Gazcorp Pty Limited v Liverpool City Council

[2006] NSWSC 490

CITATION:	Gazcorp Pty Limited v Liverpool City Council [2006] NSWSC 490
HEARING DATE(S):	25/5/06
JUDGMENT DATE :	26 May 2006
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Privilege waived.
CATCHWORDS:	Practice & Procedure - Privilege - Client legal - Waiver - Loss of privilege - Document becoming part of public record
LEGISLATION CITED:	Civil Liability Act 2002 (NSW) Evidence Act 1995 (NSW) Independent Commission Against Crime Act 1988 (NSW) Service and Execution of Process Act 1901
CASES CITED:	Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12 Application of Cannar: Re Eubanks [2003] NSWSC 802 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] 2 All ER 682 Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 153 ALR 393 Bankinvest AG v Seabrook (1988) 14 NSWLR 711 BT Australasia Pty Ltd v State of New South Wales & Telstra Corporation Ltd (No 7) (1998) 153 ALR 722 Kang v Kwan [2001] NSWSC 698 Madden as Liquidator of Aquanaut Constructions Pty Ltd (In Liq) [2001] NSWSC 966 NRMA v Morgan (No. 2) [1999] NSWSC 694 Port Stephens Council v Theodorakakis [2006] NSWCA 70 Scott Fell v Lloyd (Official Assignee) (1911) 13 CLR 230 Southern Cross Airlines Holdings Ltd (in liquidation) v Arthur Andersen & Co (1998) 28 ACSR 455 Sovereign Motor Ins Pty Ltd v Bevillesta Pty Ltd [2000] NSWSC 521 Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152, (1998) 156 ALR 634 Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347, 56 WN (NSW) 108
PARTIES:	Gazcorp Pty Limited (Plaintiff) Liverpool City Council (Defendant)
FILE NUMBER(S):	SC 50148/04
COUNSEL:	Mr M Slattery QC, Ms A Pearman (Plaintiff) Mr P Garling SC, Mr S Glascott (Defendant)
SOLICITORS:	Kemp Strang (Plaintiff) Phillips Fox (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Friday 26 May 2006

50148/04 Gazcorp Pty Limited v Liverpool City Council

JUDGMENT

The notice of motion

1 The plaintiff, Gazcorp Pty Ltd ["Gazcorp"] by notice of motion filed on 24 March 2006 seeks access to a letter dated 1 August 2003 from Marsdens Law Group to the defendant, Liverpool City Council ["the Council"].

Overview of the proceedings

2 It is convenient to commence with an overview of the proceedings which are fixed for a final hearing to commence on 11th September 2006. For present purposes the overview furnished in the written submissions of Gazcorp appear unexceptional. In short:

The nature of the dispute

i. The dispute in these proceedings relates to an invalid development consent, 2919/02, granted by the defendant council in November 2002 to the plaintiff, a company which owns and operates various shopping centre complexes, in respect of land in the Industrial 4(b) zone known as 12-18 Orange Grove Road, Liverpool (“the Land”).

ii. Pursuant to the Liverpool Local Environmental Plan 1997 (“the LEP”) shops are prohibited in the 4(b) Industrial zone. Whilst bulky goods are permitted in the 4(b) zone general retail is not permitted in this zone.

iii. The development consent provided for a change in use of the Land from a bulky goods warehouse to a warehouse clearance outlet. “Warehouse clearance outlet” is a term that is not expressly defined in the LEP.

iv. In reliance upon the consent the plaintiff (a) demolished certain incomplete bulky goods works, (b) completed the building as a warehouse clearance outlet, and (c) permitted approximately 60 businesses to occupy the building and commence trade.

v. On 25 August 2004, upon expiry of a stay ordered by the Court of Appeal of New South Wales, the warehouse clearance outlet was closed. As a result of the invalidity of the consent the plaintiff alleges that it has suffered loss and damage in the order of several million dollars. The quantum is the subject of a forensic report for the plaintiff which is currently being finalised.

vi. The plaintiff contends the defendant owed a duty to the plaintiff to take reasonable care to avoid financial harm to the plaintiff in issuing a consent.

vii. In particular the plaintiff contends, given the size, scale and impact of the proposed development, the defendant breached its duty to the plaintiff in issuing an unlawful consent by inter alia:


(a) failing to secure legal advice prior to issuing the consent;

(b) having secured legal advice following the issuance of the consent that the consent was probably invalid, failing to notify the plaintiff of this advice, and

(c) subsequent to receipt of this advice and in reliance upon a consent which may have been invalid, issuing further consents in the form of a construction certificate and an occupation certificate.


