the purchase, deposing to a conversation in which Ms Pritchard told her “I’m to hold the residual” and Ms Dixon said that she would have to check with Mr Vassallo. A copy of a file note of that discussion is exhibited to the affidavit. The cross-claimants say that this puts in issue Ms Dixon’s state of mind or understanding (as to Ms Pritchard’s involvement or otherwise in the transaction) and that they are entitled to explore that. It is said that this amounts to an implied waiver that would permit access to the emails prior to this particular point in the chronology (i.e., that anything before 4.22pm on 20 November 2015 becomes available by reason of that disclosure).

78. Reference is then made to [57] where Ms Dixon deposes that she was not aware of any additional payments to be made by EJC in respect of the transaction (other than those contemplated by the Nomination Agreement and real estate contract) and that she had understood that “the $24 million price was an approximate figure only”. The cross-claimants say this puts her understanding clearly in issue and that they are entitled to explore that. I consider that this paragraph clearly puts Ms Dixon’s understanding in issue as to the payments to be made by EJC and would be inconsistent with the maintenance of privilege in relation to communications relevant to that understanding or to test that understanding.

79. At [58], Ms Dixon deposes to instructions received in relation to an amendment to the Nomination Agreement; and at [59] to her putting the proposed amendments to Mr Fraser.

80. At [60], Ms Dixon deposes that at 5.30pm on 23 November 2015, she relayed to Mr Vassallo that Mr Fraser wanted the proposed amendments to be put in writing; Mr Vassallo wanted her to query that; and Mr Vassallo said words to the effect that he found Trading Australia and FDC “untrustworthy”. Her file note of the discussion with Mr Vassallo is exhibited to the affidavit. In my opinion, while there is a waiver of privilege in respect of those communications it does not extend more generally to other conversations or discussions with Mr Fraser and Mr Vassallo respectively. (The cross-claimants withdrew their submissions as to [64] of the Dixon Affidavit.)

81. At [81], Ms Dixon deposes:

… [I]t was always my practice to seek instructions from my clients before agreeing to any term of agreement. I do not have authority to make agreements on behalf of my clients without their express instructions. Even if a condition of the agreement has been put to me in the terms alleged (which is denied), I would have sought instructions before indicating any agreement on behalf of my clients.

82. The cross-claimants seek documents tending to prove Ms Dixon “sought or had instructions to agree to a term of the Nomination Agreement”. I do not see how Ms Dixon can be seen, by the broad statement as to her general practice in this regard, to be waiving privilege (other than if it be said that this lays open for scrutiny her general practice by reference to specific occasions of the kind there being considered). The statement by Ms Dixon that she “would have sought instructions” is hypothetical – i.e., she denies that a condition of the agreement was put to her in the terms alleged but says that (as I read it, in accordance with her ordinary or general practice) if that had occurred she would have sought instructions. What the cross-claimants apparently seek to do is to test the denial that the condition was put to her by seeing whether (in accordance with her stated practice) she did seek such instructions. EJC’s proffered schedule contemplated production of documents tending to prove that Ms Dixon sought or had instructions to agree to a term of the Nomination Agreement that there be no payments other than the payments documented by the Nomination Agreement. Nothing further in my opinion would be required to address any unfairness that might otherwise arise in the maintenance of privilege in relation to this issue.

82. As to the Vassallo Affidavit, reference is made by the cross-claimants to [60]-[61] as noted already. At [64], Mr Vassallo deposes that, to the best of his recollection, “at no point at or around the negotiation and execution of the Nomination Agreement did any person, including my lawyer, Ms Dixon, inform me that Mr Deans had any concern that there not be any payments to any third parties as part of the transaction, or otherwise that there was a dispute between Mr Deans and Mr Galati”. He also says that at no time was he aware of the substance or effect of the conversation alleged at [173] of Mr Deans’ affidavit (as extracted at [64] of the Vassallo Affidavit).

83. Further, at [91], Mr Vassallo deposes:

On 9 December 2015, as instructed by me, HDY provided [Mr Fraser] with the proposed amendment to clause 8 [of] the Nomination Agreement. The proposed amendments had the effect of excluding EJC’s obligation to pay 10% of any profits from the development of the Bank Street Property in clause 16 from the parent company guarantee given by EJ Cooper & Son in clause 8. [A copy of the email from Ms Dixon of HDY to Mr Fraser is exhibited to the affidavit]

85. The cross-claimants submit that it is unusual for someone in Mr Vassallo’s position giving credence to another party to a transaction saying that there is going to be a difference between the payments under the Nomination Agreement and the $24 million (insofar as there was a request to pay the difference to Ms Pritchard). That seems to me to be no more than a submission based on the cross-claimants’ experience of practice. In any event, I do not see that the disclosure in this regard involves any waiver. Insofar as Mr Vassallo goes on to say at [61] that he did not give this instruction “much thought”, and that it was an unusual request but that he considered the entire transaction to be unusual and considered it to be a matter between Trading Australia and FDC (and that he believed Mr Galati was speaking on behalf of himself, Mr Deans and the two companies), the cross-claimants say that Mr Vassallo’s understanding of the transaction is directly put in issue and that they should be able to access all of those emails concerning that issue. Again, that seems to be Mr Vassallo’s commentary as to the transaction and I have difficulty seeing how that involves a waiver of privilege or lays open any privileged communications.

86. In conclusion, I am of the view that where EJC has put in evidence copies of file notes of instructions or the like, or the deponents have deposed to their understanding of instructions or of the position of their clients or the like, then the cross-claimants should be in a position to test that understanding or those instructions; and to that extent there is an inconsistency between the disclosure and the maintenance of legal professional privilege in documents that go to that understanding or those instructions. However, as I indicated in the course of oral argument, I consider that the implied waiver is limited to the particular topics the subject of the particular understanding or state of mind and not more broadly in relation to the transaction as a whole.