Background to the proceedings - the plaintiff's contentions

i. The plaintiff contends, in its pleading that on or about 5 June 2003, following a letter from lawyers on behalf of competitor Westfield Management Pty Ltd (“Westfield”) requesting a review of the consent on the basis it was contrary to the Local Environmental Plan and draft State Environmental Planning Policy No 66, the defendant sought legal advice as to the validity of consent 2919/02 (paragraphs 36-37).

ii. The defendant received legal advice (from Marsdens Lawyers) in mid 2003 to the effect that consent 2919/02 was probably invalid (paragraph 40).

iii. Subsequent to this advice the defendant:


(a) failed to immediately review the validity of the development consent (paragraph 55(f));

(b) failed to notify the plaintiff that the consent may be invalid (paragraph 55(g));

(c) on or about 14 November 2003 issued Construction Certificate CCB 539/2004 which provided that the defendant consented to an internal fit out for the warehouse clearance outlet (paragraph 42);

(d) on or about 24 November 2003 issued an interim Occupation Certificate (the occupation certificate was interim due to inter alia the existence of certain outstanding road works) (paragraphs 44-45) which provided that the Applicant could occupy the development (paragraph 46(c));

(e) failed to take reasonable steps to ensure the plaintiff did not suffer financial harm by reason of the defendant’s consideration of the plaintiff’s construction certificate and occupation certificate applications and by the issuing of each of the certificates (paragraphs 55(k) and (l).

iv. By making the representations which are set out in paragraphs 42 and 46 the plaintiff further contends that the defendant represented to the plaintiff:


(a) that the defendant had not received legal advice to the effect that the development consent 2919/02 was probably invalid (paragraphs 42(d)(i) and 46(d)(i));

(b) the defendant had given proper and adequate consideration to the legal advice it had received in respect of development consent 2919/02 (paragraphs 42(d)(ii) and 46(d)(ii));

(c) the defendant had no reason to believe that consent 2919/02 may be invalid (paragraphs 42(d)(iii) and 46(d)(iii)).

v. By making the above representations the plaintiff contends the defendant further represented to the plaintiff that:


(a) the defendant had granted a valid and lawful construction and occupation certificate (paragraphs 42(f) and 46(g));

(b) the defendant had given proper and adequate consideration to the substantial size and scale of the development, to the financial commitment that would be incurred by the plaintiff in changing the existing bulky gods warehouse into a warehouse clearance outlet and to the probability that the plaintiff would on completion of the redevelopment enter into a number of retail leases (paragraphs 42(g) and 46(f)); and

(c) the plaintiff was entitled to further develop or occupy the land in accordance with the certificates (paragraphs 42(h) and 46(h)).


vi. On 17 June 2003 Westfield commenced Class 4 proceedings in the Land and Environment Court against the plaintiff and defendant.

vii. On 16 January 2004 Justice Lloyd declared consent 2919/02 was void and ordered the plaintiff to abstain from using or permitting to use the premises for the purpose of a shop or shops.

viii. On 23 January 2004 the plaintiff filed a Notice of Appeal.

ix. On 31 March 2004 Justice Lloyd’s decision was unanimously upheld by the Court of Appeal.

x. On 25 August 2004, upon expiry of the stay ordered by the Court of appeal, the warehouse clearance outlet closed.

xi. In March 2005 following certain allegations by Westfield, ICAC commenced proceedings investigating the original development consent for the Orange Grove warehouse clearance outlet, and the circumstances surrounding the refusal by the Hon. Diane Beamer MP to approve the amended draft Liverpool Local Environment Plan for the Orange Grove Centre.

xii. In August 2005 ICAC found the development consent was not as a result of any corrupt conduct or improper influence.

Key issues in the proceedings relevant to the motion

3 Gazcorp contends that the key issues in the proceedings relevant to the instant motion are as follows:

(a) Whether ss. 43 – 43A of the Civil Liability Act2002 (NSW) (“CLA”) apply and provide the defendant with a defence of substance to the plaintiff’s claim.

(b) Whether having received legal advice that consent 2919/02 was probably invalid the defendant’s actions in issuing further consents were reasonable; and

(c) Whether if legal advice had been obtained prior to the issue of consent 2919/02 it would have been to the same effect as:


(i) the decision of Justice Lloyd in the Land and Environment Court;

(ii) the three judges of the Court of Appeal; and

(iii) the advice subsequently received from Marsdens Lawyers, namely that consent 2919/02 should not have been issued.

Key issues in the motion

4 Gazcorp contends that the key issues in the motion are whether the defendant has waived privilege over the legal advice by:

(a) raising in these proceedings by way of its defence the issue of the reasonableness of its acts pursuant to ss 43 and 43A of the CLA;
(b) consenting to the adducing of the legal advice at the ICAC hearing on 1 March 2003.

5 The proposition is that the Council has waived privilege:

(a) by raising as a fact in issue in the proceeding, the reasonableness of its actions;

(b) by its conduct at the ICAC proceedings, the transcripts of which are public documents; and

(c) by formally producing the substance of the legal advice in discovery in these proceedings.

6 The Council contests each of these propositions.

The claim grounded upon the discovery

7 It seems to me convenient to commence with the contention that privilege has been waived by the formal production of the substance of the legal advice in discovery in these proceedings.

Section 122 (2) of the Evidence Act

8 Section 122 (2) of the Evidence Act 1995 (NSW) relevantly provides that:

“Division 1 does not prevent the adducing of evidence if the client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made:

……
(d) under compulsion of law."

The authorities dealing with the proper construction of the words "the substance of the evidence" appearing in section 122 (2)

9 In NRMA v Morgan (No. 2) [1999] NSWSC 694 Giles J summarised a number of the authorities in the following terms:

[11] In Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12 a sentence in a PtB statement that “Ampolex maintains that the correct ratio is 1:1 and has legal advice supporting this position” was held by Rolfe J to be a disclosure of the substance of the legal advice. His Honour rejected a suggested distinction between the substance of the advice and the effect of the advice, and said (at 19) that the substance could be disclosed even if the ultimate conclusion without the reasoning process was revealed. It was sufficient that there was disclosure of what the advice was. …

[12] In Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 153 ALR 393 Goldberg J held that a reference to a brief without its contents, or any summary of or extrapolation of those contents, was insufficient for disclosure of the substance.

[13] In BT Australasia Pty Ltd v State of New South Wales (No 7) (1998) 153 ALR 722 Sackville J referred to distinctions between a mere reference to legal advice and disclosure of its substance, and between an expression of view as to the likely outcome of litigation and the statement of the substance or effect of legal advice. His Honour observed, with reference to the earlier Federal Court decision of Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418, that the test of loss of privilege by disclosure of special circumstances was a quantitative test which asked whether there had been sufficient disclosure to warrant loss of privilege.

[14] Finally in Southern Cross Airlines Holdings Ltd (in liquidation) v Arthur Andersen & Co (1998) 28 ACSR 455 Drummond J held that a brief general summary of certain advice was insufficient to amount to a disclosure of the substance of the advice, also referring to Adelaide Steamship Co Ltd v Spalvins . His Honour did not agree with the equation of substance and effect, saying that disclosure of the effect of a document may occur where only the conclusion reached has been disclosed and that disclosure of the substance could not occur without disclosure of “both the conclusion and the critical (but not all the) steps by which that conclusion was reached” (at 462). However his Honour said that the decision of Rolfe J in Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd was undoubtedly correct, and so his Honour cannot have intended that much be disclosed by way of critical steps.

10 One may add to these statements of principle, the decision of the Full Court of the Federal Court of Australia in Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 where the joint judgment of Olney, Kiefel and Finn JJ observed (at [425-426]) in relation to the phrase "substance of the evidence" used in sections 122 (2) and (4), that:

"The test is a quantitative one, which asks whether there has been sufficient disclosure to warrant loss of the privilege. If what is disclosed falls short of the test posed by this section, there is no waiver…"

11 It is pertinent to observe that Rolfe J in Ampolex in fact observed [at 19] that the particular words in the statement held in context not to have constituted a disclosure of the legal advice, did not purport to state “the advice, or its substance or effect".

The 1 August 2003 chronology entry

12 The item dated 1 August 2003 reads as follows:

"1 August 2003 Letter from Marsdens advising of class 4 appeal and Council's options in regard to appearing in a submitting role. Letter also suggests that Council decision to approve the development for a purpose other than a shop was manifestly unreasonable."

[appearing as document number 184 in Part 1 of Schedule 1 of the Council's list of documents]

13 In my view the words used in the second sentence constituted sufficient disclosure to amount to a disclosure of the substance of the advice given to the Council in the letter.

14 Had the first sentence only appeared in the item, it could not have been said that the substance of the advice had been disclosed.