87. I do not accept that the waiver is necessarily limited to documents at the time of the negotiation or up to execution of the Nomination Agreement (on 20 November 2015) because later instructions or communications might shed light on that understanding (or might, for example, demonstrate that it was an incorrect understanding) and there were communications after the execution of the Nomination Agreement in relation to its revision that also call into question the understanding as to whether there was a concern not to have any additional payments or the like.

88. In that sense, I consider that to ensure that the cross-claimants are not misled by an inaccurate perception of the disclosed communications (to adopt the terminology in Attorney-General v Maurice) or are able to test the perception or understanding or state of mind, fairness requires that the cross-claimants be permitted to have access to otherwise privileged communications insofar as they related to the topic of the disclosed communication(s).

89. I do not consider that the formulation “tending to prove” is unduly restrictive (and I accept that a broader description – such as using the terminology “relating to” – would probably go beyond what is necessary to address the inconsistency/fairness issue) and therefore I consider that the proposal put forward by EJC represented a sensible compromise. That said, if the formulation in the fourth column were to be amended to read “tending to prove or disprove” or was framed as “tending to prove whether or not” then it would, in my view, remove any basis for concern that the categories of documents over which there had been an implied waiver of legal professional privilege did not adequately capture the field of documents necessary to explore or test the subject matter or issue in respect of which there has been an implied waiver of privilege.

90. Where there is inconsistency between the maintenance of privilege in this regard, as I see it, is where, for example, instructions have been disclosed or the witness’ understanding of those instructions has been deployed in the affidavit evidence. In those circumstances, there has in my opinion been a waiver of privilege in documents which may shed light on the nature and understanding of those instructions; as there is also a waiver of privilege in relation to documents that shed light on the circumstances in which the file note of instructions or the like were taken (such as meeting notes from which such file notes may have been prepared). I accept that the later conduct of the parties or their solicitors may inform the nature of the earlier communications which led to the instructions or understanding to which the witnesses have deposed.

91. Accordingly, I will not permit access in a general way to the documents listed in the schedule annexed to the notice of motion but I will allow access at least in the first instance to the schedule of documents prepared by EJC and put forward in its solicitors’ letter dated 27 September 2019. If it becomes apparent from a review of those documents that there are other documents likely to be the subject of an implied waiver (having regard to the conclusions I have reached as to that issue in the present judgment), then an application can be made by the cross-claimants for access at that stage (though I hasten to add that I am not encouraging any further interlocutory stoushes of this kind; and would encourage the parties instead to focus on the just, quick and cheap resolution of the real issues in dispute in this litigation consistently with the statutory mandate provided for in s 56 of the Civil Procedure Act 2005 (NSW)).

Costs

92. I note that EJC sought its costs on an indemnity basis, pointing to the evidence of the communications between the respective solicitors from which it is said it is clear that EJC has expended very significant resources attempting to resolve this dispute without the need for a contested hearing. Furthermore, it appears that much of the correspondence concerned satisfying the cross-claimants that the NRF documents were indeed privileged, (subject to any waiver); a concession that EJC says the cross-claimants did not make until 11 October 2019, some six weeks after Mr Piesiewicz’s affidavit providing the claims was sworn.

93. EJC submits that the resolution of the waiver dispute “has been stifled by the apparent inability or unwillingness” of the cross-claimants properly to articulate the scope of the asserted waiver with precision (by reference to the evidence contained in the Dixon Affidavit and the Vassallo Affidavit); and that it was in the absence of any such articulation, that it proposed the schedule of documents that they were prepared to produce.

94. The cross-claimants indicated that they wished to be heard on the issue of costs once the application was determined.

95. My preliminary view as to costs is that there is much to be said for the proposition that the cross-claimants should bear the costs of the argument on 24 October 2019 (on which they have been unsuccessful in obtaining the whole of the relief sought in their notice of motion or, indeed, general access to the documents in the annexure to their motion), the cost of which would not have been necessary had the offer put forward by EJC been accepted or had some accommodation been able to be reached in relation thereto; but that those should be on an ordinary basis and that otherwise the costs of the motion should be reserved (because on the issue as to whether there had been implied waiver the cross-claimants did succeed). However, I will make directions for submissions to be made on the costs issue with the aim of dealing with it on the papers (to avoid further unnecessary court time being taken up on interlocutory debate).

Orders

96. Accordingly, I make the following orders:

1. Refuse the cross-claimants’ application for general access in respect of documents produced on subpoena on 28 June 2019 by Norton Rose Fulbright.

2. Grant access to the cross-claimants to so much of the documents produced on subpoena as fall within the schedule of documents prepared by the tenth cross-defendant and put forward in its solicitors’ letter dated 27 September 2019 (but reading the words “tending to prove” where appearing in the fourth column of that schedule as “tending to prove or disprove or tending to prove whether or not”), without prejudice to the cross-claimants’ ability later to seek access to further documents if it is claimed that there has been an implied waiver having regard to these reasons.

3. Direct the tenth cross-defendant to provide to the Associate to Ward CJ in Eq, in a sealed envelope marked “Privileged”, within seven days the “Project Magoo” document (item 105 in the schedule prepared by the cross-claimants) for a ruling on that document in due course.

4. Direct the parties to exchange brief written submissions as to costs within seven days with a view to the issue of the costs of the notice of motion filed 8 October 2019 being dealt with on the papers.

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Decision last updated: 08 November 2019