15 The essence of the Council's submission has been that use of the word "suggests" makes clear that the item comprised no more than mere speculation as to the meaning of the advice.

16 The submission is rejected. Whilst the item does not purport to quote from the advice, a fair reading of the item clearly makes good the proposition that there has been a disclosure of the substance of the evidence within the meaning of the phrase to be found in s 122 (2).

17 It is pertinent to note that in Ampolex:

i. leave to appeal to the Court of Appeal was refused on 20 May 1996, although without relevant comment on the merit

ii. in refusing a stay order pending an application for special leave to appeal to the High Court, Kirby J said that it was strongly arguable that the reference to the supporting legal advice “waived the privilege as to the precise content of the legal advice on that point ”: his Honour observed that mere reference to the existence of legal advice would not amount to a waiver of its contents [ emphasis added]
[see Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 137 ALR 28 at 34.]

18 During the hearing of the motion Mr Garling SC, leading counsel for the Council, submitted that in the event that the Court was against all other of the propositions put by Gazcorp [and therefore left with only a need to determine the claim grounded upon the discovery], it would be necessary for the Court to inspect the subject letter in order to reach a properly informed decision as to whether or not the substance of the advice had in fact been disclosed by the chronology item.

19 Whilst it is open to the Court to inspect documents for which privilege is claimed in order to better understand their character, the Court is not obliged to do so: Ampolex Ltd v Perpetual Trustee Co(Canberra) Ltd (1995) 37 NSWLR 405 at 409 per Giles J. In my view in the present context it is unnecessary for the Court to inspect the subject letter and for that reason I have not done so. The letter has however been marked MFI R1.

The remaining grounds

20 Against the event that an appeal may be lodged it seems appropriate that the Court deal with the alternative bases put by Gazcorp as grounds for the claimed waiver of privilege

The "Fact in Issue" Ground

21 It is convenient to set out the relevant sections of the Civil Liability Act 2002 [“CLA”]:

“43 Proceedings against public or other authorities based on breach of statutory duty


(1) This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a breach of a statutory duty by a public or other authority in connection with the exercise of or a failure to exercise a function of the authority.

(2) For the purposes of any such proceedings, an act or omission of the authority does not constitute a breach of statutory duty unless the act or omission was in the circumstances so unreasonable that no authority having the functions of the authority in question could properly consider the act or omission to be a reasonable exercise of its functions.

(3) In the case of a function of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44.

43A Proceedings against public or other authorities for the exercise of special statutory powers


(1) This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a public or other authority’s exercise of, or failure to exercise, a special statutory power conferred on the authority.

(2) A special statutory power is a power:

(a) that is conferred by or under a statute, and
(b) that is of a kind that persons generally are not authorised to exercise without specific statutory authority.

(3) For the purposes of any such proceedings, any act or omission involving an exercise of, or failure to exercise, a special statutory power does not give rise to civil liability unless the act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power.
(4) In the case of a special statutory power of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44.”

22 Gazcorp has contended as follows:

i. The defendant has raised the issue of the reasonableness of its acts pursuant to ss. 43 and 43A of the CLA, see Amended Defence at paragraphs 65(d) and (e).

ii. Section 122(1) of the Evidence Act1995 (“the Act”) does not prevent the adducing of evidence the subject of client privilege which is given with the consent of the client or party concerned.

iii. A party’s consent will be implied to the use of otherwise privileged material, where the party raises for determination in legal proceedings, as an element in the cause of action relied upon, an issue incapable of fair resolution without reference to that material, vide Telstra Corporation Ltd v BT Australasia Pty Ltd ( 1998) 85 FCR 152 at 168; A mpolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 411 per Giles CJ; Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 at 358-359; 56 WN (NSW) 108 at 111.

iv. See also Sovereign Motor Ins Pty Ltd v BevillestaPty Ltd [2000] NSWSC 521 at [15] which is authority for the proposition that waiver will be imputed if there has been some conduct on the privilege holder’s part whereby it becomes unfair to maintain the privilege.

v. The plaintiff submits the issue of the reasonableness of the Council’s conduct in the operation of ss. 43 and 43A of the Civil Liability Act 2002 (NSW) is incapable of fair resolution without reference to the legal advice the defendant received from Marsdens on 1 August 2005, in particular in respect of:


a) whether the defendant’s act in not notifying the plaintiff of receipt of Marsdens’ legal advice was reasonable in circumstances where the plaintiff expended significant sums in reliance on the development consent issued by the defendant, and

b) whether the defendant’s acts in issuing the two further consents, being the construction and occupation certificates, were reasonable in the circumstances where it had advice from Marsdens that the consent was not valid.

Dealing with the matter

23 In endeavouring to deal with the matter it is necessary to note that paragraph 65 of the Council's amended defence filed on 1 May 2006 was in the following terms:

Further, in answer to the claims brought by the plaintiff, the defendant says that the provisions of the Civil Liability Act 2002 (NSW) (“CLA”) apply and, in particular having regard to the matters pleaded:

- the claims pleaded are not within the scope of liability as defined by s 5D of the CLA;

- the claims pleaded are not within the concept of factual causation as defined by s 5D of the CLA;

- by reason of s46 of the CLA, any exercise by the defendant of its functions did not create any duty of care to act in any of the ways pleaded;

- says any acts or omissions on the part of the defendant were not so unreasonable that no authority in question could properly consider the act or omission to be a reasonable exercise of its functions and accordingly, cannot be found to have breached any duty of care under s 43A of the CLA;

- says pursuant to section 43A of the CLA the defendant has no liability to the plaintiff

24 The Council's submission is that by pleading s. 43A of the CLA, the Council merely asserted that it is a “public authority” which was exercising “special statutory power” within the meaning of that section.

25 The Council's proposition is that whilst the above particular allegations may be matters of proof for the Council , they do not raise issues relevant to Gazcorp’s affirmative case seeking relief.

26 The proposition is that:

i. Those sections, and relevantly s.43A, do not provide statutory defences to the actions.

ii. They simply prescribe the applicable standard of care the breach of which the plaintiff must prove.

iii. The position then is no different to any other negligence claim where the onus or burden of proof remains upon the plaintiff.

27 The issue really resolves into whether or not in the particular circumstances:

i. the Council by expressly pleading that, as a matter of fact, any actions or omissions on its behalf were not so unreasonable that no authority in question could properly consider the act or omission to be a reasonable exercise of its functions, may be seen to have raised the issue or

ii. the issue was always an issue raised on the cause of action in negligence pursued by Gazcorp [ this being the case by dint of the enactment of sections 43 and 43A of the Civil Liability Act ]

28 Whilst I acknowledge that the resolution of the issue is a difficult one, in my view the latter approach is correct. It is trite that normally, in any court, the party who asserts must prove in order to succeed: Scott Fell v Lloyd (Official Assignee) (1911) 13 CLR 230 at 241 [cf Bankinvest AG v Seabrook (1988) 14 NSWLR 711 per Kirby P at 717].

29 The onus lay upon Gazcorp to establish that the relevant act or omission was, in the circumstances, so unreasonable that no authority having the functions of the Council could properly consider the act or omission to be a reasonable exercise of its functions.

[It may be noted that in Port Stephens Council v Theodorakakis [2006] NSWCA 70 the Court of Appeal whilst eschewing the examination or conclusion on the law relating to onus of proof concerning s 42 of the CLA, observed that the pleading by the Council should have given particulars of the facts which were said to give rise to consideration of s 42. Section 42 sets out the principles which apply in determining whether a public or other authority has a duty of care or has breached a duty of care in proceedings for civil liability to which Part 5 applies. The reasons for judgment of Bryson JA [with whose reasons Giles and Ipp JJA agreed] included (at [15]) the statement that:

"As well as indicating reliance on s 42, the pleading should have given particulars of the facts which were said to give rise to consideration of s 42. Unless reliance is notified in this way and with particularity, procedural unfairness will arise, particularly as, irrespective of whether the onus of proof of fact under s 42 lies upon a plaintiff or on a defendant, a public authority is in a far better position to know and to reduce evidence relating to the facts with which s 42 deals than any litigant contending with it is likely to be"]

30 Nor is the issue foreclosed by the use in the "Review of the Law of Negligence Final Report September 2002" [the "Ipp Report"] of phrases such as 'the policy defence'. The context in which that phrase is used must be taken into account. The Ipp Report did not purport to determine the onus issue here under consideration.

31 Gazcorp is the party with the relevant burden of proof which is the relevant initiating party (see Telstra v BT Australasia (1998) 156 ALR 634 at 647 per Branson and Lehane JJ). The proposition receives some support from the observations of Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] 2 All ER at 682:

"What, then is the power of the courts? The courts can only interfere with an act of an executive authority if it be shown that the authority have contravened the law. It is for those who assert that the local authority have contravened the law to establish that proposition."

32 For the reasons stated above, there is no inconsistency in the defendant’s “act” of pleading ss. 43 and 43A of the CLA. Privilege has not been lost under s. 122(1) on this ground.

The ground based upon the Council's conduct in connection with the ICAC proceedings

33 Gazcorp has submitted that:

i. the Council is seen to have consented to the disclosure of the subject Advice by reason of its failure to object to the tender of that advice at the ICAC proceedings;

ii. the Council has waived its privilege as a consequence of failing to object to particular cross-examination during the ICAC proceedings.

34 Gazcorp has submitted as follows:

“Ground 2(a): Exhibit 42 Ground in the ICAC Proceedings

i. Firstly the defendant failed to object to the tender of Exhibit 42 being the “Advice from Marsdens on Marsdens’ Letterhead to the General Manager of the Council dated 1 August 2003” at the ICAC proceedings dated 1 March 2005, see affidavit of Mr Martin Thorne of 7 April 2006 at Annexure “A”, page 9 at point 8.

ii. Consent pursuant to s122(1) of the Act does not refer only to express consent; Adelaide Steamship Pty Ltd v Spalvins (1998) 81 FCR 360 at 370; 152 ALR 418; see also Kang v Kwan [2001] NSWSC 698, where Santow J at [34] held that a party had consented under this provision where it had not objected to the production of documents which revealed the content of the privileged documents in question; see also Madden as Liquidator of Aquanaut Constructions Pty Ltd (In Liq) [2001] NSWSC 966 at [12] per Hamilton J.

iii. As a consequence of failing to object to the tender of the legal advice, Exhibit 42, at the ICAC proceedings, the defendant consented to the disclosure of the advice.

Ground 2(b): The Cross-Examination and Discovery Ground in the ICAC Proceedings

i. Secondly, the defendant failed to object to Mr Hammerschlag’s cross examination of Mr Graeme Wedderburn, then Premier Carr’s Chief of Staff, in respect of the advice. That cross examination disclosed the substance of the advice. The cross examination is currently available in a public document on the ICAC’s website; see Affidavit of Martin Thorne sworn 7 April 2006 at paragraphs 2-6.

ii. The defendant also failed to object to the discovery of the advice at the ICAC proceedings, see affidavit of Mr Thorne at Annexure “A”, in particular Mr Wedderburn’s evidence in cross examination at page 9 point 3:

“I believe I have seen this. I saw it I think in this place going over documents held by the Commission with – in the presence of legal counsel.”

iii. The advice is referred to by Mr Hammerschlag at page 9 point 4 of the transcript (Thorne Affidavit, Annexure “A”) with the words “ The yellow marked portion on the second page. ” In answer Mr Wedderburn is recorded as reading from the advice saying, “ Yes. (And then quoting) ‘In our view’? ”

iv. Immediately following tender of the Advice Mr Hammerschlag asks Mr Wedderburn, “Have you seen any notes or other documentary recording of advice which the council’s solicitors gave to it to the effect that they thought the consent was bad and council would lose the case?” Mr Wedderburn responds (at page 10 at point 1, Thorne Affidavit, Annexure “A”) “I may have once again since the Commission’s hearings commenced with council seen, I think, a handwritten note and other notes. Possibly to that effect.”

v. Section 122(2) of the Act does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and s. 122(4) of the Act does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person.

vi. The test in respect of substance is a quantitative one which asks whether there has been sufficient disclosure to warrant loss of the privilege; Adelaide Steamship at 371 and 375 where it was held that the substance of legal advice had been disclosed where its effect could be inferred. The good policy reason behind this is that it would undermine the administration of justice if Courts were unable to take notice of or enquire into matters which were already on the public record.

vii. As a consequence of Mr Wedderburn’s cross examination without objection the substance of the advice formed part of the public record of the proceedings with the result that privilege has been waived.

viii. Having failed to object to the production of the legal advice on discovery and the legal advice having been viewed by Mr Wedderburn, a non party to the proceedings, privilege has been waived.”

The ICAC Act 1988 (NSW)

35 Section 24 of the ICAC Act is in the following terms:

“ Privilege as regards information, documents etc

(1) This section applies where, under section 21 or 22, the Commission requires any person:

(a) to produce any statement of information, or
(b) to produce any document or other thing.


(2) The Commission shall set aside the requirement if it appears to the Commission that any person has a ground of privilege whereby, in proceedings in a court of law, the person might resist a like requirement and it does not appear to the Commission that the person consents to compliance with the requirement.

(3) The person must however comply with the requirement despite:

(a) any rule which in proceedings in a court of law might justify an objection to compliance with a like requirement on grounds of public interest, or
(b) any privilege of a public authority or public official in that capacity which the authority or official could have claimed in a court of law, or
(c) any duty of secrecy or other restriction on disclosure applying to a public authority or public official.”

36 Section 31 of the Act relevantly provides:

Public inquiries

(1) For the purposes of an investigation, the Commission may, if it is satisfied that it is in the public interest to do so, conduct a public inquiry.

(2) Without limiting the factors that it may take into account in determining whether or not it is in the public interest to conduct a public inquiry, the Commission is to consider the following:
…
(d) whether the public interest in exposing the matter is outweighed by the public interest in preserving the privacy of the persons concerned
…


(8) A public inquiry is to be held in public.

(9) Despite subsection (8), the Commission may decide to hold part of the inquiry in private if it considers this to be in the public interest."

37 Section 35 of the Act provides as follows:

“ Power to summon witnesses and take evidence

(1) The Commissioner may summon a person to appear before the Commission at a compulsory examination or public inquiry at a time and place named in the summons:

(a) to give evidence, or
(b) to produce such documents or other things (if any) as are referred to in the summons,
or both.


(2) The person presiding at a compulsory examination or public inquiry before the Commission may require a person appearing at the compulsory examination or public inquiry to produce a document or other thing.

(3) The Commission may, at a compulsory examination or public inquiry, take evidence on oath or affirmation and for that purpose:

(a) the person presiding at the compulsory examination or public inquiry may require a person appearing at the compulsory examination or public inquiry to give evidence either to take an oath or to make an affirmation in a form approved by the person presiding, and
(b) the person presiding, or a person authorised for the purpose by the person presiding, may administer an oath or affirmation to a person so appearing at the compulsory examination or public inquiry.


(4) A witness who has been summoned to attend before the Commission shall appear and report himself or herself from day to day unless the witness is excused from attendance or until the witness is released from further attendance by the person presiding at the compulsory examination or public inquiry.

(5) A person who, without being so excused or released, fails to appear and report shall be taken to have failed to appear before the Commission in obedience to the summons.

(6) A Judge or Magistrate may, on the application of the Commissioner, issue any summons that the Commissioner is authorised to issue under this section.

(7) The purpose of subsection (6) is to enable the summons to be given the character of a summons issued by a judicial officer, for the purposes of the Service and Execution of Process Act 1901 of the Commonwealth and any other relevant law.”

38 Section 37 provides as follows:

“ Privilege as regards answers, documents etc

(1) A witness summoned to attend or appearing before the Commission at a compulsory examination or public inquiry is not entitled to refuse:

(a) to be sworn or to make an affirmation, or
(b) to answer any question relevant to an investigation put to the witness by the Commissioner or other person presiding at a compulsory examination or public inquiry, or
(c) to produce any document or other thing in the witness’s custody or control which the witness is required by the summons or by the person presiding to produce.


(2) A witness summoned to attend or appearing before the Commission at a compulsory examination or public inquiry is not excused from answering any question or producing any document or other thing on the ground that the answer or production may incriminate or tend to incriminate the witness, or on any other ground of privilege, or on the ground of a duty of secrecy or other restriction on disclosure, or on any other ground.

(3) An answer made, or document or other thing produced, by a witness at a compulsory examination or public inquiry before the Commission is not (except as otherwise provided in this section) admissible in evidence against the person in any civil or criminal proceedings or in any disciplinary proceedings.

(4) Nothing in this section makes inadmissible:

(a) any answer, document or other thing in proceedings for an offence against this Act or in proceedings for contempt under this Act, or
(b) any answer, document or other thing in any civil or criminal proceedings or in any disciplinary proceedings if the witness does not object to giving the answer or producing the document or other thing irrespective of the provisions of subsection (2), or
(c) any document in any civil proceedings for or in respect of any right or liability conferred or imposed by the document or other thing.

(5) Where:

(a) a legal practitioner or other person is required to answer a question or produce a document or other thing at a compulsory examination or public inquiry before the Commission, and
(b) the answer to the question would disclose, or the document or other thing contains, a privileged communication passing between a legal practitioner (in his or her capacity as a legal practitioner) and a person for the purpose of providing or receiving legal professional services in relation to the appearance, or reasonably anticipated appearance, of a person at a compulsory examination or public inquiry before the Commission,

the legal practitioner or other person is entitled to refuse to comply with the requirement, unless the privilege is waived by a person having authority to do so.”

39 As the Council has submitted, the effect of s 24 (3) (b) is:

i. to deny to public authorities or public officials the otherwise right of persons [required under sections 21 or 22 to produce any document], to apply under subsection (2) to the Commission to set aside that requirement;

ii. hence to require that the documents which are sought from such public authorities or officials, be produced, notwithstanding any privilege of such authority or official which could have been claimed in a court of law.

40 In the present context this leaves Gazcorp with limited options in support of its contention that the Council had locus to take objections to

(1) the production of the subject letter to ICAC,

(2) the questions put to Mr Wedderburn in cross-examination and

(3) the tender of the letter which became Exhibit 42.

41 Effectively Mr Slattery QC, leading counsel for Gazcorp, was forced to contend that the Council should at an appropriate time, have made an application that the Commission hold part of the inquiry in private [being an application invoking the power of the Commission under s 31 (9). The application would presumably have had to have been in terms of that part of the inquiry which would deal with the letter which became Exhibit 42.

42 It is common ground that no such application was ever made by the Council.

43 Had the position been that:

i. the ICAC Act had included a provision whereunder the Council could have objected to the production to the Commission of the document sought on the grounds of client legal privilege;

ii. in the face of that provision, the Council had failed to take any such objection

it may well have been that the proper holding would be that the Council had by its failure to make such an application, been seen to have consented to the disclosure of the advice.

44 That however is not this case.

45 In my view the failure of the Council to make an application under s 31 (9) cannot per se be regarded as a consent to the disclosure of the advice.

Substance of the advice now forming part of the public record

46 The submission of Gazcorp is that the fact that the substance of the advice has now come to form part of the public record of the ICAC proceedings, has the inexorable consequence that the anterior privilege has been waived.

47 The misconception which underlies the submission is the proposition that the substance of the advice forms part of the public record of the ICAC proceedings. It is only the transcript that is available to the public to access by reference to the ICAC website. The substance of the subject advice was not disclosed in the cross-examination of Mr Wedderurn. Nor can one, on the website, inspect the advice which had become Exhibit 42.

48 For those reasons it becomes unnecessary to consider the respective submissions as to whether or not material which has in fact become part of the public record capable of being accessed by any person, could still attract a claim for client privilege under the Act. It would seem surprising if that were the case.

49 However there is authority that in proceedings to which the Evidence Act applies privilege may only be lost in accordance with the provisions of Pt 3.10; cf Application of Cannar: Re Eubanks (the person nominated by the United States District Court for the District of Colombia in proceedings United States of America v Phillip Morris Inc [2003] NSWSC 802 per Bell J at [107].

50 I note in this regard that the Court has been taken by the submissions of Gazcorp to the decision of Santow J in Kang v Kwan and others [2001] NSWSC 698. Gazcorp has contended that this decision is authority for the proposition that under the Evidence Act particular documents may be rendered no longer confidential where the content of the documents have been disclosed.

51 In Kang the material documents had been produced in proceedings by Mr Stenberg, a solicitor retained at the time of the production of the documents by Mr Kwan [to act on behalf of Ms Kate Woowin and Ms Eileen Woowin]. The documents produced were made available to all parties by Court order.

52 It is somewhat difficult to follow the complexities of background fact informing the decision of Santow J but it appears that his Honour's reasoning (at [34]) followed:

i. the failure of the Woowins to take any objection to that production;

ii. there being no material placed before the Court to indicate any subsequent objection.

53 His Honour held that in those circumstances:

i. the Woowins either must be taken to have consented [ s 122 (1)] or

ii. the matter must be taken to have been resolved by events.

54 The decision in Kang does not appear to me to be authority for the proposition put by Gazcorp but seems confined to very particular facts. In any event as demonstrated above, at least part of the reasoning was dependent upon the failure to object to production of the material, obviously upon the assumption that such an objection could have been taken. For reasons already given, by reason of the ICAC Act the Council was expressly excluded from taking an objection to production of documents on the basis of a ground of privilege which may have been able to be claimed in a court of law. This would in any event appear to distinguish the instant facts from the facts before the Court in Kang.

55 It is unnecessary to go further to deal with what may fall for decision in some other case, namely whether the circumstance that the substance of advice has in fact become part of the public record has the inexorable consequence that the anterior privilege has been waived.

Short Minutes of Order

56 The parties are to bring in short minutes of order on which occasion costs may be argued.